Redefining Quality –
accelerating change
reducing cost
protecting reputation
Professor John Oakland
Sellafield 2nd November 2011
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Redefining quality
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European Centre for Business Excellence
Oakland Consulting
Carbon Ready Ltd
CONSULTANCY DIVISION RESEARCH & EDUCATION DIVISION
Some of our Private Sector Clients
Some of our Public Sector Clients
Why ‘Re-define Quality?’
The 21st Century world of business never rests – the speed of flow of information has created global markets in which we all trade. Consumer needs vary widely across time and space creating constant need for alertness and change. If we as managers are not keeping up with the pace, others will – it’s very competitive out there!
In the past Quality has become synonymous with control, compliance & cost. Excessive focus on internal capability generated overly bureaucratic approaches that attracted negative perception, particularly in boardrooms
The requirements are around building a ‘learning organisation’ that is quick to change, avoids excessive costs and reputational impacts of getting it wrong!
Quality must play a wider role in business to meet the challenges of 21st century
Key concept – the journey & maturity
1
2
3
4
5
Time
Products, services, processes and organisations progress on a change journey, from idea to implementation, where quality maturity
increases over timeQua
lity
& O
pera
tions
Mat
urity
Lev
el
Key concept – the journey & cost
Time
1
2
3
4
5
As the journey progresses costs accumulate. The rate
increases early in the journey and slows as maturity is
increased
Qua
lity
& O
pera
tions
Mat
urity
Lev
el
Qua
lity
Mat
urity
Lev
el
1
2
3
4
5
Time
Maturity level
Reputation
Net cost of qualityVariablecontrol
Gainingcontrol
Incontrol
Improving – “Industrialized”
Worldclass
Scaling the maturity curve
The journey and the key stages
1
2
3
4
5
Time
Journey Progress
Stop “holding back”
As good as competitors
Clearly the best in the industry
Redefine the industry
expectations
Correct Problems
Adopt best practice
Link strategy to operations
Bust assumptions
Addressing the sustainability agenda
Environmental Sustainability Journey
Financial & reputational cost of Carbon Emissions
Addressing increasing energy costs through, low-cost, quick wins
Understanding the need for change, developing strategy and realistic objectives
Successfully deploying new technologies, management systems and behaviours for operational excellence
Developing the right end-to-end value chain for the low-carbon economy
What are the risks relating to speed of change, cost and reputation?
Speed related risks
• Projects fail to meet their objectives through a loss of momentum, which leads to stalled progress
• Benefits realisation delayed while change is taking too long
• Going slow puts more pressure on critical resources because key personnel are tied up in projects
• Slipping back down the curve due to loss of capability
Accelerate Change
Cost related risks
• Costs get out of control due to poor quality through inadequate specification, excessive rework, or too much waste
• Hidden costs don’t get addressed because they don’t feature in financial reports, because they are hard to identify
• Carbon emissions cost money – under the Carbon Reduction Commitment many companies will start being penalised for carbon emissions
Reduce Cost
– failure to manage and avoid risks throughout the change journey
Protect Reputation
Reputation related risks
• Reputation takes years to recover from failure making it harder to do business
• Perception of poor CSR will damage your reputation – consumers expect modern companies to have strong demonstrable Corporate Social Responsibility
• Reputational damage is deeper and quicker now than ever before because information, opinion, and ultimately consumer choice is affected at scale due to communication technologies
Accelerating change
Time
Journey progress
By accelerating transformation, significant
costs can be reduced or avoided, and the benefits
of transformation will start to accrue more quickly
“We were impressed at how well the techniques applied during the workshops helped us to quickly reach conclusion ”
Highways Agency
How do you accelerate change?
