Issue 23, Wednesday 12 July, 2000
Made in New Zealand - twice winners of the America's Cup
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Made in New Zealand - twice winners of the America's Cup
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Award is a free, fortnightly email magazine with the tools, techniques and best-practice models that deliver high performance in the new economy
In this issue
Competitive fitness Forget last quarter – what about tomorrow?
Transformation I - a primer Assess, measure, just keep going Transformation II Tinker and kludge all the way to success
Coaching The buzz. A sampler. The key word? WARM
New member? Here are all the back issues - and here are our web resources - one of the world's best completely free Baldrige Award and organisational excellence web sites. AOL customers (and others who can't access web-page emails) here's the on-line version at our web site. Click here to send us an email.
Competitive fitness
What's the major fault of almost all organisation assessment schemes – Baldrige (and all her cousins) included? They're backward-looking. They have to be – the future can't be measured.
Going forward, what you did last quarter (or last year, or five years ago) is much less important than how fit you are today – what matters is the capability you carry into tomorrow's market place.
INSEAD's professor Jean-Claude Larreche explains it this way: “In a world of intense competition, the modern firm wins or loses its main battles in the market place. Usual business indicators such as financial ratios, market share, innovation indices, or employee turnover depend on information gathered after the battles are over. They arrive late and provide no information on the fundamental forces influencing these results.”
What's the professor's solution? A measurement tool that assesses corporate fitness known as the Market Effectiveness Capabilities Assessment (MECA), based on management inputs, “developed specifically to address some of the key leadership challenges encountered in the creation of sustainable long-term growth in shareholder value.”
The 500 largest firms in North America and the 500 largest in Europe, in certain industries, have been measured annually since 1997, and the MECA methodology is now considered to be “both a solid research instrument and a valuable business tool to help corporations [improve] their fundamental capabilities.”
Employees at all levels rate their organisation on about 150 performance indicators. The responses are then used – with other research – to rate each company according to: mission and vision, customer focus, corporate culture, organization and systems, planning and intelligence, human resources, technical resources, innovation, marketing operations, market strategy, international strategy, and performance.
Baldrigers (and EFQMers, and all the other B-cousins) will spot the parallels. What's notably different is how the information is used. If you've got a copy of the July-August HBR in your corporate library, check page 24 for Regina Fazio Maruca's redrafted computer and electronics industry MECA summary - a radar-like web which strikingly characterise a whole industry - and right alongside, Nokia's organisation-specific equivalent (considerably fitter than industry averages, with strengths in corporate culture, performance and innovation). Check the INSEAD site for more examples, and an excellent summary of the rationale, process, and results of this program. Five stars.
So what's INSEAD?
“In just 40 years, INSEAD has grown from a modest European educational start-up to one of the world's most international business schools, with more than 650 MBAs, 5,500 executives and 40 PhDs from over 75 countries passing through it every year … taught by an internationally recognised faculty of 124 professors from 26 countries. The institute's extensive alumni network is present in 122 countries and represents more than 20,200 MBA and executive alumni,” their web site says. For more on the Competitive Fitness project, including analyses of the survey data, becoming a member of the International Executive Network (IEN), applying the MECA methodology to a specific firm, contact: Ruth Lewis, Project Administrative Coordinator or Professor Jean-Claude Larréché, Alfred H. Heineken Chair of Marketing, INSEAD, 77305 Fontainebleau, FRANCE, Tel: (33) 01 60 72 41 51 Fax: (33) 01 60 74 55 00. Email: compfit@insead.fr . For the full report (ISBN 0273 64470 X) contact Pearson Education Distribution Centre, Slaidburn Crescent, Fylde Road, Southport PR9 9YF, UK. Voice (44) 01704 508 080, Fax (44) 01704 506 685.
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Transformation I – a primer
INSEAD's on-line discussion of the MECA methodology, “the outcome of a seven-year development project involving both an intensive research program and direct experience in helping corporations enhance their capabilities, acquire new ones, or transform themselves,” is a gem of brevity and precision. Here's some high-lites:
Corporate transformations can occur in two ways, the site's anonymous author says. Either by rapid change in the firm's assets, through rationalization, focusing of resources, acquisitions, changes in market share or financial results - fast, 'flying by the seat of your pants' change. Or by re-shaping the firm to deliver sustainable long-term growth in shareholder value - by building fundamental capabilities, most of which are intangible and difficult to measure. Slower, and more like flying in a fog.
INSEAD's experience is that the first is painful, risky, and requires strong leadership; but the second is even more testing – demanding a greater alignment of the vision of top management and shareholders. It takes patience… and it is never finished.
The MECA methodology – designed to “integrate the concerns of the modern corporation, be grounded in the latest management theories, be robust, and allow for inter-company and inter-sector comparisons” – was developed to deal with the second type of transformation. Three key challenges were repeatedly encountered in such situations:
(i) Assessing capabilities, and deciding which get top priority
(ii) Measuring progress. The impact on market share or on financial results is not direct, nor immediate, and it's “disturbing not to have documented evidence that the transformation is on track beyond the confidence of 'having been there before,' a general feeling of improvement, and the informal reading of various signals.”
