BSB60407 Advanced Diploma of Management
BSBINN601B Manage innovation and continuous improvement
The following assessments are to be
(a) completed and
(b) submitted
in accordance with the associated
STANDARD INSTRUCTIONS
ASSESSMENT COVER SHEET
To obtain the qualification of BSBMGT608C Manage innovation
and continuous improvement, the skills and knowledge required are as follows:
Skills
• analytical skills to identify improvement opportunities in
relation to:
o concepts and ideas developed o services or products
delivered
• flexibility and creativity skills to think laterally
• learning skills to develop options for continuous
improvement
• teamwork and leadership
Knowledge
• cost-benefit analysis methods o creativity and innovation
theories and concepts o organisational learning principles
• quality management and continuous improvement theories
• risk management
• sustainability practices
Assessment Part A. Review performance and sustainability
Performance objective
To demonstrate the skills and knowledge required to review,
evaluate and analyse programs, systems and processes.
Specifications
You must provide:
* a written report submitted within agreed timeframe.
Your assessor will be looking for:
* reference to, and application of, quality management and
continuous improvement theories in review strategy
* reference to and application of sustainability practices
in review strategy
* analytical skills to identify improvement opportunities
* demonstration of creativity skills to think laterally and
identify improvement opportunities.
Adjustment for distance-based learners * no changes are
required.
Assessment description
You will write a report based on the case study provided and
in which you outline a performance and sustainability review strategy, evaluate
the strategy, analyse performance reports and trends, and describe how you
would seek advice from specialists to identify technological solutions.
Procedure
1. Read the case study ‘AC Gilbert’ in Appendix 1.
2. Analyse the information provided and prepare a report
addressing the following six (6) points.
A. Describe the key systems and processes used by AC
Gilbert:
a. Supply chain
b. Operational systems
c. Product/service delivery.
B. Analyse the three key systems and processes and develop
the elements of your review strategy: applying your knowledge of quality
management and continuous improvement theory, develop performance and
sustainability measures, assessment tools and techniques that you would use to
evaluate the effectiveness of the three key systems and processes.
In your report, include if applicable:
a. Lists of key result areas (KRAs)
b. Lists of key performance indicators (KPIs)
c. A description of performance review processes
d. A sample service level agreement.
C. Using the data provided for results up to 1966, for each
of the three key systems, describe how each of your measures, assessment tools
and techniques would monitor performance. Include specific examples or
hypothetical cases to test the effectiveness of the elements of your review
strategy. Write an evaluation of the effectiveness of your review strategy.
Suggest improvements to your strategy.
Refer to quality management and continuous improvement theory.
D. Using the data provided for results up to 1966, analyse
the variances from plans and targets for the key result areas (KRAs). Include
discussion on performance with regards to:
a. quality – design/manufacturing
b. sales
c. profit
d. supply chain performance (delivery)
e. business growth – staff and management performance and/or
turnover.
E. Discuss trends relevant to the organisation. What trends
did AC Gilbert fail to identify in the late 1950s*
Consider the strengths and weaknesses of the AC Gilbert
Company prior to 1960. Discuss the following in your report:
a. market share
b. reputation
c. stability
d. profit
e. sales
f. ability to adapt to change
g. customer service standards
h. innovation
i. employee performance
j. production and manufacturing.
Apply creativity skills to identify missed opportunities to
improve business performance. Describe at least one missed opportunity in
detail. Include an action plan for implementing the improvement in your report.
F. Imagine the company did not close in 1967 and has somehow
managed to continue operations until today. Discuss the possible use of advice
from specialists. What specialists could be consulted to advise on and identify
new technology or electronic commerce opportunities* Consider:
a. Internal – engineers, production staff, manufacturing
staff, sales personnel, human resources personnel.
b. External – marketing consultants, advertising experts,
engineers or designers, IT consultants.
Adjustment for distance-based learners
* No changes are required.
Assessment Part B. Develop options for continuous
improvement
Performance objective
To demonstrate the skills and knowledge required to develop
options for continuous improvement.
Specifications
You must provide a:
* one page performance improvement strategy
* 20–30 minute team briefing and consultation session (team
members may be other learners, or other group approved by assessor)
* revised one page performance improvement strategy
* written risk analysis
* written cost-benefit analysis.
