Focusing your Business Transformation through dynamic Strategy Mapping

A Chief Executive said to me recently, “I want two things – a really well defined business strategy with detailed plans of action and my people signed up and fully engaged in its implementation.  I’ve never been satisfied with the business planning process – it’s just something that we seem to write every year and then put on the shelf until we dust it off the next year. And I don’t seem to be able get my people on board, fired up and raring to go to drive the changes that we need”.

It’s a common problem.  Many organisations go through the motions on business planning – someone in top management wants a business plan done and it gets prepared, reviewed upstairs and then put on the shelf.  It’s not really used, it’s not at the centre of how the organisation goes about its business – and even if the organisation is committed to some kind of fundamental transformation, the business plan is often not at the heart of the improvement efforts.

On the other hand, just about every Investors In People (IIP) survey ever undertaken shows clearly that people right across and down the organisation feel that they don’t understand where the business is headed, what the key priorities are and what their own part is in driving it there. As a consequence, they tend to feel disconnected and sometimes disillusioned – “it’s mushroom management, all over again!!”

Based upon the balanced scorecard and strategy mapping approach developed by Kaplan and Norton, we in Four Pillars have developed our own approach to strategy development and business plan deployment.  Providing a systematic approach and the engagement of up to one hundred people in the process, it can be deployed with the corporate management team or with other functional leaders and their teams, offering fantastic results in terms of clarity, focus, commitment and action.

David Atkinson provides an overview of strategy mapping, explaining the cause and effect relationship between each perspective

We begin by helping clients to clarify their five year business vision, mission and key priorities. Then, using the four elements of the balanced scorecard as a starting point, we define the critical financial goals and the market sectors and customer value propositions.  As we progress through the programme, we ask the group to first answer the question, “How can we work together to increase revenue and reduce costs?” and then “How can we build the relationship with our customers so that we can add value and offer better service”.

The Vision, Mission, Key Priorities, Financial and Customer Perspective define the Business Plan and will generally more than meet any requirement from the top management for a detailed plan.

Next we develop the Business Improvement Plan. Using the financial and customer perspectives to give clear business objectives, we then work with clients to define the critical process improvements that are required and the learning and development needs.

This systematic approach helps the participants in the planning process to deeply understand the cause and effect relationship between the financial objectives and what they need to achieve with their customers, their critical processes and with their skills, their technology infrastructure and their leadership and culture (the Learning and Development Perspective).

We facilitate this process by developing a Strategy Map with the planning participants which then becomes a one slide pictorial presentation of the Strategy which is perfect for briefing out across the organisation.

Each aspect of the Process and the Learning and Development Perspectives will require detailed development and we support the teams that will undertake the planning with templates and facilitation to develop the Business Improvement Plan.

The benefits of this approach are extraordinary.  A clear overarching focus for the organisation, a wide understanding of the priorities and the plans to approach them and a wave of enthusiasm for tackling the biggest issues.  In other words, the all of the foundations for successful business transformation at its very best.

Michael Simmons details strategy mapping in practice with leaders and their teams.

If you would like to hear much more about how Four Pillars goes about applying this approach with our clients, simply email Michael Simmons or subscribe to our blog for more reflections and insights on strategy and business transformation.

By Michael Simmons

Posted in Business Transformation, Change Management, Performance Management, Strategy Development | Tagged , , , , | Leave a comment

Eating the elephant – process analysis in organisation change

Guest blogger, David Kemp, recently Vice President-Supply Chain at the Engine Control and Electrical Systems division of Goodrich Corporation, continues his theme on organisational change.

When I wrote here in January about how to design a successful organisation, I set out to recommend three basic steps. The approach avoided the rush to define slots for your people, but rather took a more considered and purposeful approach as follows:

  1. Identify and define your purpose and processes;
  2. Build up an appropriate organogram with the capacity to operate those processes
  3. Assign individuals to their new roles in the organisation with training and development as required.

But the first of these steps is often the hardest, especially if you are operating under time pressure to get results quickly. And who isn’t?  I remember when I took my role as the leader of the Supply Chain Function in my division in Goodrich, I was responsible for the supply chain and procurement activities of the four subsidiary businesses that made up division. I needed to move quickly to build an integrated organisation, in order to enhance our efficiency and effectiveness across the whole of the division. I had been appointed to find ways for the procurement and supply chain function to make its full contribution to the success of the whole business, and results were expected from the very beginning.

I set out with the intention of having my leaders across the business work systematically through the above three steps, starting with the project of integrating, commonising and standardising our processes throughout the division.

It was tough to know where to begin, and in truth we started off taking a populist approach to what would be the most fruitful areas for integration. We pulled a few procedures from the intranet for each location, and set a team to study them and write a version that would work for all the sites. This activity would have been followed by training and embedding a standardised way of working, with the checks and balances that I wanted.

