Sunday, December 31, 2006

Responding to requests

I am increasingly asked by clients and potential clients for simple guides that explain about the different approaches to improvement (which I generally view as Lean, Six Sigma and Risk Management).

In responding to these requests, I have completed three e-books as follows:

  • Lean for Practitioners - a guide for practitioners and those tasked with leading Lean Improvements to the secrets of Lean and how to implement it in the service sector and NHS
  • Introduction to Lean, Six Sigma & Risk Management - a beginners text on each of the three approaches to improvement and how they can be integrated
  • Sustaining Lean Improvement - looking at the four aspects of successful Lean and how to engage the team, transform cultures and sustain improvements, this guide is for advanced users of Lean and for those who's Lean Improvement Programmes have stalled

For further details and an order form, drop me an email via our website (www.amnis-uk.com).

I look forward to hearing from you and wish you a Happy New Year.

Saturday, December 16, 2006

A balanced approach to consulting

I was reflecting during a discussion with a client this week about different approaches to consulting.


At the one extreme is complete 'facilitative' Consulting - which is all about helping the team to work together to find the way forward but not providing much in the way of structure. In some environments this is a very valuable approach to consulting, normally where the team has a known outcome and they have the skills to get there and need a neutral chairman to sort it out. However, in most improvement environments this approach is far too passive as the team often need guidance on how to move forward and the next steps to take.

At the other extreme is the 'directive' approach to consulting, what is often termed the 'Screaming Sensei' who instructs the team what to do and then makes sure it happens. In some extreme environments (such as a high risk environment when safety is at risk and the Sensei is an expert or where insurmountable obstacles are being presented to improvement) but generally the Screaming Sensei will be far too directive for sustainable improvement to occur and will normally lead to quick gains that disappear just as quick as soon as the pressure is removed.
Life needs to be in balance between these two extremes. Successful consulting, where improvements are to be sustained, need to provide the support of a facilitative approach and the expert guidance of the directive approach, but without the extremes of behaviour of either end.

What are you looking for in your consultant?

Thursday, December 07, 2006

From products to services

I was chairing a meeting of the IOM's Operations Development Panel (ODP) this afternoon at Cranfield University. The ODP aims to shape thinking in Operations Management across a range of sectors and one of the topics we were exploring was 'Product Servicisation' which is where companies look to stop selling products and start selling competences.

The classic example is Rolls Royce who sell 'power by the hour' on their aero-engines, so clients have access to the value (a working engine) but avoid the liability. For many companies trying to compete on price, this approach offers the option to differentiate themselves in the market, although it requires careful planning on cashflow and having a robust model.

Cranfield are working on a two year research programme to look at the most effective way of helping companies to 'servicise' their operations and also helping service sector companies to develop products that sell and I look forward to supporting them in this research.

Sunday, November 26, 2006

Making that final investment decision

Even though many organisations are seriously unhappy with their organisational performance there is always a certain level of doubt about making an investment to make it better.

For most organisations investing in a physical piece of equipment seems to be much more palatable - yet investing in expert consultancy or training support at a fraction of the cost is often subjected to more scrutiny. I know the argument that if you have a piece of equipment it has a residual value - but that is the folly of many purchases as it is often extremely difficult to realise the value that second hand equipment have on the books!

I suppose the concern comes from whether or not you are buying quality support and consulting, unlike many commodity items, is not the same irrespective of the price. I will explain this point - you would expect a TV you purchased for £50 to work as much as you would a TV for £5,000 - the picture and features might be different but fundamentally they will both work. In consulting terms the same is not true - you can pay £50 and get a 'non functioning product' - much the same as you can for a £5,000 consulting project!

This does not make it easier to buy consulting, it actually makes it harder! Coming back to the first point I made, it is very difficult to make a decision about consultancy and many, many organisations have been caught out by being sold the 'corporate package' by a well dressed partner only to have the service delivered by a poor quality graduate.

To make the right decisions I would suggest the following five points:

1. Ask who will deliver the project - and meet them to ensure you like them
2. Buy in stages (with get out clauses) so you can terminate if you are not happy
3. Understand exactly the process/methodology they will follow
4. Ask for references - they don't all need to be directly relevant but they do need to 'stack up'
5. Get 1st hand feedback from the people working with the consultants on a regular basis

Of course, you could always go and spend £500,000 on a machine - but I would always say pay £5,000 on consultancy to identify whether you need to actually buy the equipment at all!

