Bangkok Post

AN INTEGRATIV­E ROUTE TO BUSINESS TRANSFORMA­TION

- BARRY ELLIOTT

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

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