Your assessor will be looking for:
* application of quality management and continuous
improvement theories in improvement strategy
* demonstration of creativity and innovation theories in
group consultation
* application of organisational learning principles
* demonstration of cost-benefit analysis
* demonstration of risk management
* analytical skills to identify improvement opportunities
* demonstration of creativity skills to think laterally and
identify improvement opportunities that come from group
* demonstration of learning skills to develop options for
continuous improvement * demonstration of teamwork and leadership skills to
lead group session.
Adjustment for distance-based learners
* no changes are required
* briefing and consultation session may be conducted using a
video/teleconferencing tool.
Assessment description
Based on the case study provided, you will develop a performance
improvement strategy, brief a team of peers on the strategy, develop the
strategy and encourage innovation within the group session, and incorporate
results of consultation into strategy. You will develop risk and cost-benefit
analyses which you will submit to your assessor for approval.
Procedure
1. Read the case study ‘A. C. Gilbert’ (Appendix 1). Assume
no improvements have been made and the company is still operating in the same
way today as when it closed in 1967.
2. Consider the following scenario:
Your manager, as per organisational processes for continuous
improvement, has asked you to develop a performance improvement strategy, brief
the management team, develop the idea with the team, seek the team’s approval
and seek final approval from your manager.
3. Develop a one page performance improvement strategy
related to competitiveness. Include:
a. strategic goals
b. description of proposed process or amendment to current
process
c. brief explanation of how proposal will improve performance
and competitiveness
d. KRAs, KPIs, targets.
4. Prepare to deliver a 20–30 minute management team
briefing and consultation session:
a. distribute your proposed strategies to team (team members
may be other learners, or other group approved by assessor)
b. ask team to consider strategy, including:
i. pros and cons
ii. changes or improvements to strategy
iii. preparing to discuss changes or improvements at team
briefing and consultation session
c. agree time for session (agree time with assessor to
ensure assessor can observe session).
5. Lead session.
a. discuss options and work through group suggestions
b. use creative techniques to generate or develop ideas
c. work through implications of suggestions to trial them
d. encourage group to point out issues or potential problems
during trailing
e. if and when applicable, accept failure of ideas and
recognise successful ideas.
6. Summarise results of session and seek group’s approval
for amended strategy.
7. Incorporate results of session into revised strategy.
8. Develop a risk analysis for strategy.
9. Develop a cost-benefit analysis for strategy.
10. Arrange a time to meet with assessor (as your manager)
to discuss strategy, risk and cost-benefit analyses. Explain costs and
benefits. Seek approval for strategy.
11. Submit documents to your assessor as per the
specifications below. Ensure you keep a copy of all work submitted for your
records.
Assessment Part C
Implement innovative processes
Performance objective
To demonstrate the skills and knowledge required to
implement innovative processes.
Specifications
You must provide:
* action plans for transition, communication
* two contingency plans related to transition and
communication action plans
* amended action plans and contingency plans based on data
in part 2 of the case study * evaluation and continuous improvement schedule.
Your assessor will be looking for:
* application of quality management and continuous
improvement theories to planning and scheduling activities
* application of creativity and innovation theories to
scheduling evaluation and continuous improvement
* application of organisational learning principles to
continuous improvement planning
* application of sustainability practices to
planning/revising plans
* analytical skills to identify improvement opportunities
based on data in case study
* demonstration of creativity skills to think laterally and
identify improvement opportunities to revise activities based on data in case
study
* demonstration of learning skills to develop options for
continuous improvement from data in case study.
Adjustment for distance-based learners * no changes are
required.
Assessment description
You will develop an implementation plan based on part 1 of
the case study provided to embed a new process. You will need to amend your
plan based on part 2 of the case study to ensure success.
Procedure
1. Turn to the case study ‘implement an innovative process’
(Appendix 2).
2. Review ‘Part 1 – Implementation’. Examine all aspects of
the new process to be implemented.
3. Develop action plans for 1) transition, and 2)
communication. In each action plan, include:
a. activities, objectives, measures (KPIs), timeframes
b. activities to promote the process and sustainability
c. activities to reduce any negative impact on people.
4. Develop at least two contingency plans related to
possible implementation issues you foresee in relation to activities in your
action plans.
5. Review ‘Part 2 – Follow up’. Examine implementation
issues and failures.
6. Amend your action plans and contingency plans to address
implementation failures.
7. Develop a schedule for evaluation and continuous
improvement. Include regularly scheduled:
a. evaluation activities, regularly repeated over a suitable
timeframe
b. evaluation activities to capture learnings from all work
activities
c. activities to embed learning into work processes.
