Four Principles for Your Strategic Transformation: The Kotter Way.

Change Management on the Metal Gears.

There are very few tools that have proved reliable across almost all business challenges. By their nature, most tools are ‘hammers looking for nails’. One of the few however that has been useful everywhere is Kotter’s 8-Step Process for business transformation. The original version achieved great attention after its publication in Harvard Business Review, and there is a summary here, on the Cosmapec website, reproduced by permission of Kotter International. Recently, in an interview with Kotter’s David Carder on business radio 89.9FM, they shared more insight on how to use the process (transcript here). So what are their recommendations for your successful business transformation?

Essentially their advice splits down into four key principles behind each of the eight steps, or ‘accelerators’ as they are now known. The first of these is management vs. leadership; Kotter’s observation is quite simply that business transformations require ‘More Leadership than Management.’ To quote directly:

“When he uses the word ‘more’ it’s not only more leaders at all levels, but that the organization needs to literally create more moments where people can demonstrate leadership.”

For this to work it must also be the case that the senior leadership trusts their associates by giving them the authority and autonomy to lead as required. This is also a key element of Lean thinking that is too often ignored.

The second principle is also quite simple: ‘Head and Heart.’ Again, from the transcript:

“Transformations must be driven by peoples’ hearts, passions, emotions, and aspirations to do something extraordinary as opposed to fear-based burning platforms. We say head and heart because obviously the head still matters; logical cases and rigor still matter.”

To generate this sort of passion, people must believe in a better future, and one that is worth sacrifice and hard-work to reach it. It is the leadership’s role to develop, articulate and communicate that vision, and what the eventual rewards will be. (Rewards are not all about money)

The third of the four is ‘Want To vs. Have To’: The contrast here is between management and leadership direction, which is insufficient on its own, and the concept of ‘volunteering’.

“If you can have people who are so excited about pursuing these changes above and beyond their day job, you are on your way toward a  transformation at a much larger scale. They want to do it.”

This is easier said than done, and you certainly are not going to use authority, fear or coercion to develop ‘want to’ people. People are going to have to choose to volunteer, and to continue to do so. Keeping these people in the front-line of the change effort is a delicate balance that involves mutual trust and respect between the volunteers and leadership.

And finally: ‘Few vs Many”.

“This is about the shift from a few experts leading a change to activating many throughout the organization. Now when we say 3,500 volunteers engaged [in a recent project], that’s many. Those volunteers are making an extraordinary difference with slices of their time around key initiatives. The story of these four principles – management, leadership, head and heart, want to/have to, few and many – are the undercurrents to change. They support the execution of these 8 accelerators to make the greatest difference possible.”

The most notable aspects of these principles are that none of them are about what has to change. They don’t speak to improved productivity, quality or cost. Nor to increased sales, improved margins or more customers. They are about how successful change is achieved, and that is why these tools work across multiple initiatives, industries and organisations. They are the human part of change. Too many times this is the last thing that we address when looking at transformations. It should be the first.

Strategy implementation is a critical issue for business success, please do share what works for you in the comments section.

If you want to learn more about the Cosmapec approach to strategy development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Where You Will Find the Next Generation of Supply Chain Talent

According to this article, in ‘The Load Star’ the global supply chain is about to suffer a severe talent shock.  The baby boomers that have driven the globalisation of supply chains are now retiring.  In droves.  Many organisations have relied on this cohort of the workforce for too long, and the hard work of developing the next generation of talent has been neglected.

If this is the scenario your supply chain is facing, how are you going to respond?  It is probably useful to understand why the baby boomers have had such an influence on the western world.  They arrived in the workforce at a time of great economic upheaval; the worldwide oil crisis, US ‘stagflation’, and collapse of the UK economy meant there was a great deal of work to be done.  They were fortunate that the urgency of the situation pushed responsibility and authority to them earlier in their careers than for any subsequent generation.  The downside for the generations following them was the baby boomers have retained it.

The challenge facing us (for I am one of the baby boomer generation) is to pass on the torch to the next wave of talent.  We benefited from being in leadership roles at an early point in our business lives, now is the time to do the same for those that follow us.  However, we face a well-known problem.  We are hard-wired to believe we have done much better that we probably have.  We minimise the impact of our mistakes, and exaggerate the importance of our successes.  And when we observe others we do the opposite.  So those that follow us will, in our eyes never do as well as we did.

