Change Management and “Moneyball” (Movie Version) December 1, 2013Posted by Tim Rodgers in baseball, Communication, Management & leadership, strategy.
Tags: baseball, change management, leadership, management, power, strategy
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The other day I watched the movie “Moneyball” again and was reminded of a few important characteristics of successful change management. Brad Pitt stars as Billy Beane, the general manager of the Oakland A’s baseball team, an organization struggling with a limited budget to develop, attract, and retain players.
At the beginning of the movie we learn that before the 2002 season the A’s have lost three of their best players who have signed more lucrative contracts elsewhere. Beane is trying to figure out how to replace these players, and more generally put together a winning team within the financial constraints imposed by ownership. After a chance encounter with a low-level analyst from a rival organization, Beane realizes that he cannot compete if he builds a team using the traditional ways of assigning value to players. Almost out of desperation, he decides on an unconventional strategy based on the emerging science of sabermetrics. He immediately faces resistance from his experienced staff, specifically the field manager and scouts who are unconvinced and in some cases actively working against the strategy.
Ultimately it’s fairly happy ending: despite public criticism of Beane’s decisions and early disappointments on the field, the A’s have a successful season. At one point they win 20 straight games, setting a new league record, and they make the playoffs, but lose in the first round. Beane is offered a significant raise to leave the A’s and join the Boston Red Sox where he would have the opportunity to apply the same principles with a much larger budget. Beane declines the offer, but the unconventional strategy has been seemingly validated.
The movie focuses Beane’s underdog status and uphill battle during the season, and I’m sure some of the real-life events have been changed for dramatic effect. Regardless of whether they actually happened or not, there are several scenes that illustrate elements of successful change management.
1. A clear explanation of the new direction. In the movie, Beane leads a meeting of his senior staff to discuss plans for acquiring players for the upcoming season. This looks like Beane’s first opportunity to apply his new strategy, but he misses an important chance to align with his team. It’s clear that he’s the boss with the final authority, and it’s not necessary for everyone in the room to agree, but Beane could have taken the time to explain the new direction and acknowledge the objections. In later scenes, Beane acknowledges this mistake to his field manager who has been undermining the strategy through his tactical decisions, and fires a senior staff member who has been especially vocal in opposition.
The lesson: the team may not agree with the change, but they should be very clear about why change is needed. Team members should have the opportunity to raise objections, but once the direction has been set, their only choices are to support the change or leave the team.
2. Removing options to force compliance. Beane is frustrated by opposition from his field manager who gives more playing time to players whose skills are not highly valued in Beane’s new system. Beane stops short of giving a direct order to the manager to be make decisions that are more consistent with the strategy, and instead Beane trades these players to other teams, effectively removing those undesirable options. This is a variation of what is sometimes called “burning the boats,” from the Spanish conquest of the Aztec empire. You can’t go back to the old way of doing things because that way is no longer an option. As Beane replaces players, his manager has fewer opportunities to not follow the strategy.
The lesson: this seems like passive-aggressive behavior from both parties, but I can see how it can be effective. My preference would be to reinforce the desired change rather than take away choices, but if the old way is very well established you need to help people move on and not be tempted to return.
3. Giving it a chance to work. The A’s get off to a slow start and pressure builds on Beane to abandon the new strategy. In one scene he meets with the team’s owner and assures the owner that the plan is sound and things will get better. It eventually does, despite all the skepticism and opposition, and the movie audience gets the underdog story they were promised.
The lesson: even the best ideas take time. It’s absolutely critical to set expectations with stakeholders to help them understand how and when they will detect whether the change is working. Impatience is one of the biggest causes of failure when it comes to change management.
Firing Customers For Profit November 7, 2013Posted by Tim Rodgers in Management & leadership, strategy, Supply chain.
Tags: business development, early stage companies, management, outsourcing, project management, strategy, supply chain
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Businesses large and small generally work diligently to satisfy customers, and they’re frequently reminded that the cost of acquiring a new customer is much greater than the cost of retaining an existing one. Unfortunately many of those businesses fail to appreciate that each customer has an incremental cost, not just to acquire, but also to manage. It’s possible that an organization can spend more money to support a customer than what they get in return, which is obviously an undesirable situation.
