ModelsGuidelines_v5

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Model&Application

GUIDELINES

a world standard...for a global economy


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Model & ApplicationGUIDELINE

THE SHINGO PRIZE FOR OPERATIONAL EXCELLENCJON M. HUNTSMAN SCHOOL OF BUSINESSUTAH STATE UNIVERSITYLOGAN, UTAH USAWWW.SHINGOPRIZE.ORG

VERSION 7 MAY 2012

COPY RIGHT 2012 THE SHINGO PRIZE FOR OPERATIONAL EXCELLENCE. ALL RIGHT

Dear Shingo Associates,

ank you for taking time to study our model for operational excellence and considering thebenefits of using the model within your organization. Many of our associates have indicated thatthe model and assessment can assist in better understanding where you are on your journeytoward operational excellence and how to accelerate your efforts. We sincerely hope that thisdocument will enable you to become more keenly aware of not only your strengths, but also yourgreatest opportunities for improvement.

If your intentions are to eventually challenge for e Shingo Prize, this booklet will introduce youto the process of applying and preparing your achievement report. You will learn how our e xam-iners, your peers from other companies, will evaluate, score and provide feedback to your facility.

is booklet is different from past issues. Based on our decades of experience in searching for,evaluating and recognizing some of the worlds very best companies, we have come to understandhow truly difficult it is for even the best to create sustainable transformation and build lasting

cultures of operational excellence.

In the past, our search for great companies focused primarily on determining the degree towhich the organization had successfully deployed the tools and techniques oen associated withmost of the business improvement programs conceived over the past few decades. Based on ourlong-term association with these companies and thought-leaders, we have come to understandthat the focus on tools and techniques must be led by a thorough understanding of key concepts or guiding principles around which the tools have been developed. ose guiding principlesbecome the bedrock of a corporate mind-set and the foundation for the design of systems thatreinforce these principles in every action of every associate.

is relationship between guiding principles, management systems and improvement tools is thebasis for e Shingo Prize model and our approach to organizational assessment. We invite all toreview and engage in critical dialogue with your peers around the ideas presented here. encontact us at www.shingoprize.org and we will be eager to share with you more of the detailsbehind the model and assessment methodology.

Robert D. MillerExecutive Directore Shingo Prize for Operational ExcellenceJon M. Huntsman School of Business


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THE SHINGO PRIZEforOPERATIONAL EXCELLENCE | Model & Application Guidelines4

The mission of The Shingo Prize is to create excellence

in organizations through the application of timeless,

universal, and self-evident principles of operational

excellence; alignment of management systems; and the

wise application of improvement techniques across the

entire organizational enterprise.

Our vision is to be the Standard of

Excellence for every organization.

Board of GovernoShingo Mission

Shingo Vision

Paul A. BrentRetired General DirectorGlobal Supply Mgt.RestructuringDelphi

Jerry BussellExecutive AdvisorUnderwriters LaboratoriesKnowledge ServicesArthur P. ByrneOperating PartnerJ.W. Childs AssociatesDouglas F. CarlbergPresident & CEOM2 Global echnology,Ltd.Gary ConvisCOOBloom EnergyCorporationCarolyn CorviVice President, GeneralManager, AirplanesProgramsTe Boeing CompanyTimothy A. CostelloChairman & ChieExecutive OfficerBuilder Homesite, Inc.Michael N. DaPrileExecutive Vice PresidentSW Manuacturing, Inc.

Bruce E. HamiltonPresidentGreater BostonManuacturingPartnership, Inc.Thomas G. HartmanPresident & ManagingDirectorAutoLiv do Brasil LtdaJack HelmboldtSenior Vice PresidentDenso Manuacturingennessee, Inc.Luis IzquierdoVice President, CorporateOperationsRaytheon CompanyMichael JoyceSenior Vice President,Operations and ProgramManagmentLockheed MartinBill KesslerProessor & Director oExecutive ProgramsGeorgia ech ennenbaumInstituteGeorge J. KoenigsaeckerPresidentLean Investments, LLCJulie MadiganChie ExecutiveTe ManuacturingInstitute

Mike MartynPrincipalSISU Consulting GroupJohn E. MarushinChie Operating OfficerClear Path SolutionsRobert D. MillerExecutive DirectorTe Shingo Prize orOperational ExcellenceR. David NelsonChairmanQuality AnalyticsRusty Patterson

Chairman & CEONCFAMDennis K. PawleyPresident & CEOPawley EnterprisesGary PetersonExecutive Vice PresidentSupply ChainO.C. anner CompanyClifford F. Ransom IIPresidentRansom Research, Inc.Peter N. RileyEVP Integrated OperationsBell Helicopter extronInc.Don RonchiChie Human ResourceOfficerCeberus Operational andAdvisory Company, LLC

David RowlandsCEOGold Pride PassRichard J. SchonbergerPresidentSchonberger & AssociatesInc.John ShookPresident & CEOLean Enterprise InstituteKenneth SnyderExecutive Dean & ChieAdministrative OfficerJon M. Huntsman Schoolo Business, Utah StateUniversityCarl G. ThorPresidentJarrettTor InternationalJohn J. Van GelsVice President Operations& Supplier ManagementTe Boeing CompanyAlejandro von Rossum Sr.Chie Executive Officer,Chemical DivisionCydsa Corporation S.A.de C.V.Helen ZakPresident & COOTedaCare Center orHealthcare Value

AcknowledgementsWe wish to thank various people at Te Shingo Prize or Operational Excelle nce and Te Jon M. HunstmaSchool o Business who made up the team that provided scholarly work, ideas that significantly enhancedthe clarity o the model and guidelines, and content editing. Tose most closely involved with the projectinclude: Randall Cook, Robert Miller, Jacob Raymer, and Shaun Barker. A special thanks to Brian Atwateror his contribution regarding systemic thinking, especially the idea to create a systemic process model.We would also like to thank the members o our B oard o Governors who provided practical insights andcritical eedback through the years as the Shingo model evolved. Finally, each time we teach a course wereceive valued input and ideas rom our Shingo affiliates, whose expertise and riendship we truly value.


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Shingo Academy

mes F. Albaughxecutive Vice President

Te Boeing Company

oji Araiecretary General Internationalroductivity Service

an A. Askrenhairman, President & CEONI Corporation

. Battenberghairman & Chiexecutive Officerelphi Corporation

Warren Battshairman NAMupperware Corporation

orman Bodekormer Presidentroductivity, Inc.

uy D. Briggsice President, General Motorseneral Manager, GM North Americaehicle Manuacturing

ifford M. Brownlant Managerleveland Engine Plants, Ford Motorompany

ernon M. Buehlerroessor Emeritustah State University

rry Bussellxecutive AdvisorL Knowledge Services

rthur P. Byrneperating Partner

W. Childs Associates

imothy A. Costellohairman & Chiexecutive Officeruilder Homesite, Inc.

ephen R. Coveyo-ounder/Co-chairmanranklin/Covey Company

. Lawrence Culp, Jr.resident & CEOanaher Corporation

Michael N. DaPrilexecutive Vice PresidentW Manuacturing, Inc.

oseph C. DayEO & Presidentreudenberg, NOK

arnest W. Deavenport, Jr.ormer Chairmanastman Chemical

Mark DeLuzioPresidentLean Horizons Consulting, LLC

Frank J. EwasyshynExecutive Vice President -ManuacturingChrysler Group

Orest J. FiumeFormer Vice President, Finance TeWiremold Company

Louise L. FrancesconiPresidentRaytheon Missile Systems

Eliyahu M. GoldrattFounder Goldratt Institute

Benjamin S. Griffin

Commanding General, Retired USArmy Materiel Command

Andrew M. GuarrielloFormer Vice President & CEOA& Microelectronics PowerSystems

Bruce HamiltonPresidentGreater Boston ManuacturingPartnership, Inc.

Tomas G. HartmanPresident & Managing DirectorAutoLiv do Brasil Ltda

Masaaki ImaiChairmanKAIZEN Institute o Japan

Jerry J. JasinowskiPresidentNational Association o Manuacturers

Brian S. JonesPresident & CEONypro, Inc.

Daniel . JonesFounder & ChairmanLean Enterprise Academy

Michael JoyceSenior Vice President, Operations andProgram Management LockheedMartin

James H. KeyesChairman & CEOJohnson Controls Inc.

George J. KoenigsaeckerPresidentLean Investments, LLC

Peters LawsonVice President, ManuacturingFord Motor Company o Australia

Hank LenoxDirector, Ford Production System FordMotor Company

David J. LogozzoPresident, LE PartnersLean Enterprise Institute

Jack MichaelsChairman, President & CEOSnap-On Incorporated

R. David NelsonChairmanQuality Analytics Inc.

Rodney ONealPresident & Chie Operating OfficerDelphi Corporation

Paul ONeill

Former Secretary, US reasuryFormer Chairman and CEO, Alcoa,Inc.