8. Submit documents to your assessor as per the
specifications below. Ensure you keep a copy of all work submitted for your
records.
APPENDIX 1 – A. C. Gilbert
History 1909–1961
Alfred Carlton Gilbert was an inventor and a toy
manufacturer who invented the Erector engineering set. His original company,
The Mysto Manufacturing Company, was founded in 1909 to manufacture the Erector
set. In 1916, Mysto became the A. C. Gilbert Company and gained a reputation
for producing quality toys.
By the 1950s, A. C. Gilbert was one of the leading toymakers
in the United States with annual sales regularly topping $17 million. This was
an outstanding achievement for a relatively small company.
In 1961, A. C. Gilbert senior died, leaving the company in
the hands of his son, A. C. Junior. At the time A. C. Junior took over the firm,
the company was established as a traditional, reliable and profitable
manufacturer of educational toys.
Product lines and rationale
A. C. Gilbert produced train sets but their most popular
lines were chemistry sets, microscopes and their best seller, the Meccano-like
Erector engineering sets that had been popular with children for more than 50
years.
A. C. Gilbert toys were not cheap. They were high quality,
solidly crafted and made to endure. Parts and packaging were designed to last
for many years, with the Erector set packaged in long-lasting metal boxes. The
focus was on educational toys, primarily aimed at boys rather than girls. The
company had a limited range but what they did manufacture was top quality and
highly regarded.
Systems and processes
A. C. Gilbert was a small company. The following model
demonstrates the systems and processes in place.
Note: These flowcharts have been included for assessment
purposes only, and may not accurately reflect the actual processes in place at
A. C. Gilbert.
History 1961–1967
As the 1950s moved into the 1960s, there were huge cultural
changes across the world. The fifties were a very traditional era of family
values and morals, conservative and staid. Then came the ‘swinging sixties’.
The sixties were a time of rapid change both technologically and culturally.
Old fashioned values gave way to new moral freedoms.
Where the fifties represented solidarity and familiarity,
the sixties embraced change. Everything was bolder, brighter and more daring. A
new young president and rising social activism by youth saw changes in
clothing, music and interests. Young people rebelled against the values of
their parents and embraced a more fast paced, exciting and riskier lifestyle.
Changes to the toy industry
Cultural changes had a huge impact in western toy markets.
Barbie and Action Man became
‘must have’ toys. Girls moved away from baby dolls and cots
and wanted dolls that were more grown up, modern and trendy. They wanted dolls
they could dress in the latest fashions and who had exciting ‘careers’,
boyfriends and cars of their own. Boys were moving away from the traditional
train sets towards exciting new slot-car racing sets and action figures from
popular movies and television shows.
Traditionally, toy advertising had been done via magazine
promotions but the sixties brought in a new phenomenon: television advertising.
A hugely powerful medium, TV advertising became increasingly ‘hard sell’, with
toys heavily promoted, especially in the lead up to Christmas. Children wanted
the latest and greatest toys that they saw in these advertisements and put
pressure on their parents to buy, which they did.
Retailing of toys during this period reflected a shift in
retailing in general. Small, specialty retailers with experienced and
knowledgeable staff were going out of business, replaced by large discount
stores catering for the mass market. The goal of this type of retailer was to
turnover stock. Heavily advertised lines were in demand and that is what they
would stock. Cheap was in and giant retailers were after a quick profit from
easily saleable, inexpensive products. They weren’t interested in catering to a
niche market by stocking more expensive, harder to shift lines.
Packaging was bright and colourful in order to attract
children growing up in a world of colour TV, hypercolor clothing and visual
stimulation provided by the swinging sixties.
Affects on A. C. Gilbert
As a small, traditional company, A. C. Gilbert was slow to
react to these changes. It may have been that they were not aware of the
changes or were overly confident that their good name and reputation was
sufficient to continue trading as before. The consequences of this short
sightedness soon became apparent.
1961 (figures approximate)
L/Y Sales Actual sales Difference Profit
$12.6 million $11.5 million ($1.1 million) $20,011.00
This drop in sales was also reflected in a fall in the share
price of the company.
Outcomes
As a result of the falling profits and share price, the
company became attractive to an opportunistic businessman, Jack Wrather. Jack
Wrather was an independent television producer who had made his money producing
the popular programs ‘Lassie’ and ‘The Lone Ranger’. Jack Wrather wanted to
purchase a successful business and felt that in A. C. Gilbert, he had the
opportunity to use his knowledge of popular entertainment and apply it to the
production of toys. He purchased 52% of A. C. Gilbert for $4 million and
immediately set about making his mark on the company. A. C. Junior stayed on as
Chairman but his influence was minimal.