Early stage companies are particularly susceptible to this kind of trap. In their eagerness to turn their ideas into revenue, they will often incur hidden costs in order to customize products and services for each potential customer. Any customer who is willing to pay looks like a good customer. Geoffrey Moore writes about this in his excellent book “Crossing the Chasm” (HarperBusiness, 1991). The danger is that the company loses economies of scale, leverage and re-use efficiencies, and ultimately the focus that defined the unique profit opportunity in the first place.
Unprofitable customers or segments can be hard to detect. It’s easy to add up the direct material cost of a single product configuration, but you also need to understand how much time your sales and support staff spend with a customer. Does your purchasing team have to manage unique suppliers? Does your quality team perform special tests or inspections? Your indirect labor may be spending a disproportionate amount of time dealing with requirements and requests from customers who squeak.
Unprofitable customers are not necessarily bad for the business. Moore writes about segments with “bowling pin potential” that may be a net loss today, but enable the firm to establish foundational processes, move up the learning curve, and leverage and grow in the future. These loss-leaders have long-term strategic value, but it’s important to understand and assess the investment in order to ensure the expected return.
Actually refusing to do business with a customer is extreme and could hurt your reputation, but consider ways to reduce the cost to manage a customer that isn’t currently providing a net profit or enables future profitability. The firm that fails to understand their “cost to serve” may find itself out of business despite many happy customers.
Innovative Design vs. Lean Product Development April 17, 2013Posted by Tim Rodgers in Management & leadership, Product design, Project management, Quality.
Tags: innovation, management, process, product development, six-sigma, strategy
I’ve been very busy focusing on my job search and some self-improvement projects, and unfortunately it’s been harder to find some time to address my accumulated backlog of topics. I regularly follow several group discussions on LinkedIn related to product development and quality, and lately a popular discussion topic is how to inspire innovation in product design.
See for example Wayne Simmons and Keary Crawford “Innovation versus Product Development” (http://www.innovationexcellence.com/blog/2013/04/12/innovation-versus-product-development/), and Rachel Corn’s blog “Is Process Killing Your Innovation?” (http://blog.cmbinfo.com/bid/87795/South-Street-Strategy-Guest-Blog-Is-Process-Killing-Your-Innovation?goback=%2Egde_2098273_member_229196205). The latter post quotes a former 3M vice president who says that Six Sigma killed innovation at 3M, apparently because 3M’s implementation of Six Sigma required “a full blown business case and even a 5-year business plan to get a new idea off the ground and into production.” The VP wonders: how do you institutionalize innovation without stifling it?
The conventional wisdom seems to be that product design is inherently a creative, right-brain activity that will fail or at least fall short if constrained by process. You can’t make art on a schedule.
I think this is a false conflict. I don’t see any reason why teams shouldn’t be able to conceive new designs within a structured and disciplined product development environment. Obviously the ultimate objective is to get a product to market, so at some point the experimentation must end, doesn’t it?
Six Sigma is about reducing variation. The lean movement is about eliminating waste. I understand that the early stages of product development may be wildly unpredictable and seemingly inefficient. Shouldn’t the latter stages focus on predictable outcomes, standardized processes, fast time-to-market, defect prevention, and efficient production?
Can Managers Make Innovation Happen? February 12, 2013Posted by Tim Rodgers in International management, Management & leadership, strategy.
Tags: innovation, job satisfaction, leadership, management, performance measures, strategy
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I’m hearing a lot about innovation these days. It seems that everyone is looking for new breakthrough ideas in products and services in order to grow revenue, differentiate from competition, and establish sustainable profitability. However, waiting for a flash of inspiration or “Eureka” moment is too random and unpredictable for most businesses. They would like to actively innovate, or at least provide an environment where productive innovation is more likely to happen.
What role do managers play in an organization that’s looking for innovation? What can managers do to inspire or foster innovation? I’ve always operated under the assumption that innovation is a creative, “out of box,” right-brain activity that can’t be managed with performance objectives and a schedule. I’m not convinced that you can innovate on-demand. I can’t recall ever attending a scheduled group brainstorming session that led to breakthrough ideas.
Some years ago I visited a peer manager at a different HP site to do some internal benchmarking and look for some best practices that I could bring back to my team. On a monthly dashboard of department metrics this manager included a bar chart showing the number of patent applications proposed by the team. I was astonished that this group of about 30 engineers and managers were averaging 30-40 applications every month. I was especially curious because this was a software quality team, and it wasn’t clear to me what part of our work could be patentable.
