realizing operational efficiency dr. elspeth murray associate professor & managing director,...
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Realizing Realizing Operational Operational Efficiency Efficiency
Realizing Realizing Operational Operational Efficiency Efficiency
Dr. Elspeth MurrayDr. Elspeth MurrayAssociate Professor & Managing Director, Associate Professor & Managing Director, Queen’s Centre for Business VenturingQueen’s Centre for Business Venturing
Queen’s School of BusinessQueen’s School of Business
In partnership with
Queen’s School of Business
Why Are You Here?Why Are You Here?
““Many more individuals of Many more individuals of each species are born than each species are born than
can possibly survive. can possibly survive. Consequently, there is a Consequently, there is a
frequently recurring struggle frequently recurring struggle for existence, and it follows for existence, and it follows that any being, if it varies that any being, if it varies
however slightly in any however slightly in any manner profitable to itself manner profitable to itself
under the complex under the complex
conditions of life, will have aconditions of life, will have a better chance of surviving, better chance of surviving,
and thus be naturally and thus be naturally selected.”selected.”
Charles Darwin, The Origin of the Charles Darwin, The Origin of the SpeciesSpecies
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AgendaAgenda
Great Organizations – Long term Great Organizations – Long term success success
Your Radar Screen: Key TrendsYour Radar Screen: Key TrendsKnow when & what to change….Know when & what to change….
Your Edge: Critical Implications Your Edge: Critical Implications …….and in what ways.and in what ways
Defined & Defined & forward lookingforward looking
strategystrategy
InnovativeInnovativeapproachesapproaches
DynamicDynamiccultureculture
EstablishEstablishdirectiondirection
Expect changesExpect changes
Create newCreate newrulesrules
Pride, passionPride, passion
Raise theRaise thebarbar
AdjustAdjustalong thealong the
way way
Outwit theOutwit thecompetitioncompetition
EnergyEnergy
Ability toAbility toinvent theinvent the
futurefuture
Ability toAbility tomake itmake ithappenhappen
Visionary Visionary leadersleaders
PR-103
What Was Darwin Really What Was Darwin Really Saying?Saying?
The Executive "Balancing Act"The Executive "Balancing Act"
Create and Create and build for the build for the
futurefuture
Manage today's Manage today's business business
efficiently and efficiently and effectivelyeffectively
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IIf you don't know what to do with many of the papers piled on f you don't know what to do with many of the papers piled on your desk, stick a dozen colleagues initials on them and your desk, stick a dozen colleagues initials on them and
pass them along. When in doubt, route.pass them along. When in doubt, route.
~ ~ Malcolm S. Forbes Malcolm S. Forbes ~~
Forward Thinkers: Their Radar Forward Thinkers: Their Radar ScreenScreen
Increasing expectations from all Increasing expectations from all stakeholder groupsstakeholder groups
Post-911 fallout Post-911 fallout
Post-corporate scandal fallout Post-corporate scandal fallout
Technological shifts Technological shifts
Demographic shifts Demographic shifts
Globalization Globalization
PR-604
Your “Radar Screen”: Stakeholder Your “Radar Screen”: Stakeholder ExpectationsExpectations
Shareholders – push for quarterly Shareholders – push for quarterly returns, ‘what have you done for me returns, ‘what have you done for me lately’lately’
EmployeesEmployees – ‘what’s in it for me?’ – ‘what’s in it for me?’
CustomersCustomers – better, faster, cheaper – better, faster, cheaper customized, high quality customized, high quality
Partners – easy to do business with Partners – easy to do business with
Suppliers – want ‘your’ attention, lock Suppliers – want ‘your’ attention, lock you in you in
Important Innovations by Important Innovations by CustomersCustomers
CategoryCategory
Health ProductsHealth Products
Personal CarePersonal Care
SportsSports
FoodFood
OfficeOffice
ComputersComputers
Apparel Apparel
ExampleExample
GatoradeGatorade
Protein-based ShampooProtein-based Shampoo
Mountain BikeMountain Bike
Chocolate MilkChocolate Milk
White-out LiquidWhite-out Liquid
E-mail, Desktop E-mail, Desktop PublishingPublishing
Sports Bra Sports Bra
How Often Do Users Innovate?How Often Do Users Innovate?
