Business Transformation Process

Stick to Status Quo & outcome could range from ‘business as usual’ to becoming irrelevant. Transformational change is an imperative for exhilarating growth. In some cases, it is a lifeline for survival….

Master Sun Consulting

Transformation Process : Sub Processes

Transformation Process : Tools & Methodologies

Transformation: Execution Matrix Ability to Execute Low High High Clarity of Strategy

Issues/Opportunities become crises

Reactive culture and fire-fighting

Active politics

Decision by “no decision”

No accountability

Protecting the status quo

Missed opportunities

Wasted time/effort

History repeating itself

Running in Place

Short-term Design

Competing priorities

Slow decision making

Lots of meetings

Taking on too much

Employee burnout

Flavour of the Month

Great results

Fast, reliable decisions

Empowered employees

Solid teams

Trust and integrity

Alignment and Progress All Talk-No Action

Transformation Process

Transformational Process (TFP) is a proven & highly capable process for engineering sustainable cultural transformation

Four sub-processes: Business Health Check, Design , Rollout & Institutionalization

Measures hard business benefit indicators as well as soft cultural indicators at the termination of every sub process

Aided by various tools & methodologies

Business Health Check Design Process Rollout Institutionalization

TFP: Strategy Implementation Framework Sustained Strategy Strategic Direction Strategic Guidelines Strategy Stage Output Institutionalization of the process Identification & definition of areas of improvement Development of solution and testing Implementation of solution across all units Activity Business Health Check Design Process Rollout Institutionalization

TFP: Strategy Implementation Framework Sustained Strategy Strategic Direction Strategic Guidelines Strategy Stage Output Institutionalization of the process Identification & definition of areas of improvement Development of solution and testing Implementation of solution across all units Activity Business Health Check Design Process Rollout Institutionalization We are here

Business Health Check Design Areas

Business Health Check

Depending on the critical needs of a business , at a point of time, the Business Health Check will Design on some or all of the following Design areas

Business Performance Analysis

Strategy Planning Analysis

Organization Culture Analysis

Process & Systems Analysis

Operations Analysis

Marketing Analysis

Sales & Distribution Analysis

Customer satisfaction analysis

Health Check : Process & Systems

Objective

Identify gaps in the internal business process & management control systems .Impact of gaps on performance

Measure the robustness of the existing processes & management control systems

Time frame:1-2 weeks

Studies

Brown Papers

Mapping & Critiquing existing management control systems in marketing management, distribution management, productions process management, service management, planning, purchase management etc.

High Level Process Maps

Mapping & Critiquing existing planning process, service delivery process, order management process, complaint redressal process, NPD process etc.

Health Check :Operations

Objectives

Find cost saving opportunities in throughput, yield , waste, energy & purchase

Improvement opportunities in equipment uptime & maintenance

Opportunities to improve productivity, reduce turnaround times & complaints

Gaps in supervisory behaviour & operator management

Time frame: 1-2 weeks

Studies

Shop Floor Observations

OEE: Earned Hours,Downtime Study,Yield Loss Flow, Machine Operating Study

Man Loading & Productivity Studies

Sigma Levels Quality Study

On-time Performance Study

Day in the Life of Operator, Supervisor & Production Manager

Supplier selection & management process & systems

Pre-certified supplies of material/services , Continuous Quality-Cost Improvement,I nvolve suppliers during early stages of product/Service development.

Health Check : Organization Culture

Objective:

Evaluate transformation readiness of organization

Current state of competing values & the distance from desired culture

Approach to align culture to business requirements

Gaps in leadership & effectiveness of leaders

Perception of self & company

Perception of improvement opportunities

Time Frame : 1-2 Weeks

Studies

Management Climate Analysis

Competing Values Framework

Leadership Analysis & transformation Leadership Behaviour Analysis

Measurement of employee involvement : Suggestion per Employee, Cross-Functional Team participation, etc

Process for translating TQ Principles into Company culture

Structured Interviews with Senior Management

Skills & Competency Enhancement Practices

Health Check :Role in Transformation

Develop a compelling vision for transformation & create a sense of urgency

Compelling reasons for why significant transformation is necessary

Create a sense of urgency about the transition and that the status quo is unacceptable

Employees understand the potential benefits of transformation

Create alignment about problems (e.g., profits up but market share down), potential problems (e.g., a new competitor is showing signs of becoming more aggressive) & potential opportunities (e.g., through technology or new markets)

Generate energy and urgency in others to get things done

Design process sets strategic guidelines. It challenges assumptions.