Saturday, November 11, 2006

Repetition and (no) Deviation creates Hestitation

Stealing shamelessly from BBC Radio 4's 'Just a Minute', I have modified the rules for the game to highlight a problem that came up in a workshop I was attending today at Earl's Court.

Doing the same thing over and over again makes people an expert at undertaking that task, but in the longer term - when variation is required - this repetition creates a 'furrow' into which people channel their energies - making it hard for them to create the new patterns of working that are needed.

In the worst cases, the desire to continue doing what has been done before (without deviation) delays the organisation's ability to react to the changing circumstances and prevents improvement. This hesitation can be devastating to the long term health of the organisation.

The cure is often hard bear for some people in that it requires them to accept (and perhaps even value) failure, errors and divergent thinking - something that people normally get fired for in many corporates!

But to be clear, this disruption is different to devastation - which will be the topic of a later post!

Friday, November 10, 2006

Strategy Drives Improvement?

Earlier this week I was due to run a workshop but because of a mix up I had to allow someone else to do it for me.

The topic was to explore the linkage between Strategy and Improvement and in planning for the event (which ultimately I did not undertake), I was given the time to reflect on another reason why improvement programmes go wrong - this being that the various areas improved have no impact on the organisational trajectory and therefore the net effect is like the proverbial 'arranging the deck chairs on the Titanic'.

An example I was made aware of was given me by a friend last night who had worked with one of the 'Big 5' consultancies and had been tasked with transforming the administrative processes in the business's headquarters in Switzerland. Very quickly he realised that the real problems lay with the root and branch sales activities which were spread out across Europe. However, he diligently worked through the improvement programme, charging some £500k, and the overall effect on the bottom line was nothing as the company ran out of cash and closed.

This demonstrates that if you choose to improve the wrong thing, you will improve nothing! Therefore, being clear about the Strategic Issues facing the business is almost more important that rapidly moving to action and actually doing something!

Sunday, November 05, 2006

Increase in Productivity or Increase in Intrusion?

I am writing this on a train coming back from a business development weekend in Scotland - the train is moving and I am sitting here wondering whether the fact that I have cleared my emails, dealt with a client proposal for the NHS and am now writing a blog entry is an increase in productivity or just an increase in the levels of intrusion into my 'personal space'.

At present, I am feeling quite good about the experience in that I know when I finally get home at around midnight tonight that I will not have to deal with any emails and can just go to bed -but if I were here with a friend, had a good book to read or just did not feel like working, I would probably feel that the ability to access WiFi/Emails during the journey would be an intrusion, nagging away at me - asking for me to deal with issues.

In business, having a clear delineation between 'work time' and 'play time' (the latter which could include creative time) is vital - but the line between the two is disappearing. On Tuesday I have a meeting which we have had to book a room in a hotel to avoid being disturbed, but even there we will probably be interupted by mobiles and the occasional message at the hotel.

I worry that this blurring of work and play will have a serious impact on organisational performance as individuals have less and less time to themselves and less time to be creative - but for now I am just enjoying the ability to travel and work!

Monday, October 30, 2006

Success in Healthcare

Last Friday I was delighted to host a meeting of one of the Ecademy clubs I belong too (CEN). The event focused on issues relevant to Healthcare and we had a great mix of people, including some with extensive 'in house' expertise of working in the NHS.

What we discovered is that (not unsurprisingly) the opportunity for improvement is great, especially in the area of sustainable improvement (using a variety of tools such as Lean etc). It is perhaps one of the best environments for leading change - you have motivated and skilled people who share a common aim (delivering patient care).

However, the issues of 'improvement fatigue (IF)' and changing public priorities will make it a long and slow process to implement (and sustain) the benefits that individual trusts can realise.........fancy joining us to help make it happen?

Tuesday, October 24, 2006

Loyalty in Adversity

When things start to go wrong in relationships (whether personal or business), loyalty becomes a very important issue.

If you have built up relationships with your network, when things start to go wrong they will support you - whether you are right or wrong - but when you haven't built the relationship, or if you use up all of your 'emotional credit', the loyalty and support is not there everything becomes much harder.

In change, it is important to have a relationship with the people you are working with so that when things start to 'get sticky' (and they will), they support the change.

The Duke of Wellington had a great saying which emphasises the power of loyalty and training and went something like, "When other Generals make a mistake they are beaten, but when I make a mistake my troops pull me through."

When things go wrong, who will support your change programme?

Wednesday, October 18, 2006

Buzzword Bingo

It is a very worrying fact that a lot of consultants use very complex language. Well, it isn't even limited to just consultants, but to pseudo- academics and pompous people of all persuasions!

