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Fractal presentation for the meet up

Andrew Holm presents

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Fractal presentation for the meet up

  1. 1. Copyright © A Holm & J Wilson All Rights Reserved CREATING A SELF MANAGING ORGANISATION Andrew Holm (andrew@mattblacksystems.com) THE FRACTAL ®
  2. 2. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® Context 1 My Position Industry Competitor Evolution Migration Industry Survived (Y/N) Company Survived (Y/N) Electrical Design Engineer Shipbuilding Increase - Global (mainly Asia) To Korea No Yes Project Manager Water Increase -Global (mainly India) To India No Yes Commercial Director Electrical Cables Increase -Regional (mainly European) To Eastern Europe No Yes (the only one!) Statutory Director Aerospace (GSE) Global To USA No No Statutory Director Aerospace (Cockpit) Global To China No Yes (only two left!) I was the runt of the family
  3. 3. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® It Wasn’t a Great Journey Executives had big offices and fruit in the fruit bowl – ‘bring me solutions not problems’ ‘Team’ was an illusion – internecine war was the norm? The management were clueless & out of touch I was fearful, stressed, angry & upset Compliance to the system was more important than doing the job right (I was considered a loose canon) I felt like a slave. Other people had control of my future In-order to do better for myself I had to climb the ladder away from Value Add to Non-value add I was engaged in a sea of disengagement I was robbed of my success & blamed for other peoples failures The company could be hugely successful without the internal & external intermediaries
  4. 4. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® What I Saw 10 100 I mapped the whole internal & external supply chain. I calculated that management & bureaucracy accounted for up to 50% of the Costs in the whole supply chain And Gary Hamel agrees with me.
  5. 5. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® Disintermediate Or Die Disintermediate internally and externally i.e. remove the people that did not directly touch the product, service or customer. Get every person in the supply chain to add value. GET RID OF THE WASTE!
  6. 6. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® I Joined My Business Partner In 2001 3 Julian • Designer (engineering) • Councillor (humanities) • Great Analyst (detail) Andrew Designer (engineering) Systems Thinker (economics) Great Synthesist (big picture)
  7. 7. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® The Business Started With An Engaged Individual with Purpose 1 Person has: • PURPOSE (intent) • SELF-CONTROL to ensure achievement of purpose • FIDELITY to own purpose • SELF-DISCIPLINE to realise purpose • SELF-AWARENESS to recognise deviation from purpose • DRIVE to rectify deviations from purpose
  8. 8. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® The business grew (on the back of their engagement) Decision Functionalise Fractalise   Franchise  2 Purchasing Upper Management Sales Design Accounts QualityManu- facture Logistics Process Process Process ProcessProcessProcess This is always the way!!
  9. 9. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® But it lead to failure It was change or close 4 THE FRACTAL ®
  10. 10. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We Had Great Ideas Change Customers? Introduce more management? Enhance QMS? Address Wider cultural Norms? Address Company Culture? Change Suppliers? New ERP? Introduce Automation? Implement Lean? Implement AgileTraining?
  11. 11. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® 21 People Turnover £1.3m21 People Turnover £1.3m And a Scientific Approach 5 Quality Customer returns Quality Customer returns Profitability Return of total labilities Profitability Return of total labilities Delivery On time and in full Delivery On time and in full Conformance To statutory, regulatory and contractual requirements Control To statutory, regulatory and contractual requirements A JOURNEY OF 100 MISTAKES OVER 10 YEARS The metrics used to determine success (or failure) are established. From the start these are measured monthly
  12. 12. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We Tried Our Great Ideas! Quality Customer returns Quality = Unknown Customer returns Quality Customer returns Delivery = 17% On time and in full Quality Customer returns Profitability = 15% Return of total labilities Quality Customer returns Conformance = Unknown To statutory, regulatory and contractual requirements 6 What We Actually Did Approx. Cost (£k) QDPC Impact (* = little, *** =lots) New IT £20k * Automation £40k * Lean Consultants £20k * Training & mentoring £25k * Change trading partners £10k * Sales Focus (1 additional person) £30k * Change BMS £5k * Increase management (4) - to break contractual power of staff £100k * Change employees £20k * Total £270k We Ran Out Of Cash
  13. 13. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We Just Could Not Make It Work? 6 The Pendulum Always Swung Back To The Sweet Spot when a project finished?
  14. 14. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We Wanted This 3 Purchasing Command & Control Sales Design Accounts QualityManu- facture Logistics Activity & Resources Activity & Resources Activity & Resources Activity & Resources Activity & Resources Activity & Resources Management Conform & Comply Check & Correct We needed the benefits but without the management cost? Without this (David Marquet Turn The Ship round)
  15. 15. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® One Last Throw of the Dice? 6 What We Actually Did Approx. Cost (£k) QDPC Impact (* = little, *** =lots) Change to Cell Structure £5k *** Change Rule Set (overtime) £1k *** Total £6k It worked The pendulum swung back to a different position. We had changed the sweet spot!! Change rules e.g. overtime? Change Structure e.g. cell?
  16. 16. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We SPLIT Quality Customer returns Quality = 85% Customer returns Quality Customer returns Delivery = 35% On time and in full Quality Customer returns Profitability = 5% Return of total labilities Quality Customer returns Conformance = 72% To statutory, regulatory and contractual requirements V.C’s Do: Manufacture, Purchasing & Logistics Manager Sales Design Accounts Quality 7 30 People
