Profit From Experience B I Z


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Profit From Experience B I Z

  1. 2. Profit From Experience Practical, Proven Skills for Transforming Your Organization AUTHOR: Gil Amelio and William L. Simon PUBLISHER: Simon and Schuster DATE OF PUBLICATION: 1997 NUMBER OF PAGES: 309 pages Book pic
  2. 3. THE BIG IDEA <ul><li>The gateway to the new Human economy. </li></ul><ul><li>“ Few organizations are so weak they can’t be saved, few </li></ul><ul><li>are so healthy they can’t be improved.” -Gil Amelio </li></ul><ul><li>An inspiring and true story of National Semiconductor’s Transformation Management process, as told by the former Chairman and CEO of Apple Computer. </li></ul><ul><li>This remarkable firsthand story of corporate transformation from a key change agent shows how to engineer a turnaround, bring health to any company, and enjoy greater long-term profits. </li></ul><ul><li>Outlining key issues, strategies, and guidelines Gil introduced at National Semiconductor, this captain tells the story of how he steered his ship from the brink of bankruptcy to its highest earnings in just three years. </li></ul>
  3. 4. PART ONE – PEOPLE LEADERSHIP Charting the Course <ul><li>Chapter 1- Creating the Vision </li></ul><ul><ul><li>Vision is a statement of what the company wants to become; </li></ul></ul><ul><ul><li>Mission is a more precise description of what the company does, and purpose is associated with specific objectives – to double sales annually or gain more market share by a certain percentage. </li></ul></ul><ul><ul><li>Your vision should clearly express your values. </li></ul></ul><ul><ul><li>Your vision statement must be powerfully short, and succinct. </li></ul></ul><ul><ul><li>Take Johnson & Johnson, when several cases of death in Chicago arose from the use of Tylenol, the company immediately recalled the product, nationwide. </li></ul></ul><ul><ul><ul><li>This decision was guided by the first line of the J&J mission statement, “We believe our first responsibility is to doctors, nurses, patients, mothers, and all others who use our products and services…” </li></ul></ul></ul>
  4. 5. CHAPTER 1- Creating the Vision <ul><ul><li>Your vision must be an evolving document. </li></ul></ul><ul><ul><li>Disney’s basic vision/mission of “making people happy” has guided it through decades of changes in the entertainment industry </li></ul></ul><ul><ul><li>Your vision must go beyond the obvious reason-for-being, that is, to make money. </li></ul></ul><ul><ul><ul><li>It must serve a higher purpose and be inspiring enough for people to get out of bed every morning and come to work. </li></ul></ul></ul>
  5. 6. <ul><li>At National Semiconductor, the program instituted was called “Leading Change”. </li></ul><ul><ul><li>Culled from the ideas of employees at all levels, the program called for a balance between personal and work life. </li></ul></ul><ul><ul><li>Key initiatives were launched to address this issue: </li></ul></ul><ul><ul><ul><li>Celebrating a “Kids to Work” day where the employees’ kids could come and learn about what their parents’ jobs were like. </li></ul></ul></ul><ul><ul><ul><li>Community care and volunteering efforts brought 40 employees together to refurbish the home of an elderly ill woman as part of a “Christmas in April” program. </li></ul></ul></ul>CHAPTER 2 – Involving Everyone In Defining the Organization
