September 12, 2014
By James Hamilton
Humans set personal goals and aspirations. They inspire and when we truly believe in them we connect at an emotional level. Why should organisations be so different?
Customers increasingly demand more for less – it is a fact of life. Businesses respond through novel products and services, branding, marketing, and other value-add differentiators. Eventually the long-term success of a business depends on its ability to continue delivering value at a competitive cost.
Reducing cost is an ever-present challenge in supply chain operations. Companies go through waves of attacking waste and removing cost through departmental and functional initiatives, all promising to strip out cost and boost margin. Usually these initiatives start at Board level and are cascaded and dissected through various levels of leadership. By the time these targets arrive with those actually adding value, the context and the ‘WHY’ is often unclear or even absent. The lack of context and clarity stifles motivation and inclination from those on the value streams who best understand the process and are making the minute-to-minute decisions directly influencing cost and actual margin.
Some common problems relating to communicating targets and strategies are:
- ‘Why’ and the big picture? Employees value being treated with respect and not left in the dark. With your most creative and influential assets, don’t go straight to the ‘What’ and ‘How’ before taking the time to explore the ‘Why’.
- Strategy can mean different things to different people. Making it personal, relevant and inspirational will help them see the key role they play and how they can engage and contribute with pride.
- How does it all fit together? The volume of measures, initiatives and requirements can be overwhelming – taking the time to link back to the big picture will encourage understanding, challenge and support.
- Some will have seen it all before. There will always be those that choose to look through darker glasses – encourage dialogue and ideas in order to learn from the past; transformed cynics can become strong advocates.
- Build on the good work already done. Strategies should connect to provide a clear and simple story. Take time to explain how they build on each other to drive the business forward in the context of external forces.
So how best can we stimulate understanding and align and inspire the hearts and minds of an organisation to unleash its potential?
The Power of a Goal
Humans set personal goals and aspirations. They inspire and when we truly believe in them we connect at an emotional level. Why should organisations be so different? Organisations by definition need to make choices on how to organise resources to deliver a purpose and a goal. If we as individuals disagree with a goal, it becomes very clear, and we can work out what we need to do to either get ourselves aligned or get out.
Why is a goal so important?
- It provides a consistent aim to unite and align our efforts
- We can see how near or far we are from our goal and act accordingly
- We can judge our options and decisions on how they impact our goal
- It forces understanding and connects us emotionally
- It drives our behaviour
What should be considered when setting a goal?
- Keep it simple and easy to understand – a seven year old should get it
- Setting multiple goals dilutes focus – better to have one at a time
- Make it engaging, original and meaningful – something that peaks curiosity
- Easy to measure – it should be obvious if we are there or not
- Beware of unintended consequences – these could drive the wrong behaviour
- Communications will always distort, don’t leave this to chance – use it as a real opportunity to generate understanding and ideas
Consider a company producing gas turbines from tens of thousands of parts. As time passes its successes result in higher sales of a broader portfolio delivered through an organically evolving supply chain. Following its successes the company is now in a position where some orders have backlogs of several years with delivery commitments, inventory levels and quality all struggling to meet expectations. Business processes had evolved to become overly complex, supply chains and warehouses clogged and functions all trying to improve in isolation. So what happened…?
The Company recognised it had to do something quite different before it lost market share, and the workforce was engaged to find a way of focusing and aligning efforts. Whilst the future state could have been described as a series of KPIs, the Company decided to identify one measure that could focus the organisation, and if achieved would drive the other measures in the right direction. The goal was set based on a maximum number of calendar days to produce the product from launch to delivery – the 40 Day Engine.
This goal, embraced at Board level, peaked curiosity in every employee and forced them to gain a clear understanding of the part they could play in making it happen. Every function and team analysed, improved and (where required) re-engineered their processes and activities to be in a position to support the goal. Week by week it was clear how the Company was doing on its common journey towards the goal and evident where areas required further support and creativity.
Life is full of surprises and unintended consequences. This Company was no different – in this case the risk involved increasing inventory levels to accelerate service orders from stock. This was quickly anticipated and managed using a balanced scorecard approach. Once these unintended consequences were mitigated it started to drive the behaviour and focus on JIT and Lean processes, product quality, planning, data and velocity through the end to end supply chain.
Finally, and possibly the most important aspect of a goal driven organisation, is to openly discuss the goal and allow the options, decisions and solutions to be driven and owned by those operating the processes. To this end the organisation placed great emphasis on encouraging multifunctional groups to come together and challenge, understand and discuss the goal at the start of the process and throughout. The communication was not treated as a one-off, one way, top down process that is assumed to happen flawlessly, a necessary evil – rather it was an ongoing dialogue and opportunity used to generate understanding, alignment and solutions.
As we humans reflect on our progress towards our personal goal, we make adjustments all the way by talking to people, trying and testing out, until we eventually get there, but we always know where there is. Given companies are driven by humans it stands to reason that this is a powerful mechanism to exploit.