Is it because they like the sounds of the words or because they do not really know the answer and need to use complexity to mask stupidity? In my time, I have worked with both groups of people, some of them even believing that they were really impressing others by using 'complex interactive knowledge processes' when in reality they were boring the others rigid and demonstrating quite the reverse of what they were hoping - instead of appearing intellectual, they appear confused and instead of appearing dynamic they appear boring.

I was prompted to write this entry by a good friend emailing me the link to Buzz Phraser which is, I am sure, where these people get their words from!

Saturday, October 07, 2006

Every experience is unique

If you think about it, everything we experience is completely unique.

Where we are sat in a room of people is unique and therefore the acoustics at that point is unique. The way our brain processes the sound and then our conscious and sub-conscious analyse the sound into concepts we can understand is completely unique.

Two people sitting side by side listening to a speaker on a training workshop will both experience different events, take different learning and have different emotions.

This makes communicating such a fascinating topic for a consultant such as me - how do you ensure that the message you are transmitting is the message they are receiving - and how do you ensure that the activity you are leading is the activity they are needing.......

I don't have the answer, I only pose the question......

Thursday, October 05, 2006

Random Connection

I realised yesterday that all the important people in my life (other than brothers, uncles, aunties and children) I have met because of a random connection.

In a family context, I met my wife because she happened to be at a mutual friend's house when I was and in a business context, one of my business partners I met because I decided to try a different form of networking event.

Subsequently, these random connections lead to a wide range of things such as children, contracts, further introductions and friendships, but the root of all success comes from a random connection.

In analysing why this is an important message, it is because the more random connections you make, the more success you will have - but the real issue is pushing yourself to go and make those connections!

On a different issue, have you seen my other blog on Lean Sigma (called Flexiblean - pronounced Flexible Lean)

Saturday, September 30, 2006

20 Year Complacency

I was preparing some materials for an event that I am speaking at next week (download the brochure here) and realised that we are possibly heading toward another period of complacency in the UK.

In the 1950's, there is a lot of historical evidence about the fact that UK industry were complacent about the impact that the rising quality and productivity of Japan would have on us and in the 1960's/70's it killed off our motorcycle industry (for all intents and purposes) and a lot of our electronics and automotive industry as well.

In the 1970's we were complacent about the Asian revolution, joking about the quality of what they were capable of and in the 1980's and 90's they stripped our manufacturing and are now advancing on our service industries.

In the 1990's we were complacent about the rise of China saying they would be become the 'low cost but low tech' outsourcing centre of the world and today they are encroaching upon our high tech industries and sectors.

As we move toward the 2010's, I am beginning to wonder whether we are facing another period of complacency in the UK....perhaps because of the impact of Eastern Europe, the BRIC nations (Brazil, Russia, India & China) or even the Middle East or Africa - maybe it will not happen at all but history seems to be against us on that!

Tuesday, September 26, 2006

Stress + Depressed = No Success

Individuals who are stressed under-perform - everyone knows that - hence the growth in stress coaches, but have you considered that organisational health and levels of stress also affect performance?

Organisations which are feeling the squeeze find it difficult to focus on the longer game and it permeates through to the individuals working in the organisation, which in terms affects their performance and hence the results achieved by the business.

This is not about 'benchmarking', but is purely a matter of fact that organisational stress is a real phenomena and has a major impact on the results achieved - any comments?

Saturday, September 23, 2006

Innovation?

I was invited to an 'Innovation Dinner' this week at which some 150 people had booked and paid to attend.

The dinner had a good keynote speaker, but the topic was less about Innovation and more about how they had grown their business from scratch.

The problem for me is that the whole affair seemed to be a 'ra ra' session about innovation without any practical advice or information for the participants - the typical 'Innovation: Its a good thing' type approach.

For many, Innovation means developing a new product, whilst others think of it as a new creative design for a brand, but if we take the government definition of Innovation it is about 'the exploitation of new ideas' - meaning that it is equally relevant to the improvement in a process as it is too the development of a completely new process.

To find out more, read my article on INNOVATION at Ezine Articles.

Changing Direction

I have decided to split my ramblings into two seperate blogs.

This one will change to be about the activities I am involved in, the people I have met and what I have heard, whilst my blog FLEXIBLEAN will evolve as the main site for comments on making change sustainable, flexible and high impact.

I hope you enjoy the journey!

Monday, August 07, 2006

Are you completeLEAN mad?

Subscribe



I was speaking late last week to a real 'Lean Jockey' with a well known American consultancy who are building a presence in the UK.

