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Newsletter April 2009
Greetings!
 
I just finished reading a business best-seller by Chan Kim and Renée Mauborgne, management professors at INSEAD business school outside of Paris.   Blue Ocean Strategy summarizes and "validates" the management principles that we apply with our clients.   It is a rare study on strategy that departs from quantitative analysis to focus on the all-important role of people in defining and implementing successful strategic initiatives.

At a time when organizations are struggling to decide what to do next and individuals are demoralized by the well-publicized greed and unfairness that brought on the current crisis, it is good to remind oneself that an approach which fosters creativity and individual initiative has proven track records.

Two concepts stand out in Blue Ocean Strategy: Value Innovation and Fair Process.  They aptly demonstrate the need to integrate business and human processes in what we, at Business Advisors Network, call Holistic Business.
In This Issue
Value Innovation
Fair Process
Change "on a dime"
Value Innovation 
Blue OceanThroughout Blue Ocean Strategy are examples of companies that created success in industries where business fundamentals appeared to be inescapably dismal: Southwest Airlines, Cirque du Soleil, and Dell Computer.
 
These companies stepped outside of the boundaries that defined their industries until then, to create a new offering combining a better value for the customer and a lower cost structure.
 
How can a company follow such a path of value innovation?  From their research, Chan and Mauborgne conclude that such a breakthrough cannot be attained by analyzing the numbers.  Looking at the past puts the focus on existing market conditions, locks strategic thinking on what competitors are doing rather than what clients may want.  Worse it prevents creative thinking.
 
In short, innovation is not about repeating what worked in the past; it is about how we look at the world and changing the way individuals do things to create a new reality.  As the authors appropriately state, it is about beliefs and actions. 
Fair Process
Count me in!
For Chan and Mauborgne, true value innovation strategy means people in an organization must be proactive participants in change.  They pinpoint and emphasize why it is so important that every one: 1) contribute their thinking to the strategy definition; and 2) understand how and why the final strategy is chosen.  This is what they call Fair Process.

Write the authors, "People's minds and hearts must align with the new strategy so that at the level of the individual, people embrace it of their own accord and willingly go beyond compulsory execution to voluntary cooperation in carrying it out."

As consultants we often experience resistance from management to putting in place just such an open process.   Objections include "it would take too long" and "most people don't have the knowledge, skills, or experience to understand the issues."  The fundamental unspoken fear is that management will lose control of the decision.

Yet when change is involved, the cost of not engaging in an open process is high.  Numerous are the examples of organizations of all sorts that failed to implement a well-designed change strategy because of distrust, resistance or even sabotage.

Today people have increased access to information and greater individual aspirations, at least in Western societies.  No wonder, Fair Process, once considered an enviable best practice, must now be seen as standard and necessary in all organizations.
In these days of institutional breakdown and mistrust, we need open management practices to find new solutions quickly. Group processes are more likely to uncover the new perspectives needed to move forward.  Furthermore open group processes naturally create the alignment that frees individual initiative and smoothes counterproductive friction from an organization's system.

Read more about Holistic Business on our website.
 
Sincerely,
 
 
Alain Bolea
 
 
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Can you turn your management team around "on a dime"?

Well, maybe not instantly, but what about within a week?  It's not just possible; it's being done.
 
In this business climate, leaders who feel overwhelmed by the need to change operations must first shift their perspective on what they can achieve.  Rapid team turn-around, we're finding, comes about quicker when managers find solutions together than when they receive direction from their leader.
 
We experienced this recently with a large, international logistics company.  One of their critical field offices had proven unable to adjust to a major change in contract terms and consistently failed to meet their customer delivery expectations.
 
After more than a year of unsuccessful attempts to restructure operations, the discouraged management team agreed to a one-week re-engineering effort.  To their surprise (but not ours) it worked.  Why?  There were three key elements:
 
1. First, shift the mood: The team initially had to shake off the 'numbness' of relentless negativity and pressure to perform.  Focusing on failure and blame was keeping managers from tapping into truly different, creative approaches only possible when everyone believes they can and must handle their own fate.
 
2. Declare the old model 'broken': The team then had to acknowledge that, without any remaining doubt, no amount of tinkering with the current operations would achieve the required performance.  Why? Because existing processes were geared first to serve internal control rather than customers needs. 
 
3. Use proven tools: First, the technical managers had limited knowledge and practice with known, practical 'change' methods such as work process analysis.   A rigorous use of this substantially reduced the time required to develop a customer-oriented operation. Second, we created an open forum for them to share ideas and create solutions for managing capacity, building on each other's input.
 
Completing the re-design took the management team about 20 hours over the course of a five-day work week.  Not only did staff buy into the new approach, their major customers quickly recognized the new delivery system could work and agreed to give the company more time to adopt the new system.
 
In addressing team change efforts, the temptation is almost always to jump immediately into an analytical thought process that feels tangible and objective.  However, when the emotional layer associated with change is not addressed, people continue to run their old stories ("We've never done it that way!") and fail to make the deep new commitments that are absolutely essential. Soon old patterns repeat themselves; the team achieves very little progress and continues to fall short of its target performance. 
 
For change to succeed, teams must experience all three steps: 1) change the perspective, 2) acknowledge the same reality and 3) build the new solution in all of its details.  Most importantly, they must engage as a group to build cohesion around the new plan and its implementation.

 
Scott Brumburgh