It turned out that the patent applications up to that time had nothing to do with software quality, or software testing, or anything remotely related to the products we were working on. Most of them seemed to be new applications of existing HP products. There may have been some occasional good ideas for new products in there somewhere, but I can almost guarantee that none of those patent applications were new, or unique, or valuable enough to be actually filed by the HP legal staff.
At the time I wasn’t eager to challenge the HP manager who was hosting my visit, but I still wonder what they were trying to do. The energy put into patent proposals didn’t seem to provide any direct contribution to the department’s objectives. I suppose it’s possible that the team brought more creativity and innovation to their work in software quality as a result of their patent efforts, but I couldn’t tell how that positively affected their other performance measures. I don’t think this was a good example of inspiring innovation.
I’m still not sure what managers can do to make innovation happen, but I think managers have a lot of influence over the work environment, and that can create conditions where innovation is more likely to happen:
1. Managers can communicate the business’s strategic interest in innovation, and help channel the team’s creativity to address specific needs (e.g., new products, new processes to reduce cost or improve quality).
2. Managers can identify those people in the team who are inherently creative and encourage them. Good ideas can certainly come from anywhere, but the fact is that some people are better able to think outside the box and make unexpected connections.
3. Managers can keep an open mind about new ideas and provide sufficient time and resources to evaluate them. This can be hard when resources are limited and the innovation is unfamiliar and risky. On the other hand, you shouldn’t expect the team to be innovative when there’s no chance their ideas will be given an opportunity to prove themselves.
I don’t think of myself as an innovative person who can generate creative ideas. I do think of myself as someone who understands the value of innovation to the business, and I want to do what I can to enable others to innovate effectively.
Decisions Based on Psuedo-Quantitative Processes December 28, 2012Posted by Tim Rodgers in Management & leadership, Organizational dynamics, Process engineering, Quality, strategy.
Tags: leadership, management, performance measures, problem resolution, project management, six-sigma, strategy
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I’ve spent a lot of time working with engineers and managers who used to be engineers, people who generally apply objective analysis and logical reasoning. When faced with a decision these folks will look for ways to simplify the problem by applying a process that quantitatively compares the possible options. The “right” answer is the one that yields the highest (or lowest) value for the appropriate performance measure.
That makes sense in many situations, assuming that improvement of the performance measure is consistent with business strategy. You can’t argue with the numbers, right? Well, maybe we should. In our rush to reduce a decision to a quantitative comparison we may overlook the process used to create those numbers. Is it really as objective as it seems?
There’s a common process for decision making that goes by several different names. Some people call it a Pugh diagram or a prioritization matrix. A more sophisticated version called a Kepner Tragoe decision model includes an analysis of possible adverse effects.
These all follow a similar sequence of steps. The options are listed as rows in a table. The assessment criteria are listed as columns, and each criterion is given a weighting factor based on its relative importance. Each row option is evaluated on how well it meets each column criterion (for example, using a scale from 1 to 5), and this assigned value is multiplied by the weighting factor for the column criterion. Finally, the “weighted fitness” values are summed for each row option, and the option with the highest overall score is the winner.
At the end there’s a numerical ranking of the options, and one will appear to be the best choice, but the process is inherently subjective because of the evaluation criteria, the weighting factors, and the “how well it meets the criteria” assessment. It’s really not that hard to game the system and skew the output to provide any desired ranking of the options.
I’m not saying this is a bad process or that the result is automatically invalid. What I am saying is that this isn’t like weighing two bags of apples. The value of a decision analysis process isn’t just the final ranking, it’s the discussion and disagreements between the evaluators, which are obviously subjective. We shouldn’t consider the process to be an infallible oracle that delivers an indisputable answer just because there’s math involved.
I’m sure there are other examples of psuedo-quantitative processes that shouldn’t be accepted at face value. Leaders should question assumptions, listen to dissenting opinions, and check for biases. It’s rarely as cut-and-dried as it seems.
Changing the Tires While Driving the Car December 13, 2012Posted by Tim Rodgers in Management & leadership, Process engineering, strategy.
Tags: 30-60-90 day plans, change management, leadership, management, process, strategy
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That’s a phrase we often use to describe a chaotic work environment, but what if anything can be done when you’re faced with this situation? How should we manage when the current processes are incomplete, insufficient, ineffective, or even missing? How do you evaluate and implement process improvements without jeopardizing commitments to deliverables and performance metrics? Is there a logical way of managing these changes, or do we muddle through it, and later smile sympathetically when we hear about another manager’s struggles?