StudyStudy
Scientific InstrumentsScientific Instruments
Process MachineryProcess Machinery
Tractor ShovelsTractor Shovels
Plastics Plastics
First Device Used in FieldFirst Device Used in Field
Developed and Built By:Developed and Built By:ProductProduct ProductProduct
UserUserManufacturersManufacturers
77%77% 23%23%
67%67% 33%33%
6%6% 94%94%
0%0% 100% 100%
Source: E.v. Hippel, The Sources of Innovation, Oxford University Press, 1988
Innovation Patterns Innovation Patterns Documented Documented
77% of Innovations
Developed byUsers
First firmBringing
Product toMarkets 5 – 7 Year
Transfer Lag
Example: Scientific Instruments
Implications of Customer Implications of Customer LoyaltyLoyalty
77%77%
21%21%
1%1%0%0% 0%0%
100%100%
Of those who rated:Of those who rated:• A very satisfied rating, 77% would definitely recommendA very satisfied rating, 77% would definitely recommend• A satisfied rating, 21% would definitely recommendA satisfied rating, 21% would definitely recommend• Neither satisfied nor dissatisfied rating, 1% would Neither satisfied nor dissatisfied rating, 1% would definitely recommenddefinitely recommend• A dissatisfied or very dissatisfied rating, 0% wouldA dissatisfied or very dissatisfied rating, 0% would definitely recommenddefinitely recommend
VeryVerySatisfiedSatisfied
SatisfiedSatisfied NeitherNeitherSatisfiedSatisfied
nor nor DissatisfiedDissatisfied
DissatisfiedDissatisfied VeryVeryDissatisfiedDissatisfied
High Employee Satisfaction Equals High Employee Satisfaction Equals Customer Satisfaction -> LoyaltyCustomer Satisfaction -> Loyalty
CustomerCustomerSatisfactionSatisfaction
RatingRating
5.05.0
3.673.67
3.803.80
4.014.01
LowLow2.5 - 3.02.5 - 3.0
Employee Satisfaction RangeEmployee Satisfaction Range
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AverageAverage3.0 - 3.53.0 - 3.5
LeadersLeaders3.5 - 4.53.5 - 4.5
Drivers of Employee Drivers of Employee SatisfactionSatisfaction
Ability to satisfy Ability to satisfy customer needscustomer needs
Possesses the Possesses the appropriate skills and appropriate skills and knowledgeknowledge
Ability to influence the Ability to influence the workplaceworkplace
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EmployeeEmployeeSatisfactionSatisfaction
OutstandingOutstandingServiceService
SatisfiedSatisfiedCustomersCustomers
CustomerCustomerLoyaltyLoyalty
Job Job InvolvementInvolvement
ProfitabilityProfitabilityIdeasIdeas
ProductivityProductivityContinuousContinuous
ImprovementImprovement
Employee/Customer Employee/Customer Satisfaction Drives Profitability Satisfaction Drives Profitability - Two Ways- Two Ways
Your “Radar Screen”: Post-911 FalloutYour “Radar Screen”: Post-911 Fallout
More hassles at the border More hassles at the border – the future of JIT in – the future of JIT in jeopardy?jeopardy?
More regulation of More regulation of transportation industry – transportation industry – cost pressures, H/R cost pressures, H/R pressures pressures
Greater scrutiny of Greater scrutiny of transported goods – more transported goods – more delays, Homeland Security, delays, Homeland Security, “where is your stuff” “where is your stuff”
““North American” North American” standards and compliance – standards and compliance – increased costs of increased costs of coordination coordination
Your “Radar Screen”: Post-Your “Radar Screen”: Post-corporate corporate scandal fallout scandal fallout
Corporate governance – Corporate governance – tough to find directors, tough to find directors, more ‘fingers in’ the more ‘fingers in’ the businessbusiness
SOX compliance – SOX compliance – bureaucracy & controls bureaucracy & controls abound taking ‘eyes’ off abound taking ‘eyes’ off the businessthe business
Environmental liabilityEnvironmental liability
Your “Radar Screen”: Technological Your “Radar Screen”: Technological ShiftsShifts
RF id (item)RF id (item)NanotechnologNanotechnology y Electronic Electronic Paper/Digital Paper/Digital Ink Ink On-Demand On-Demand Software Software
Your “Radar Screen”: Demographic & Your “Radar Screen”: Demographic & Social Shifts Social Shifts
Aging workforceAging workforce
25% of business 25% of business owners retiring in next owners retiring in next 5 years 5 years
Work-life balance Work-life balance concerns concerns
Your “Radar Screen”: GlobalizationYour “Radar Screen”: Globalization
Outsourcing & Outsourcing & offshoring – not offshoring – not just goods but just goods but services alsoservices also
Key trends driving Key trends driving these views:these views:
Declining shipping Declining shipping costs & abundant costs & abundant and cheap and cheap bandwidth China bandwidth China and India and India emerging as emerging as economic forceseconomic forces
The Operations ChallengeThe Operations Challenge
Competition - Ruthless and Dynamic
We are getting better!