I found the conversation both interesting and a little disturbing on the basis that the approach being followed appeared to be 'tools only' - a quick 'Value Stream Map' and a series of Rapid Ram-Raids on the business, with no focus on sustainability.

One of the worrying things about the approach they are adopting is that the consultancy concerned it is growing nicely with an impressive range of new clients - and this fact made me challenge what I believe to be true - namely that the 'tools approach' is not sustainable in the long term.......so why were these guys being so successful?

Having spoken to a couple of people last week, including one of whom has been a current client of the consultancy concerned within the NHS, my fears have been allayed - it appears that whilst the price is high and the benefits good in the short term, the results last as long as the consultant is on site, creates bad feeling in the team and does not create an optimal solution.

We are about to extend our research into the sustainability of Lean, the first phase of which led to the development of our PROTOCOLS(tm) approach which assists organisations to prepare for Lean (or any form of transformational change). We will be speaking in depth to up to forty organisations from the service sector who have tried Lean to correlate our findings - although initial feedback says that the same bunch of cowboys who saddle their Lean tools outside manufacturing companies are now putting on their boots and striding into the service sector!

Beware the 'tools only' approach to Lean - unless your people bed it in and believe in the change, it does not matter how good the consultancy presentation is, the project will fail!

Monday, July 10, 2006

Public Profile

I was delighted today to receive a report about the growing use of Lean and related techniques in the public sector.

Having spent a number of years working in the public sector on transformation programmes, including with the RAF, NHS, Public Agencies and Local Authorities, I have seen many of the pitfalls that can behalf public bodies embarking on a transformation programme.

It was a long time ago that I gave up being a 'Tools Jockey' - partly because I realised the damage it was doing to organisations when I was leading programmes of support in the private sector. Luckily I was able to take this knowledge of sustainable lean into the public sector.

Sadly, for many public bodies, it seems they are going down the route of a 'tools approach', using 'drive by kaizen' which makes a quick improvement and collapses even quicker, unless you pour an ever increasing amount of money into supporting it (normally ever increasing consultancy fees).

True sustainability of change (and particularly Lean), relies on employee engagement, a vision of the future and development of internal capability. These are hard learnt lessons which it seems that many public bodies are going to learn the slow and expensive way.

Ho hum..........

Saturday, June 17, 2006

Your Attitutde Affects Your Performance

For some, this might be a statement of the blindingly obvious, but I think it is an important point to make.

My attitutde at the current time is based upon a range of external influences such as my relationships with my colleagues, clients, friends and family. It is also influenced by some internal influences, such as my energy levels and levels of confidence.

Now, my current attitude is based on the combination of these (and other) internal and external influences, and this attitude affects my performance. Obviously, as the influences change (perhaps after a good nights sleep, or receipt of some good news) so does my attitude and in turn my performance.

When you are the manager or leader of a change programme, the attitude you have makes a significant difference to the performance of your team and therefore the success they achieve.

Being aware of the affect external and internal influences have on you is an important step to maintaining an appropriate attitude - which in turn is essential to the success of your team in leading change - and the bigger the change, the more the attitude of the leaders affects the result.

Several development processes exist to assist leaders of change to manage the effect influences have on them - and these include NLP and Emotional Intelligence - and for further information please feel free to contact me about them.

Friday, May 26, 2006

Sustainable Does Not Mean Forever

An interesting concept that has raised its head this week is the idea that some organisations are looking to 'fix' their change - and are turning to the concepts of Sustainable Change as a way of achieving it.

Whilst Sustainable Change does ensure that organisations get the most benefit out of their improvement activities, motivate their people effectively and also ensure they maintain their position in there market, it is different to 'fixing' change in place.

To fix change would imply a rigid system - a winning formula that once developed was never changed. But what would this mean when the circumstances changed and the world, the market or individuals moved on?

Look at McDonalds, for years they had an almost winning formula; Burgers, Beverages & Breakfasts, but over the last few years they have recognised that society has moved on and demands more variety - especially healthier options.

Sustainable Change ensures an organisation remains 'best' for a period of time, but also leaves them with the capability to move on when circumstances change.

So, the idea is not to 'fix things forever', but to fix them and flex them as the requirements change - and this is the basis of Sustainable Change.

By the way - our new book entitled 'A Beginners Guide to Continuous Improvement' is now available.

Visit my Ecademy profile and then drop me an email for further details.

Sunday, May 07, 2006

Surviving Change

More organisations lose money on their change programmes than gain benefit.

This is a true whether they base their approach on Lean, Six Sigma, Concurrent Design, Kaizen or something else......