Achieving this result for just one of the most basic processes in a supply chain department took much more time than we could afford. After many months, it became apparent that the approach was not going to work in our timescales, and that we had massively underestimated the task at hand. And of course, working through the on-line media, it is impossible to grasp easily the scale of the challenge – you cannot see how thick is the book that you are trying to edit! It was only when I saw the piles of printed paper that represented all the documents we had loaded onto the intranet, that I realised it was time to try something different.

So another approach which we tried was to draw a top level process map for the procurement function, showing the inputs and the outputs, and identifying the value added. Sounds straightforward? We found ourselves challenged but the complexity of a modern business, with multiple rework loops and support functions, each of which had its own set of process definitions to work with. We looked at sister business, and for ‘best practice’ benchmarks externally, all of which informed the discussions but did not move us forward with the required pace. Looking across the procurement and manufacturing processes in our multiple sites, this quest for a master process map became a project in its own right! We were not actually helping to build the integration in the businesses that we needed, but engaging in a theoretical debate as to what should be, rather than what is and what might be.

The task would have been so much more straight forward if we had been starting with a clean sheet of paper. But, of course, we were not – we were starting with a fully approved suite of processes with differing legacies that had been in use for a long period of time. These were complete, but with a scattering of inconsistencies and discrepancies, and with a general need for modernisation.

The discussion did progress, however, to the point where we found ourselves starting to identify areas of process groupings that we could focus the teams onto. From the highest level, what are the primary purposes of the organisation? What are the areas of the business that the teams work together in based on their expertise and skills?  This somewhat empirical approach flew in the face of the systematic approach that I would have preferred, but as a way to get the whole team moving forward it was a correct and pragmatic adjustment.

Some groups of terms and definitions started to come together, ones that eventually became helpful.  For example, one logical group of headings that came together embraced terms such as:

  • Supplier selection
  • Sourcing
  • Management of the Approved Supplier lists
  • Commodity strategies.

Not everyone would agree with which processes belong in which groups, but as a leadership group we set about achieving a consensus and then backing it unanimously. And of course, semantics came into play, with the need to be mindful of the differing interpretations of words that occur in different countries.

We ended up with six groups of processes that would be recognisable in many businesses:

Sourcing strategy:
Commodity and category management, supply base analysis, source selection, price negotiations and approval.

Generate and fulfil orders:
All the transactional stuff of a purchasing department.  Orders, Invoices, Goods Received procedures etc.

Supplier relationship management and performance:
Segmentation of the supply base, the spectrum of supplier management tools and process, performance scorecards, problem solving and escalation.

Quality requirements:
Regulatory requirements and their application. Inspection and product management processes.

Management of product discrepancies:
The handling and disposition of non conforming products to assure product integrity to the customer

New Product Introduction (NPI) and change management:
One of the hardest areas, reaching across all the disciplines and integrating new product launch, supplier transitions, and the procurement aspects of product lifecycle management.

With these six groups accepted by all the stakeholders as the right groupings, we then slotted into this structure all the existing processes from the different sites. If something did not fit, we took a decision to make it fit somewhere, rather than add complexity with an additional process group.

It became apparent quite quickly that we had devised a way to ‘eat the elephant’- one piece at a time! It became less challenging to integrate, commonise and standardise now that we had this overarching framework in place, and progress started to gather momentum as part of normal business improvement activities. Rigor could be applied within the process groups, to the point that we began to standardise, and remove unnecessary or duplicative steps that held the business back, with the result that a number of division – wide processes came into place at the tempo that we needed.

In summary, my top three tips for sorting out a complex set of processes in your area would be:

  1. Make a rough cut. Look for groups of processes reflecting the overall purpose of the organisation, and get your leadership to endorse them
  2. Stick with those groups until you have allocated every detailed process into one of them
  3. Rationalise one group at a time, into a standard format, using flow charts where you can

By David Kemp

David Kemp has held a number of senior roles in Procurement and Supply Chain, most recently as Vice President-Supply Chain at the Engine Control and Electrical Systems division of Goodrich with accountability for direct and indirect materials. Prior to this, he spent over 30 years developing his expertise in purchasing and supply chain management at Rolls-Royce, holding Executive positions for 12 years until joining Goodrich in 2009. He is considered expert in leading and managing complex supply chains, negotiations management, effective global team working and supply chain strategies.

He has delivered transformation programmes, major commercial agreements, new projects, and extensive work in developing worldwide supply chain organisations.

David became a Fellow of the Chartered Institute of Purchasing and Supply in 2002 and was elected to the Board of the Institute in 2008. He now serves as a trustee of CIPS pension fund. He is also a Fellow of the Chartered Institute of Logistics and Transport, and a Fellow of the Royal Aeronautical Society.