  6. 7. CHAPTER 2 – Involving Everyone In Defining the Organization <ul><li>Wisdom in a nutshell: </li></ul><ul><ul><li>Remember, transformation is a Process. </li></ul></ul><ul><ul><ul><li>When someone comes up with a solution, insist on a timeline with an outline and rough details. </li></ul></ul></ul><ul><ul><li>Have a creative workshop. </li></ul></ul><ul><ul><ul><li>You don’t need to hire a creative agency to communicate your new vision. </li></ul></ul></ul><ul><ul><ul><li>Follow this process: </li></ul></ul></ul><ul><ul><ul><ul><li>Tape large sheets of paper on the walls of a big meeting room. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Have everyone put ideas on it. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Do not reject any idea. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Let people express themselves graphically, or with words. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>From this basic brainstorming you can see what key ideas must be included in your vision. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>This can later be integrated into a poster for HR to place in every cubicle and common area. </li></ul></ul></ul></ul>
  7. 8. CHAPTER 2 – Involving Everyone In Defining the Organization <ul><ul><li>Provide a link to the history of the organization. </li></ul></ul><ul><ul><ul><li>A new vision can be scary for some. </li></ul></ul></ul><ul><ul><ul><li>People may accept change easier when they see how it relates to the company’s past. </li></ul></ul></ul>
  8. 9. <ul><li>When Gil Amelio speaks of “setting the initial vector”, he means setting the process in motion in a way that gets people’s attention. </li></ul><ul><li>Be bold enough to act. </li></ul><ul><ul><li>Any visionary knows this deep down inside. </li></ul></ul><ul><ul><li>When you over-plan, you are stalling. </li></ul></ul><ul><ul><li>Simply make sure you have the support, the equipment, the manpower, and the tools, and go ahead. </li></ul></ul><ul><ul><li>You cannot plan for every eventuality, but you can be prepared for it. </li></ul></ul><ul><ul><ul><li>Many inventions are born out of the work of people who do things others thought couldn’t be done. </li></ul></ul></ul><ul><ul><ul><li>Act boldly. </li></ul></ul></ul>CHAPTER 3 – Setting the Initial Vector
  9. 10. CHAPTER 3 – Setting the Initial Vector <ul><ul><ul><li>Communicate the Vision wisely and widely. Provide nicely designed aids or a “meeting kit” which includes: an agenda, a set of color overheads, or graphics on boards, a bullet-point script with a suggested opening and closing, plus a list of questions to expect and the answers. </li></ul></ul></ul><ul><ul><ul><li>Use off-site gatherings to bond and set guidelines with direct reports. </li></ul></ul></ul><ul><ul><ul><li>Once a month, sit down with a dozen randomly chosen employees from all departments, and allow each person to air a question. </li></ul></ul></ul><ul><ul><ul><li>Your communications effort must reach all corners of the company, clearly. </li></ul></ul></ul><ul><ul><ul><li>Celebrate every success and communicate these wins on your public address system, the email, the cafeteria, or the common reception area. </li></ul></ul></ul>
  10. 11. <ul><li>A clear understanding of what your customers value is required for any strategy to succeed. </li></ul><ul><ul><li>If your customer wants you to assemble parts in another way, find a way to give him exactly what he wants. </li></ul></ul><ul><ul><li>Your business is a value delivery system. </li></ul></ul><ul><li>Federal Express founder Fred Smith understood the value proposition from the start. </li></ul><ul><ul><li>He could not depend on airlines for his delivery service to guarantee his idea of next-day deliveries. </li></ul></ul><ul><ul><li>He offered 100 per cent certainty, at 100 times the cost of regular mail. </li></ul></ul><ul><ul><ul><li>Airplanes, a fleet of trucks, a processing plant, and an enormous information system, with a big 25 million-dollar budget to provide instantaneous communication with every driver, these are the elements that answer why customers are loyal to FedEx. </li></ul></ul></ul>CHAPTER 4 – Valuing What Your Customers Value
  11. 12. <ul><ul><li>You learn and determine what a customer values through a process. </li></ul></ul><ul><ul><li>This is a relationship that builds over time, just like any other. </li></ul></ul><ul><ul><li>Understand the customer’s application of your product or service. </li></ul></ul><ul><ul><li>Locate the point of engagement where there is greatest economic growth. </li></ul></ul><ul><ul><li>The value advantage is your competitive distinction, the reason a customer would choose you over others. </li></ul></ul><ul><ul><li>Customers are always willing to pay a premium for products and services they know they can trust and depend on. </li></ul></ul>CHAPTER 4 – Valuing What Your Customers Value
