Re: REQUEST: systems thinking for management

[MartinS999@aol.com]

Nigel Edwards writes:

Begin quote:
I have been practicing & developing my learning in the real world for the 
last five years & have had numerous small successes since being trained by 
PMI in England. I have been with my present company for one year promoting 
the message of profound knowledge at every opportunity. Some managers are 
starting to listen & realise that something needs to be done. I have been set 
a task to give a presentation on the way forward so that the business 
processes become aligned to the aim of the system. Has anyone out there had a 
similar experience which they would like to share with me please. I realise 
there are massive implications for the system to be transformed but someone 
has got to do it.
End Quote.

REPLY
>From Martin Stankard, martins999@aol.com

About 20 years ago I worked with an organization that completely transformed 
its performance and its processes over a five year period. The whole change 
was driven by a new CFO who eventually went on to become CEO of this 
organization and then of a much larger one that bought out the subject 
company. 

The CFO initially put in a planning system that identified the firm's 
opportunities -- with heavy emphasis on revenue generation. He then targeted 
the selling process for improvement and raised selling productivity 80% in 
nine months, and by 140% in 18 months. From that success each year he used 
the planning system to target 3 to 5 opportunities -- most of them revenue or 
service/productivity improvement opportunities. Note that the initial 
emphasis on building revenue and customer retention and loyalty put pressure 
for improvement on back office operations. He never had to cut staff across 
the board, and over five years the whole firm grew by over 100 percent in 
volume with no change is total staffing.   

As they re-engineered processes for each opportunity they implemented 
improvements that usually reduced labor intensity. However, he planned the 
improvements so that the staff savings were needed to meet growing volume. 
(When forced to, he obtained the volume by cutting price and attracting 
enough volume from competitors to keep the staff busy and raise profits.)

After a year or two, the CFO, who had been keeping senior executive jobs 
vacant as they turned over, began filling them with "plate breakers" -- 
managers who were good at making change. 

The lessons to me were:
1. You must have constancy of purpose right at the top. The sponsor does not 
have to know everything about how to transform, but the sponsor has to have a 
steady long-term commitment to learning enough to transform.  This sponsor 
was a unique individual having served both in investment banking and 
management consulting before taking on a line management job.  He did not 
seem to have any vision other than to make his outfit the most competitive 
and profitable firm in its class. (Which he accomplished.)
2. You need a solid company-wide planning system to get everyone aligned with 
the overall purpose. It also is needed to make sure that everyone feels 
comfortable and commited to where the organization is going. (Drive out fear 
at the top.)
3. You need to start with processes that can generate more business. If you 
begin with cost cutting to generate early successes, and add no new volume, 
you will have to cut staff to realize the savings, and this will kill the 
transformation.
4. You need a solid, fact based corporate plan that all key executives 
participate in. This forms the political and practical foundation for a 
company-wide PDDSA cycle.
5. You need to rely on cross functional teams of managers to DO the plans. 
They must be trained in process improvement methods and the sponsor has to 
supervise the initial cycles of implementation very closely.  The CFO above 
ran the first improvement cycle personally and after that held monthly 
reviews that were very probing. His reviews solved or dissolved problems and 
barriers as they came up.
6. You need a very fact-based process improvement approach for the teams to 
use in implementing their planned improvements. He challenged teams to come 
up with 100% measurable improvement or show him the facts that proved 100% 
improvement was impossible.  (Usually the facts pointed to more than 100% 
improvement when you finally gathered them.)
7. You need to take a look at what worked each year, before planning and do 
more of it. You need to see what did not work in the past year and come up 
with an improvement for the next cycle.
8. You will need outside resources -- training and consulting -- to achieve 
the first major success or two and install a capability to make improvements 
as planned.
9. You need to  pursue all opportunities where ever they lead in the 
organization. The problems do not respect organizational boundaries so the 
solutions cannot either. (These were his own words.)
10. It takes a long time and lots of steady commitment from the top. In 
several hundred clients I have found only a few that really wanted to do what 
it takes.  The bottleneck in the whole process is with executive leadership 
-- which is a scarce resource.
11. Take it one project at a time, one success at a time, one year at a time, 
and cumulate the lessons learned by building them into a management system -- 
company wide PDCA. This executive was one of the first in the US to run a 
Baldrige assePDSAnt, solely to improve his company -- no interest at all in 
an award.

Good Luck.  Show this post to your CEO and if he or she can envision a 
multi-year PDSA process, plan a pilot of the first year's cycle focusing on 
selling productivity or launching a great new product.

Hope this helps.

Martin
-----------------------------------------------------------------
Martin Stankard, martins999@aol.com
Productivity Development Group, Inc. 
Business Excellence and Process Improvement
Training and Consulting
P O Box 488
Westford, MA 01886
Voice (978) 692-1818
Fax (978) 692-5080
Please visit out web site at http://www.martinstankard.com and let us know 
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