Implementing your business plan (continued): a real-life example

To illustrate, an automotive client had to increase production dramatically. They faced significant management inertia and a legal barrier limiting the solution.

The resulting success of this six month Pyramid ODI assignment triggered legislative change, increased revenue by $20m and added $4m to the bottom line.

Success came from attributes “stolen” from the business planners’ manual:

- detailed market analysis principles were used by three shop-floor facilitated groups to find solutions from way beyond their current business sector;
- risk mitigation principles were used to identify “new entrants” and “substitution” that were not impacting the current business but could influence the future;
- segmentation was used to identify the unique needs of all those currently influenced and those identified in risk mitigation - leading to multiple action and communication strategies.

In seven weeks, the teams picked up ideas, modified them and designed their preferred solution, within a framework that included a “no increase in operating costs” framework set by management.

Management were initially sceptical and then amazed. Supervision attended a weekly breakfast briefing. Initially negative, they soon embraced the changes.

These teams had no previous involvement in influencing change; for many, this represented their first visit to another company and their first presentation to anyone above their immediate supervisor.

Key to their success was the identification and inclusion of “new entrants” who played a significant part in influencing a successful outcome. Left unattended, they could have blocked the change. The early inclusion of authority figures from the local community, the country’s Prime Minister and the Group Board were crucial.

We engaged with the workforce in a fundamentally different way. Their solution grabbed the imagination of supervision, management, executives and government.

Views on shop-floor capability changed forever, as self-confidence grew and the capacity for change increased. HQ invested in new capital projects. The future, for a generation at least, seems secure.

The shop-floor even found their own elegant solution to avoid conflict with their trade union at national level.

In conclusion, “Getting to Plan B” works equally well in implementing the resulting change. True culture change can occur rapidly with really effective segmentation and due diligence.

Postscript: The quote from their Finance Director, which he delivered in between pinning me to the wall and then giving me a large bear hug, will stay with me forever, “I have worked here for 35 years. I never realised the potential of our own workers. We have wasted so much in that time!” He was shaking with emotion.

Process excellence includes keeping your competitors guessing and your board aware.

How does our perception of process excellence play out in an aggressive market place? Is process excellence a barrier to competitiveness? Well, I believe it can be, if the mindset is not prepared for change. Here is why.

In turning our business around, we recognised the need to increase sales; developing $140m new prospects in 6 months and converting this into a 70% increase in first year revenue; a team effort combining the best disciplines of engineering design, manufacturing and service.

Our bids were close to perfect, including the right level of resource and materials. We worked closely with suppliers. We built and installed reliable equipment. We evaluated risk and included appropriate mitigation. Contractually, we offered tight, but fair terms, with appropriate warrantees.

A winning combination, you might think? Our engineering excellence played well with established customers. Our competitors knew our strengths. Our owners wanted positive cash flow. Lower cost new entrants challenged pricing. How did we all respond?

Our excellent processes ensured that the original bid was profitable, commercially complete in every detail and would pass the scrutiny of the customer’s buyers and our board’s technical experts.

Our competitors took a different perspective of the project life-cycle. They submitted a lower initial price and were happy to run with negative cash flow for longer. Either through guile or incompetence, they might under-quote on engineering time or forget to include some items. They knew that by the time their work was incorporated into our customer’s large infrastructure project there would be many changes to the successful bid. They also knew that the initial project would be awarded to the lowest bidder and the changes in the years ahead would not be put out to re-tender.

Our competitors gambled on making money from the variations that would be requested later in the cycle. How were we aware of this behaviour? Large bids are opened publically by the awarding organisation. From the numbers read out, we got a quick sense of where competitors’ offers varied from our own. They worked on the presumption that they could correct any mistakes and add back profit via some of the many requested project variations. They knew that changes post project award were commonplace. Our owners, from a service and financial background, did not understand this.

We were sometimes outraged that our competitors acted with lower quality. They were prepared to manage risk and relationships later to ensure profit across the whole life-cycle of the project.

So, my advice to those who pride themselves on process excellence is this. Ensure that your processes are reviewed regularly against the needs of ALL those who benefit. Be aware that your unique selling points can be exploited. Keep your competitors guessing and your Board aware of what you are doing.

Feel free to push back on my observations and have a great week.

Michael