The company had an history of growth and earning good margins. However, for quite some time growth slowed down, margins were declining, some key customers started to leave and the number of new product introductions had declined.
The Management Team wanted to turn the business around, had sharpened the vision and crafted a new strategy. Axisto was asked to support deployment of the strategy
Together with the Management Team it was decided to use Hoshin Policy Deployment to structure the deployment of the strategy. The process kicked off with a two-day workshop with the company’s Top30.
After sharing and discussing the vision and strategy, the ‘how to deliver it’ was explored in break-out sessions. The two days generated not only a clear sense of direction and alignment, but also a more connected and energised Top30 community.
In a series of follow-on worksessions involving more people objectives and targets were sense-checked. And the deployment was completed down to concrete break-through projects.
Massive change ahead
We’ve just had a long period of ever-increasing economic growth, but this has been halted in its tracks because of the Corona virus. The impact of the global lockdowns is huge, both generally, on the economy and society as a whole, and specifically, on companies, families and individuals. A major recession is a given. Consumer behaviour is likely to change in a fundamental way – and so are the ways in which business will be conducted in the future.
How will you navigate these current challenges and position yourself for new growth? Now is the time to review your company, the products and services it offers, the markets it serves and the way it conducts its business. Significant change is required to create the “new normal”. Your strategy needs to be reviewed. New (perhaps digital) operating models need to evolve. And all this needs to be implemented fast so that you can capitalise on new opportunities and build your competitive advantage.
The change challenge
Transformation, strategy execution and performance improvement programmes are notoriously hard to deliver successfully. Most change initiatives struggle to accomplish and sustain the initial programme goals – in fact, only 30 percent are successful. The delivery of a mission critical initiative on time and in full is, therefore, a real determinant of competitive advantage for any company. The vast majority of change initiatives stumble because of precisely the thing they are trying to transform: attitudes and behaviours of people at all levels in the organisation.
Successfully implementing change
The ability for people to change their attitudes and behaviours is primarily driven by their perceptions and intentions. These must be changed first before any change in attitude and behaviour occurs. So how can we do this? People’s perceptions and intentions change due to experiences and information. Perceptions and intentions capture people’s motivations and are indicators of how hard they are willing to try or how much effort they plan to exert in order to perform the required behaviours.
During a change process, people are confronted with two forces: first, change tension (the perceived necessity and urgency of the initiative) and, second, the power to change (the willingness to support and adopt the change and the ability to contribute effectively). Both forces are required in a programme to make change happen.
The way people experience these forces is the key indicator for people’s perceptions and intentions towards an initiative. The rating for these two indicators gives the best prediction about a person’s intention to adopt the attitude and behaviour that is needed. In different parts and at different levels in the organisation, the two forces are likely to develop differently. This drives the need for differentiated interventions for various parts of the organisation. Our Change Insider® provides insights and fact-based guidance for precisely these differentiated interventions to enable the on-time-in-full delivery of a company’s mission critical initiative.
We live in a time of unprecedented change and uncertainty. To survive, your company must be unified and agile. However, in practice, the agendas and targets of departments are not well coordinated. Everyone moves in different directions, focusing more and more on the short term, and the company runs into problems. Axisto helps you establish organisational alignment by aligning the vision, strategic goals, targets, operating model, behaviours and skills of the people in your organisation. You will be able to address your short-term issues in the context of your long-term goals. And your company’s development will be on track to fulfil its vision.
Is your cost structure still fully aligned with your vision?
The global lockdowns are having a significant – if not devastating – effect on most businesses. Many companies will survive the crisis, but they’ll emerge a lot smaller and in a changed environment. Reviewing your vision has now become a necessity. Your current cost structure is most certainly no longer optimal. Now is the time to ensure that every euro spent contributes 100 per cent towards achieving your ambition.
Aligning your vision and cost structure – 4 questions
There are two basic ways to approach cost cutting: targeted and zero-based. As most companies are facing a major, and quite disruptive, change, a comprehensive approach is needed. In our experience, Zero-based Alignment provides the better way to radically redesign the cost structure of a business.
The first step is to work out an appealing vision for your business in the “new normal” and set a challenging cost target. Next, current activities and cost structures need to be mapped and understood in detail. To understand how best to address this, we work with four main questions (see figure below).
The answers to these questions become the input for an iterative process that starts with a redesign of end-to-end business processes. Next, the organisation structure is designed to fit these new processes. The design always starts with a blank sheet of paper. By comparing the existing state with the ideal state, many opportunities are identified for both savings and new growth opportunities.
The Zero-based Alignment workflow
The overall process that Zero-based Alignment follows is shown below.
