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Exploiting the concept of a manufacturing system part II

Principles and origins of the managing-by-projects engineering

change methodology

John Parnaby Aston Academy of Life Sciences Ltd and

Business Process Systems Engineering Ltd, Solihull, UK, and

Denis R. Towill Cardiff University Business School, Cardiff, UK

Abstract

Purpose – The purpose of this paper is to establish the influence and discipline of process control and systems engineering theory plus engineering practices in the chemical process industry on current operations management development. Part I has laid the requisite groundwork for this paper; Part II covering the concept of a manufacturing system, its evolution into the managing-by-projects (MBP) methodology, and application to the extended enterprise. Later, Part III will concentrate on the usage of MBP within individual manufacturing and other businesses. Hence, the concentration will then be on cellular operations and the “natural grouping” task force genré.

Design/methodology/approach – The paper is based on experiential case study outputs from a large number of European and international organisations. Benchmarking of total business performance is shown to be a driver of change. Via the systems approach, it is shown how a set of interlinking programmes are planned and executed to enable comprehensive improvements in business performance. The core characteristics of MBP are detailed plus how systems engineering principles can enable effective BPI.

Findings – MBP is an holistic approach. It can start at the competitive achievement plan level to scheme and implement total business change executed by internal task forces. The procedure is illustrated for an international enterprise via results obtained from re-organising a multi-site auto components business. Large gains in key performance indicators are evident.

Research limitations/implications – A key finding is the importance of generating internal experience and competence. Learning has to belong to the organisation, not some external group. There must be careful sequencing of projects, otherwise there will be “indigestion”. Elephants should be eaten in bite-sized chunks.

Practical implications – This original concept has now evolved after some 30 years and proven routes to implementing MBP have been established. Furthermore, a vast quantity of supporting material is now available. Setting up an effective, and organisationally relevant user-friendly open-learning facility is a top priority.

Originality/value – The originality lies in the concept of a manufacturing system. But the innovation manifests itself in the successful transformation into the MBP methodology for engineering effective change in a wide range of organisations.

Keywords Business process re-engineering, Change management, Learning organizations, Systems engineering, Project management

Paper type Case study

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1741-038X.htm

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Received October 2008 Revised March 2009 Accepted April 2009

Journal of Manufacturing Technology Management

Vol. 20 No. 8, 2009 pp. 1047-1069

q Emerald Group Publishing Limited 1741-038X

DOI 10.1108/17410380910997209

Introduction The universal problem in the face of a recent history of many changes in global market places and the emergence of China and India as determined low-cost supplier of goods and services, industry and commerce is to continually update and develop both capability and performance. So, there will be changes in both behaviour and performance with time as business effectiveness improvement programmes, destructive products/services, learning curve innovations, economic environment changes, and other improvement stimulation sources impact on output. But unfortunately, there is also the possibility of performance regression due to negative effects of poor motivation followed by drifting back to older, amateur and less effective practices (Gomersall, 1964).

Such behaviour can be traced at least as far back as Gilbreth and Gilbreth (1917) and his concept of method study. This was devoted to determining the best way of performing a task, and is a fundamental element of many embodied within the Toyota Production System (TPS). Subsequent to Gilbreth, method study was expanded to become the discipline of industrial engineering. Regrettably, the latter methodology then suffered something of a decline in importance in the western world in the 1950s and 1960s, only to be revived with alacrity as it was realised that the emergent Japanese business success was based on it (Suzaki, 1987; Robinson and Robinson, 1994).

The relapse was partly due to the onset of the “management guru” style of superficiality, with fad predominating over substance (Ettorre, 1997). There was a consequential emphasis on “quick fix tricks” rather than deep understanding. It was aided by the emergence of the modern type of generalist chief executive of corporate enterprises and their focus on a three year get rich quick horizon. In turn, this was amplified by a new breed of city financial analyst focused on quarterly business results for the short-term raising share prices. Hence, this pressure greatly reduced the essential investment in an organisational cadre capable of defining, designing and implementing effective change.

“Managing-by-projects” as new management theory “Managing-by-projects” (MBP) has its origins in the then novel concept of a manufacturing system (Parnaby, 1979) but now developed into a proven business process improvement methodology. Based on effective action with “Natural group” task forces as key, it has been successfully applied to many types of businesses in a variety of market sectors including automotive, electronic, pharmaceutical, aerospace and healthcare. In practice, MBP operates in a similar modus operandi to the TPS (Ohno, 1988). Like TPS, MBP is an integral holistic methodology, not an instant piecemeal panacea. Hence, it can be related to the powerful four level prism model describing organisational change mantra (Werr et al., 1997). So the vision, principles, toolkit, and most important of all, the learning organisation therein are self-evident and feature strongly in the detail of MBP (Parnaby et al., 2003).

However, the strongest roots of TPS lie in method study, since it has been traced back to Frank Gilbreth, and his series of lectures to Japanese industrialists immediately after World War I (Robinson and Robinson, 1994). Other authors who have contributed to such a systems view of production activities include Alcalay and Buffa (1963), Mouly (1969), Christensen and Brogan (1971), Jenkins (1972), Towill (1981), Cherrington and Towill (1983), Globeson (1984), Olsmats et al. (1988) and Parnaby (1988). An integral feature of these papers has been the emphasis on smooth product

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flow which in turn highlights the importance of effective interface design and integrated operations. So it is no surprise that continuity is a key feature of MBP (Parnaby et al., 2003), as indeed is of TPS (Spear and Bowen, 1999). Despite their different origins, the commonality in praxiology between TPS and MBP is unsurprising. Both methodologies were developed over an extended period of time by industrial engineers driven to carefully experimenting in real-world production environments.

