By Sean Culey
Sean Culey, member of the European Leadership Team of the Supply Chain Council and CEO of business improvement consultancy SEVEN Collaborative Solutions, discusses the challenges of creating organisation wide process integration, strategic alignment and a culture of disciplined and effective execution. He also gives an overview of a new suite of material called ‘The 7 Keys to Unlocking Organisation Greatness’ designed to aid businesses through these challenges.
Having worked with a large number of clients across the world, from huge multinationals to smaller firms, one thing remains constant: they are all trying to survive and thrive in an ever-changing and increasingly challenging environment. However, I have all too often been exasperated to see money, time, effort and customer loyalty squandered due to poorly-implemented technology, sub-optimal processes, ineffective leadership, and soul-destroying cultural behaviours. As an example, Gartner predicts that the worldwide spend on IT in 2011 will total $3.6 trillion – expenditure intended to create improvements in business performance. However, historically 80% of cases have shown a return on investment that is either below expectations or, worse, unknown. I became driven to understand why businesses allowed this to happen, and whether my team and I could use this understanding to develop approaches to reverse the trend.
In his book ‘Good to Great,’ Jim Collins’ states that “Greatness is not a function of circumstance; greatness is largely a matter of conscious choice and discipline”; to get different results any organisation has to make a conscious choice to develop, operate and behave in different ways. Organisational design expert Arthur W. Jones tells us that; “all organisations are perfectly aligned to get the results they get.”
Are these two statements related? We believe so. Many organisations get the poor or mediocre results they get because they are – usually unintentionally – set up that way. Any initiatives to change things are often unsuccessful because the organisation somehow fails to apply sufficient conscious choice and discipline to the task, despite best efforts. There isn’t generally a lack of intellect and effort, but for whatever reason, it does not translate into results. In this article, we’d like to share the results of our research and experience into what business managers can do about it.
Our research represented a three-fold challenge. Firstly, we wanted to understand why organisations accepted (or were blind to) sub-optimal ways of working and struggled to adopt change. Armed with this knowledge, my team and I could recognise early warning signs that change was being resisted or was not on track, and guide an organisation through the transition process successfully. Secondly, based on this understanding, we wanted to develop approaches, tools, training and education materials to help our consultants and clients.
Finally, we wanted to take those lessons and the techniques that we developed and apply them to our own business. We were determined to make the ‘conscious choice’ and apply the discipline to ourselves, in order to create solid foundations to build upon in our quest to become a great organisation.
The Enemy Within
A study on ‘Supply Chain Strategy in the Boardroom‘ by Cranfield School of Management and Solving Efeso, asked executives in 181 different organisations to list their main barriers to success.
They listed; culture, leadership, CEO support, management skills, lack of information, lack of goals, and a lack of urgency. These are all things that are internal to the organisation and thus the organisation should be in a position to affect them. Yet many do not. Perhaps they do not see the issue or, if they do, they don’t know how to change the situation.
If (as the Cranfield study found) culture is the number one barrier to success and if we accept the term ‘culture’ is short for ‘the way we do things round here’, then ‘the way we do things round here’ is the main barrier that stops us from doing the things we need to do in the way they need to be done. Ergo, the business is somehow ‘choosing’ to create or maintain an environment whereby successful outcomes are less likely to occur.
We also noted a relationship between these findings and Stephen R. Covey’s pivotal work on personal effectiveness; ‘The 7 Habits of Highly Effective People’. We found that there are enormous parallels between personal and organisational effectiveness – which is unsurprising when you consider that an organisation is nothing more than a collection of individuals. Over the years I’ve spent trying to implement well thought out, leading edge, well documented, tested and trained processes, using leading ERP technology; I consistently struggled to understand why we kept bumping into the same internal barriers and resistance. The challenge to understand this has been a driving force through this research and a fundamental factor in the establishment of our organisation.
The below diagram describes a simple model that our research indicates is more likely to enable successful change.