“ One big reason why a companies’ longevity is hurt is they fail to challenge the assumptions” (Nandan Nilkeni, MD & CEO , Infosys)

TFP Sub Process : Design Process Reengineering Realization Plan Development MCS Development Roles and Responsibilities Performance measurement process Review process Transformation Leadership Diagnosis Working norms and SOPs Short Interval Control Financial Targets and Schedules Training modules Lean Opportunities Rollout plan Detailed RCAs & Action Plan Building High Return on Management Business Health Check Design Process Rollout Institutionalization

Design Process :Create Guiding Coalition

Most resistance to transformation is a precondition for transformation.

“ A critical mass of commitment will never be generated without conflict escalation – the airing of differences, divided opinions, good ideas, criticisms and the like.” Paul Taffinder

Benefits of conflict (Vliert, 1997)

Generate motivation and energy to deal with underlying problems.

Make underlying issues explicit.

Sharpen people’s understanding of real goals and interests.

Enhance mutual understanding between different groups.

Stimulate a sense of urgency.

Discouragement people to engage in avoidance behavior.

Prevent premature (and therefore dangerous) resolution of problems.

Design : System/Process Maps & Critiquing

Design : Installing a Root Cause Problem Solving Process Step 1 - Data Collection: Data from Shop Floor Control System,Rejection Control System,Customer Complaints,SPC Charts Step 2 - Assessment: Pareto chart of major problem areas. Step 3 - Consideration: Fishbone or Brainstorm of possible causes. Step 4 – Investigation: Determination of most likely root causes. Step 5 - Analysis: Determination of most likely solutions. Step 6 - Decision Making: Evaluation/Cost Benefit Analysis of possible solutions. Step 7 - Initiation: Trail runs, prototype solutions etc. Step 8 - Verification: Data collection to confirm that the solution is correct. Step 9 - Implementation: New procedures, drawings, BOM. Weekly Furnace Owner Review Meeting Weekly Furnace Owner CFT Review Meeting Fortnightly Process Owner CFT Review Meeting Operational Review Meetings: 5 minute presentation by CFT leader (all CFT members to attend) Identification of Cross Functional Team (CFT): Maximum of 4 people. Process Owners to be informed of the new CFT. 10 STEP PROBLEM SOLVING APPROACH Display and reviews of the performances of existing CFTs on the basis of the 10 Step Problem Solving Approach. CFT on schedule? Yes No 3rd off schedule occurrence? No Satisfactory? Fix revised dates for the CFT to solve the problem. Yes No Monitor of poorly performing CFT. Decisions on how to improve the results. Minutes to Process Owners & Enabling Dept. Step 10 - Control & Improvement: Health Checking of new procedure/processes. To be raised at the Operational Review Meeting (ORM) CFT FORMATION & REVIEW MECHANISM ISSUE ELEVATION & RESOLUTION MECHANISM

Design : Building Coalitions

To what extent are your department’s monthly results evaluated in light of the new vision?

To what extent are the workforce’s ideas and knowledge being tapped to question and test the validity of the proposed methods of operation?

To what extent do you feel you have a real stake in improving your organization’s performance as opposed to just your narrow job responsibilities?

To what extent do business unit leaders act on criticisms and suggestions for improvement?

To what extent have you been involved in redesigning your new job?

To what extent is your input valued for improving your job responsibilities during the transition?

Design : Building Coalitions

To what extent was provided training adequate preparation for the new realities of how you must now do your job?

To what extent were you adequately trained on transformation management concepts and techniques?

To what extent is information about the transition easily understood by every member of the workforce?

To what extent does your manager act as if they believed the organization needed major transformation?

To what extent does your manager constantly demand new ideas and perspectives?

To what extent does your manager sustain pressure so that people achieve more than expected?

Design : Generate Short Term Wins

Generating short-term wins

Planning for visible improvements, or “wins”

Create those wins

Visibly recognize and reward people who made the wins possible

Consolidate gains and producing more transformation

Using increased credibility to transformation all systems, structures, and policies that don’t fit together and don’t fit the transformation vision

Hire, promote, and develop people who can implement the transformation vision

TFP Sub Process : Rollout Marketing Strategy Product Mix Strategy Distribution Strategy Pricing Strategy Promotion Strategy Strategic Guidelines Rollout Strategy Prelim Scoping Detailed Scoping Location Strategy On site implementation Off site implementation Consolidation Policy Formulation Product Mix Policy Distribution Policy Pricing Policy Promotion Policy Corporate Policy Example: Rollout Approach for Marketing

Rollout : Establish Organization-wide Pervasive Communications

Using every vehicle possible to constantly communicate the new vision and strategies

When communicating major transformation to employees, keep it simple

Avoid mission statements and management proclamations – most important, give them the facts; be straight.