Considerable detail on MBP applications is already available in Parnaby et al. (2003). What this paper does is to describe the origins and theory of MBP back to the original concept of a manufacturing system. It is the second paper in the series. Part I (Parnaby and Towill, 2010a) described the relationship to process control. It also contained (Table I therein) comprehensive definitions of terms used in all three papers. The third paper (Parnaby and Towill, 2010a, b) similarly explains the concommittment business practice and industrial impact. Our belief is that together they place MBP on the requisite rigorous conceptual base. But why is this establishment of generic theory so important to twenty-first century business? Since attempting just to copy odd bits of a methodology which at first glance appears to work elsewhere is unlikely to result in success.

Spear and Bowen (1999) provide ample evidence of such piecemeal induced failures involving companies attempting to emulate the TPS, but implementing it only in part (and then often the least suitable segment for their particular purpose). It is the totality of the approach which matters. By generating a theory (however simple), it becomes much easier to construct and test a generic model against all the available evidence. There is thus every chance that the MBP model emanating from the concept of a manufacturing system will then pass the very important “transferability test” proposed by Micklethwait and Wooldridge (1996). Successful evaluation then opens up the way for this proven methodology to be widely exploited both in other cognate businesses and in other market sectors.

The nature of “messes” We agree in general terms with the viewpoint of Ackoff (1999) who said:

Problems are not experienced; they are abstractions extracted from detailed experience by analysis. They are related to what is actually experienced as atoms are related to tables. Tables are experienced, not atoms. What we experience are dynamic situations that consist of complex systems of problems, not individual or isolated problems.

Paradox no. Basic proposition (enable) Corollary (yet still enable)

1 Support employees Achieve financial goals 2 Challenge employees Build confidence 3 Encourage personal initiative Maintain shared visions 4 Encourage diversity Mould cohesive teams 5 Learn from past Seek new knowledge 6 Take incremental risks Break new ground

Source: Andriopoulos (2003)

Table I. The embracing act: the

six paradoxes in managing creativity

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Ackoff (1999) calls such systems messes:

Therefore, when a mess, which is a system of problems, is taken apart it loses its essential properties and so does each of its parts. Hence, the behaviour of a mess depends more on how the treatments of its parts interact than on how they act independently of each other (Olsmats et al., 1988).

A partial solution to the whole system of problems is better than whole solutions of each of its parts taken separately. (Students) are often taught to treat problems as separable, self-contained units. So they tend to be unaware of the existence of nature of messes and, of course, of ways of dealing with them.

In particular, with such a fragmented approach, interface problems which are always critical to effective operations of the real enterprise tend to be ignored. The systems engineering methodology which identifies, by input-output analysis of the sub-processes of a system, the integrated interfaces requirements, at the system design stage enables a full solution to the holistic system requirement (Parnaby, 1995).

The methodology “managing-by-projects”, which is the subject of this paper, is anchored into systems engineering and is particularly concerned with enabling better performance from the whole organisation (Parnaby et al., 2003). In particular, it is concerned with attaining world-class standards of business performance. Independent proof this has been achieved is available in Schonberger (1995) with respect to the automotive sector, and Velocci (1999) in aerospace. But we must emphasise that MBP is not an instant recipe for success. As shown in Figure 1 (Voss and Blackmon, 1998), the enterprise has to simultaneously take account of both short- and long-term horizons.

Figure 1. Enterprise horizons in operations management

Short term emphasis Long term emphasis

Common misconception of

“Western” priorities

Common misconception of

“Japanese” priorities

Proven Japanese strategy for covering the spectrum

(Toyota production system)

Proven “Western” Strategy for covering the spectrum

(Managing by projects)

Source: Authors based on Voss and Blackman (1998)

P ri

or it

ie s

Integrated emphasis

Time scale

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MBP shares this dual characteristic with TPS, as is evident from examination of the excellent detailed DNA model of the latter created by Spear and Bowen (1999).

Management paradoxes MBP was initially developed and implemented between 1983 and 1990 to meet the needs of introducing TPS like cultures and effectiveness right across Lucas Industries PLC Group, a large and multi-national enterprise. It was successfully applied to many distinct companies therein which are currently still operating successfully in a very competitive market place. Importantly, there were internal systems engineering consultants available to train and guide “Natural group” task forces in setting and achieving their process improvement goals. Hence, the MBP modus operandi appears very similar to the development of TPS. However, in the latter case, the consultancy role was initially undertaken for Taichi Ohno of Toyota by associated experts such as Shigeo Shingo from the Japanese Management Association (Robinson and Robinson, 1994). The present track record of MBP suggests that is a strong candidate for classification as a methodology for innovatory change under the heading of “new management theory”.

It manifestly passes the “transferability test” between companies and between market sectors as posed by Micklethwait and Wooldridge (1996). Furthermore, the benefits of MBP programmes can be readily identified at both micro (local) and macro (enterprise) levels. It also, due to its step-by-step process, module by module controllable approach, meets the needs of busy operations managers. MBP is an industrial engineering type of methodology. Analysis, design, implementation, controlled start-up and continuous improvement of standard working best practice procedures are all essential phases within the approach.

