Saturday, September 4, 2010

Corporate Change--Step 3

Many of the companies in which I've worked have enjoyed rapid success: 50% reduction of problems in a few months, 50% improvement in results in less than a year. Not all metrics improved so substantially. But the ones that mattered did.

Never create change for change's sake. This is what leads to "fad of the month". Many businesses will start Lean programs, Six Sigma programs. In the past three to five decades of business, management has trotted out a program in their company that worked somewhere else. Consultants add a nuance and give the previous program a new name and it becomes a new fad.

Okay, I'm a cynic.

I've watched this happen in many companies. I've been the victim of some of those programs. I've been given books to read that purport some new way, never to see those new ways be instituted. One company read the "Great Books" of business: In Search of Excellence, Built to Last, From Good to Great, Breakthrough Companies and others that dealt with isolated corporate systems like performance reviews. The effort to read, understand and discuss these lessons never turned into actionable plans.

Sometimes they do. Sometimes the organization will roll them out with great fanfare: "we're embarking on the great journey of Lean!"

This is change for change's sake.

Why are we making these changes? What do we expect to see happen as a result?

When you answer the second question, that has become step 3: set the goal and measure it. A great goal involves everyone (see Step 1, because all corporate elements are interrelated), and everyone wants to feel like their contributing. A great goal makes a difference to the customers. A great goal makes a difference internally, and requires new behaviors.

It does not require new programs! I repeat: it does not require new programs.

One company radically improved on-time delivery, increased output, improved quality significantly and had more demand...yet felt like they weren't busy. If they had laid out a plan to increase production by 20%, improve quality by 30%, nearly double the load on current capacity according to the manufacturing routing standards and achieve near perfect delivery (reduction of late delivery by 99%), they would have said it would take 12 months and a massive investment of capital and effort.

In hindsight, it took 2 months, and a shift in how the capacity was scheduled, a "few" hours of communication and one change in an objective (goal). It didn't take capital investment. It didn't take a program.

It took focus on the "great" objective and everyone's cooperation. They had a "good" objective, not a "great" one.

There is a seminal work published in Harvard Business Review many years ago about how change programs don't work. I wholeheartedly agree. (I disagree that it requires upper management support--see step 2). Change programs don't work. They create corporate fatigue. They create failure in the corporation through micro-optimization (see step 1), disillusionment and distraction of resources away from the "great" objective.

Answer the question about results. Set the objective and ask everyone to participate in achieving the objective. Dig in. Occasionally, step back and watch how well it's working because it will be fun to see...that it is!

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