How One Company Used Strategy Deployment to Make Sure It Is Turning Strategy into Reality
The traditional approach to executing strategic plans is ineffective. Progress is slow and uncertain because there’s little connection between the strategy and everyday business priorities. Learn how a European provider of aftermarket electronic repair leverages Hoshin Kanri to accelerate improvements in productivity and profit margins.
Business leaders constantly struggle to balance long-term strategies with near-term execution. Somewhere between quarterly revenue forecasts and monthly budget gaps, between the operating plan and production report, the long-term strategy gets lost in the day-to-day fray of running the business.
There is one primary reason why most companies fail to achieve their strategic goals. It’s not because they don’t have a viable strategy, or that they’ve failed to communicate it. It’s because the strategy doesn’t connect to what managers focus on, how their performance is measured, and what the business actually does every day.
For the Regenersis operation in Sömmerda, Germany (between Frankfurt and Leipzig), the time to reboot came in early 2014. During the strategy workshop that TBM facilitated that December, the Regenersis Sömmerda management team agreed on a number of key breakthrough objectives. Their targets included double-digit percentage increases in productivity and gross profit, and a significant reduction in employee absenteeism.
Regenersis implemented Hoshin Kanri using the X-matrix tool to align the goals with their improvement plans and associated projects. Management then allocated the cross functional resources that would be necessary to turn the plans into reality. “The greatest challenge we faced was how to integrate the entire management team into the culture change,” says General Manager, Dirk Jungnitz. “I consciously focused on junior managers with the courage to shake things up and move forward with me.” That willingness to shake things up was necessary to implement another key element of the organizational change recommended by TBM: Managing for Daily Improvement, or MDI for short.
A core element of an effective management system, MDI starts with tracking and reporting key performance indicators (KPIs) that were identified during the strategy deployment process. Managers review the KPIs with team leaders every day at a designated time. It’s important to monitor progress on a daily, weekly and monthly basis, so as to not lose sight of the objectives and sustain forward progress.
Within eight months, Regenersis Sömmerda increased productivity by 14 percent, boosted gross profit by 17 percent, and reduced absenteeism by 33 percent. In addition to the disciplined implementation of MDI and leadership standard work, open and proactive communication, and continuous training measures across all levels constituted key success factors.