Change strategy

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Use BPM To Align Strategy And Execution

Whether manual or automated, companies have learned that the piecemeal process improvement doesn’t produce breakout results. To drive real business transformation, companies need to link their strategy and some business process management to drive change at every level within the business.

There are different accelerator tools to help business deploy a new business strategy and improve business results. Strategy deployment and BPM dovetail for a few reasons. Which is why it’s worth considering how they relate to one another.

Hoshin Kanri or, Lean – or, both? Well, let’s start by looking at what Lean is and then Hoshin Kanri as this will help us answer that very question.

The core differences between popular best-practice methodologies often just boil down to terminology… but, the hoshin process (when deploying strategy combined) used in combination with a structured lean improvement program (to build operational excellence and innovation system) companies position themselves to be in the 30% of high performing companies who achieve radical change.

What is Lean?

Without trying to cover what Lean is in this post, let’s summarise Lean as a method to create process efficiencies by eliminating non-value adding activities (Muda).

In order to eliminate waste, you look out for TIM WOOD or, the 7 types of waste:

  • Transportation
  • Inventory
  • Motion
  • Waiting
  • Over Processing (too difficult)
  • Overproduction (too much or too soon)
  • Defects

This waste is identified across the core business processes for both information and service flow, by a team of trained employees and their leaders in what each type of waste entails.  In that sense, Lean is definitely “Bottom-Up” and it does not need strategic intent to be achieved. After all, deciding to put the printer in the office rather than the canteen just makes sense whatever the strategy or mission of your business is.

What is Hoshin Kanri?

Hoshin Kanri is a method for ensuring that the strategic goals of a company drive progress and action at every level within that company. This eliminates the waste that comes from inconsistent direction and poor communication.

Hoshin process strives to get every employee pulling in the same direction at the same time. It achieves this by aligning the goals of the company (strategy) with the plans of middle management (tactics) and the work performed by all employees (operations). In that sense, Hoshin is definitely “Top-down” and it does need strategic intent to be achieved. It must start with a vision and is then broken down into 3-5 years of Breakthrough Objectives by the C-suite.

A ‘catch-ball’ process follows where the top management and middle management agrees on how those breakthrough objectives will be achieved, thus creating annual goals. Goals are nothing without concrete actions, however, and so the next step is then to identify improvement priorities.

Wrap Up

If you combine a strong lean program, with your strategy deployment process, the two will meet in the middle to yield a positive outcome to your change effort.

Hoshin Kanri and Lean will at some point meet, right in the middle between the Top-Down Hoshin Kanri and the Bottom-Up Lean. As lean’s purpose is the reduction of waste, the business can use lean to identify improvements which can only empower the business further to achieve their strategic goals.

 

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Case for Developing An Effective Change Approach

Developing new strategies or operational initiatives is the most important way companies renew themselves, by helping to preserve their competitive advantage and stimulating platforms for long-term success. Changing the existing way a business is run can be beneficial, but, it can also introduce a lot of risks. When it comes to making big changes executives know that the wild card is their employees’ capacity to adapt to a new order. Most people do not like change, especially when it comes to changes in the way they do their job on a daily basis. Preparing the company for a change by making any level of the organisation better able to deal with it may be as important as the details of the project. User adoption and business processes changes must be addressed in the change management plan. Fortunately, when companies attempt to manage people change, a little improvement goes a long way.

There are two components involved when managing a successful business transition and changing how people interact and accept those changes. Without considering both, the change initiative will most likely fail.

(1) Organisational change management focuses on the people side of change: how people’s behaviours influence operational changes, and how changes impact the intended audience.

(2) Operational change management focuses on the physical aspect of a change, for example, infrastructure, software, hardware, or environmental changes.

Chanage management has a significant impact on your ROI
McKinsey did a study to determine the role of people and process issues in change programs. They gauged the difference between the expected value of a project (calculated in the project business case for it) and the value (benefits plan) the company claimed to have achieved when program was completed. Each company’s strengths were weighted across twelve widely recognised success factors for managing change effectively, including the roles of senior and middle managers in the initiative as well as the company’s project-management skills, training, and incentives for promoting change. These two dimensions made it possible for them to compare patterns in change management strengths and weaknesses with realised returns. Not surprisingly, perhaps, companies with the lowest returns also had poor change-management capabilities, and companies that gained big returns had strong ones.