Hajime OhbaPresident, SSC, Inc.oyota Suppler Support Center

James J. PadillaChie Operating OfficerFord Motor Company

Dennis K. PawleyPresident & CEOPawley Enterprises

Clifford F. Ransom IIPresidentRansom Research, Inc.

Ross E. RobsonPresident & CEODnR Lean LLC

Donald L. RunkleFormer Vice Chairman, EnterpriseechnologiesDelphi Corporation

Russell ScaffedeOwner Lean Manuacturing SystemsGroup, LLC

Richard J. SchonbergerPresidentSchonberger & Associates, Inc.

Anand Sharma

President & CEOBM Consulting Group

Ritsuo ShingoFormer Presidentoyota China and Hino Motors China

John ShookPresident & CEOLean Enterprise Institute

Harold M. SimonsExecutive Vice President,ManuacturingO.C. anner Company

Art SmalleyPresidentArt o Lean, Inc.

Mohsen SohiPresident & Chie ExecutiveOfficerFreudenberg-NOK GeneralPartnership

James L. SolbergExecutive Director, Manuacturing,North American PowertrainsOperationsFord Motor Company

Anne StevensChairman, President & CEOCarpenter echnology Corporation

Carl G. TorPresidentJarrettTor International

John S. oussaintCEOTedaCare Center or HealthcareValue

Robert H. ransonGroup Vice President Manuacturing -Executive OfficeFord Motor Company

Nickolas Vande SteegPresident & COOParker Hannifin Corporation

Alejandro von Rossum, Sr.CEO-Chemical DivisionCydsa Corporativo S.A. de C.V.

Michael J. WardPresidentAutoliv Americas

Donald J. WetekamPresidentAircraf Services AAR Corporation

David WohleenPresident, Electrical, Electronics,Saety & Interior Sector

Delphi CorporationJames WomackFounder & PresidentLean Enterprise Institute

THE SHINGO MODEL FOR OPERATIONAL EXCELLENCE

8 The House - The Shingo Principles of Operational Excellence

9 The Diamond - The Shingo Transformational Process

12 Dimension 1: Cultural Enablers

12 Principle - Respect Every Individual

13 Principle - Lead with Humility

14 Table One - Examples of Ideal Behavior for Cultural Enablers

16 Dimension 2: Continuous Process Improvement

16 Principle - Focus on Process

17 Principle - Embrace Scientific Thinking

17 Principle - Flow and Pull Value

17 Principle - Assure Quality at the Source

17 Principle - Seek Perfection

18 Table Two - Examples of Ideal Behavior for Continuous Process Improvem

22 Dimension 3: Enterprise Alignment

22 Principle - Create Constancy of Purpose

23 Principle - Think Systemically

23 Systemic Thinking Chart

25 Table Three Examples of Ideal Behavior for Enterprise Alignment

28 Dimension 4: Results

28 Principle - Create Value for the Customer

29 Table Four - Examples of Ideal Behavior for Results

30 Scope of Transformation

30 Business & Management Systems

32 Summary

34 The Shingo Model

ASSESSMENT GUIDELINES

38 Assessment Criteria

39 Dimension 1 - Cultural Enablers

40 Dimension 2 - Continuous Process Improvement

42 Dimension 3 - Enterprise Alignment

43 Dimension 4 - Results

46 Assessment and Scoring

46 Assessment Areas

49 Behavior - Assessment Scale

50 Results - Assessment Scale

APPLICATIONGUIDELINES

52 Application Process

58 Writing the Achievement Report

59 Introduction

59 Achievement Report Format

60 Dimension 1 - Cultural Enablers

60 Dimension 2 - Continuous Process Improvement

60 Dimension 3 - Enterprise Alignment

60 Dimension 4 - Results


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THE SHINGO

MODEL FOR

OPERATIONAL

EXCELLENCE

inarguable because it is sel-evident. Dr.Covey teaches that values govern our actionsand principles govern the consequence o ouractions.

Values are cultural, personal, interpretable, andvariable. Our personal values influence howwe see the world and ultimately our choices orhow to behave. Principles govern the outcomeso our choices. In other words, the values o anunprincipled person will very likely lead tobehaviors that have negative consequences.

Principles govern everything that happensin the natural world. Scientists the world-over continually search to understand moreo the principles that govern the universe.Tey do not invent them; they only discovertheir existence and seek to do good by taking

purposeul action based on knowledge o theguiding principle. Principles govern the lawso science; they determine the consequenceso human relationships, and ultimately,principles influence the successul outcome oevery business endeavor.

Principles Predict PerformanceOne o the most powerul aspects o principlesis their ability to predict outcomes. Principlesgovern the outcome or consequence o thebehavioral choices we each make. Te closerour actual behavior aligns with the idealbehavior that is linked to the principle, thegreater the likelihood that the outcomes oour behavior will be positive. Tis is prooundgiven that very ew things in any business canbe predicted with a high degree o certainty.A culture where every employee understandsand is committed to principle-based behaviorwill be a culture with a very high likelihood oachieving great business results.

Similarly, a corporation not grounded inprinciples, will result in a wide variety o

personal interpretations o how to apply theirvalues in work situations.

Why Operational Excellence?For decades we have watched, and all tooofen experienced, the disappointing effortso programmatic improvement initiatives,leaving in their wake a trail o unintendednegative consequences rarely resulting in

Principles of Operational ExcellenceTe search or improvement is instinctive. Forbusinesses and indeed any organization tobe successul in the long term, they must beengaged in a relentless quest to make thingsbetter. Failure to make this an organizationalpriority will inevitably result in organizationaldecline. Excellence must be the pursuit o allgreat leaders. In act, the passionate pursuit operection, even knowing it is undamentallyimpossible to achieve, brings out the very best

in every human being.

Why So Many FailImprovement is hard work! It requires greatleaders, smart managers, and empoweredpeople. Improvement cannot be delegateddown, organized into a program, or trained intothe people. Improvement requires more thanthe application o a new tool set or the powero a charismatic personality. Improvementrequires the transormation o a culture to onewhere every single person is engaged every day,in most ofen small, but rom time to time, largechange.

In reality, every organization is naturally insome state o transormation. Te criticalquestion is, to what end is the organizationbeing transormed and who are the architectso the transormation? Te Shingo model ooperational excellence asserts that successulorganizational transormation occurs whenleaders understand and take personalresponsibility or architecting a deep andabiding culture o continuous improvement.Tis is not something that can be delegatedto others. As the CEO o a very successulorganization recently said, Leaders leadculture!

A Culture Built on Correct PrinciplesStephen R. Covey describes principles asundamental truths. He defines a principle asa natural law that is universally understood,timeless in its meaning and undamentally

lasting improvement. Quality Circles, Just-in-ime, otal Quality Management, Business

Process Re-engineering, Six Sigma, and mostrecently, Lean are a ew illustrations o well-intentioned initiatives that have ar under-delivered on their promised benefits. Our studyo these programs over the last 25 years has ledus to believe that the problem has nothing todo with the concepts and ever ything to do withthe programmatic, tool-oriented deploymento them.

Te Shingo model or operational excellenceis based on a systematic study o each othese improvement initiatives. Our approachbi-passes the tools that each program hasengendered and ocuses rather on theunderlying/guiding principles and supportingkey concepts behind them. We recognize thenecessity o good improvement tools but ocuson them only within the context o enablinga system to better drive ideal, principle-basedbehaviors. Te Shingo House provides asummary and categorization o this collectiono guiding principles and supporting concepts.

When taken in their totality, these timelessprinciples become the basis or building alasting culture o excellence in the executiono ones mission statement. We call thisrelationship between business results andprinciple-based behavior, operationalexcellence. Operational excellence cannot bea program, another new set o tools, or a newmanagement ad. Operational excellence is theconsequence o an enterprise-wide practice oideal behaviors, based on correct principles.

For organizations to be successful

over the long term, leaders must

deeply and personally understand

the principles that govern their

success. Further, they must ensure

the behaviors of every person who

contributes to the business are in

harmony with these principles. In

short, the organizational culture

they build must be grounded in

correct principles.


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As long as improvement is seen as somethingoutside the core work o the business, aslong as it is viewed as something else to do,operational excellence will remain elusive.

When leaders anchor the corporate mission,vision, and values to principles o operationalexcellence and help associates to connect andanchor their own values to the same principles,they enable a shif in the way people think andbehave. Changing the collective behavior o t hegroup changes the culture. Tis is leadershipresponsibility that cannot be delegated.

