PROGRAM LEADERSHIP, VALUES AND ORGANIZATION

“The new world will belong to passionate, driven leaders — who not only have enormous amounts of energy but who can energize those whom they lead and influence.”

Jack Welch

This chapter addresses institutional values, leadership, organizational issues and skills management that are vital foundations for an Asset Optimization program. Necessities for formulating and managing the improvement process and implementing the program are covered in Chapters XVII and XVIII.

INTRODUCTION

A successful Asset Optimization process has a number of key requirements in leadership and organization. These include interest, clear vision, continuous drive and participation from senior executives; ambitious objectives, financial prioritization, initiative, ownership and support throughout the organization. Organizational excellence is crucial. Training and skills management are essential in order to maintain and elevate knowledge and skills in all areas of Asset Optimization.

A simplified sketch of the overall Asset Optimization process is illustrated in Figure 10.1.(11)

Implementation Tactical Action Plan Processes Systems Technology Resources Strategy Prioritization Opportunities GAP Continuous Improvement Metrics Results Current Conditions Objectives Implementation Tactical Action Plan Processes Systems Technology Resources Strategy Prioritization Opportunities GAP Continuous Improvement Metrics Results Current Conditions Objectives

Figure 10.1 Detailed Physical Asset Optimization Process BASIC LEADERSHIPAND ORGANIZATIONAL ATTRIBUTES

Some elements of leadership and organization are essential for the success of an Asset Optimization program. All must be present at the beginning of the process or developed early during its implementation.

Commitment and Support

Executives and senior management establish the climate and tone that are essential for the success of an Asset Optimization initiative. Direct involvement through personal leadership, engaged, active and energetic advocacy is essentials that can’t be delegated. Without full and visible commitment at the top levels of management, success is difficult, if not impossible to achieve.

Clear vision, solid objectives, continuing advocacy, active guidance, organizational alignment and close attention are leadership imperatives to demonstrate the necessity, importance and value gained from the Asset Optimization initiative. Leadership must strongly communicate the vision, necessity of the process, what must be accomplished and actively remove barriers that are always present, and will certainly arise, during any change process.

Industry leading companies drive the improvement process from the top. Leaders in this group recognize that continuous improvements to the institutional culture, organization, processes and practices are essential to keep pace in a competitive environment. Executives within industry leading companies are actively engaged, continuously communicating and promoting the necessity to achieve the highest level of excellence. They provide a vivid picture of the necessity and process that engages others to create the motivation, commitment and ownership needed for success throughout the organization.

Appointing operational leaders and encouraging progress are also key functions of executive management. Executive management must assure that operational leaders have the personal skills, position, organizational authority and time necessary to achieve success. Operational leaders must be assigned clear objectives, including a timeline. Real accountability for results, rewards for success and penalties for failure are essential. Generally speaking, successful improvement programs are led operationally by an individual at the Superintendent level or above who reports directly to the plant manager.

Insufficient / inadequate leadership is observed over and over again as a primary cause of improvement programs failing to meet expectations.

At a staff meeting, a plant manager asked why he hadn’t observed improvements resulting from a major productivity improvement effort that had been in-place for about eight months. After a long, uncomfortable pause, one of the participants stated “improvements had not been implemented — there was too much resistance from the working level and insufficient interest and real leadership from management to overcome the barriers and get anything done”.

While leaders may profess commitment and interest, responsibility of the actual initiative may be a secondary duty assigned to a very busy executive who doesn’t have much time to spare. As a result, the improvement initiative doesn’t get the attention required and is viewed by those involved in implementation as a low priority that can be avoided. Under these circumstances is it surprising that expectations aren’t met?

Finally, executives within industry leading companies continuously demonstrate their engagement and total commitment to the improvement process by action. It is astonishing to see how a plant manager’s demonstration of interest in the improvement process by occasional active participation in steering and action team meetings energizes the people and process.

Clear Vision and Objectives

As an essential part of leading the improvement initiative leaders must provide clear objectives defining just what it is they want to achieve. Is the primary objective of the Asset Optimization program to increase availability and production output, reduce costs or some combination of the two? Leadership must specify the objective, how much and whether other objectives, such as improved safety and environmental performance, are included. Clear statements from leadership detailing why the objectives are necessary (competitive pressure) are vital to gain commitment and ownership.

