Scaling Up Excellence, The Toyota Way

Scaling Up Excellence The Toyota WaySo – if Scaling Up Excellence is a manual about how to create a ‘relentless restlessness’ that drives customer-centric innovation, where does that leave The Toyota Way? Do Sutton and Rao’s prescriptions ‘supercede’ The Toyota Way? What does Sutton and Rao’s analysis tell us about the continued validity of what has become effectively the gold standard in operational excellence?

There are clearly differences in scope. The Toyota Way is a complete philosophical system. It is structured, prescriptive and sometimes rigid; but its impact in engaging people, in nurturing their creativity and commitment to deliver continuous customer-centric innovation, has been awesome. Organizations the world over are proudly attempting to replicate it.

Scaling Up Excellence, on the other hand, does not attempt to define any kind of closed-loop system.  It is a distillation of the evidence about how best to promote operational excellence in the real world, shaped into a set of tools, tricks and mantras for ‘fighting the ground war’ that is the pursuit of continuous improvement. And it has a broader canvas too, taking in education, anti-bullying initiatives, creative industries and start-ups, for instance.

But there is a huge overlap. Much of the evidence presented in Scaling Up Excellence can be seen as a ringing endorsement for The Toyota Way. Both Stanford academics, Sutton and Rao pursued their quest with open minds, spoke to a lot of people and were led by the evidence. But their conclusions about how best to scale excellence closely mirror The Toyota Way: Continue reading

Goobledegook And The Bottom Line

ChaosThere’s a parable for our times over on the FT. It’s a story about the real-life rebellion of a senior director who refused to approve a new IT system because he had “not understood a word” of the presentation to the board. Initially the lone dissenting voice in the room, his fellow board members eventually admitted that they had not really understood the project either, which had been explained in “baffling goobledegook”.

In this particular re-enactment of Twelve Angry Men, no innocent man was saved from the gallows but the board did go on to demand that the CIO come back after translating the plans into plain English. As the author Gillian Tett notes, it’s a story that should challenge us all:

“For when we look back at 2013, one of the big themes was the regularity with which computing systems produced costly glitches.”

There’s been a lot written on IT failures and their impact, which can be devastatingly expensive. The evidence points overwhelmingly to poor communication as the most common root cause. Between all the stakeholders, but most critically between IT and the business. Successful IT project teams, as McKinsey has noted, continually engage with stakeholders – at all levels, internally and externally – within a rigorous governance framework for managing change.

What happens most often of course is that the board blindly nods the project through. But this isn’t just a problem of poor communication at board level.  At every level, there’s often a stilted and meagre dialogue running between IT and the business, increasing risk and undermining business benefits. And it’s mostly hidden in plain sight just because expectations are so low.  Caring too much about clarity and accountability can even be career-limiting.

How then do we fix this? Continue reading

Big Data, Advanced Analytics and Black Swans

black swanCan advanced analytics be as much a threat as an opportunity? It seems quite plausible: it’s complicated.  The near wipe-out of a leading Wall Street brokerage in just two hours demonstrated how complexity can be financially catastrophic, to take just one example.

McKinsey’s latest advice to organizations investing in advanced analytics highlights the value of simplicity, which enables the business stakeholders to be engaged:

“Two guiding principles can help. First, business users should be involved in the model-building process; they must understand the analytics and ensure that the model yields actionable results. Second, the modeling approach should aim for the least complex model that will deliver the needed insights.”

McKinsey quotes a case where the complexity of a model prevented the business users from spotting its flaws, and so correcting its grossly misleading conclusions. It took the creation of a new simplified model by different authors to realise the mistakes that were being made. I suspect that many of us know of similar instances.

Looking at how companies can turn valid data-driven insights into effective action on the front line, McKinsey notes how user engagement becomes crucial:

“Companies must define new processes in a way that managers and frontline workers can readily understand and adopt.”

I’m not a big data and analytics skeptic.  When data-and-analytics is done well, it has huge potential, especially perhaps for consumer-facing organizations.  But it seems to me that there’s an essential enabling infrastructure that’s required to ensure that fast-paced data-driven agility is managed safely and sustainably.

