Tag Archives: Best Practices

Hitting a Strategic Sourcing Home Run

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I’m not a huge baseball fan, but my daughter gave me the book Moneyball (used at many leading business schools) by Michael Lewis and I was eager to see the movie.  Brad Pitt takes a break from his jet-setting life with Angelina Jolie to play Billy Beane, the General Manager of the Oakland Athletics baseball team. Billy Beane is well-known for fundamentally redefining the way baseball teams make decisions and challenging the way teams had been managed for over a century.  He essentially changes the decision criteria used to select players to a much more fact-based model, which focuses on the real value the players bring toward the Intended Consequences (getting a win).  Once he redesigns the consonants (People, Process, Technology), he quickly realizes that getting to the expected results is still far away. It’s not until he focuses on the vowels (Adoption, Execution, Implementation, Optimization and Utilization) that the results start showing up.  The constraints he faces should sound very, very familiar to everyone.  Follow the trail and tell me if you agree that we all need to be a Brad Pitt (no that does not come with Angelina Jolie).

  • Faces resource constraints in terms of total budget available – SIGNIFICANTLY less than the competition
  • Entrenched resistance
    • Scouts who still evaluate talent the way it’s been for decades (decision models and processes)
    • Salaries of players based on old metrics (reward system)
    • Players who define their roles based on those metrics
    • Middle management (Manager) a TOTAL barrier to change
    • Players totally fighting the change
    • An organizational attitude that accepts failure
  • An environment (the entire sport of baseball) that is openly hostile to every move he makes
  • Changing the entire Value Chain and redefining the way value is created(getting on base leads to wins)
  • Dealing with early losses and still getting the organization to stay committed
  • Getting rid of some of the players to set an example
  • Create value from a supply market (players) that has been sourced by the competition already

The parallels continue.  By the way, those of you not familiar with this particular story or baseball in general, a parallel might be what Lionel Messi and Barcelona have done in terms of redefining soccer away from long kicks and passes to short passes and a possession game.  Even though they have clearly proven that it is far superior to the competition, others have been very slow to adopt.  This concept is why you need Next Practices as a way to create an advantage while others chase Best Practices.

The more interesting question is what you do to stay on top while others adopt the same style and strategy.  And if you think I’m stretching the argument, you will find that since a large portion of baseball has adopted Billy Beane’s vision, his old techniques no longer provide the leverage.  In fact, he cannot compete because he does not have the resources that the other teams do.  And since they are sourcing the same pool of players using the same techniques, his leverage (exploiting market inefficiency) is gone.  This is no different than Supply Chain/Sourcing organizations going back into the supplier market using the same techniques that everyone else is using (Best Practices).  In fact, the best model of that are now the Milwaukee Brewers, not the Oakland A’s.  And even they have had to continuously adapt because everyone has adopted the same tools.  And oh by the way, we all assume in the Supply Chain world that the supply market has not adjusted to the techniques that we have been using?  If you think of it as a system that seeks equilibrium, that assumption just does not hold true.  If you would like a more detailed presentation on this, let us know.

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Adoption / Implementation and “Going Green”

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As I was getting my day going by catching up with my typical round of marketing blogs, I caught an article on mashable.com about the value Canon is getting from “going green” (4 Ways To Make Your Office Greener, http://mashable.com/2011/07/12/green-office-canon/).  I found this article interesting as I have always thought that the use of the word “green” in marketing and business is overused, trendy, and underwhelming. This feeling comes from my tendency to cringe every time a word becomes overused in advertising like cutting-edge (of course we will ignore my tendency to use the word awesome at every opportunity). However, as companies work to find ways to cut costs and streamline processes, it appears that the savings some organizations are experiencing by “going green” are anything but underwhelming. In fact the results can be quite impressive.

According to mashable.com, Canon saved 2.7 million kilowatt-hours of energy from 2009-2010. This equaled a savings of more than $300,000 in utility fees over a two-year period. With companies scrimping and saving these days, we aren’t talking small organic potatoes. The four areas they focused on in this initiative included replacing monitors, switching traditional light bulbs with low carbon lighting, and replacing personal printers with multi-function systems. However, the area of change that stood out most to me was on the operations side. The change went beyond the usual turning off of lights and updating equipment. The drive to “go green” also became part of the organizational cultural. As part of the program, they conducted environmental education and training for the staff. In my opinion, this additional step was why their initiative was so successful.

According to the Daily Energy Report (Feb, 2011 http://www.dailyenergyreport.com/2011/02/how-to-incentivize-employees-to-go-green-at-the-office/) most buildings that are considered green are not living up to their green performance ratings. The main reason for this discrepancy, the Report states, is that the employees themselves are not “going green.” They are not following the green guidelines for various reasons. To rectify this issue, organizations need to look beyond the processes and see what they can do to influence the organizational culture with stakeholder buy in from all.