  17. 17. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We PROCESSISED 6 We mapped all the Value Added ACTIVITIES (verbs) & RESOURCES (nouns) We mapped all the Non Value Added ACTIVITIES (verbs) & RESOURCES (nouns) We distinguished all the generic requirements that the business must meet • Statutory • Regulatory
  18. 18. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We PASSED DOWN Quality Customer returns Quality = 93% Customer returns Quality Customer returns Delivery = 78% On time and in full Quality Customer returns Profitability = 23% Return of total labilities Quality Customer returns Conformance = 77% To statutory, regulatory and contractual requirements 16 People 9 We integrated all the RESOURCES & ACTIVITIES into each Virtual Company
  19. 19. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We AUTOMATED 9 We automated the processes to make them user configurable & slick
  20. 20. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We REVIEWED 10 Quality Customer returns Quality = 93% Customer returns Quality Customer returns Delivery = 78% On time and in full Quality Customer returns Profitability = 23% Return of total labilities Quality Customer returns Conformance = 77% To statutory, regulatory and contractual requirements
  21. 21. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We REPEATED The Cycle
  22. 22. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We Arrived Here Virtual Companies Do: Manufacture, Purchasing, Logistics, Quality, Sales, Accounts, Design & Strategy Quality Customer returns Quality = 99% Customer returns Quality Customer returns Delivery = 98% On time and in full Quality Customer returns Profitability = 27% Return of total labilities Quality Customer returns Conformance = 92% To statutory, regulatory and contractual requirements 10 People Turnover £2.1m 10 Statutory Company Virtual Company Virtual Company Virtual Company Virtual Company                                     Each person in a Virtual Company All transactions via formal contract (automated)  
  23. 23. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® There is nowhere to hide and work becomes much more like our lives at home... 11 THE FRACTAL ®
  24. 24. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® At Home 12 No functions or hierarchy Do all activities No extrinsic control and command We’re fully engaged, we make decisions and suffer consequences or get the benefits Own or borrow everything Control all of the resources We manage ourselves
  25. 25. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® 13 Imagination (looking forward) Creativity (problem solving) Curiosity (gaining knowledge) Realisation (making things happen) Self-discipline (process following) Cooperation (working together) At Work We are managed
  26. 26. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® The Informal (home) & Formal (work) Management Structures Were In Conflict! 1 Command & Control Catalogue & Communicate Conform & Comply Check & Correct The Informal (home) Management Machine & The Formal Management Machine Are In Conflict.
  27. 27. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® Value Adders Didn’t Generate Enough Excess To Pay For The Structure To Manage Them Person has: Legislature • PURPOSE (intent) • SELF-CONTROL to ensure achievement of purpose Executive • FIDELITY to own purpose • SELF-DISCIPLINE to realise purpose Judiciary • SELF-AWARENESS to recognise deviation from purpose • DRIVE to rectify deviation from Purpose Command & Control Catalogue & Communicate Conform & Comply Check & Correct Price = £100 Cost = 50 Cost = 20 Cost = 20 Cost = 20
  28. 28. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We Could Afford This! 1 Person has: • PURPOSE (intent) • SELF-CONTROL to ensure achievement of purpose • FIDELITY to own purpose • SELF-DISCIPLINE to realise purpose • SELF-AWARENESS to recognise deviation from purpose • DRIVE to rectify deviation from Purpose We went back to where the journey started We proved the formal management is double handling and is a WASTE
  29. 29. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® There is an elephant in the Room There is something very important missing in how we understand business
  30. 30. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® The Traditional Structure Creates Intermediaries
  31. 31. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® We Changed Our Structure From Traffic Light to Roundabout 19 People must decide for themselves at a roundabout People do as they are told at the traffic lights A paradigm of loyalty & obedience A paradigm of self expression & power
  32. 32. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® People Were On A Journey of Growth 2 - Pre Follower 3 - Follower 4 - Changer 5 - Creator 1 - Starter 0 - Drifter Disposition (level) Description Drifter (0) Is not engaged in process Specialiser (1) Specialises in part of a formal process Starter (1) Does not use a formal process; relies on informal instructions Pre-follower (2) Given an existing process Follower (3) Adopts a formal process Changer (4) Amends an adopted formal process Creator (5) Creates a formal process 22
  33. 33. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® People Choosing Their Own Purpose
  34. 34. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® What it can achieve:  Customer perception from poor to outstanding  Productivity up 300%  Profits up 10%  On-time and in full delivery greater than 96%  Pay up 100%  Low waste and managerial costs  High employee engagement  Highly innovative, flexible and scalable  Still contains efficient controls and measures 26
  35. 35. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® What do the founders/directors do? Money at a competitive rate Space to work at a competitive rate Business model / IT Knowledge & coaching Supplier of value add services to the Virtual Companies 27
  36. 36. Copyright © A Holm & J Wilson All Rights Reserved THE FRACTAL ® If you are facing the same business growth or survival challenges: Contact: andrew@mattblacksystems.com fractalwork.com 28 Self Management 14,200 hits per month just in the UK

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