It’s an infrastructure characterized in three ways:

it’s process-based and leverages the power of visualization and personalization to simplify and engage

it provides 360 degree visibility; joined-up and comprehensive perspectives where roles and responsibilities, linkages and dependencies are always readily apparent

it enables a rich and effective collaboration across silos, within a unified and robust governance framework.

It adds up to an enterprise process management platform.  And it’s an approach that was reinforced, looking at this from a different angle, by a Deloitte webinar this week on the new COSO 2013 Enterprise Risk Management Framework.  Deloitte’s key messages to senior stakeholders included the need to adopt holistic perspectives, to ensure traceable connectivity between policies and everyday practice, and to ensure ongoing engagement with control owners across the enterprise.

Related Posts

02 Apr 2013   A Simplification Bandwagon Begins To Roll

26 Mar 2013   A Litmus Test For Process Craft  

Why Are So Many IT Projects Successful?

It’s bizarre how many major IT projects are ‘successful’.

Imagine buying dinner for your loved ones at a restaurant where the service was always slow, the bill was usually way beyond the prices shown on the menu, and the dishes were less than half as delicious as you had expected.  And, 17% of the time, the evening would be so disastrous that it would threaten your marriage. Not sure that many of us would call that successful? But when it comes to ERP, that’s what people most often do.

A new survey on ERP implementations, published on Michael Krigsman’s Beyond IT Failure blog, records:

  • over 50% of projects experienced cost overruns
  • over 60% experienced schedule overruns
  • 60%  of respondents received under half of the expected benefits.

It’s another piece of evidence to add to the bulging portfolio marked ‘IT Project Failure’ (the root causes for which I’ve rehearsed elsewhere).

But it leaves the intriguing question: How can it be that 60% of respondents in this survey thought their ERP implementation was successful?  It’s not an aberration. The hard data and the shot-through business case may point conclusively in the opposite direction, but most often organizations define their major IT projects as ‘successful’.

Maybe it’s a mix of Stockholm Syndrome and exhaustion.  It may feel initially like a comforting embrace, but the SI relationship frequently turns sour (only 25% of respondents in this survey were satisfied with their implementation partner). As the project challenges mount, the client’s expectations plummet.  In the end, there’s relief that it simply finished. And at that point, the client is happy to draw a veil over its own shortcomings and declare success.

Which is understandable but a pity. There’s a colossal waste of resources going on here, and, as McKinsey has warned, maybe 17% of major IT projects are black swans that can threaten the very existence of the organization.

Related Posts

07 Jan 2013    Cloud Without Risk: Pie In The Sky

08 Nov 2012    IT Success: Don’t Let The SI Take The Wheel

© Text Michael Gammage 2013

When Process Standardisation Backfires

Current orthodoxy is that process standardization is a Good Thing.

People are committing enormous resources to programmes to deliver global processes supported by a common toolset. It’s driving business transformation across every industry and region.

Process standardization is a fine idea.  But the heretical truth is that, as in everything, it’s the ability to execute that counts.

A standardization program can unlock game-changing efficiency savings and service improvements. But pitfalls abound:

It becomes IT-led. IT systems are at the heart of most major programmes. Too often IT takes the wheel, leaving business stakeholders in the back seat. And so a business transformation program morphs into an IT project.

Out-of-scope impacts are missed.  Costs ‘saved’ in one standardization project re-surface as incremental ‘work-around’ costs in other parts of the organization.

The voice of the customer is muted.  Standardization delivers efficiency savings but at the cost of the customer experience.

Process variants are concreted in. There is a one-time negotiation instead of a framework that enables variants to be continually re-optimized, reflecting developments in global best practices and changes in business units’ requirements.

The benefits aren’t sustained. The change doesn’t stick. Gartner termed it ‘organizational snap-back’. McKinsey published an estimate that only 10% of cost reduction programmes showed sustained results three years later.

It’s time for a reality check.  I can’t be the only one who’s seeing projects with hidden costs and flaky benefits pedestalized because they are delivering ‘standard global processes’?

