Focused journey of change.

EXECUTIVE SUMMARY

The challenge: Align a newly merged manufacturing organization to a common way of doing business while meeting ongoing contractual obligations. Overcoming this challenge would require a journey based in the lean philosophy, Six Sigma, and a manufacturing excellence mode that defined positive behavior change. Suppose you worked at a company that had just completed complex mergers of four different companies into one. Let's say you were in charge of 3,000 employees in your manufacturing organization that interacted with 8,000 others in various program and functional organizations, and your task was to align the work of 23 factories into one smoothly operating lean process. To make things a little tougher, what if your employees were consolidated from different geographic locations from around the country (as a result of the mergers), with each employee bringing different processes, methods, tools, systems, and work cultures? And what if you discovered there were language differences--even though everyone spoke English? What if the strengths of each former company represented tremendous potential if they could be captured, hut in reality these strengths were slipping away? And don't forget that you still had to meet contractual production obligations to your customers while you were solving these problems.

The Raytheon Missile Systems manufacturing organization in Tucson, Ariz., faced exactly these challenges. Three years later, the organization was recognized with the Shingo Prize for Manufacturing Excellence in 2004 Curious how we did it?

The following story will give you the essentials of our change journey and what we did to make things better. Ours is not the only way to change and achieve improvements, but it is the story of what we did to align a large number of employees and organizations at Raytheon to achieve success in Tucson.

The journey

In a nutshell, the goal was to align an entire organization. The challenge was to do it while we were already in business. In a way, it was like rebuilding an airplane while it was flying.

The first step was to "Go get smart," as the operations manager said. A core team was formed consisting of five Raytheon Six Sigma experts from different parts of the organization. (Raytheon Six Sigma is the umbrella initiative launched by Raytheon to help transform tire entire corporation.)

The core team embarked on a learning expedition by benchmarking other companies to discover how they had overcome similar challenges. The core team also reviewed the rich histories of the companies now merged into Raytheon. The result was a mixed bag of critical concerns, activities, tools, models, and plans. The core team learned what worked and didn't work at other companies and what might work for us. The discovery was that Raytheon Missile Systems (RMS) operations needed to create a solution tailored to our own unique work culture and business challenges while leveraging the learning and wisdom of others. In short, we needed to use what we learned to build the change model that would work for us.

A lean vision

Visions with catchy slogans and buzzwords are fine for marketing, but they serve little purpose in guiding the average employee in daily efforts. We were not suffering from a lack of vision; in fact, we had the opposite problem. The merger brought together myriad visions, values, and methods. Corporate had espoused the overall direction, but some organizations were struggling with translating it into actionable directives.

One struggle was language, particularly nouns. RMS employees often had four names for the same physical object. For example, an item as simple as the transparent film typically used with overhead projectors was referred to as a transparency, a slide, a flimsy, a view graph, and an overhead. Imagine the language challenge when there are multiple names for processes, parts, tools, and complex assemblies. Further transform those words into the jargon of acronyms and you can almost hear the problem yourself. Confusion reigned.

One solution was to find the verbs we agreed on. Verbs stay pretty consistent no matter the process name.

The core team decided to write a new and different kind of vision, one built with behavior descriptions. The focus of this different vision was on behavior and to a lesser degree, results, but not on status such as being the best in something The core team held a deep belief that if employees could understand what was expected of them, then they could translate that into supportive appropriate action. The core team thought if the focus was on verbs, behaviors, and actions, then a lean focus would be the best model to support change in the manufacturing environment. This is because lean is based in how work gets done as it enables the elimination of waste.

We wrote a 634-word vision statement that read as if we were standing in the future and we were merely reporting what we saw: it described what was happening in terms of action. Its existence challenged our norm of terse, cute, and innovative slogans. Our operations' leadership shared our long vision statement with other company leaders and received gentle teasing in return, such as "Those operations guys need a lot of instruction." Translation: "You can't do that, it's different!" Yet when that same vision was shared with middle management and lower-level operations employees, we could see the light of understanding come on in their faces. They got it; they understood what we were trying to accomplish.

A high-level roadmap

It is hard to eat an elephant in one bite, as the saying goes: likewise, it is hard to create a future reality in one giant step. Equipped with a vision of the future, the next challenge for the core team was to translate it into a roadmap tot actionable, meal-sized focus areas. The goal was to create a manufacturing excellence model to help focus attention, resources, and improvement efforts.

