Focused Management - Essential Capability for Suceeding in Today's Business Environment

2. Copyrights©2014ShridharLolla,AllRightsReserved 3 Forces Blocking Growth* …Often they come together Complexity Uncertainty Ambiguity Too many things to handle Unknown Probability of Occurrence Multiple viable options *Ref: Management Attention by Rami, 2011

3. Copyrights©2014ShridharLolla,AllRightsReserved Manifestation of 3 Forces …They come in different forms • Growing Complexity : – More resources, Larger Infrastructure, Larger portfolio of products and projects, More Locations, More and Diversified Customers, Fierce Competition, Excessive Management Attention and Time, Increasing Costs, Delayed ROI, Fire Fighting as a Norm • Unrelenting Uncertainty : – Increasingly Uncertain Forecasting, Fluctuating Demand, Changing Plans, Shifting Priorities, High Employee Attrition, Large and Uncertain Resource Bench, Delayed Fulfillments, Choosy Customers • Increasing Conflicts: – In Resource Allocation, in Funds Management, in Finding Optimum Solution, Between management and staff, Between functions, Between two right choices 28-04-2014 3

4. Copyrights©2014ShridharLolla,AllRightsReserved Real Undesired Effect Management Attention is Constantly Challenged Work on New Products Work on Commercial Orders Increase Deliveries Improve Quality Reduce Expenses Protect Jobs Increase Stocks Reduce Cost Accept Scope Changes Protect dates & BudgetAdopt New System Manage with Current Way In order to meet growing expectations in the new environment Managers need NEW capabilities!!! Focus on Growth Focus on Stability Focus on Now Focus on Future

5. Copyrights©2014ShridharLolla,AllRightsReserved Traditional Way of Management …Devastating Results Complexity Uncertainty Ambiguity Divide into Parts & Improve Every Part Impose Certainty on Uncertainty Compromise Exhaustion, Chaos, Firefighting Gross Errors and Enormous Waste Status Quo and Resistance to Change Traditional Way ResultsForces

6. Copyrights©2014ShridharLolla,AllRightsReserved New Capability for New Situation Focused Management • When there is so much complexity and chaos all around, Focusing on right things is the right strategy. • Focused Management*: The Revenue focused approach that gave astonishing results despite uncertain environment – In IBM, Micro Soft, TATA, Mazda, P&G, BP, Godrej, Ericsson, L&T, Infosys, ABB, Mahindra and Mahindra, Dr. Reddy’s etc. – Based on the insight that an organization is like a chain whose strength is decided by the weakest link. • That is, in order to dramatically improve performance, an organization must focus on the weakest link than trying to improve each and every part. 28-04-2014 6 * Also called TOC, Theory of Constraints or Constraint Management

7. Copyrights©2014ShridharLolla,AllRightsReserved Focused Approach Dramatic + Quick + Cost Effective Results Complexity Uncertainty Ambiguity Focus on Core Problem Provide Strategic Slackness Resolve Conflict Dramatic Improvement while being cost effective Growth with Stability Business Innovation Focused Approach ResultsForces

8. Copyrights©2014ShridharLolla,AllRightsReserved Focused Management Also called Theory of Constraints, TOC • Employed for solving management problems of today’s environment and quickly improve business results by an order of magnitude, for example, – Dramatic improvement in throughput (capacity) without costly investment – Shorter lead times without increasing operating expenses – Radical improvement in productivity without creating chaos – Consistent fulfillment of SLAs cost effectively – Optimum resource management at Enterprise Level • Provides direct impact of people’s effort on business results and thus makes people central to organization’s strategy 28-04-2014 8 Without causing costly trade-offs and burn-outs of traditional management approaches!

9. Copyrights©2014ShridharLolla,AllRightsReserved Applying Focused Management Example 1: Business Operations • Challenge: – Ever Improving Throughput (Capacity) while improving Productivity – Shrinking Response (lead) time – Meeting SLAs consistently – Too many things to be improved too fast • Core Problem – Over whelming size and scope of activities • Current Approach – Improve each and every process (The Whole is equal to sum of parts) • New Approach: – Management by constraint (Strength of the chain is no stronger than the Weakest Link) • Typical Results: – Dramatic improvement in capacity, compliance to SLAs and shorter response time , while achieving higher productivity by 30-70% in a very short time 28-04-2014 9 Business Process, Delivery Management, Production, Development Centers

10. Copyrights©2014ShridharLolla,AllRightsReserved Focus on Constraint , NOT on Everything Traditional Approach New Approach Improve each and every part of the System Focus on just few Constraints that limit the capacity of the System A Chain is no stronger than its Weakest Link 28-04-2014 10 A B C D The Whole is equal to Sum of Parts

11. Copyrights©2014ShridharLolla,AllRightsReserved Applying Focused Management Example 2: Project Management • Challenges: – Managing Multiple Projects – Achieving consistently high On time Delivery without compromising on scope and cost – Improving Productivity of project management function • Core Problem: – Projects belong to probabilistic domain but are managed deterministically • Current Approach: – Buffer Estimation at each Task – Monitor and Review Project at each task • New Approach: – Aggregate Variability and incorporate people behavior in project planning and execution • Typical Results: – Complete most of the projects in time and with higher productivity (more projects per year). – On Time Performance >95% – Lead time reduction 15-50% – Project Management Productivity 10-50% 28-04-2014 11 Product Development, NPI, Engineering, R&D, Construction, Projects