Actions taken by Jack Wrather
* Set a goal to achieve sales of $20 million in 1963.
* Replaced the top A. C. Gilbert executives with his own
people.
* Initiated a massive advertising campaign.
* Increased sales staff by 50%.
* Instructed sales staff to adopt an aggressive sales
approach.
* Introduced 50 new toy lines, raising the line to 307.
* Changed the focus from traditional boys toys to ranges for
pre-school children, dolls and other toys aimed at girls between the ages of 6
and 14.
* Spent $1 million on changing the packaging for all lines
to brighter, more colourful boxes.
Performance report
Year Sales Difference from previous year Profit
1961 $11.5 million ($1.1 million) $20,011.00
1962 $10.9 million ($600,000.00) ($281,000.00)
1963 $10.7 million ($200.000.00) ($5.7 million)
1964 $11.4 million $700,000.00 ($2.6 million)
1965 $14.9 million $3.5 million ($2.9 million)
1966 $12.9 million ($2 million) ($12,872,000.00)
1967 A. C. Gilbert closed 1909–1967
Key milestones 1962:
* Jack Wrather purchased 52% of A. C. Gilbert.
* Replaced existing executives with his own people.
* Increased sales staff by 50%.
* Implemented extensive television advertising.
* Set an organisational goal to achieve sales of $20 million
for 1963.
* Company recorded a loss of $281,000.00.
* Introduced 50 new lines in less than 12 months, using
existing engineers and production departments who lacked training and
experience in the new product range.
* Repackaged existing lines at a cost of $1 million.
1963:
* Sales and profits down on previous year.
* Anticipated drop in profits due to expansion and cost of
establishing new lines.
* Sales fell short of expectations.
* Decline in quality of toys – feedback indicated products
poorly made and designed (dolls did not even come with a change of clothing).
* New range perceived by customers as poor quality and
over-priced – not value for money nor attractive to the target market.
1964:
* Jack Wrather fired most of the top management team he
hired two years previously.
* Crisis management lead to multiple changes and dramatic
measures being taken and then changed – often one measure contradicting the
previous.
* Jack Wrather hires new CEO – Isaacson.
* Isaacson fires the entire sales team.
* Isaacson makes huge cutbacks in spending.
* Sales are channelled through independent manufacturer’s
reps, which was cheaper than maintaining an in-house sales force.
* Long-standing relationships soured as the independent reps
worked on commission and pushed sales, with no interest in maintaining or
building relationships with customers.
* A. C. Gilbert had built its success on personal service
and building relationships – that was destroyed within 12 months.
* A. C. Gilbert Junior dies and is replaced as Chairman by
Jack Wrather. Isaacson assumes the role of President.
* Prior to Christmas, many of the previous year’s failed
products were deleted and 20 new items introduced.
* Reduced the price of core lines such as the Erector set
from $75 to $20 but quality also impacted – cardboard box instead of metal
boxes, and brittle parts instead of sturdy long-lasting parts.
* Sales increased and there was some degree of optimism.
1965:
* Sought to capitalise on popular crazes such as James Bond
and The Man from Uncle by introducing action figures for Christmas.
* Due to internal strife and staff cutbacks, the new lines
were not delivered to the stores until after Christmas.
* Operating on a skeleton workforce.
* Due to lack of staff, A. C. Gilbert is unable to implement
changes or introduce new lines quickly enough to capitalise on trends.
1966
* Increased advertising spending to $3 million.
* Introduced point of purchase display products supplied to
dealers free of charge.
* Borrowed $6.25 million, granted on the event that the
company made a profit in 1996.
* Company made a loss of $12,872,000.00.
1967
* February – A. C. Gilbert closed its doors after 58 years.
Note: This case study is a true story. You may wish to read
more about this organisation or to conduct additional research online.
Reference material Tibballs, G., 1999, Business blunders, ‘A. C. Gilbert: Toy
Story’, Robinson Publishing Ltd, pp. 43.
Appendix 2 Implement an innovative process
Part 1 – Implementation
John Jones, a Production Manager at A. C. Gilbert, has
developed an idea for improving efficiencies in the manufacturing process at A.
C. Gilbert. The idea came as a result of the innovative ideas program, and John
has successfully trialled the program on one line in the processing plant.