The core team's research of other successful methods was gathered and synthesized into 20 macro elements necessary for our manufacturing organization to he successful. The 20 elements are grouped under six focus areas as follows:

* Effective and productive culture: leadership and vision, learning culture, open communication. support integration, and product-focused organization. These five are supported by our operations management.

* Customer focused: customer requirements and customer satisfaction. The RMS customer-focused marketing initiative supports these two steps.

* Integrated planning and shaping: development integration, integrated enterprise planning, and risk management. These three are supported by our integrated product development system process and structure.

* Organized for lean, flawless execution: factory organization, workplace organization, parts presentation, pull systems, visual controls, and lean supply. Our Raytheon principles of manufacturing support these six steps.

* Perform on our commitments: supplier management, quality management, and cost and schedule performance. These steps are supported by business reviews.

* Drive continuous improvement: continuous improvement/Raytheon Six Sigma.

As illustrated in Figure I, these focus areas and elements integrate into our manufacturing excellence model (MEM). A metaphor for the model is a wheel on a car. The center is the axle and the drive for improvement. The inner circle is the wheel and is foundational as an operating infrastructure. And the outer circle is like the tire--where the rubber meets the road--representing the business process at the macro level. Repetition provides cycles of improvement and learning.

The MEM, in essence, became our defined operating model for lean implementation and improvements. Why was this important? There were many operating models in the organization, all competing with each other: One model needed to be defined and supported so that everyone could see and understand the goal.

MEM as maturity model

A lean operations vision and an overall roadmap for change were good enablers for improvement in our organization. Yet these two tools still represented too large a bite for each factory organization. It was still possible for the factory organizations to interpret and manifest things differently than what the team intended. A model of how well we were following the desired behaviors was needed--a maturity model. The core team's next goal was to subdivide MEM elements into bite-sized action able steps.

A capability maturity model index (CMMI) is a model for enterprise capabilities and development. We turned to it only to discover that it seemed to be missing manufacturing processes. Even though this was missing, the maturity concepts could be applied to the MEM it the levels were redefined for manufacturing concepts. We could create a tool to help us assess how well we use lean manufacturing methods. This could serve as a baseline as to how lean we were (or were not) and also provide a maturity ladder for each factory to climb, one step at a time, one bite at a time.

The core team tackled this problem by developing a diagram that illustrates the comparable level concepts of CMMI and MEM, moving from "Sloppy" to "Slick" (Figure 2).

Applicable snippets from the vision statement were used to describe Level 5--the best there is. Level 1 was easy to describe as not doing any of the desired behaviors. Then it was a matter of scaling the descriptions of desired behaviors in the remaining three levels. Level descriptors--behavior-based and worded to be observable and measurable--were designed to reduce arguments and eliminate partial level scoring.

Buy-in and participation

The core team had created a powerful tool to be used by committed employees to guide their improvement activities. This new tool and concept represented a common way to perform the business of manufacturing. However, most employees in operations were unaware of fine forthcoming changes. We now needed to create alignment and buy-in front the organization for this model and to change.

There are many ways to solve this problem, but what the core team did was to pocket the level descriptions and pretend they didn't exist. Three off premise workshops were held to help design and describe the desired behaviors for each element and maturity level. We invited participants from more than the operations organization, reaching out to engineering, quality, Raytheon Six Sigma, program offices, and other organizations to participate in and co design the MEM levels.

The workshops were designed to be fun, enlightening, and social as a means to accomplish the real work of aligning people and organizations. As sub-groups assigned to tables got stuck, the core team facilitated hints and suggestions on what that level description might be. In no time at all, employees at table groups developed descriptions that paralleled what the core team had originally designed yet were richer and more robust. Most important, these factory managers had developed the very assessment criteria that they would be measured against later on in the form of level descriptions.

Assessors

Once we knew where we were going, we needed to assess our current status before we could plan and act to close the gap and improve.

The current factory behavior at that time was firefighting the crisis of the moment. Factory managers rarely had time to look up and see something new or different, even when a change could help them be more successful or free up time for them. If time could be spent in these kinds of efforts, it would help the factories become more efficient, which generally produces higher productivities, which tends to create more time for further improvement efforts. This is a success cycle.