ROI Case For Effective Change Management

  • 58% of the companies failed to meet their targets;
  • 20% captured only a third or less of the value expected.
  • 42% of companies gained the expected returns or exceeded them (by as much as 200-300%).

For the  more successful companies in the study, effective change management engaged at every level: senior and middle managers and frontline employees were all involved, responsibilities were clear, and the reasons for the change were understood throughout the organisation.

  • On average 143% more of the returns they expected.

By contrast, in companies that fell short of expectations, we found a lack of commitment from or follow-through by senior executives, defective project-management skills among middle managers, and a lack of training for and confusion among frontline employees.

  • On average only 35% of the value they expected.

So what happens without change management?

This is very well illustrated taking a scenario from the McKinseys study that juxapositions the two hospital experiences both implementing a similiar change program but, applied very different methods. The contrast is quite stark and compelling for companies to ensure effective change management is integrated with their projects. At one hospital, the executive team communicated their bold expectations for the initiative, and stakeholders at every level were involved throughout it. At the other hospital, the executive team did not mandate the change and were described as ‘invisible’ during implementation, middle managers did not know who made the calls and frontline staff had no clear understanding of the new business changes or, of the reasons for complying with them.

The first hospital exceeded its expectations for the initiative (125% of the business case) in less than a year, while the second gained barely half of the expected savings. If any single level of the organisation of the second hospital had been better primed to implement the changes, it could have realised a better return on its change initiative, they would have had a much better outcome.

Firms with weak organisational change management skills have projects that unravel at both ends of the spectrum. Upper management quickly distance themselves from the project . End-users not understanding why their way of working is being changed, resist adopting the system altogether. They either do not pay attention (or show up) during training or, they continue to use outside systems and workarounds. And they encourage others to do the same.
There is a lot of work involved in making sure every person, inside and outside an organisation, it may be even harder than getting the ‘hard’ stuff right like the correct alignment of people, budgets and technology.  However, research findings focused on some of the top performing companies indicate that managing the ‘people side’ of change has set them apart from the pack.
Do not think you have the time or, money to invest in change management? Can you afford not to?
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Strategies for Growth and Moving Beyond The Status Quo

One of the biggest dangers for companies is to believe that their success means they are doing things right and keep on doing them that way. We have all heard the story of a dominant company that lost its way by not embracing change, or, by going about it the wrong way.

Taking a classic case in point, the Kodak example who at one time was the biggest photo printing company in the world. But, fearing that photography going digital would undercut its wildly profitable film business, executives buried the digital camera technology they had developed in 1980’s for fear of cannibalising its all-important film business. In contrast, Fujifilm who envisaged the disruption of digital and the decline of the traditional film took a more flexible approach to executing its strategy – by getting as much money out of the film business as possible, preparing for the switch to digital and developing new business lines. In response Fujifilm developed in-house skills and new digital product lines whereas, Kodak took the easy route to milk its wildly profitable film business and partner or, buy its way into new markets as digital took off.

Today Kodak share is only 15% versus Fujifilm who controls 40% of the photofinishing market and should serve as a warning about the danger of relying on market position and status quo over embracing change.

Balance your strategy framework to focus on your needs of today with the future state of your business

For the most part, change is uncomfortable for companies, particularly when things are going well. Most organisations want growth and acknowledge that innovation is a critical component of achieving that growth. Yet so many of them do not grow or, innovate past a certain point. One of the most common reasons for this is the perceived gap between the innovation of tomorrow versus the reality of running the business today. 

If you feel as though your organisation is mired in ‘chugging along’ delivering business as usual here are few pointers to ensure you execute the right strategy to grow and innovate to survive. It is different for every company and depends on the industry. Here are a few questions to consider when creating stepping stones between running your business profitably today and growing it for the future.