Successful change is possible when all 7 key elements are addressed and readiness is achieved before you start changing processes and implementing other changes
PlanningPlanning
Leadership& DirectionLeadership& Direction
ProcessesProcesses
Organisation& ResourcesOrganisation& Resources
BehavioursBehaviours
Systems& Controls
Systems& Controls
Need forChange
Need forChange
Effort wasted on non-core
Driving blind
Paralysis and frustration
Resistance endangers success
No urgency and no action
Never leave the start
False starts and wrong directions
Missing focus Result
ImplementingChange
Readinessfor
ChangePlanningPlanning
Leadership& DirectionLeadership& Direction
ProcessesProcesses
Organisation& ResourcesOrganisation& Resources BehavioursBehaviours
Systems& Controls
Systems& Controls
Need forChange
Need forChange
External or internal
drivers of change
Oakland figure 8 model of effective change
Reducing costs
Time
The cost of delivery
The cost to deliver products and services is
reduced by addressing the causes of poor quality
(mainly waste & variation) and busting assumptions about how services are
delivered
“The application of the ‘DRIVER’ model to our claims process yielded an audited savings of €1.6m. This is evidence of the what the DRIVER model can deliver”
Eurocopter
How do you reduce cost?Reduce process time•Apply approaches such as “Lean” to remove the non-value adding waste from a process, pathway or service
Reduce variation•Use techniques such as “Six-Sigma” to reduce undesirable variation in patient facing and back-office processes
Bust assumptions•Assumption busting leads to paradigm shifts – this can drastically reduce costs and create step changes in quality
Waste Removal
Variation Reduction
TIME
COST£££
Improving customer satisfaction andincreasing value for money
QUALITY
VALUEoutputs
Lean Six sigma
Protecting reputation
Time
Desired outcome reputation lags by customer response
time
The development of reputation
Journey progress
“You have taken us light years ahead – great value” Shell
How do you protect reputation?Protecting reputation starts with understanding performance and risk
Use an assessment tool developed across the dimensions of quality management including:
Leadership
Policy
Organisation
Manufacturing
Supply
People management
Performance improvement
Bringing together your performance measurement across the supply chain will
highlight areas of priority, risk and specific improvement actions
Reducing Carbon
Whether its a recession, competition from the far-east or climate change, your organisation’s success depends on its fit with the external environment
As with other complex business problems, we use a structured approach based on many years research and practice coupled with the specific expertise required to address climate change.
1. Evaluate external events2. Develop a strategy for
success in a low-carbon economy
3. Establish 21st Century business processes which will enable performance
4. Support the operational delivery
Developing Strategy
Planning
Leadership &
DirectionNeed for Change
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Operational Delivery
Behaviours
Systems&
Controls
Organisation &
Resources
PROCESSES
External Events
Energy Costs
Customers and Consumers
Legislation
Reputation
Physical Environment
How do you address carbon reduction?
Delivering value in CarbonLinking CO2 with Service Delivery
Working with a large local authority we used Carbon Stream Mapping on each service line to identify CO2 hotspots.
This enabled the organisation to reduce emissions whilst maintaining service quality, improving delivery time and reducing cost.
Reducing Energy Intensity in Heavy Manufacturing
We developed and ran a change programme to mitigate energy price rises with minimal capital investment. Reduced site operating costs by £50K per annum and developed internal capability to sell goods in low-carbon markets.
1: Understanding the need for change, developing strategy and
realistic objectives 4: Bringing 1, 2 & 3 together to address specific non-discretionary needs – the CRC (Carbon Reduction Commitment)
2: Successfully deploying new technologies, management systems
and behaviours for operational excellence
3: Developing the right end-
to-end business processes for
the low-carbon economy
Carbon reduction strategy
Developing Strategy
Planning
Leadership &
Direction
Need for Change
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‡
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‡
‡
Operational Delivery
Behaviours
Systems&
Controls
Organisation &
Resources
PROCESSES
Success depends on fit
with external environment
Carbon management
factors:
External Events
Energy Costs
Customers and
Consumers
Legislation
Reputation
Physical Environment
There are four key areas that our carbon services address
• Redefining Quality with understanding and applying what quality means in the 21st century
• How are you going to accelerate change, reduce costs and protect reputation?
• You need to:• Understand your customers• Set your strategic direction• Diagnose the problems in your business• Improve your efficiency and
effectiveness• Transform the way you do business• Help change happen in your organisation
so that it is sustained • Collaborate with your partners much
more effectively
Redefining Quality
UnderstandCustomers
Set Direction
DiagnoseProblems
ImprovePerformance
TransformBusiness
www.oaklandconsulting.com
“No great improvements in the lot of mankind are possible, until a great change takes place in the fundamental constituting of their modes of thought” – John Stuart Mill
Oakland Consulting plc33 Park Square WestLeeds LS1 2PFTel 0113 234 1944
Professor John Oakland; Executive Chairman, Oakland Consulting plc
Emeritus Professor, Leeds University Business School
Professor Oakland and his team have completed numerous advisory assignments and management development programmes in their field, the aim of which has been to bring the practical application of best practice within the reach of top management in all types of organisations. He is author of several best selling books, including: Total Organisational Excellence; Total Quality Management, Oakland on Quality Management, Statistical Process Control and Production and Operations Management. He has written hundreds of papers, articles and reports on various topics in these and related fields.
Oakland Consulting, in its original form, was created by Professor Oakland over twenty five years ago (1985) and now operates throughout the world, helping organisations in all areas of business improvement.
Professor Oakland is a Fellow of the Institute of Directors, Chartered Quality Institute and Royal Statistical Society. He is also a Member of the American Society for Quality.
John is Chairman of Oakland Consulting plc and Head of its Research and Education Division, the European Centre for Business Excellence. He is also Emeritus Professor of Business Excellence at Leeds University Business School. Over 30 years he has researched and consulted in all aspects of quality management, strategic process management and business improvement in literally thousands of organisations. He has directed several large business research projects in Europe which have brought him into contact with a diverse range of organisations.