organizational agility · organizational agility may 4, 2010. 2 steve sakats vice president, human...
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Accelerating and Sustaining Growth Through
Organizational Agility May 4, 2010
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Steve SakatsVice President,
Human Resources
Tom O’Shea, CMCPrincipal
Today's Business Landscape is Undergoing Rapid and Transformative Change
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Are you prepared?
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It doesn't matter whether you are a lion or a gazelle, when the
sun comes up, you’d better be running.
The New Law of the Jungle
It doesn’t matter if you are big or small … it is whether
you are fast or slow!
Mitch Modell, CEO Modell Sports
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"时势造英雄“May You Live In Interesting Times!
Old Chinese Proverb
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• “The world is becoming turbulent faster than companies are becoming resilient”*
Why Is Agility Important?
Quotes from Gary Hamel ~ Quest for Resilience
• The “fog of the future” requires greater focus creating an “execution culture” - Donald Sull, London School of Business
• Volatility is redefining the business environment and today’s “best practices” are manifestly inadequate*
• “The only dependable advantage is a superior capacity to reinvent your business model … before circumstances force you to.”*
• Creating an “strategic agility” – # 1 CEO priority – Henning Kagermann – SAP Co-CEO
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• How can I get my organization to anticipate changeand not always just reacting to what happens?
• How can we generate confidence with all stakeholders and lead our organization like winners?
Questions CEO’s Ask Most Often Today
In other words, how can our company become more AGILE?
• How can we create a more decisive, responsive organization where initiating action is a smooth reflex and not always an ordeal?
• How can we create an organization with fresh, liberated thinking ~ always seeking new, innovative ideas to the new challenges we continuously face?
• How can we create focus in our organization ~ evaluating results on those success measures that really matter?
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Key Findings• Pace of change accelerating every year
• Nature of change more disruptive
• Greater volatility and risk has become the norm in many industries making the “consequences” much tighter
Factors that Hinder Agility
• Cultures that don’t adapt
• Poor leadership
• Failure to plan
How to Face the Future?
• Build greater adaptive capability and find areas blocking transformation
• Build and expect at all levels
• Create greater openness & collaboration
• Learn from high performers
• Focus on customers and insights
• Greater focus on team design, skills and deployment of influence
• Organisational Agility is a core differentiator in today’s rapidly changing business environment 90% believe OA is critical to business success Half agree that rapid decision-making and execution are essential
to competitive standing
• Most companies not flexible enough to compete successfully Nearly 30% say they are at competitive disadvantage and not agile
enough to anticipate marketplace shifts
• Internal barriers are stalling efforts to become more AGILE 80% say they have tried one or more initiatives to improve agility
over past three years 34% say they have failed to deliver desired benefits Main obstacles to improved business responsiveness …
Slow decision-making Conflicting departmental goals and priorities Risk-averse cultures Silo based information
These are also design specifications as we think about how to BUILD the enterprise of the future!
Dynamic capability to sense and respond better and faster than competition
by being …
What Is Organizational AGILITY ?
What Is Organizational AGILITY ?
The AGILE Model™ from Agility Consulting
The Agile Model®
Key Organizational Agility Processes
Anticipate Change
Visioneering Sensing Monitoring
Generate Confidence
Connecting Aligning Engaging
Initiate Action
Bias for Action Decision-Making Collaborating
Liberate Thinking
Bias for Innovation Customer Focus Idea Diversity
Evaluate Results
Creating Expectations Real Time Feedback Fact- Based Measures
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Building Greater Agility Into Organization DesignOverall
Agility GoalsKey Agility Processes Key Agility Indicators
Focused
• Visioneering• Aligning• Creating Expectations• Fact-Based Measures• Customer Focus
• Performance mgmt % achievement
• Strategic deployment activities
• % Alignment on objectives
Fast
• Bias for Action• Decision-Making• Collaboration• Real-Time Feedback• Monitoring
• Process cycle times• Go-to-market times• Problem identification &
solution cycles in teams• # problem solving teams
Flexible
• Sensing• Connecting• Engaging• Bias for Innovation• Idea Diversity
• Process change-over cycle time
• % cross-trained in teams• Relative % WIP or FGI
• Visioneering• Aligning• Creating Expectations• Fact-Based Measures• Customer Focus
• Bias for Action• Decision-Making• Collaboration• Real-Time Feedback• Monitoring
• Sensing• Connecting• Engaging• Bias for Innovation• Idea Diversity
• Performance mgmt % achievement & rewards
• Strategic deployment of initiatives and activities
• % Alignment on objectives
• Process cycle times• Go-to-market times• Problem identification &
solution cycles in teams• # problem solving teams
• Process change-over cycle time and scope
• % cross-trained in teams• Relative % or $ WIP or FGI • % cross-trained leaders
Reactive Agility Preemptive Agility
Agility Boosts Financial Performance
Net Margin Return on Assets Revenue Growth Earnings Per Share
20% higher
30% higher
8% higher
29% higher
Industry Average Agile Companies Source: MIT Sloan School of Management, 2007
The ROA* of Agility?
