Operational Excellence is not a Substitute for Effective Leadership or a Good Strategy
It’s old news that Fannie Mae (FNM) is in big financial trouble. Through some bad decisions and an overall poor strategy, they are now on the brink of collapse. What is news, however, is that they are starting an Operational Excellence program and are aggressively recruiting for a Director of Lean Six Sigma — a recruiter called me today, wanting to talk with me about the job.
Apparently, after stumbling upon shmula.com via a google search on Lean or Six Sigma keywords, the recruiter felt impressed to contact me and thought I’d be a good fit for the position. What happened next really solidified my view: Operational Excellence IS NOT a Strategy; it can enable a strategy, but Operational Excellence — in itself — is not a strategy. That is, for firms that wish to remain competitive in the marketplace, Operational Excellence is necessary, but not sufficient.
She and I talked about the job and the state of Fannie Mae. She told me that there’s job security. She, then, went on to share that Operational Excellence is going to be a key strategy going forward for Fannie Mae. I told her thanks, but that I’m not interested right now but to keep me in mind for other opportunities.
The Art of Exclusion
Michael Porter (Porter’s Five Forces) argues — I believe correctly –, in his seminal work, What is Strategy, that Operational Excellence is necessary but not sufficient. What is needed — even still and always — is a winning strategy. In his article, he argues that the essence of strategy consist of two related propositions:
- strategy is engaging in activities that are different than the competition
- strategy is engaging in activities that are similar than the competition, but perform better than the competition
Regarding (1), Porter argues that, regarding (1), the firm must choose a position — one that sets the firm apart from its competitors; a position that makes the firm and its products or services uniquely and competitively different and leads to a sustainable and profitable competitive advantage. Porter then claims that an important aspect of strategy is deciding what NOT to do — the art of exclusion.
Regarding (2), a firm will undoubtedly engage in activities that are similar than the competition. For example, take a traditional internet retailer — a firm in that space will usually have a front-end store and a fulfillment back-end. To set the firm apart on similar activities from its competitors requires that the firm perform those activities better — with better quality, lower costs, with better service, and deliver quicker than the competition.
Deploying a Lean or Six Sigma culture within your firm is essentially an activity borne from (2) — but it is not a panacea; by itself, a culture of Operational Excellence will find itself lacking in a hyper-competitive world.
Necessary but Insufficient
While Fannie Mae might wish to adopt Operational Excellence, it has, over the recent years, essentially failed to engage in activities that are uniquely and competitively different than the competition.
Speaking as an outsider, it appears that Fannie Mae has continued to run an efficient business, producing products and services that had adequate demand, but the Fannie Mae leadership executed a poor strategy, rife with bad decisions leading the firm to its current state of near-collapse: No amount of Operational Excellence would have prevented failure stemming from poor decisions and a bad strategy.
The Need for Leadership
The theme, I see, with most corporate problems, overwhelmingly points to Leadership. The OPPOSITE of long-term thinking, inspiring, visionary, humane, collaborative, reflective, selfless, nurturing, interested, responsible, and mobilizing is what seems to be what most companies elevate to the Chief Executive position.
Emulating Gary Convis
Gary Convis was recently brought in to be the CEO of Dana Corporation (DAN), an $8.7 Billion manufacturer of auto parts. Convis is a 40 year veteran of the auto industry and a former executive at Toyota. Dana Corporation is a struggling giant, currently in bankruptcy. When asked what words of wisdom he has to impart to his new team members at Dana Corporation, he said this:
“manage as if you have no power”
For me, that statement elegantly summarizes the the essence of Leadership — the type of Leadership that is capable of satisfying both (1) and (2) above.
The job description if below, right above the comment section, in case anyone is interested.
+++++
Articles on Ethnography and Design:
- Feature? What Feature?
- Simplify The Product
- Ask Aza Raskin
- Aza Raskin on Poka-Yoke & The Humane Interface
- Aza Raskin on Quasimodal Design and The ATM
- Aza on Feature-Bloat and Site Clutter
- Aza on Google Search Results Page
- Aza on Cooperation and Team Size
- Design Thinking in Medicine
- On Designing a Watering Can for Little Hands
- Queueing Theory and Visual Management
- An Interview with the Inventor of “Clocky”
- Bad Breath but Good Design
- What is Ethnography
Articles on Leadership:
- Overmanaged and Underled
- Colin Powell on Leadership
- Team or Staff?
