Tuesday, October 27, 2009

Staying with Operations Excellence...

The last time we were here, I said, "The surprising thing about execution is that it is very, very simple. Any one can do it.  And that is the problem! It is very, very boring."  So how does one handle this situation? 
The first - and simplest - is when an 'activist board' takes control to decide whether the company needs an 'Operational CEO' or a "Visionary CEO" (yes, they are different people).  They then go about hiring the right kind of CEO.  The Operational guy does not get bored with the execution stuff.  S/he revels in it.  They love going to the shop floor, getting involved, meeting the people there, motivating them with coffee or beer.  They pour over reports and ask questions.  They are thinking next quarter, next product launch - and if they really need some visionary thinking, they call in McKinsey - or is it Bain? - whoever.

What if the Board decides they want a "Visionary CEO"?  Well this guy comes up with a new vision, is hopefully charismatic and manages to rally the troops around their vision.  Should the time come for execution, he hires a Chief Operations Officer.

But then a few CEOs manage to do both, i.e., the vision thing as well as getting hands dirty.  How do these people do it? 
Great companies like GE have developed a mantra for this.  They use two broad tools:
  1. Dashboards
  2. Calendars
Dashboards are standard reporting formats, typically graphic.  They tell the operations story visually and do not take a lot of pages.  They come in slides, instead.  The page layout and orientation shifts from portrait to landscape.  You see less text and more bullets, arrows, graphs, pictures and colors.  You think visually.  This brings the detail more in tune with the visionary's bias for the visual.

Dashboards are not easy though.  They take a lot of time to design.  Even more, to bring to shape.  The CEO needs to sit with her team and be able to identify the vital few metrics s/he wants to track.  They need to be few and yet comprehensive enough.  A Balanced Score Card kind of approach is very helpful here.  It then takes a smart six sigma kind of person to design the actual dashboard templates.  The scene then moves to IT to come up with a system to generate the required data and massage it to fit the template on a periodic basis. 
The good news is that this can be done. 

Calendars.  This is the "Financial Year" kind of rhythm, you find in the Finance Departments of most multinationals.  "If its September, its time for Budget Blues", "February is Performance Review month", etc.  You set up a detailed, enterprise-wide process for key functions and ensure it works like clockwork. 
The idea is to eliminate the 'clutter' of unplanned work taking over your day.  (You never succeed 100%, but you can still do a good job). 
So, there are cycles for all key processes.  The work for them starts on a particular date every year and concludes on a particular day every year - typically by way of a presentation to the CEO or to the Board.  This enables this CEO to stay on top of operational issues, while focusing all the time in-between to his vision thing.

I bet there are more.  Can't think of them right now, though!  If you can, please add here.


Tuesday, September 15, 2009

"Operations Excellence"

Nice buzz word, that! Never fails to capture the interest of the CEO! Every one seeks Ops Excellence. However, most managers have no clue on how to achieve it. The real reason is, they haven't really explored its meaning in detail. A quick search for the definition of the term on Google reveals thousands of pages and as many approaches! One model I liked took the Malcolm Baldrige National Quality Award as a reference point. That is definitely a good place to start. However, the award considers over a thousand points - way too much for the business we meet with every day. (I have not yet begun consulting with the CEOs of the Fortune-100). To me Ops Excellence has two elements:

  • Satisfactorily meeting the requirements of ALL stake holders
  • Continuous improvement.
That's it!

So, who are our stake holders?

I think of four:

  1. Share Holder
  2. Customer
  3. Employee
  4. Community
Not necessarily in that order. The priority depends on where you are messing up!
I would recommend most businesses should start with this simple model and move forward.

The next question is: "what does each of these stake holders want?"

Often, they know what they want. Sometimes we have to tell them. Let’s start with areas where the stake holder knows what s/he wants. We then check the data to see if we are able to give them what they want. If yes, we go beyond toward 'delighting' them. If not, we identify the gaps and plug away.

Looks simple enough, but this is where the gap between knowledge and execution widens. Up to this point, most business leaders have no difficulty. In fact they know the gaps intuitively. The challenge lies in the next steps.