To combat this, I would like to extend a personal invitation to the Surviving Lean Conference on the 18th May (Right Click & Download the brochure HERE)

Look forward to seeing you there!

Friday, May 05, 2006

Best is only a moment in time......

In addition to running one of our regular masterclasses for the public sector in how to sustain change and running a two day strategic planning programme with a 'running' client, I also had an evening meeting with a potential manufacturing client this week who said they felt they were 'best in class'.

When I explored this statement it appeared that they felt this way because they were profitable and because they had relatively low customer churn. They did not know how they matched to their competitors in terms of price, quality, options, flexibility etc. In addition, they had not done anything to improve their internal operations for a number of years because they were 'too busy' everyday to make the changes.

These were interesting responses - surely, you cannot be 'best in class' without knowing the details of who else is in the room? Also, being 'best' is only a moment in time and things move on. Being profitable today does not mean profitable tomorrow and being busy today and not focusing on tomorrow almost guarentees that profits will drop over time.

Perhaps it is counter-intuitive but the best time to improve what you are doing is when you are busy and profitable as this is the moment when you can be best without worrying about the worst!

Wednesday, April 12, 2006

Pan-Sector Panacea

The more I get involved in transforming diverse organisations - from NHS Trusts to RAF Stations and from Manufacturing Companies to Housing Associations - the more I realise that every sector faces the same problems when it comes to leading and sustaining change.

With so many organisations failing to achieve sustainable results (in our survey 87% and in one undertaken by Henley Management College >75%) I am surprised that not more organisations want to find out why their change programme is more likely to fail than to succeed.

Across all the diverse sectors we work in, the one universal truth is that transformational change is only possible when the organisation is ready for it and when it has some infrastructure (and I mean internal people and systems to sustain change and keep it going) to support it.

Interestingly, the issues faced in every sector is the same - and the broader my experience becomes the more I believe this to be true. Maybe the language is different and the prevailing management culture is different (think of the difference between the Command and Control structure of the RAF and the inclusive management style of the NHS), which creates slight differences in the responses seen by organisations, but the underlying issues are the same.

I have seen organisations which have pushed forward change so rapidly it has created long-term health issues for the business, and others which have gone so slow that the initiative has drowned in its own inertia. I have also seen organisations who have led rapid change in a sustainable manner by utilising internal talents, addressing underlying concerns and through constant communication - the same problem approached in a different way generating different results.

That is our approach in summary - using different approaches to solve common problems and generating different results. I would be delighted to discuss the top four causes of organisational change failure with you - just send me a message or indeed look to attend one of our regular masterclasses where we share these insights with a broad range of organisations.

Thursday, March 09, 2006

Making It Meaningful

I heard a quote that went something like 'Only a wet baby likes change', a very true statement even though we are all involved in 'change' everyday.

An important aspect of change is to make it meaningful to the people involved - the old 'WIIFM' test (What's In It For Me?) - meaning that people immediately consider what the impact of the change will be on them personally - will it increase their wealth, decrease their stress, improve their working environment, stop them from doing things they like etc etc.

Any change that is imposed will generally fail to address these issues for individuals and result in CPF (Change Programme Failure) as individuals and small groups undertake guerilla activities to undermine the change and return it to the status quo. Even given this figure, something like 50% of change programmes will be substantially driven by managers, or worse, external consultants, forcing people to make changes they may not agree with and which have not past the WIIFM test.

To make change meaningful to people, they need boundaries to operate within, the skills and vision to enable them to create a mental picture of an improved process, guidance when they get stuck and the freedom to make mistakes on their journey.

Whilst this goes against many of the philosophies of change which focus a lot on ram-raids and detailed analysis by externals, it leads to change that people believe in - something they find meaningful.

Wednesday, March 01, 2006

Are you really ready? Are you?

My own research undertaken several years ago demonstrated that 87% of change programmes failed to achieve sustainable results. I was therefore pleasantly surprised to have these results confirmed by Henley Management College at a recent seminar which stated that 'over 75% of change programmes fail to achieve results that are sustainable meaning that of the $60 Billion invested by the UK annually in change, over $45 Billion is wasted.'

In analysing why such a large percentage of programmes fail to achieve the desired results, my research again was confirmed by Henley, with the environment created by Leaders stifling change, internal cultural misalignment to the aims of the business not being addressed and the misapplication of tools being some of the common areas our work agreed on.

