Getting enough from your Lean Six Sigma program?

1. The spark

1.1 LSS doesn’t seem to be working and there is another way

Lean/Six Sigma is one strategy many organizations use as a part of their overall Transformation Program. We have recently been working with a number of organizations that are struggling in various ways with their Lean/Six-Sigma programs:

A global financial services company brought in Six Sigma last year, got some good initial results, but these diminished over time and little of value was being delivered a year later. The bank then changed its focus to Lean, they disbanded their Six Sigma team, and are now trying to make this new approach work.
A global Pharmaceutical company has spent millions working with a leading consultancy to build a Six Sigma program, to develop the needed ‘Belts’. Their CEO has limited visibility of how the program is going, receiving only monthly Excel Spreadsheet updates in which he has little confidence or opportunity to influence. He cannot afford for this to fail.
A major supplier of the Healthcare sector has had the same leading consultancy helping them implement Lean. Black and Master Black Belts have been parachuted in, projects have been delivered, but no real knowledge and skills transfer has occurred. The million Euro investment has delivered some impact, but is now floundering.

1.2 Culture change is being short-changed

At the heart of each of these examples is a highly programmatic, methodology-driven, and expert-based approach to making organizational change happen. The deep integration of the underlying philosophy of core Lean/Six-Sigma into the culture is simply not happening. So, changes are short-lived and ebb away over time as the spotlight moves onto other strategies.

1.3 No purposeful, collaborative environment to enable LSS changes

Despite highly connected, end-to-end enterprise systems for the core business processes (ERP, CRM, HRM, etc.), the Program teams and organization delivering Lean/Six-Sigma business changes have few if any systems to support them. If they are lucky they might have a reporting tool to extract progress and reports. Probably they’ll have desktop applications to help execute elements of the methodology, for example the LSS analytical tools. Certainly, people won’t have any collaborative LSS solution that provides these tools so that people can easily work together on them and deliver sustainable change through their LSS projects.

1.4 Expert-driven versus organizational stickiness

The lack of focus on culture change and underlying systems to support LSS programs means that often they remain driven by ‘experts’. This reduces true organizational adoption and stickiness of the approach. Parachuting-in of expertise, driven by the Master Black Belt/Black Belt/Etc. structure, is inadvertently detracting from the critical task of knowledge transfer, making changes less enduring than needed.

We believe these flawed approaches are central to many Six Sigma/Lean/Lean-Six-Sigma failures.

2. Historical context

Over the past two decades there have been many methodologies and approaches adopted in order to dramatically improve business performance.

At the center of all of this have been the improvement methodologies started in the ‘50’s in Japan that eventually came West in the ‘80’s under the Lean, Just-in-Time (JIT), Total Quality Control /Management (TQC/M) and Kaizen banners.

2.1 Pulling not pushing

Lean, a central tenet of the Quality revolution, focuses on a fundamental shift to a ‘pull’ based approach across the whole system. In post-war Japan resources of all forms - raw material, working capital, etc., were scarce. This drove Toyota to transform conventional, mass-production manufacturing so they could viably build a wider range of models in radically smaller quantities. They shifted from a ‘push’ (build to stock), to a ‘pull’ (build to order) approach, forcing the elimination of waste across the system (over-production, inventory mountains, inspecting quality into the product, etc). In the ‘80’s the West caught onto this approach, and called it Lean manufacturing, of which Just-in-Time was a major element.

Having been on the coal face during this period (setting up a JIT supply base for a green-field Hewlett Packard business), the shift was revolutionary. Conventional wisdom said you needed to have three or more suppliers in order to optimise pricing, delivery and security of supply. Lean said, define your strategic components, single-source their supply, and work together to deliver ‘leanly’ (no incoming inspection, delivery of components straight to the line, 2 weeks inventory max on high value parts, etc.). I directly experienced the responsibility and investment needed to succeed in a single-source mode, and how it drove deep collaboration centred on removing ‘waste’ from the process so we could all succeed. We restructured to integrate strategic supply chain and manufacturing expertise into the development process. We optimised product specs for manufacturing and assembly, and radically changed our operational, commercial and planning models with suppliers. There simply was little or no fall back if things went wrong. In Lean, every process, from understanding the market need and orders, through to delivery of the product to market has to be aligned and streamlined to remove wasteful practices.