Most CEOs have not listed out the gaps explicitly. Those who have done that, lack the ability to strategically prioritize them. And finally, even assuming they (or a consultant) did manage to prioritize well; few know how to pursue the chosen priorities simultaneously.

At this point, managers need several skill sets / tools:

  1. Ability to identify, measure and set KPIs for each area that stake holders are interested in
  2. A performance management process that tracks and measures all round performance
  3. A methodology for initiating and establishing a continuous improvement culture, and
  4. A determined and consistent management focus on monitoring the process… call this execution.
Items 1 to 3 can be bought. Item 4 cannot be bought and cannot be delegated. It is THE JOB of leadership. This is also the most common point of failure.
The surprising thing about execution is that it is very, very simple. Any one can do it.
And that is the problem! It is very, very boring. It does not challenge your intelligence. It does not get you in to the front pages.
No wonder most leaders hate to do this. They either delegate this or else do it in an inconsistent manner. No wonder Ops Excellence fails.
In upcoming posts, we will look at how some great companies manage to do this…. And how smaller businesses can aspire to learn and practice this.


Monday, August 31, 2009

A Key Performance issue: Design of KPIs

Working on performance issues of a Dutch MNC in Malaysia.
Issues are (of course) more Malaysian than Dutch. The big ones?
- One, KPIs are loosely defined... basically each Manager is left to set their own KPIs for their team. There's no 'roll-up' in to the company's objecitves - at least the's no process or system to ensure this happens.
Working on this, I found the concept of Value Tree extremely helpful. Ever tried that? Simple and powerful concept. Start with your vision / value / objectives and go on drilling down layer by layer to factors contributing to it. (Six Sigma types will recognise the Transfer Function here; {Y = f(x)}. When you reach specific activities or a point where the responsibility lies with a specific Manager, list out the KPIs. I'm not yet comfortable with the linkage with KPIs. Got to pilot in real life and check-out. Maybe for my next entry!
- Two, No rhythmic / regular follow-up on the KPIs. There is of course a generic, informal, "how is it going?" kind of follow-up and the Supervisor does stay in touch with their team's performance. The issue was that there was no feedback to the subordinate. This meant, the sub did not know how s/he was doing and the annual performance reviews always became nightmarish.
Funnily I've seen this across the board in Malaysia as well as India and Indonesia, the three Asian countries I'm familiar with. I think this is very much a cultural issue. We Asians do have trouble giving face-to-face feedback - whether positive or negative. I'm working on a Training Program to imbed this in to the culture. I guess, to start with I've got to build it into a process and ensure the process stabilises... hopefully it will become a culture eventually.


Saturday, May 2, 2009

At The Heart of Change Management...

I think the essence of change that is accepted and adopted is that it is desired by the "Changee" - not the changer.  We all like to change.  But we want to change at OUR pace, in the direction WE like.  We do not want the other guy telling us what to change to.

Unfortunately most change management begins after some one up there has already decided what that change needs to be, based on what he wants.  Then he assumes people are resisting his change and sets about 'managing' the resistance, to ensure everyone adopts the change he wants.

In our work shops on change management, we do  two things differently and the results have been amazing.
  1. We make sure the participants, mostly 'change agents' and 'solution developers', experience the pain of change directly, themselves.
  2. We spend a lot of time understanding how change management needs to be built into the solution itself.  Understanding the life, culture, behavior and roots of the people impacted by any proposed change is part of the Analysis / Diagnisis phase of any change effort.  This has to precede the development of the solution.  When you understand that some of your audience may be asians, you build the asian-friendliness into the solution.  When you do this, you  don't need a separate 'change management' initiative.
Key to this type of Analysis is the fact that people develop roots in their current context.  When I take up a job in Brentwood, CA, I also get myself a home nearby and put my children into schools nearby.  These 'roots' cause me to 'resist' any change to my job location.  If this is understood, the change agent stops saying I resist change and starts exploring how he can solve the problem by adapting the solution or building facilitation of my move away from Brentwood into the solution and / or implementation plans.  Once the 'root cause' of my resistance is addressed logically, I do not resist the change any more.  I've become a partner - even a champion.