A new and stimulating future
Zero-based Alignment generates powerful effects: a fresh and energising vision that reflects changed market conditions, significant cost reductions, improved yield on every euro invested, new growth opportunities, and a new and stimulating future for your business. And that’s exactly what every company needs right now?
To what extent is your organisation able to move quickly and decisively?
Already in normal times companies struggle to deliver business targets on-time-in-full. Typically, we find three related main causes: (1) there is no appealing vision that is owned by everyone in the company, (2) the strategic goals are unclear and (3) the organisation is not aligned. As strategies are not unique anymore, it’s delivery fast and in full is, therefore, a real determinant of competitive advantage for your company.
It starts at the top
All successful change management initiatives start at the top, with a committed and well-aligned group of executives. The first step is to ensure that the team will coalesce around a coherent vision on how the company should look and run like. It is the basis for the identification of the three to five strategic goals with challenging targets.
And cascades down the organisation
Next the top team involves the next organisational level down in refining the vision and gives them the challenging targets set. Collectively, they will need to work out how to deliver them. This requires horizontal within the organisational level and vertical alignment between the levels. This process is iterative and continues right through the levels till shopfloor is reached. What happens is alignment top-down and horizontally at each level.
The process is not a one-way street, it is a ‘catch-ball’ process. The higher level throughs the ball, i.e. the target to the next level down. They will sort out how to deliver it. It requires the involvement of the various departments at each level as they are interdependent. If they can’t find ways to deliver and substantiate this, they are allowed to through the ball back with an indication of what is achievable. Our experience is that, if done well, this results in challenging targets which are more often than not higher than the top team started with. The process builds on the collective insight, knowledge and experience. What happens is both alignment and ownership of the targets, a great starting point for moving quickly and decisively.
Are your business processes still up to the required standard?
Particularly now, in the major economic recession that has set in due to the Corona lockdowns, the quality of your business processes have to be top notch. After all, this is the determiner of the operational performance your company delivers.
Over the years your customer base will have changed, but so too has your supplier base, your products and services, your employees, your IT-infrastructure and your organisational structure. With every change your processes have been affected and now they are rather a tangled web with insufficient performance.
Understanding how your processes behave – a prerequisite for improvement
The scale of the current crisis requires companies to move quickly. You want to cut costs, slash cycle time, serve customers faster, get things right first time, improve reliability and be more agile. Therefore, you need a 100% fact-based insight into how your business processes are currently performing – and this can only be obtained through Process Mining.
Process Mining – the gateway to rapid operational performance improvement
How business processes behave is determined by the way those processes are designed and represented in IT-systems on the one hand and how your employees behave on the other. The good news is that this information is already captured in the log data in your IT-systems. This log data can be loaded from your IT-systems into the Process Mining software tool and, literally at the touch of a button, it then displays your process, as it behaves in daily reality, with all the process variants, rework loops, bottlenecks, compliance issues and more. Static, as a process flow, and dynamic, in the form of an animation. In short, a fast and effective way to understand processes and make an effective impact on those things that really matter.
The power of Process Mining
Process Mining (PM) quickly puts an end to “underbelly” discussions because it is fact-based. With PM, both the entire process and an individual case can be analysed – and everything in between. After loading your log data into PM, interactive “deep dives” can be organised with the people involved in the process. Our experience is that the root cause of problems is discovered in a short time and it quickly becomes clear which actions need to be taken to solve problems and seize opportunities.
Steering the company in volatile times
The coronavirus pandemic has caused a swell across business markets, in terms of both volatility and financial risk. To sail the company ship through these rough economic seas, your compass needs to be accurate and the quality of decisions and actions taken must be right. All crew members need the appropriate information to make the right decisions and act accordingly. Unfortunately, this is seldom the case. More often than not the crew sails blindfolded, unable to act effectively; the company drifts off course and targets are not met.
The Performance Management System
This is where the Performance Management System (PMS) comes in. In Part 1 we focused on an appealing vision and ambition – the dot on the horizon to sail to. In Part 2 we considered how to align the cost structure with this vision. In Part 3 we deployed the vision and ambition through all organisational levels and made sure that everyone in the company was aligned and owned the targets. In Part 4 we looked at how to design the key business processes. The PMS ties all of this together.
The PMS is like the control panel in the bridge of a ship. In fact, it is a set of fast and slow Plan-Do-Check-Act cycles. PDCA – the good old Deming cycle. The basic principle is shown below.
On the right is the “P” column: turning the annual budget into a daily activity schedule. The lower horizontal part is the “D” area: the actual business processes where activities are done. On the left is the “C” column: reporting actual performance against the targets. In the middle is the “A” column: the daily, weekly, monthly, quarterly and annual meetings in which actions are formulated and decisions taken to drive actual performance to KPI targets based on the information and insights supplied through the reports. The fast cycles occur shift-to-shift, day-to-day and week-to-week. Above that the slower cycles are active.