In order to generate the visible results that follow logically from successfully implementing new and effective ways of working, you first have to work below the surface – addressing the ‘roots’ of the resistance – people’s pre-existing mindsets, paradigms and values. These are often deep-rooted. As Covey articulates, unless people can first accept that alternative ways of operating exist, then working on implementing new elements, such as processes and tools, will always be limited in its success. People will attempt to return to the comfort zone of their previous state. With people, developing ‘soft’ skills has ‘hard’ results, and taking your time at this stage gets the business results much faster. However, most organisations either don’t recognise the issue or they feel unable to address it. After all, there are always orders to satisfy, product to make or another crisis to address.
The Curse of the 4 M’s
So, what creates such counter-productive organisational environments? During our time working with companies on large-scale change and IT programs we have identified four factors which help to create a culture that hinders, rather than helps, success. We call them ‘The 4 M’s’.
• Mindset: The mindset of the organisation, its values, beliefs and culture
• Money: Whether the organisation has a plenitude or scarcity attitude to its finances
• Management: Excessive management, scarce leadership; structure over strategy
• Metrics: Excessive number of functionally-focused metrics, not aligned with the goals
Arguably, the most important factor is ‘mindset’.
In her book ‘Mindset: The New Psychology of Success,’ Carol S. Dweck explains how differing attitudes affect the way that people view both themselves and their interactions with others. Dweck argues that there are two fundamental mindsets that people use: the fixed mindset and the growth mindset.
People who practice a growth mindset believe intelligence, talents, and abilities can be developed over time.
They focus on constantly improving, and believe that abilities can be improved through hard work and persistence. When presented with an obstacle, they tend to rise to the challenge. Organisations predominately demonstrating a growth mindset do not fear failure, rarely settle for ‘good’ and know that through focusing on being better, growth and profits will take care of themselves. As Sir Winston Churchill famously proclaimed; “Continuous effort — not strength or intelligence — is the key to unlocking our potential.”
Organisations populated with a fixed mindset culture, however, do not wish to challenge their abilities because they fear the possibility of failure. Challenges are frequently viewed negatively, instead of an opportunity for growth. Any feedback that indicates that things are not well may be ignored or hidden, because this is not what they want to hear. At the extreme, managers see their role not to drive the business forward but to control people and communications – a form of ‘organisational and cultural thought police’. When issues arise, the culture reverts quickly to ‘blame’ and in order to protect themselves, groups form into ‘tribal functions’. Ray Immelman’s book ‘Great Boss, Dead Boss’ describes what creates tribal factions within organisations. He characterises how a strong tribe thrives in a fixed mindset organisation where protecting individual and tribal values and security is key: protect the tribe, protect the status quo and undermine those who challenge. The business becomes “perfectly aligned” to get the results it wants – and what it primarily wants is to hear that everything is okay so that the status quo is protected.
Any attempts to improve things typically fall short and activity is often mistaken (and rewarded) as if it is achievement. The business becomes ‘initiative rich, but results poor’ as it constantly lurches from one improvement project to the next, looking for a ‘silver bullet’ solution through acquiring, firing, re-organising and restructuring, but failing to recognise that the solution lies within.
Perhaps the most important message throughout Dweck’s book is the assertion that each person’s mindset (and thus the organisation’s) is not permanent. Answering the question; ‘how do we go about changing an organisational culture and ensuring that business initiatives are successful?’ became the challenge.
Going back to the 4M’s, what we have found is that fixed mindset behaviors do not just appear, they are developed and reinforced by the culture of the organisation; set either consciously or unconsciously by its leadership. Whether leadership takes a plentitude or scarcity mindset to money can also have a major impact.
We have seen the case of ‘too much money’ being viewed by some organisations as recognition that all is well – blinding them to serious inefficiencies until it was too late. In others, the scarcity mindset limits any discussion on investment in improvement opportunities. If projects are undertaken, they are often ineffective because the focus is on what they cost, rather than the desired outcome and its longer term value to the business.
Management structures and behaviors protect this mantra, and can stifle initiative and expression; and tribal, silo behaviors are reinforced by the measures and metrics that exist.