  12. 13. <ul><li>Here is the National Semiconductor list. The list will be different for each company, depending on the situation and circumstances. </li></ul><ul><ul><li>Organizational Excellence </li></ul></ul><ul><ul><li>Operational Excellence </li></ul></ul><ul><ul><li>Strategic Positioning </li></ul></ul><ul><ul><li>Return on Investment in R&D </li></ul></ul><ul><ul><li>Financial Performance </li></ul></ul><ul><ul><li>Customer Delight </li></ul></ul><ul><li>At the core of Organizational Excellence is a process that focuses on making employees highly effective. At National Semiconductor, teams aimed for these goals: Direction setting and visioning, eliminating obstacles, and educating (Included opening of the National Semiconductor University, where employees and outsiders could pursue degrees and acquire skills training). </li></ul>CHAPTER 5 – Uncovering the Factors that Define Success: The Six Critical Business Issues
  13. 14. CHAPTER 5 – Uncovering the Factors that Define Success: The Six Critical Business Issues <ul><li>Operational Excellence programs address specific problems such as the effort “Every Call Counts” which was designed to improve telephone responsiveness. </li></ul><ul><li>Strategic Positioning </li></ul><ul><ul><li>Deals with identifying and achieving a business model that will enable superior financial performance. </li></ul></ul><ul><ul><li>It is the company periscope – providing input on issues such as how our customers and competitors view us. </li></ul></ul><ul><li>Return on Investment in R&D was important in National Semiconductor because it was a technology company – the lifeblood is new products, ideas, and new methods. </li></ul><ul><ul><li>The company’s success or failure depends on the ability to transform R&D dollars into effective products that build on company history. </li></ul></ul>
  14. 15. CHAPTER 5 – Uncovering the Factors that Define Success: The Six Critical Business Issues <ul><li>Financial Performance will take care of itself if the company achieves the first four Critical Business Issues. The first four CBI’s should yield: </li></ul><ul><ul><li>Steadily rising productivity </li></ul></ul><ul><ul><li>Declining break-even as a percent of sales </li></ul></ul><ul><ul><li>Rising revenue per payroll dollar </li></ul></ul><ul><ul><li>Increasing gross profits </li></ul></ul><ul><ul><li>Improving return on net assets and return on equity </li></ul></ul><ul><li>Customer Delight means more than service, support, or satisfaction. </li></ul><ul><ul><li>Delight means helping customers win in their marketplace, by delivering value through innovation and service. </li></ul></ul><ul><ul><li>Provide customers with products that will help them beat their competition. </li></ul></ul>
  15. 16. <ul><li>“ Don’t attribute to malice that which you can attribute </li></ul><ul><li>to ignorance.” </li></ul><ul><li>If others perform their work in a different way than we do, if they don’t have the same work habits, we tend to see them as villainous. </li></ul><ul><ul><li>Always assume most people are working with good intentions. </li></ul></ul><ul><ul><li>Nobody wants to do a bad job on purpose. </li></ul></ul><ul><li>A transformation involves a cultural change. </li></ul><ul><ul><li>It may be necessary to bring in young blood, it is a strain on an organization but it cannot be avoided. </li></ul></ul><ul><li>Choosing People: 10 Attributes to Look For… </li></ul><ul><ul><li>Strong personal values and ethics </li></ul></ul><ul><ul><li>Brightness or the ability to catch on quickly, a wide range of interests </li></ul></ul><ul><ul><li>Experience </li></ul></ul>CHAPTER 6 – Selecting, Developing, and Keeping People