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Michael Simmons takes the lead in Business Transformation

Four Pillars is delighted and proud to announce that Michael Simmons has been appointed Director of Business Transformation and Organisation Development Services from the 1st March, 2013.

Michael brings a huge wealth of experience to Four Pillars in successful business transformation.  He will lead our change management and organisation development services, providing expert consultation to clients on business strategy development, achieving operational excellence, installing a performance management system and culture and leadership development.

After working with him over the past 12 years, previously as a client of his and now as a colleague, I’m thrilled that Michael has agreed to take up this role. I’m certain he will bring his deep knowledge and experience, along with his always-practical insight and wisdom to our clients. His primary focus during the coming months will be to lead further development of the Four Pillars approach to Business Transformation and introducing a new approach to Achieving Operational Excellence.

I would urge anyone currently wrestling with organisational change, or with a desire to step-up the leadership capability of themselves or their team, to contact Michael here at Four Pillars and have a chat. You won’t regret it.

David Atkinson

Posted in And another thing…, Business Transformation, Change Management, Coaching & Mentoring, Leadership & Personal Mastery, Performance Management, Trusted Advisor | Tagged , , , , , , , , | Leave a comment

Buyer-Supplier Power: Concept Not Practice

In this second in a series of blogs from Chris Lonsdale on the concept of power in buyer-supplier relationships, he cautions practitioners not to confuse the concept of power with the lazy assumption that it determines how relationships should be managed in practice.

In a recent post, I suggested it might be time to re-visit the subject of power in buyer-supplier exchanges. Over the past 16 years, I must have taught, trained, worked with and advised somewhere between 1,500 and 2,000 procurement professionals and others professionals with an interest in procurement. During this time, the topic of power (the subject of many publications, not just by me, but also my colleagues over the years at Birmingham) has always been one of the topics to generate the most interest and yet, arguably, power does not have a profile in the profession to match this interest.

The initial post in this series outlined a number of issues to be explored. The first reminded us that power is a concept not a practice and should not be associated with any particular type of management action. In particular, many people associate the word power with the aggressive exploitation of dominance. They should not. In this (rather technical, but hopefully not too dry) post, I explore the concept of power.

Power was defined in the initial post as the ability of one party to make another party act in a way that they would not otherwise have done. There are two things here. One, power is understood here as residing in the relation between two parties. That is, you don’t say ‘IBM is powerful’. Rather IBM is said to be, for example, dominant in its relation with X, but not in its relation with Y.

Two, what provides the ability? The rather circular answer is power resources. Buyers and suppliers in exchanges, whether it is a new exchange or the continuation of an existing one, possess power resources and it is the relative possession of power resources that determines the power relation.

These power resources are many, but most can be placed in three categories – scarcity, utility and information. Scarcity refers to the options available to the two parties. Sometimes this can mean the availability of other buyers and suppliers to the buyer and supplier in question. In existing relationships, however, scarcity concerns both the availability of other buyers and suppliers and the ease of switch. Time is also relevant here. Scarcity of time affects the power relation.

Utility refers to the importance of the exchange to the two parties. Is it critical to the buyer’s business (e.g. a core sub-assembly)? Is it critical to the supplier’s business, either in terms of immediate revenue or future potential revenue (e.g. the buyer provides access to a new market or technology)?

Information refers to the existence or otherwise of information asymmetries between the two parties. Economists have invented a range of concepts to describe different types of information asymmetries, including: adverse selection (the supplier is trying to pass off rubbish as quality); moral hazard (the supplier is putting in less effort or lower quality inputs than it is letting on); strategic misrepresentation (the buyer or supplier is bluffing about their walk-away point); hold-up (the buyer or supplier is trying to lock-in the other party while talking about sweetness and light).

Depending on the balance between the two parties in respect of these three categories of power resources, the relation between them can be one of four types. Buyer dominance and supplier dominance are two of them and represent power positions. The other two (which are strictly speaking not power positions, for reasons too boring to go into) are independence (neither party considers the other important) and interdependence (both parties consider each other very important).

So this is a little synopsis of the concept of power. Of course, buying organisations can be left with only ‘potential power’ if their power resources are affected by poor internal practice. To give a few examples, scarcity can be affected by over-specification and the over-consolidation of spend, utility can be affected by the excessive fragmentation of spend and information can be affected by poor negotiation and contract management practice. This raises the question of whether enough procurement practitioners (not to mention internal clients) have a thorough enough understanding of the concept of power to be able to incorporate it into their practice.

In the next post in this series, I discuss the different ways in which buyers and suppliers can utilise (or not as the case may be) positions of power in business markets and look at the relationship between buyer-supplier power and buyer-supplier co-operation.

By Chris Lonsdale

Guest blogger Chris Londale is a Reader in Procurement and Supply Management at Birmingham Business School’s Centre for Business Strategy and Procurement. See CBSP_brochure for details of the Centre’s research and renowned MBA programme.

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