1. Are you asking ‘Why’ 

Companies must change their own thinking about long-held business habits to successfully anticipate market trends to create new businesses and Why is a great question to start transforming your mindset! It can be easy for companies to get complacent and comfortable in their success. One way to avoid this is to think about what you would do if you were starting the company from scratch today. Often, new employees ask these questions naturally. Consultants can help because they ask these questions to better understand how to help. Why do you do it this way? What would you do differently? What would you do the same? Are there things you used to do well that have been lost as you have grown? Asking yourself these questions can help you narrow your business innovation focus.

2.  What amount of risk is smart?

The introduction of change brings risk and defining the risk versus reward of a potential opportunity guides how much risk is worthwhile to determine the right changes to pursue.  For example, if a new product could increase your market by 10% but, you would sacrifice 50% of your revenue to get there, it may not worth it. Diverting all your research and development resources to new products may accelerate new revenue but, if recurring revenue from existing customers is at risk, this may be shortsighted. The answer is usually less dramatic than this example.

More often than not, the biggest risk in the change journey is a distraction from regular operations and unforeseen challenges. If uncertainty and speedbumps are anticipated as a normal part of the process, you can more easily deal with them. That is why sports teams have backup plans and substitute players on the bench and so, too must companies when assessing change with a long-range view and the confidence that the risk of the change effort is worthwhile.

3.  Are your growth and change execution strategies looking far enough into the future?

Many companies seeking change falter because they do not dedicate the time to assess market trends and changes with the longer view in mind. Drawn to the immediate payoff of a quick-win, instead, many companies focus on the core business rather than those macro changes 3 to 5 years into the future that will impact the market you serve. This is particularly perilous for fast-moving industries like tech when executing strategies for growth.  There are three key premises companies should consider when implementing their growth strategies.

(i) Maintain and improve your core products or, services. Get as much money existing products or, services to milk your current revenue by reducing costs and increasing efficiencies.

What can you change and improve to add revenue by attracting new customers and increasing the loyalty of customer base? Now, imagine that you lost them entirely. Imagine that you’re Kodak and customers refuse to buy photo film anymore in preference for the digital alternative. You would move straight to growth strategy (iii) create new business(es) – as did Salesforce when creating CRM as a cloud offering, for example.

(ii) Expand into new markets and nurture emerging business. Taking what you already have, and extending it into new areas of revenue-driving activity. Innovate products and services that extend, expand and enhance your existing portfolio but, do not yet produce revenue. 

There may be an initial cost associated with developing new go to market products and strategies, but these investments are a well-proven way most companies increase addressable markets and revenue but, stop here. Examples of this could include launching new product lines or, expanding your business geographically or into new markets. With the necessity to keep ahead of the competition, companies must also embrace what we call innovation the third growth path rule.  

(iii) Create New Business(es). Introduce entirely new elements to your business that don’t exist today by investing in transformative initiatives that look to create new products and services.

They may not produce any real returns for several years out but, could potentially double or, triple your addressable markets and, or, represents an entirely new way of solving the problems you solve today. Innovating and preparing to switch to new markets and trends happening in the industry gives any business the best chance for sustainable growth.

A standout case in point is Salesforce, they did not really create the CRM business, the leader in that sector was Seibel Systems. But, Salesforce determined that CRM users were likely ready to use a CRM solution that was not necessarily managed and implemented by its own IT department. A bold idea at the time and, as we all know how they were absolutely correct. At Salesforce, it became clear the normal enterprise IT department at customer companies had little resources to satisfy the new application demands of its lines of business. By offering its technology via cloud customers could build its own applications using business analysts and project managers rather than programmers from the IT department? Might have been a different story if, Seibel had anticipated customers preference and prepared to offer its CRM IT service via the cloud?

Practice the 70 / 20 / 10 rule for your strategic plan

As a rough rule of thumb try to ensure that around 70% of your activity is focused on (i) maintaining and improving your core products and services.  After all, you need to survive and thrive today to have any chance of succeeding tomorrow.  Allocate around 20% of your effort to focus on (ii) nurturing emerging business and R&DLeaving 10% of your overall effort. focused on research and experimentation (iii) to create future new in-house businesses and diversification of your portfolio.

How close are you to the 70 / 20 / 10 rule? Do you have a clear understanding of your current reasons for success? Do you have a plan for if they were to be taken away from you? Did you find this article helpful?

