Archives March 2019

Address Process and Culture First to Ensure Digital Transformation Success

Digital transformation is a topic that affects every company.   4aBetterBusiness believes that addressing the process and cultural issues in a company is an essential pre-requisite to success with Digital Transformation.  This is the story of how 4aBetterBusiness used those beliefs and our proven implementation approach to help a company to achieve both business and digital transformation, with take-aways you can use in your business.

4aBetterBusiness was engaged by the company when integration of two operations, as part of an acquisition, had reduced on-time delivery performance to 50%.  It was clear from a brief initial assessment that resolving the poor delivery performance would involve every area of the company.   

We believe that employees are the world’s experts at knowing what they actually do every day – their local systems – and we started by building immediate, enthusiastic buy-in to change with management and employees. 

We also believe that 90% of the issues in a company are embedded in how those local systems work and work together.  We combined the buy-in to change with developing an in-depth understanding and documentation of the end-to-end processes and interconnections among every area of the entire company.  As this development proceeded, we enlisted input and ideas from all the employees as part of developing solutions.  This not only increased the buy-in to change, but also developed enthusiastic participation and contribution to change, and employee ownership of the results.  The process-based actions took hold and process-based thinking developed as a result at every level of the company.

The process and cultural changes that were developed, including in-depth end-to-end process knowledge, buy-in to change and process-based thinking, created the ability to achieve rapid and sustainable change.  On-time delivery performance improved, even though all the operational data for production and inventory was still paper-based. 

The opportunity for digital transformation presented itself when the CFO determined that a full physical inventory was required – to be done within 3 weeks.  I called one of our technology partners and presented the challenge:  design, develop and implement a complete digital system for production and warehousing –  within 3 weeks.  The technology partner immediately accepted the challenge. We combined the end-to-end process knowledge 4aBetterBusiness had with technology partner’s technical expertise, and designed the system over a weekend.  Our partner bought all the equipment and built the database and communication system.

Based on the processes we had already determined, 4aBetterBusiness worked hands-on with the employees to establish an effective warehouse layout and to mark all the locations. 4aBetterbusiness also coordinated with outside vendors to ensure wireless capability suitable for mobile operations (and different than wi-fi for an office) was in place and to produce and install all the overhead signage. 4aBetterBusiness also worked with employees to design the actual physical inventory process, and carried out hands-on training of all the employees to transition from use of a paper-based system to use of scanning and electronic records.

Over a weekend, three weeks from the inception of the project, the full physical inventory was completed, and all of the production and inventory operations were converted from paper-based to electronic records, with a system in place that ensured accurate updates. 

In the second phase, relying again on the deep process knowledge and buy-in to change already established, all the electronic data was fully integrated with the company’s MRP system.  Process changes developed with the employees and another technical partner ensured clean capture of all the data into the database.  Despite the complexity of this operational and technical change, the changes were completed and the company was fully operational on the new system within 4 hours of cutover to the new system.

Neither of these digital initiatives would have been possible to complete without first addressing the process and cultural issues in the company. 

Outcomes with the company included achieving and sustaining 99%+ on-time delivery performance, while reducing inventory by 22% and eliminating the need for annual physical inventory.

What are the take-aways from this experience you can use for your business?

  • Recognize that employees are the world’s experts at knowing what they do every day
  • Engage employees immediately to develop buy-in to change
  • Develop process-based thinking and action from top to bottom in your company
  • Develop deep knowledge of end-to-end processes, including customer journeys

Use these elements as part of an integrated approach to develop the capability for rapid, sustainable change.  Address the process and cultural issues first, and you can use digital transformation success to ensure you outpace and outperform your competition.

Tough Challenge Met Yields Transformational Insights

My name is Paul Vragel, Founder and President of 4aBetterBusiness.  This is a story of an experience I had very early in my career (age 23) that was foundational in developing the beliefs that support 4aBetterBusiness’ Transformational Results through People+Process approach and our Custom, Accelerated Buy-In, Process and Execution Transformationsm  for already-busy executives and organizations.

