Blended toolkit – Why fluidity and a customized approach are best for process excellence

Craig Sharp

Financial services regulation is tighter than ever, increasingly, regional laws and regulations are putting global businesses under pressure to adapt quickly in order to comply. Some businesses attempt to take a ‘one size’ fits all approach, they try to please many masters and in the process risk pleasing no one.

Ahead of Operational Excellence in Financial Services Europe next month, PEX Network spoke to Derek Miers, Principle Consultant at Forrester Research about how a more personalized, blended approach to the process excellence toolbox is the only way to succeed…

Craig Sharp: Why would a financial services company want to take the ‘blended tools’ route as opposed to just adopting six sigma or lean for example?

Derek Miers: Any one size fits all approach just doesn’t work, period – what worked for company A won’t necessarily work for company B.

You know, every organization has its own history and experience, its own culture, and things that worked and things that didn’t.

In one organization I was working with, ‘agility’ was considered the wrong approach, and you think, hold on, why? It turns out that a past CIO spear headed an agile project, but in reality what happened was he tied the business into a very stilted, very constrained way of doing business – using highly structured ERP environment, – and it failed and was thrown out. Now branding your change program as building an agile organization is the kiss of death in that firm. I use that example not to badmouth the vendor, but to make the point that all firms are different with different politics and histories.

The reality is that you have to almost construct your own clinical trial. You’ve got to choose the methods, look at them, think about what works, what doesn’t and why.

At the heart of all these operational excellence type discussions is the notion of process, if you had to describe your personal job with a set of rigorous procedures that is followed every time, on a scale of one to ten where would you rank those rigorous procedures in terms of how helpful they are to you, I guarantee you it’s a one or a two, right?

Craig Sharp: On the odd occasion, yes.

Derek Miers: Right, and in my case too, and anybody else’s in a managerial position. Yet we continue to follow the stupid idea that we can stick to our rigid procedures and succeed in any given situation.

If you’re going to be a heavy hitter you’ve got to be able to dance like Cassius Clay – you need some fluidity and room to maneuver. There is a strong element of process in the blended toolkit, but if you think about procedure, which is where we tend to lock ourselves down - you know, the rule book says I must do this - what happens is very often you find they can cause as many problems as they can provide solutions – you need to be able to move, and quickly.

Craig Sharp: We’ve established that agility is important. You cannot stay boxed in. Sooner or later, you’re going to encounter issues that are only exacerbated by rigid procedure. So, if you’ve reached the decision that you need something a bit more customized, something more blended and free-form, how can a person go about identifying what each tool has to offer and whether it’s right for their business and their requirements?

Derek Miers: Well, I think first of all you have to accept that a fool with a tool is still a fool. Actually it comes about by working out what the problem is that you’re trying to solve.

For most organizations that means engaging the people in their business - that’s the primary problem they have to solve - getting them to reinvent themselves going forward. That means you really need to engage people, you need to get them to see differently and think differently. Standing at the front of the room and telling them what to think will have zero chance of changing anybody’s behavior. Yes - they’ll all nod appropriately. In the end, you need them to take an active role; an active lead in their own change.

Now, coming back to your question, how can they identify what tools to use and why to use them, you really have to encourage people to figure out what tools they want and what tools will work for them. If they don’t do it themselves you’re imposing them on them.

But go back to my analogy of a clinical trial earlier on, you regularly need to test and review the tools at your disposal. The stuff in your kitbag you’re using today, how often do you review how well that kitbag is really working for you? Review after each project? At each critical juncture or phase in the project? Or after engagement with the stakeholders?

Let’s say, for argument’s sake, you’ve got a center of expertise or excellence – a CoE - a group that is trying to help drive transformation in the organization, that group is the owner or the steward of your operational toolbox. They should be testing and probing and thinking about what tools are needed and why. They need to be able to be empowered to think differently and to challenge their business colleagues differently. That means their charter has to be appropriate to that objective too.

Ultimately, the choice of tools and the way in which you, as an organization focus down on one or another set of tools, tends to be driven in a sort of top down fashion; but that CoE team needs the ability to look critically at the business from the outside, rather than taking the current organizational structure as a given.

If your staff don’t feel empowered to think and respond critically they’ll blindly but reluctantly follow – often to the detriment of your business. And so you need to have ways of thinking about the firm in terms of its purpose and the way in which it delivers value without getting rooted in the current mechanisms for apportioning blame.

If you’re going to have a way of thinking about the firm that’s independent of the organizational structure then you also need to be able to think about how the needs of customers are served - what capabilities are required?

Craig Sharp: So we’ve established that we need a blended toolbox and that we need a team to approach this from an outside-in perspective. Who should we be looking to for this mammoth task? Should they even be an internal team or should we be looking externally?

Derek Miers: You’re almost certainly going to need other voices, another view. I mean, I’m a methods geek, and there are hundreds and hundreds of methods. Whether or not we’re talking about the six hats of de Bono, role activity diagramming, IDEF or Six Sigma and Lean, you need a way of thinking about the firm from the outside in. Let me put it this way - do you care how your bank is organized as a customer? Of course not, you only care about the experience you receive in the service you consume and that they don’t lose your money. On the other hand, the inside-out view of the firm is all about efficiency and risk reduction and so on.

Given the move to a customer-centric, age of the customer approach that we at Forrester pursue vehemently, you need a way of integrating that outside-in view of the world. A way that’s linked to your organizational maturity too. You know, if your level of maturity is low, your chance of project failure is much higher, but if you’ve got basic governance around the way in which you create change programs and projects, then your chances of project success goes through the roof. We found in our joint survey with IQPC that 84% of organizations that have fundamental governance around the way in which they create projects and programs either achieve the benefits they expected or over-achieve the benefits they expected - 84%! That’s a massive contrast to the 70% failure rate anecdotally discussed based on Koter’s HBR article of the mid 90s.

Craig Sharp: Talking about maturity, OPEX teams, as you know, are flourishing; they’re becoming more and more influential within companies. Where should they sit within the organizational structure? Should they be spread throughout the organization, should they be representatives from various different levels of the organization, and as we’re talking blended tools, should they specialize in everything, generalize, as it were, or should they…?

Derek Miers: The answer is – I am sorry - it depends. It belongs everywhere – as a responsibility, as part of the way in which a business needs to get rigor and discipline about how it does things. Where do you start if you’re early on? Well, you probably need to have some sort of center of expertise that’s going to ‘teach people to fish’ – to get the staff engaged, not in better processes, but in delivering more value for their customers. Show them how engagement is really useful, and at the same time, show them how to identify those people who want to improve on that value proposition, because otherwise they’ll be wasting their time.

As that grows, it becomes a more distributed thing where the expertise is rolled out into the Lines of Business. That then also changes the role of the center; those folks become more responsible for the core methods and frameworks, while the regions or LOB teams take they lead in driving individual changes. The central CoE provides the framework for implementing improvements, tracks the benefits and builds business cases.