So, what to do? With the cumulative experience of over 120 years internal and external consulting, analysis of countless books and articles looking for supporting and / or contradictory evidence, and input from many different business leaders and executives about their organisational challenges, we have developed ‘The 7 Keys to Unlocking Organisational Greatness’.
The 7 Keys.
The 7 keys are seven different areas which help transition businesses from a reactive, fixed mindset, to a culture of growth and continuous improvement. These are ‘keys’ not ‘steps’ – they do not follow a sequential sequence, but represent the essential elements needed in order to ensure success. The absence of any one can be the catalyst for sub-optimal organisational performance.
We have spent our time researching and developing the 7 keys to help companies provide answers to the following questions:
• How do we establish what our goals, values and beliefs should be and embed them throughout the organisation? What are the right strategies to deliver these goals?
• How do we consistently execute this strategy with excellence? How do we lead our organisation and become more effective as individuals, as teams and as an organisation?
• What processes should we develop? What should we stop doing?
• How should we approach technology and how can it enable our team to plan and perform better?
• How do we control and manage data so that it provides the most accurate and timely information possible?
• What measures and KPIs do we need to ensure we live our values, operate effectively and deliver our goals and strategies?
• And finally, how do we create a cohesive joined-up culture that drives people to willingly volunteer their best efforts all of the time?
The first of the ‘7 Keys’ defines the goals, direction, strategy and leadership needed to set the path for superior and sustained business performance.
The remaining ‘Keys’ explain how to ‘operationalise’ the delivery of these goals and strategies, and how to ensure successful execution.
The following table is a very brief overview of the 7 keys.
See Note 1 for a summary of the overview and subsections behind each key.
Nearly all organisations have goals and strategies, documented processes, tools like ERP, and people on the payroll. What most approaches to date have failed to understand and explain is what the key to each element is (what is it about people, processes or technology?) and how to join them up so that they seamlessly work together rather than operating as disparate, counter-productive elements.
The diagram below shows the interrelationship between the 7 keys.
The power of the keys is that they recognise the value of integration and alignment. It is not about how well strategy, people, processes and technology work in isolation; it is about how well they all work together. What is needed is true understanding of how they can be integrated together, aligned to the goals of the organisation and implemented in a way that delivers results.
We have spent a long time researching and analysing approaches in this area and combined the best and most relevant elements of goal and vision setting, strategy and supply chain development, people and organisational effectiveness, change management techniques, processes like Sales & Operations Planning, methodologies like SCOR, Lean and Six Sigma, knowledge of effective ERP systems, data management techniques, aligned and integrated metrics and information on culture and execution – and turned it into what we feel is a practical and scalable approach for clients that contains unique education materials, implementation tools and methods and organisational health-checks.
This was a brief overview of the 7 keys; a full publication is in development and due early 2012.
About the author
Sean Culey is a member of the European Leadership Team of the Supply Chain Council, the global, not-for-profit centre for Supply Chain Excellence, and founder of Aligned Integration Ltd. Previous to this he was CEO for SEVEN Collaborative Solutions, and Principal at Solving Efeso.
Sean has worked around the globe helping companies create dramatic increases in profitability and growth, breaking down their barriers to success through the alignment and integration of their people, processes, systems and data. He helps companies to navigate the journey from functional silos, creating foundations of control that enable continual improvement and innovation via his ‘Aligned & Integrated Organisations’ (AIO) approach designed to create end-to-end, integrated customer and profit focused Value Chain teams. This approach also helps companies align their Integrated Business Planning, Management and Execution processes. He also has 20 years’ experience of creating value from ERP investments such as SAP, and is an expert in helping companies to understand how to realise the value of these investments.
Sean is a frequent conference chair, speaker and author with many published articles on Organisational Greatness, Cultural Change, ERP and Value Chain excellence. His book ‘Becoming Great (by taking everyone with you) – Developing the Aligned and Integrated Organisation’ is due to be published late 2013.
He can be contacted via his company Aligned Integration at [email protected]