Throughout our discussions on MBP, there will be much attention paid to innovation and creativity. This is not surprising as the successful twenty-first century organisation must be innovative if a high standard of competitiveness is to be achieved. Even more importantly, such an advantage must be maintained over a significant period of time requiring all organisations to embody well-founded operational and development functions in their practices. As Andriopoulos (2003) has argued, this requires addressing the six apparent paradoxes in managing creativity shown in Table I. Hence, we shall examine how MBP targets these issues. They manifestly include investment in people, their motivation, and how the requisite action is enabled. There is a concurrent need for collaboration and individuality, progression in learning simultaneously from the past and from knowledge bases elsewhere, plus substantive achievement in both short steps forward and in novel developments.

It could be argued that all of these paradoxes are best handled by ensuring that the business is an effective learning organisation, which is a critical key factor in MBP. Individuals in MBP associated teams are “natural” in the sense that between them they include all of the skills, methodologies and experience to carry out the design and installation of a specific business process module, or the operation and continuous improvement of the delivered process module to best practice TPS standards. A central operational principle is the simplification of business processes, procedures and job structures. MBP creates a strong no-compromise discipline within the organisation for the on-time delivery of innovation targets based upon best project planning and management practices and subsequently making change stick through disciplined,

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and monitored continuous improvement project practices. It requires a formal organisational change mechanism to be set-up, i.e. an organisation development capability as outlined in Parnaby et al. (2003).

The systems approach An early definition by Elmaghraby (1966) suggested that “A system is any collection of interacting elements that operate to achieve a common goal.” Obviously, this applies to virtually every field of human endeavour but, as Mouly (1969) argues, “systems engineering is actually the art and techniques of building practical working systems, artefacts and organisations”. This would not be a novel activity different from conventional engineering except for two aspects. According to Mouly (1969), the first factor is the formal awareness of the importance of interface interaction between the parts of a system. The second factor is that systems engineering implies very effective integration. It specifically says the whole is more than the sum of the parts, which is how it is customarily highlighted (Senge, 1990).

Figure 2 which long predates the explosion in TPS literature is a landmark description of a manufacturing system and its integrated dynamic control mechanism (Parnaby, 1979). Not only are delivery processes clearly shown, but also well-controlled materials and information flow are obviously the key to effective operation. Once, it is realised that interfacing between the core processes of business units is critical, it then becomes manifest that the goal becomes designing to minimise the number of “handovers”. Their smooth running is absolutely essential for successful operation of the enterprise. Hence, the emphasis in much of what follows on the drawing-up of input-output diagrams of various processes. These highlight potential problems with such handovers and related impediments to seamless operation readily identified

Figure 2. Block diagram representation of the concept of a manufacturing system

Source: Parnaby (1979)

Assessment of effectiveness of marketing and

advertising

Marketing and advertising

strategy

Market

Sales plans

Actual sales

Other distributors

Market stimulus

Sales forecasting programme

Strategy decisions

Models of production processes

Production forecasting programme

Factory production processes

Assessment and control logic

Tentative sales enquiries

Current and forecast sales demands

Advance warnings of marketing strategies

Output production levels and

factory states*

Allocation and control actions

Schedules loads, plans

Production level and state forecasts

Predicted production

targets

Actual weekly sales information

Predictive process control advice

*Examples are: • Inventory levels • Stock turns • Lead times • Adherence to schedule • Manpower and machine allocations • Production rates • Efficiences

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(Towill, 1997). As we shall see, a reduction in the number of handovers by the use of natural group team organisational elements is an important metric when assessing system re-designs.

In fact, the foregoing concept of a manufacturing system can be readily extended to cover the extended enterprise. For example, all businesses may be reduced to the four interacting key processes shown in Figure 3. These are:

(1) marketing and sales process (MSP) responsible for acquiring orders for goods and services;

(2) product introduction process (PIP) which designs new services and products to meet market need;

(3) product delivery process (PDP) for delivering the requisite products and services; and

(4) support and control process (SCP) to provide and operate the necessary infrastructure to enable the business to function as intended.

The systems engineering approach ensures that an optimal “how” is seamlessly blended with the best “what” for these four business processes. The value-adding operational and organisational methodologies finely honed and applied via a well-trained workforce will provide protection and competitive advantage. After all this is now a world where the same standard modern machinery, associated equipment and software can be purchased by any competitor. Its possession no longer generates

Figure 3. Systems engineering approach – the four

integrated key business processes

Source: Authors

Conceiving our products

(Product Induction Process)

PIP

Acquiring orders

(Marketing and Sales Process)

MSP

Enabling the action

(Support and Control Process)

SCP

Delivering products

(Product Delivery Process)

PDP

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competitive advantage as of right. Management must ensure best practices are used to ensure efficient and effective utilisation. These four key business processes should also contribute to the way each task is performed and to the corporate know-how developed and embodied in its managerial control system.

MBP is conceived in a way that such expertise and essential world’s “best practice” company knowledge will be well-known in-house and readily promulgated via open learning programmes. The objective herein is to understand how an enterprise may be re-engineered not merely to play catch-up, but as shown in Figure 1 to overtake the current “exemplars” plus any up-and-coming possible global competitors. However, to achieve this, we must understand the need for an innovations driven learning culture.