(iii) Keeping going. Early gains create a natural enthusiasm, and it's relatively easy to keep everyone motivated, but “after a while, there is a risk that this effort will not be sustained and that operations will lapse back to the state they were in prior to the change.”
Transformation II – no gain without pain!?
Not according to Columbia Business School professor Eric Abrahamson (Eric@Abrahamson.net). Same issue of the HBR, page 75.
We all know the mantra, he says: change or perish. True, of course, even if it's a late twentieth century cliché. But what about those organizations that change and perish? Disruptive change can tear you apart.
Wherever he travels, Abrahamson sees the evidence of active resistance to change, and a deep-seated cynicism – Dilbert cartoons festooning office doors, people living by the first law of corporate physics (when the pendulum swings, don't stick your neck out), and greeting each new change program with a BOHICA (bend over, here it comes again) cheer.
So don't do it, Abrahamson says, or at least, don't do it all the time. Have your cake and eat it too. Pace yourself. Try tinkering and kludging, the elements of a process he calls dynamic stability. Not as easy as ramming through a great big hairy audacious goal (and maybe not as much fun), but more likely to leave some survivors standing.
The best change masters in the world are tinkerers, he says. 3M, HP, Dow Chemical. Or take the the change-averse post cold-war helicopter manufacturer which adapted to the new realities by building Barbie Doll choppers – mass-produced basic machines dressed differently for different functions. No great transformation, no new business model, just some creative tinkering.
Kludging is tinkering on steroids. Larger scale, more components, sometimes leading to the creation of new divisions or whole new businesses. GKN, a British industrial conglomerate, solved a manpower problem by renting out underused engineers, found it payed, and turned it into a new business. Kludging can work brilliantly when dot-com-ing old-economy firms – Barnsandnoble.com was cobbled together from spare parts, from inside the firm and outside; little was invented from scratch.
Abrahamson offers four operating guidelines for successful tinkering and kludging:
(1) Noodle with what already exists. Don't be afraid to borrow, imitate, and shamelessly copy. And reward the people who do it successfully.
(2) Make it everyone's job to tinker and kludge, but make someone responsible. Appoint a chief memory officer – with the clout to make herself heard.
(3) Start at home. Dynamic stability is easier to manage with indigenous assets. Eighty percent of the 450 Fortune 500 companies that implemented Japanese-style quality circles on the 70s and 80s quickly abandoned the idea – they'd have been better tinkering with what they already knew. Southwest has kludged its way to become one of the US's largest airlines, and Cisco Systems is a very adept kludger – only acquiring small high-growth companies that fit the culture and live nearby.
(4) Hire people who hang out with rock musicians, plumbers and nuclear physicists. Generalists. Boundary-spanners.
Change is the real oldest profession, Abrahamson (almost) says, but change itself is changing. Chaos, cynicism and burnout are counterproductive. By pacing change, and by stopping from time to time for a cup of tea and some quiet tinkering, companies can achieve change that succeeds.
Transformation III – fire-fighting
Yep. Same issue of the HBR. Page 83. New product introduction (NPI) can be one of the most fraught change processes – whatever the organization produces, but particularly in manufacturing firms, where there are inevitably more problems than people to deal with them, and where chronic fire-fighting can consume enormous, sometimes crippling, resources.
One of the most serious problems facing many managers of complex, change-driven processes, fire-fighting is a curiously under-studied syndrome, says associate professor Roger Bohn of UC San Diego.
Diagnosis
How do you know if it's a problem in your organization? Take the Bohn test – if you answer yes to more than three of these, you're a victim:
(1) There's never enough time to solve all the problems
(2) Solutions are patches – underlying causes are not identified and removed
(3) Problems recur and cascade – old problems continually re-emerge, patching one just causes others to break out
(4) Urgency out-ranks importance – short-termism dominates, and there's no solution-oriented ranking of problems
(5) Problems often escalate – frequently flaring up just before deadlines, and take heroic efforts to quell
(6) Performance suffers – diverting resources to fire-fighting has a measurable impact on the bottom line.
Prevention
Stop fire-fighting before it stops you by adopting a mix of:
(1) Tactical methods – add temporary problem-solvers (call in neighbouring brigades), but only when problems are sporadic, not chronic, when doing so won't risk setting fires elsewhere, and when they know what they're doing. Do as Toyota does - shut down 'the line' until the root cause is found and fixed. Or triage – use a set or priority rules, attack the worst problems first, park lower-order problems that may never be fixed. Shoot the prisoners.