  16. 17. <ul><ul><li>A Sense of Humor, because the workplace is stressful enough </li></ul></ul><ul><ul><li>The Ability to Work Hard and keep a high energy level </li></ul></ul><ul><ul><li>Intuition or the ability to decide without the benefit of complete information </li></ul></ul><ul><ul><li>The ability to approach a problem from more than one perspective </li></ul></ul><ul><li>Wisdom in a Nutshell </li></ul><ul><ul><li>Those HR forms and aptitude tests are generally a waste of time. </li></ul></ul><ul><ul><li>Move junior people around to see where they can shine. </li></ul></ul><ul><ul><li>Beware of the brilliant loner. A less brilliant team player is your best bet. Transformation depends on people working in teams. </li></ul></ul>CHAPTER 6 – Selecting, Developing, and Keeping People
  17. 18. Creating Commitment: The Desire to Contribute CHAPTER 7 – Institutionalizing Excellence: The Leading Change Program <ul><li>Creating an Environment for Change </li></ul><ul><li>“ The very best and most creative organizations, those that are </li></ul><ul><li>world-class, are not comfortable.” </li></ul><ul><li>There is a good kind of stress or tension in the workplace that can produce just enough pressure on people to push themselves further. </li></ul><ul><li>The wrong kind of stress is when management places obstacles in the path of change and use bureaucracy to derail the change train. </li></ul><ul><li>Gather your disciples of change! </li></ul><ul><ul><li>If a person feels good about coming to work, the work experience makes them feel good about themselves. In this situation, people become more committed and willingly devote nights or weekends for something they believe in. </li></ul></ul>
  18. 19. CHAPTER 8 – Empowerment is Hell <ul><li>People at the grass roots can lead change and drive it harder than senior management. </li></ul><ul><ul><li>Change has to stay permanent, no matter who leaves the company. </li></ul></ul><ul><ul><li>Let subordinates come to you with their own initiatives and timelines. </li></ul></ul><ul><ul><li>Remove the speed bumps that are in their way, and allow change to happen. </li></ul></ul><ul><ul><li>There is responsibility and accountability that goes hand in hand with this new freedom, for a leader this kind of empowerment is difficult and tricky. </li></ul></ul><ul><li>The 6 Steps to Empowerment: </li></ul><ul><ul><li>Understand the definition of success. Refer to your new Vision. </li></ul></ul><ul><ul><li>Understand your status, strengths and problems. </li></ul></ul><ul><ul><li>Develop metrics. Measure how you’re doing against the competition. </li></ul></ul><ul><ul><li>Develop an overall roadmap. </li></ul></ul>
  19. 20. CHAPTER 8 – Empowerment is Hell <ul><ul><li>Develop an overall roadmap. </li></ul></ul><ul><ul><li>Get buy-in from your team, and from management. Make them part of the process by soliciting ideas and advice. </li></ul></ul><ul><ul><li>Be accountable. Accept responsibility for the results. </li></ul></ul>
  20. 21. CHAPTER 9 – Encouraging Individual Performance <ul><li>How do you encourage and arm people to make their own decisions? Give them a precise set of guidelines and boundaries. Show them how far they can go, and support the risks they take. </li></ul><ul><li>People must come to you with a solution, not just a problem. You are there to give them the go-ahead. </li></ul><ul><li>The process solution must include: </li></ul><ul><ul><li>A clear description of the problem </li></ul></ul><ul><ul><li>The plan to solve the problem </li></ul></ul><ul><ul><li>How this supports the goals/priorities for the company </li></ul></ul><ul><ul><li>What resources are required </li></ul></ul><ul><ul><li>What steps in the process will be taken </li></ul></ul><ul><ul><li>What the milestones will be/specific completion dates </li></ul></ul><ul><ul><li>Deadlines for presenting progress reports </li></ul></ul><ul><ul><li>Success metrics </li></ul></ul>