The appropriate authority here is Drucker (1994) who has described such an effective organisation as follows:

[. . .] the Japanese have re-structured the way they do innovation as a continuous, systematic, organised, purposeful activity. Their great advances in these last thirty years have not been in technology or in manufacturing processes; they have not been in lower costs and increased quality; they have not been in marketing. The Japanese have made innovation systematic, purposeful and disciplined; and they have made entrepreneurial strategies similarly systematic, purposeful and a discipline. They have not done anything spectacular at the elemental level and [certainly] nothing requiring genius but accepted that innovation is a discipline with its own – fairly simple rules.

This masterly statement is in line with that made by Suzaki (1987), a Toyota associated consultancy specialist. He made it abundantly clear that TPS did not contain novel elements. Instead it was the new way in which well-known procedures were fine tuned and integrated into novel systems, i.e. a total systems approach entirely consistent with that already met in Figure 2.

Engineering the business “Engineering our business” means ensuring that design and delivery strategies for goods and services have been subjected to rational analysis and optimally matched to marketplace needs. Then these strategies have to be appropriately resourced, and implemented. Both start-up and subsequent “steady state” operations have to be effectively managed. But in the twenty-first century the marketplace is itself dynamic. Hence, in some senses “continuous change” becomes the “new steady state”. This is where implementation of the innovative organisation is essential. Products and services and novel ways of delivering them are thereby conceived in the light of improved design, enhanced knowledge, and better, regularly updated work practices. Such activities justify this discipline being termed “business systems engineering” (Parnaby, 1995).

The essential requirement is to view the enabling of such change as a key management activity (Towill, 1991). Figure 4 shows how this may be achieved within an innovations scenario (Parnaby et al., 2003). There is an ongoing requirement which drives the need for a fundamental wide ranging MBP policy which promotes a culture of recognising the continuous change required in running the business. In turn, this necessitates the vision (preferably over a five year horizon) to be identified and communicated in detail throughout the organisation. Furthermore, it needs to be widely understood and accepted, and planned via appropriate implementation mechanisms.

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Progress is then enabled in MBP by setting up a number of time sequenced but overlapping projects. These will be resourced internally via teams of “players” normally engaged in these tasks supplemented by “own company” experts and training facilities. Such projects are actively steered and driven by existing managers to meet an integrated set of short-, medium-, and long-term targets.

Within MBP, as will become apparent later, the change process is based on a particular interpretation of the principles of systems engineering as due to Parnaby (2002). Table II shows the results in the specification of a framework (based around the ideas initially expressed in the TPS, Ohno (1988), Shingo (1989) and Spear and Bowen (1999)) with a focus on cross-functional and cellular organisational design and control. Within this umbrella are tackled the four previously defined core business processes, where the objective is to ensure fitness for purpose achieved with minimum waste. The third particular aspect is the detailing of the modus operandi covering team composition, training, project execution, and ability to meet specified measures of performance (MOP). Finally, the essential focus on simplification necessitates use of appropriate tools and techniques of systems design to enable the elimination of complexity and variability, unnecessary interfaces and non-value-added (NVA) activities.

Figure 4. The overall change

management process Source: Parnaby et al. (2003)

Promote a need for change

Communicate vision and mission

Set-up implementation

mechanisms

Short term targets

Medium term targets

Long term targets

Actively manage projects

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Concept of MBP The trajectory shows in Figure 5 neatly crystallises the challenge faced by twenty-first century businesses who wish to ensure international competitiveness. The vertical axis is a relevant performance metric (in reality this may be multi-dimensional such as the typical set comprising (price, quality, lead time, service level, stockturns)). The horizontal axis is calendar time, and the possibility is that the first trigger is the experience of losing market share or experiencing financial losses. This means an

Principle Detail

Framework Exploit derivatives and variants of the TPS Focus on cross-functional and cellular team organisational design and control

Core business processes Effective design and operation for minimal waste Apply systems engineering to all our team operated core business processes (PIP, PDP, MSP, and SCP)

Modus operandi Team-based cellular organisational structures with necessary training in core business systems design and operational methodologies Emphasis on company competitiveness and meeting n carefully cascaded MOP

Focus on simplification Use of appropriate tools and techniques of systems design to achieve optimum and robust operations Elimination of complexity and variability, unnecessary interfaces, and NVA activities

Source: Parnaby (2002)

Table II. Principles of systems engineering as applied to enable business success

Figure 5. The essence of business getting from here to there

Our performance in absence of innovation

MBP Action horizon

Our present performance (here)

C ur

re nt

G ap

EXT ERN

AL “BE

ST PRA

CTI CE”

Our future

Advantage gap

Improvement trajectory following MBP

application

Targeted future

Performance

Critical goal (there)

MBPRIN

Source: Authors

Our future

performance

A pp

ro pr

ia te

p er

fo rm

an ce

m et

ri c

Time

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investigation as to why, by benchmarking the performance metric against the opposition and best practices in other industries. The next step is to determine which of these metrics is the order-winner (OW) and which are market qualifiers (MQ) according to the Hill (1993) terminology. The MQ is the standard for market entry, and OW is the critical metric which clinches the order. Note that these OW’s and MQ’s are themselves dynamic (Johansson et al., 1993). For example, the quality dimension made the initial breakthrough for the sale of Japanese TV sets in Europe during the 1970s, but within a few years price was the clear OW.