A US manufacturer discovered that a world-class commodity manufacturing facility in China could deliver product meeting all specifications to US customers at approximately 75% price of the US manufacturer. The immediate objective, essential to keep the facility operating, was to close the price gap to a maximum of 5% at an acceptable profit margin.

Solid Overall Strategy

In addition to defining specific objectives, leadership must establish the strategic basis for the plans that will be developed to achieve these objectives. Connecting business / market objectives to production, equipment, and component effectiveness is one example of a key strategic principle of Asset Optimization. Gaining permanent, sustainable improvements to both availability and costs by eliminating defects is another.

Industry leaders recognize that producing the short-term results essential to satisfy business requirements within a long-term strategy of continuous improvement is the best and most certain route to success. Likewise, executives within industry leading companies recognize that permanent improvement requires initiative, commitment, ownership and constant effort. It is the reward of a journey — a result not a command — and takes time to accomplish. This may be a significant differentiator between the best and everyone else. Many professionals identify an executive mindset that improvement can be ordered by command as a major barrier to progress within their organizations.

Total Organizational Ownership and Commitment

Organizational ownership and commitment are continuing major challenges that require constant, highly visible effort and often strong persuasion. The necessity for success and value gain must be publicized throughout the organization. Everyone must be committed to the Asset Optimization process. Barriers, including active and passive resistance, lack of commitment, ownership and cooperation must be minimized.

Without continuing, visible interest and attention, people affected by the improvement initiative are likely to conclude it is simply another “program of the month” that if ignored will go away. Everyone follows a leader, or at least observes a leader’s interests to remain out of trouble. If leaders don’t demonstrate real and continuing commitment by interest in and driving a change process, those who must do the work are unlikely to invest much emotional commitment, time or effort. The Asset Optimization program is too important to allow that to happen.

Directed to Success

Leadership attention to master the “soft” issues that establish initiative, ownership, commitment and support are crucial toward the success of Asset Optimization. These include commitment to business objectives, quality in all activities, moving toward a profit-centered mentality, defect elimination and productivity improvement. It must be recognized that Asset Optimization is a continuous process with many elements. Leadership must assure that all ingredients are present to assure success, Figure 10.2. If one or more ingredient is missing the entire process will fail.

Success Confusion Frustration Anxiety Ineffective Slow Temporary

Vision Resources Skills Action Plan Commitment Incentive Measurements Results

Failure Success Confusion Frustration Anxiety Ineffective Slow Temporary

Vision Resources Skills Action Plan Commitment Incentive Measurements Results

Failure

Figure 10.2 All Ingredients must be Present for Successful Physical Asset Optimization Some have questioned why the third bar down has two gaps. The answer is that without resources there can’t be any skills.

Recognition that Improvement Takes Time to Institutionalize

To achieve objective results there must be a full commitment at the senior executive level to institutionalizing the Asset Optimization program. For the purposes of this handbook, institutionalization is defined as occurring when the objective end states have been attained and solid processes are in place

governing all program elements. The optimized way is the only way and there is no institutional memory of “old way” pre initiative processes or practices. The possibility of falling back to a former bad practice is therefore minimal.

Realistically, it will take five years or longer to fully institutionalize optimized practices implemented with Asset Optimization. Until that occurs, leadership must pay close attention, monitor metrics that might indicate backsliding and inject corrective action quickly if gains and / or interest appear to be eroding. Elements of the teams that have implemented successful improvement initiatives must be kept in place long after the initiative has been implemented to assure improvements are refined and sustained. A post implementation control plan to assure sustainability is essential. The temptation to demobilize the team and diminish effort on the first signs of improvement must be resisted.

Many facilities declare victory and demobilize the implementing effort as soon as 80 percent or so of an objective has been attained. As a result, initiatives remain partially complete with full benefits yet to be realized. In many cases backsliding occurs. This can be a very emotional issue and source of frustration for all involved.

To avoid this predictable pitfall, the Asset Optimization program plan must have a sustainability component to maintain effort through 100 percent completion and full institutionalization of the improvement process. It is imperative to keep the entire organization mobilized, engaged and focused on sustainable, objective results. To reduce the resources required as an initiative reaches maturity with results tracking objectives, people assigned can be reduced and the interval between oversight team meetings can be extended. The control plan mentioned earlier is detailed in Chapter XVII.