  21. 22. CHAPTER 9 – Encouraging Individual Performance <ul><li>Love the mavericks. </li></ul><ul><ul><li>They may appear to be rule-breakers on the surface, but they have the intensity and passion to pursue a project to the bitter end. </li></ul></ul><ul><ul><ul><li>They are the asset to a company and should be valued. Do not force these high-energy types to conform. </li></ul></ul></ul><ul><ul><li>How do you handle those who resist change? Give them fair warning, some time to adjust or redeem themselves, and when all else fails, be ready to fire them. This will show you will let heads roll when it comes to pursuing the new Vision. </li></ul></ul>
  22. 23. PART TWO – BUSINESS LEADERSHIP Fixing Framework <ul><li>Chapter 11 – Structuring for Success </li></ul><ul><ul><li>Whether your company is a fast-growing start-up or an established worldwide organization, it needs structuring that is not so rigid it reeks of bureaucracy, but not so fluid that every rule can be bent to fit a situation. </li></ul></ul><ul><ul><li>The National Semiconductor solution was to move toward a new structure, graphically depicted as a cube, in which employees are challenged to operate not just vertically, but horizontally. </li></ul></ul><ul><ul><ul><li>This is called the “three-dimensional manager” or “multi-dimensional manager”. </li></ul></ul></ul><ul><ul><ul><li>Customers’ perspectives are integrated into the cube via regional market segment. </li></ul></ul></ul><ul><ul><li>This structure forces managers to lead rather than micro-manage and reduce the layers in a company. </li></ul></ul>
  23. 24. CHAPTER 12 – Organizational Excellence-Elevating Performance and Achievement <ul><li>At National Semiconductor, quarterly executive off-site gatherings became the framework for launching Organizational Excellence. </li></ul><ul><li>The objective was to educate National’s corporate leaders in decision-making skills. This means getting every manager to think and decide the way the organization’s leader would think. </li></ul><ul><li>The Basic elements of Organizational Excellence: </li></ul><ul><ul><li>Direction Setting and Visioning </li></ul></ul><ul><ul><li>Eliminating Obstacles </li></ul></ul><ul><ul><li>Educating </li></ul></ul><ul><ul><li>Informing </li></ul></ul><ul><li>To use a metaphor, think of putting your company on a path to good health, rather than going on a crash diet. Crash diets don’t work. You need a lifestyle change. </li></ul>
  24. 25. CHAPTER 12 – Organizational Excellence-Elevating Performance and Achievement <ul><li>Gil Amelio’s Personal Tips on Making OE work: </li></ul><ul><ul><li>Look for opportunities to bring in outside experts </li></ul></ul><ul><ul><li>For off-sites, pose a single question for the group to tackle </li></ul></ul><ul><ul><li>Let the group set their own priorities, guide them toward their own solutions </li></ul></ul><ul><ul><li>Let them implement their own solutions </li></ul></ul><ul><ul><li>Make sure they stay aligned and focused </li></ul></ul><ul><ul><li>For the middle manager: give subordinates free rein </li></ul></ul><ul><ul><li>Every session must end with a list of Action Items </li></ul></ul>
  25. 26. <ul><li>National’s strategic planning is based on a 3-phase process. </li></ul><ul><ul><li>Prolog, constraints are set for individual business managers to focus on, such as amount of capital available. </li></ul></ul><ul><ul><li>Dialog phase, the managers and those they report to discuss the best-choice strategy option for each business. </li></ul></ul><ul><ul><li>Final decisions are communicated back to individual businesses in the third and last phase, the Postlog. </li></ul></ul><ul><li>Questions to ask during the strategic planning: </li></ul><ul><ul><li>Do these plans support the objectives of the company? </li></ul></ul><ul><ul><li>Do people know the cut-off date for input so they can submit ideas on time? </li></ul></ul><ul><ul><li>Are people using the road map for the future? (For products, three generations is not too far ahead for planning purposes) </li></ul></ul>CHAPTER 13 – Operational Excellence – The No. 1 Strategic Weapon
