AN INTEGRATIVE ROUTE TO BUSINESS TRANSFORMATION
Today we wish to revisit a topic about which we have written often. It was prompted by a thought-provoking blog entry by Robert Hart of Competitive Capabilities International, developer of the terrific TRACC value-chain improvement solution. Much has been written about the advantages of individual continuous improvement methodologies such as the Toyota Production System, Total Productive Maintenance and Lean, yet few companies have achieved sustainable success as a result of adopting such approaches.
We contend that no single type of initiative is sufficient to bring about acceptable levels of performance improvement. In fact, focusing on one methodology can limit progress, constraining an organisation’s ability to realise its full continuous improvement potential.
For instance, despite spending a lot of time, money and energy on a broadscale quality programme, a training programme, or an initiative to refocus an organisation’s culture, measurable downstream benefits often fall well short of expectations.
Ask 10 executives to name the one factor critical for the success of their transformation initiatives, and you’ll most likely get 10 different answers. That’s because each executive looks at an initiative from his own viewpoint and, based on personal experience, focuses on different success factors.
Transforming an organisation from its current state into a world-class competitor calls for substantial changes in structure, systems, culture and behaviour at all levels. Achieving this requires strong leadership, project management, drive and commitment. Yet few global organisations have the capability to drive the required transformation that will deliver superior business performance over the long term.
In a study conducted a few years ago McKinsey & Co looked in detail at transformational change efforts at 30 leading US companies. It found poor results invariably were the result of focusing efforts along only one or two — rather than all three — of the key axes of change:
top-down direction setting to create a focus throughout an organisation and develop the conditions for business performance improvement;
broad-based, bottom-up performance improvement to get people at all levels to take a fresh approach to solving problems and improving performance;
cross-functional core process redesign to link activities, functions and information in new ways to achieve breakthrough improvements in cost, quality and timeliness.
Together, these three axes make up what McKinsey describes as a “transformational triangle” — a balanced, integrated framework for combining separate initiatives into a coherent overall programme.
Balanced approach: To build a sustainable advantage across their end-to-end value chains, organisations must seriously consider developing integrative improvement capability. This means having in place a shared maturity framework for structuring activities and responsibilities, a codified roadmap for laying out their proper sequence and a background set of guiding principles about the “natural laws” governing organisational transformations.
All three of these elements — framework, roadmap and guiding principles — have a critical role to play in giving management the practical means to shepherd through a balanced, integrative improvement programme.
To adopt an integrative improvement approach, organisations must learn to document, analyse, improve and measure results across the enterprise rather than at the functional or silo level. It must transform itself from a functionally managed organisation to one that is process-based and designed with the ability always to meet (and even shape) demand. Doing so will involve a complex combination of organisational development, front-line execution and systems improvement work that needs to happen simultaneously.
People-driven transformation: The upshot of an integrative approach is an organisation primarily designed around customers and products — not functions. It ensures that both functional improvement requirements — for example, planning, procurement, IT, quality, maintenance and HR — and the improvement methodologies used are on a common platform and executed in concert with one another.
The term “integrative” must relate to each and every part of an organisation or enterprise including its people, processes, resources, systems and data. And not only does integrative concern all parts of an organisation but also relates to the way in which integrative improvement should be adopted and rolled out. Importantly, improvements must be done by a line or area and not to a line or area.
In other words, the know-how and methodology of implementation is placed in the hands of line employees so that they themselves become the vehicle through which the transformation is driven and managed. The Link is coordinated by Barry Elliott and Chris Catto-Smith as an interactive forum for industry professionals. We welcome all input, questions, feedback and news at: bjelliott@abf1consulting.com cattoc@freshport.asia