2.2 Quality tools and culture to improve processes

As well as the pull/flow-based thinking of Lean, the Quality revolution brought tools that would operationally drive the ongoing improvement and control of process quality, cost and yields:

Problem identification tools: flow charting, check sheets, brainstorming, nominal group techniques, pareto charts, etc., and
Problem analysis tools: histograms, scatter diagrams, control charts, process capability analysis, run charts, cause and effect, etc.

But the tools are just the tools. At the heart of Lean is a bottom-up, problem-solving culture. This ensures that people operating the processes are skilled, equipped and empowered to control them, and identify and deliver the necessary changes/improvements. Supervisors and Managers work alongside staff simplifying and eliminating waste from processes. Fundamentally, a pervasive culture of full employee engagement in continual process and skills improvement is required.

Initially known as Total Quality Control (TQC), this then evolved into TQM which extended the thinking from operational processes to include management and support processes.

2.3 Motorola bring six-sigma to the table

In the ‘80’s Motorola, inspired by TQC/M approaches, pioneered the concept of Six Sigma. This shifted the goal-posts from thinking a process performance rating of 99% was good, to it being dismally inadequate i.e. ten thousand failures are happening for every million successes! It brought a statistical rigour and toolkits to the development of business processes, and an explicit focus on the financial impact. However, unlike TQC/M that drives change from developing the skill of the core business team, Six Sigma uses an organizational structure of experts to provide the impetus and knowledge for solving problems – an accredited belt system denoting expertise, span of influence, and level of role dedication to the Six Sigma task – Master Black Belts, Black Belts, etc..

I remember the shock of learning that we needed to deploy Six Sigma within our Hewlett Packard business unit as an accreditation requirement for supply to IBM. My initial thinking was that pushing to achieve parts per million failure levels was simply was a step too far. In fact it wasn’t - we integrated the Six Sigma approach into our existing business quality practices and philosophy, and dramatically raised the bar on our performance. As a lean/quality-driven business, with many years experience/success deploying these approaches, we rapidly enhanced our quality tools, skills and thinking with the Six Sigma methodology.

3. Best practice thinking – lean six-sigma and operational excellence

Today the system-based, ‘pull’ thinking of Lean has been combined with the statistical rigor and strengths of Six-Sigma into what is known as Lean-Six-Sigma (LSS). Under the banner of Operational Excellence, LSS business process excellence is coupled with change enablers such as technology and information, culture, organization and people, and clear strategy to properly bring it alive and integrate it into day-to-day business practice.

In this way, organizations know:

what’s important to focus on - clear connection to the corporate strategy
what’s broken and needs improving - KPI reports from the management control system
how to address it

by knowing what to deliver via integrated, reliable, pull-based end-to-end management systems
by constant streamlining and improvement of business processes via application of LSS thinking, methodologies and tools
how to make it stick/endure – by explicitly shaping people’s behavior and the organizational culture.

The Operational Excellence approach therefore provides a more cohesive and integrated approach to delivering enduring business change. This is vital given the level of failures involved.

4. The LSS approach – has evolved and endured but not enough!

Over time the methodology and tool-kit has been supplemented and refined, but the original tools and underlying philosophy and intent have largely endured:

think ‘pull’ rather than ‘push’
systematically drive out waste and redundancy from the system
improvement is a never ending task
the whole organization needs to embrace the thinking and approach; and
people doing the job, given the right tools and support, know most about how to make improvements happen, and want to make things better.

However, there are too many instances where organizational implementations are not enduring!

One unintended consequence of the Six Sigma approach needs unpicking, namely that the separate Six Sigma expertise structure can, and sometimes does, undermine the widespread cultural adoption.

4.1 Adopting the LSS culture – patchy and flaky?

Over the past 20 years the introduction of the accreditation-based Six Sigma methodology has driven a dramatic increase in the commoditisation and productisation of the methodology. Every major consulting practice now has a Lean-Six Sigma blue-print, the A, B, C of delivering dramatic business change. Whilst this blue-print serves a valuable purpose, demystifying the change process, there is also a big danger that it implies a complex, multi-dimensional culture and business change strategy (to become lean, etc.), can be rapidly delivered via the blue-print.

What’s more, all too often external consultants start to drive this change, rather than business leaders and staff. This thinking and approach is fundamentally flawed, and is resulting in the poor adoption of these transforming approaches.

Basically, the workforce remains at the passive/active involvement level rather than really taking ownership for ongoing delivery of change. After all, the tools are just the tools. Without the proper transfer of skills, mindset and ownership across all levels of the business, they become just another expensive consulting investment that doesn’t add commensurate or sustained value to the bottom line.