Obviously the whole point of introducing a new process or making a process change is to gain some improvement in performance, output, and/or cost. However there’s no getting around the fact that any process change will be accompanied by at least a short-term loss of productivity until you’re past the learning curve.
Will the current activities or projects continue long enough to benefit from an immediate change? If the benefit doesn’t outweigh the “distraction cost,” then it’s probably better to wait for scheduled downtime or a natural break between projects (in other words, wait until the car is stopped before changing the tires). If there is no natural break, then at least one project will have to pay the price so that future projects can realize the advantage. Which project can best tolerate the cost, or the risk of failure to meet scope or schedule requirements?
One practical question is whether it’s even possible to switch processes in mid-stream. If you’ve already started with the old process, can you finish the job with a new one? Starting over again from the beginning should be considered a last resort, only practical if the existing process is so unsatisfactory that you’re willing to sacrifice time for better results.
Another key concern is whether or not the organization as a whole is aligned with the need for a process change. It may be politically useful to roll out the new process on a small scale in order to build support for broader implementation. On the other hand, if there’s enough critical mass, it can be highly effective to “burn the boats,” essentially making it impossible to return to the old process.
If it’s the right thing to do, it’s just a question of when. If the benefits can’t be clearly articulated, it will never be the right time.
Consulting Pull vs. Push Strategies December 10, 2012Posted by Tim Rodgers in Management & leadership, Organizational dynamics, strategy.
Tags: change management, leadership, management, problem resolution, strategy
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Several of my former colleagues are now working to establish themselves as independent consultants. I’ve thought a lot about consulting over the last few years. I’m attracted to the narrative of tackling a new puzzle, dispensing wisdom from an independent perspective, solving problems and fixing whatever needs fixing, and then accepting the team’s grateful thanks before riding off into the sunset in search of the next opportunity.
I suspect it doesn’t work that way for the majority of solo consultants. Consultants are no different from other businesses in that they have to define a value proposition that’s compelling to their target market and provides some competitive differentiation. Building a successful practice requires advertising and promotion. You have to offer something that people need, and you have to sell it.
It seems to me that selling a consulting service should be focused on making it easy for a potential client to understand how you can solve a problem. The client’s gain that will be realized after the solution of the problem provides the potential energy or attractive force that pulls the consultant in. Some effort is necessary to identify a problem that’s worth solving (your target market), but that surely requires less effort than trying to push a solution on a skeptical or reluctant client.
Your choices are:
(1) Wait for a client whose problem is so serious and evident that they know exactly what kind of help they need (“the power’s out, so let’s call an electrician”). That definitely doesn’t require much energy on your part, but it’s also a very passive approach.
(2) Cold-call clients armed with your credentials, in the hope that one of them will have a problem that coincides with your current availability and skills (“excuse me, do you need an electrician?”). This is the hard-sell push and requires a lot of energy.
(3) Think about how your skills can benefit potential clients, then target your business development activities accordingly (“I can help you reduce your energy bill”). This approach is still active, but uses the customer’s emerging awareness of the problem to pull you in.
Just as change management requires people to first accept that the status quo is unacceptable, clients are more likely to be open to a consultant if they first acknowledge the existence of a problem. The consultant looking for business should focus on problems that need solving and the benefits to clients (in terms the client can appreciate), not tools or specific solutions.
Should Stretch Goals be Achievable? October 25, 2012Posted by Tim Rodgers in Communication, International management, Management & leadership, Organizational dynamics.
Tags: change management, leadership, management, performance measures, strategy
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In the early 90s our division went through a week-long training session to learn some basic process improvement techniques. As part of the program we were divided into teams of 6-8 people and given a simulation exercise based on a bare-bones “order fulfillment” process. We were instructed to run the process as a team several times as quickly as possible and record our average time. When all the teams reconvened we reported back to the instructor and discovered that everyone’s average time was between 3 and 4 minutes, and no one had achieved better than 2:50.
The instructor wrote the times on the whiteboard, then turned to the class and told us our performance was pathetic. He revealed that our imaginary competition had achieved an average process time of 20 seconds. If we couldn’t at least meet that benchmark level of performance, we would lose our imaginary customers and go out of business.