To quote a well know saying, "Prior Preparation Prevents Poor Performance", and this is as applicable to general change programmes as it is to the planning of military operations. Some of the key aspects are obviously understanding why the change needs to happen and where the organisation needs to improve most, but other issues such as identifying how leadership style might affect success or failure and how the organisational environment needs to be adjusted to support the change process, are often ignored.

As such, we regularly undertake a 'Strategic Change Readiness Review' with clients which looks at the drivers and barriers to successful change with the aim of minimising the risk of failure and also maximising the returns on investment covering 10 'success factors' from organisational culture to performance measures and from the tools of change to 'Change Planning'.

With so much at stake, it has to be asked: Are you ready for change?

Tuesday, February 14, 2006

Fed Up With Lean!

For every ten genuine Lean Experts, there are 100 people who claim to be experts but are not. The biggest mistakes made by these others is to apply tools blindly without considering the people, who ram-raid organisations creating very short term results but leave nothing sustainable, fail to transfer knowledge to the teams involved and do not engage the leadership in the change process.

I have headed this blog 'Fed Up With Lean' on the basis that there are so many people claiming to be experts who are not that it has started to devalue something, which if applied correctly, is highly valuable. Because some people feel that by having read a book they are somehow been transformed into a Lean expert who can revoluntionise entire enterprises, the feeling among many others is that Lean 'must be easy' without having seen it done properly by professionals.

Lean is not a 'quick fix', although it can generate quick returns, it is not something that can be imposed, it is not something that is purely tactical, it is not something which can be undertaken half-heartedly, it is not something that can ignore organisational culture and it definately is not the answer to all problems by itself.

Lean is a key tool in the business armoury which if applied correctly and professionally will transform an organisation's performance and when coupled with effective leadership development and an aligned organisational culture will lead to strategic change at the highest level.

It is not something to be dabbled in by half trained facilitators at a tactical level - although I am sure they will continue to have short term, unsustainable, success whilst continuing to damage the general view of true and strategic Lean.

Thursday, February 02, 2006

Leadership Makes The Difference

Change in business takes many forms and I have worked with many hundreds of businesses and seen all sorts of change processes being used - from the straight 'Lean on the Factory Floor' in manufacturing to high level strategic planning using Hoisin Planning and Policy Deployment. I have also worked with the organisations who think change is about investing many thousands in new machines, buying MRP/ERP systems or purely undertaking training.

However, the thing that sets apart a successful change programme from a mediocre (or damaging one) is the ability of leaders to set the right tone and direction for the change and their ability to inspire people.

In this short statement we see three key issues:

1. How does a leader set the right tone or create the right environment in which people can feel valued and successful during the change process? This is often a function of the individual's levels of Emotional Intelligence.

2. How do leaders set the right direction for the change process? This needs to take a medium to long-term view as although change can generate results very quickly, the reality is that sustainable change can take up to 12 months or more to become 'embedded' in the organisation to the extent that behaviours change, which is what change is al about. We often talk about the '3 Coffee Shop' measures which will be used to describe success a year from now - meaning that you should imagine you are in a coffee shop with a colleague a year from today and they say to you 'I hear your change programme was great' and you reply 'Yes it was, because.....' - these three measures will follow and will be things like 'Our Productivity Improved', 'Our Costs Reduced', 'Our Sales Doubled' etc. Selecting the right 3 measures will set the tone for the entire change programme.

3. The ability to inspire the team - which combines vision with the ability to communicate that vision and which is a key determinant of success. Someone once wrote that 'Leaders give meaning to the work of others' - as true of managing the status quo as it is of managing change.

These thoughts are things that we continue to develop our thinking in and which influence the way we deliver rapid change as change that is not sustainable is not change at all.

Friday, January 06, 2006

Interview for Oman

The following was the transcript for an article I did for PEIE (the Oman Public Establishment for Industrial Estates) which was later modified and published in the Oman Economic Review (OER).

How long have you been involved in manufacturing?
Having spent a number of years in design engineering, I came into manufacturing in the early 1990’s and after having held a number of senior operational management roles, I then moved into consultancy.

How do you see manufacturing changing over the next 20 years?
Obviously, it is possible even now to theorise about the world-wide impact of the growth in the Chinese economy and the stress it will place on global competition. I would also anticipate the continuing rise in the importance of brands in high end manufacturing, both at the business and national level, and the consolidation of low end manufacturing into fewer, more specialised manufacturers who will offer flexibility and extremely high levels of productivity. I also predict that increasing globalisation will have the impact of increasing the number of SMEs who chase low costs around the world, but who are currently prohibited by the extreme costs involved. However, within a little more than 20 years I anticipate we will need to find new ‘emerging markets’ as the costs in China, India and even Eastern Europe will begin to reach a level where it is uneconomic to outsource to them. Throughout this period, niche businesses will continue to thrive by providing differentiated, flexible services at higher costs.