4.2 Is culture change being short-changed?

Given the substantial cultural change that is implicit in the whole approach, where is the toolkit to support this, and how can enduring cultural adoption of these approaches be achieved? It seems there is a glut of ‘technical’ tools, and a dearth of ‘cultural adoption’ tools. For example, how many LSS programs analyze and make the appropriate changes in their organizational structures, responsibilities, performance management systems and broader management processes so that LSS really sticks as a fundamental way of doing business? How often is DILO analysis (day in the life of) used to understand the ‘as-is’ state of people’s roles, create dialogue around the required ‘to-be’ state, and to work through the needed transition? How often is DMAIC maturity measured over the long haul, i.e. demonstrated organizational confidence and competence delivering value with the LSS approach and tools rather than reliance on a super-team of ‘Belts’? Fundamentally, the people side of change is not being robustly managed over either the short or long term.

4.3 Push versus pull of culture change

My guess is that often the cultural change aspect of LSS is also being approached through a fundamentally ‘push’ strategy:

pushing people through training (but then not into direct and continuous application of this knowledge)
push communications with the broader organization, with little opportunity for healthy dialogue about problem solving, cultural expectations, challenges, etc.
pushing Black Belts onto teams (and not expecting supervisors and managers to be able to stand alongside and lead their teams in improving their business).

Clearly some push is required, but in balance with:

pulling people into improvement of the processes they operate
developing their skills through hands-on delivery of change to their processes
facilitating learning and dialogue across the organization about LSS successes and failures
connecting in-the-process practitioners with others they can discuss with and learn from.

Fundamentally, people want to improve the business, they want to fix problems and make a difference. It is a critical leadership role to provide the conditions in which this happens by working with people and all the elements that drive the culture with energy and focus.

4.4 No pull-based system to facilitate culture change

A key problem facing all Operational Excellence programs is that, beyond face-to-face meetings, there is no suitable environment within which teams can collaborate whilst tackling improvement projects. To contribute to your project I need to email, call or meet with you. To find similar projects that will help me better apply the methodology I need to look through an Excel tracking sheet, or maybe find a project summary document in the Knowledge Management system. To find out how things are going overall (what the project funnel looks like, which projects are stuck, delivering great results, etc.) I need to wait for the monthly Excel tracking sheet. Everything is highly manual and fragmented with broader organizational knowledge and expertise remaining largely invisible. LSS programs are not alone.

Provides inter/intranet-based tools within a team workspace structured on the DMAIC phases
Provides the DMAIC lifecycle and tools within the Platform so teams can deliver projects, thus building organizational knowledge with every project
Ensures people can easily find other projects and colleagues with relevant expertise based on how they tackled their projects and applied the tools
Gives leaders visibility so they can actively and intelligently encourage the continued embedding of the approach into the day-to-day way in which work gets done.

Engaging?

“Transforming the business is a key management process that is now an everyday practice. In other words, managing a business now equates to transforming it. For 82% of managers, transforming the organization has become of vital importance in business… with 94% saying that these transformations are an integral part of their daily existence.”

Capgemini Business Transformation Consulting Survey 2009

The ability to implement effective major organizational change is recognised by business leaders as a critical requirement for future success. But major Transformation Programs are necessarily far-reaching and complex in nature. To be successful in delivering significant organizational change, the Transformation Program will often need to span business units, functional areas, geographic regions and time-zones. Additionally, the activities that need to be undertaken across the business are multi-dimensional, covering leadership, resource management, capability development, organizational structure, performance management and employee engagement.

The leadership team, who have identified the business imperative which demands organizational change management, are immediately confronted with the challenge of how to communicate this compelling need to the broader organization in order to effect the transformation. Typically as the “Tops-down” message is broadcast through a dispersed organization, the rationale for change and “call to action” is diluted at the lower levels and outer reaches of the structure, resulting in a reduction in employee engagement and alignment.

To add further to the challenge, due to the multi-dimensional nature of Transformation, the activities required in each of the functional areas or geographies will be different; for example for a transformation effort with the objective of improving profitability, Production may be focussed on cost reduction programs whilst Sales may be introducing customer excellence initiatives to improve growth. The Leadership team is faced with a complex matrix of activities to manage and control in order to effect sustainable organizational change.

So in the light of these challenges, what is the success rate of Transformation Programs? In short, the research doesn’t tell a good story!