- Tipping-Point Leadership
- Abraham Lincoln on Leadership
- How to transform an Organization: Chime-in Before Buy-in
Articles on Queueing Theory:
- Queueing Theory: Part 1
- Queueing Theory: Part 2
- Queueing Theory: Part 3
- Queueing Theory: Part 4
- What is Waste?
- On Time-Traps and Waste
- Call Centers as Queueing Systems
- Travel Time & Waste
- Little’s Law for Product Development
- YouTube’s Queueing Properties
- Psychology of Queueing and Disneyland
- Queueing, Disneyland, and FastPass
- Multi-Tasking Leads to Lower Productivity
- Queueing Theory and Terrorism
- On Queueing Theory and Elevator Mirrors
- Psychology of Queueing, Haunted Houses, and Halloween
- The Variability Tree
- Attitude and the Psychology of Waiting – The Psychology of Queueing
Articles on Operations, lean and six sigma:
- Managing Constraints Under Peak Volumes
- Order Pipeline of Events
- On Game Theory
- Applied Regression Analysis
- 5S
- Click-to-Ship Processes
- Kanban Sizing and “Pull”
- Lean at Krispy Kreme
- Theory of Constraints and Camping
- Lean for Software Development
- Don’t Waste the Customer’s Time
- Featuritis and the Focus on the Customer
The Fannie Mae Job Description
Fannie Mae is a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. In 2008, we mark our 70th year of service to America’s housing market. Our job is to help those who house America. For more information about Fannie Mae and our career opportunities, please visit www.fanniemae.com.
The Director of Lean Six Sigma is also the Master Black Belt and is responsible leading a team to deploying and driving Lean Six Sigma across assigned divisions/functions. This position has significant leadership impact on the success of the Lean Six Sigma program and reports directly to the VP of Operational Excellence. As a senior member of the Lean Six Sigma Team, this position will drive results oriented performance improvement initiatives using the proven methodologies of Lean and Six Sigma while ensuring accountability, focus, strategic alignment and cross functional relationships with the other Fannie Mae entities through the use of metrics based goals and objectives. This position will also develop and deliver the materials and method for effectively training Champions, Sponsors, Black Belt and Green Belts on the Lean Six Sigma methodologies.
- Lead the development and implementation of Lean Six Sigma for Fannie Mae and establish a sustainable model for continuous process improvement
- Manage a team to drive the model of continuous process improvement through Lean Six Sigma and creating development opportunities by setting direction and driving quality results
- Align Lean Six Sigma initiative and project objectives to business strategy, and prioritize projects accordingly
- Train, coach and develop Black Belt and Green Belt resources assigned to projects related to Lean Six Sigma tools and methodology and offer technical expertise and guidance in project reviews
- Provide technical leadership and coordination to major improvement projects within the business
- Provide problem resolution point of contact for Black Belts and Green Belts to offer technical or professional expertise
- Lead multiple process improvement teams towards quantifiable result in defect reduction, cost avoidance, loss reduction or revenue enhancement
- Deliver significant operational improvement and financial benefit across assigned divisions/functions
- Act as change agent to instill Lean Six Sigma culture throughout the organization
- Serve as internal expert on process improvement tools and techniques focusing on Lean Six Sigma and coach process owners, black belts, and deployment leaders
- Expand the education and develop training curriculum for Fannie Mae leaders, managers and process improvement teams regarding Lean Six Sigma
- Facilitate quality and change management processes; identify customer needs and key drivers to reach customer satisfaction goals with financial benefit
- Lead the identification, prioritization and selection of process improvement opportunities
- Develop a more formalized approach to organizing and pursuing projects, including development of project management skills and techniques
- Monitor service delivery to ensure customer satisfaction and project delivery to ensure benefits are realized
- Advise and support Senior Management regarding culture change needed to successfully accomplish and maintain improvements
KEY QUALIFICATIONS
- Technical competency in Lean Six Sigma skills: Lean, DMAIC, DFSS, Kaizen/Work-out, process management, change management and advanced statistical techniques
- Subject matter expert in process improvement with a focus on Lean Six Sigma tools and techniques
- Significant experience in application of Lean Six Sigma in the mortgage or finance services industry
- Strong leadership abilities and experience including situations involving organizational culture change