Which emerging technology do you think has the most potential to change manufacturing?
You cannot answer a question like this without first referring to the impact of the wireless communications, and the continuing growth in the Internet, on all aspects of manufacturing, from machine measurement through to supply chain planning. A secondary technology that will have an impact that will, I believe, be bigger than we can currently predict, will be RFID with its applications in everything from product tracking to national security.

In terms of the new sectors that will impact on manufacturing, these are unequivocally micro/nano technology and bio-processing, all of which will make a major impact on the world, although due to the investment barriers to entry in the market, will make it difficult for companies to break into in the medium term (that is until the technology is freely available) unless they consider their entry strategy in the very near future.

What are your thoughts on the issue of knowledge transfer from academia to industry?
The amount of research capability in academia far out-strips that available in industry and there is an urgent need in many economies to make this research more accessible to industry and also to significantly simplify the process of working with academia. I have been deeply impressed by the Fraunhofer Institutes that originated in Germany and how they are both accessible to industry and focused on the commercialisation of research.

There’s a lot in the press lately about how universities need to become more responsive to the needs of business ... what are your thoughts/experiences on this?
Having been involved in partnering with a number of universities in the UK over a number of years, I would agree that for many businesses the processes of accessing and then forming a relationship with universities has been very difficult, often caused by the different needs of the organisations concerned. There have been a number of attempts to simplify the process of getting access to universities and making them more responsive, including introducing layers of intermediaries, but there are still some major problems to overcome before universities are as responsive as they need to be to support industry effectively.

What type of involvement would you like to see business have with universities? What opportunities do you see?
Universities are fundamentally clusters of knowledge. Virtually no business could afford to have research capabilities as big as those held within even a single university. I would be delighted to see universities starting to become an integral, but out-sourced, part of the R&D functions of organisations, and I don’t just mean large companies. This may mean that different funding models need to be used including such things as deferred payments or universities taking a percentage of future sales without requiring funding up-front.

You’ve visited hundreds of plants around the world. While the industries, products, and equipment vary, what are the common principles that guide the best manufacturers?
Another interesting question. The most prevalent measures of success in manufacturers around the world appear to be having an appropriate culture that supports the aims of the business – whether that is to be the most innovative, lowest cost, fastest turn-round etc. For many manufacturers, relationships with customers and suppliers are also key and the formation of effective partnerships is going to be a major source of competitive advantage in the coming years. In addition to these internal factors and skills, governmental policy and regional trading conditions need to be monitored and reacted too accordingly and the best organisations are adept at keeping close to the external factors that affect the internal operations of their business.

Anybody can buy the latest, greatest equipment, but manufacturing isn’t a purely mechanical system. It's the "people systems" that determine a plant's productivity. Without clear processes to change parts, clean machines and report and fix problems, employees improvise, allowing inconsistency and inefficiency leaks in. How does a manufacturer build the necessary “people systems”?

For all but the most automated factories, people are the essential variable that will make every product, fix every problem and identify every improvement. Without ‘people engagement’ no business can hope to be a success, but how you engage them is recognised as one of the most difficult issues faced by senior management and changing culture one of the most difficult and time-consuming change processes. There is no general solution to how you build the necessary people systems, it is a function of where the businesses culture and systems are today and where the business managers want to business to move to (the Future State) and then planning the improvement Roadmap. However, wherever the organisation starts from the solution will include such things as: policies, procedures, management style, measurements, communication and reward/recognition systems.

We all think that the faster a plant can make a quality product, the less that product costs to produce. Those savings can be applied to new features (adding more leather upholstery, say). That's how you become more competitive, sell more products, increase profits and ultimately improve job security. Is this how manufacturing works in the real world?

This is a common misconception and the cause of many businesses going out of business. Doing things faster often implies throwing extra effort and resources at it and these carry extra costs. In addition, making things faster that you have not (or cannot) sell, means wasting money faster too. Going ‘faster’ often drives people to build bigger batches of products (to avoid costly set-up times which would slow things down) and this means producing things that cannot be sold immediately, which ties up significant cash and space. A better approach is to focus on shortening change-over times so you can run smaller batches, and remove non-value adding activities so the business is more responsive. The benefit is that your productivity and flexibility will increase making it easier to cope with what the world will throw at you.

