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I continue to read articles decrying the lack of innovation in outsourcing relationships.  Companies say they want their IT Outsourcing service providers to innovate, and service providers respond that they want to deliver innovation, but their hands are tied by the contract.   Everyone seems to be stuck on exactly how to accomplish innovation.    In fact, there doesn’t even seem to be much agreement on what is meant by “innovation”.  It is a bit like asking a dozen strangers to agree on what might constitute a “fun weekend”.  Who or what is to blame for "Non-Innovation Mode"? Many seem quick to name the culprits of non-innovation -- often superficial or peripheral issues – such as the contract, service provider malaise or “second stringers” on the team.   The services contract seems to be getting a lot of attention -- those locked-down and tied-up services agreements so often contentiously negotiated.   Others blame the overzealous push toward cutting out all ‘fat’ (i.e. profit margin) in a sourcing agreement so that the service provider has no room to innovate.  Once the promises are made and the contract is signed, the less qualified, inexperienced service provider team takes over the delivery of the contract.  Their priorities are 1) deliver to

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April, 2013

Three Sixty Trends

Volume 1, Issue 3

Inside this issue:

Managing in a Lean Environment

1

Innovation in Outsourcing

1

WTA Supports CTA

3

Denver Peak Academy

4

WTA Signs Master Agreement with C&CD

4

New Associates, Partners and Projects

5

If we have an overarching goal as an organization, wouldn’t it be ‘habitual excellence’?  How do we adopt that habit?  Since the success of every project, every initiative, every department-wide goal depends upon executive support, it follows that excellence itself depends on management. If we want to create an excellent Lean organization, we have to manage that way – there must be a corollary to Lean operations.  We must manage a Lean environment using Lean principles.

The Lean Workplace is a dynamic one.  The work process is more transparent, it changes to meet customer demand, and engaged workers demand more of their managers. The purpose of this series of discussions is to present common challenges to managers in a Lean environment, and outline some proven methods to overcome them.

Management is comprised of four interdependent functions:  Leading, Planning, Organizing and Controlling.  Each has its own challenges.  Let’s examine the Lean Manager’s perspective for them in order.

Continued on Page 2

Challenges of Managing a Lean Environment by Scott Zimmerman

Is innovation in Outsourcing Possible?

by Kathryn Douglass

Continued on Page 3

2

Challenges of Managing in a Lean Environment, Cont.

Leading - What is the Lean Approach? 

Challenge:  Communicating accomplishments, priorities, and maintaining morale

The first thing a Lean Manager understands is that the organization needs leadership.  Your department needs someone to lead and, in the process, assume the role of the other facets of management – the aforementioned Planning, Organizing and Controlling functions.  [And we are talking here about Control in the sense of process control – not the dysfunctional, pop-psychology term ‘controlling’.]  There is no substitute for good leadership, though, to maintain morale and ensure the team is meeting the standards of behavior and performance.

Leadership at gemba

Proper leadership is a very public role.  It requires communication as an active listener and as the voice of the Planner, Organizer and Measurer to give direction.  The Lean Leader strikes a balance between directing activity and seeking information from the workplace.

Part of the leader’s role is to be out where work is performed (“gemba”) in order to build morale. The psychological sciences tell us that people hear negative feedback 2-3 times louder than positive reinforcement.  Therefore, to have an effect, encouragement must be communicated much more often than

censure.  In The One-Minute Manager, Ken Blanchard urges leaders to “catch people doing something right”.  Even Dale Carnegie, dating back to the 1930’s, recommended being “hearty in your approbation and lavish in your praise” for best results.  Lean leaders observe and make correction, but also view their role as truly setting a positive example.

When touring gemba, the leader must understand how work is being performed.  The Lean leader is a problem-solver and a disseminator of process knowledge, and so he or she is out in the workplace to go see and ask why.  This is especially true in a Lean workplace, where process changes are occurring as part of the work effort.  Some of the performance information is used as input for planning, organizing, and measurement roles that the Lean Manager plays, and some should be immediately reflected back to the workforce.

People performing the work in the operation need and want to know how they’re doing and what needs to be done next.  While they’re busy working away in their compartment of the ship, they need someone who’s been topside to tell them what ocean they’re in and what waters they’re headed toward.  That’s a key role of the leader – learning and disseminating useful information to the team.

Next time:  Planning and Organizing

“Proper Leadership is a

very public role.”

Scott Zimmerman

Three Sixty Trends

Volume 1, Issue 3

3

the letter of the contract, 2) avoid invoking service penalties, 3) make a clear profit and 4) sell more services – innovation is not a concern for them.

Although it is true that these issues are present in troubled relationships, I don’t believe these reasons are at the core of the innovation problem. 

How do we establish an "Innovation Friendly" environment ?

Firstly, I believe there will be no innovation in outsourcing contracts as long as the business environment is focused on short term goals such as cost cutting, and views the IT function as an administrative support function. The ground work is set for innovation when organizations view their IT resources as a critical conduit for business success, and as an underpinning for facilitating growth , customer satisfaction and shareholder return. For innovation to occur, creative ideas must be operationalized -- new ideas and creative approaches must be implemented into business processes within the organization, and changes in the products and services must be provided.

When innovation is viewed from this perspective, one realizes that it cannot be achieved solely within the confines of the outsourcing agreement. Innovation can be achieved only where there is impetus and cooperation from the business to affect operational processes. IT must be an integral part of the organization’s drive to innovation. Innovation isolated to the IT department or to the outsourcing contract is suboptimal, and will never result in significant innovation at the business level.