(2) Strategic methods – change design strategies, like introducing modular or common elements across a number of processes, or recycling sub-processes or components that are already bullet-proof. Outsource to component or process specialists. Group problems into classes and find a 'class' solution. Use learning lines – production processes that mimic real-world conditions, where data are gathered, experiments conducted and bugs swatted. Grow more (TQM-capable) problem-solvers – on Toyota's lines, everyone is an engineer
(3) Cultural methods – change behaviours. Don't tolerate patching. Don't push to meet deadlines at all costs – because that institutionalises a fire-fighting mind-set. Measure the number of outstanding issues and work to drive the number down. And don't reward fire-fighting – are your heroes the people who put out the biggest fires? According to Robert Hayes (HBR July-August 1981) “American managers actually enjoy crises; they often get their greatest personal satisfaction … and their biggest rewards from solving crises.”
For Baldrige-winning best-practice, look at Solar Turbines' NPI process in our exhibits resources. Where does this fit in the B-family scheme? Look at category 4 – information and analysis, and category six – process management.
Transformation IV – coaching
And if all else fails … hire a coach. “From start-ups to Fortune 500 companies, coaching has taken the business sector by storm,” says the Marin Coaches Alliance.
Here's the buzz (thanks to the Marin team) - from Investor's Business Daily “Across corporate America, coaching sessions at many companies have become as routine for executives as budget forecasts and quota meetings.”
From Business Magazine “Coaches say they're in the vanguard of an entirely new, and distinctly '90's profession. Part consultant, part motivational speaker, part therapist and part rent-a-friend, coaches work with managers, entrepreneurs and just plain folks, helping them define and achieve their goals - career, personal, or, most often, both.”
From Fortune (So You're a Player. Do You Need a Coach?) "Coaches are everywhere these days. Companies hire them to shore up executives or, in some cases, to ship them out. Division heads hire them as change agents. Workers at all levels of the corporate ladder, fed up with a lack of advice from inside the company, are taking matters into their own hands and enlisting coaches for guidance on how to improve their performance, boost their profits, and make better decisions about everything from personnel to strategy.”
You get the picture. Coaching is … warm. It's certainly warmed us up! We'll be back with more in future issues, but to get you-all started, here's a quick run through our email in-box (and, folks, there's heaps!):
Begin with The Source – the International Coach Federation “... the largest professional association worldwide of personal and business coaches.”
If you're based in Australasia, look at Results Life Coaching a team/trust with international ambitions, who say “Life coaching is part of the personal development and training industry which is now worth over $100 billion a year worldwide [and] as a stand-alone profession has come into its own in the last few years. The Sydney Morning Herald in February 1999 said that personal coaching in the US was the 2nd fastest growth industry, after IT. There were only a handful of coaches in the US 5 years ago; this year they expect to have around 2,000 - 3,000 coaches there. At the beginning of 1998 there were half a dozen coaches in Australia. By the end of 2000 we expect there will be 500 coaches in Australia, of which around 40% will be working under [our] umbrella. We expect there will be 1,000 life coaches in Australia within 5 years.”
Go visit Colle Davis at Executive Coaching who says “Coaching helps [executives] make specific changes in their style, approach, and attitude based on their desired outcomes. Coaching is often for relatively short periods, although it can be longer, depending on the needs of the executive.
“Mentoring is the process of helping a protégé, not under your jurisdiction, learn about your company's culture, procedures and political requirements needed to advance their career and your's. A mentoring relationship is often measured in years or decades”.
“On our website at we have several free processes that many people have found very helpful in reducing stress and becoming focus,” Colle says, and “Our book Forever: Two Years at a Time will be available in about six weeks. It is about how to stay married by creating a handcrafted document for leading a life together as a couple.”
Look at nationally-syndicated Jennifer White's work – starting with WORK LESS, MAKE MORE IN ACTION, a weekly e-zine "for the Work Less, Make More Community. Hosted by The Work Less, Make More Group”
There's Phillip Hay, who's soon-to-be-released newsletter - NEWSCAPS - is directed to organizations and individuals interested in issues, events, programs and services related to the field of coaching.
Susan Carlisle emailed to say “Coaching is GREAT. I'm so fortunate to have found … such a satisfying and fulfilling career. I suggest you contact Amazon.com and order Co-active Coaching by Laura Whitworth, Henry Kimsey-House and Phil Sandal and check out their web site at www.thecoaches.com. It is the paradigm that I have found to be most effective for the people in leadership positions I am coaching.”
Gene Glatter
And that's a tiny sample. We'll be back with more on this subject.
Interested in hiring a coach?
Give us a call. We'd love to talk to you about it!
Next issue of this e-zine 25/26 July. Reader contributions warmly received!
Copyright © 2000, Macpherson Publishing
All rights reserved. But if you found this newsletter useful we strongly encourage you to email it intact to a business associate, friend or acquaintance. Award and EDGE FIRST are trademarks of Macpherson Publishing. Contact us at macalex1@xtra.co.nz; visit our web site at www.baldrigeplus.com
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