Challenges on making a successful business transformation

1. CHANGING HOW WE CHANGE
Keys to business transformation success
Carlos de Castro
Amsterdam - March 3rd
20162nd AnnualGlobal Process Improvement & Opex Summit

2. KEYS TO BUSINESS
TRANSFORMATION SUCCESS
2nd Annual Global Process Improvement & OpexSummit 2
• The objective of any
transformation process is to
obtain sustainable results.
There are many tools and
models proposing ways to
implement a business
transformation.
• But many implementation
programs ignore the importance
of creating a learning and
adaptative organization that
defines the ambition,
recognizes the challenge,
understands the current
situation and the gap to the
target, and moves forward with
clearly defined tasks.
• We must understand what
problem is there to be solved.
Otherwise we will end up with a
“solution in search of a
problem”.
• We want to get everybody
engaged but people will not
have time to spend with “fuzzy
ideas”.

3. NOT A NEW TOPIC
2nd Annual Global Process Improvement & OpexSummit 3
• What motivates workers for
change? Researchers have
asked this question for years.
Some pioneering work began in
the 1920s with Elton Mayo and
Fritz Roethlisberger.
• Both have conducted a study at
the Hawthorne plant of the
Western Electric Co. on the
socio-psychological aspects of
behaviour in organizations.
• They were originally looking into
the relationship between work
efficiency and environmental
conditions, such as lighting,
temperature, and humidity for
assembling electronic
components.
• In five years of analysis, Mayo
and Roethlisberger realized that
human factors played a much
larger role in motivation and
productivity.
• Implementing changes in break
times, pay system, and type of
supervision, they found changes
in work output.
• For the first time serious studies
were conducted about the
motivating factors for changes
in attitudes, impact of the peer
group, and effects of other
social forces, as well
supervisory style.
• It was the beginning of the
human relations management,
as well as the development of
motivational tools.

4. NOT A NEW TOPIC
2nd Annual Global Process Improvement & OpexSummit 4
• In 1964 Juran wrote his
“Managerial Breakthrough” where
he explains differences between
“control” and “breakthrough”
phases.
• He dedicated one entire chapter to
the risk of focussing solely on the
technical aspects of change.
• Juran wrote: “In dealing with
cultural patterns we are at our
worst, hampered as we are by our
limited knowledge and by our own
emotional involvement”.

5. ARE WE MISSING THE POINT?
2nd Annual Global Process Improvement & OpexSummit 5
• As Juran wrote in 1964, we
failed in implementing change
mostly not due to the resistance
but due to the lack of skills on
how to manage it properly.
• We watched improvement
initiatives leaving a trail of
unintended negative
consequences and rarely
resulting in lasting
improvement. From Quality
Circles to Just-in-Time, from
TQM to Business Process Re-
engineering, including Six
Sigma and Lean; these are well
intentioned initiatives that in
many companies have not
delivered on their promised
benefits.
• The Shingo Institute had
analyzed change programs over
the last 25 years and realized
that the problem has nothing to
do with the concepts but with
the programmatic, tool oriented
deployment of them.

6. CHALLENGE #1
HAVE A CLEAR MANAGEMENT
PHILOSOPHY
2nd Annual Global Process Improvement & OpexSummit 6
• A management philosophy is a
set of principles to guide
someone’s actions and
decisions in an organization.
• It also helps defining a process
on how to make decisions and
prioritizing in a consistent way.
• Andreas Kramvis gives an
example of a car that has
broken down. You are the owner
and calls the mechanic to get it
fixed. When the mechanic
arrives, he knows exactly where
to look for causes of the
problem and what tests to make
before giving a diagnostic.
• He didn’t design the car but
knows what fits where and how
it all fits together as a system to
make the car work. Even if cars
are different, he understands
the principles utilized to design
them.
• During a transformation
process, the leader has to play
all these roles: the owner driving
everyday’s actions, the
mechanic getting the
organization fixed, and the
designer rebuilding the
organization.
• A clear challenge for the leader
is to have the understanding of
how things work and a set of
principles to guide the actions
and decisions through the
transformation.

