Values & Metrics

Overview
Once the mission of the organization has been defined it's time to work towards defining the vision of the organization but in order to do this correctly we must first assess the values and metrics of the organization. Every organization will have unique situations and approaches to this but there are few activities we strongly encourage all organizations look at. The first thing we'd encourage you to look at are the values of the organization which strongly influence the way associates work on a day to day basis. Let's look at an example. Ford's values are focused on People, Products, and Profits. For example, Ford states that their people are the source of our strength. They provide our corporate intelligence and determine our reputation and vitality. Involvement and teamwork are our core human values. Now, obviously, every organization will have their own set of values and care should be taken to ensure these values are most than just words on paper instead they should truly represent how each and every associate in the company works on a day to day basis. Most companies discuss and update values at the same time they look at the mission. And, it's important to note that it's definitely acceptable to examine the values of the organization before you look a the mission you see the hoshin planning process is extremely fluid and flexible so while we provide a roadmap it's OK to make the process your own.

Metrics
Next, the metrics of an organization are also extremely important to understand prior to defining the vision of the organization. For profit companies will almost always focus on financial metrics such as Operating Income and Earnings Before Interest, Taxes, Depreciation and Amortization. And while these financial metrics are important it should be noted that they are almost always lagging in nature meaning they are poor predictors of future performance.

3. Values & Metrics

Page 1

So, in addition to financial metrics organizations do well when they also focus on leading style metrics such as Innovation metrics that determine how much profit came from products and services released in the last 12 to 18 months. These types of metrics are more leading in nature allowing the company to better gauge future performance. So, it's important for companies to critically evaluate the metrics they're tracking on a regular basis. Next, assessing the current state of the company obviously involves evaluating the performance of the key metrics we just discussed. And while many organizations like to compare metrics against the previous year's performance we'd also encourage you to use tools like Control Charts on a monthly basis as this is a far more powerful approach to assessing the health of the organization. As long time Gemba Academy customers know we cover Control Charts in our 7 QC Tools and Practical Problem Solving courses so please be sure to review those courses if you haven't already. Additionally, we'd also encourage you to read the book called Understanding Variation by Donald Wheeler if you'd like to learn more about Control Charts.

STEEP Factors
Finally, to wrap this module up we'd like to share some powerful analysis techniques that can be used to better understand the state of the company prior to defining the vision. The first analysis technique focuses on what are referred to at STEEP factors. STEEP stands for Social, Technological, Economic, Environmental, and Political. STEEP Analysis should not be an annual activity. Instead, the management team of any company should stay aware of any potential risk to the company. For example, when a new President or leader of a country is about to take office companies should assess the impact this might have. Additionally, changes in technology can play a major role in the success or failure of a company. As those in North America has seen companies such as Netflix and Redbox have changed the way consumers watch home video. To be sure, STEEP analysis is as much an art as it is science but is still an extremely important aspect of strategic management.

3. Values & Metrics

Page 2

SWOT Analysis
The second analysis technique is the SWOT analysis which stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT can and should focus on all aspects of the business including topics we've already discussed such as company value, metrics, and STEEP factors. There are many ways to perform a SWOT analysis including managers meeting with employees one on one in order to determine what the employee believes to be the organizations strengths, weaknesses, opportunities, and threats. This should be an honest discussion with the employee feeling at ease to speak openly with their manager. If a manager does this with all their employees and begins to group common themes together it's possible to learn a lot about the current state of affairs.

3. Values & Metrics

Page 3