Innovation and Efficiency – No Contradiction

In our discussions with managers we often learn that efficiency is not their highest priority; innovation and new product development are. Therefore, the focus is shifting from improving the cost position and increasing the company performance to succeeding with new products and innovations.
However, innovation and efficiency are often perceived as contradictions: either a firm wants to be efficient or it wants to be creative. It can not be both at the same time, or can it?

Even more so, there is academic research that recommends to top executives to make up their minds: you should pursue cost leadership, customer intimacy or innovation (e.g. Treacy& Wiersma (1997)). 

In fact, our experience in the field teaches us a more differentiated understanding. Innovation and efficiency are very compatible concepts and need to be pursued in tandem. There are specifically these cases, where this is useful:

  1. Innovation itself is a process that should be efficient. Not only the amount of money that is poured into innovation is decisive. It is the effect per invested dollar or euro that counts. For example, Apple is investing a lot less than other much less innovative market players, but is extremely successful with its new products. Therefore, companies need to focus on efficient innovation.
  2. Innovation and efficiency are based on the same disciplines of effective organizations. These success factors start with a strong leadership team, and goes on with highly motivated employees, strong results-orientation, high quality awareness and other virtues. That leads to the plausible conclusion that highly professional organizations do excel in efficiency and in innovation at the same time.
  3. Process innovation is not just a slogan. It means the application of new ideas on processes and activities. With thousands of small ideas a lot of efficiency is generated. These continuous improvement efforts can make the difference between a highly creative, but bankrupt operation, and a successful innovative company, which earns money with its new products.
  4. In today´s dynamic business world innovation is an ongoing requirement, not the occasional project. Only by continuous learning companies will deliver enough competitive innovations, solutions and servcies that satisfy ever increasing customer expectations.

These cases show that innovation and efficiency are two sides of the same medal. However, there ARE big differences between both. Managers and executives just need to be clear on how these two concepts are understood and implemented in their organizations. 

For questions and comments, post here or write an e-mail to sattlberger@procon.at

Business Excellence: How to Activate Your Inner Excellence

“It is not enough to know, one must apply; it is not enough to want, one must act as well.”
Johann Wolfgang von Goethe

Business Excellence means top performance. The meaning of it is the best performance that a company has the power to achieve. Excellence drives towards the effective realization of the business potential that is “hidden” in the company.

Top performance is rare, but rewarding

To achieve Business Excellence is challenging, but very profitable. Every percent of sustainable profit growth increases the company value exponentially by a 15 to 20 multiple.

Pursuing this goal and driven by intensified competition many manager start out on the path to excellence. Few keep up the way and reach the desired summit.

The highly successful companies apply for prestigious awards that confirm their top achievements. To name only the most important prizes, these are:

  • EFQM – European Foundation for Quality Management – Excellence Model
  • MBNQA – Malcom Baldrige National Quality Award
  • Deming Prize – Award named after Dr. W. Edward Deming
  • Shingo Prize for Operational Excellence
  • and many more national Quality Awards.

But awards by themselves don’t guarantee sustainable success. Firms like Motorola, Armstrong World Industries, Cadillac (GM), Dana Corporation, Wallace Company and AT&T were Baldrige Award winners and ended up in bankruptcy or as take-over targets.

 

For further information on the path to Business Excellence contact the author Andreas Sattlberger, Executive Advisor for Business Excellence at the firm procon in Vienna, Austria. You can reach him at sattlberger@procon.at

The revision of the AS9100 has landed

How to prepare for the revised 9100 standard

The 9100 series of standards regulates the requirements of quality management systems (QMS) of organisations in the aviation, aerospace and defence sector. The AS 9100 revision was guided by the international Aerospace Quality Group (IAQG) and the standard was published in October 2016.

The new AS 9100 is based upon the revision of the ISO 9001:2015 and that standard publication in September 2015 triggered the revision-process of the AS 9100. The goals of the AS9100 revision is to specify QMS-requirements further and to ease the implementation with consideration of the needs of stakeholders of the organisations.

The most important reasons for a planned and timed implementation of the AS9100:2016 are:

  • international business opportunities through demonstrating an effective QMS
  • necessary for being listed in the „Online Supplier Information System (OASIS)“ database
  • minimizing risks regarding products, processes and services, while meeting stakeholder needs
  • securing continuous improvement and strong focus on process-management

The transition period for the AS9100:2016 is based upon the ISO 9001:2015 as well, where a transition deadline is set on the September 15, 2018. The combined transition period shall help organisation to plan, coordinate and manage the internal standard transfer.