Principles of Operational Excellence(The Shingo House)In his bookKey Strategies for Plant Improvement,Shigeo Shingo said, Tink in terms o

categorical principles. Te Shingo Houseis a categorization o the guiding principleso operational excellence. Associated with

Te dimensions are the result o thinkingcategorically about the principles. It is clearthat all our dimensions o the model requireocus in order to achieve excellence. In thesame way that we need to comprehend objectsin three dimensions to truly appreciate all otheir characteristics, operational excellencemust be viewed in these our dimensionsin order to ully appreciate the power o theprinciples to affect business outcomes.

Transforming a Culture(Shingo Transformation Process)Many organizations and their leaders arecoming to understand that sustainabilityrequires ocusing on the c ulture; thats theeasy part. Te difficult part is in knowinghow to really affect a change.

Te Shingo transormationprocess is a methodology oraccelerating a personaland enterprise-widetransormationto a culture ooperationalexcellence.Te processis basedon theteachingo Dr.Shigeo Shingowho recognizedthat businessimprovement camethrough understandingthe relationship betweenprinciples, systems, and tools.

Dr. Shingo understood thatoperational excellence is not achievedby superficial imitation or the isolatedand random use o tools and techniques

(know how). Instead, achieving operationalexcellence requires people to know why i.e., an understanding o underlying principles.

In the 1940s, the work o French socialscientist, Piaget, led us to understand thatlearning occurs when people come todeeply understand the meaning behind themethodology. People naturally search firstor meaning, the principle, and then attemptto organize them somehow into a system, or

each category are also listed many importantsupporting concepts.

Te principles are categorized into ourdimensions: cultural enablers, continuousprocess improvement, enterprise alignment,and results the ultimate end o all businessinitiatives. Tese our dimensions overlayfive core business systems: product/servicedevelopment, customer relations, operations,supply and a variety o management oradministrative support systems.

Guiding PrinciplesTe Shingo Prize or Operational Excellencedid not create the 10 guiding principles ooperational excellence but rather they havealways existed. In truth, there is ample evidencethat these principles have been well understood,more or less, at different time or thousands oyears. As the world has gone through cycleso advancement and decline, it seems theseprinciples are routinely lost and orgotten andmust be re-discovered. Emerging rom thedark ages into a period o enlightenment andindustrialization, the impact o these principlesare only now beginning to be understoodagain.

Certainly, and even surprisingly,business schools do not emphasizethese principles even though they

are the driver or business executionexcellence. Te cause or this may be that theseundamental business principles have beenlost in management ads and tool boxes thatbecome programs or flavors o the month.

Te Shingo Prize or Operational Excellencehas made a diligent search o thought leadersover the last 100 years. Teir work has beencareully analyzed and dissected and theunique concepts or principles rom eachhave been extracted. Compiling, distilling,

and prioritizing the list led to the 10 guidingprinciples on the lef side o the house and the

supporting concepts or each dimensionon the right side. Supporting conceptsare critical to pay attention to butmay not stand up to the rigor o beinguniversal, timeless, and sel-evident likethe principles.

some kind o order. Finally, they create toolsto better enable the systems to accomplish thepurpose or which they were created.

Learning and Teaching the PrinciplesTe first step a leader must take in leadingcultural transormation is a personal journeyto understand what each o these guidingprinciples mean conceptually and then whatthey mean personally. It is impossible or aleader to lead the development o a principle-based culture until he or she has gone through

the deep reflection required to begin apersonal transormation. Tis is no trivial

task. For many and perhaps most, ullyembracing these principles requires

a undamental re-thinking o therules o engagement used to

get to where they are.

At a minimum,leaders must be

curious enoughto experiment

with the

principle.John Shook

at the LeanEnterprise Institute

taught us that it isofen impossible to

think our way into a newway o acting. Rather, guided

by correct principles, one maydo, observe, learn, and then do

something else until we act our wayinto a new way o thinking. By careully

analyzing the cause-and-effect relationshipbetween principles and results, a leader willbegin to shif their own belies about whatdrives optimal business perormance. Afergaining this new insight it becomes the effectiveleaders primary responsibility to see that othersin his/her organization have experiences wherethey can gain the same insight.

Results

Enterprise Alignment

Continuous ProcessImprovement

Cultural Enablers

CreateConstancyof PurposeThinkSystemically

FocusonProcess

Flow&Pull ValueAssureQualityatthe Source

LeadwithHumilityRespectEveryIndividual

CreateValuefortheCustomer

SeeRealityFocusonLong-term

AlignSystemsAlignStrategy

Stabilize Processes

RelyFacts& Data

Standardize Processes

FocusonValueStream

KeepitSimple& Visual

IntegrateImprovementwithWork

Empower&InvolveEveryone

DevelopPeople

AssureaSafeEnvironment

AlignBehaviorswithPerformance

hingoPrize

GUIDING PRINCIPLES SUPPORTING CONCEPTS

MANAGEMENTSUPPLY

OPERATIONS CUSTOMER

RELATIONS

PRODUCT

& SERVICE

DEVELOPMENT

EmbraceScientific Thinking

SeekPerfection

InsistonDirectObservation

IdentifyandEliminate Waste

MeasurewhatMatters

IdentifyCause&EffectRelationships

NoDefectsPassedForward

StandardizedDailyManagment


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Leaders who choose to disregard the principlesthat govern business outcomes do so at greatperil. Whether we acknowledge them or not,the principles o operational excellence alwaysgovern the consequence o our leadership andmanagement behaviors. An example may help.

I we encourage, enable, or simply allow aculture to emerge where employees are t houghto merely as an unortunate cost burden or thatthe smartest people are those that rise to thetop, the consequence will be a workorce thatis not ully engaged, ideas or improvementare never articulated and acted on, people eelunulfilled in their work, and turnover is veryhigh. Labor costs become excessively high,business systems stagnate, and innovationis not ast enough to compete in a rapidlychanging business climate. Unwise leaders see

this as a validation o what they believed ratherthan the sad end o a sel-ulfilling prophesy.

When people understand principles orthemselves, the why, they become empoweredto take personal initiative. Leaders who teachassociates the principles behind the tacticsor the tools can be confident that innovationrom each individual will be pointed in theright direction. It is not necessary or a leaderto define ideal behaviors or others. I theprinciple is truly a principle, diverse peoplewith different values will readily be able todefine ideal behavior or themselves and bevery consistent with others.

Dr. Shingo understood this and taught

that the primary role of a leader is to

drive the principles of operational

excellence into the culture.

Aligning the Systems with PrinciplesAll work in organizations is the outcome o asystem. Systems are either designed to producea specific end goal or they evolve on their own.Systems drive the behavior o people or ratherthey create the conditions that cause people tobehave in a certain way. One o the outcomes opoorly designed systems is enormous variationin behavior or even consistently bad behavior.Variation in behavior leads to variation inresults. Operational excellence requires idealbehavior that translates into consistent andideal results.

Experiment with the PrincipleOne o the principles o operational excellenceis scientific thinking, which is intendedto oster a culture o experimentation anddeep learning. People must be able to putto the test each o the principles espousedby the principle-based leader. Only whenpeople see or themselves the cause-and-effect relationship o results relative to theprinciple, will they come to deeply understandthe value o the principle to them personally.Repetition through many cycles o learning inthe experiment gives people a personal insightabout the principle and empowers them tomake personal judgments about its validity.

Te Shingo transormation process illustratesthe critical need to align every business,management, and work system o theorganization with the principles o operationalexcellence. When systems are properly alignedwith principles, they strategically influencepeoples behavior toward the ide al.

Dr. Shingo also taught that the primary

role of managers must shift from fire-

fighting to designing, aligning, and

improving systems.

The Enabling Role of Improvement ToolsA tool is nothing more t han a point solution ora specific means to a specific end. Dr. Shingoreerred to tools as techniques or problem-

solving, necessary but not sufficient. He taughtthat tools should be selected to enable a systemto perorm its intended purpose. In many ways,a system may be thought o as a collectiono tools working together to accomplish anintended outcome. A successul enterprise isusually made up o complex business systemsthat can be urther divided into layers osub-systems, each having embedded in themthe necessary tools to enable the successulpurpose o the system.

Perhaps the largest mistake made bycorporations over the last three or our decadeshas been the inappropriate ocus on a specifictool-set as the basis or their improvementefforts. ools do not answer the question owhy, only the question o how. Knowing thehow without understanding ully the why,leaves people waiting or instructions and arepowerless to act on their own. Organizationscan never sufficiently release the ull potentialo their people by creating a tool-orientedculture.


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HE SHINGO PRIZEforOPERAIONAL EXCELLENCE | Model & Application Guidelines14

Cultural Enablers (People)

DIMENSION ONE:

CULTURAL

ENABLERS

throughout the enterprise. Tis is becausethese values are whats that ail to answeror people the question o why. A principleanswers the question o why.

Here is a way to think about the alignment oprinciples with these kinds o values.