Those who follow gurudom and subsequently believe that instantaneous across-the-board success is achieved by TPS orientated change management programmes are due for a rude awakening (Schonberger, 2007). For example, it is claimed that realistically Toyota took some 20 years to fully develop and implement just-in-time production. Even when armed with specialist TPS fore knowledge it is still a lengthy procedure, which Ohno (1988) suggested may well be a ten year hard slog to play catch-up. Consequently, any hoped for “quick hits” can usually only be achieved against the right organisational-, motivational-, and knowledge-based background. The MBP antidote to this disease may be summarised via the five core characteristics shown in Table III. Note that all must be present if sustained innovation and improvement is to result. It is not a case of mix n match, rather it is “all or nothing”. Like TPS, MBP has had a long and honourable gestation period since it dates back some 25 years to its first steps to re-vamp the extensive international range of the Lucas Group of automotive, electrical and aerospace companies. Indeed, as we have seem previously the basic model of a manufacturing system dates as far back as Parnaby (1979).

Delivering innovation via MBP An extremely detailed action plan of how various international businesses within the Lucas Organisation were encouraged to adopt the innovationary culture associated with MBP is given by Parnaby et al. (2003). The key elements include addressing the educational needs at all levels from directors and senior managers right down to the shop floor operatives. The clear message which emerges is that the requisite required culture is now one of continuous change so that innovation and the learning organisation drives the enterprise forward. Furthermore, everyone in the business is involved in such innovation, both in the transient part of Figure 5 and the subsequent continuous improvement activities. In TPS language, the latter is generally known as “Kaizen” for describing standard but continuously developing work practices. It becomes an essential and integral part of the “day job”, in other words an on going commitment for the requisite “operational natural group” basic organisation team element.

Within the MBP regimen innovation and change are recognised via high-level appointments. These include the change programme director and setting up the programme office responsible for leading and supporting such activities throughout the enterprise as necessary to deliver the business strategies. Such activity is strongly supported by senior management steering committees. Very strong and determined, persistent leadership is an essential no-compromise element. In practice, according to one of the present authors (JP) it is a “balls-breaking” activity (quoted in Oliver and Wilkinson, 1992). It definitely requires a “hands-on” mode of leadership to ensure that people indeed interface problems are designed out of the culture for doing things.

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The associated institutional “open learning” programme has a high priority with company knowledge bases continually updated from successful projects. People interfacing is thus seen as a major MBP priority, as is communication, especially of total business objectives, which can often be hidden from people directly involved in the delivery process. The whole ethos of MBP in enabling a change culture may be shown in value chain format in Figure 6. Vital constituents are that it be people driven; achieves goals via carefully managed programmes; enhances performance; and actively promotes corporate learning.

Such a learning organisation as shown in Figure 7 is established via the dynamics of a “virtuous circle”. It strongly implies that as new knowledge is acquired it is made transparent to all “players” in the enterprise. Furthermore, the requisite skills are also retained “in-house”, and not resident in some high powered and very expensive

Characteristics Details

“Natural group” based Individual group members are “natural” colleagues based on their capabilities and work activities Between them they have all the skills and methodologies to carry out business process module design or operation to best TPS standards A central principle in MBP is the simplification of business processes, procedures, and job structures undertaken by trained and targeted “natural group”, cross-functional task forces

Disciplined approach MBP requires the setting up of a formal and authorative organisation development capability Establishes a strong discipline within the organisation of innovation targets delivered on time Is based upon best project planning and management practices including making change stick

Integration of activities Strongly integrates top-down strategy and leadership activity with bottom-up resourcing and delivery strategy Ensures overall business targets are realistically and robustly linked to appropriate delivery projects Ownership and responsibility for projects is transparent at all levels Avoids short termism by integrating means for maintaining progress through medium- and long-term horizons

Emphasis on delivering innovation

Defines clear roles and training needs associated with innovation for all personnel from CEO down Embraces steering committee, change manager, task force leader, and “natural group” members in enabling strategic objectives to be met and maintained All roles linked via disciplined, standardised, project planning, approval and delivery processes

Integrating and supporting On-the-job-training built into all innovation projects training Training is integrated at all levels in the organisation

Strong re-inforcement via open and strong communication channels including feedback of other case study material and recording for access, experiences of innovation

Source: Authors based on Parnaby et al. (2003)

Table III. Core characteristics of “managing by projects” in a nutshell

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external consultancy. In this way both “process knowledge” and “scientific knowledge” are continuously updated throughout the organisation. Both are regarded as essential ingredients in maximising the chance of project success (Lapré and van Wassenhove, 2002). Various MBP mechanisms are used for promulgation include internal workshops, the production of internal handbooks (Parnaby et al., 1992), distributed open learning centres and task force training workshops. The system approach was also codified via comprehensive handbooks, and summary sheets and it needs to be promoted continuously and widely in internal manager conferences.

