CHAPTER 1

Building the Anatomy for High Performance

Because of its ability to withstand attack by improvised explosive devices(IEDs, including homemade bombs), the mine-resistant, ambush-protected vehicle(MRAP) has become a critical asset in protecting our warfighters across theglobe. Demand for MRAP vehicles increased virtually overnight, from about 200vehicles for the U.S. Marine Corps in late 2006 to more than 15,000 vehicles forthe combined services by early 2007. In response to growing public concern aboutthe adequacy of U.S. warfighters' field resources and protection, the U.S.Congress mandated delivery to Iraq of 1,500 MRAP vehicles by December 31, 2007.

Achieving this mandate required a rapid acceleration in production from 10vehicles per month to 50 vehicles per day. The Navy and Marineswere faced with a seemingly impossible challenge: increase output by a factor of150, as quickly as possible. Building more facilities was out of the questionbecause it would take too long. Simply throwing more and more bodies at theproblem wouldn't generate the results needed (at one point the final assemblyplant did reach maximum staffing and operated 24/7 but still fell far short ofthe 50-vehicle-per-day goal).

The leaders of the effort realized they needed a new approach that wouldgenerate greater productivity within the resource and time constraintsthey faced. There were three main components to the path they followed:

• Adopting practices for achieving Operational Excellence. Theseincluded continuous process improvement (CPI) methods that eliminate waste andimproved quality throughout a process (key to increasing productivity 150 timeswithout requiring 150 times more resources). Most importantly, the leadersapproached the challenge with an enterprise view of the productionprocesses, meaning they looked at how to make all the pieces of the puzzle worktogether most effectively, end to end.

• Driving a rapid response (agility). The leadership committedits own workforces and budgets appropriately. Recognizing the congressionallymandated timeline, the leaders brought in outside experts who guided decisionmaking and drove innovation while internal resources were being brought up tospeed.

• Shifting the culture. This will create a learning environmentin which workers were encouraged and supported in their efforts to obtain andapply new skills and tools for attaining Operational Excellence and agility.

Together, these three components—building Operational Excellence,developing agility, and creating a supportive culture and workforce—setthe foundation for increasing output and quality while reducing the amount ofresources and cost needed. These components give an organization the rightanatomy for achieving high performance: the capability to continuallyimprove productivity and to deliver more mission for the cost.

Targeted improvements in the MRAP assembly operation were launched in August2007. Production had reached 10 vehicles per week by that time, thanks to acombination of increasing the number of workers (= higher budget) and someinitial Operational Excellence improvements. Unfortunately, production was stillfar below the target.

Only by adding in the other two components of Performance anatomy—agilityand culture—did MRAP production reach its 50-vehicle-per-day goal justfour months later, in December 2007. (Published accounts cite 2008 productionfigures that occasionally rose even higher, to 70 vehicles per day.)

This book looks at the three components of a Performance anatomy from aleadership perspective, examining key leverage points in each area. To lay thefoundation, here is a quick overview of each component.

Component 1: Operational Excellence

It is likely that you have heard the term Operational Excellence before, perhapsframed as the ultimate goal of adopting a particular continuous improvementmethodology. Some related terms you may be familiar with are processimprovement, Lean Six Sigma (LSS), Lean Transformation, and businessreengineering.

We use the term Operational Excellence in its broadest sense to meanmaximizing outcomes for the cost. That definition describes a comparisonthat is not yet widely recognized in the public sector: that the valuedelivered by an organization will always be judged against the cost to deliverit. Operational Excellence means you can continue to deliver more and morevalue for less and less cost.

The comparison between value and cost is important for every organization and isbecoming increasingly important in the public sector. Managers and leaders areunder constant pressure to decide where and how to best allocate shrinking orlimited resources. In government organizations, the investment decisions areoften complicated by regulatory requirements that mandate how portions of thefunding must be allocated. This further pressures the organization to createfavorable outcomes within prescribed funding limits.

Key attributes of organizations that achieve Operational Excellence include:

• They understand and communicate what is important. They have a clearsense of mission, have identified their customers (the people and groups who usetheir services or products), and have expended the effort to deeply understandwhat those customers value most.

• They are constantly evaluating their own performance. They haveidentified metrics linked to strategic and operational goals and monitor themetrics regularly to evaluate progress and gaps.

• They link improvement efforts to strategic priorities. Improvementefforts at every level are linked to cascaded priorities; each effort drives theexecution of agreed-upon strategic priorities.