Because we respect every individual

(the principle); therefore, we always

placesafety first(the value). Because

we haverespect for every individual(the

principle); therefore, weempower people

to act independently (the value).

Because we have respect for every

individual(the principle); therefore, we

make all of our communications openand transparent (the value). When

people understand the why, they

are far more capable of consistently

interpreting the correct behavioral

implications of the value, the what.

Principle - Lead with HumilityOne common trait among leading practitionerso operational excellence is a sense o humility.Humility is an enabling principle that precedeslearning and improvement. A leaderswillingness to seek input, listen careully, andcontinuously learn creates an environmentwhere associates eel respected and energizedand give reely o their creative abilities. Tereis also a need or humility on the part o allmembers o an organization. Ideas can comerom anywhere. One can learn something newrom anyone. Improvement is only possiblewhen people are willing to abandon ownership,bias, and prejudice in their pursuit o a betterway.

Because I Lead with Humility (the

principle); therefore, I am open to good

ideas and innovationfrom anywhere in

the organization (the value). Because

Cultural enablers make it possible or peoplewithin the organization to engage in thetransormation journey, progress in theirunderstanding, and ultimately build a cultureo operational excellence.

Operational excellence cannot be achievedthrough top-down directives or piecemealimplementation o tools. It requires awidespread commitment throughout theorganization to execute according to the

principles o operational excellence. A culturemust be developed where every person inthe organization demonstrates a high level orespect or every other person. Developing aculture o mutual respect and humility takesa consistent commitment over a sustainedperiod o time.

Principle - Respect Every IndividualRespect is a principle that enables thedevelopment o people and creates anenvironment or empowered associates toimprove the processes that they own. Tisprinciple is stated in the context o everyindividual rather than or people as a group.Respect must become something that is deeplyelt or and by every p erson in the organization.

Respect or every individual naturally includesrespect or individuals representing customers,suppliers, the community, and society ingeneral. Individuals are energized whenthis type o respect is demonstrated. Mostassociates will say that to be respected is themost important thing they want rom theiremployment. When people eel respected theygive ar more than their hands; they give theirminds and hearts.

Respect or every individual becomes apowerul why or many o the valuesespoused by great organizations. For example,simply stating important values such as saetyfirst, empowerment, or open communicationsofen ails to create uniorm ideal behaviors

I Lead with Humility (the principle);

therefore, I accept responsibility and

enable change (the value). Because

I possess humility (the principle);

therefore I seek, trust, and follow the

direction of those with a responsibility

to lead (the value).

Te ollowing table provides examples o idealbehavior or leaders, managers, and associates.Te list is intended to provide examples oideal behavior that comes rom these twoguiding principles and should not in any waybe considered as an exhaustive list.


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Cultural Enablers

Supporting Concept Assure a Safe EnvironmentTere is no greater measure o respect or theindividual than creating a work environmentthat promotes both the health and saety oemployees and the protection o the environ-ment and the community. Environmental andsaety systems embody a philosophical andcultural commitment that begins with leader-ship. When leadership is committed, then theorganization creates and supports appropriatesystems and behaviors.

In short, saety is first!

Supporting Concept Develop PeoplePeople development has emerged as animportant and powerul cultural enabler and

goes hand-in-hand with principles o op-erational excellence. Trough people devel-opment, the organization creates the newscientists that will drive uture improvement.People development is ar greater than justclassroom training. It includes hands-onexperiences where people can experience newideas in a way that creates personal insightand a shif in mindsets and behavior.An organizations leaders must be commit-ted to developing people and expanding theknowledge base. Leaders come to realizethat expenses or education and training arenecessary investments or long-term health;as such, the commitment to this investmentdoes not waver.

Supporting Concept Empower & Involve EveryoneFor an organization to be competitive, the ullpotential o every single individual must be re-alized. People are the only organizational assetthat has an infinite capacity to appreciate invalue. Te challenges o competing in globalmarkets are so great that success can only beachieved when every person at every level othe organization is able to continuously in-novate and improve. Elimination o barriers tothat innovation becomes the responsibility omanagement.

Fundamental to the Shingo model is the con-cept o teaching people the key principles (thewhy) behind everything they do. When pe opleunderstand why, they become empowered totake personal initiative. Managing a team o

people who share a deep understanding andcommitment to the key concepts and prin-ciples is much easier than managing the worko those who are only doing what they aretold. Empowered employees who understandrelevant principles are ar more likely to makegood decisions about the direction and appro-priateness o their ideas or improvement.

Similarly, when employees have a clear senseo direction and strategy and have a real-time measure o contribution, they become apowerul orce or propelling the organizationorward.

Table One: Examples of Ideal Behavior for Cultural Enablers

Category Examples of Ideal Principle-Based Behavior

Leaders All leaders routinely spend time at the actual work locations where the actualwork is performed.

Leaders continuously seek the input of others, listen to their input, and adapttheir actions based on what they learn.

Leaders in all areas demonstrate a willingness to learn and publicly acknowl-edge important insights they have gained.

Leaders take responsibility for applying principles of operational excellence intheir own lives and ensure these principles become the foundation of organi-zational culture.

Leaders engage people at all levels i n defining ideal, principle-based behav-iors and support managers in the alignment of all business and managementsystems.

Leaders develop systems to ensure they remain publicly accountable for theirown principle-based behavior seeking feedback from all levels and across theentire enterprise.

Leaders ensure products and services do not have an unintended negativeimpact on the sustainability of communities and the planet.

Managers All managers constantly work with others to better align systems with idealbehaviors as defined by the guiding principles.

Managers act as coaches and mentors to others in the execution of principle-based systems and are constantly receiving personal and organizationalfeedback for improvement.

All manage rs are visibl e in the work space and demonstrate an opennessto listen and learn from others.

Managers across the enterprise ensure associates have the information theyneed to be successful in their work and push decisions out and down to theappropriate levels.

Managers create a safe and productive work environment- keeping the safetyof all associates as the highest of all priorities.

Managers regularly review the skills and competencies required of all associ-ates and work with each one to provide appropriate opportunities for associ-ates to gain new insight.

Managers ensure appropriate systems are in place to protect the environmentand support for the communities where they are located.

Associates All associates, every day, demonstrate a commitment to the policies, prin-ciples, and standards developed for the areas in which they work.

Associates seek out and learn from others in the organization including leaders,managers, and peers.

All associates take full responsibility for their own personal development inrelation to their contribution to the enterprise.

Associates demonstrate a strong commitment to providing the greatest valuefor customers with the least amount of non-value-added resource.

All associates seek to understand issues from the customers point of viewand strive to maximize the uninterrupted flow of value to them.

Associates demonstrate an eagerness to learn new skills, take initiative andshare their learning and success with others.


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CONTINUOUS PROCESS IMPROVEMENT

DIMENSION TWO:

CONTINUOUS

PROCESS

IMPROVEMENT

the mistake but rather leads to a pursuit o thereal culprit (process) that allowed the mistaketo be made. Tus, process ocus also supportsthe cultural enablers, creating an environmentwhere learning rom mistakes can become apowerul element o continuous improvement.

Principle Embrace Scientific ThinkingA ocus on process lends itsel to scientificthinking, a natural method or learning andthe most effective approach to improvement.All associates can be trained to use scientificthinking to improve the processes with whichthey work creating a culture that providescommon understanding, approach, andlanguage regarding improvement. Scientificthinking is also results-based, placing apremium on defining and communicatingdesired outcomes throughout the organization.

Tere are a variety o models or scientificthinking, such as PDCA (plan, do, check,and adjust), the QI Story, A3 thinking, andDMAIC (define, measure, analyze, improve,and control).

Principle Flow and Pull ValueFlow thinking is the ocus on shortening lead-time rom the beginning o the value stream tothe end o the value stream and on removingall barriers (waste) that impede the creation ovalue and its delivery to the customer. Flow isthe best driver to make processes aster, easier,cheaper, and better. Other potential driverssuch as unit cost or process variability are toonarrowly ocused, distorting priorities anddelivering suboptimal results. A cost ocusis particularly dangerous, when it createsperverse incentives and budget manipulationsincidental to actual improvement.

Pull is the concept o matching the rate oproduction to the level o demand, the goalin any environment. Yet pull is not easible or

cost-effective without the flexibility and shortlead times that result rom flow.

Flow and pull create enormous positivebenefits in all aspect s in any business. Focusingon flow will lead to improvements, includingbetter saety and morale, more consistentquality with ewer deects, increases in on-time delivery and flexibility, and lower costs,

Continuous improvement begins by clearlydefining value through the eyes o customers.Expectations must be clearly communicatedso systems can be designed to meet customerneeds. Every employee must know what goodis, whether his or her process is creating goodproduct or service, and they must know whatto do i it is not.

