by Bob Zaruta, President/CEO, NWIRC
Manufacturing companies we serve in our 13-county region of Pennsylvania are back to business and have implemented safety protocols to keep employees safe. You are continuing to navigate challenges with sales goals, supply chains, staffing levels, and fulfilling customer demands- all with or without outside resources. But are you prepared- based on still very uncertain times ahead- as reported by medical professionals, global consulting firms, and the news media?
It’s not enough to have a 3-year business plan or strategic plan in place. Being more agile and forward thinking is now critical. It’s also important to have a team that is aligned to the strategic direction of the business and that a disciplined approach to accelerate decision making is in place. A recent article by McKinsey & Company (a global management consulting firm) suggests that additional fall-out is coming down the road, stemming not just from the spreading virus, but also from changing customer behaviors and business models. Months ago, McKinsey suggested putting an agile “Plan Ahead Team” in place to “stay on top of the ever-changing business environment”. The concept is for this team to “collect forward-looking intelligence, develop scenarios, and identify options and actions to act strategically”, and in doing so, develop their plan to address five frames. While reading the article’s description of the ‘five frames’, I couldn’t help but flash to thoughts of the work that manufacturers already do every day with continuous improvement initiatives, including the mindset of the Toyota Kata practice. Here are the five frames described in McKinsey’s strategic crisis action plan, along with my continuous improvement analogy:
1. Starting Position– last known position (aka, baseline back to January 2020). When working on an improvement kata, this is also known as the ‘current condition’, because it’s important for the team to understand how things are operating today. In this crisis scenario, it would be how you were operating
2. Scenarios for Future– there are two big uncertainties for the future, the virus spread and economic fall-out, so examine what your company will look like in the ideal state for various situations. In kata, this is known as the ‘challenge’.
3. Broad Direction of Travel– what are possible responses to the evolving situation? McKinsey suggests that the goal isn’t to develop the details here, just a broad direction. Again, turning to kata… this would be establishing target conditions that become the building blocks or roadmap to reach your challenge.
4. Actions and Strategic Moves– tactics should be created for all future scenarios. For improvement kata, these are the experiments that help in planning additional target conditions- each experiment comparing what you think will happen to what actually happens.
5. Trigger Points– are the elements that will drive your company to act at the right time or serve as an “early warning system”. In the world of continuous improvement, these can also be referred to as KPIs (key performance indicators).
McKinsey notes that speed is of the essence and the Plan Ahead Team must move fast to add in any new issues or opportunities that arise. This behavior is also the essence of the lean or continuous improvement culture. My point of sharing these concepts is to acknowledge that manufacturing companies are poised to successfully navigate the fall-out from the pandemic because many already embrace this mindset. In some cases, it just needs to be formalized.