In the late 1990’s PROSCI, the market-leading BPR and change management research and consulting organization, published their ADKAR change model, followed in 2004 by their Change Management Maturity model. Their year on year research findings show little movement from the 30% success rate established by Kotter in 1995. McKinsey’s research in 2009 also concluded that this rate was still running below 40%. PROCSI’s latest 2009 research cites the top two reasons for failure as:

The gap between the strategic vision and a successful Program implementation and the lack of a practical change management model and tools to bridge that gap.
The "hidden and built in resistance to change" of organizational cultures and the lack of processes and change management methodologies to address this.

So, latest research underlines the issues described above, namely the lack of employee engagement in the Transformation management process together with the absence of a cohesive, comprehensive system to manage the whole Program complexity. Indeed, these two factors may overlap. Basically, it is easy to see how the lack of an appropriate framework into which to contribute can be a significant inhibitor to facilitating sustained employee participation and the full engagement of the organization in the Transformation process.

Promoting Sustained Organizational Engagement in Transformation

Transformation processes involve many human interactions and so are inherently complex in nature. The “hidden and built in resistance to change" of organizational cultures needs to be minimized to enhance the chance of success. Clearly this resistance will be significantly reduced if the fundamental needs of each participant in the Transformation management process can be met, so increasing engagement.

We have identified the typical participants in a typical Transformation management process as:

CXO (Board level)
Program Manager
Team Member
Individual Employee
Public, External Stakeholder

The chart below shows the key needs for each type:

Public external stakeholder	Employee	Team member	Program Mgr, HR, Director	CXO
Inclusion in the change process	Inclusion in the change process	Single environment for all change activities	Management of multiple, complex activities	Successful execution of strategy
Ability to participate	Understand corporate priorities	On-line tools to support the work	Sustain momentum following launch	Rapid implementation
Suggest improvements	Contribute and participate in key initiatives	Locate, connect and leverage experience of others	Repeatable, standard, transformation methodology	Repeatable, standard, transformation methodology
Involvement in activities	Get own ideas heard	Collaborate virtually without need for travel	Leverage experience across the organization	Visibility through real-time executive dashboard
Offer experience	Be able to make a difference to the business’ success	Knowledge management capability for team output	Real time visibility of progress	Ability to provide focused feedback and support
Understand status and progress	Work on the “right things”	Linkage of team to corporate goals	Real time, consistent measurement of benefits	Ongoing development of the transformation capabilities of the organization
Have a sense of making a difference	Recognition of contributions made	Visibility of status and progress	Flexible reporting capability	Focus whole organization on key initiatives
	Understand status and progress	Recognition of team contribution	Ability to provide focused feedback and support	Maximise productivity through full employee engagement
	Have the right tools to work effectively		Motivate and engage all employees on key initiatives	Recognise and reward success
	Develop own skillsets		Identify star performers	Avoid bureaucratic, high cost, program management

The needs are diverse in nature. For example, the CXO’s overarching need is for the achievement of the strategic goal in a timely manner, and to this end have visibility of progress and the ability to intervene in real-time.

In contrast, an individual employee may view the initiative more in terms of “what does this mean for me” and so may be motivated by feeling included, having their ideas heard, knowing they are working on the “right things” and being recognised for their contribution. Program Managers may feel empowered to enact the change processes under their remit if provided with the right framework and tools to perform the work and the ability to readily garner resources and expertise from the broader organization.

Increasing the Success Rate of Transformation Programs

Until now, there has been no single solution which provides a practical Transformation Management system to enact major organizational change and addresses the needs of each participant in the Program. element8, who have over 20 years experience in helping leadership teams successfully enact change in companies such as Johnson Controls, ST Microelectronics and Royal Bank of Scotland, have recently produced xpoint^TM, a unique Web 2.0 enabled Sharepoint Application that fills this void.

At the heart of this Initiative Collaboration software is the Transformation Lifecycles module. Here Initiative teams can come together and perform their work in a single environment, using a repeatable, structured methodology supported by e-tools and e-coaching capabilities.

Underpinning this are collaboration tools such as chat, forums and expert locator to enable the right people to be found and work together in virtual teams. A document management capability allows work that is completed to be readily stored and retrieved within the platform. In this environment, the efficiency and effectiveness of teams is greatly enhanced and sustained engagement can be achieved as the needs of both Program Managers and Team Members are met.

The performance management module meets the need of the CXO and Program Managers with full, real-time oversight of the status of the Transformation effort, so enabling timely intervention where necessary and the ability to identify and reward successes along the way. The Connectivity module allows updates and alerts to be sent automatically to mobile devices and email. All of this negates the need for a costly Program Office to laboriously gather and collate information which is often out of date by the time it is published.

