Prior to any operational change, a factual understanding (qualitative or quantitative) of what works well or less well in an organization or team is required.
The performance diagnosis is the key element that will allow everyone (and not just a few enlightened individuals) to become aware of and take a step back from what the organization is delivering and what is actually expected by the various players.
It is a process that is both an effort of communication and alignment combined with an inclusive approach that will involve the organization’s stakeholders so that they can take ownership of the findings. Indeed, nothing is worse for commitment and future change than making a performance diagnosis while leaving the players out of the process. Failure guaranteed from the start of the desired change.
Before any diagnosis begins, there is a fundamental question that must be answered: What performance are we talking about? What dimensions are important and what change would we like to see? better safety for employees? better customer service? better margins? better product quality?
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A performance diagnosis often has several dimensions or axes that directly affect business impact and profitability (better reputation, more sales, lower costs, therefore in the end an improvement of margins and cash flow and a reduction of net working capital). The more dimensions there are (sometimes interconnected), the longer the diagnosis will take.
A typical diagnosis can take 2-3 weeks in a department / factory of 200-300 people and is done by qualified people who bring the right tools to analyze the situation.
The performance diagnosis always has 3 angles that will help the actors to see more clearly.
The trigger axis is the external diagnosis or commonly called External Benchmarking. Whenever possible, we carefully compare figures or ratios and performance indicators with competitors or other industries. This exercise triggers awareness and can initially create rejection…”. Yes but WE are not the same… “and generate excuses. For example, we can compare the number of ideas generated per employee in every company in the world that measures this indicator of work commitment but having the same definition everywhere is impossible so this measure will just create a kind of shock. Because when your employees see that Toyota generates 100 times more ideas than your best plant, they will understand that they still have a long way to go. The desired effect is there…awareness.
In many cases, external benchmarks are known to companies (especially management) or industry federations that have experts who compare and analyze data. Sometimes it is the databases of certain consultants or universities that will give clues or should be used. In the Pharmaceutical sector for example, McKinsey’s POBOS is one of the most instructive paid sources because they have standardized more than 500 industrial sites per product family. The University of St. Gallen in Switzerland is also a reference in the field of pharmaceutical quality and industrial performance.
The manufacturer’s axis is internal diagnosis or internal benchmarking. This time, we speak the same language and compare apples with apples… Admittedly, apples are not all of the same nature, but they are still apples.
It becomes more difficult for the actors to find excuses because we are going to compare them to sites producing more or less the same type of products with similar processes.
Sometimes we will take into account a certain complexity but we will really start to put our finger on important differences between sites or units. Again, the goal is not to find the absolute truth but to make people think and bring acceptance of the need for change further.
This is often the decisive moment when the proudest people start to realize that they are very far from the idea they have of their performance.
We begin to see this on the faces and in the words of the actors on the site at this point in the diagnosis.
Among hundreds of examples, in the automotive plastic components sector, we have carried out internal benchmarks on machine performance and reject rates.
Since the thermoplastic injection technology is the same with similar plastics and similar quality criteria, we considered that the sites were close enough to align on the same definitions and start comparing.
When this comparison was never made, we were often surprised to see very large differences between units.
In the more administrative functions, for example in insurance, we have regularly carried out internal benchmarks on file processing times or response times to clients or the number of files per month and per medical expert (the classic bottleneck).
Finally, the motivating axis is the internal analytical diagnosis. Here, we concretely apply well-known analytical tools to read the “innards” of the unit and make its staff and its figures/ratios speak for themselves.
There are 3 dimensions to the internal analytical diagnosis:
Wondering why these dimensions?
We simply answer with an easy-to-understand picture: if you want to win a race, you will need a good car and engine (the processes), a good analysis of the sensors, dashboard and circuit (the governance) and last but not least, crucially, a team and a driver capable and with a huge desire to win. It is therefore essential to analyze these 3 dimensions because without this honest view, we can miss the biggest problem to solve or focus on the wrong problem.
We have a lot of examples where the problem seemed at first glance to be related to the processes but in reality it was the motivation and capabilities of the staff that was not sufficient.
In each dimension, we have specific diagnostic tools that will reveal, in a qualitative or quantitative way, the real performance problems and the potential for improvement. This does not mean that the solution must capture all the potential detected, but certainly a good part of it to get closer to the internal benchmark.
For process diagnosis, we very often use tools from Lean management such as VSM (Value stream Mapping) or OEE or OPE (equipment efficiency or people efficiency) to understand :
For example in the pharmaceutical industry, the main problem is often related to very long delays in processes due to deviations of product or process parameters during manufacturing. We analyze with VSM and quickly identify bottlenecks on which we need to focus our productivity and efficiency efforts so that performance changes and lead times are reduced.
Other key tools:
For the diagnosis of the governance or ‘performance infrastructure’, we map the management of meetings, the analysis effort and the quality of problem solving in teams, the decision-making processes among many other tools.
Finally, for the diagnosis of mindsets and behaviors, we often conduct workshops in sub-groups to reveal states of mind, we analyze staff commitment, or we put the finger on the negative effects of the organizational structure. We also analyze in detail the capability gaps in teams and training efforts.
Of course, the more broadly defined the problem, the more tools we use, but the goal is to make the analyses easy for staff to do with us and learn how to use them.
It is essential to do the performance diagnosis together with the actors, because the conclusions will be the best and this will greatly help the actors to take ownership of the results.
When you have done the analysis yourself and you have seen the problem with your own eyes, it is 10 times more powerful than if someone else tells you.
“I only believe what I see” by St Thomas should be used as a motto).
To conclude the diagnosis, we organize a large restitution session by the actors and employees to their colleagues followed by very important Question / Answer sessions to explain and clarify. This is not where or when the solutions are discussed, but it will serve as a collective alignment and the start of the design phase of the (often profound) changes to be made.