Figure 6. Value chain format of

MBP framework for enabling the engineering

of effective change

People driven

Learning culture

Programme execution

Performance enhancement

Enablers Enablers Enablers Enablers

• Good communications

• Effective interfacing

• Innovations based

• Everyone involved

• EasyAccess training

• Effective feedback

• Comprehensive procedures

• “Natural Group” task forces

• Internal change specialists

• Interlinking MOPs

• Task force auditing

• Bottom line impacting

Source: Authors

Figure 7. How MBP enables the

“learning organisation” via virtuous circle

dynamics

E nh

an ci

ng ca

pa bi

li ty

E nh

an ci

ng ef

fe ct

iv en

es s

Continually expand organisation

knowledge base

Develop innovative

culture

Establish task forces and

steering groups

Design and engineer improved

processes

Train everyone to use the

systems approach

Select and drive project

scenarios

Learning organisation

“Virtuous” circle

Source: Authors

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The competitiveness achievement plan We have suggested earlier that MBP has evolved steadily over a period of more than two decades and has already successfully transformed well over 100 businesses. The methodology has also been readily transferred to non Lucas businesses including healthcare. Many have been turned into recognised world leaders (for example Schonberger, 1995, and Velocci, 1999). But this modus operandi, based on the generic systems approach, is designed not to age and wither away. On the contrary, the methodology is general in terms of applicability to market sectors, and in time. Because of the universality of the techniques used therein it equips companies to compete in the twenty-first century as it has already done in the past. MBP is quite robust in being equipped by continuous improvement, e.g. by outsourcing non core services to specialists or partners, to deal with new marketplace challenges.

But how does a business actually exploit MBP in such a situation? The answer becomes obvious when the strategic competitiveness achievement plan (CAP) of Figure 8 is considered. This outlines how everything is integrated to ensure that innovation becomes an ongoing way of life within the implementation of the company strategy. It is manifestly analogous to the concept of the manufacturing system already met in Figure 2. Our starting point is that the marketplace scenario is being continuously monitored and our own performance assessed against both current and expected future competition.

Perhaps, the trigger is that a key competitor is about to bring out new models, or offer updated features of services. Maybe there is general gearing up for a price war leading to drastic reductions in margins or perhaps there are new entrants from overseas low-wage-based competition with low-cost competing services. There could

Figure 8. Integrated overview of CAP implementation system in action

Strategy/annual time phased review

Means whereby • Organisaton • Task-forces

• Resources • Cause/effect analysis

• Effective programme/project management

Build project plan into budgets and

financial plan

New/improved products and

services

Change implementation

Trend and scenario analysis

Monitor and review

Overall goals and objectives

Cascade measures of performance

(Facing up to the challenge)

(Selected route)

(Looking ahead)

(Enabling improvements)

Marketplace challenges

(Assess and act)

(What we offer)

(How effective are we)

(Where we need to go)

Source: Authors based on Parnaby et al. (2003)

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even be novel materials exploited in our products leading to opportunities for micro miniaturisation, etc. Possibly as posited by Hill (1993), the OW MOP may temporarily be lead time, with price still very important but dropping down to the level of a market qualifier. These are typical dynamic challenges for the company to anticipate, monitor and rapidly respond to Johansson et al. (1993).

In Figure 8, the CAP system identifies the requirement for a strategy update. After the associated benchmarking and market review the route to meeting business challenges is defined. At the next level below, there is a set of actions required and associated mechanisms to determine where and how we need to progress, looking ahead to plan the improvement programme via MBP, and ensuring that the company has the resources and organisation skills whereby the strategy will be delivered. The next level includes specific projects for the design and introduction of new products and services, the implementation of change, supported by clearly setting up appropriate cascaded top to bottom MOP to facilitate overall control and assess how effective we are in the new modus operandi. This must be supported by a company wide communication and training plan. Finally, we monitor and review progress in order that we can continue to assess our effectiveness in the presence of continual marketplace challenges. By comparing actual with target performance the need for any subsequent action is activated by the feedback loop shown.

Implementing the CAP in an international business – the criticality of the first project For best chance of success, it is actually important to focus first on a project with high potential for demonstrating effective improvement. It is manifestly the preferred starting point in CAP implementation. This initial project should be constrained to a sub-section of a large business process where progress would not be impeded by poorly performing adjacent sections. There is thus a controlled gradual build-up of a cascade of project activities starting with a few carefully selected sub-business processes. This is a critical part of the MBP philosophy, because it is essential to ensure staff motivation that the first few projects within the enterprise are resounding successes. They can then be looked upon as demonstrator role models or examples of modus operandi for change.

Unfortunately, it is usually the case that once such successes have been achieved and seen to be of permanent benefit, there will be considerable pressure within the organisation to over-expand the rate of re-engineering with indigestion from too many initiatives. Hence, there is a danger of the “tipping point” phenomenon occurring (Gladwell, 2000) with too great a swing towards new projects. This tendency must be powerfully resisted, on the basis that the resources available become over loaded and current operational requirements are not met due to current workloads on key staff. This results in insufficient training time being allocated or sufficient lead time being allowed for best practices to become embedded within the developing culture. Hence, instead of the desired virtuosity, a vicious circle driven by over expansion and failure will result.

It is, therefore, critical to control the rate of MBP expansion so that the organisation is not trying to grapple with too many initiatives at the same time. The available systems engineering talent must not become too thinly spread, otherwise the ramp-ups thereby cause excessive interference with the essential to stay-alive day-to-day

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operational business processes. After all, money can usually only flow into the business after effectiveness improvements have reduced costs and improved performance, also new or improved products/services have been delivered and the cash-to-cash cycle completed! So, the MBP implementation message is clearly “only eat the elephant by chewing bite-sized chunks” (Parnaby et al., 2003). Since the change programme is engineered largely by staff temporarily seconded to task forces from their “day-job”, the planning, synchronisation, and magnitude of the task force programme effort must be carefully planned, and over a finite time scale of monitored milestones. A typical profile is shown in Figure 9, and in this instance covers a 30-month period.

