Innovation case study submitted by Afoes Consultants during 3rd Continual Improvement & Innovation Symposium organized by Dubai Quality Group's Continual Improvement Subgroup to celebrate World Quality Day 2011.
WQD2011 - INNOVATION - Afoes Consultants - An Innovative Approach
Innovation Storyboard [A Major Engineering Firm in the Middle East][Strategy Development by Conjoining Top-down Directives and Bottom-up Commitment: An Innovative Approach] [May 2010-June 2010] [Strategy Masters]
About the Organization• Case Study Organization (CSO) is a SBU of a $13B global group. CSO has installed more than 28,000 automation systems in more than 7,500 sites since 1974, representing a $17 billion installed base—one of the largest in the automation industry.• CSO is headquartered in Abu Dhabi, UAE, is a subsidiary of global group. The operation of CSO covers various countries within the ME region. Due to confidentiality the name of the organization not revealed
Opportunity for Innovation• In April 2010 a New Engineering Manager was recruited for the CSO.• In order to effectively run his function he wanted to formulate a strategy for Engineering Department for the next two years in line with the CSO’s corporate and business strategies.• Our firm was selected for this project.
Opportunity for Innovation• In August, 2009 the Manager Project Operations (MPO) of CSO formulated a strategy (top-down approach) for the overall Project Operations Department of which ED is a part.• hardly any participation from ED (bottom-up involvement) .• nobody in ED knew the existence of this strategy document.
Preliminary Research• A recent survey by Harvard Business Review (March, 2010) corroborated this fact, companies are more top-down than bottom-up in their approach to strategy Who Gets to Shape Strategy? formulation (Source: Harvard Business Review, July-August 2010, p. 74)
Preliminary Research• It was quite akin to what HBR says, “A lot of people say they can’t [state their strategy].• situation is particularly bad among those who Can You State Your Strategy? (Harvard Business Review, July- aren’t involved in August 2010, p. 74), strategy development”
Opportunity for Innovation• To be effective, a strategy has to be constructed and owned by those who will execute it, namely the line people.• With its current skilled and experienced human capital base, ED can identify promising new strategic approaches by encouraging emergent strategizing (Kaplan 2008) and aligning it with the top-down directives.• This was the first time this innovative approach for strategy making was applied in this CSO.
Stakeholder analysis and team selection High Power Context Players Setters Involved Unaffected ActorsLow Interest High Interest Crowd Subjects Unaffected Involved bystanders bystanders Low Power
Team Selection ED Others (Projects, PCO and Management)• Engineering Manager • Regional General Manager (RGM) (Process Owner) (Sponsor)• Senior Technical • Manager Project Operations (MPO) Managers x 2 (Champion)• Technical Managers x 3 • Country Operations Manager (COM) • Senior Project Manager
Process• Primary data were collected over a period of two weeks using three methods of data collection: – existing CSO strategy documents, – interviews and (RGM and MPO of CSO ) – group discussions. (four workshops in which the key stakeholders of ED participated )
Objectives of TMT Interviews• to get more information about the existing strategy of CSO• to understand perceptions of the strategic issues facing ED with respect to its impact two years into the future• to know their aspirations about ED’s performance.• Each interview and workshop lasted for around one hour and three hours respectively
Objectives of Workshop Top-down Perspective What does CSO Wants ED to do? ED’s Strategy Bottom-up Perspective What day-to-day Experience suggests ED should do?
Data Analysis• cognitive mapping technique was followed to collect and analyze data.• cognitive maps are tools for the representation of qualitative data.• We utilized facilitator-operated causal mapping software (‘Decisions Explorer’ – Banxia 2000) for the workshops to capture the different issues and perceptions raised by the participation.• Four workshops were conducted in a period of three weeks keeping in mind that the gap should be no more than a psychological week
Risk Management• Though individual interviews allow the elicitation of deeper individualistic knowledge, it comes at the cost of creative group dynamics.• Data comparability can also be an issue for open- ended semi-structured interviews which has to be managed through proper indexing of collected data and keeping notes of discussion points.• To overcome this, we audio recorded the conversations apart from maintaining notes individually.
Risk Management• Interviews were conducted with the RGM and MPO only.• For the first three workshops, the participants were the managers from ED. The RGM and MPO were not included in the workshop so that the participants could bring out their issues more openly without any pressure during the discussions.• However, in final workshop all of them (top and line managers) came together to develop strategy for ED.