Secondly, innovation cannot be the responsibility of one party. Innovation takes a creator and an adopter to be successful. IT Service Providers often find that their clients want them to “push” innovation, but the true opportunity for innovation is when

organizations “pull” innovation, taking the service provider on the journey with them. And not every service provider is capable of providing the kind of strategic thinking and support required to foster and implement innovation, so both parties must be aligned not only in mission but in capabilities as well.

A company must contemplate whether or not it requires innovation, and if so, must make this a key requirement in the selection of a service provider and the building of the relationship. The relationship must be designed and structured to include innovation, strategy and collaboration from the beginning. Service Providers, typically focused on providing contractual services at the least amount of cost and the highest profit, must seed their organizations with business focused personnel who understand the client business and how to apply technology to achieve business results.

Will negotiating innovation clauses into the agreement make innovation happen? Many advisors will trumpet this approach. We believe quite the opposite; no amount of legislation will ensure innovation. Without building the proper groundwork in your organization, selecting a provider with the same objectives and innovative spirit, and establishing a collaborative relationship – no contract is going to turn a transactional, cost focused services agreement into an innovative partnership.    

Three Sixty Trends

Volume 1, Issue 3

WTA served as Ambassador for Steve Shattuck, Regional VP of Hitachi Data Systems and a Mile High Celebrity. This is the forth year that WTA has support this outstanding annual event, put on by the Colorado Technology Association, and attended by over 90 industry executives and 1500 industry leaders.

CTA’s mission is to foster innovation and growth for Colorado’s information technology industry to compete on a global basis. As the voice of our state's technology community, CTA connects member companies in our fields and builds recognition of the Colorado tech industry as a global leader through high-level business connections,providing avenues to develop our professional network, participating in legislative and regulatory advocacy, providing educational influence and support, and organizing events and business specific activities.

C-Level Auction proceeds enable CTA to work on behalf of the technology community to keep Colorado’s business environment healthy for technology .

WTA Supports Colorado Technology Association C-Level at Mile High

“We are what we repeatedly do. Excellence then, is not an act,

but a habit”.Aristotle

Is Innovation in Outsourcing Possible, Cont.

4

WillowTree Supports Mayor Hancock’s Peak Performance InitiativeBy Kathryn DouglassWillowTree Advisors worked with Mayor Hancock’s Performance Improvement Office, to develop and deliver a Lean Simulation for the Denver Peak Academy pilot, which illustrated many Lean Principles, and provided an opportunity for the pilot participants to experience and practice Lean process improvements, principles, tools and methods.

Special thanks to Scott Zimmerman and Triche Guenin who facilitated the workshop, and to Norm Thiele and Toby Threadgill, who assisted in the review and dry run of the simulation.

The Mayor’s Office & City leaders have created the Peak Academy to train colleagues in the principles of Lean. Through Peak Academy, city employees will learn techniques and strategies for implementing Peak Performance throughout their department, taking personal investment in the City's continuous improvement initiatives.

WillowTree Signs Master Agreement with City and County of DenverBy Toby ThreadgillIn January, WillowTree Advisors (WTA), began offering business transformation and Lean consulting services to the City and County of Denver under a Master Services Agreement. WTA will be working in conjunction with the Mayor’s Peak Performance Initiative, under the leadership of Dave Edinger and Scotty Martin. Today’s economic and political pressures have pushed governments to do more with less. Lean Government methodology enables agencies and public entities to do more with the resources they have and provide better services to their stakeholders and constituents. “the application of Lean techniques to business processes can save time, reduce waste and eliminate costs – while improving customer and employee satisfaction,” said Kathryn Douglass. “This opportunity is an excellent way for the City and County of Denver to optimize its operations and focus on the customers and public it is serving.”

Lean Government initiatives center on the agencies’ work and operations, helping them think differently about the way they work, while increasing capacity and adding value for those they serve.

The following are real results from City and County of Denver that resulted in costs savings and improved services to customers:

u At the Denver Department of Human Services, the team reduced the number of internal mail transfers from 23 to 12, and increased the percentage

of cases indexed within 24 hours from 29 percent to 100 percent. The bulk of the work took one week, and the financial payback occurred within seven months. 

u      At Denver Public Works-Parking Collection team members changed the policy for employee parking payments to be entirely paid by Electronic Funds Transfer, which eliminated invoicing and reconciling cash payment for customers. This changed resulted in $20,833 in

projected annual savings.   .

“One Denver colleague went back to her wastewater division office and created over $46,000 of annual savings. She determined that the 11,000 annual lien letters from her department did not require certified mail.”

Investing in Ourselves“In  our  model,  training  leads  to  ac2on.”

Dave Edinger

Three Sixty Trends

Volume 1, Issue 3

5

By Toni Martin

Our extended team has grown over the last quarter and we are pleased to welcome several new associates, consultants, teaming partners and support staff members. Welcome all!

u David Callen, Lean Health Care

u Walt Tarpley, Lean Six Sigma

u Rika Mead, Performance Excellence

u Merrilee Phillips, Lean HealthCare /Change

u Carl Schoberle, Outsourcing and Governance

u iModus3, Teaming Partner

u Lewis and Fowler, Teaming Partner

u Boyd Group Internationall

u Beca International

WillowTree WelcomesNew Associates and Partners

‘Never doubt that a small group of thoughtful, committed people can change the world. Indeed, it is the only thing that ever has.’

Margaret Mead

Three Sixty Trends

Volume 1, Issue 3

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FAST. FLEXIBLE. FOCUSED

WillowTree Advisors, LLC

3773 Cherry Creek North Drive, #575Denver, CO 80209

Phone 888.998.0008

Fax: 888.233.1472email: mail@willowtreeadvisors.comwebsite: http://www.willowtreeadvisors.com

Three Sixty Trends