As associates learn to identiy and eliminatewaste, they will by necessity ollow Dr. Shingos

advice: Improvement means the eliminationo waste, and the most essential preconditionor improvement is the proper pursuit o goals.We must not be mistaken, first o all, aboutwhat improvement means. Te our goals oimprovement must be to make things: Easier,better, aster, and cheaper. Particular emphasisis placed on a quicker, more flexible responsethroughout the system.

Te ocus or continuous improvement cannotbe only quality or cost but instead mustincorporate all aspects o value as perceivedby the customer, including innovation,quality, cost, flexibility, quick delivery, and acomprehensive view o environmental healthand saety.

Continuous improvement ocused on flow ovalue requires both scientific thinking and thecapacity to identiy and eliminate waste (thingsthat interrupt the continuous flow o value).

Principle Focus on ProcessA process ocus recognizes that all outputs,whether product or service are created byprocesses acting upon inputs. Tis simpletruth is ofen overlooked: Good processes willproduce the intended output, as long as properinputs are provided.

Process ocus also helps ocus problem-solvingefforts on process rather than people. Acomplete shif to process ocus eliminates thetendency to find the culprit (person) who made

without running into the traditional trade-offs.In addition, daily and weekly results becomemore consistent and predictable.

Principle Assure Quality at the SourceAssuring quality at the source is thecombination o three important concepts: (1)do not pass deects orward, (2) stop and fixproblems, and (3) respect the individual in theprocess. Deects are a source o instability andwaste, so assuring quality at the source requiresthe establishment o processes or recognizingerrors in the process itsel. Organizationsmust commit to stopping and fixing processesthat are creating deects, rather than keepingproduct or services moving while planningto fix the issue later. Proper use o the humanelement in the process or thinking, analysis,problem solving, and the implementationo countermeasures is vital to continuousimprovement.

Principle Seek PerfectionIt is important to understand that thecontinuous process improvement journey hasno end. Tis explains Dr. Shingos philosophythat one should always look or problemswhere there doesnt appear to be any. Tis iscontrary to the traditional belie: I it isntbroken, dont fix it. Te pursuit o perectionreveals that there are always opportunities orimprovement. Tere is always waste, and themore a process is observed the more waste willbe seen.

While ocus on process guides and directs theimprovement efforts, seeking or perection isthe engine that keeps improvement energizedand moving orward at an aggressive pace. Teterm problem-solving may imply that afer asolution is implemented, improvement is done.Seeking perection and scientific thinkingcombine to find countermeasures, not game-ending solutions, and then revisits the issue

again and again, pursuing perection withoutreally expecting to find it.

Te ollowing table provides examples o idealbehavior or leaders, managers, and associates.Te list is intended to provide examples oideal behavior that come rom these fiveguiding principles and should not in any waybe considered as an exhaustive list.


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Supporting Concept Stabilize ProcessesStability in processes is the bedrock oundationo any improvement system, creatingconsistency and repeatability. Stability is aprerequisite or improvement, providing abasis or problem identification and continuousimprovement. Almost all o the continuousimprovement principles rely on stability.

Stability is the precursor to achieving flow.Many o the rationalizations or waste are basedon the instability o processes, as i they arebeyond our control. Instead, we should applythe basic tools available to reduce or eliminateinstability and create processes that enable theidentification and elimination o waste.

Supporting Concept

Rely on Data & FactsShingo emphasized the importance o beingdata-driven in the pursuit o continuousimprovement. He requently shared exampleso specific situations where data was collected,but it was not the correct data or the datawasnt actually being used in the improvementprocess. Finally, he was adamant that theunderstanding o the actual process be sodetailed that when implementing a change inthe process the improvement in the data couldbe predicted. Tus, reconciliation is requiredbetween the predicted results and the actualresults, making the improvement processtruly data-driven. Te principle is that whendata is treated loosely or imprecisely, there isa tendency to leave potential improvement onthe table or, even worse, to not achieve anyimprovement at all.

Supporting Concept

Standardize ProcessesWhile stability is a necessary preconditionor creating flow and improvement,standardization builds control into the process

itsel. Standardization is the supportingprinciple behind maintaining improvement,

rather than springing back to precedingpractices and results. Standardization alsoeliminates the need to control operationsthrough cost standards, production targets, orother traditional supervisory methods. Whenstandardization is in place, the work itselserves as the management control mechanism.Supervisors are reed up or other tasks, whenthey are not required to monitor and controlthe output and costs.

Supporting Concept Insist on Direct ObservationDirect observation is a supporting principle tiedto scientific thinking. It is in act the first stepo the scientific method. Direct observation isnecessary to truly understand the process orphenomenon being studied. All too requently,perceptions, past experience, instincts, and

inaccurate standards are misconstrued asreality. Trough direct observation, realitycan be seen, confirmed, and established as theconsensus.

Supporting Concept Focus on Value StreamFlow and pull value combined with ocus onprocess lead to the necessity o defining valuestreams and ocusing organizational attentionon them. A value stream is the collection o allo the necessary steps required to deliver valueto the customer. Defining what customers valueis an essential step to ocus on the value stream.Clearly understanding the entire value stream,however, is the only way or an organization toimprove the value delivered and/or improvethe process by which it is delivered.


Leaders Every leader devotes a significant amount of his/her time (up to 80 percent)ensuring the principles of continuous improvement are deeply embedded intoevery facet of the organizational culture.

Every leader consistently evaluates their own behavior related to each of theprinciples.

Leaders ensure continuous improvement is a part of their daily standard workand are accountable to others for their improvement.

Leaders in all areas create a healthy tension between celebrating accomplish-ments and setting goals to move to the next level.

All leaders in every area of the organization encourage the establishment ofstretch goals and encourage managers and associates to push themselves tolevels of performance that do not seem possible.

Leaders consistently ask for and expect to see the application of appropriatetools to understand root cause prior to implementing countermeasures.

Leaders expect and support the role of managers in designing and constantly

improving systems at the business, management, improvement, and worklevels as the first course of action when results are less than expected.

Every leader understands and balances the organizational focus on both be-haviors and results, holding themselves and others accountable for both.

Managers Every leader understands and balances the organizational focus on both be-haviors and results, holding themselves and others accountable for both.

All managers participate with associates as required on improvement initiatives.

Managers demonstrate knowledge of appropriate tools and use them regu-larly to solve problems related to their areas of responsibility.

Managers ensure the necessary resources are always available to supportcontinuous improvement and help associates to understand the reasons whya particular idea may not be implementable, empowering them to create evenbetter ideas the next time.

All managers watch for and appropriately recognize associates for both dem-onstrating ideal behavior and for achieving business goals.

Associates Every associate in every part of the organization is engaged every day in us-ing the appropriate tools of continuous improvement to eliminate waste andmaximize value creation.

Associates everywhere seek to understand the principles (the why) behind thetools (the how); they learn and use that knowledge to continuously improve theapplication of the tools.

All associates demonstrate the courage and integrity to tell the truth, stop pro-duction, and be accountable for defects they observe or create themselves.

Associates share their expertise in developing best practice standard work anddemonstrate the discipline to follow it until a better way has been developed.


Table Two: Ex amples of Ideal Behavior for Continuous Process Improvement


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Supporting Concept Keep it Simple & Visual

Everything should be made as

simple as possible, but not simpler.

~Albert Einstein

Simplicity is the ultimate

sophistication.

~Leonardo DaVinci

In society today, there is requently a biastoward complex solutions and a premiumpaid to those who seem to manage complexitywell. However, it is usually the case that better

results at a lower cost can be achieved bysimplification. Dr. Shingos lie work in mistakeproofing is centered on this principle.

Many o the seven orms o waste are in actthe result o inormation deficits. Makinginormation visual is the supporting principlethat when combined with simplification solvesthe inormation deficits.

Supporting Concept Identify and Eliminate WasteIdentification and elimination o waste isa practical concept or making processesflow, thus it becomes a primary ocus ocontinuous improvement. Waste eliminationis a powerul supporting principle because itis easily understood by everyone associatedwith a value stream, compared to the complexconcepts and computations ofen associatedwith cost per unit, cost variances, statisticalvariability, and other complex metrics.Focusing on the elimination o waste will

Supporting Concept Integrate Improvement with WorkAs the migration toward a principle-basedculture occurs, the activities and approachesor continuous improvement become a parto the everyday work o every employee in anorganization. Associates become scientistswho continually assess the current state otheir processes and pursue a better uture statethat will enhance the value (or eliminate thewaste) and thus pursue perection.

Each person in an organization perormsdaily work. When improvement is integratedwith work, each person accepts responsibilityor improvement o the daily work processes.Executives are responsible or improvingstrategy setting processes or perhaps resource

alignment processes. Tey are primarilyresponsible to deploy mission-critical strategyand metrics down into the organization suchthat every person not only has a clear line osight to what matters the most but are alsomotivated by the mission in a way that createsa compelling case or improvement.