Our exemplar engineering manufacturing business unit may be expected to a business with around £150 million pa turnover. To transform the overall manufacturing operations process and new PIP of such a company would typically take two to three years working within a five-year plan. A change programme manager responsible to lead innovations would be appointed and a senior management steering committee set-up and trained. One up-front priority task force would develop the CAP strategic plan in detail. A second priority task force would carry out a diagnostic project to propose a programme route map and then set-up the programme office and its integral communication and worlds best practice training material resources. It would be responsible for running senior management training workshops and task force start-up training. The third task force would act as a pilot scheme to design and implement the first carefully chosen demonstrator process module. As stated earlier this would be a project which could not be impeded by other poorly performing sub-process since it is of great importance for the “demonstrator” to communicate, motivate staff and highlight the resultant benefits.

Five other task forces each with a small core team of experienced full time staff plus several part time staff who can readily access and analyse information focused on the area of attack and also carryout any short-term “quick hits” identified would re-design the supplies chain process module and the remaining manufacturing process modules,

Figure 9. Typical task force profile for achieving world-class performance

Setting-up phase Roll-out phase

NB. Profile is for complex business unit with circa £M150 annual turnover

0 0

2 TF2 TF6

TF3 TF5 TF7 TF8

Sets up all facilities needed to underpin

innovations culture

Engineer procurement and supplies

process

Engineer a new product

process

Develop the Business

Competitive Achievement Plan

(CAP)

Engineer demonstrator

(manufacturing operations)

Engineer sales and marketing

process

Engineer product/services

platform rationalisation

Engineer supply chain

process

6 12 18 24 30

Months

Source: Authors

N um

be r

of t

as k

fo rc

es c

ur re

nt ly

o pe

ra ti

TF4

TF1

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i.e. a total of eight task forces. In this way, the resource used is taken from different areas of the business so as not to cause organisation overload. In this way, the whole MBP programme including the subsequent embedding of a Kaizen programme follow on continuous improvement processes for delivering the CAP is thereby achievable in the target timescale of two to three years. The set of projects for each process in a change programme would run in parallel as distinct fixed time window task forces subject to leadership resource and trained support internal expert availability. They would frequently operate for up to six months for each core process.

Results from implementing such a large-scale CAP are shown in Table IV. Perhaps, the key metrics to highlight are the average lead time, down by 60 per cent and the sales per employee up by 150 per cent. Note that in the particular example used, the five sites worldwide were rationalised and re-structured into just two highly effective plants thus releasing a considerable amount of space for re-deployment. Typically, many of these companies used project team analysis of successful Japanese would leading companies to define best practice MOP for the CAPS, e.g. Toyota for the automotive companies. However, MOP can also be determined by analysing of non-similar but world-class companies. Thus, in other market sectors, Wal Mart and Tesco offer suitable opportunities to study supply chains with world-class MOP.

Discussion The solutions to handling all six paradoxes in managing creativity identified earlier in Table I (Andriopoulos, 2003) lie in the details of the learning practices within MBP. These are all “people centred” with colleagues having individual and team activities to undertake, “open learning” mechanism for easy on-site access, and transparent feedback from investigating many best-practice projects worldwide. But most of all the core “people” activity resides in the “natural grouping” flexible cross-functional team task force with its enthusiastic, educated and motivating leadership, used to inspire, execute, and implement change (Parnaby et al., 2003). Hence, the use of multifunctional trained natural group teams that are able to interpret and apply an integrated systems approach to simultaneously utilise a set of chosen tools to solve business-specific problems is one of the two fundamental features behind the success of the MBP approach. Indeed, we argue it is at the heart of this effective methodology of change, as shown in Figure 10.

These teams provide the “engine” which links and enables the delivery of the vision via the application of business systems engineering principles, supported within the

Performance metric Recorded improvement (%)

Sales per employee Up 150 Average lead time across all business processes Down 60 Cost base reduction Down 40 Purchasing costs Down 15 Stock turnover ratio Up 100 Rate of development of new products Up 30 Head count Down 40 Number of separate sites Down 60

Source: Authors based on Parnaby et al. (2003)

Table IV. Complete outputs results

from restructuring and reorganising an

international automotive component business

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context of the learning (creative) organisation. The second essential fundamental feature is the use of a highly disciplined and structured no-compromise project programme management procedure with integrated focus on resource management. This is the direct analogue of the concept of a manufacturing system outlined in Parnaby (1979). A justification element must be firmly embedded within the organisation, and supported by regular management reviews and rapid decision-making mechanisms. Manifestly, MBP fully exploits the dual local knowledge (“operational” and “scientific”) base regarded as essential for successful project execution (Lapré and van Wassenhove, 2002). For example, in MBP there is a state of flux within the organisation ensuring that appropriate skills are readily available.

The consequence is that “process players” with detailed local “know how” become members of “Natural group” task forces for re-engineering that set of activities. But internal consultants with wide company experience additionally provide general up to date methodologies for system design inputs into task forces. This helps enable rapid promulgation via the programme office of the “new” knowledge and detailed case examples across the whole enterprise. So, via the learning organisation, the company seeks to maximise its competitive position by being in a position to lead the market, rather than to be forced into continually playing “catch-up”.

