How to Think About Breakthrough Objectives

It’s the time of year when many organizations begin their final review of the past period, and begin looking ahead to the next one. Before setting goals for the coming year, it’s common to zoom out, looking at the big picture. We may ask ourselves questions related to vision and strategy. What game are we playing? What are the rules? How can we win? This may involve reviewing an organization’s vision, mission, principles and processes.

Once the long-term direction is clear, and we have derived annual goals from this, it’s important for everyone to hear the same message, and speak the same language.  How will we deploy the strategy? How do we make sure everyone is working on the right things? How will we know if we are on track? Organizations on the lean journey adopt a set of practices known as hoshin kanri, or strategy deployment. Identifying a handful of breakthrough objectives is a foundational step in the annual cycle of setting the hoshin plan.

What Is a Breakthrough Objective?

It’s important to note that breakthrough objectives are more than hitting the numbers, however big these numbers may be. It’s true that breakthrough objectives tend to be stretch goals. But they are more than that. Breakthroughs should be customer-focused, or stated in customer language as much as possible. For this reason, they tend to be emphasized as capabilities rather than end results. An organization may want to grow revenue or retain clients. The necessary breakthrough capability may be a one-day response time.

A characteristic of breakthrough improvements is that even when it’s clear what we need to do, it’s not always clear how we will do it. Breakthroughs require exploring beyond the comfort zone, into the learning zone. For this reason, people may feel insecure about committing to a breakthrough objective at first. Fortunately, part of the hoshin process is the refinement of the “how to” through a process known as catch ball. On the surface this looks like a negotiation between the manager and her boss. In reality, it’s often a way of educating the leadership about where there is overburden, variation, and what it really takes to get the work done.

Breakthrough objectives should not be achievable by individual effort or by a single department. True, customer-focused, value stream-aligned breakthroughs require cross-functional cooperation, learning, and innovation. They should challenge our way of thinking, cause us to develop a new standard, and establish a repeatable competitive advantage.

Linking Kaizen Efforts to Breakthrough Objectives

One of the areas organizations struggle with on their lean journey is seeing direct financial impact for their continuous improvement efforts. One way to make sure we don’t leave this to chance is to link improvement management, policy (hoshin) management, and daily management by design. There are some questions to ask during this annual reflection period. How do our improvement priorities link to our strategic business priorities? What’s not on our improvement plan that we need to start doing? What’s on our plan that we need to stop doing?

Part of the beauty of the hoshin planning process is that it gives people the freedom to deselect things that take resources but don’t contribute to a breakthrough. Over the course of a year, it’s easier to expand responsibilities, customer requests, or problem-solving projects, than to strike them off or our list. Few people want to say no to a boss or a customer. Everyone wants to add value. Everyone has ideas, things they think the organization should do. Ideas are cheap, execution is dear. Deselection and focus on the vital few is key to success. Getting the breakthrough objectives right is important. It sets constraints on our understanding not of what we can do but of what we must do.

Focus Breakthroughs on Muri and Mura

When setting breakthrough objectives, it’s worth remembering the trio of muri, mura and muda. Muri is overburden or unreasonableness in how we work. Mura is undesired or excessive variability in a product or process. Muda is wasted time, effort, money, and so forth. Continuous improvement focuses on reducing all three, but muda often gets most of the attention. It’s the most visible and easiest to address at the superficial level. The risk is that we say, “Let’s achieve a breakthrough in reducing the waste of defects,” or another waste.

Whenever possible, I would suggest that breakthroughs should aim to address muri and mura, rather than muda directly. We are not ignoring waste. It is still the target of daily kaizen. It’s also addressed indirectly by looking at overburden and variation at the systemic level. These are often the result of business decisions, product-service configuration, organizational design and so forth. They are out of scope of most kaizen efforts.

Asking, “How does this breakthrough objective help cut muri and mura?” has the effect of forcing the leadership to look deeper at the systemic root causes of waste in their operations. I’ve seen organizations that set so-called breakthroughs of “10% year on year improvement” in such-and-such metric. That’s fine, but the impact of our improvement efforts is much more powerful when we stop trying to meet unreasonable requirements or excess variation in customer demand. Building capability to respond to these may be a breakthrough. It’s worth reminding ourselves, at least once every year, that when we try achieve targets without adequate resources, or place undue burden on people, we create processes that generate waste.

Finding the Right Balance Between Today and Tomorrow

Imagining the big things we could do tomorrow is more fun than the hard work of doing what needs to be done today. In the beginning it’s common for 80% or more of an organization’s kaizen activity to be tactical, immediate, short term and not linked to the strategy. Lean thinking encourages, “Try now, think later,” or a “Just-do-it” mentality. This is helpful at first to get out of analysis paralysis. It’s also designed to quickly engage as many people as possible in making small, positive changes.

There’s no guarantee that the other 20% of continuous improvement effort is aligned with the business strategy. Part of hoshin planning is to align improvement efforts by design, not luck. How do we mirror our PDCA cycles at the process level, in a daily cadence, with those on the strategic level, on a monthly and quarterly cadence?

In my observation, organization’s don’t spend enough time on hoshin, whether we call it strategy deployment, policy management, or something else. I don’t know whether the target balance between strategy-aligned improvement and bottom-up, hard-to-link-to-bottom-line improvement is 50/50 or some other number. It’s probably 80/20. Over time, an organization’s improvement efforts should be vastly more strategy-aligned than the small, opportunistic, fix-what-bothers-you type. This is a daunting task, requiring education, skill, awareness, analysis, visualization…in other words, new capabilities. It’s okay to start with daily kaizen, aka the easy stuff, as long as we follow a plan to shift in a more strategic, customer-focused, value-stream aligned, long-term direction.

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