To empower the next generation requires us to pass on responsibilities, and handover authority.  To stop feeding our self-serving biases; to see past the mistakes they will make, and celebrate the successes they will achieve.  The longer-term picture is too important to do otherwise.  We can help them work through the short-term difficulties, and in doing so build their knowledge and experience.  Our job now as leaders is to become mentors.  We have achieved much; our next challenge is to ensure the next generations do much more.

Successful organisations consistently develop new ideas to grow their businesses, and face challenges and threats that need to be addressed.  These are the breeding grounds for your next generation of talent.  Projects and initiatives to develop these opportunities need managers and leaders, and rarely are there enough experienced individuals to fill them.  Next time you face this dilemma, don’t look only to the past and overload your current star performers.  Balance this with a view to the future and give your next generation some responsibility.

The biggest challenge for an organisation is to turn its high potential employees into good managers, and to develop the good managers into the next generation of leaders.  Your succession planning process should be telling you who these individuals are, but how do you give them the knowledge and experience to equip them for the future?  The answer lies in training and development.  Some key managerial skills can and should be taught in the classroom, but the ones that are mission critical are earned, not learned.  Here are the top skills that your next generation of talent need to demonstrate, and how and where you can help them do it.  They need to show that:

  • They are capable of setting objectives, and can organise and deploy resources effectively to achieve them.  Your first job here is to give them an area to try out their skills.  So when you are assigning your current ‘stars’ to important projects and initiatives, move them part or full-time into a new role and back-fill with the next generation.
  • They generate trust amongst their employees and their future peers.  Trust leads to respect, and respects builds loyalty. Again this can only be done ‘on the job’.  It doesn’t take a long time to see if trust is building, and it is immediately apparent if it has been lost.  Significant roles on new projects are good opportunities to see whether they can do it.  Projects have clear deliverables, for cost, quality and timeliness.  If your high-potential employee can deliver these outside their current comfort zone, they are a long way to earning trust and respect.
  • They can build authority, by achieving objectives and getting the big decisions right.  Leadership requires a field to play on, with objectives to be achieved, obstacles to encounter and difficulties to be faced.  New initiatives provide this proving ground, requiring planning, organisation and leadership, in an unfamiliar environment.

It should go without saying that there will be disappointments alongside the successes, and not everyone will complete the journey to be a leader.  It may also give you some initial pain as they grow into their roles, but the longer-term is your focus here. After all, it did the baby boomers no harm, did it?

 

Is developing talent a priority for you?  Please do share your experience in the comments section so all readers can benefit from your knowledge.

 

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

 

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Align Your Supply Chain with Your Customers

The final corner of the Triple-A supply chain triangle is Alignment.  It seems simple, but in practice there are few supply chains that consistently align themselves with that most important element, the end customer.  In most companies this alignment gap is a result of good intentions, usually based around solving the challenges of cost, quality and inventory.  But along the way, service to the customer suffers. Late deliveries, out of stock and lost sales are the symptoms, swiftly followed by the sound of customers heading towards the competition.  How do you avoid this?

The solution lies in designing and optimising your supply chain for the customers you serve, through fully understanding what they need from your product and service.  It sounds deceptively straight-forward, but  most supply chains are designed around the ‘things’ in the supply-chain.  Some organisations will concentrate on optimising warehouse utilisation and truck capacity, and at others they are focused on the manufacturing facility productivity.   Another organisation may be driven by their enterprise resource planning systems.  On top of these physical structures, we layer on any number of different process optimisation tools to make these ‘things’ as productive and efficient as possible.  The net result is often a highly cost-effective supply chain that is inflexible to customer needs.

In contrast, companies with Triple-A supply chains have re-designed them around their customers.  They  recognise that their customers may require two or more supply chains for different products, and can offer a variety of service options with differing replenishment times and inventory levels to support them.  Crucially, the piece that makes the biggest difference is that everyone involved in the supply chain is organised around meeting customer expectations, and they know which behaviours to use to achieve them.  This includes suppliers, trading partners, logistics providers and manufacturers, as well as their own associates.  Their reward systems are also based on customer service, so that bonuses are paid on meeting the targets, and costs are incurred if they do not.  These companies revolve around incentivising the people in the supply chain to deliver service to their customers.