  26. 27. <ul><li>The Value of Teams: </li></ul><ul><ul><li>More people in the organization share leadership </li></ul></ul><ul><ul><li>More experience and knowledge are brought to solve complex problems </li></ul></ul><ul><ul><li>More information goes directly to the point where action can be taken </li></ul></ul><ul><ul><li>More decisions are effectively and quickly implemented because the implementers are part of the decision-making process </li></ul></ul><ul><ul><li>More employees view themselves as business partners striving for the same goal </li></ul></ul><ul><ul><li>More innovation and risk taking is possible </li></ul></ul><ul><ul><li>More people are listening to customers and have authority to solve customer problems </li></ul></ul><ul><ul><li>More people focus on learning from mistakes rather than unproductive competition between groups. </li></ul></ul><ul><ul><li>More global thinking and long range planning takes place because as teams make day-to-day decisions, front-line leaders have more time for higher-level tasks </li></ul></ul>CHAPTER 14 – Teamwork at the Top, Teamwork Everywhere
  27. 28. <ul><li>Teams must have a life cycle of 120 days or four months. That is enough time to achieve something useful and then move on. </li></ul><ul><li>Teams are the answer when the problem requires a cross-disciplinary approach/expertise. </li></ul><ul><li>Team Spirit </li></ul><ul><ul><li>Provide training in team leadership and being an effective team member </li></ul></ul><ul><ul><li>Use a team when a problem cannot be solved by individuals, or if time is of the essence. </li></ul></ul><ul><ul><li>Use supervisors rather than managers to provide leadership experience. </li></ul></ul><ul><ul><li>Assign a sponsor to each team, a member of the management team who will support and guide the leader </li></ul></ul><ul><ul><li>Create a timetable under which the team ceases to exist after a certain date, preferable after 90 to 120 days. </li></ul></ul>CHAPTER 14 – Teamwork at the Top, Teamwork Everywhere
  28. 29. <ul><li>Chapter 15 – Speed is Life- Using Time as a Competitive Weapon </li></ul><ul><ul><li>It is widely recognized today that for companies to stay competitive, they need to shorten their development cycles, time to market, and the entire business process. </li></ul></ul><ul><ul><li>To use time as a competitive weapon- </li></ul></ul><ul><ul><ul><li>Increase your rate of learning. </li></ul></ul></ul><ul><ul><ul><li>Use time to prioritize. </li></ul></ul></ul><ul><ul><ul><li>Focus on improving cycle times </li></ul></ul></ul><ul><ul><ul><li>Use feedback loops </li></ul></ul></ul><ul><ul><ul><li>Use the principles of optimization </li></ul></ul></ul>Time, Metrics, and Money
  29. 30. <ul><li>These are the critical items for measuring the health of your organization: </li></ul><ul><ul><li>Gross profits </li></ul></ul><ul><ul><li>Profit before tax </li></ul></ul><ul><ul><li>Return on net assets </li></ul></ul><ul><ul><li>Break-even </li></ul></ul><ul><ul><li>Investment performance-Return on equity. The best performing companies frequently achieve an ROE of 20 percent. </li></ul></ul><ul><ul><li>Profit on value added </li></ul></ul><ul><ul><li>Asset management </li></ul></ul>CHAPTER 16 – Made to Measure
  30. 31. <ul><li>The right way to manage expenses is to set a ceiling and keep it. </li></ul><ul><li>Critical Financials: </li></ul><ul><ul><li>The profit equation </li></ul></ul><ul><ul><li>The success model </li></ul></ul><ul><ul><li>Human asset productivity </li></ul></ul><ul><ul><li>R&D return on investment </li></ul></ul><ul><ul><li>Gross profit </li></ul></ul><ul><ul><li>Break-even </li></ul></ul><ul><ul><li>Investment performance </li></ul></ul><ul><ul><li>Asset management </li></ul></ul><ul><ul><li>Return on Equity and Return on Net assets </li></ul></ul>CHAPTER 17 – From Red to Black
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