Are competitors getting better?
Faster?
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Time
Performance
So What Can You Do?So What Can You Do?
Good news and bad news – depends on Good news and bad news – depends on your perspective…..your perspective…..
Every industry is impacted, in different but Every industry is impacted, in different but significant ways significant ways
To lead and manage effectively in the face To lead and manage effectively in the face of all this change, operations professionals of all this change, operations professionals need to be very good at: need to be very good at:
Setting strategy – recognizing the need to Setting strategy – recognizing the need to change, creating a plan change, creating a plan
Fostering innovative & creative thinking Fostering innovative & creative thinking
Engaging employees Engaging employees
Leading and managing the changes that resultLeading and managing the changes that result
Your Radar Screen: Tracking Your Radar Screen: Tracking Leading Indicators Leading Indicators
Monitor performanceMonitor performanceExecute wellExecute well
Avoid complacencyAvoid complacency
Turnaround required:Turnaround required:Improve operating Improve operating
performanceperformanceRe-position the Re-position the
businessbusiness
Operating performanceOperating performancemay mask deterioratingmay mask deteriorating
strategic healthstrategic healthRe-formulate strategy Re-formulate strategy
Avoid long-term pain Avoid long-term pain for short-term gainfor short-term gain
Operational program:Operational program:Improve margins, costs,Improve margins, costs,
productivityproductivity
Strategic HealthStrategic HealthWeakWeak
StrongStrong
WeakWeak
OperationalOperationalHealthHealth
StrongStrong
Streamlined Strategic Planning Streamlined Strategic Planning ProcessProcess
EnvironmentMacroIndustryCompetition
Corporate• Capabilities
Business• Positioning• Critical successfactors
EnvironmentMacroIndustryCompetition
Corporate• Capabilities
Business• Positioning• Critical successfactors
Vision/mission
Objectives
Strategies
Initializing actionplansWhoWhatWhenHow much
Implementationissues
Vision/mission
Objectives
Strategies
Initializing actionplansWhoWhatWhenHow much
Implementationissues
Task Forces
Implementand Review
Discussions
Study Groups
‘Radar Screen’Review
InformalPre-Work
Size-UpWorkshop
StrategicIssue
Analysis
Strategic PlanDevelopment
Workshop
2-4 weeks 2-3 days 4-6 weeks 2-3 days
ManagementReviews
PR-029
CustomerSurveys
Benchmark
Engagement: Link to Business Engagement: Link to Business Results Results
Best EmployerBest Employer research has identified a strong and consistent link between research has identified a strong and consistent link between engagement and various performance measures. An analysis of the 2003 engagement and various performance measures. An analysis of the 2003 study results comparing the 50 organizations that were identified as the 50 study results comparing the 50 organizations that were identified as the 50 Best (“Best”) to the 78 organizations that did not make the top 50 list Best (“Best”) to the 78 organizations that did not make the top 50 list (“Rest”) indicated the following:(“Rest”) indicated the following:
Measure Best RestEngagement
- Percent of employees considered engaged 80% 57%Attraction
- Average number of job applications received per employee 8.2 5.8Retention
- Average rate of turnover 9% 17%Financial Returns*
- Total shareholder returns 4.6% 1.5%
- Total shareholder returns in excess of industry sub-index 11.2% 9.3%
* Information is based on total shareholder returns for publicly traded organizations over a five-year period (annualized over five years: 1997 to 2002).