The diagram below, from Dynamic Supply Chains by Dr John Gattorna, is a useful guide to aligning the elements of your supply chain behind the customer experience.  No specific model is suggested, as each company’s customers and processes are unique.  But answering the questions in the diagram will help you to design a supply chain that will delight your customers.

Supply_Chain_ORG_STRUCTURE

 

None of this says that process otimisation is not a relevant objective, or that popular programmes such as Lean and 6-Sigma are not required.  What it does say though is that supply chain performance should be defined firstly by the customer’s requirements.  It is not just working towards arbitrary targets that are commonly applied to measure supply chain ‘efficiency’ at each point in the process.  All layers of the pyramid shown here are important, but rather than concentrating  on optimising each one, every block is laid down with the end objective in mind, to maximise customer value.

 

Are you working towards a Triple-A supply chain?  Please do share your experience in the comments section so all readers can benefit from your knowledge.

 

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

 

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Why Leaders Resist It, Even When They Want Change

One of the paradoxes of change management programmes, and Lean in particular, is that leaders are often responsible for blocking the change they profess to want.  After all, as leaders, we have spent many years building our careers by understanding, and succeeding in, the organisational culture that we grew up in.  We know in our heads that it has to change to adapt to the continuous challenges our customers and competitors place upon us, but deep inside we really want to stay in our comfort zone and fall back on the things that have made us successful in the past.  How should we deal with this?

Ownership is a powerful emotion, as we discussed last week, and as people who have experienced great success on their way to becoming a leader our ownership of the things that worked is highly significant.  Even if now these things are clearly failing, and failing catastrophically, the Euro currency being the current most spectacular example of leadership unable to let go of an idea that no longer works for the benefit of all.  The key to the next phase of our development is humility, understanding that we do not have all the answers, and that our behavior is probably the biggest reason why change isn’t happening.

Improving the process that creates customer value drives organisations that have truly become Lean.  Their leaders understand and value the associates who fulfill the service and product needs of their customers, and they actively work to make these employees successful.  If you have arrived at a leadership position in a traditional business, you have had to demonstrate the strength of your own ideas and performance to get there.  And often battle with your management peers and employees to overcome resistance.  All valuable learning experiences, but the next stage of leadership acknowledges that the game you have just been playing is mostly irrelevant to the customer.  The next challenge is how to focus on improving the customer experience.

Here are a few ways you can do it:  Tie your performance goals to the success of your associates, especially the frontline employees.  You only win if they do too.  If they get their performance bonus, you get yours.  If they don’t, you don’t.  But above all break down the barriers between you and your associates.  Collectively they know far more, have better ideas, and understand your customer more closely than you ever can.  Make service to customers the most important metric, not the cost to serve them.  Get out of your office and experience what it is like to be a customer, and what it means to be a frontline employee.

Also put in place a process to get regular feedback on your own behaviour.  Your peers and direct reports have to be able to trust you enough to tell you when you are doing the wrong thing.  You have to trust them enough to act on it.  Appoint a mentor, and ask them to critically appraise your performance and act as your conscience.  If it doesn’t feel uncomfortable, then you are probably not being honest with yourself.  We all think we perform better than we actually do, if you really do want to be a role model for change getting independent feedback on performance is essential.

 

What have you done to recognise your need to change?  Please do share your experience in the comments section so all readers can benefit from your knowledge.

 

If you want to learn more about the Cosmapec approach to process improvement, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

 

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

 

 

Listening for Leadership, Make Room for It

Leadership is essential for making successful changes as discussed in last week’s article, and several interesting ideas and examples in the comments prompted this week’s blog.  Adam Payne pointed out that Obeya rooms can provide a structure that will facilitate people getting their ideas heard and support implementation of their proposals.  (Obeya is a Japanese term that literally means war-room, but in a business context is used to describe a space for project teams to work in).  We discussed what we call these rooms when we are implementing projects, and this reminded me of the topic about the importance of ownership.  Researching ownership, Langer conducted the lottery ticket experiment that has significantly changed our understanding of ownership, and I learned a lesson that has personally served me well.  That lesson is that people are sometimes not rational in their behaviour, and they value what they create far more than what is simply assigned to them.