7. CHALLENGE #2
PLAN THE ‘HARD’ AND ‘SOFT’
ASPECTS
2nd Annual Global Process Improvement & OpexSummit 7
• Building a transformation plan
requires more than preparing a
normal plan. Additionally to the
annual sales, operational and
financial plan, a plan for a
transformation has to include
the build-up of new skills and
competences, closing of current
gaps, definitions of where to
invest and where to disinvest,
and programs to reinforce the
expected improvement culture.
• Leaders need as well to
understand and take personal
responsibility for creating and
managing a culture of
continuous improvement. This is
not something that can be
delegated to others.
• To stay coherent, every
business, management and
work system should be aligned
to the management philosophy
adopted. When systems are
properly aligned with principles,
they strategically influence
people’s behavior toward the
ideal.
• When people understand for
themselves, the “why this?” and
“why now?”, they become
empowered to take personal
initiative. It will also make it
easier to deal with “grief” that is
a natural emotion in all types of
change, both personal and
organizational.

8. “I’ve heard the boss changed his mind …
He wants to be cremated instead!”
CHALLENGE #3
CREATE A SHARED MINDSET
2nd Annual Global Process Improvement & OpexSummit 8
• How to build into every
employee in the organization a
commitment to the same
principles and how to align
individual behaviors in such a
way to be able to permanently
shape the culture of the
organization?
• Dialog encourages and fosters
commitment, which helps
controlling the levels of anxiety
and fear inside the company.
• On the other hand an empty
communication without actions
kills the trust. Defining high
expectations for performance
and stretching the individuals
make the messages credible.
• In general people react
positively when understanding
the change process as inspired
by principles and driven by
values.
• Finally it is crucial to show
constancy of purpose and
consistency.

9. CHALLENGE #3
CREATE A SHARED MINDSET
2nd Annual Global Process Improvement & OpexSummit 9
• Another aspect of creating a
shared mindset is what Kotter
calls “creating a powerful
guiding coalition”. Even the
most powerful CEO would not
be able alone to develop the
right vision, disseminate it, lead
pilot projects, change
behaviours and transform the
culture.
• You might try to force some
simple changes but how to force
practices such as a good yearly
review meeting between leader
and employee? It requires
alignment from the leadership
team.
• Specially in large corporations
the team has to have the right
position power, the right
expertise and high credibility.
Creating such a coalition
requires selection and
formation.
• Not everyone is prepared to
lead through change times. But
e leader can use all resources
available to communicate,
explain, motivate jointly
activities and use those
moments to disseminate a
vision.
• It goes much beyond the “team
building exercises” organized by
companies. Gathering top
managers for 3 days and
making them jump and play is
not enough to create a shared
mindset and the trust that the
changes will benefit everyone.

10. CHALLENGE #4
BUILD ATTITUDES &
COMPETENCES
2nd Annual Global Process Improvement & OpexSummit 10
• A pike, a carnivorous fish, was
placed in an aquarium together
with a group of small fishes but
separated by a glass wall.
• The pike made several attacks
against the wall trying to reach
the fishes but always hitting
strong against the glass.
• Eventually the pike stopped,
understanding the effort was
pointless. As the wall was
removed by the scientists, the
small fishes started swimming
all over the aquarium.
• The pike didn’t move and ended
up dead by starvation, not being
able to change a behaviour
pattern learned after the
unsuccessful attemps to eat.
• Professor B.J. Fogg from the
Persuasive Lab at Stanford
University developed a
Behaviour Model showing
that three elements must
converge at the same
moment for a behaviour to
occur: Motivation, Ability,
and Trigger. When a behaviour
does not occur, at least one of
those three elements is
missing.
• Fogg also explains that a better
path to change is making the
target behavior easier to do – a
succession of easy steps
practiced regularly and
methodically, like learning a
musical instrument or a martial
art.

