In his August Blog entry titled “Continuous Improvement: Filling the Gap Between Floor Workers and Senior Management,” Jacob Nance briefly touches on the A3X. In this post, my aim is to build upon what Jacob introduced and further develop how this versatile tool can be used. Properly leveraged, the A3X is a simple yet immensely powerful tool that could help a single department or the entire organization layout its entire strategy on a single page and exploit realignment opportunities. To build the tool, follow these four steps:
1. Fill in the strategic-level inputs of Breakthrough Goals and Strategies. Breakthrough Goals are the financial goals of the company, while Strategies are overarching objectives that the company would be striving to achieve. Sometimes, the mistake is made where these two factors are formulated in isolation from each other: Breakthrough Goals by finance or an executive team and Strategies by individual departments. These two elements have a very close relationship with each other, and should not be determined in isolation.
2. Fill in the tactical-level inputs of Tactics and Performance Targets. Tactics are the ground-level initiatives that a company will undertake, whereas the Performance Targets are how ground-level success will be measured. These two groups of inputs should be a reflection of Breakthrough Goals and Strategies, only at the tactical level.
3. Fill in the four corners of the chart by evaluating the level of correlation (Strong, Medium, or Weak) between individual elements of the adjacent groups. While no particular order needs to be followed, I have personally found a line-by-line approach to be particularly insightful. Start with the Strategies that the company wants to follow, and make sure that the Breakthrough Goals align well with them. Next, look at how well your individual tactics help you achieve the corporate strategies. Then, check and see whether your proposed Performance Targets support the tactics’ success and the Breakthrough Goals.
4. Interpret the results and make adjustments or selection as necessary. The A3X is used to help ensure that strategies, financial goals, tactics, and performance targets of a company are consistent with each other. It can provide significant value as a project selection and improvement tool. Projects that exhibit “Strong” correlations to the corporate strategies and performance metrics are favored over those that have “Weak” correlations. One can also gain insights as to how potential projects could be improved by focusing on the “Weak” correlation areas that warrant adjustments so as to achieve better alignment.
In summary, the four steps involved in creating an A3X include:
- List the strategic-level inputs
- List the tactical-level inputs
- Evaluate their levels of correlation
- Interpret the results, adjusting the inputs as appropriate to reach a cohesive and effective plan
However, don’t just take my word for it. After all, as one proverb says: “To hear, is to know. To see, is to remember. To do, is to understand.” Check out the A3X for yourself, as it is quite a handy tool not only in corporate planning but in project selection and improvement. (Click on the image to enlarge.)
To dive further into the details of this tool, read Hoshin Kanri for the Lean Enterprise; a book by Thomas L. Jackson.
Written by Sun Kwok, Lean Logistics Specialist at LeanCor
- What the Stocks vs. Dollar Seesaw Is Saying Now (dailyfinance.com)
- Advanced Business Strategies (thinkup.waldenu.edu)
- Anthony Tjan: The Fallacy of Financial Metrics (huffingtonpost.com)
- Why do well-formulated strategies fail so often? (normanmarks.wordpress.com)