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Fostering Innovation David Spong President American Society for Quality Former President Aerospace Support, Integrated Defense Systems, Boeing 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 1 Innovation The Key to Sustainability “Innovate or die.” “This is the New Economy. The Old Rules do not apply…” “But it must be relevant so we must forecast the future! 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 2 What Is Innovation? Instituting significant change that adds value: • Increasing efficiency • Increasing effectiveness • Reducing costs • Developing new profit streams 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 3 Needs for Aerospace/Manufacturing Products Processes • Reduced Cycle Time • • Reduced Tooling • • Just-In-Time Inventory • • Lean Six Sigma • Lightweight Structures Increased Reliability Reduced Maintenance Improved Fuel Consumption 4 Microsoft, Redmond, WA 30 September 2010 So What’s the Problem: Obstacles to Innovation* External • Government and other legal restrictions • Economic uncertainty • Inadequate enabling technologies • Workforce issues arising externally Internal • Unsupportive culture and climate • Limited funding for investment • Workforce issues • Process immaturity • Inflexible physical and IT infrastructure • Insufficient access to information * IBM 2006 CEO Study 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 5 How do we facilitate Innovation? The Compelling Case For the Three “I’s”: Integration, Involvement & Innovation All Embedded in the Right Culture Involve Integrate Innovate The “Sweet Spot” Only at the intersection do you get relevant innovation 6 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 6 Signs of Lack of Innovation • Fear of failure is palpable (shoot the messenger) • A complex process with multiple levels of approvals exists for screening new ideas • A small group is the expected source of new products or services for the organization • Suppliers and customers seldom contribute to new product and process ideas • Ideas that originate inside of one country are rarely adopted by others 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 7 Signs of Dis-integration • Each part of the organization seeks to maximize its own profit or “success” • Strategies and plans are developed independently and often in competition • Financial and operational measurement systems are not linked with or reinforced by reward and recognition systems • Suppliers and stakeholders held at arms length • Customers viewed only as sources of revenue and irritation 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 8 The Common Denominator: Organizational Culture • Observed behaviour • Group norms: standards and values • Espoused values: published, public • Formal philosophy: mission • Rules of the game • Climate: group interaction • Embedded skills • Habits of thinking, acting, paradigms • Shared meanings of the group • Metaphors or symbols * Organizational Culture and Leadership by Edgar H. Schein 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 9 Leadership Cultural aspects of an organization can only be set and sustained by leadership! 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 10 How do you foster Innovation? “Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It's not about money. It's about the people you have, how you're led, and how much you get it.” Steve Jobs, Fortune, Nov. 9, 1998 US computer engineer & industrialist (1955 - ) 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 11 The Leader’s Role Leadership Management Set of processes that creates/adapts organizations to significantly change them Set of processes used to keep people and technology running smoothly Captain The “Leader” Uncharted Waters Steering Communi cations Engines Navigation Catering Entertain ment 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 12 Leadership Attributes • Display high integrity & honesty • Drive for results • Establish stretch goals • Taking responsibility for outcomes/initiativ Focus on Results Leading Organizational Change Character Personal Capability • Technical and professional expertise • Solving problems & analyzing issues • Innovation • Practicing self-development • Developing strategic perspectives • Championing change • Connecting outside world – networking Interpersonal Skills • Communicating powerfully and prolifically • Inspiring/motivating others to high performance • Building relationships • Developing others • Collaboration & teamwork 2-20 From the “Extraordinary Leader”, Zenger & Folkman (2002) 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 13 Culture – A Set of Shared Vision/Values/Beliefs/Goals Integrity Learning Shared Value Filter Corporate Citizen Quality Stakeholder Requirements & Expectations Diversity The Organization Teamwork Safety Innovation Customer Satisfaction Sharing & Supportive Agility The Leader establishes the culture to be shared by his/her behavior 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 14 Mission, Vision & Values Culture/Integration Mission Provide world-class sustainment solutions to our aerospace customers Vision People working together as the world’s number one provider of innovative sustainment solutions 10 Year Objective We will be a recognized world-class, global business, providing sustainment solutions aligned with our customers’ evolving needs Values Leadership Integrity Quality Customer satisfaction People working together A diverse & involved team Good corporate citizenship Enhancing shareholder value 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 15 Leadership System Continuously Improve Set and Communicate Direction Be Role Models Vision & Values Organizational & Employee Learning Stakeholder Requirements & Expectations Organize, Plan, and Align • Customer • Work force • Suppliers • Community • Shareholders Motivate Employees Reward & Recognize Empower Teams Perform to Plan Analyze & Compare 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 GP30117.ppt 16 Focused Survey Culture IDS Aerospace Support – 58 Questions –1 Narrative question – 58 Questions – 3 Narrative questions + – 28 Focused questions – Results to only the Business, Function, Department? Level – Results to the Business, Program, Function, Site, to the manager level with 5 or more D/R – Results not actionable – Results actionable Summary for 17 key issues Exec summaries for each Bus, Site, & Function 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 17 Code Of Conduct Enabled by the correct behavior where messengers don't get shot and failures are not punished but learned from 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 18 Operating Principles • • • • • • • • • • • • • • • Culture We insist on integrity, first and foremost We tell it like it is We communicate openly and candidly in all our dealings We respect, honor, and trust one another We work toward consensus Disagreement is healthy and encouraged, but once a decision is made, we proactively support it We have one conversation at a time Our silence is consent We focus on issues and ideas rather than titles or personalities We actively listen and question to understand We do not attack the messenger We identify clear objectives and expectations for our meetings We start on time, observe time limits, and end on time We praise in public, we coach in private We have a bias for velocity Have Fun. . . Enjoy the journey and each other 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 19 Employee Involvement A Human Resource Focus on developing a team-based culture with a robust recognition and rewards program 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 20 Employee Involvement • The extent of workforce commitment – both emotional and intellectual – to accomplishing the work, mission, and vision of the organization • Members of the workforce find personal meaning and motivation in their work • An engaged workforce benefits from trusting relationships, a safe and cooperative environment... 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 21 EMPLOYEE INVOLVEMENT (EI) Involvement Is it a Culture? Is it Teams? Is it a Belief? Is it Belonging? Is it a Way of Life? Is it a Process? "It is not a new program, project or process. EI is a cultural change in the way we treat each other and work together. It is a journey in which people apply their skills to improve individual, team and organizational performance continuously. This leads to employee satisfaction and improved business results.“ Raj Kanungo 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 90 Leadership Drives the Employee Satisfaction Index 80 78 ESI Percent Positive Culture 73 70 71 Great Leadership Results in Top Quartile Satisfaction 66 Good Leadership Results in Okay Satisfaction 62 60 58 60 52 50 47 Poor Leadership Results in Low Satisfaction 40 39 30 1 2 3 4 5 6 7 8 9 10 Leadership Effectiveness Deciles 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 23 Percent Positive on Employee Involvement Leadership Drives Employee Involvement Involvement 100 90 Great Leadership Results in Top Quartile EI 80 70 Good Leadership Results in OK EI 60 50 40 Poor Leadership Results in Low EI 30 1 2 3 4 5 6 7 8 9 10 Managers Level of Leadership Effectiveness (Deciles) 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 24 Boeing Aerospace Support’s employees are more motivated 66 62 New Leader ESI EI 50% 58 54 50 1999 2000 2001 2002 2003 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 25 Cooking the “Soup” or Creating an Innovation Culture 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011 26 Cooking the “Soup” or Creating an Innovation Culture Vision & Values 19th Annual Conference on Quality in the Space & Defence Industry 14 March 2011