In summary, xpoint^TM provides a unique solution to the two major factors that cause Transformation Programs to fail – the lack of an organizational change management system and failure to engage each participant group.

How engaged are you teams, and do you need greater engagement to accelerate your Transformation Management Programs?

Transforming?

Transforming?
The ability to implement effective major organisational change is recognised by business leaders as a critical requirement for future success. Yet:

“It’s relatively rare for transformation programs to succeed; many surveys, including our own, put the success rate at less than 40 %”.

McKinsey 2009

In 1995 Kotter published his findings showing transformation success rates at only 30%. He went on to contribute his 8-step change process.

In the late 1990’s PROSCI, the market-leading BPR and change management research and consulting organisation, published their ADKAR change model, followed in 2004 by their Change Management Maturity model. Yet, inline with the Kotter and McKinsey research, PROSCI’s year on year research findings show little movement from the 30% success rate of programmes. PROCSI’s latest 2009 research cites the top two reasons for failure as:

The gap between the strategic vision and a successful programme implementation and the lack of a practical change management model and tools to bridge that gap.
The "hidden and built in resistance to change" of organisational cultures, and the lack of processes and change management methodologies to address this.

PROSCI 2009

What is clear is that whilst significant academic developments and contributions have been made over the past 15 years, transformation programmes really haven’t moved off the bottom of the business capabilities league table!

Why stagnant?

So why is there no improvement when:

Change management methodologies have dramatically improved
Transformation has moved to centre stage
Most companies now have sophisticated programme management offices, allowing structured application of project management techniques and approaches
The amount spent buying in expertise from change consultancies has grown into a hundreds of billion pound market
Enormous research has been done year-on-year understanding performance levels and showing that the reasons behind this (consistently they are: poor sponsorship, methodologies, tools, and engagement of people)?

It is almost as if transformation has hit a ‘glass ceiling’. Something else must clearly be going on when every other business process has improved out of recognition during this same period, including the so-called soft processes such as sales and HR. What is it about Transformation that’s so different and could be behind the continued poor performance of it as a business competence/process? We think three important characteristics make it different:

transformation work is complex
Sustainable transformation requires many pieces of the organisational jigsaw to be adjusted simultaneously – leadership, resources, capabilities, business processes, structure, performance measures and insight, engagement. So a one-size-fits all approach won’t work.
transformation is a highly human process
Transformation work is mainly designed and delivered through face-to-face activity, workshops, meetings, coaching with limited collaboration tools to support it (emails, use of shared drives for programme documents, etc.). These human-to-human interactions are critical to gain the buy-in and engagement that are required. So, how do you scale and accelerate this process?
transformation processes are unique and highly localised
Different types of transformation require different delivery approaches. For example, implementing a technology transformation requires a different programme of activity from trying to build a more innovative culture. In addition transformation typically involves and includes tops-down strategies (T), bottoms-up (B) widespread engagement, and cross-business (X) projects and delivery. So again, a one-size-fits all approach won’t work.

McKinsey’s research and model from the 1980’s (still valid!) highlights what has been a gaping hole in the work and world of transformation. Their 7-S model calls for an integrated and aligned approach to be taken in order to make strategic change happen and stick. Over the years each dimension of the 7-S has been researched, developed and improved; except for systems. For example, the mechanistic, tops down style that was the perceived wisdom has evolved to more inclusive, empowered approaches. Likewise structures are typically flatter, and often matrix in nature, allowing for increased individual responsibility and the complexity of global businesses to be accommodated. Staff and skills dimensions are unrecognisable with talent management processes and employee value propositions, for example, demonstrating a massive shift in businesses’ relationship to staff. Across the 7-S’s much has changed.
But if we look at the systems side of things, almost nothing has changed. Most programmes, to this day, are:

managed via excel spreadsheets or project management tools that rely on manual tracking of component parts of the programme to deliver updates so that:

the performance snapshot is out of date the minute it is issued
professionals spend most of their working day phoning and chasing after people trying to determine progress (never mind gathering insight from the data)

manually cascading and facilitating (or not) the engagement of the wider organisation
delivered within a collaborative environment that is substantially below that which people enjoy at home - project teams work independently of each other, largely they communicate via email, sometimes they work face-to-face, maybe they use a shared drive for project documents.