Managers are responsible or improvingquality systems, or perormance developmentsystems, or value stream flow. Line workersare responsible or improving their cycletimes, or quality o work, or yields. Integratingimprovement with work is more thanassigning responsibility. It entails the creationo standardized work that defines proceduresor improvement.

Implications o this concept are thatimprovement initiatives that requireorganization, the definition o projects,assignment o ull-time personnel, or the use ospecial titles should be seen as transitional. Aslong as improvement largely depends on thesethings, the culture o operational excellence

will remain elusive.

consistently drive appropriate behavior, whilethe wrong ocus can requently become abarrier to improvement, large inventorywrite-downs, fire sales, or scrap. In the end,identiying and eliminating waste is a conceptthat effectively engages the entire organizationin the continuous improvement effort.

Supporting Concept No Defect Passed ForwardTis concept is essential or operationalexcellence rom many different points o view.From a leaders perspective, it requires greatcourage to stop the process long enough tounderstand the root cause and take counter-measures that prevent the process romreoccurring. For the leader, this ofen meanstrading any short-term loss or substantiallong-term gain.

From a managers perspective, systems mustbe in place to ensure that any result that variesrom the standard, even slightly, creates anexpectation o and support or immediateaction. We ofen call this swarming.

From an associates point o view, no deectpassed orward requires a mindset oownership and accountability. I standards areclearly defined, every person should know whatgood is. Leaders and managers should rolemodel then create the conditions or associatesto develop the mindset o personal integrity;meaning, that no one would ever knowinglyor willingly orward the outcome o their valuecontribution to someone else i it contained theslightest variation rom the standard.

Tis supporting concept eeds the mindset andtools o continuous improvement and createsthe conditions or seeking perection. It ispossible to achieve perection in the applicationo this concept.



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provides a uniying vision. Tis sense odirection helps people keep their eyes on thehorizon so that when tactical decisions requirea temporary detour, they understand why andcan contribute to getting back on track.

Te second category or where constancy opurpose can be achieved is in the establishmento the guiding principles upon which theorganization is grounded. Principles areuniversal, timeless, and sel-evident laws thatgovern the consequences o our actions. Tedegree to which principles are adhered willalways impact the success o any organization.Leaders must come to understand whichprinciples have the greatest impact on resultsand then make certain every aspect o theorganization is organized to drive behaviorthat is in greatest harmony with the principles.

Having established direction and guidingprinciples, a leader must align strategy andperormance metrics broadly and deep into theorganization. A system must be built to ensureconstant communication, both up and down.

One o the most significant ailures o modernmanagement is its ocus on strategy and planningwithout considering execution. o succeed,organizations must develop managementprocesses that align work and behaviors withboth philosophy/principles and directionin ways that are simple, comprehensible,actionable, and standardized. Individualleaders cannot develop individual approachesto management without introducing massivewaste into an organization.

Strategy deployment requires a managementprocess built around scientific thinking, withmore emphasis on cycles o learning thanon perect plans. It is essential to establisheffective communication, a process or gainingconsensus, clear accountability, and systemswhere execution and countermeasures areplanned and tracked, whether throughPDCA or a similar methodology. In essence,operational excellence is the definition osuccessul strategy deployment, when businessstrategies are aligned with correct principles.

Te sum o individual efforts rarely evenapproximates the effective alignment o thepieces into a single integrated whole. Creatingvalue or customers is ultimately accomplishedthrough the effective alignment o every valuestream in an organization.

Principle Create Constancy of PurposeAlmost every aspect o any organization is ina constant state o change. Customers change,customers expectations change, competitorschange, markets change, technology changes,

leadership and management changes, processeschange, products change, strategies change,even values or the implied meaning o thosevalues change. Even knowing this, the first oW. Edwards Demings 14 Points is to createconstancy o purpose. How is this possible?

Purpose, at the highest level answers thequestion: Why does this organization exist?It is incumbent upon leaders to find agreementon philosophical and strategic direction that

Changes in direction, guiding principles, andkey metrics should be treated like changes inthe national constitution. Organizations thatrequently redirect philosophies and strategiesail to recognize the tremendous waste associatedwith instability, fluctuation, and perhaps mostimportantly, the loss o human commitment.

Principle Think SystemicallySystemic thinking is the principle thatunifies all the other principles o operationalexcellence and enables organizations to sustaintheir culture o continuous improvement anddevelop a constancy o purpose.

Systemic thinking requires organizationsto both analyze and synthesize. Analysis, orconvergent thinking is ocused on takingthings apart to see what can be learned rom

the various components. We call this lookinginto things. Synthesis, or divergent thinking,is ocused on seeing how things might worktogether. We call this looking out o things.Convergent thinking includes being logicaland organized while divergent thinkingembodies being imaginative and interpersonal.Operational excellence requires both.

DIMENSION THREE:

ENTERPRISE

ALIGNMENT

Looking into things-take apart

Looking out of things-see how things work together

2Synthesize

1Analyze

(Convergent Thinking) (Divergent Thinking)

Systemicthinking

Concept

Tools

Tools

Concept



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Leaders realize that the impact o synergy how things work together is ar greaterthan the sum o the parts. As managersdesign and align systems with correctprinciples they must shif rom thinkingpurely analytically to thinking systemically.Systemic thinking is comprised o threeparts: holistic thinking, dynamic thinking,and closed-loop thinking.

Holistic thinking is about seeing the bigpicture. It requires two things. First,everyone has a common vision concerningwhat they are working to achieve. Tesecond requirement is transparency acrossthe system.

Dynamic thinking requires recognizingthat all current situations are the resulto interactions between parts o a systemthat occur over time, rather than snap-shotevents.

Closed-loop thinking requires under-standing how changes within the systemripple across the value stream affecting thework/behavior o other employees in thesame department, in other departments,external customers, suppliers, and otherstakeholders.

As managers move into systemic thinking,the ull value o operational excellenceis realized across the organization, theenterprise, and ultimately the entirevalue chain. As associates adopt systemicthinking practices, they gain the necessaryperspective to saely initiate improvementprojects on their own. Ultimately, thisunderstanding is what allows improvementeffort to transition rom being solely top-down to more o a grass roots effort.

Te ollowing table provides examples oideal behavior or leaders, managers, andassociates. Te list is intended to provideexamples o ideal behavior that come romthese two guiding principles and should notin any way be considered as an exhaustivelist.



Leaders All leaders share a common, clear, and compelling vision of the future and talkabout it in a consistent way everywhere they go.

Leaders create and consistently execute a system of catch ball to presentideas on strategy down and across the organization, receive feedback, andbuild organizational consensus.

Leaders establish a simple system of metrics and accountability that alignsand prioritizes the work, decision making, and improvement efforts of theorganization.

Leaders focus both on results and behavior, setting targets and accountabilityfor both.

Managers Managers ensure a continuous flow of information (both horizontally and verti-cally) to associates, making sure they fully understand the context for theirwork and the goals they set.

Managers develop systems to ensure all associates understand strategy, tactics,and metrics and know how their work contributes.

All managers ensure people have enough information and a broad enoughperspective to know the implications of their recommendations and actions.

Associates Associates ask questions that expand thinking to the broader context beyondtheir own jobs.

Associates seek job experiences that broaden their perspective.

All associates know the performance and behavioral metrics for their area, usethem to create personal and team improvement, and connect their work withcompany goals.

Table Three: Examples of Ideal Behavior for Enterprise Alignment


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Supporting Concept

See RealityTis is a very important concept. Mostmanagers and leaders consider themselvesquite capable o seeing the world around themand assessing the current situational realities.However, Dr. Shingo teaches that peoplecan have blind spots created by long-heldparadigms, experience, history, expectations,etc. Tus the practice o go and see wasdeveloped based on the principle that realityneeds to be perceived and understood basedupon the five senses.

Most organizations create barriers that makeit very difficult or people to see and tell thetruth about what they see. A recently retiredUS senator wrote that having travelled onnumerous trips with other political andmilitary leaders to areas o serious worldconflict, his greatest disappointment was thatvirtually all o their assessments o progresswere greatly distorted rom the actual datathey observed.

Further, most organizations unintentionallybuild cultures that prevent the ree flow oinormation that communicates an honestpicture o reality. Max De Pree said, Te firstresponsibility o a leader is to define reality.A leader must establish systems that makeorganizational perormance and associatebehavior transparent to all.

No leader can effectively lead without havinga firm grasp o the current business realities.

Supporting Concept Focus on Long-termJeffrey Liker highlights the principle o long-term ocus, which provides a oundationo stability in the executive suite that canbe achieved in no other way. When anorganization creates a long-term ocus, it is

Supporting Concept Standardized Daily ManagementTe concept o having some level o detailedwork description or how to actually do dailywork applies at all levels o the organization.Regardless o the perception among manyleaders, their work can and should also beorganized into standard components.