It is amazing how these articles mesh perfectly with our AEIOU approach. The vowels stand for Adoption, Execution, Implementation, Optimization and Utilization. An organization can have the best processes of any company in the United States, but without the additional AEIOU, the process stays to paper and rarely becomes fully executed to its full potential.  AEIOU gives meaning to the measureable components and creates a real transformation effort.  Unfortunately, this additional step is frequently overlooked as organizations concentrate on the areas that are measurable.

For a company to truly go green, they need to look beyond how many energy-saving printers are available and look at how best to get employees to move from thinking to acting. Processes and Training are only part of the equation. The culture also needs to change to create maximum impact. That is why Canon was successful at going green, while other organizations have missed the mark. They understood that changing light bulbs and printers was not going to give them the results they were looking for. They created support from their employees and made them stakeholders in the change.

So perhaps I should look at “going green” a bit differently myself and see it as more than just a marketing catch phrase but truly a frame of mind.

 

If you have any thoughts or want to add to the conversation, please do.  I’m always interested in other perspectives.

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A “Side-ways” Look at Measurement and Change Management

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Ever notice, that in spite of all the energy and “diligence” we put into selecting the right measures or metrics for business today, and how much measurement detail we wire into our Change Planning, we can still question these measures when change stumbles mid-stream or we find ourselves rationalizing (again) the outcomes upon project completion?  Measurement is certainly one of the facets of change management that can become over-engineered and we can get lost in the complexity we create.

Take for example, the oft cited disappointment with the “failure rate of change”–our OWN scorecard! It is estimated to be as high as 70% in studies by researchers at Harvard and McKinsey.  Just how badly should we feel?  Of course, we are motivated to succeed and are even drawn to the role of Change Leader to take on challenges from which many others would run.  That said, in a classic measurement mind-set error, we are beating ourselves up for this “high” and “unacceptable” failure rate.  Really?…what if the base-rate for failure is 100% and the best we can hope to achieve—the summit (as an average across initiatives and all companies) is 60% failure…now THAT changes your perspective…does it not?  If you only fail 2 of every 10 times, you’d be a genius!

The most frequent Change Measurement error I find, in spite of great diligence placed on defining metrics in many Change Teams, involves the arbitrary nature of the measures chosen.  Why, for example, were you asked to report monthly or define your project milestones relative to the calendar or company’s fiscal year?  Is this the natural cycle of change and the most meaningful definition of milestones and achievement for the transformation you’re leading—I doubt it.

When I was a child, we measured my height on the first day of the new school year, and marked my progress on the door frame to my bedroom.  Now…what if my “growth spurt” occurred during the months of June – October, is any conclusion about which school year included the most growth either accurate or representative?…No.

Take a look at the measures you’ve wired into your Change Initiative?…Do any of those seem to be a bit arbitrary—or moored to the wrong anchor for creating meaning and accurately representing change progress?  Consider, for example:

  • If you are attempting to influence your customer’s business, are your measures defined by the natural cycle of their outcomes…or your own?;
  • Look at the reality of the change you are driving—What are the early signs of progress?…What indicators would tell you that it’s taking hold?…How will you know when it is “complete?”…(my guess is that these have nothing to do with the calendar or your company’s fiscal schedule);
  • Do your measures of sales/revenue growth match the sales cycle?…or your customer’s buying patterns (e.g., their own fiscal year or timing defined by their market)?
  • And most fundamentally…

“If you took away the calendar, is there ANY reason why you’d chop up your transformational, complex endeavor into bits defined by December 31?…Fiscal “quarters?”…Days when it is most convenient (or traditional) for the Management Team to meet?”

Challenge your Change Team to re-examine the “logic” behind your measures or the measures that are important to your stakeholders.  In all likelihood, some of these measures lack meaning because they are not connected to how you are creating value through your initiative—even getting shaped by rather arbitrary factors (if not lazy efforts) like the calendar on the meeting room wall or your businesses monthly reporting cycle for everything from paying taxes to ordering office supplies.  Measurement plays a key role in managing expectations and delivering demonstrable value through change—get this part right and where necessary, lead a revolution to overthrow arbitrary accounting of success.

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More from The Mpower Group’s Next Practices Xchange (NPX). . . . . . From Cost to Value

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On June 9th  Sourcing and Supply Chain executives from a group of Fortune 500 companies from around the world gathered for The Mpower Group’s Next Practices Xchange (NPX) to share ideas and challenge one another on the move “From Cost to Value” within their organizations.   This has been one of the hottest topics in our discipline which made this meeting so timely.   The day long forum combined thought provoking speakers with workshops and good old fashioned peer networking.   Many great ideas were exchanged and challenges were raised.  Here is another example of how major companies are moving their Supply Chain organizations “From Cost to Value”.    