Overall, the systems being used are 20th century, not 21st, and are sub-standard to what people have access to at home care of Facebook, Slideshare, Skype, Google, et al!
This places massive strain on the work of transformation, it is almost like having an arm tied behind our back:

Engagement at any scale becomes hugely challenging
Embedding TBX change (tops-down, bottoms-up, cross-function) becomes almost impossible to achieve
Keeping informed about progress is heavy duty work, only ever delivering back-ward-looking, infrequent, snap-shots in time.

A way forward – bridging the systems gap

The technology now exists to accommodate these differences and bring transformation approaches and tools into the 21st century - all of it, into one, cohesive environment. The combination of web2.0 technologies with proven and scalable business and performance management technologies is game-changing. For the first time the complexity of processes, humanity and flexibility needed to successfully deliver transformation is available. This technology is available within xpoint™ which:

provides a common environment for all transformation – T-B-X
allows people to explore and align on business strategies and issues – T-B-X
means people can go beyond discussion and ideas, into deployment of actual change, delivering initiatives in a collaborative, open manner so others can help and be helped
automatically delivers real-time information about the state of play – which aspects of the transformation agenda are flying, and which are sinking fast and need life-boats?

xpoint™’s technology is beyond:

facilitating conversations (but it does this and uses it as an important piece of the transformation jig-saw puzzle)
capturing ideas, or being a whizzy sort of ideas box (but it does this and also helps teams to actually take their ideas forward within the system)
social networking (but it uses this to help people find other experts relevant to delivering their initiatives, and build valuable cross-business relationships)
performance management (but it enables this through making people’s initiatives transparent and tangible regarding business impact)
knowledge management (but it applies this to ensure any transformation work or conversations across the organisation can be accessed and SWP - stolen with pride!).

Element8’s xpoint solution goes beyond component solutions to deliver a comprehensive environment and toolkit that is integrated, purposeful and flexible.
Do you need to bridge any transformation gaps?

Innovating?

“Innovation is not the product of logical thought, although the result is tied to logical structure.”

Albert Einstein

Einstein’s observations are interesting in the way in which they combine the need for both the soft and hard dimensions of innovation, the need for:

creative and engaged individuals (soft), and
the form and structure needed for translation of innovation into business value (hard)

This insightful quote resonates with our own experience, capturing the tensions at the heart of innovation i.e. the need to encourage expansive individual thinking, and the need to quickly nail down ideas and translate them into business impact.
Innovation and the translation of this into business value has never been more critical:

the pressure for constant innovation and reinvention
the need to refresh and renew the portfolio of offerings, and
the imperative to increase performance and efficiencies.

Simultaneously the morale, engagement and autonomy of the workforce in many sectors is at an all time low as many live with the daily fear of restructuring and redundancy, and the year on year increase in demands, and relentless pressure.

From an employee’s perspective

It is easy to see common themes emerging across many industry sectors: innovation, employee engagement, productivity improvement, cost reduction and customer experience.
As an employee, I mainly experience these strategies as the latest “flavour of the month initiative” to which I may be invited to contribute. Typically, they have been developed with little or no end-user participation in their design, and are often kicked off with a large fanfare and launch of cascaded workshops and training. These can range from un-interesting, tick-box exercises, to significant and potentially compelling events. However, the imposition of the plans, together with the lack of infrastructure and resource to support their implementation often leads to an air of cynicism amongst the very people required to engage in the process let alone embed the necessary changes into the core delivery processes. [Long gone are the days when facilitators and coaches are around to help me work with a team delivering change]. What’s more, the pressures of day-to-day delivery, and poor measures , mean I’ll most likely stick to focusing on the day job. Add in a little fear, uncertainty and doubt regarding my future employment because some restructuring is round the corner, and I’ll probably just keep my head down.
In this context the barriers to widespread innovation become too high. Most people, despite seeing the need for change, simply won’t bother after the initial enthusiasm from compelling events wears off, and the realities of the day-to-day work environment resume.

Companies whose programs are effective in maintaining or improving the drivers of business performance also pay more attention to tools that support or enable capability building, such as standard operating procedures, IT systems, and target setting and metric tracking.

McKinsey 2010

From the organisation’s perspective

It’s clear the need for, and the rate of innovation and transformation, has never been greater. Yet delivering coherently on this important agenda is challenging.

Building organizational capabilities is a top priority for most companies. Nearly 60% of senior leaders see it as a top-three priority for their companies within the strategic agenda. However, many of them have not yet figured out how to do so effectively.

