ExpoGestão 2018 Palestra Peter Walker

www.rnggc.comCopyright © 2018 R&G Global Consultants
Continuous Improvement
Business Process
or
Wish List ?
Peter Walker
Managing Partner
R&G Global Consultants
ExpoGestão 2018

Copyright © 2018 R&G Global Consultants 2
Business Planning
ControlYour Own Destiny
….. before someone does it for you!
Strategic Planning
Longer term (3-5 year) view of the business and the markets.
Principally intended for business activities requiring a significant
amount of capital, resource allocation, preparation or focus.
Execution Planning
Detailed activities required to meet the financial targets of the
current year business plan.Typically finalized 1-2 months prior to the
start of the financial year.

Execution Planning
Operating
Margin $
LastYear - Actual ThisYear - Plan
100
110

Execution Planning
Typical Financial ‘Walk’
Operating
Margin $ LastYear - Actual ThisYear - Plan
100
110
Price
Volume
Product Mix
Productivity

Operational Levers
Organizational Beliefs
1. Price is controlled by the market – little to no control
2. Additional volume is always possible… at a lower price
3. Product Mix is all market driven
4. We’ve already taken all the excess cost out
How Do We Make the Business Plan a Reality?

Operational Levers
Points to Remember
1. This is a ‘Tops-Down” plan
2. Price &Volume include all identified commercial opportunities
3. Product Mix is based on historical data ( & new products)
4. Productivity is a ‘plug’ (the number required to make the financial plan)
Let’s Just Allocate the Productivity Across All Functions!

Operational Levers
Points to Remember
1. This is a ‘Tops-Down” plan
2. Price &Volume include all identified commercial opportunities
3. Product Mix is based on historical data ( & new products)
4. Productivity is a ‘plug’ (the number required to make the financial plan)
Let’s Just Allocate the Productivity Across All Functions!
Sound Familiar?

Functional or Process?
Functional Approach
1. Little investigation – immediate action lists
2. Functional focus – could hurt the business (cost versus reliability)
3. Targets infrastructure & service costs
4. Add-on activities – competes with other priorities
5. Cost reduction is the goal – process performance is a consequence
6. Difficult to sustain in the long term (motivation)
Process Approach
1. Needs (much) more planning
2. Identify opportunities by business process
3. Requires cross-functional teams
4. More likely to address root causes through data analysis
5. Process improvement is the goal – cost reduction is a consequence
6. Much more sustainable through process management.

Cost Productivity
Example : Manufacturing Business Process

Cost Productivity
Cost KPI : Manufacturing Business Process

Cost Productivity
Does Process Drive Costs?
Daily
Output

Cost Productivity
This is a Low Risk Strategy !
Continuous (Process) Improvement
…… is the ONLY form of sustainable cost productivity
What do you need to implement ?
1. Data driven decision making
2. Effective methodology toolkits
3. Change Management tools
4. Institutionalized learning
5. Dedicated project leaders (future functional managers)
6. Informed, engaged & passionate leaders
Where ?
1. All business processes

Cost Productivity
This is a Critical Success Factor!
…… is the ONLY form of sustainable cost productivity
Implementation Requirements
1. Data driven decision making
2. Effective methodology toolkits
3. Change Management tools
4. Institutionalized learning
5. Dedicated project leaders (future functional managers)
6. Informed, engaged & passionate leaders

Change Leaders
Let’s Look at Some Examples
Informed, engaged & passionate leaders
Managers who meet this requirement have 3 essential characteristics:
1. They consider making the company better & more profitable to be more
important than their own functional goals.
2. They are dissatisfied with the status quo
3. They invite their direct reports to challenge their (leaders’) paradigms

Change Leaders
1. Making the Company Better
Aircraft Engine Servicing
You Can Only Measure Me On What I Control

Change Leaders
WhyWould I MeasureWhat The Customer Measures ?

Change Leaders
You Get WhatYou Measure ! You DeserveWhatYouTolerate !

Change Leaders
2. Dissatisfied with the Status Quo
Production Output – Line 1
(Extracted from monthly reporting)

Change Leaders
Manager Statements:
1. Plant is operating at max capacity (5,712)
2. Output is very reliable (Q4 – 2015 due to lower demand)
3. Request for Capital to increase Capacity to 8,000 already submitted.
4. Additional Capacity estimated to be available Q3 - 2017

Change Leaders

Change Leaders
Weeks with output close to 8000
Weeks with output @ or below 4000

Change Leaders
Data based analysis:
Taking exactly the same data as that used for the monthly graph, we have
constructed a weekly overview. Significantly more variation indicating :
1. Line capacity is actually close to 8000
2. Several unreliable weeks with output well below demand

Change Leaders

Change Leaders
Raw Data
This is the raw data used to create the monthly graph. 436 days of output from
Line 1.The level of variation is substantial and days with zero production have been
excluded.
1. Maximum daily output : 10,900
2. Average : 5,712

Change Leaders
Same Data ……… Different Reality
Which Shows BetterWhat Our Customers Feel?
Which Reflects Better Employee Stress?
Which Shows Better the Improvement Opportunities?

Change Leaders
Same Data ……… Different Reality
WhyThen DoYou Send the Left Graph toYour Boss ?
Answer : It’s easier to manage the graph than fix the process !

Change Leaders
3. Challenge My Paradigms
What about Paradigms that are NOT true ?
• Paradigms are beliefs. Noble certainties.
• They dictate the way we look at life.They determine our solutions to
problems.They represent the limits within which we have to operate.
• Paradigms are real.They are (usually) not validated with data because they
are self-evident and long standing.
• The majority of paradigms are by and large true.

I expected this to be
important
I did NOT expect this
to be important
Data indicated
that this
is important
Data indicated
that this is NOT
important
I knew this already
– it’s important
CONFIRMATION DOUBT
IRRITATIONDENIAL
Reaction:
Actions:
Opportunity to accelerate
– concentrate resources on this
Make sure the team all agrees
– Communicate this
Waste of time
– Check no-one’s working on this
Make sure the team all agrees
– Communicate this
Reaction:
Actions:
This needs more attention
– Re-allocate resources
Understand why this is important
– Learn and institutionalize
Reaction:
Actions:
Reaction:
Actions:
Resources allocated ineffectively
– Change work methods/focus
This can lead to negative energy
– Communicate to the team
My Belief Structure
I just can’t believe that
– something’s wrong
Now that is surprising
– are you sure?
This is hardly a surprise
– it’s irrelevant

Change Leaders
Rail Car Terminal in the port ofVancouver, Canada unloading grain

Change Leaders
The belief of the terminal manager was that the vast majority of low output days
were caused by the railroad not delivering full grain cars on time.
The issue was not internal and not within his span of control. He believed there
was no way he could increase the volume of unloaded grain per day (10,500)

Change Leaders

Change Leaders
About 25% of the output
variation is due to OOC

Change Leaders
One conclusion that can be drawn from this analysis is that there are some significant
operational issues (other then OOC) that need to be addressed in order to effect a
substantial increase in unloading capacity.

Change Leaders
This is the Problem
Future Leaders Need a Different DNA
Managers who meet this requirement have 3 essential characteristics:
1. They consider making the company better & more profitable to
be more important than their own functional goals.
2. They are dissatisfied with the status quo
3. They invite their direct reports to challenge their (leaders’)
paradigms
30%
15%
5%
100%

Change Leaders

ExpoGestão 2018 Palestra Peter Walker

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ExpoGestão 2018 Palestra Peter Walker