This document discusses shifting from austerity measures like cost cutting to a more strategic approach of continuous improvement. It outlines three generations of approaches: 1) cost reduction, 2) doing more with less, and 3) tackling inefficiencies through integrated solutions. The Rolls-Royce case study transformed its Trent XWB engine production through a third generation approach involving new organizational structures, team-based working, and workplace design to increase collaboration. This led to faster iteration, less rework, and an engaged workforce. Sustaining change requires continuous improvement, champion networks, and effectively using new workspaces.

1. When there are no more costs to cut
Moving on from austerity
Sanjeev Verma and Hilary Jeffery

2. The burning platform is changing
1st generation
2nd generation
3rd generation
Getting fitter
Getting smarter
Becoming strategic
• Cost reduction
• Reducing
headcount
• Tackling
expenses
• Cost avoidance
• Becoming more agile
• Doing more with less
• Engaging with
stakeholders
• Driving business value
• Getting to root causes
• Tackling business
inefficiency
• Integrated solutions
• Whole system approach

3. Are we dealing in false economies? 3
Some all too familiar examples:
- Cutting research and innovation programmes
- Employee benefit reductions
- Client facing reductions
- Efficiency programmes potentially leaving companies ill
prepared for problems

4. Shifting the conversation
90% of projects still
operate here
Changing how .
resource used .
Org structure/
workstyles
Changing what people do
Business process
Changing how people do it
Culture
Influencing business direction
Vision and objectives

5. Limiting the value we can add
Introduce more mobility/sharing
BUT
Paper based workflow
‘that’s the way we’ve always done it’
Focus on limiting risk
Changing how
resource used
Org structure/
workstyles
Changing what people do
Business process
Changing how people do it
Culture
Influencing business direction
Vision and objectives

6. Limiting the value we can add
Reduce physical barriers between teams
BUT
Email audit trails required
Blame culture
Reward individuals, not teams
Changing how
resource used
Org structure/
workstyles
Changing what people do
Business process
Changing how people do it
Culture
Influencing business direction
Vision and objectives

7. Limiting the value we can add
New iPhones for all staff to support innovation
BUT
Complex and stringent rules for usage
Monthly ‘shame’ reports on bills
Conflicting innovation/cost
reduction views
Changing how
resource used
Org structure/
workstyles
Changing what people do
Business process
Changing how people do it
Culture
Influencing business direction
Vision and objectives

8. The Rolls-Royce story – so far…
1st generation
7 years of reduction
2nd generation
Refining our toolkit
3rd generation
Testing some early ideas
Getting fitter Getting smarter Becoming strategic
• Year on year 5%
reduction over last 5
years and is ongoing
• Exhausted
opportunities for
cost cutting
• 20% of our sites are
agile
• Targeting 45% by
2016
• Ongoing portfolio
rationalisation
• Focusing on productivity
and doing more with less
• Integrating all
workstreams – whole of
systems approach
• Identifying early pilot
groups to test ideas

9. Trent XWB vision
1.To produce the world’s most efficient engine
2.To be producing an engine a day by 2016
3. To address the challenges prevalent in Gas Turbine New
Product Introduction (NPI), in particular:
• Inefficient programme management
• Challenges with number of design iterations
• Complex and hierarchical organisational structure leading to
difficulties in teamwork
• Lack of focus on customer
• Workspace that didn’t support how people worked

10. If we had tackled the challenge from a
1st or 2nd generation perspective
1st generation response 2nd generation response
• Reduce headcount
• Flatline salaries
• Reduce sqm
• Reduce travel
• Reduce technology spend
• Restructure the team –
combining roles
• Invest in agile working to
reduce footprint
• Co-location
• Introduce new
technologies

11. A 3rd generation approach
New organisational construct - key principles:
• Aligned interaction with clear accountabilities
• Integrated Project Team (IPT) model
• High-performance team-based working
• Dissolution of boundaries
• Clear, consistent communication
Designed to:
- drive a high performance culture
- allow accountability for both System and Sub-System
integration in one project team
- Enable teams based on complementary skills
Minimum direct supervision and external support

12. The challenge
Org structure and
design
Ways of
working/processes Workplace and IT
What we did
Transformation team - business lead, HR, IT and Comms
• New organisational
structure
• Capability to form and
disband teams
• Co-located support
teams
• Clear role statements
• Leadership training
programme
• Voice of the customer
events
• Process redesign
• Staff training
• Definition of culture and
values – all involved
• Programme of
celebrating successes
• Employee defined
space
• Neighbourhood
strategy
• Project spaces
• Inspiring design
• Supporting technology
& visual management
• Wide range of
collaboration spaces

13. Sustaining the change
1. Continuous Improvement
2. Transfer ownership
3. Maintain Champion network
4. Lead by example
5. Effectively use the spaces available

14. Return on investment
Impact on behaviours
• Increased informal collaboration
• Quicker information sharing and
decision making
• Failing smarter and faster
• Faster iteration across teams
Impact on Product
• Pushing iteration up the
design process
• Less costly rework
• More engaged,
empowered workforce

15. If you’re serious about doing this 15
The Business Output
How work, worker & workplace support
that output
That the new model works
The hurdles blocking the way
The changes promised
Define
Determine
Demonstrate
Diffuse
Deliver

16. If you’re serious about doing this 16
- Whole of system thinking throughout:
- Business cases to include mandatory identification of, and engagement
with, other parts of business impacted (e.g. HR, IT, Comms, Brand etc.)
- Return to logic – what is the problem? What will be the (measureable)
benefit/costs of addressing it? What needs to change throughout the
business to fix it?
- Proper diagnostics to understand root causes
- Fully resourced and integrated transformation team
- Thorough understanding of the mechanics of the business
- Require experts in process engineering
- Strong relationships with senior leaders
- Change management done in an authentic way - can’t just consist of a
handful of workshops….
- Sufficient time to properly address issues
- Identification of a pilot project to test ideas and gain buy in

17. Thank you
Any questions?
Sanjeev Verma and Hilary Jeffery