- Ability and demonstrated experience in providing education and training related to process improvement including Lean Six Sigma
- Strong written and verbal communication skills with emphasis on oral presentation skills and class room training techniques
- Project management expertise and experience
- Facilitation of groups, especially as it relates to identifying opportunities for improvement
- Significant experience in use of metrics and benchmarks to drive process improvement
- Strong analytical skills including the ability to assess complex situations and data, and reduce important and actionable tactics
- Experience in complex organizations and matrix reporting relationship
- Ability to interact with multiple layers of the organization with demonstrated success initiating change and ability to influence at all levels
- Minimum of 8 years professional level experience
KNOWLEDGE/SKILLS REQUIREMENTS
- Bachelor’s Degree (MBA preferred)
- Formal Lean or Lean Six Sigma training and Master Black Belt certification
- 5+ years of Lean and/or Six Sigma performance improvement and change management experience, with a minimum of 2 years of experience as a Master Black Belt
- Completion of 3 transactional-related projects with demonstrated success and financial results (preferably in the mortgage or finance services industry)
- Extensive Lean and/or Six Sigma Performance Improvement experience 5+ years consulting or management experience in the mortgage or finance services industry preferred.
- Extensive training, coaching and mentoring experience (strongly preferred)
- Proficiency in Windows, Minitab, Excel, Word, PowerPoint and both simulation and project management software
COMPENSATION
Fannie Mae’s compensation and benefits package is very competitive. It is designed to help employees meet varying needs throughout their careers and to reward employee’s skills, experience, and potential. Fannie Mae is an equal employment opportunity employer and considers qualified applicants for employment without regard to race, gender, age, color, religion, national origin, marital status, disability, sexual orientation, or any other protected factor. As a condition of employment with Fannie Mae, any successful job applicant will be required to pass a pre-employment drug screen and to successfully complete a background investigation, which may also include a credit check if the position is sensitive in nature.
WP Cumulus Flash tag cloud by Roy Tanck and Luke Morton requires Flash Player 9 or better.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
@Mark,
I appreciate the question.
I’m sure Convis arrived at that decision with much thought and personal anguish. The bottom-line is that Dana does not have the cash reserves or ability to support the current workforce like Toyota can. If you remember in the past, Toyota did lay-off, but Kichiro Toyoda walked out with them and resigned in 1948. But, Toyota has contract workers now (not permanent) that it does and recently laid-off.
Can the free cash flow support the philosophy? I think that’s the question.
I like this quote a lot: “manage as if you have no power”. I think this is the daily life of most Project Managers, they manage, but they do not have power.
That’s why the leadership factor is extremely important for Project Managers.
I don’t like the term ‘Manage as if you have no power’. i think a feeling of power is critical to lead succesfully. However, power need not be necessarily derived from external sources only. A sense of poer arises from self belief, knowledge and integrity.
When we feel powerless we become victims of the environment
I am a bit flummoxed, since it is difficult to understand why one would even attempt to prove that “Operational Excellence is not a Substitute for Effective Leadership or a Good Strategy”!!
Of course it is true. As the name suggests, tools, frameworks, methodologies, whatever – related to “Operational Excellence” – is for “operations” and NOT for strategy.
@Sukamar,
Some companies, when growth has slowed down, have turned to Operational Excellence — often Lean of Six Sigma — for help. GE, Motorola, and others fall into this camp.
What they fail to understand is that Operational Excellence will often NOT lead to growth: one can make or produce the perfect service or product, but the market may still not want it. That was my point.
Every attempt to “manage” must be driven by a purpose or an objective. Power is the fuel that drives it. Power is the embodiment of conviction which in turn is the strength of knowledge.
Leave a comment
Additional comments powered by BackType
[...] Operational excellence is not a substitute for effective leadership or a good strategy (by Peter Abilla) Deploying a Lean or Six Sigma culture within your firm … is not a panacea; by itself, a culture of Operational Excellence will find itself lacking in a hyper-competitive world [...]