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How To Build A Business Change Roadmap For Effective Change Planning

How many of us in the profession can truly say we have been taught to develop, refine, and deliver a professional roadmap based on a sound method with consistent repeatable results?  Have been in project and change environments for years, and still astonished at the wide variety of quality in the results I have experienced over the years – and it is not getting any better. Not sure I can identify why this is so, maybe it is the consolidation and changes in the traditional consulting business or, the depreciation of the craft itself among our peers. And then again, maybe sound planning went out of style and I did not get the memo. No matter what the root cause(s) is I want to take a little time and share some (not all) of what has worked for me with great success over the years and may make your next roadmap better.

I’m no genius, but, investing in structured thinking, communication skills, and just plain good old analytic skills over the years has made the difference.  Why there is not more of this kind of investment is truly troubling.

What I’m going to share works well across most transformation programs. You will struggle to find this in the one place (I have looked, maybe not hard enough). You will most likely find something similar to this in the best and brightest organisations who have adopted an optimised way to think about how to guide their organisations to perform as expected (some of us call this experience).

High-Level Business Change Roadmap Stages

At the risk of over-simplifying things, here is the overall pattern all business transformation roadmaps should follow:

1) Develop a clear and unambiguous understanding of the current state
– Business Objectives (not just strategy or goals, real quantifiable objectives)
– Functional needs
– High impact business processes or, cycles
– Organization (current operating model)
– Cost and complexity drivers
– Business and technical artefacts

2) Define desired end state
First, (I know this is obvious right) what are trying to accomplish? Is there an existing goal-driven strategy clearly articulated into quantifiable objectives? Sounds obvious, yet many companies set out on their change program without a strategic plan or, an implementation strategy to track their progress getting there. Where it does exist in other cases business does not know about it or, cannot clearly make out what the end game means in terms of their objectives.

This could be a well-guarded secret. Or, what is more, common the line of sight from executive leadership down to the front lines is broken, where no one knows what the true goals are or, cares (it’s just a job after all) becomes an annual charade of managing by objectives with no real understanding.

Some better examples I would expect include:
– Balanced Scorecard Performance targets linked to strategy
– Operating Model Improvements
– Guiding principles

3) Conduct Gap Analysis
Okay, now this is where the true fun starts! Once here we can begin to evaluate the DELTA between who we really are, and what we truly want to become. Armed with a clear understanding of where we are and where we want to be, the actionable activities begin to fall out and become evident.

Gap closure strategies can then begin to be discussed, shared, and resolved into any number of possibilities usually involving the following initiatives:

– Organisational
– Process
– Architectural (technology)

The DELTA, in this case, represents the recommended Gap Closure Strategy between current and desired end states. Or put simply, the changes we need to execute to close the gap between where are, and where we want to be.

4) Prioritise
Now that we have the list of changes it is time to prioritise what is front of us. This is usually driven by a roadmap by evaluating the relative business value AND the complexity, plotting the risk and reward to determine if, the change is worthwhile.

It is critical here that the stakeholders are engaged in the collection of the data points and they are keenly aware of what they are scoring. At the end of the day, what we are doing here is IDENTIFYING what is feasible and what has the highest business value. I know, I know this sounds obvious, and you would be astonished by how often this does not occur.

5) Discover the Optimum Sequence For Your Portfolio of Changes
Okay, now we have the initiatives, the prioritisation, how about order by which one delivers the portfolio of agreed changes? In other words are there things we have to get accomplished first, before others? Are there dependencies we have identified that need to be satisfied before moving forward? This sounds foolish as well, and we sometimes we need to learn how to crawl, walk, run, ride a bike, and then drive a motor vehicle.

What about the readiness of an organisation to take on change? Not to be overlooked, this is where a clear understanding of the organisational change dynamics is critical (see step number 1, this is why we need to truly understand where we are). Remember culture eats strategies and plans for breakfast, dinner and tea!

6) Develop and Communicate the Road Map To The Impacted Stakeholder Groups
Now we are ready to develop the roadmap. Armed with the DELTA (current versus desired end state), the prioritisation effort (what should be done), and the optimum sequence (in what order) we can begin to assemble a sensible, defensible roadmap describing what should be done in what order. How this is communicated is critical now.