Leadership set expectations that each factory manager had to participate in assessing each other's factory to establish a baseline lean maturity score. This plan contained a hidden agenda. Careful thought was put into who was selected to be an assessor for each factory. The core team had determined that some factory managers were very good at a particular lean tool or method and weak on others. The assessor plan was designed to pollinate ideas across organizational boundaries. We had created a structured learning plan built on developing new relationships, and as one factory manager said, "I didn't know we did this [lean technique]! This is cool." In no time at all, the factory managers were helping each other implement the best manufacturing methods we possessed across organizational boundaries.

Lastly, a ground rule el all or none was established for an assessment: All the behaviors of the level criteria had to be met in order to earn that level score. This saved many hours el negotiation and argument.

Integration

When a new initiative shows up in an organization, it likely competes with other existing initiatives for resources. Employees can become cynical, and, like ice cream, many flavor-of-the-month change initiatives melt away over time,

Anticipating this, the core team made sure that the MEM integrated into the whole system of the business. It needed to integrate with existing corporate and customer initiatives. It needed to complement the capability maturity modal and other process initiatives. It needed to he practical and useful to the end user (something that actually helped each organization perform better). And it needed to he measured in our performance metrics.

Pull for improvement

We now had a vision a maturity model. defined levels, and an organization that understood where it wanted to go. Surprisingly, that is still not enough to sustain change--it must he pulled for over time.

The lean definition of pull is essentially the subordination of your own. work to what is consumed in a down stream process; an empty kanban can be a signal to create another widget. Pull, in an organizational context, can be loosely defined as creating enough want in other employees to inspire them to take the desired actions to improve. RMS utilizes metrics based on the Oregon productivity matrix (OPM) to measure factory performance, and the core team added the MEM score to the OPM. This created pull for improvement because bragging rights and rewards were based on year-end OPM scores.

Given the assessors baseline score, each factory could define a maturity gap between that score and the vision. The factory can now focus resources to close the gap and, as a result, improve their maturity score. The MEM had 20 elements with five levels each, which represented 100 points (20 x 5). Assessors might indicate a factory was a 2 in vision, a 1 in learning culture, a 3 in open communication, and so on. Dividing the total score by 20 produces an average score or overall maturity level. For example, a factory's baseline score might be 1.9 in an immature or non-lean factory or a 3.4 in a factory well on its way to becoming world class.

Leadership set a goal for each factory to improve its average maturity level (MEM score) by one point or one level by the following year. In essence, this became a five-year plan to become world class. Where the points were obtained was not dictated; rather, it was left to each factory manager to decide which elements to improve. Some would argue that only low-hanging fruit would be plucked, which did occur, but the core team was delighted that improvement efforts and resources were now being focused on a common vision. We were building a common way to conduct factory business. We also knew that the subsequent years would be much more challenging.

To assist busy factory managers. the core team created a learning infra structure to guide employees and help improvement teams become successful faster. A dynamic Web site was developed to connect people to information with only a few clicks of the mouse.

One example of this is the Point Path. a quick, high-level, what-to-do guide that factory managers and improvement teams could nee as aft improvement path. Once they decided which elements they were going to improve they could develop their own plan or refer to the Point Path as a guide.

The example in Figure 3 is the Point Path for vision. It is simple, but it also was a timesaver for those factory managers and teams that had little time to spare in the beginning.

Outside validation

RMS operations wanted to grow rote a world class lean operation. The MEM, as integrated with other initiatives, became our roadmap to get there. One could argue that using the MEM takes longer because higher-level MEM maturity scores are harder to improve because they require systemwide improvements.

Two years into the lean revitalization journey, the core team decided to benchmark progress against an outside measure and apply for the Shingo Prize for Excellence in Manufacturing managed by Utah State University. We believed doing so would help us assess where we were in our lean journey and gain guidance on what else we should do to improve.

As a note of warning to others engaged in large change efforts--be sure to celebrate accomplishments. We noticed that in our relentless effort to improve, it became possible to create a perception that the organization would never be good enough. The improvement mantra can create a negative perception among employees that what they do isn't ever enough. This happens when an organization is always looking forward without ever looking hack on how tar they have come.