Dell hit in excess of US$45 billion in annual revenue and is growing at nearly 20% yearly, and seems well on its way toward surpassing its goal of US$60 billion within the next few years. And it's not letting up. Still relentlessly striving to get better faster, Dell intends to slash US$2 billion in costs. CFO Jim Schneider has indicated that much of the cuts will come from manufacturing operations and the supply chain. In your opinion, is speed the ultimate competitive weapon?
Responsiveness is an effective weapon for many manufacturers, but not all. It is important for organisations to understand the key drivers in their markets – what are the market leaders doing? What do the customers value? The best weapon is to have a clear understanding of the competitive factors that drive the sector each company operates in – looking externally at what is required rather than internally at what is offered!

Do small manufacturers need big-name supporters?
Many small manufacturers have difficulty managing larger suppliers in their supply chain and I believe there will be a continuing move toward purchasing clusters to allow smaller companies to leverage cost savings and improvements in responsiveness from larger suppliers. In wider terms, many smaller companies can be highly successful without big name supporters, especially in niche markets or for markets where the customers are ‘brand insensitive’ (as in they are not bothered by brand value). Perhaps the best big name supporters of smaller companies will be banks and the media and for many these should be the ones to ensure you have a good relationship with.

Whether you're running a company with 3 people or 3,000 people, you have to hire the best engineers, the best marketers and the best production workers. The products you make, the programs you have, the mission you espouse should make people feel good about working for you. In your view, are corporate values a real motivator?

There are two parts to the answer to this question. In the first instance I would like to challenge the assumption that you always need to hire the best (implying the most expensive). Misquoting Toyota, we get; “we produce excellent results from average people with excellent processes. Our competitors get average results, with excellent people and broken processes.” This statement says that a well organised (and Lean) business will inherently be more effective than an organisation with any number of excellent people but with ineffective processes. Answering the second part of the question, in a competitive situation where companies are trying to attract talent and there are numerous options for the individual, then the decisions come down to which organisation best meets the personal needs of the individual. Some of these needs will be logistical (closeness to where they want to live, working hours that fit their lifestyle needs etc) and some will be emotional (values of the business, working environment, appropriate opportunities for advancement etc). The most effective organisations will aim to achieve the best fit between the needs of the business and the logistical and emotional fit of the individual.

We’re living in difficult times. Indeed, what do you do when the business world as you've always known it simply ceases to be? When new competitors and new technologies explode the industry economics? When everything that worked before won't work - and can't work ever again?

It is difficult for organisations to recover from a major fracture in the market and this is where there is a need to have good external scanning processes to try to predict major changes in the market in a timely manner. However, using a metaphor, whilst we have the technology to spot large asteroids that are likely to hit the Earth, there is a chance we will miss one, and one is all it takes! Therefore, in a market where the world has changed, the winners will be those who can evolve fastest, the most innovative organisations with the ability to quickly restructure their finances and operations to meet the new challenge.

If we don't have to own it, let's not own it. And if we do have to own it, let's reduce the risk by sharing it. How does this kind of thinking apply to today’s manufacturing sector?
There have been attempts to share resources and workforces (particularly in areas where the skills are difficult to access) and there are organisations who have recognised that one company’s waste is another’s raw material but these are in a minority at present. For many companies, forming trading partnerships to share resources will be an effective way of reducing risk, but the key issue is finding the right partner to link with. In the UK, this is being addressed by PSL (Partnership Sourcing Limited) who are a not for profit orgnisation originally established by the UK government and who are now leading the development of the new ISO standard (11000) which will cover how to effectively partner.

If we can't dominate a category, let's get out. Is this smart thinking?
The answer to this is to look at the BCG (Boston Consulting Group) matrix. If the market is low growth and you hold a low share (what is termed a ‘Dog’) then it may be best to plan an exit strategy, but if the market is growing and the company holds a low share (a ‘Question Mark’) then the organisation has options based on the competitive situation in the market. If the market looks likely to consolidate around one or two major players then it prompts one exit strategy (possibly holding out to be bought out?) whereas if the market looks like it will support numerous suppliers, it may be prudent to hold your nerve and stay with it. The answer therefore is not simple and will need to be thought through by the business.

Finally, future plans... anything our readers should be aware of?
In terms of the future plans for my business, we are focusing on WET (Whole Enterprise Transformation) by taking Lean out of the factory and applying it to the office and managerial systems. We are also moving outside of manufacturing and working with service businesses, including hospitals and banks as there is a lot of opportunity to re-group the organisation around better and more effective processes. Another exciting development is our new model for combining Lean with leadership development and cultural change to not only sustain but also to accelerate the benefits of improvement.