It is important to ensure that the PDCA cycles are closed and that the faster and slower ones work in synch. Closed PDCA cycles drive actual performance to KPI targets.
Purpose of the Performance Management System
The purpose of the Performance Management System is to (1) manage the organisation and the business processes to ensure delivery of the company goals, (2) support the development and continuity of effective behaviour of people at all levels in the organisation, and (3) facilitate people to work as “one team – one goal”.
Dealing with the uncertainty of “the new normal”
Many people talk about “the new normal”, but nobody really knows what it will look like. The increased volatility and financial risk will remain with us for a while; however, Robotic Process Automation (RPA) could well be a solution to help address this current uncertainty. RPA drives down costs, is adaptable to changing circumstances, reduces cycle time and increases quality. And, at the same time, RPA could be a suitable way to kick start your digital transformation journey.
Robotic Process Automation (RPA)
RPA uses digital robots (or bots) to automate mundane and repetitive tasks and processes in the workplace. A bot is a piece of software, programmed to do specific tasks on a computer. It is taught a workflow – and it can do more or less anything as long as the workflow can be defined. The bots mimic human behaviour and work well in a rule-based environment, preferably with structured data.
RPA and the operating model
In Part 5 we discussed the PMS operating model, which is supported by IT systems through the automated execution of business processes and which provides reporting functionality. In every performance improvement programme we conduct, we find that the operating model is not well-aligned with the vision and that people don’t have the information they need to do a good job. We know that the minimum requirement is decent reporting. To get this, people end up collecting bits and pieces of information from the various non-integrated IT legacy systems. Integration is costly and time consuming, so it is never done.
As a consequence, business effectiveness breaks down: employees carry out highly repetitive, boring, and transactional activities; companies handle high-volume, unstructured data in silos; data is underutilised for reporting, analysis and continuous improvement; and customers often face a fractured experience in contacting businesses. In short, high operating costs and low performance.
RPA addresses these issues fast, reliably and at a low cost. And on top of that, the programming of the bots can be easily adapted if circumstances and functionally requirements change. The bots are flexible, scaling up and down with demand.
RPA – a gateway to artificial intelligence (AI)
As RPA is IT-system agnostic it can interact with any technology platform. The bots can collect and process data from various cognitive technologies such as machine learning and computer vision – indeed, Optical Character Recognition (OCR) is a broadly applied technology.
We don’t see RPA having a long-term future on its own, but we do see it as a crucial piece in the puzzle of a true digital operating model that includes artificial intelligence. Dealing with the consequences of the coronavirus pandemic is, as we see it, a great time to kick start your digital transformation journey.
The site had created an appealing vision, and its realisation was seen as crucial for the site’s long-term viability.
However, a year and a half later, little had been achieved and the management team had lost control.
Axisto was hired to help put the realisation of the vision back on track and prevent it from derailing again.
The existing vision and strategic drivers had been relevant and appealing. However, the translation of the vision into strategic goals and targets had been missing. Furthermore, the composition of the Site Management Team (SMT) had changed considerably over the past year.
The first step was to allow a careful onboarding of the new site management team (SMT) members and to strengthen relationships within the SMT. Next, the first step of the Hoshin Policy Deployment process was done, setting level 0 strategy and targets. In a series of consecutive sessions next organisation levels were involved until the shop floor was reached. We followed the ‘catch ball’ process carefully.
Now, threequarters of the year onwards the results are what the SMT was looking for.
Purpose of the Business Change Mentor
Change and improvement is difficult. Only 30% of initiatives are successful. The goal of the Business Change Mentor is to enable you to independently deliver successful improvement projects. The Business Change Mentor ensures that you:
deliver all project objectives quickly, on time and completely
realise operational and financial improvements – and that they take root
have employees who feel they are co-owners of the business and the results
proceed immediately from improvement project to continuous improvement
get external support where it is necessary
It has been a trend for some time that companies want to carry out their change and improvement projects independently as much as possible, calling in external support only where necessary. COVID-19 has accelerated this trend.
COVID-19 has also created more pressure to change: to face problems or to seize new opportunities. In addition, COVID-19 requires that any external support be arranged online as much as possible.
How does the Business Change Mentor add value?
The Business Change Mentor (bcmentor.com) offers you an online change approach that has proven to be successful in hundreds of projects – timely and complete delivery of results that are sustainable – and 95% of these achieved their intended objectives on time, in full and within budget.
Experienced mentors are available to support you online, or in the field where necessary, allowing you to independently carry out a high-quality improvement project and make it a lasting success.
Visit www.bcmentor.com for more information, and contact us to explore the possibilities for you – Master Your Change Challenge!