12. Copyrights©2014ShridharLolla,AllRightsReserved Buffer the Project, NOT Tasks Critical Path TOC uses Aggregated Project Buffer and uses only this buffer to monitor and control project Task Task Task Task Project Buffer Each Task of Critical Path has significant buffer and each task is monitored and controlled Traditional Approach New Approach Lead Time Reduction Even at Planning Stage 28-04-2014 12 Improved project reliability during Execution

13. Copyrights©2014ShridharLolla,AllRightsReserved Applying Focused Management Example 3: Supply Chain • Challenge: – Supply of right quantity of right product at right place at minimum cost • Core Problem – Stock-out and Overstock occur at same time – Demand uncertainty • Current Approach – Forecasting – High reliability of supply can only be achieved with higher inventory • New Approach: – Demand Driven Synchronized Supply Chain • Typical Results: – High On Time Delivery at lower inventory and operating expenses 28-04-2014 13 Supply Chain, Management, Distribution, Logistics Management

14. Copyrights©2014ShridharLolla,AllRightsReserved Synchronize, NOT Forecast Traditional Approach New Approach Long term Forecast and fire fighting Synchronize supply to actual demand A demand driven synchronized supply chain provides exceptional delivery service at lower cost and enhanced agility 28-04-2014 14 Based on the belief that for excellent delivery service high inventory and operating expense is necessary. Plant/ WH 1 2 4 5 A 1 3 4 B 3 4 5 C 1 3 4 D 5 3 4 E 7 3 2 Forecast Plant/ WH

15. Copyrights©2014ShridharLolla,AllRightsReserved Applying Focused Management Example 4: Enterprise-wide Resource Allocation • Challenge: – Managing Resource as per demand – Often Resources required now are not available while those not required now are aplenty, leading to loss of revenues on one hand and blocked investment on the other hand • Core Problem: – Sub optimal and low responsive resource management system • Current Approach – Current Practice of Hire to Deal, Hire to Forecast and Supply Demand Matching • New Approach: – Benefit of Aggregation; and Management by Size and Time Buffer • Typical Results: – High availability of resources together with overall thinner bench strength – Reduction Lead time by 20-40% – Improvement in on time availability of resources by 20-30% – Reduction in bench strength by 5-15%, 28-04-2014 15 Large Consulting, BPO, IT and Service Organizations , Outsourcing centers

16. Copyrights©2014ShridharLolla,AllRightsReserved Hire to Buffer, NOT to Forecast Practice Department Skill Groups Project Process Project Process Traditional Approach New Approach High Availability and Thinner Bench! Long term Forecasting + Disaggregate recruitment and allocation of resources28-04-2014 16 Closer to Demand + Benefit of Aggregation based recruitment and allocation of resources

17. Copyrights©2014ShridharLolla,AllRightsReserved Real Benefits.. Overall Impact Apr.02.2013 17 Lead Times 70% Cycle Times 65% Inventory Levels 49% 44%On-Time Delivery, Availability 63% 73% Revenue, Throughput Combined Financial Source: The World of Theory of Constraints, Vicky Mabin & Steven Balderstone

18. Copyrights©2014ShridharLolla,AllRightsReserved Summary • No matter which function you belong to and however, complex business environment becomes, building your team’s capability in focused management will dramatically improve impact of its effort on business results. • In fact, no function is a cost center; rather every function has a role in dramatically improving business results!!! • Quick and Dramatic improvement in business results is possible on an ongoing basis without incurring costly trade- offs and burn-outs!!! 28-04-2014 18

19. Copyrights©2014ShridharLolla,AllRightsReserved Workshop on Focused Management Dramatically Improving Impact of management effort on Business Results without incurring costly trade-offs and Burn-outs - Understanding Complexity - Accepting Inherent Simplicity - Theory of Constraints - Case Studies - Internalizing Concepts of TOC -The Process of Ongoing Improvement For Level-1 team of your organization / function Content Attendee • Equip Managers with New Capability • Learn How TOC is helping organizations in Dramatically improving their performance • Relate and Identify Applicability of TOC concepts in your Organization • Get Started with Proof of Concept Take Away Fast paced, Interactive Workshop with management games, discussions, videos and presentations. Format 28-04-2014 19

20. Copyrights©2014ShridharLolla,AllRightsReserved By: Shridhar Lolla Shridhar is a practitioner of Organizational Effectiveness and handholds management teams in dramatically improving impact of their effort on business results. He holds a PhD degree from IIT Delhi. Early in his career Shridhar worked with ABB, Sify, KEC and Tecumseh in R&D, Manufacturing and Service functions. His last assignment was with ABB as a member of the management committee and as the Head of Application and Solutions Group at its global R&D Center in Bangalore. Shridhar has authored two contemporary books on Theory of Constraints, TOC. He lives in Bangalore and is reachable at lolla@cvmark.com and +91 9448 070081 28-04-2014 20