McKinsey 2010

Yet some companies are able to perform in this context. Tthe Hay Group Insight global study in 2009 is compelling, showing that organisations with widespread employee engagement are capable of ‘delivering 4.5x normal business performance levels’.
This is backed up by research released in 2009 of Pfizer’s experience of managing over 20,000 ideas across more than 200 ‘campaigns’ (strategies/areas of focus) within their organisation. This is also compared with experience from other blue-chip organisations including Bombardier, CSC and Cargill. Robin Spencer and Timothy Woods’ research shows definitive patterns of value creation across the contributing population:

The conclusions to this are very clear:

the top 1% of contributors deliver disproportionately to the tune of 20% of value
but, it is only by achieving widespread engagement in innovation that you access the remaining 80% of potential business value add.

Innovation can take many forms, and it is all these forms that need to be accessed, for example:

process, product, and customer experience innovation
what we are doing, how we are doing it, where we are doing it, who we are doing it with, and for whom.

This touches all aspects of the organisation, so the ‘long tail’ of the organisation can and must contribute. Viable ways must be found to access and sustain everyone’s hearts and minds. Manual, cascade programmes simply don’t work beyond creating an initial enthusiasm from staff (evidence a consistent 70% failure rate of programmes over the part 15 years). Thousands and tens of thousands of people and ideas cannot be encouraged, supported and tracked using business analysts, emails, phone calls, and excel spreadsheets. Very quickly everything grinds to a halt! Scalable approaches are needed to support the level and breadth of activity involved in wide-spread engagement.
Traditional interventions must be supplemented by scalable ways of supporting innovation, so people can engage, embed changes, and know where to act through being well informed about business priorities and the contribution towards this.

Lessons learned

The challenges facing many corporate initiatives can be summarised as follows:

Organisational take up is limited, especially when trying to achieve wide-spread engagement
People and their initiatives have little or no support after the fanfare of the launch
Leadership are unsighted as to innovation/transformation performance – measures are poor and ability to track these is weak
The broader organisation, i.e. the ‘long tail’, represents 80% of the innovation value opportunity, and are rarely involved in any effective way
Leadership do not have a viable way of translating key strategies into transformation programmes that can be effectively executed
In this context, the costs of the ‘manual’ model are too high and don’t deliver a sustainable or scalable way forward.

A way forward - bridging the gap

It is apparent that an approach which can support both the soft and hard aspects of innovation is required, a system that supports the important, but insufficient, manual work (face-to-face leadership, workshops, coaching, etc.).
Element8 have spent three years developing and proving a solution with clients such as STMicroelectronics, Johnson Controls, Barclays Bank and RBS. The xpoint™ platform, empowers successful innovation and transformation programmes. It provides the innovation lifecycles and processes, collaboration tools and associated performance management capability within a cohesive web2.0 environment, so people can work together and take ideas from concept through to business impact.

xpoint™ is unique in how it integrates different and important dimensions. At its heart it allows individuals and teams to deliver initiatives via lifecycles in a collaborative, open and outcome-focused manner. In turn, these lifecycles enable insight into the performance of the transformation programme – which initiatives are flying or sinking, which geographies/departments/etc. are racing ahead or stalling? xpoint™ facilitates concept capture, but it goes well beyond this, accelerating the work of transformation, the translation of initiatives into sustainable business impact. Because of this it provides a real boost to the engagement process, people can not only suggest ideas, but also drive them forward –true validation of their alignment and engagement with the business imperatives.
So, in summary, xpoint™ represents a breakthrough in thinking that:

engages and enables people across the business – their feedback, their ideas, their energy to drive change
provides a common environment for everyone to take initiatives forward and explore business priorities and issues
supports the organisational need for constant and diverse types of innovation and transformation activities
provides much needed live performance insight whilst removing the wasteful overhead of data collation and reporting
aligns and supports strategic, operational and tactical innovation activity breaks down silo P& L mentality.

Do you need to bridge any innovation gaps?

Changing?