Much to our surprise, RM5 operations won the Shingo Prize on the first attempt. This was the largest organization ever to win the prize. Winning it became a milestone of how tin our organization has traveled, validating the approach for continued lean improvements and encouraging further growth and improvement. It serves as a reason to celebrate the journey.

Looking back, the MEM became a shared tool for "goodness" that defined what we wanted to achieve in terms of behavior. The MEM developed into a tool that aligned our manufacturing employees, teams, and other organizational resources to contribute to enterprise success in a focused way.

Raytheon CEO honored

Raytheon chairman and CEO William H. Swanson received IIE's 2005 Captains of Industry Award at this year's IIE Annual Conference. The award, which was given for the first time this year, recognizes outstanding leadership in business or government by industrial engineering graduates who identify the IE profession as a key to their success.

Swanson joined Raytheon in 1972 and has held a wide range of leadership positions, including manufacturing manager of the company's equipment division, senior vice president and general manager of the Missile Systems Division, general manager of Raytheon Electric Systems, and chairman and CEO of Raytheon Systems Co.

Swanson graduated magna cum laude from California Polytechnic State University with a bachelor's degree in industrial engineering. His graduate work was performed in business administration at Golden Gate University.

Figure 2. Illustrating the concepts of capability maturity and
manufacturing excellence allowed the team to see where they were
headed.

From sloppy to slick

  CMMI

5 Focus on process               Optimizing
  improvement

4 Process measured               Quantitatively
  and controlled                 Managed

3 Process institutionalized      Defined
  for the organization and is
  proactive

2 Process characterized          Managed
  for projects and is
  often reactive

1 Process unpredictable,         Performed
  poorly controlled and
  reactive

  Lean Enterprise

5 Lean company continuously      The best
  achieving highest              there is
  performance in industry

4 Lean company (recognized),     Being lean
  consistently meeting
  performance targets

3 Traditional company            Trying to be
  implementing lean              lean
  enterprise plan

2 Traditional company            Wanting to
  with intention to do           be lean
  lean deployment

1 Traditional company            No lean
  without intentional lean       focus
  deployment

Figure 3. Point Paths, such as this one for vision, helped put busy
factory managers on an improvement plan quickly.

Fast path to improvement

Element 1: Vision

Point Path

  Situation                                      Solution

1 No vision present,             [right arrow]   Adopt Lean Enterprise
  People are clueless on                         Vision or create your
  direction and focus                            own comprehensive lean
                                                 vision

2 Your department has a          [right arrow]   Share the vision
  vision but no one knows
  it or how to use it

3 People can recite the          [right arrow]   Define roles &
  vision but don't know how                      responsibilities for
  they support the vision or                     people in their work
  how it affects them                            toward a lean focus

4 People can see their role      [right arrow]   Align your goals and
  but work is not aligned                        strategy
  and initiatives keep
  changing things

5 People are an integral part    [right arrow]   Help others succeed
  of the vision implementation
  (dynamic, responsive, lean),
  which is documented in a
  strategy map and used for
  decision making

  Situation                                      How

1 No vision present,             [right arrow]   Read and understand
  People are clueless on                         the Lean Enterprise
  direction and focus                            Vision and its
                                                 applications to
                                                 your department, or
                                                 hold a vision workshop
                                                 in your department
                                                 (template)

2 Your department has a          [right arrow]   Hold communication
  vision but no one knows                        sessions with vision
  it or how to use it                            as the topic, flow
                                                 down the vision
                                                 through staff
                                                 meetings, web sites,
                                                 post vision posters,
                                                 etc.

3 People can recite the          [right arrow]   Hold role definition /
  vision but don't know how                      mapping workshops,
  they support the vision or                     identify key handoffs,
  how it affects them                            plan and document
                                                 work, develop a
                                                 strategy to implement

4 People can see their role      [right arrow]   Hold a strategy
  but work is not aligned                        workshop (SFO or
  and initiatives keep                           MBO workshop, plan for
  changing things                                update cycles, review
                                                 your market

5 People are an integral part    [right arrow]   Share, teach, mentor
  of the vision implementation
  (dynamic, responsive, lean),
  which is documented in a
  strategy map and used for
  decision making