Introduce the planned transformation face to face, not through videos, publications or vast, impersonal public meetings.

Target supervisors: get senior managers who are involved in the transformation to brief small groups of supervisors face to face.

As a consultant, spend 80% of your time concentrating efforts on supervisors

Do briefings in two rounds – first, to explain the transformation and get supervisors’ reactions and recommendations, second, to explain any modifications of the planned transformation based on the supervisors’ feedback.

Rollout : Establish Organization-wide Pervasive Communications.

To what extent do you feel the organization communicates honestly and openly about the transformations going on?

To what extent does information about the status of the business flows freely throughout the organization with minimal filtering?

To what extent does information (business, industry, production, etc.) flow to the right people, at the right time, in the most appropriate/effective medium throughout the organization, without barriers?

To what extent do you have access to the information you needed (daily? in the long run?)

To what extent does useful knowledge and good ideas travel across the organization?

To what extent do business units learn from one another (i.e., reinventing the wheel almost never happened)?

TFP Sub Process : Institutionalization MCS implementation Compliance Parameters Compliance Schedule Compliance Audit Training Mechanical Compliance Usage Understanding Culture Process Capability Business Health Check Design Process Rollout Institutionalization

Institutionalization: CAMS

Audit questionnaires are developed to assess the mindset levels using a structured approach:

Closed ended questions for compliance.

Open ended questions for understanding.

Demonstrative questions for usage.

Measuring the Four Mindsets: transformation Assessment Management System (CAMS)

The Audit questionnaire answers get converted into a scoring scheme…

0 for wrong or not done.

1 for partially right or partly done.

3 for correct or demonstrated.

The percentages of each system performance category are plotted

The target is 100%.

Institutionalization: CAMS Installation Status 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% -5 -4 -3 -2 -1 0 Current Period Achievement Installed Partially Installed Not Installed System Utilization Status 0% 20% 40% 60% 80% 100% -5 -4 -3 -2 -1 Current Period Achievement Mechanical Understanding Usage

Master Sun Consulting

Transformation Process : Sub Processes

Transformation Process : Tools & Methodologies

TFP: Tools & Methodologies Balanced Scorecard Strategic Implementation Business Process Design ,Re-engineering & Automation Impacting Leadership, Management Climate Management Control Systems ,Short Interval Control Project Management, Training & Communications Transformation Management, Minds Path Matrix Methodologies & Tools Process Business Health Check Design Process Rollout Institutionalization

Transformation : Inevitable Questions How will my job transformation? Who will I report to? How will my performance be measured? What decisions do I have to make? What new skills do I need? Will this transformation be as difficult as the last transformation? How will my co-workers be effected? When will the transformation impact me? Who will I work with? What’s in it for me? They are of a very personal, individual nature. ? ? ? ? ? ? Why should I care?

During times of transformation, employees Design :

1st, personal implications of the transformation

2nd, organizational implications

Employees may or may not ask these questions out loud, but more often than not they are thinking them.

The process for answering the questions is as important as the answers themselves.

TFP Methodologies:Transformation Management Conscious Unconscious Incompetent Competent Direct Delegate Support Coach The Four States of Mind! Minds Path Matrix … No shortcuts possible... Conscious Unconscious Incompetent Competent Compliance Culture Understanding Usage

TFP Methodologies : Minds Path Matrix Conscious Unconscious Incompetent Competent Compliance Culture Understanding Usage

People understand that they are “being told” to do something new.

God knows why because they don’t see the use of it !!

This is normally viewed as extra non-value added responsibility.

If you stop checking, they will stop trying.

People start realising why the data recorded in the system might be of use to them and the business in the future. Process transformation begin to inspire confidence

There is some light at the end of the tunnel .

You still need to keep them on close track however.

Recording this new or extra data and working in a new way has now become a fact of life. Process compliance is high

They now start using (read : analyzing) the scorecards.

Meetings are held to review the data. The wheel starts turning!

TFP Methodologies : Minds Path Matrix Conscious Unconscious Incompetent Competent Compliance Culture Understanding Usage

People understand that they are “being told” to do something new.

God knows why because they don’t see the use of it !!

This is normally viewed as extra non-value added responsibility.

If you stop checking, they will stop trying.

People start realising why the data recorded in the system might be of use to them and the business in the future. Process transformation begin to inspire confidence

There is some light at the end of the tunnel .

You still need to keep them on close track however.