Sustaining innovation within a major organisation is no trivial undertaking. Each of the six paradoxes of Andriopoulos (2003) is ready to react against progress if given half-a-chance. As Skinner (2007) comments on unexpectedly poor performance in some top American companies:

How could manufacturing managers go wrong by applying conventional premises of industrial management developed and improved over a century? Every managerial team

Figure 10. Holistic approach endemic in MBP oriented enterprises

Design and operating principles

Innovative learning

organisation

Systems engineering

toolbox

Source: Authors

Vision and long term

(5 year) plan strategy

Task force driven project

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pulled its own not-invented here way and the manufacturing plants, run by separate conventional industrial management concepts were not outstanding at anything, so were not able to compete. The basic causes were poor manufacturing development policies. Top management should manage manufacturing by making sure that those policies were right, innovating by having an open mind, continually searching out best practices and tailoring these to their specific company needs. This would ensure the manufacturing process became competitive. The business system works when the whole set of core processes fit together and support corporate strategy.

In other words, the MBP driven CAP should define exactly what the total business change and development programme should do to provide effective total process system improvement and interface integration.

MBP endeavours to avoid such Wickham Skinner alerted problems by ensuring full understanding that there are four integrated project sub-structures underpinning sustainable innovation. These are grouped in matrix format in Figure 11. The axis are characterised by relative difficulty in execution (tough/easy) and project typology (fixed term/ongoing). Furthermore, the successful organisation has to understand that each structure is likely to be required to enable continuing creativity. In MBP terms, the fixed term projects generally require the specially constituted process design Task Forces such as those formed to execute the automotive business development vision shown in Figure 9. The on-going process operations management projects are also enacted by “natural groups” with some members having served in the appropriate design task force, but this time confined only to those involved directly in running the particular operations process. Hence, continuous innovation is embedded in the culture as very much an on-going part of the “day job”.

Figure 11. Structure and project mix

to enable sustainable innovation

T O

U G

H E

A S

R el

at iv

e di

ff ic

ul ty

o f

ex ec

ut io

• Demonstrator projects • Staff training projects • Small selected group projects

• Company wide kaizen programmes

• Widespread incremental changes

• “War on waste”

• Focused work on process simplification

• Company wide implementations

• Outsourcing of non core activities

• Supplier

Proving the approach

Steady state increases

Move to next

business

Locus for an enterprise

FIXED TERM (Localised short term cost reduction)

ON-GOING (Meduim to long term major cost reduction)

Project type

Source: Authors

Dynamic

roll out

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Conclusions From previewing the impact of the emergence of new global competitors in most industries, it became clear several decades past that a proven systems engineering MBP approach is necessary for effective modern total enterprise design. Furthermore, despite being based on the earlier Parnaby (1979) concept of a manufacturing system this remains a proven enabling framework for the creation of factories to meet the needs of the twenty-first century worldwide (as outlined in “Factory 2000 plus”, Parnaby, 2002). Each element or process sub-system has to be designed and managed to integrate and interface effectively within the business process system as a whole. It will combine a set of modern organisational and operational methodologies with selective use of cost-effective technologies to meet the particular needs of each business. In such scenarios, machines and computer systems are manifestly still of fundamental importance because of the particular roles they can play when professionally integrated inside effective processes and due to value-adding, difficult to copy, know-how embodied in them and their associated adaptable software. However, the engineering of operational systems to achieve best interaction between humans and machines to obtain the “best” solution is always an essential ongoing innovative activity. But even as new ways of doing things emerge, the “human factor”, remains pivotal in creating, managing and executing projects (Upton, 1995).

The industrial “specialised functional silo” mentality is an all too common phenomenon well documented by Rummler and Brache (1995). To counter this situation, MBP ensures that the internal project leaders and task force teams are provided with business process systems centred training to provide an adequate working knowledge right across the business. This includes the development of a standard terminology and an understanding of strategy, market and financial analysis, systems engineering analysis, process design and implementation. Hence, the requisite practical systems language can be talked at all times so as to encourage everyone to grasp how their particular problems could be tackled within a total view of the CAP and thereby satisfactorily solved. Note the similarity here with the reported comprehensive shop-floor “indoctrination” of new Toyota executives, even those with prior wide industrial experience elsewhere (Spear, 2004). In other words, local knowledge is seen as a prime contributor to present day business success.

In this paper, we have described the systems engineering origins dating from Parnaby (1979) strongly influencing MBP. This is a methodology firmly embedded within the learning organisation. Innovation is seen as an on-going culture spread and practised by managers, engineers and operators with internal experts and programme office capabilities acting as catalysts. Those “players” responsible for the day-to-day operations of processes are seconded core members in “natural group” task forces. The detailed modus operandi of the latter within the MBP context is the subject of our companion paper (Parnaby and Towill, 2008). Hence, at the strategic level, the principles of MBP as reviewed herein are focussed in on the vision of the business generating and systematically, persistently implementing the appropriate CAP. This is carefully driven forward by managers and “product champions” motivating steering task forces to achieve specific goals within the strategic framework and the framework of a sound change project organisation. These activities exploit business process systems engineering tools supported by a proven methodology toolbox incorporating a wide range of tried and trusted analysis and design techniques. The emphasis is

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clearly on controlled implementation and innovation element start-up, searching out and promulgation of new knowledge, and the firm commitment and active involvement of everyone in the business in the learning organisation.

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