In the lottery ticket experiment, half of the study group were randomly assigned a lottery ticket number, and the other half could write their own.  Immediately prior to drawing the winning number, members of each group were asked to sell their numbers back to the researchers.  The group that had written their own numbers demanded five times more to sell them as they deemed them to be much more valuable.  Rationally this ignores the reality that any number has an equal and random chance of being drawn.  But the selection and creation process adds perceived value in the eyes of the owner that warrants a greater price to reach a fair exchange.  Adam commented that he calls Obeya rooms whatever suits the process improvement team he is working with.  Another approach is to let the team name the room.

In one optimisation project, we had no suitable team room, and I wanted to make a statement about the significance of the project.  As the leader of this facility I had the largest and most extensively equipped office on site.  So I moved to a smaller office on the factory floor, and gave the team the vacated space to create and name their team room.  Knowing the process improvement project was ultimately important to growing company sales, they named the room after the company’s much admired original sales representative.  I never had a problem with convincing them of my commitment with the managers, supervisors and operators from that day forward.

We also re-invented 5S, Kanbans, SMED, Poka Yoke, FMEA, schedule-smoothing and many other aspects of Lean, and the teams had their own names for these as well.  The important point here was that listening to their ideas, discussing them in the team room and on the factory floor was how we got things done, and how the changes stuck.  My knowledge of Lean tools helped them to frame the problems and to design solutions, but crucially they owned the ideas.  Ultimately we far exceeded the expectations of our company’s senior management and made step changes to service, quality, cost and health and safety.  Every single person on the team eventually moved on to positions with higher levels of responsibility.  And it all started with a room with no name.

Finally, don’t let your ownership of what you have created on your way to becoming a leader become a problem.  Many change projects fail because leaders value what has worked for them in the past more than the potential for future success.  Next week I will add in a few ideas on how you can stop this happening.

 

What have you done that increased ownership?  Please do share your experience in the comments section so all readers can benefit from your knowledge.

If you want to learn more about the Cosmapec approach to process improvement, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

 

 

Starting From the Top

Every time I write an article here I get an unexpected bonus:  I am consistently reminded of how much more there is to know.  People who read my blog are kind enough to send comments about the subject I discussed.  They challenge me, add in their thoughts and describe their experiences.  It is a great learning experience.  We hear a lot about what to do to become Lean, but not so much about how to do it.  Mark Berlin sent me a note describing one of the essential ‘hows’ of the Japanese model in response to Lean is About People.  With Mark’s permission, I am sharing his experience with you this week.

Here is what he said:

I would like to share a little different food for thought. The Japanese model does not mention Lean because it is embedded in the culture.  How did it become embedded: It starts at the top with the Executive Team.  The Executive Leadership typically works the factory floor 4x/year (1x/quarter) taking direction, not giving direction. It is part of the performance bonus at year end.  I know, I’ve worked for four companies:  Initially working side-by-side with VP’s, and then as a VP taking direction not giving it.  It was at these companies where Lean was not discussed beyond year one, as we had 24/7, 52 week per year events running at multiple factories.  I can recall at two companies where senior execs did not receive a major percentage of their bonus structure when they only attended 3 of 4 events.  It was this set of leaders that made the rallying cry around their functional discipline to be participating on the factory floors, warehouses, etc.  Happily I can say I never lost any bonus money.

More importantly, the leadership worked cross functionally more cohesively to drive cost out and create solutions to drive top line revenue.  It was at these companies in difficult times, that earnings improved and top line grew on average 25%+ per year.

  Yes, it’s about the people.  However, the reason the process improvement or Lean initiatives don’t stay and a cultural mindset is not built around Lean/Process Improvement – the Executive Staff does not participate.  I can tell you I worked side-by-side with Bridgestone and TRW Executive Leadership on their plant floors running an event that was driven by my Supplier Development Team.  It will never stick with supervisors, managers, and line members if the process does not start at the top.

Presently doing an advisory work with a group, and I told them as much as I want a contract, I would not sign it, unless the Executive Leadership participated in an Alignment Meeting the first week, and they agreed to work the floor across six operations.  They all signed the alignment contract, and they are working the floor taking direction.  Instead of 3 – 5% savings, they are seeing 7 – 22% across various activities.