11. CHALLENGE #5
CREATE AN OPERATING
MECHANISM
2nd Annual Global Process Improvement & OpexSummit 11
• The function of an operating
mechanism “is to run your
business and enable decisions
to be made in an effective
manner” (A.Kramvis).
• Differentiating “transformation
processes” from “standard
business processes” leads to
alienation. Very quickly change
initiatives become generic and
disconnected from reality. On
contrary having an operating
mechanism that drives cultural
change is the most powerful
way to train new behaviours, put
in practice the management
philosophy and create a
learning organization.
• Such mechanism needs to
serve the needs of the business
and should be structured
according to the organizational
level and the severity of
decisions to be made.
• In a production unit you might
run it daily, at the top of the
corporate it can be monthly. It is
important thet people don’t see
it as “a meeting” because the
concept of meeting is very
damaged. Staying in conference
rooms, sitting in comfortable
chairs and watching
presentations is not an
operating mechanism, it is a
waste.
• A mechanism based on “The 6
Reals” is the best way to
effectively structure the time of
the people and promote a
learning culture.

12. CHALLENGE #6
FOCUS ON REALITY, NOT
IMAGINATION
2nd Annual Global Process Improvement & OpexSummit 12
• When we conduct brainstorms
opportunities, problems or
reasons for change in any type
of organization the results listed
by the participants tend to
repeat the same general topics.
• If we stay at this level of “fuzzy
problems”, the probability we
can define any effective
program or initiative is very low.
• Success of a change comes
from making appropriate
choices that address real needs
and can be executed with
limited resources.
• People tend to generalize with
low understanding of the
situation or lack of clues.
• This is commonly visible in long
brainstorms or mapping
sessions where the participants
don’t have the vision of the
reality of facts.
•
•
Copyright: Novelis Inc.

13. CHALLENGE #6
FOCUS ON REALITY, NOT
IMAGINATION
2nd Annual Global Process Improvement & OpexSummit 13
• An operating mechanism should
help the leaders to drive the
expected cultural change.
• The only way to stay grounded
and avoid imagination is to “go
and see” problems at their
source.
• Being as near as possible to the
source of problems and
opportunities seems to be the
best way to keep the focus.
• “The 6 Reals” provide a good
structure to the discussions,
decisions and actions:
1. real place
2. real time
3. real actors
4. real parts
5. real differences between good
and bad situation
6. real data as detailed as
possible
Copyright: Novelis Inc.

14. KEYS TO BUSINESS
TRANSFORMATION SUCCESS
2nd Annual Global Process Improvement & OpexSummit 14
• A transformation is never totally complete.
The complexity of the challenges and
effort needed is determined by the “clock
speed” of each industry. You need to
determine when the sustainability of
results, profitability and growth achieve
the expected levels to balance the efforts
put on further changes.
• Success is what makes leaders enjoy the
fruit of their efforts and moves them to
work harder to maintain the changes.
• It is responsibility of the powerholders in
the organization to sustain the achieved
culture and values faithfully.

15. 15
Leading Change
ISBN: 9780875847474
Author: J. P. Kotter
TheLeadership Mystique: auser's manual for thehuman
enterprise
ISBN: 9780273656203
Author: ManfredF. R. Kets deVries
Reinventing Giants: How ChineseGlobal Competitor Haier
Has Changed theWay Big Companies Transform
ISBN: 9781118602232
Authors: Bill Fischer; Umberto Lago; Fang Liu
Transforming theCorporation
ISBN: 9780615515281
Author: Andreas C. Kramvis
Perfect QRQC (Quick ResponseQuality Control)
ISBN: 9782840017103
Author: Hakim Aoudia and Quintin Testa
A Behavior Model for PersuasiveDesign
Author: B.J. Fogg
www.bjfogg.com
Toyota Kata: Managing People for Improvement,
Adaptiveness and Superior Results
ISBN: 9780071635233
Author: MikeRother
Managerial Breakthrough: A New Concept of the
Manager's Job
ISBN: 9780070331723
Author: J.M. Juran
ShingoModel™
ShingoInstitute, UtahStateUniversity
Managerial Breakthrough: A New Concept of the
Manager's Job
ISBN: 9780070331723
Author: J.M. Juran
2nd Annual Global Process Improvement & OpexSummit
REFERENCES