Without a platform for effective collaboration among the stakeholders, and a complete understanding of the big picture, there are very significant risks that the benefits of any standardization initiative will be mythical. And without a means to deploy process content in a way that ensures real adoption, the opportunity for ongoing collaborative innovation is missed.

Related Posts

13 Dec 2012    The Universal Business Language: Process

19 Nov 2012    No Other Corporate Asset Is Wasted So Spectacularly

© Text Michael Gammage 2013

Social Business: Finding Meaning At Work

There’s a report published last week by McKinsey that deserves to be widely noticed.  It challenges some common preconceptions about how we see work – and highlights our deepest motivations in our work.  It confirms just how universal – and important to the bottom line – is our search for meaning at work.

Intellectual Quotient (IQ) matters, says McKinsey: everyone needs role clarity, clear objectives and access to the resources to get the job done.  Emotional Quotient (EQ) is similarly vital: we need trust, respect and a sense of collegiate collaboration.  But while IQ and EQ are absolutely necessary, they are far from sufficient for peak performance, says McKinsey.  Being ‘in the zone’ demands that work has meaning.  High performance organizations operate in a high-IQ, high-EQ, and high-MQ (Meaning Quotient) environment.

The productivity differential when working at peak performance is astounding. Yet most executives report that they and their employees are ‘in the zone’ at work less than 10 percent of the time.  The McKinsey authors conclude:“The opportunity cost of the missing meaning is enormous”.

What’s really fascinating in the McKinsey results is how much, across a wide range of cultures and income levels, meaning at work is universally linked to the idea of service to humanity: to society, to customers, to co-workers.  It’s the first data I’ve ever seen that confirms that our most profound happiness, our deepest sense of wellbeing, comes from being connected to others, and being able to serve them in some way.

It has to be sincere of course. It’s difficult to reconcile ‘We want to make the world a better place’ with ‘and crush the competition’. ;

Cloud Without Risk: Pie In The Sky

We know that systems failures are surprisingly common, hugely wasteful and can bring a company to its knees.

Best example last year must be Knight Capital, a market-maker responsible for 10% of US equity trading volumes. In two hours of trading on the afternoon of 1st August, a ‘software glitch’ lost the firm $460m. The subsequent rescue package cost the owners 70% of their equity.

Arguably though there’s no such thing as an IT failure. If all work is ultimately process, then ultimately it’s always a process failure.

At one level, Knight Capital went down because of a flawed implementation of a software upgrade. But it’s probably more true to say that, somewhere along the line (and maybe we’ll find out once the legal battles are done), there was a flawed process, or a good enough process that was poorly executed.

Probably both. And almost certainly – because this is the continual theme – the root cause was ineffective collaboration.  Vital stakeholders were missed out from the consultation. People thought that they had a common understanding of an end-to-end process and missed the gaps. There was no governance framework to ensure that people used the latest document. No-one realised that there were two different versions of the same process…

So McKinsey is right when it warned last week of the new risks in the migration to cloud services, making it clear that this is not simply a technical IT challenge:

“IT organizations must now adopt a business-focused risk-management approach that engages business leaders in making trade-offs between the economic gains that cloud solutions promise and the risks they entail.”

In cloud migrations, as in every other business transformation program, it’s effective collaboration that underpins innovation and sustainable improvement – and ensures that risks are properly managed.

It’s extraordinary therefore that so many organizations flirt with disaster, blithely assuming that they don’t need an enterprise-wide process management platform equipped to enable effective collaboration.

They may say otherwise but in practice they rely on definitions of their business based on process fragments, in multiple formats and tools, often in arcane technical languages, of unclear provenance, scattered across multiple repositories, only tenuously linked with operational realities, and ‘managed’ with the flimsiest of governance.

Amazingly, Gartner’s dramatic prediction, announced two years ago this month, that: “Between now and year-end 2014, overlooked but easily detectable business process defects will topple 10 Global 2000 companies” still looks a safe bet.

Related Posts

11 Dec 2012    Process Management and Google Maps

19 Nov 2012    No Other Corporate Asset Is Wasted So Spectacularly

© Text Michael Gammage 2013