Recording this new or extra data and working in a new way has now become a fact of life. Process compliance is high

They now start using (read : analyzing) the scorecards.

Meetings are held to review the data. The wheel starts turning!

People don’t think about the new system& processes anymore. It is THEIR system now.

They fully optimize the usage of data gathered at all levels.

They use the Scorecards to drive improvements in business performance.

They improve details of the systems as per the requirements.

TFP : Management Climate Study

Climate refers to meaningful interpretations of a work environment by the people in it

Objective of the Study :

To understand the relationships between the work environment (policies, practices, procedures) and work-related attitudes and behaviour

Set of Questions measuring 8 characteristics

Management Style

System Orientation

Organisation Culture/Decision Making

Quality

Customer Service

transformation

Communication

Accountability

Also looks at perceived performance & opportunities for improvement

TFP : Climate-Company Company needs to improve on transformation , communication, accountability & org.structure/decision making

TFP :Climate- Individual Customer service orientation, org. structure, accountability : key areas of concern

Align Climate with Transformation

Transformation sticks only when it becomes “the way we do things around here.”

Climate is powerful for three primary reasons

New employees are selected and indoctrinated through climate

Culture exerts itself through climate which determines the actions of hundreds or thousands of people.

All of this happens without much conscious intent and thus is difficult to challenge or even discuss.

Two approaches to anchoring transformations in an organization’s climate

Actively show people how specific behaviors and attitudes have helped improve performance.

Verify that promotion and performance criteria are fostering the next generation of management that personifies the new vision (this takes time).

TFP Methodologies : Leadership Analysis

Methodology

Feedback from boss, peers& sub-ordinates

Analyses performance on 20 leadership behaviours

Analysis of behaviours critical to transformation leadership

Analysis of self vs. others

Used as a tool for leadership development & assessment

TFP Methodologies :Analysis of transformation Leadership

TFP Methodologies : Balanced Scorecard Strategy Management Brand / product development, sales, service, operations, logistics.. Activities needed to create the required customer value proposition and differentiation and the desired financial outcomes Organization infrastructure, skills, capabilities, knowledge of employees, working climate.. The ability to execute internal business processes in new differentiated ways Who are the target customers that will generate the revenue growth? What are the objectives and how do we measure success with them? What are the financial objectives for growth and productivity? What are the major sources of growth? Vision and Strategy Financial Perspective Customer Perspective Internal Perspective Learning and growth Perspective

TFP: Operational KPI Roll Down – Oil Refinery Example Manpower Index (SMI) Non Energy Cash Costs (NECC) Maintenance Index (MI) Man Hours Unit of Hardware Unit of Hardware is a constraint Man Hours is not a constraint Man Hour Categories Standard Hours Turnaround Hours (Outside of current scope) Other Hours (Outside of Maintenance Engineering Services) Contractor Hours Shell Hours Skills constraint Risk constraint Profit constraint Equipment constraint Shell hours constraint Response Time = Sigma [Job Time Raised – Job Time Closed] No. of Jobs Availability = (Total m/c hrs) - (m/c downtime hrs) x 100 (Total m/c hrs) Reliability (MTBF) = (Total m/c hrs) - (m/c downtime hrs) No. of Breakdowns Maintainability (MTTR) = (m/c downtime hrs) No. of Breakdowns PM Index = No. of m/c for which PM is carried out No. of m/c due for PM Crew Utilization = Total earned hrs x 100 Actual available hrs MMTR = Mean Time To Repair MTBF = Mean Time Between Failures Versus MTBM = Mean Time Between Maintenance? Backlog Hours = Sigma [Job in queue x standard time] Cost = Actual Job Cost + Lost Opportunity Routine Index (MI) Turnaround Index (MI) Maintenance Capex Maintenance Costs Inspection Costs Routine Costs Plant transformations Extraordinary Costs Operating Costs Contractor Costs Turnaround Cost (Outside of current scope) Equipment Constraint Hours Risk Constraint Hours Skills Constraint Hours Profit Constraint Hours Non Constraint Hours RCA Design % RCA Installation/ Repair % RCA Utilization % RCA Preventative % RCA Planned % Maintenance Schedule Adherence Planning Accuracy = Actual Hours/Estimated Hours

Align Balanced Scorecard with Organizational Design

To what extent is the design of your job based on the Scorecard Matricies rather than on position descriptions, reporting relationships, and title transformations?

To what extent does your organization encourage individuals, regardless of job description, to search for innovation & growth ?

To what extent where you briefed on how your job impacts the KPIs of other department?

To what extent are there lots of planned opportunities for talk with other departments and joint activities?