Working toward Operational Excellence has many beneficial side effects. Thinkabout the training that runners do to lower their time in a 5K race (a desiredoutcome). They need to make a number of "operational improvements": develop moreefficient strides, control their breathing, and develop better runningtechnique. As they make these improvements, they see additional benefits, suchas better muscle tone, fat loss, decrease in resting heart rate, shorterrecovery periods, and so on. Those benefits come along with achieving their keyoutcome, building speed for the 5K.

In the same way, High Performance government organizations gain from OperationalExcellence in secondary ways. Besides the direct benefit of delivering oncurrent outcomes with improved efficiency and effectiveness, they displayexecution excellence across other aspects of the enterprise (see TableA).

For example, suppose a public safety organization wants to reduce crimelevels—an outcome. It conducts a survey to find out what citizens valuemost, which turns out to be a quick response when they report incidents. Afteridentifying a range of possible actions that would contribute to fasterresponses (a citizen-oriented outcome), the organization makes operationalimprovements that consistently decrease response time. That effort leads togreater citizen satisfaction, a side benefit of a chain that started with astrategic focus on an important citizen-oriented outcome. This cascading ofpriorities is vital to the success of any organization as it plans investmentsand channels resources to achieve its desired outcomes.

Part I provides detail on shaping an effective Operational Excellenceeffort.

Component 2: Agility

For all the known challenges that public sector organizations face, there aremany more that we can't anticipate. Two years before the Navy was required tostart producing 50 MRAPs a day, few people, if any, recognized the need for avehicle resistant to IEDs. Two weeks before the collapse of the bankingindustry, the U.S. secretary of the treasury had no idea that his office wouldsoon be in charge of $700 billion in bank bailout funds.

Citizens are expecting higher performance and demanding more from governmentdespite a relatively fixed investment. As the world grows more complex andintertwined, the pressure to be agile—to respond quickly to new andevolving demands and needs in innovative ways—grows every day. Challengescan occur without warning; yet we can be sure that something is likely tohappen. Agility allows an organization to adapt, change, and innovate quickly.

In the past, agility in the public sector was largely associated with those fewagencies or departments that respond to emergencies: the Federal EmergencyManagement Agency (FEMA), fire and police departments, rapid deployment units inthe military, and others. But more and more, public sector leaders are seeingthat the future will require every organization to be more agile than it istoday, in one or both of these dimensions:

• Short-term agility: the ability to respond within days or weeks to asudden change

• Long-term agility: the ability to anticipate and respond to longer-term changes

Public sector organizations that master both short-term and long-term agilitywill be sources of strength and national or regional competitive advantage fortheir populations. The highest-performing government organizations possess theability to both respond rapidly in the short run and to look out over the farhorizon and make changes before the next challenges reach them.

The U.S. Army is a great example of an organization that has mastered agility inequipping soldiers. After the deployments in Iraq and Afghanistan, Army soldiersand leaders quickly identified modifications and improvements to their equippingsets (the term used for the suites of assets required by a combat unit,including tanks, guns, spare parts, etc.). Rapid changes in battlefieldconditions meant that they needed to be able to change the combination of assetsin each equipping set with lightning speed.

However, traditional operations were more focused on the long term and not wellsuited to the rapidly changing short-term needs of soldiers in the battlefield.In quick response, the Army created the Rapid Equipping Force (REF) to work withsoldiers and leaders in combat situations. A separate organization with its ownfunding and processes, the REF can provide exactly the right equipment to meetcritical needs at the right time. It addresses problems much faster that anyonepreviously imagined possible.

The kinds of changes in structure, resourcing, and processes needed to make theREF successful challenged the conventional system and assumptions. As such, itcreated an opportunity for the Army to redesign its acquisition processes. Theorganization is converting what started as an asset for short-term agility intoan asset for long-term agility that will benefit the Army for years to come.

Part II describes what agility means in the public sector and outlineswhat it takes to create an agile organization.

Component 3: Workforce and Culture

At the foundation of the performance anatomy of any organization is itsworkforce: the people, their culture, their capabilities, and their attitudes.

Lasting change in any organization begins at the top, with leadership. Manypublic sector leaders are in a quandary, trying to keep one foot in today sothey can continue to meet their basic mission, while placing the other foot outinto tomorrow so they can be prepared for whatever comes next. They must balancethe discipline to drive today's mission in a reduced-cost environment with aninnovation-friendly perspective for understanding tomorrow's challenges andopportunities.