Everyone was stunned. No one could imagine how the process could be completed more quickly. I don’t remember if it was the instructor or one of the students, but someone suggested throwing out the script and changing the process completely, removing unnecessary steps and focusing on speed. Of course that was the point of the whole exercise. We achieved the 20 second goal, and I think we even managed to get down to 10 seconds.
I remembered that story the other day when I read a caution about setting aggressive goals for a team. The question is whether “crazy-high” goals are demoralizing because they’re impossible to reach, or whether they’re useful in getting people to think outside the box. Besides, who can say whether or not a goal is actually achievable?
Someone once told me that the metaphor is a rubber band. If you stretch the rubber band you can generate a lot of potential energy that can drive the organization to achieve unexpected things. On the other hand, if you stretch the rubber band too far it will break and there will be no gain.
I think it’s good for an organization to have aggressive goals that may seem just out of reach. It keeps people motivated and focused, and it can prevent them from becoming complacent. At the same time there should also be some kind of market advantage or competitive advantage or financial advantage associated with achieving those goals, otherwise this is just manipulation or sadism. I’m not sure it even matters whether or not the goal is ever achieved. Progress toward the goal can still be recognized and celebrated because it represents a finite improvement that supports business objectives. However, the real breakthroughs won’t come from incremental improvements to meet an easy goal.
Benchmarking: It’s the Process, Not the Data That Matters September 20, 2012Posted by Tim Rodgers in Management & leadership, Process engineering, strategy.
Tags: change management, leadership, management, performance measures, process, strategy
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It seems not that long ago that benchmarking was another “next big thing,” touted as an invaluable tool for strategic planning and operational improvement. I remember attending several training seminars that cited examples from clever firms that used publicly-available information or found benchmarking partners who were willing to share details about some industry-leading or “best in class” process. Whatever the source, these firms were able to make dramatic improvements in their process by leveraging these best practices, typically after some customizing for their own local ecosystem.
Or at least that’s how it’s supposed to work.
I think one big reason why we don’t hear much about benchmarking any more is that many organizations either misunderstood the concept, or discovered that it’s harder than they expected. I’ve seen a lot of presentations that included “benchmarking data” that showed the performance of our competitors in some key area. Obviously it’s good to know how your competition is doing, but benchmarking isn’t about compiling a table of numbers comparing your business to theirs.
What’s often lost is the reason to do this in the first place. It’s supposed to start with a prioritized need to improve some key process or function, learning how to do it better, and then committing to a change management program to implement best practices. Because it’s pretty unlikely that your competitors are going to help you, benchmarking requires identifying companies (or possibly even other organizations within your own business) who perform that process or function well, regardless of their industry. In addition, the breakthrough ideas are more likely to come from outside your industry, and those folks are much more likely to cooperate with your investigation.
It’s easy to say “that can’t work here,” particularly if there are significant changes required to implement the lessons. This is when it’s important to go back to the start to re-visit the business need and why it was a good idea to try benchmarking in the first place. That’s no different from any other change management initiative that requires high-level support and perseverance.
Collecting Data Not a Substitute For Strategy September 5, 2012Posted by Tim Rodgers in Management & leadership, Process engineering, strategy.
Tags: leadership, management, performance measures, strategy
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Some years ago I managed a team that was required to present a monthly report to a VP who drove us crazy. We spent at least a week preparing for every meeting, scrambling to pull together data that we were criticized for not having available at the previous meeting. It was never enough, and we were never able to understand or anticipate what this guy was looking for. The VP wouldn’t explain the logic or underlying business need, and after a while we were all just too intimidated to do anything but grimly re-group and try again the following month. I was very glad to leave that position.
It’s possible that this VP was just that kind of manager who thought that intimidating his subordinates was part of his job description, or maybe our monthly failures gave him a useful scapegoat for more significant shortcomings elsewhere in the business. Regardless, I did notice that all of the other departments seemed to be just as occupied with repeated cycles of data collection and reporting. We all spent a lot of time searching for numbers and plotting them on graphs, I suppose in the hope that something useful would come out of it all, some truths would be revealed, and the path forward would become clear.
Over the years I’ve met a lot of managers who get this wrong. Data is a means to an end, but you don’t start with data as a substitute for strategy. The proper sequence is this: determine what it is you want to improve, or what business goal you want to achieve, then collect data to help you assess whether you’re approaching that goal. If the team understands what actions and behaviors push the needle in the right direction, then they can make the appropriate choices on their own.