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Benchmark Agility with Key Agility Indicators
270 KAIs in the Benchmark Wizard
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The journey to create a truly AGILE organization starts with a thorough assessment of current
organizational state
The roadmap has many important stops along the way in order to create
successful design & sustainable results!
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Who is
Land O’Frost?
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THE LAND O’FROST STORY
•Who we are?•Why change?•Why Agility?•What we did?
Agile ProcessProcess ChangesStructure Changes
•Is it working?
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• Company History
• LOF Culture
Who we are?
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Historical Growth
1969 Lansing
2007 Madisonville Plant
1969 Lansing
1976 Searcy Plant
2007 Madisonville Plant
Paul DonnaAntoon
Who we are …
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Why Change?The Burning Platform!
• Named new President
• Aging Leadership Team
• Market Position vs. Retailer Strategy
• Tougher competition
• Built for incremental change
Is it Really that Hot?
• History of success
• Experienced/confident Leadership Team
• Operational Excellence
• Internally defined success measures
• Like incremental change
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Cultural Transformation?Who we were• Operationally Focused
• Strong Team Procedures
• Continuous Improvement
• Incremental Growth
• Hub & Spoke Communication• Internally Focused
Who we want to be• Brand Focused
• Team Culture (No Silos)
• Agile Company
• Accelerated Growth
• Participative Communication Style
• Externally Benchmarked
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Why Agility & The Agile Model®?
• Provide structured Model
• Inclusive/open system
• Respect for our culture
• Hold us accountable
• Great Value
The AGILE Model®
Our Strategic Roadmap
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• LOF Vision & Strategy Map
• Enterprise-wide Agility Audit™
• Strategic deployment
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LOF Vision of the Future
• Total Team Effort• Clear Vision for the Future• Specific Operating Plans• Enterprise Engagement
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Strategy Map Creation
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The primary benefit from becoming more Agile … To execute strategy better and faster than competition!
Anticip
ate C
hange Generate Confidence
Init
iate
Acti
on
Liberate Thinking
Evalu
ate
Resu
lts
TechnologyTechnology ProcessProcess
PeoplePeople
The Agile Model®
Executing Strategy … Better & Faster
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Our Agility Audit™
• Focused on people, process, and technology
• Helped identify organizational strategies
• Helped identify internal and external obstacles
• Galvanized leadership team around feedback
• Enabled leadership team to align improvement and operating plans
Enterprise-Wide Agility Audit™
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How We Did It…
Enterprise-Wide Agility Audit™
The insights from the Agility Audit™ enabled our leadership team to align specific improvement plans with each department’s operating plan.
Impact Est $Recommendations Resp Time
Recommendations
Agility Profile
•Anticipates Change
•Generates Confidence
• Initiates Action
• Liberates Thinking
•Evaluates Results
Perf
orm
ance
Importance
C1
Agility CriteriaCurrent State Assessment
GapAnalysis
People Process
Structure Technology
Culture
Increase Shareholder
Value
Gap
Aligned
Surplus
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What Did We Change?Our Information System
• External Focus Customer Surveys Consumer Research Industry Benchmarking
• Created Success Measures
• Metrics Dashboard
• Aligned by strategic objectives
• Rolling 52 view of our world
• Incorporate SPC Techniques
Strategic Deployment Through Aligned Processes & Teams
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Land O’Frost Strategic Workshop
Agility Consulting & Training, LLC
PERFORMANCE ASSESSMENT
1. While overall category has declined over 2 year period; LOF has maintained growth (Value proposition extremely important); but growth rates are slowing
2. Recent economy conditions seems to have shifted dollars into faster, easier prep hand held foods
3. HH penetration and category share still trending upward, but overall awareness of LOF brand lower than competitors with much larger packaged meat presence, heavier advertising
4. Encroachment of space is a danger for a one segment player (only lunchmeat)
5. Innovation in category ( = space gains) value added items
CONCLUSIONS
1. LOF’s value positioning in market (with heavy promotion) is holding growth up, but slowing over previous years pace. Ability to saturate our top lines (Premium & DS) is essential. Currently the money makers average less than half the line placed, in half the country.