The program has been evaluated and found to be successful,
and you are now in the process of implementing the program company-wide.
Overview of the program
The goal of the program is to increase productivity, reduce
waste, improve sustainability, and reduce errors on production lines by 20% by
allocating specialist team members to individual lines.
A secondary goal is to reduce staff turnover from an average
of 32% per annum to 20% per annum, thus improving the skill levels and
efficiencies of the plant and reducing costs in recruiting and training new
staff.
Production staff and process workers will be divided into
five different teams. Each team will be responsible for the manufacturing of
five product lines. Team members will only work on their specialty line, and
rosters will be altered to ensure adequate staff on each line during the
12-hour production cycle. This may involve changes to staff rosters, in some cases
by implementing 12-hour shifts, but will not impact on earnings or result in
the loss of any hours of work.
John also suggested involving teams in goal and objective
setting for their own product lines. Each month they meet to develop production
and error rate projections for the next, with a goal to continuously improving
both rates to achieve a maximum of 4% error rate and a 40% increase in
productivity within 24 months. Current error rates are at 22%.
To incorporate this change, production lines will be closed
for 48 hours for re-tooling. During this period, staff will be re-trained in
the production of their designated lines by shift supervisors. Training
required will include technical training, motivational training and quality
control procedures along with goal and objective setting workshops.
Costs
It is projected that the costs incurred for the change will
be:
Development costs
* Initial trial $150,000
Implementation costs
* Re-tooling the production line
* Training
* Loss of productivity $1.2 million $20,000
$50,000
Ongoing costs
* Initial errors and reduced productivity $150,000
Anticipated savings
By implementing the above measures the following savings
have been budgeted:
* savings of $300,000 per annum in staff turnover costs
* savings of $1 million per annum in lost productivity and
errors
* savings of $200,000 per annum in service and repairs costs
to equipment.
Benefits and concerns
During the trial, a number of advantages and concerns were
identified. There were initial fears that staff would become bored and
complacent, continually producing the same lines.
Analysis during the pilot found that, after the first week,
staff became quite ’proud‘ of their output and felt a degree of ownership for
the lines they were responsible for. Morale improved in a ’team‘environment.
Employees were initially reluctant to participate in setting
their own error and productivity targets. They tended to over-estimate the
percentages and did not wish to commit to large improvements. Managers feel it
will take some time and training in understanding the financials and
operational reports for them to set realistic targets.
Many employees lack formal education and some have limited
English, which was also an area of concern when trying to involve them in what
they perceived to be ‘management decisions’. This style of management is a huge
change in the workplace. Most employees were used to being lectured for making
mistakes, rather than encouraged to participate in decision-making and feeling
like they have some ownership of the process and outcomes. There is some
reluctance and anxiety involved as a degree of resistance from some long-term
employees, who feel they are being asked to do a management job and should be
paid accordingly. Management fear there could be some industrial relations
implications.
Other concerns revolve around productivity levels during the
transition. It is understood that it will take some time for employees to
operate at full productivity, as they will be working on new production lines
and different products. Concerns that deliveries won’t be met and customers
disadvantaged is a key concern for management.
From a technology standpoint, the new production lines will
be faster and more efficient. However, the current service technicians are used
to the old lines and lack the experience to service and maintain the new
equipment. It is possible that breakdowns could impact on production targets.
Part 2 – Follow-up
Make the following assumptions:
* The new program has been in place for eight weeks with the
following outcomes:
* productivity has decreased by 8% to 66%
* delays on the line have increased by 10%
* waste has increased by 10%
* error rates have fallen by 2% to 20%
* 15 out of 300 staff have resigned since the new program
was introduced, including two shift supervisors.
* After 16 weeks:
* productivity remains at 66%
* delays on the lines have improved and are now at
pre-change levels
* error rates have remained steady at 20% * staff levels
have remained steady.
* The following comments were raised at a staff forum held
two months after the implementation.
* New machines are very different, training was not
sufficient.
* Employees feel that figures don’t mean much to them – they
are struggling to understand what % rates have to do with their day-to-day
workload.
* Employees understand the importance of sustainability, but
have no idea how to apply sustainable practices to workplace or amend own work
practices to make them more sustainable.
* New rosters have been unpopular with some employees.
* 12 hour shifts were introduced to keep teams together but
they are causing difficulties for staff with regards to managing their
families.
* Longer shifts are also resulting in people becoming tired
and making errors.
* The OHS representative is concerned that injuries might
increase as a result.
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