We have the facts, we have the path outlined, and we have a defensible position to share with our peers. We have the details readily available to support our position. Now the really difficult exercise rears its ugly head. Somehow, we need to craft a simple yet compelling vision of how we will transform the business, or enable new technology to accomplish what is needed.

Do not underestimate this task, after all the hard work put into an exercise like this, the last thing we need to do is to confuse our stakeholders with mind-numbing detail.

So, this is the basic pattern describing how a robust roadmap should be developed for any organisation across any discipline (business or, technology) to ensure an effective planning effort. Wanted to share this with you to help you with your own work, this is usually not an exercise to be taken lightly.

We are after all discussing some real-world impacts to many, all the while understanding the laws of unintended consequences, to come up with a set of actionable steps to take along the way that just makes sense. This method has worked for me time after time. I think this may just work for you as well.

What do you think? Is this helpful? Happy to discuss these points with you to see what is really relevant.

 

 

 

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Craft Your Why, Who, What and How To Create The Right Change Story

Change methods, models, or tools are mostly applied at the surface level of an organisation understanding because they do not understand the fundamentals of managing for successful change program. Largely because most companies understand change management from a project management school of thought where it is perceived as a bolt-on activity of implementation.

If you have an interest in consulting, management and persuading people into action, watch the famous TED talk by Simon Sinek called How Great Leaders Inspire Action here.

The 5 W’s and H method is a key tool people use when doing strategic planning. They are also used by writers, of course, when composing a piece. Rudyard Kipling wrote:

I keep six honest serving-men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who.

The concept is basic but powerful. Because many companies still struggle to integrate the why’ and ‘the who’ before they hand over the initiative for implementation getting a change program off to a shaky start.  Implementors must then take these ideas to the next tougher stage and translate into successful change projects. And establish the right transition structure for the company to get there the future destination ‘the what’. But you cannot get there unless you have a change implementation plan ‘the when and how’.  

The Who of Change: Two groups are crucial to any change project: planners and implementers.

Planners, typically more senior than the implementers, must answer some important questions before they hand over the initiative for implementation. When these questions are not dealt with adequately, the initiative can get off to a shaky start.
Implementers have the more difficult task of the two groups. Until implementation begins, the change initiative is only an idea. The transition structure for implementation should definitely include a skilled change champion, but a steering committee, an executive sponsor and implementation teams are also associated with a successful change project. The tasks of implementation are numerous—communicating, scheduling, assigning responsibilities, thinking about details, dealing with resistance, assessing progress and so forth—and so getting the right people with the right skills focusing on the tasks of implementation is very important. Some of this work is easy, some hard and some tough.
The Why of Change: The first thing people want to know when a change is proposed is why this change is necessary. If you do not have a very good answer, then they will not support it. And the statistics show that having a good percentage of supporters at the outset of a change initiative is strongly associated with success. Don’t believe me? Then just think about the constant “why” questions your child may be plaguing you with. So your first task in change is to answer those “why” questions. This requires rigorous honesty, hard thinking and hard work, plus some very tough choices.
The What of Change:  The “what” of change means creating and communicating a post-change vision. I define this vision as a clear and compelling picture of the ideal future with a commentary on why it’s desirable. A vision is important to motivate people to buy-in to the changes. Just as you would not set out on a major trip without an idea of where you are trying to travel, you shouldn’t set out on a change project without a vision of its final destination. A clear vision forces you to identify exactly what you are aiming for. During turbulent times, people’s uncertainty climbs, and they hunger for meaning and direction. They seek leaders who have a clear vision and communicate a clear message. It is tough work to construct and hard work to communicate a motivating vision statement, but a good statement can be a game changer in terms of getting people onboard. You should not just throw some words on a page and send them out to your stakeholders.
The How of Change: The vision is the destination, but you will not arrive there without creating a change implementation plan. This is the “how” of change, and it is highly correlated with the success of your initiative. The change implementation plan contains goals, objectives, measures, deadlines, timelines, roles and responsibilities, key resources, pilots, training plans, and more. Too often change projects fail when organisations try to implement change without creating a complete roadmap, resulting in gaps and panicky attempts to make up for those gaps.
Do not let that happen to your change project!
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