To what extent do you feel you receive a sufficient amount of feedback from internal and external sources to help you improve what you do?

Align Balanced Scorecard with Organizational Design

To what extent is your balanced scorecard tied to the transformation initiative?

To what extent does your performance appraisal system integrated with balanced scorecard KPIs?

To what extent does your current compensation/promotion system support/promote balanced scorecard KPIs?

To what extent do you understand what you must do to satisfy the customer’s needs?

To what extent can you link your day-to-day work to satisfaction of the client’s needs?

TFP Methodologies – Management Control System-The Deming Cycle PLAN DO CHECK ACTION Continuous Improvement

TFP Methodologies : Management Control System Elements Forecast Plan Control Report Variance What we want to do… How do we do it? Do it! How did we do? What are we going to do about it? Market trends… Material supply… Past performance… Targets… Detailed plans… Capacities… Constraints… Execute… Supervise… Timely, accurate feedback… Structured… Communicated…

TFP MCS : Distribution Management Forecast Plan Control Report Manager Retail Distributor DSM Retailer / Customer Sales Plan Route plan Contact Plan Customer / Retail Card DSM Daily Score Card Territory Sales Target Retail Manager Contact Plan Distributor Coverage Target DSM Target DSM Weekly Score Card DSM Monthly Score Card Distributor Weekly Score Card Distributor Monthly Score Card Review Distributor Sales Target Market Intelligence Retail Mgr Segment Manager Marketing Department Review Review Segment Mgr Monthly Score Card Retail Mgr Ride with Segment Mgr Weekly Score Card Segment Sales Target Review Distributor Daily Score Card Review Direct Sales input Retail Mgr Daily Score Card Review Review Review Review Segment Mgr Daily Score Card Review Review Review Distributor Quarterly ROI Analysis Marketing Ride with Retail Mgr Weekly Score Card Retail Mgr Monthly Score Card

TFP MCS: Operations Planning Weekly Plant Commitment Meeting Monthly Material Utilization Meeting Weekly Performance Review Weekly RM Compliance Meeting ABP / AOP Confirmation from Tisco Raw Material Requirement B.O.M. Available To Promise Standard Time Daily Prod. Plan Shop floor control Fortnight Prod. Plan Machine Capacity Zinc on Wire matrix Production Consumables Requirement Procurement System Vendor Performance Review Sales Planning Monthly Planning Meeting Order Acceptance Stores Goods Inward System Monthly Scorecard Weekly Scorecard Weekly Delivery Compliance Meeting Daily Dispatch Plan Weekly Dispatch Plan Dispatch Order Clearance System Non Moving items review

TFP Methodologies :Concept of Short Interval Control Performance X = Lost Output with SIC Y = Lost Output without SIC Time Output =X =Y

TFP Methodologies: Business Process Re-engineering Example

Outline Project Schedule 4 8 16 12 20 28 24 36 32 40 44 48 52+ Project Start-up Design Process Model testing Institutionalization Training to identify opportunities Coaching in delivering results Week Roll out

TFP: Classroom Training to aid Shop Floor Training

Groundrules

Team Brainstorm

Electric Fence

Presentations

Forest Fire

Dinner (1900Hrs)

Perceptions

What are we going to do

Concerns

MCQ

Famous Partners

Lean Concepts

Who Does What

Lunch(1230Hrs)

System Flow

Dinner (1900Hrs)

System Flow Critique

Kaizen Ideas

Process maps

Process Gap Analysis

Paper plane

Lunch(1230Hrs)

Lost Time

transformation

Colour Naming

Iceberg Analysis

Walking the Square

Dinner (1900Hrs)

System Flow Presentation

Cooperation Squares

Team Work

Mips to Berylon

Confrontation

Lunch (1230Hrs)

Process Maps

Terra Nova

System Flow (Rehearsal)

Dinner (1900Hrs)

Patent Office

5S Workplace

Red Tag Exercise

Understanding OEE

System/No System

Management Control System

Pareto Analysis

Recap : TFP Critical Practices

Imperatives for successfully realizing transformation objectives

Health Check : Determine organizational readiness & build the business case for transformation.

After Health Check : Develop a compelling vision for transformation & create a sense of urgency

Design : Create a strong guiding coalition of executives & generate stakeholder commitment

Design : Generate short terms wins, consolidate gains & produce more transformation

Rollout : Establish pervasive communications

Balanced Scorecard : Align organizational design and performance management systems

Minds Path Matrix : Build individual and team capacity to transform

Rollout & Institutionalization: Align climate and transformation process

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Business Transformation Process

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