2. Bistro growth important (revenue) and expands brands shelf presence outside of being the “deli pouch kings”.
3. Space is shifting away from LM for items that are seen as more innovative and value added.
4. Continued push to gain higher awareness and recognition of brand is key to broader acceptance of consumers.
5. Expand brand reach to other channels
Strengths Weaknesses
• Consistent growth brand• History of incremental growth
w/o cannibalizing• High consumer loyalty• Improved HH penetration• Value positioning has been
insular in last 18 months
• Low brand recognition relative to category share
• Small share in ttl pack meats• Ability to saturate skus relative
to top competition• Lacking non-lunchmeat exposure
to broader audience
Opportunities Threats
• Build on first year media advertising to further awareness – w/metric
• Expand channels- Clubs
• DINV- singular purpose
• Grow Bistro
• Loss of space / encroachment• Continued erosion in category
shifting retail to focus on non-LM items to build on
• Promotion crack addition• Retail margin madness• “Best friend” accounts die off
LOF Marketing Current Performance Assessment
KEY PERFORMANCE TRENDS
Key Measures 2006 2007 2008
$Vol <%> 7.3% 4.9% 2.7%
Eq Vol <%> 7.0% 5.0% 2.7%
$ Share 4.8% 4.9% 5.1%
HH Penetration 10.0% 11.3% 11.5%
% Loyalty 20.4% 21.7% 21.3%
% HH Repeating 4.8% 5.5% 5.5%
* source: volumetric measures ACNielsen U.S. Supermarkets
Consumer Purchase data- IRI Home panel
• LOF has an effective system in place to support on-going focus and rapid action deployment through high-performance teams
• Key is keeping the energy focused on mission critical initiatives
Initiating
Processes
Closing
Processes
Planning
Processes
Executing
Processes
Monitoring &
Controlling Processes
Mission Critical Outcomes
Mission Critical
Initiatives
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Reinforcing Line of Sight to Our Strategy
• Constant communications
• Employee engagement initiatives
• Employee rewards alignment
Business
Unit
Company
Department
Work Team
Core Values1. Customers are the focus of our entire business: Our business begins with our customer. Our
work must be conducted with our customers in mind.
2.We provide quality products and services: A quality product or service is one which continually meets each customer’s needs and expectations at a price they are willing to pay.
3. Continuous improvement is essential to our success: We must strive for improvement in everything we do: the value of our products, our services, our human relations, our competitiveness, our profitability and our quality.
4. Employee involvement is our way of life: We are a team. We must treat each other with trust and respect.
5.Our sales agents and suppliers are our partners: We must maintain mutually beneficial relationships with our sales agents, suppliers and other business associates.
6. Integrity is never compromised: We must conduct ourselves and our business in an honorable and ethical manner.
7. People. Our people are the source of our strength, provide our company’s intelligence and determine our reputation and vitality. Involvement and teamwork are our basic values.
8. Products. Our products are the end result of our efforts and services and must be the best in satisfying our customer’s expectations. As our products are viewed, so we are viewed.
9. Profit. Profit is the best measure of how efficiently we provide customers with the best products for their needs. Profit is required for our survival and long term growth.
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What Did We Change?Our Communication System
• Message Strategic Focus – Where are we going? Line – of –Sight - What do you do to make a difference!
Growth Imperative
One Company
• Process Annual Managers “Strategy Map” Meeting
LOF – TV
Revitalize Traditional Vehicles PIPS Meetings Orientation Director/Manager Participation
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The LOF Wiki
Some of Our Communication Vehicles
LOF TV
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What Did We Change?Our Decision Making System
• Link to Strategy Map
• Profit = Revenue – Cost
• Leadership Council Balanced Agenda Strategic Focus
A time-compressed company does the same thing as a pilot in an OODA Loop … It’s the competitor who acts on information faster who is in the best position to win.
Decision environment – Turbulence with constant uncertainty, volume and magnitude of new information, time to market, information overload ,etc.
• Push the “Brain Line” Down
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The Agile Model®
Key Drivers for Agility
Anticipate Change
VisioneeringSensing
Monitoring
Generate Confidence
ConnectingAligningEngaging
Initiate Action
Bias for ActionDecision-Making
Collaborating
Liberate Thinking
Bias for InnovationCustomer FocusIdea Diversity
Evaluate Results
Creating ExpectationsReal Time Feedback
Fact- Based Measures
Leadership and Agility Workshops
Models of Agility at Land O’Frost
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What Did We Change?Our Compensation System
• Move to Performance-Based Company
• Leadership Compensation Framework Individual and Shared Goals
• Future Focus
• Career Development & Succession Planning Based on Leadership Agility
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What Did We Change?Our Structure• Sales
Additional Resources Customer Focused Compete vs. “The Big Two”
• Marketing Innovation Category Management
• Leadership Team Strategic Balance
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Some Lessons• Senior leadership team shared Vision & Commitment
• Active Involvement of next tier of leadership
• Involves giving both the “permission” and the skills
Key Benefits• Company-wide awareness of the “agile imperative”
• Building key leadership and action skills across the enterprise
• Reinforcing our existing culture … but taken to new level
• Transformation in mindset and operating style into what it means to become a “High Performance Team” in today’s environment
• Equipping LOF to face the future with greater confidence for success!
Lessons & Benefits From Our Journey
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Is it working …?• Hit our revenue targets 2009
• Q1 Revenue up 30%
• Address situations much faster
• Feels good
• Employees Positive
• Greater collaboration
• Have a road map with metrics for success!
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Designed For Growth & Agility!
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Employee Engagement
Video
Questions?
Tom O’Shea
Agility Consulting, LLC
Greensboro, North Carolina 336-282-1211
www.agilityconsulting.com
Steve Sakats
VP HR, Land O’Frost
Lansing, Illinois
708-394-8110
www.landofrost.com