Risk Management for workshops• the participants were briefed on the subject of the workshop in advance• ‘Round-robin’ was used to ensure all those participating are able to contribute• participants were encouraged to ‘piggy back’ off one another’s views• participants were explained the importance of thinking in terms of ‘yes and’ rather than ‘yes but’ to avoid shutting down others options and discouraging members• participants were discouraged from removing one another’s contribution• issues and goals from the top-management were used as ‘triggers’ to ensure strategic intent of ED fits within the organizational whole (form of political feasibility)
Classification of high priority issues• ED lacks effective performance measurement system• ineffective use of knowledge repository• training for engineers is inadequate• motivation of staff in ED is dropping• lack of uniform understanding of business processes in CSO• lack of multicultural staff in ED• GES centers in China, Eastern Europe, South America underutilized
Comparison of TMT Goals and Emerged ED Goals Project Operations Goals Emerged ED GoalsImprove one CSO scope by 20% • achieve sustainable business growth • achieve continued business from existing customers through add-onsBecome more cost competitive on projects and across • reduce blended cost of engineering servicesall business functions • reduce end to end lead time of project deliverablesSimplify the way we do things so customers find it • provide innovative solutions to customerseasier to do business with usLeverage global capabilities and resources more • achieve uninterrupted availability of services fromeffectively BOStrengthen the business by continuing to improve • sustain 100% billability of ED staff in FOworking capitalImprove end-to-end quality in everything we do for • achieve improved quality of project deliverablesour customers (internal and external)
Comparison of TMT Goals and Emerged ED GoalsDeliver flawless execution on all projects • deliver effective solution in an efficient manner • achieve consistency in project implementationEstablish world-class supply chain • integrate existing and emerging technology seamlesslyEngage employees in understanding and helping drive • improve skill set of engineerschange that improves the business • retain key talents within ED • achieve employee satisfaction in EDRecognize employees who demonstrate the focus • rewards and recognition for ED engineers for theirbehaviors and reward outstanding business results successful contribution • promote multi-perspective approach in dealing with engineering issues • achieve scale in knowledge reuse • retrieve codified knowledge without having to contact the person who originally developed it
Strategic Intent• Effectively implement HOS and Functional Transformation through Six sigma• Develop and implement a strategic performance measurement system• Recruit and retain engineers from multi-cultural background• Impart appropriate training for engineers to enhance their technical and non-technical skills• Roll out a comprehensive program in collaboration with HR to improve staff motivation• Develop and implement an electronic document system that codifies, stores, disseminates, and allows reuse of knowledge• Develop and implement a sustainable FO-in-BO delivery model to improve utilization of GES centers world-wide
Deciding What to Measure• We identified measure that was important along with structured set of measures• Used existing strategic/business objectives to help provide a focus• Used stakeholder judgements to help decide what’s important• Used a Scorecard to help with the overall framework
Structure for Performance Measurement Objectives • Focused on outcomes, results, deliverables KPI • Focused on identifying the right indicators Targets • Focused on end-stateKey activities • Focused on what you do Enablers • Focused on what you need (Process, Resources)
Structure for Performance Measurement Objectives • Effective Implementation of HOS & Lean Six Sigma Initiatives KPI • Improvement in Process Effectiveness & Efficiency • Reduction in Process Waste & Variations Targets • Achieve a minimum of 4.5 sigma levelsKey activities • Appropriate project selection. Enablers • Identify PIT, train them in lean six sigma methodologies, appoint consultants.
The key differentiating factors of the innovative• approach firstly it focused on the day-to-day realities of management especially the strategic issues and concerns that managers believe they faced.• In the bargain, the key stakeholders recognized and appreciated that in most situations incremental change is more realistic than wide-ranging and deep-seated change.• Further, the key stakeholders discovered ED’s core distinctive competences through their combined efforts rather than just being plainly stated or assumed; and• finally, it focused on conjoining top-down directives with bottom-up commitment, and in the bargain a robust business model evolved for the Engineering Department of HPSME.
Key Learning• The learning and adjustment of strategy during the process produced a series of logical increments towards ED’s strategies.• The very process of consultation involving higher level strategic issues created its own positive dynamics. For instance, one of the line managers at the end of the second workshop commented that ‘this exercise is first of its kind wherein our views would go into formulating strategy for ED’.• The overall sense of ownership that the process created was palpable. We are unsure how exactly the process we have started would unfold and this is not worrisome.
Key Learning• It is important for ED to continually test the emergent strategies through improved quality of information and feedback for future decision making. This will complement its efforts in successful implementation of strategies.• The group processes that have been set up already at ED through the consultative group processes during the workshops are harbingers of institutionalization.• These processes can be characterized as commitment, ownership, procedural justice, procedural rationality, open communication and collaborative learning.
Key Learning• the strategy-making process suggested here would require the participants to understand the importance of double- loop learning.• This may not always be a free of tension. However, the very process of recognizing tension and surfacing conflicts (where there is, for instance, procedural justice) would generate creative solutions.• The multiple realities that apply to diverse individuals in the group indeed are in negotiation with each other in many senses; psychological, emotional and social.• This view is in conflict with traditional positivistic approaches that managers have hitherto been adopting.
Limitations• After each workshop we sat down to tidy up the maps. This was indeed a very time consuming and challenging process.• We realized that we were trying to over-analyze the data which was consuming up our most important resources, time and patience.• The most important realization was that the data analysis is a means to an end and not an end in itself.• Availability if Power-Brokers due to their travel schedules. However, this was well managed as the RGM got personally involved.
Way Forward• The CSO has institutionalized this methodology.• Feedback from one of Project Manager“Congratulations to AFOES for conducting a veryproductive workshop on the Engineering departmentemergent strategies. I thought it was very professionallyconducted and facilitated free flow of thoughts. Sri (that’sme!) was outstanding in the way he facilitated thisworkshop and Peter (Engineering Manager), as is wellknown, showed 100% commitment. Every point wasdeliberated appropriately without taking any on their facevalue”. This was indeed gratifying to me personally.