My initial education and experience is in Naval Architecture and Marine Engineering – that is, ship design and construction. Building a ship involves building a hotel, a restaurant, a huge warehouse and a power plant, putting them all together, putting a propeller on it and sending it out on the ocean where there are no service stations. 

Ship design and construction is essentially a demanding, large-scale systems engineering project.  

I graduated from Webb Institute of Naval Architecture (http://www.webb.edu/about-webb-institute/) (there were 19 graduates in my class), and worked at Newport News Shipbuilding.  Working with construction of nuclear submarines and aircraft carriers, I led successful implementation of an analog-to-digital conversion for a major production facility – their first-ever analog-to-digital conversion.  After a year, 2 prior graduates of Webb Institute, working for Amoco Corporation, hired me, at the age of 22, to manage ship construction programs in Spain.  A couple weeks after I was hired, I was on a plane to Spain with my instruction set being, essentially, “figure out what you’re supposed to do, and do that.”

After a year, one of the earlier ships built in the series came in to Lisbon for its guarantee drydocking and inspection.  When we opened one of the crankshaft bearings of the 30,000 hp main diesel engine, we saw the bearing material, which was supposed to be in the bearing, was lying on the crankshaft journal, in pieces.  This is bad by any stretch of the imagination.  And the fun had just begun.

The ship was built by a company controlled by the Spanish Government.  They were the holder of the guarantee.  The engine was built by a different company, also controlled by the Spanish Government.  Amoco had a contract with the shipyard, not the engine builder.  And the engine was built under license from a company in Denmark.

I was there as an observer for the new construction department.  The ship was under the control of the operations department.  I had no authority and no staff reporting to me.  I’m a very good systems engineer but I had no technical knowledge of poured metal bearings in high-powered diesel engines, I didn’t speak Portuguese or Spanish, I was 23 years old, and the instruction from my boss was very simple: “Fix It!”  To add to the urgency of the ship being out of service, the shipyard in Lisbon, where the ship was located, was charging $30,000/day (about $250,000 in today’s dollars), just for being there.

I went to the engine builder in Spain and asked the management the first logical question:  What’s the plan?  Their response was, “we don’t think we have a problem – we think the Danes have a problem.  They designed the engine, we just built it according to their instructions.”  I quickly concluded that, if I moved heaven and earth to get the Danes down to Spain, all that would happen is finger pointing back and forth – at $30,000/day.  I didn’t think this was a productive approach.

So looking at my options, what did I have? Nothing, except that I was there.  So I decided the only thing to do was to go into the plant and talk to the people who made the bearings.  One problem – they only spoke Spanish, and I only spoke English. But there are lots of ways to communicate if you really want to.  I observed what they were doing, pointed, asked a lot of questions – they learned a little English, I learned a little Spanish – and we sketched out how the bearings were made.

After a couple days, I pretty much figured out what was the cause of the problem – and I had the good sense to shut up, on a couple theories.  One, while our communication had become pretty good, I was sure that there were other parts of the process they knew about (they did this every day) that we hadn’t touched on that might be part of the problem or solution.  If I just told them what I thought, everything would stop there without awareness of those elements and we wouldn’t get an effective solution. But if I could work with them through the process so they saw the issues, the employees would bring those additional elements to the table, we would have a full understanding of the system, the employees would be part of the solution, and employees would have ownership in the results.

And that’s exactly what happened.  With a little more effort we found and fixed the causes of the problem (which was causing porosity in the bearing). 

So I looked back to review what had happened.

I had no authority, no technical expertise, no staff, I was 23 years old, I didn’t speak Portuguese or Spanish, and in a few days, working cross language and cross culture in an overseas plant I had never seen in a technology in which I had no experience, we together achieved a solution that permanently raised their manufacturing capability – that they owned.

Pretty powerful stuff.  As I mentioned at the outset, this was a key formative experience that led to the beliefs on which 4aBetter Business was founded:

  • We believe that employees are the world’s experts at knowing what they actually do every day – their local systems
  • We believe that 90% of the issues in a company are embedded in the way these local systems work and work together

Using those beliefs I developed our Transformational Results through People+Process approach and our Custom, Accelerated Buy-In, Process and Execution Transformationsm  for already-busy executives and organizations.