Standard daily management creates a reerencepoint rom which continuous improve can bebased. Standard daily management can alsolead to greater process control, reduction invariability, improved quality and flexibility,stability (i.e. predictable outcomes), visibilityo abnormalities, clear expectations, and aplatorm or individual and organizationallearning. Standard daily management enablescreativity that is ocused and controlled rather

than ad hoc.

Leaders who ollow standard work send a clearmessage that they are serious and no one isabove continuous improvement.

more likely that decisions will in act pursuesaety, quality, delivery, and cost rather thanmonthly or quarterly financial targets orbonus cut-offs. In conjunction with takingcare o the short- and medium-term priorities,thinking in terms o 20- to 50-year legacy goalssignificantly reduces the tendencies or knee-jerk reactions to urgent pressures.

Supporting Concept Align SystemsFrom the stakeholders perspective, the ullpotential is realized only when most criticalaspects o an enterprise share a commonplatorm o principles o operationalexcellence, management systems, and tools.While it is expected that organizations developsome unique elements o their local culture,it is also expected that principles become a

common, uniting part o each locale. op-levelleadership, staff, and business processes shouldexempliy the same principles, systems, andtools as do the operational components o theenterprise.

Supporting Concept

Align StrategyPolicy deployment is a planning andimplementation system, based on scientificthinking, employee involvement, and respector the individual. At the strategy level, policydeployment provides leadership with thenecessary principles, systems, and tools tocareully align key objectives and executionstrategies while empowering the organizationthrough cascading levels o detail to achievethose objectives. Because so many people areinvolved, clarity is critical; the simplicity oaligning strategy helps keep everyone, literally,on the same (single) page, pointed in the samedirection.



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Results

to know to be able to plan, organize, andcontrol. Within a model where widespreadinvolvement is essential or continuousimprovement and consistent perormance, itis important to define measures that matterto those who will be using them. Tereore,line associates need different measures thanleaders responsible or the overall enterprise.Many thought leaders on measurement havesuggested the new measurements need to: 1)be directly tied to strategic priorities movethe dial, 2) be simple and easy to capture, 3)give timely eedback that is tied to the cycle owork, and 4) drive improvement.

Measures that matter can be created throughoutthe organization to assure that everyone isocused on the appropriate strategic activitiesand driving continuous improvement thatmoves the whole enterprise ahead.

Supporting Concept Align Behaviors with PerformanceIdeal behavior drives long-term results. Tishappens when the systems are aligned withprinciples o operational excellence. Managersshould help each person anchor their ownpersonal values with these same principles.Personal values are what ultimately driveindividual behaviors. Leaders are responsible

Te basic principle o the results dimensionis that businesses must flow value, with valuetypically defined as something or whichcustomers are willing to pay. Tereore, thedefinition can include many stakeholders:Customers willing to pay; investors willingto invest; communities willing to support;and employees willing to commit theirtrust, confidence, and careers. Operationalexcellence creates the flow o value to allstakeholders, improving customer satisaction

and stakeholder value, while maintaining a saeand healthy environment.

Principle Create Value for the CustomerEvery aspect o an organization should beocused on creating value or the customers,investors, employees, and communities. Again,it is helpul to consider the true north conceptthat should guide decision-making andcontinuous improvement. An organizationshould drive all aspects o value, includingquality, flexible responsiveness to customers,and return to stakeholders (e.g., growth,revenue, profit, saety, and environmentalimpact).

Te ollowing table provides examples o idealbehavior or leaders, managers, and associates.Te list is intended to provide examples oideal behavior that come rom this singleguiding principle and should not in any way beconsidered as an exhaustive list.

Supporting Concept Measure what MattersHistorically, measurement has been ocusedon management what management needed

or creating the environment and the processor people to evaluate the correctness o theirown values relative to the perormance resultsrequired o the organization.

A business set a goal to reduce customercomplaints only to find that as they did, theybegan to lose valuable customers. Te measurewas driving behavior that made complainingsuch a painul experience that they juststopped calling. A better measure might havebeen to increase the number o complaints sothat every single disappointment is given anopportunity to be resolved.

Supporting Concept Identify Cause & Effect RelationshipsWhen we want to make a car go aster, wesimply press more on the gas pedal. So, thedial is the speedometer. What moves the dial?Pressing on the gas pedal. Why does this work?Because there is a physical linkage rom thepedal to the engine to the axle. Tere is a clearcause-and-effect relationship.

Organizations must ollow the linkages todetermine the cause-and-effect relationshipsand how goals can be achieved. Tis is the sameconcept as root-cause analysis but applied tocreating value.

DIMENSION FOUR:

RESULTS


Leaders Leaders make sure the company scorecard is balanced between results andbehavior.

Leaders ensure the voice of the customer is clearly heard throughout theentire organization.

Leaders systematically discuss all business results with employees,encouraging questions and discussion.

Managers All managers implement systems that place value creation and waste elimina-tion at the heart of management and improvement efforts.

Managers routinely discuss with associates the relationship between actual re-sults and the systems and principles that are creating them.

Managers make sure that established metrics are aligned upward and side-to-side and are understood and committed to by the people who affect them, sopeople can see instantly where they are relative to the targets and they knowhow to move the dial.

Associates All associates systematically review results and ask questions to understand

cause-and-effect.

Associates use results metrics to prioritize and take personal initiative to makeimprovements that impact the areas where improvement is needed most.

Table Four: Examples of Ideal Behavior for Results


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Operations

Product or Service Delivery

Materials management

Process engineering

Maintenance

Quality assurance and reliability

Testing

Supply

Supplier Selection and Qualication

Supplier development and partnering

Procurement process

Logistics

Management Support Recruiting

Compensation and benets

Training and employee development

Employee relations and satisfaction

Capital budgeting

Budgeting

Financial reporting

Management accounting reporting

Accounts receivable and accounts payable

(A/R and A/P)

Asset management

Computer systems and support

Computer application design and/or support

Networking systems and support

Business & Management SystemsTe principles o operational excellence must beapplied across all the business and managementsystems. Te pie in the center o the Houserepresents the scope o transormation withinan organization, including all basic customer-acing business systems and all managementsupport system. Te systems associated witheach o five typical business areas could include:

Customer Relations

Sales

Advertising/promotion

Order processing and tracking

Responsive/exible scheduling

Invoicing and collections

Warranty

Product/service development

Business processes

Product or Service Development

Market segmentation and selection

Research

Development of products or services,

processes, and prototypes

New product or service launch

Many, i not all, o these management supportprocesses are undamentally non-value-addedin a pure lean sense; that is the customerwould not pay extra or these. However, somepart o each process is necessary non-value-added work that is currently vital to theproper unctioning o the organization andthe eventual effectiveness o the value-addedprocesses, (i.e., a company needs to pay taxes),but the customer doesnt necessarily get valuerom the process. Applying the principles tothese processes will help to make sure that theyare completed as quickly as possible with theewest possible resources.

Principles o operational excellence shouldbe applied conscientiously in all o thesebusiness and management support processes.As understanding deepens and application

spreads throughout the entire enterprise,a consistent culture develops which is sel-perpetuating and sel-directing.SCOPE OF

TRANSFORMATION

SCOPE OF TRANSFORMATION


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improvement planning. A ew use the Shingomodel as a way to recognize their associates orexcellent work, and others use it to demonstrateto current and prospective customers that theycan compete with anyone in the world. Someuse the Shingo model or all o the above.

The real Shingo Prize, however, is the businessresults that come rom the relentless pursuito a standard o excellence that is, withoutquestion, the most rigorous in the world. Tosewho use the Shingo model will embark on ajourney that will accelerate the transormationo their organization into powerul, dynamic,nimble competitors.

No obstacle affordable healthcare,efficient transportation, emerging globalenvironmental concerns will be beyondthe reach o those who embrace principles ooperational excellence and make certain thatevery person in their extended value streamdeeply understands the why behind thewhat.

Operational excellence is the vision thatmany organizations have established todrive improvement. Programs, names, tools,projects, and personalities are insufficientto create lasting change. Real change isonly possible when timeless principles ooperational excellence are understood anddeeply embedded into culture. Te ocus oleaders must change to become more orientedtoward driving principles and culture while themanagers ocus becomes more on designing

and aligning systems to drive ideal principle-based behavior.