The challenges don't stop there. Leadership also has to create an environmentwhere the workforce can thrive, both today and in the future. All employees needthe opportunity to develop new skills and competencies and to become moreconnected with their customers. There must be systems for maintaining HighPerformance.

A big step toward creating a future-ready workforce and a new culture focused onpriorities and customers is changing how you measure performance of bothprocesses and people. Sound targets and associated metrics provide for more opencommunication, the basis for evaluating how the organization is doing and whatit can do better. A workforce responds to performance metrics and targets thatare aligned to strategic goals, and monitored and rewarded by leadership. Peoplewill respond positively when they understand how their individual contributionsaffect the greater outcomes.

Part III presents a discussion of workforce and culture.

Finding the Leverage Points

Rather than addressing the full scope of High Performance, this book focuses onhelping you answer every leader's first question: where do we start?Parts I, II, and III focus on the high-leverage points in eachcomponent of a Performance anatomy: Operational Excellence, agility, andworkforce and culture. Part IV addresses the overarching task of tyingall the pieces together. (The answer is simpler than you might think: you canget the shift started in the right direction by using strategic planning as thecritical lever for all three ingredients.)

The need to build a robust anatomy for higher performance has never beengreater. Everyone knows just how high the stakes are these days for governmentat all levels. Budgets across the board are being pinched. Priorities areshifting constantly with changes in public sentiment crises at home and abroad.Not changing, given the reality of the New Normal, is not an option.

In the prologue, we promised that creating a High Performance organization willhelp you reduce costs by at least 10–20% while improving quality and speedat the same time. Achieving that promise will be easier than you might think, asdemonstrated by the many forward-thinking public sector organizations wehighlight in the following chapters and the practical, pragmatic methodsdescribed throughout this book.

CHAPTER 2

Aligning Outputs to Desired Outcomes

Making sure that what your organization does will get you where you want togo

You've probably heard or read the new language popping up in discussions aboutthe responsibilities of senior leadership—how leaders need to adopt an"enterprise view" of their organization, or need to look at their organization"end to end" to achieve "alignment."

The emerging discipline of organizational alignment has developed in recognitionof a simple fact of life: devoting time and effort to developing world-classprocesses won't have the impact you're looking for if the pieces of theorganization as a whole don't fit together seamlessly.

For example, the former acting CEO of a federal agency knew the agency's two-fold mission quite well: lead the nation in fostering civic engagement throughservice and volunteering, and foster innovation to address our most pressingproblems. The CEO and her leadership team could see great challenges for theiragency. First on the list was how to expand the agency's impact under thethen-new Serve America Act, given that the organization was already challengedin terms of its workload.

The agency leadership knew that one of the best ways to expose inefficiency andmisalignments at a departmental or organizational level was to conduct anenterprise analysis, which means looking at what it takes to deliver thecore work of an organization (the work that defines why the organizationexists). An enterprise analysis takes a macro view of how that core work getsdone as it flows through the organization and identifies the internal andexternal influences that affect the process, such as guidelines, policies,information, and customer and stakeholder requests. This agency was particularlyinterested in how outside agencies, state and local governments, and nonprofitswere affecting their organization's ability to build a world-class service andvolunteering organization.

By looking at the flow of work across the organization, the leadership teamrealized:

• The agency was striving to satisfy an unusually large number of stake-holders,including the White House and the U.S. Office of Management and Budget. Eachstakeholder organization was affected by its own set of complex influences.

• Getting alignment to build a community of volunteers was complicated becausethe agency operates primarily through a holding-company structure. Each of itsindependent "business units"—AmeriCorps, VISTA, and others—has itsown policies and values.

• The agency was delivering inconsistent outcomes to citizens because (a) itsoperations were fractured—different portions of the work were done bygroups that had little or no contact with each other, leading to inefficiency,gaps, and duplication of effort, and (b) the organization had an ad hoc approachto handling high-profile initiatives that should have been more systematicallymanaged.

To address these issues, the leadership team faced two challenges: First, theagency had to focus more on building stronger relationships and bonds with boththe people who fund the agency and the people and organizations that performedthe agency's volunteer placement work. Internally, this was called"strengthening the life-cycle connection," and it was directed toward nationalservice participants, grantees, and sponsors. Second, the agency needed toimprove the efficiency and consistency of its operations.

(Continues...)