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5S Applied to the CEO Role

Written by: Harvey Schiller

Article Overview: We’ve taken the 5S concept and philosophy that is traditionally applied to workplaces, shop floors and operations and applied it to the role of the CEO and to the performance improvement of the enterprise.

5S Applied to the CEO Role

5S is a workplace organizational tool that is the foundation of Lean Manufacturing systems and provides the necessary groundwork for workplace improvement. 5S is a way of organizing and managing the workspace and work flow with the intent to improve efficiency and is represented by 5 “S” words – Sort, Set, Shine, Standardize and Sustain. It builds a clear understanding of how work should be done and instills ownership of the process in each employee.

We’ve taken this concept and philosophy that is traditionally applied to workplaces, shop floors and operations and applied it to the role of the CEO and to the performance improvement of the enterprise. SORT

Lean = Distinguish between what is and is not needed

CEO = Focus the organization

Businesses today are operating in an extremely volatile, complex strategic landscape that is characterized by a high and constant rate of change. It is imperative that the CEO sort through the myriad of strategic imperatives and distinguish between what is and what is not the strategic focus of the organization. The CEO must lead the organization to staking out and claiming a viable, practical and profitable value proposition and then excelling at delivering that value proposition to a select target market. The strategic choice of a value proposition shapes the company’s subsequent plans and decision, coloring the whole organization from its culture to its public stance.

SET

Lean = A place for everything and everything in its place

CEO = Build and align the operating model

Operating models are made up of operating core processes, business structure, management systems, culture and information technology, all of which need to be synchronized to create and deliver the selected value proposition. The CEO should set in place the process for transforming the organization and putting in place a well tuned operating model dedicated to delivering unmatched value to customers.

SHINE

Lean = Clean, inspect and detect maintenance

CEO = Audit for desired performance

The CEO must establish a monitoring process that include metrics and measurements so that deviations to desired performance can be detected and corrective action taken, if necessary. By doing so it creates the standards and expectations for performance, while establishing accountability and ownership.

STABILIZE

Lean = Create rules and standardize to maintain desired state

CEO = Institutionalize changes and new practices

Once new practices are implemented, the changes must be allowed to sink into the culture of the organization and become part of the way business is done. The CEO should continue to develop and inspire the shared vision and strategic focus by constant and consistent communication, enforcing the standards and by modeling the expected behaviors.

SUSTAIN

Lean = On-going improvements

CEO = On-going improvements

In order to stay ahead, organizations have to continue to move ahead. The CEO must leverage successes and wins to further improve delivery of the value proposition and the business operating model. The CEO must sustain improvement of value delivery to customers and operating improvements by continually challenging processes and tightening standards to meet the ever increasing demands and expectations of customers and competitive inroads.

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Article Tags: 5s, ceo, cost reducing, lean, operating model, strategy, value proposition
Referred by: http://www.marshallnorthcott.com



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How to valuate a business - Hi Garth - here is how we did it at Northern Crown Capital when I was helping them raise venture capital for Toronto-based entrepreneurs. Assume the start date is 2003 so 2008 projections are 5 years out: How Northern Crown Capital Valuates a Business 2008 Financial Projections Earnings Before Tax $5,865,000 Tax Rate 42% Taxes $2,463,300 Net Earnings $3,401,700 Amount Seeking to Raise Today $3,500,000 Discounted Value of Future Opportunity, 5 Years Out 2008 P/E Ratio 15 Value of Company in 2008 $51,025,500 Discount Rate Applied 30% Year 2008 $51,025,500 Year 2007 $35,717,850 Year 2006 $25,002,495 Year 2005 $17,501,747 Year 2004 $12,251,223 Value of Company at Investment in 2003 $12,251,223 Less: Investment Amount $3,500,000 Present Value $8,751,223 Discount for Risk & Private Company 40% Less: Discount for Risk & Private Company $3,500,489 Private Company Value $5,250,734 Present Value (What the Owner Keeps) $5,250,734 60.00% Financing (What the Investor Gets) $3,500,000 40.00% Total $8,750,734 100.00% I hope this helps!


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