The new, respectively, revised topics of the AS9100:2016 are listed in the table below:

Context of the Organisation Evaluation of external and internal influencing factors and needs and expectations of interested parties to meet the organisational strategic planning process.
Risks The “risk-based thinking”-approach from the ISO 9001 standard is integrated into the AS9100 and requirements were adapted.
Process Management Higher requirements concerning systematic controlling and performance evaluation of internal and external processes and the process environment.
Configuration
Management
The process-requirements include physical and functional attributes during the whole product-life-cycle.
Product Safety Planning, implementation and controlling of the necessary processes to guarantee product safety during the whole product-life-cycle.
Counterfeit Parts Requirement to establish prevention-processes for counterfeit and suspected counterfeit parts.
Awareness Higher requirements concerning awareness of the individual and his or her contribution to conformity of products and services, to product safety and ethical standards.
Human Factors The organisation shall consider human factors, which can influence the performance of the QMS and the processes. A consideration of human factors while performing cause analysis of nonconformities is mentioned.
Documented Information No explicit demand concerning a handbook

How Can You Efficiently Manage the Standard Transition in Your Company?

The basis for a profound project management for the standard transition in your company is to know the gaps, which should be evaluated in form of a Critical Delta Audit. The next step is to develop a Project Plan to coordinate the necessary adaptions of the QMS. After the approval of the Project Plan you can address the gaps and the tasks to the affected team-members.

After all tasks concerning the gaps are finished, it is recommended to perform an internal audit with the changed requirements of the AS9100:2016 to check upon the conformity of the companies processes. All found nonconformities and observations should be systematically handled in form of an Action Plan, so that the tasks are finished before the following project phases. The last step before beginning the certification process is to perform a Management Review, where the management has the opportunity to evaluate the QMS and to show commitment and leadership.

It is strongly recommended to coordinate your transition-project with the certification-organisation. Those companies want to manage their resources efficiently because of the short transition period.

For further information concerning the revised AS9100 or a first scan of your QMS, please contact Jürgen Birgfellner MSc., eMail aerospace@procon.at

 

 

Project Management as internal Success Factor for further Development

According to sophistication of project management, you can see how mature an
organization is in executing their undertakings. Via further development of project
management also the responsible managers and teams start to develop and consequently
also the organization. The more transparent work and steering are, the more successful an
organization will be. Automatically also the internal culture develops in a positive direction.
Project management contains different methods and tools (time management,
communication, risk management etc.), but breeding ground for all those are the following 3 principles:

Adequacy:

The methods of project management are required in any case, but they have to be used
adequately for the particular undertaking. Also for smaller endeavors eg. risk management
with its fundamental requirements is needed, but it will be setup smaller and less
automated than in a huge program, consisting out of several work streams or projects.
Like also in other management tasks adequate tools and levers are success guarantors.

Focusing:

The project management has to be detached from its line management role during the
lifespan in a sufficient manner. It is required that enough focusing and time are present, in order to lead the team, measure and steer the progress that finally delivery is in time, in
budget and with sufficient quality.
Also in this area, there is a lot of parallelism with other management activities. All is about
delegating, measuring and being ahead of the team.

Responsibility:

For success, it is vital that the project management is handed over not only the task but
also the responsibility. In case one is missing, it will turn out more difficult to achieve
excellent results. Also the learning curve will be massively slowed down as automatically
learning by negative examples develops but positive learning by success drops out.
This principle is not only the basis for the management but also for ale roles within the
organization.
This interaction of on one hand methods and tools and on the other hand frame conditions
makes not only successful project management but also that organizations further develop along with it.
A project can be considered in the end as a “passing through a desert”. Once you have made it with your project team, you have learned a lot for your daily business with your own permanent team. Exactly that is the above mentioned internal development.

You would like to know more about it? Get in touch with us via mail.

Author: Andrea Maier

 

How Lean Tools Lead to Waste and What Managers Need to Do About It

„For a man with a hammer everything seems to be a nail.“ This saying also applies frequently for the use of lean tools. With great enthusiasm plenty of lean tools are getting trained in order to achieve higher efficiency and profitability. However, in truth all this tool training is a huge waste.

Werkzeug, Werkbank, Kind
Lean Tools Add Waste

Typical lean tools that are trained with little benefit:

_ 5S
_ SMED
_ Kanban
_ Just in Time
_ Jidoka
_ Kaizen Workshops
_ Standardized Work
_ Visualization
_ Value stream
_ A3 Problem Solving
_ TPM, etc.

This type of training of lean tools is peddled to organizations with the promise of improvement. Unfortunately, the situation does not improve, but mostly it is deteriorating. Why? Because used in this way the tools are searching for the right problems.

In addition there is a psychological phenomenon. As we learned from nobel prize winner Daniel Kahneman, we tend to replace a difficult, complex problem, whose solution is hard for us, with a known problem, where we have smooth, easy solution. This may sound ignorant, but is probably practiced by all of us at times. Really dumb, however, seems to be the fact that we don´t like to admit our self-deception.

