"The Ambidextrous Organization"

Charles O'Reilly and Michael Tushman

Harvard Business Review

April 2004, pp. 74-81

The issue examined in this article is that "Most successful enterprises are adept at refining their current offering, but they falter when it comes to pioneering radically new products and services." In conjunction with several other researchers, the authors "looked for companies that attempted to simultaneously pursue modest, incremental innovations…and more dramatic, breakthrough innovations." They studied 35 attempts to launch breakthrough innovations, in 15 different business units from nine different industries.

Breakthrough projects were found to be structured in four alternative ways:

• Teams that were completely integrated into the functional structure of the organization
• Cross-functional teams that operated within the organization but outside the existing management structure
• Independent units set up outside both the management hierarchy and the existing organizational structure
• "Ambidextrous organizations" where the breakthrough efforts were organized as structurally independent units, each having its own processes, structures, and cultures but integrated into the existing senior management hierarchy

The "ambidextrous organizations" were found to be significantly more successful in launching breakthrough products or services, when compared to the other three structures. It was also found that "ambidextrous organizations" were also more successful in terms of the performance of existing product.

The authors identify three key factors in becoming ambidextrous:

• "Ambidextrous organizations need ambidextrous senior teams and managers-executives who have the ability to understand and be sensitive to the needs of very different kinds of businesses"
• Resistance at the top levels of the organization cannot be tolerated
• A clear and compelling vision must be relentlessly communicated by the company's senior team

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"Lean Manufacturing: The 3rd Generation"

David Drickhamer

Industry Week

March 2004, pp. 25-30

This article explores the thoughts of a number of a number of individuals who are attempting to move the Toyota Production System to more system-wide applications, emphasizing overall organization functioning, business processes, and profit. Two names for this approach are "system kaizen" or "business process kaizen." The challenge is "dealing with non-physical inputs and outputs and much longer time frames than on the shop floor, such as the three-year product development cycle. Just as kanban cards are a method for transforming intangible information into a physical form, office applications of lean make work and information flow more visible." These individuals also stress that the lean strategy is not the same as the lean tools. Different situations call for different methods. Some of the companies and individuals featured in the article are Chris Couch (Toyota Motor Manufacturing Kentucky), Art Smalley (Lean Enterprise Institute), Steve Spear (Harvard Business School), Ian Kalinosky (Duracell), John Marushin (Alcoa), and James Womack.

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"The Optimas Awards 2004"

Editorial Staff

Workforce

March 2004, pp. 35-52

Workforce magazine has announced this year's winners of its Optimas awards for Human Resource excellence:

• General Excellence—General Motors Corp
• Competitive Advantage—Cendent Mobility (global relocation services)
• Financial Impact—Alegent Health
• Global Outlook—Mattel
• Innovation—Baptist Health South Florida
• Managing Change—Union Pacific Corp.
• Partnership—The Global Workplace Collaboration (four book-manufacturing companies in Ann Arbor, Michigan)
• Ethical Practice—Lockheed Martin Corp.
• Service—Wachovia Corp.
• Vision—Monical Pizza Corp.

The article includes one-page descriptions of the HR programs at each award winner.

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"Becoming an Effective Teaming Organization"

Robert Trent

Business Horizons

March-April 2004, pp. 33-40

The objective of this article is "to fill a void in our thinking by presenting a four-phase teaming process that considers the major hurdles, issues, and decisions managers should consider as they make teams an integral part of their organizational design."

The four phases of the organizational teaming process are:

1. Plan
   • Assess organizational readiness
   • Select appropriate tasks
   • Form teams
   • Evaluate additional preparation issues
2. Perform
   • Establish team-based performance goals
   • Promote member effort and commitment
   • Facilitate internal team interaction
3. Evaluate
   • Assess progress towards stated goals
   • Provide feedback and rewards
4. Maintain
   • Maintain team performance

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"Deep Change: How Operational Innovation Can Transform Your Company"

Michael Hammer

Harvard Business Review

April 2004, pp. 85-93

The author of this article (Dr. Michael Hammer, of reengineering fame) defines operational innovation as "the invention and deployment of new ways of doing work." He also states that "Operational innovation should not be confused with operational improvement or operational excellence. Those terms refer to achieving high performance via existing modes of operation: ensuring that work is done as it ought to be to reduce errors, costs, and delays but without fundamentally changing how that work gets accomplished."