One of my favorite presentations of the day was delivered by Alistair Donald, the Chief Procurement Officer of Global Procurement Services of ConocoPhillips Company.  Alistair’s presentation had a James Bond / Secret Agent theme which made it very entertaining as well as informative.  Alistair has a  wonderful story to tell of his success in transforming the Supply Management function within ConocoPhillips. Michael Lamereaux from Sourcing Innovation, an NPX attendee, wrote that Supply Management has been a key contributor to ConocoPhillips’ financial success over the last several years in his blog post, Supply Management:  Secret Agent of Business Improvement (Key NPX Take Away 5) where he articulated Alistair’s value contributors.

Alistair stressed that having the right talent with the right skills was his greatest asset and his “secret formula” for success.  His staff, fondly described as his “secret agents”, are extremely valuable because they are more than just technical executioners.  The skills he values most are those that allow his secret agents to deal with all the challenges that arise such as:

  • artificial constraints
  • strategy changes
  • short term focus by the peer group organizations
  • talent abduction
  • availability of SMEs
  • change management
  • sleeper agents

Alistair talked about how he inherited a group of mostly Engineers – not a bad thing BUT he immediately identified the need for a more diverse set of skills.    He knew that his “Secret Agents” needed much more than technical competency to be successful.  As such, Alistair immediately launched an end-to end talent management program to help him create the type of organization that could drive Supply Management Value throughout the company.  Those skills are usually described as “soft” skills but are FAR from it.   Skills such as:

  • leadership
  • change management
  • consulting & facilitation
  • influencing others
  • business acumen
  • financial / analytical
  • …. just mention a few.

are critical to driving change through an organization.    His approach was right on target by identifying cross-functional high potential and recent college grads along with some external expertise Alistair was able to build the organization that drove significant change for ConocoPhillips. 

He describes a world where his organization has taken every dollar available from the Supply Base and where they pursue the real opportunities which lie in all the hidden value that can be found by exploring potential business improvement opportunities.   This process has already started and Alistair believes he is well positioned to create even more Value.

 Alistair’s presentation was enthusiastically received by the group and supported as many of our member organizations are struggling with talent management.  In addition, The Mpower Group recently partnered with IACCM to survey their membership on “Are We Leaving Value in the Supply Chain?”  

The results support talent management as being one of the key challenges in driving Value throughout the Supply Chain.    

Stay tuned for more on the move “From Cost to Value” as we continue to share more on this topic. Please give us your perspective on this very important issue.  Please join the conversation . . . . . . . .

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Now is the Time to Invest. . . . . . in Your Employees

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We have heard from many of our clients and prospective clients that they have significant concerns about their current employee base.  The issues that we have heard are:

  • The workforce is aging and institutional knowledge will quickly be leaving the company
  • The glut of  senior, long time resources means there is nowhere for future leaders to move
  • When the economy improves, the best and brightest will go elsewhere

Our research tells us that our clients are not unique AND like most other companies they are not quite sure what to do.   The declining economy has caused employers to cut everything from salaries and bonuses to training and development budgets. As companies are trying to figure out how to survive during these tough times, employees are being pushed to the side. Employees may be frustrated and disheartened but feel like they have nowhere to go – which is probably true. 

Smart companies are planning today for the recovery.  As retirement accounts make a comeback, potential retirees will actually begin to retire.  As they retire, years of knowledge will be following them out the door which is virtually impossible to replace.  Working with those employees NOW on Knowledge Continuity can go a long way to be prepared for their departure.  Here are a few things to think about:

  • Create paired relationships between potential retirees and a few of your potential future leaders to begin to exchange long standing institutional knowledge
  • Create incentive programs for potential retirees to share their knowledge
  • Ensure knowledge management systems and practices are in place to capture institutional knowledge
  • Create training programs for future leaders which include participation of potential retirees so that knowledge can be freely shared
  • Ensure that succession plans are in place so that as resources leave their replacements can quickly step in 

In addition, ensuring that your most critical resources are not getting lost in the shuffle is important.  Those that feel like they have been ignored may be the first to leave as new opportunities present themselves outside the company.  Let your “best and brightest” know that they are valued.  If you can’t reward them in terms of compensation then offer them other incentives such as interesting assignments, more responsibility, access to senior leaders in the company, etc.  so that they can see that someone is interested in their future.  Also, spend some time doing some career planning to chart out the future to let them know what their next move is.   These ideas can go a long way to making valued employees feel valued.

Those companies that will emerge more successful as the economy improves are those that are investing in the future – their employees.  They recognize that when business improves they are going to need to rely heavily on their people.  While things are slow, consider identifying skills gaps among your people and use focused training and on-the-job application to build / enhance skills.  Employees will see this as investment in them and you will end up with a more highly skilled workforce – one that is ready to take on the new challenges that the recovery will bring. 

As the job market opens up, many companies are going to see their talent rush out the door.  Don’t be caught off guard.  Ensure that your institutional knowledge is preserved and your “best and brightest” feel valued enough to stick around as the economy improves.  These are simple steps but can go a long way to preserving your most precious resource – your emnployees.

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