With lean management this means that we do have many difficult problems in our operations, where a lasting solution would greatly pay off. However, instead of trying to understand the problem thoroughly on site (gemba) and starting the hard path of step-wise improvement, we prefer instead to just “implement” the lean tools. Voilá, the problem seems solved! (Or not, as it is revealed shortly thereafter.)

Therefore the difficult problem (e.g. profit decline) is replaced with a simple problem (e.g. lacking lean skills), where the solution is an elementary training that can be provided quickly and simply.

Complex Problems Require Profound Solutions

The mistake with this kind of “solutions approach” consists of the fact that at our workplace we face problems with a complexity too high, than that they could be resolved with simple tools.

The true task requires us to eliminate all causes and obstacles that prevent us from fulfilling a customer order in one flow from receiving to delivery of the product, using the minimum of time, cost and effort.  As Taiichi Ohno said:

„All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value adding wastes.”

Aim and Function of Lean Tools

The purpose and benefit of lean tools is to support employees and managers to clearly identify value and to immediately and urgently highlight waste. This waste then can be eliminated quickly and for good.

That means for example, not the introduction of just-in-time transforms the operation to become lean. Just-in-time only helps to see the problems that prevent us from a highly value added operation.

The reason is that only when the worker really depends on every supplied part, then it becomes paramount to develop and practice quality and reliability for the actual work and for the long term. Everything else is just pretty words.

Ultimately, lean cannot be established by implementing lean tools. Lean tools can only support people to solve their problems and overcome their challenges in order to deliver higher value.

Managers still need to step up to their responsibility, take an impartial look at their true problems and implement effective counter-measures on the basis of sound factual analysis. And yes, lean tools can be pretty helpful at this!

For questions and comments reply here or send an email to me at sattlberger@procon.at

 

 

How to Achieve Compliance And Performance Together

We all love toMoebiusschleife travel. And we all want to feel safe when flying to our destination. The fundamental principle of aerospace is to care for safety.

Over the history of air travel, we have learned what works and what poses risks. The result is an astounding record in terms of safety, compared to car travel or even the railway. Per 100 million miles travelled there are 1.33 deaths by car, 0.13 fatalities per train and only 0.0077 casualties by air travel (air is safe).

Therefore it is essential that the aerospace industry complies to these hard learned lessons on safety. While we all agree on this principle, it poses a strict discipline on the production of aerospace equipment.

The challenge is not only to stay in full compliance to the rules, regulations and lessons from history, however. Suppliers also need to deliver economic performance at the same time.

That is the task:  high performance and high compliance – together. While neither is easy to deliver by itself, all together are a real challenge.

For a recent example, see how VW managed to grow profits and violate environmental standards, breaking emission rules.

How to deliver performance and compliance together?

While performance usually focuses on the top and the bottom line, compliance traditionally was delegated to a representative for quality, security, health, environment, risk, etc. It seemed an afterthought.

In any case, often the compliance officer was a secondary or less important function to the performance stars.  This thinking was changed quite a while ago in quality by Dr. Juran, who first taught quality control and by Dr. Deming with his quality management.

At that time professional managers learned that quality is not an afterthought, after the product was produced, but an integral element to high performance.

Compliance is performance in disguise

Despite the fact that compliance today still is approached in a normative fashion with ISO norms, laws, audits and finger wagging, modern managers are integrating the various compliance requirements in their Integrated Management System (IMS).

The emphasis is on big capital Management, implementing the performance circle of

  • setting goals
  • organizing resources
  • monitoring the implementation
  • handing out consequences – positive and negative.

As a result, compliance work contributes to organizational and business results the same as performance work does.

The secret to modern compliance lies in applying the management principles to requirements, being these customer driven, financial driven or compliance driven.

For questions, comment below or send an email to Andreas Sattlberger:

aerospace@procon.at

Challenges of Aerospace Supplier

The aerospace supplier industry is changing profoundly and rapidly. Gone are the days of comfortable, long-term contracts with ample time for delays, quality-related rework and double trouble. Today, the requirements for suppliers have increased due to following trends:

  • High demand: surging market demand for product puts strain on capacity and require fast scaling of excellence
  • Shorter product life-time: acceleration in product life cycle because of faster technology innovation progress
  • Cost pressure: airlines under pressure for profitability hand down the increasing efficiency requirements to the supplier hierarchy
  • Lean methods: adoption of manufacturing process methodology along the lines of lean management and six sigma
  • Management change: transfer of managers from the automotive industry migrating into aerospace positions

Supplier managers face these challenges and more through need for automation, digitization / Internet of things, changing demographics, market shift to developing countries and more.