Changing?Managing Successful Enduring Change
“this will mean reinventing management processes in ways that broaden the scope of experimentation, depoliticize strategic decision making, and enlarge the gene pool”. Gary Hamel 2009
Business leaders recognize the importance of the need to transform their organizations. However, the process of implementing significant organizational change successfully is difficult, complex and hard to manage. It requires clear communication of the rationale for change to engage the workforce and a method for defining, planning, implementing and tracking the myriad of individual projects required to reach the larger goal.
Whilst daunting in itself, the executives and managers with responsibility for these critical transformation activities also have their existing “day jobs” to perform, keeping their “business as usual” (BAU) processes running within their own functional areas. For example:

The CFO may be tasked with a radical improvement in the profit margin for a global business whilst still ensuring financial accounting, treasury and taxation processes continue unaffected
The HR Director may need to outsource a part of the organization’s operations whilst still supporting performance management, training and development etc
The Sales and Marketing managers may need to identify and break into new markets whilst still maximizing business in the existing fields of interest

To accentuate the challenge still further, the managers will typically find that they lack the necessary “toolkit”, in terms of automated systems or defined processes in order to achieve the engagement and implementation required for successful transformation. As a result, the methods used by organizations to attempt transformation are largely “improvised, informal or ad hoc”. (IBM biennial Global CEO Study 2008 – The Enterprise of the Future).

In order to overcome both this lack of structure and address their own personal “bandwidth”, managers frequently turn to consultants to provide extra resource and expertise in driving the transformation effort and, consequently, a substantial market in has grown in this area. Whilst consultants can undoubtedly help with the set-up of the transformation work, the problem of maintaining the initial impetus and moving it through to successful implementation remains. Often “Program Offices” are constructed in an effort to understand the status of the work underway and measure the benefits achieved. Frequently these structures are characterized by their high cost, manual processes and delays in producing the relevant information, due to the lack of a common fabric linking all transformation activities together.

It is perhaps unsurprising therefore, that despite the vital nature of transformation in the eyes of business leaders, studies have shown that over the past 15 years the failure rate of these programs has remained at around 70% (Kotter 1995, McKinsey Global research 2008).

This relative failure is in direct contrast to the BAU activities operated by the managers. These BAU activities have typically evolved to become well structured and automated through systems such as ERP. This also allows them to be readily measured and managed through typical Quality Maturity techniques. The diagram above depicts the relative maturity of the BAU business processes relative to those used in business transformation.

The immaturity of the transformation processes is in stark contrast to the strategic importance of successful organisational change. To develop a competence in this area, organisations will need to evolve towards the advanced process maturity for transformation that is evident for BAU. This is not to say that BAU techniques, where the system rigidly controls input and output and leaves little latitude for creativity or discussion are suitable for transformation. Transformation, with its inherent complexity and multiple variables, requires a “looser” framework, allowing more room for manoeuvre than the “tight” control exerted by BAU systems.
An enduring transformation framework needs to possess three key attributes:

It should ENGAGE those involved in the transformation activities through:

Enabling communication of the rationale for change and the vision of the desired end-state
Creating an inclusive environment, where individual voices and ideas can be heard, regardless of level within the organisation
Enabling free flow collaboration, allowing cross-functional teams to form, discuss ideas and create plans
Enabling those who make contributions to be identified and recognised
Facilitating regular updates on status and progress made
It should EMBED change so the vision gets translated into the core delivery processes through:
Providing a structured methodology to execute project plans
Supporting teams with tools to progress projects to completion
Providing a collaborative environment to enable virtual teams work efficiently
Leveraging the knowledge of the organisation by connecting teams with relevant expertise
Providing knowledge management capabilities to store and retrieve relevant documents
It should INFORM leadership of progress so it can intervene effectively by providing:
A real-time executive dashboard summarising the transformation activity
Drill down capability to identify where progress has stalled
Quantifiable metrics to show ROI to date and future projections
Customised reporting for different audiences

Until now, there has not been a single software solution available which encompasses each of the ENGAGE, EMBED and INFORM dimensions of organisational change to support hard-pressed managers tasked with transformation initiatives. Xpoint, from Element8 fills this void. The diagram below shows a high level overview of the XPoint platform.

Ideation and Social Networking capabilities ENGAGE the organization by promoting creativity, communication, participation and collaboration.

The Transformation Processes, based on lifecycle methodology, supported by e-tools and e-coaching modules, are at its heart. These EMBED the changes made within the organization and retain the learning made for future reference within the Knowledge Management capability.

The Performance Management suite of real-time dashboards and customizable reports INFORM management of progress made.

In summary, the xpoint™ platform from element8 provides the “missing link” for executives and managers who are struggling to cope with the demands of their BAU responsibilities and the complexity of transformation initiatives by providing a common environment and methodology in which transformation takes place. Through deployment of the system within the organization, the major management challenges of engaging the workforce and the real-time tracking of the overall status and benefits achieved are solved, significantly increasing the speed and likelihood of delivering a successful transformation program.