Though the author discusses several organizations that have achieved great results through operational innovation (Wal-Mart, Toyota, Dell Computer, Met Life, Shell Lubricants, Progressive Insurance, American Standard), he says that its revolutionary nature requires active executive leadership. However, there are three difficulties with getting executive support:

• Business culture undervalues operations (compared to strategy, finance, marketing, and sales)
• Operations are out of sight and out of mind-set (Many senior managers have entered the organization through finance, strategy, or marketing, and they rely on others to take care of operations)
• Nobody owns operational innovation (It is organizationally homeless; Innovations cross organizations boundaries; There is no budget for it; and it can become lost in the multiple smaller change initiatives most organizations have going at any time)

In those organizations that manage to overcome these management barriers, organizations must first pinpoint key areas for innovation and set performance goals. Hammer also offers the following suggestions to accelerate the speed of organizational innovation:

• Look for role models outside your industry—Otherwise, you can do no better than imitating what your competitors have done
• Identify and defy a constraining assumption—There must be a totally new way of looking at how work should be done
• Make the special case into the norm—Crisis in some part of your organization can be the mother of invention, and these ideas may be made into the standard
• Rethink critical dimensions of work—This includes what work should be done, when it should be done, where it should be done, etc.

Hammer also suggests an approach to implementing operational innovations: "an idea variously known as iterative, evolutionary, or spiral development. One begins with one's best estimate of the innovation, builds a first version of it, and then tries it out with customers or users. Knowledge gained form these tests is then fed back into a fast-cycle iteration of the next version."

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"Six Sigma In Sight"

Linda Heuring

HRMagazine

March 2004, pp. 76-80

After providing an overview of Six Sigma, this article discusses how Six Sigma has been applied to HR projects in organizations such as Dow, Dupont, Motorola, Ford, and General Electric.

Six Sigma has been successfully applied to address issues in recruiting, log-term disability, providing standardized learning resources worldwide, hiring, length of assignments for expatriates, employee benefits call centers, pension programs, and hotel room rates for employees on travel.

This article is a very good introduction to Six Sigma for managers of HR departments or processes.

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Application Across the Organization

John McNeil, GP Deltapoint

This month's articles provide a succinct summary of effective ways to extend lean thinking and waste elimination from the factory floor to office operations. Great strides have been made in the past 20 years by automating office functions (do the same with less), but not enough attention has been paid to redesigning office processes for efficiency and to meet customer needs better. Taken together, O'Reilly, Drickhamer, Trent and Hammer urge us to pioneer radically new products and services; to operationally innovate through a structured, team approach that extends lean principles from the factory to company-wide business processes.

Is such a grand approach feasible or manageable? Are the methods described consistent and are the gains from their application sustainable? Our experience shows that such transformations are reasonable and attainable even for "average" companies. But they must be accompanied by rigorous management systems if they are to have staying power.

Let's work backwards from business wide processes to new products and services. Processes of any stripe are prime targets for improvement through value stream mapping (VSM) that uncovers waste in existing methods and then guides the design of new processes with less waste, smoother flow and better communication with customers and suppliers. It is true that there is a nice library of canned VSM tools and techniques to apply to factories, but nowadays there is also a rich set of business-wide examples. Of course inventory on the factory floor is easy to see, while an inventory of backlogged insurance claims or of candidates to be hired is hidden in a computer file and may never before have been measured. Sometimes it is easier and more effective to make such backlogs visible through paper folders or display boards rather than using complex computerized systems.

Teams and teamwork are integral to any attempt at lean improvement. We have found that Rapid Improvement Workshops can create as much innovative change business-wide as they do with production teams. However it often takes multiple events before participants cease to view the workshops as "classes" (often passive events for the exercise of the presenter's ego) or "meetings" (wherein a team will seldom make incisive change in a mere three to four days).

Structure is promoted by steps-based methods such as those described in the Trent article. For acute issues, Six Sigma, our QIS or Global 8D promote a Plan—Do—Check—Act approach. Any of these methods must in turn be backed up by a system comprising:

• Standard Work—To set operating standards
• Key Performance Indicators—To track how we are doing
• Goal Deployment—For quantum leap improvement
• Daily Management—Operating to standards and continuous improvement
• Improvement Methods—To improve standards

When this structure is in place it supports innovation in products and processes far beyond the factory floor. And it is this structure, rather than the simple presence of tools such as Six Sigma and VSM that separates the organizations celebrated in this month's articles from the rest.

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