Te ultimate mission o Te Shingo Prize orOperational Excellence is to assist organizationso all kinds in building operational excellence.Te Shingo model may be used as a benchmarkor what excellence at the highest level shouldlook like. It may be used to align all elementso an organization around a common set oguiding principles and a proven methodologyor transormation. Some use the Shingo modelas the basis or organizational assessment and

SUMMARY


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The Shingo Transformational Process

TOOLS

RESULTS SYSTEMS

GUIDING PRINCIPLES

Core ValuesAnchored to

Culture(Behavioral Evidence)

AFFIRM

DRIVE

ENABLE

SE

LECT

REFINE

ACH

IEVE

ALIG

NDRIV

E

INDIVIDUAL FOCUS

ORGANIZATIO NAL FOCUS

TM The

Shin

goPriz

e

The Shingo Principles of Operational Excellence

Results



Cultural Enablers

Create Constancy of PurposeThink Systemically

Focus on Process

Flow & Pull ValueAssure Quality at the Source

Lead with HumilityRespect Every Individual

Create Value for the Customer

See RealityFocus on Long-term

Align SystemsAlign Strategy

Stabilize Processes

Rely Facts & Data


Focus on Value Stream

Keep it Simple & Visual

Integrate Improvement with Work

Empower & Involve Everyone

Develop People

Assure a Safe Environment

Align Behaviors with Performance

The ShingoPrize


MANAGEMENTSUPPLY

OPERATIONS CUSTOMER

RELATIONS

PRODUCT

& SERVICE

DEVELOPMENT

Embrace Scientific Thinking

Seek Perfection

Insist on Direct Observation

IdentifyandEliminateWaste

Measure what Matters

Identify Cause & Effect Relationships

No Defects Passed Forward

Standardized Daily Managment

The Shingo Model


20/37


Go & See

(3Day)

(3Day)

(3Day)

(3Day)

Timeline Appr

(weeks)

0

4

8

12

16

20

24

28

32

36

40

44

48

52

56

60

Go & SeeGo & See

GoGo SeeSee

GoGo SeeSee

Go & SeeGo & See

HomeworkTeamWebinarPersonalCall

HomeworkTeamWebinarPersonalCoaching

Homework

TeamWebinarPersonalCoaching

HomeworkTeamWebinarShingoExchangeBlog

-

LEARNING FLOW:The 4 DisciplinesofOperational ExcellenceDISCOVER BUILD LEAD ALIGN

Discipline1:

Principles of Operational ExcellenceTransformationProcess Principles BehaviorAssessment

Discipline2: BuildingSystems toDrivethe Right BehaviorSynthesize InterconnectAdjust

Discipline3: Leadingwith PrinciplesLearningCycle TeachingCycle Engagement

Discipline4: Behaviorbased StrategyDeploymentTSP Mapping TrueNorth Measures OrganizationalAlignment

Learning-

Observation-

Refle

ctionJournal

ExecutiveEducation Certificate USU/Shingo Prize

(3Day)

(3Day)

(3Day)

(3Day)

DISCOVER the BRIDGE

BUILD the VEHICLE

the DRIVER

ALIGN the DIRECTION

Recognized atInternationalShingo PrizeConference

Participants in the workshops will be able to:

Copyright TheShingo Prize

Administeredby theJon M. HuntsmanSchool of Businessat UtahState University

ExecutiveEducation Certificate USU/Shingo Prize

benefits Describe the of focusing on principles Articulate principle-driven behavior Identify how tools link to systems See and assess behavior to provide constructive feedback Explore what adjustments could be made to improve systems in driving

ideal behavior

fire-fightingScientifically

Select high impact systems to drive ideal behavior experiment with adjusting systems Re-align systems to eliminate work-a-rounds/ Build system reliability - monitor behavior

Clarify teaching role: when to mentor, coach, lecture Unify the learning & teaching cycles Ask questions that inspire & motivate Unleash talent and passion Create a workforce that engages in continuous improvement

specific Translate your desired culture into behaviors Monitor behavior (KBI) & performance (KPI) Align and measure the execution of YOUR strategy Create a visual map to align & adjust your culture

LEAD

DISCOVERPrinciples of Operational Excellence

Organizational Transformation with Principles, System & Tools

BUILDBuilding Systems to Drive the Right Behavior

Mobilizing Capabilities

LEADLeading with Principles

A Leaders role in Creating Individual & Organizational Alignment

ALIGNBehavior-Based Strategy Deployment

Aligning Performance with Ideal Behavior

Shingo Executive Education Courses: Taught Separately

Shingo Executive Education Year Long Certificate Track:This 12-month, highly-integrated educaexperience, coaches executives on how to lead their organization through a "Principle-based Cultural Transformation".


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The Shingo Principles of Operational Excellence The Shingo Transformational Process

The Shingo Model

Results



Cultural Enablers

Create Constancy of PurposeThink Systemically

Focus on Process

Flow & Pull ValueAssure Quality at the Source

Lead with HumilityRespect Every Individual

Create Value for the Customer

See RealityFocus on Long-term

Align SystemsAlign Strategy

Stabilize Processes

Rely Facts & Data


Focus on Value Stream

Keep it Simple & Visual

Integrate Improvement with Work

Empower & Involve Everyone

Develop People

Assure a Safe Environment

Align Behaviors with Performance

The ShingoPrize


MANAGEMENTSUPPLY

OPERATIONS CUSTOMER

RELATIONS

PRODUCT

& SERVICE

DEVELOPMENT

Embrace Scientific Thinking

Seek Perfection

Insist on Direct Observation

IdentifyandEliminateWaste

Measure what Matters

Identify Cause & Effect Relationships

No Defects Passed Forward

Standardized Daily Managment

TOOLS

RESULTS SYSTEMS

GUIDING PRINCIPLES

Core ValuesAnchored to

Culture(Behavioral Evidence)

AFFIRM

DRIVE

ENABLE

SELE

CT

REFINE

ACHIEV

E

ALIG

NDRIV

E

INDIVIDUAL FOCUS

ORGANIZATIO NAL FOCUS

TM The

Shin

goPriz

e


22/37


23/37


Results



Cultural Enablers

CreateConstancyofPurpose

ThinkSystemically

CreateValuefortheCustomer

SeeReality

FocusonLong-term

AlignSystems

AlignStrategy

AlignBehaviorswithPerformance

The Shingo Prize

MeasurewhatMaers

IdenfyCause&EffectRelaonships

StandardizedDailyManagment

GUIDINGPRINCIPLES SUPPORTING CONCEPTS

MANAGEMENTSUPPLY

OPERATIONS CUSTOMER

RELATIONS

PRODUCT

& SERVICE

DEVELOPMENT

FocusonProcess

Flow&PullValue

AssureQualityattheSource

LeadwithHumility

RespectEveryIndividual

EmbraceScienficThin king

SeekPerfecon

StabilizeProcesses

RelyFacts&Data


FocusonValueStream

KeepitSimple&Visual

IntegrateImprovement withWork

Empower& Involve Everyone

DevelopPeople

AssureaSafeEnvironment

InsistonDirectObservaon

IdenfyandEli minateWaste

NoDefectsPassedForward

SUPPLY MANAGEMENT

OPERATIONS CUSTOMERRELATIONS

PRODUCT& SERVICE

DEVELOPMENT

BUSINESSSYSTEMS

Tis robust assessment process is used or allentities applying or Te Shingo Prize. It is themost rigorous cultural assessment availablebecause it combines documentation in theachievement report (perceived reality) alongwith two sources o direct observation, theSCOPE survey, and the site visit (actual reality).Tis provides the most accurate assessment oyour culture available.

Assessment Criteria

Tis section covers the our dimensions othe model and serves as a guide and provides

Dimension 1 Cultural Enablers(250 Points Total)

Guiding Principles:

Lead with humility

Respect every individual

Supporting Concepts:

Empower and involve everyone

Develop people

Assure a safe environment

Te ollowing are examples o systems thatdrive behaviors and are aligned to principlesas exemplified in the model (the first portiono this document). Some tools are also listedas examples. Tis is not intended to be a checklist, nor is it all inclusive. Not all will be presentin every organization, and organizationsmay have others not listed here. Tese aresimply examples and provide organizationssome guidance on what an assessment wouldevaluate.

Systems:

Individual development

On-the-job training/training within industry

(OJT/TWI)

Coaching

Standard daily management

Leadership development

Idea sharing

Suggestion and involvement

Reward and recognition

Communication

Environmental, health, and safety

Education/training

Community involvement

Recruitment and succession planning

Accountability

examples o systems that drive principle-levelbehavior and tools that support those systems.Te ollowing is not intended to be a check listor each dimension; it simply provides exampleso principles, systems, and tools in eachdimension. Te systems and tools observedduring an assessment are the artiacts o aculture. Te behavior that is observed duringan assessment is key to evaluating the level ocultural transormation that an organizationhas achieved. Ideal behaviors are characteristico the highest level o achievement and areexemplified previously in the model. Exampleso questions in each dimension are alsoincluded or guidance purposes.

It is important to note that every businesssystem within an organization is assessed tothe entire model, operations, product and

service development, customer relations,management, and suppl

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