Leadership is important, and Mark does a great job explaining why.  As Gandhi said, ‘Be the change you wished to see’.  If you are a leader, and you want to make a change, be aware that your people are watching you to see whether or not you are serious about it.  They are quite rightly going to hold back their efforts until they know they are going behind a worthwhile cause.  Many will have experienced disappointment from previous initiatives that promised much but failed to deliver. Being consistently and visibly committed to the change is essential.  Plan how you will do this, publish the schedule of when you will do it, stick to it and track progress.  After your people have got over the shock of seeing a genuine attempt at engagement, they will begin to trust you.

 

Do you have more examples of  leadership behaviour that demonstrated their commitment?  Please do share them in the comments section so all readers can benefit from your knowledge.

If you want to learn more about the Cosmapec approach to process improvement, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Respect Builds Talent

If you liked last week’s article on Lean, I came across this piece by a very talented writer with a deep understanding of the subject.  The key theme of the article is about respect for people, and again cites Toyota as the organisation that has managed to achieve this better than any other.  One  point in the article is about lay-offs.  A common fear about process improvement and optimisation is that it will lead to job losses.  Indeed this is very likely as wages are a cost to organisations and ultimately to the end consumer.  Toyota, however, has never laid-off any of its staff, yet is by far the most effective automotive company in the world.  So why is respect important, how do you demonstrate it, and what impact does it have on job losses.

For me the answers revolve around the most critical assets for an organisation, the knowledge, skills and experience of the associates.  In a single word, talent.  As a leader, talent development is one of your most important tasks.  It has always been my top agenda item, and the one that keeps me awake at night.  Your organisation and your culture are unique, so you need produce your own processes to develop your talent, and there are many ways to do this.

I will share here what has worked for me in the past, but before I go there, just a few cautionary words.  Process improvement is not what you do to resolve a crisis.  You need to already have reliable processes before you can improve them.  If your processes are broken, and you are losing customers, failing to gain new ones, have high levels of rejects or whatever is symptomatic of a dysfunctional organisation, you need to fix these first and stabilise the situation.  This is a project, treat it as such.  If it requires immediate job-losses be open, honest and decisive and then do everything possible to find alternatives for those you have to let go.  Process improvement should prevent you having to do this again.

Demonstrating respect to achieve process improvement is essential.  This is why:  You have a massive amount of talent at all levels within your organisation that you are probably unaware of. Process operators and technicians I have managed have included musicians, journalists, under-graduates, reservist officers, horticulturalists, sports club directors, race car drivers, skilled photographers and zero-handicap golfers to name just a few.  What has got them there?  Passion and determination to improve; long-term commitment and belief in their abilities; a knowledge that obstacles will be encountered, and the tenacity to overcome them.

If you want to demonstrate respect, you and your management team, and yes the executives are included in this, have to listen to ideas from all levels within the organisation and work to implement them.  Toyota evolved it’s own tools to do this, you should develop yours as well, your culture is different to theirs.  A few things that have been successful for me in many diverse cultures:

  • Hack the existing management and production control system, add agenda items and new team members to existing review meetings. If you are the leader attend every one.
  • Re-structure the bonus system.
  • For those that want to, train them in better-paying jobs, even if there aren’t any vacancies yet
  • Create project teams and make time for the process operators and technicians to participate. Sponsor as many as you can.
  • Push project sponsorship deeper into the organisation.  Chair a sponsor’s committee to guide them through the learning process.
  • Increase recognition events.
  • Appoint someone to be your conscience for when you fail to act appropriately.
  • Create a training package of the key skills required to implement changes, and offer it to everybody.
  • Cross-post to other parts of the organisation outside of the supply chain.
  • Appoint internally, unless it is impossible for legal reasons.
  • Give all the executives and managers a mentoring target as part of their rewards system.

The output of these types of activities is a learning organisation, with the skills and knowledge to continue to improve.  A large number of associates have the opportunity to excel in areas that they were previously excluded from.  These people are extremely valuable and many will move on to new more challenging roles, hopefully within your organisation.  Lay-offs become a thing of the past, your challenge now is to keep them.

 

Do you have more examples of how you can demonstrate respect and build talent?  Please do share them in the comments section so all readers can benefit from your knowledge.

If you want to learn more about the Cosmapec approach to process improvement, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.