Procedures• People Practices • Performance Review
Total Rewards• Pay• Benefits• Recognition
People• Senior Leadership• Manager• Co-workers
Opportunities• Career Opportunities• Development Opportunities
Quality of Life• Work / Life Balance• Physical Work Environment
• Intrinsic Motivation • Resources • Corporate Citizenship
Work / Values
EngagementEngagement
Engagement: 15 Related Engagement: 15 Related Drivers Drivers Hewitt’s Engagement Model Hewitt’s Engagement Model TMTM
The Importance of InnovationThe Importance of Innovation
“… the only sustainable competitive advantage is to innovate consistently …”
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… remember Digital Equipment Corporation?
… remember when gold was the precious consumer metal?
Different Levels of InnovationDifferent Levels of Innovation
High
Low
Degree of Difficulty
Incremental “Tinkering at the Edges”
Breakthrough “Outside the
Box”
Quantum “New Box(es)”
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Fostering Innovation Fostering Innovation
Intrinsically Intrinsically motivated peoplemotivated people
Objectives around innovation Objectives around innovation NOT just inventionNOT just invention
Stay ‘close’ to customers Stay ‘close’ to customers
Opportunities for diversity of Opportunities for diversity of perspectiveperspective
A disciplined process to A disciplined process to evaluate and fund new evaluate and fund new initiatives with potential and initiatives with potential and ‘weed out’ the rest ‘weed out’ the rest
Time for people who do the Time for people who do the work, to “think” creativelywork, to “think” creatively
““Strategies take on value only as committed people Strategies take on value only as committed people infuse them with energy”infuse them with energy”
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Philip SelznickPhilip Selznick
Managing Change: It’s Not Managing Change: It’s Not What You Do, It’s How You Do ItWhat You Do, It’s How You Do It
Family VacationsFamily VacationsWe all know what makes We all know what makes for a smooth journey on for a smooth journey on the drive across Canada: the drive across Canada: create the winning create the winning conditions conditions
PhysicsPhysicsIt’s all about momentum It’s all about momentum and overcoming inertia -and overcoming inertia -> GUIDANCE, SPEED & > GUIDANCE, SPEED & CRITICAL MASSCRITICAL MASS
HeterogeneityHeterogeneityThe workforce is The workforce is diverse, and typically diverse, and typically operates under the operates under the ’20:70:10’ principle ’20:70:10’ principle when it comes to when it comes to change change
Winning Conditions for ChangeWinning Conditions for Change
Guidance – share the itinerary Guidance – share the itinerary Establish the need, create shared understanding Establish the need, create shared understanding of the entire journey, make a planof the entire journey, make a plan
Speed – overcoming inertiaSpeed – overcoming inertiaCreate urgency, focus on a ‘critical few’, enable Create urgency, focus on a ‘critical few’, enable rapid decision making, deploy initiatives in rapid decision making, deploy initiatives in parallel parallel
Critical mass – gaining momentum Critical mass – gaining momentum Provide leadership, operationalize ’20-70-10’, Provide leadership, operationalize ’20-70-10’, deal with the ‘arsonists & saboteurs’ deal with the ‘arsonists & saboteurs’
Find the ‘Tipping Point’ Find the ‘Tipping Point’
Defined & Defined & forward lookingforward looking
strategystrategy
InnovativeInnovativeapproachesapproaches
DynamicDynamiccultureculture
EstablishEstablishdirectiondirection
Expect changesExpect changes
Create newCreate newrulesrules
Pride, passionPride, passion
Raise theRaise thebarbar
AdjustAdjustalong thealong the
way way
Outwit theOutwit thecompetitioncompetition
EnergyEnergy
Ability toAbility toinvent theinvent the
futurefuture
Ability toAbility tomake itmake ithappenhappen
Visionary Visionary leadersleaders
PR-103
Long Term Success Long Term Success
Staying Ahead – Reading ListStaying Ahead – Reading List
The EconomistThe Economist
MIT’s Technology ReviewMIT’s Technology Review
The Tipping Point (The Tipping Point (GladwellGladwell) )
Fast Forward: Organizational Change Fast Forward: Organizational Change in 100 Days (in 100 Days (Murray & RichardsonMurray & Richardson))
Built to Last (Built to Last (Collins & PorrasCollins & Porras))
Good to Great (Good to Great (CollinsCollins) )