Business decompression for business progression. By Lloyd Snowden
Organisations are under more pressure than ever before to deliver growth and increased margins. However, despite an established recognition that planning for the future is the key to survive – let alone thrive – in these tough times, many organisations are eternally trapped in the short-term, imprisoned by excessive fire-fighting, a lack of decision-making and an inability to appropriately delegate responsibilities. These ‘compressed’ organisations [see figure 1] are integrated functionally with resources focused wholly on the short-term and any long-term or future planning largely ignored.
Short-term = short-sightedness
The problem is that in many organisations, the reality of the way people behave compromises the effective operation of the business, within the context of three horizons; strategic planning, business planning and execution. Compressed organisations tend to neglect the business and strategic planning horizons in favour of focusing and resolving problems in the short term. Realistically, there is little that can be done to significantly improve the long-term when the focus is in the short-term, as there is limited attention given to keeping day-to-day activities aligned with the business strategy, or on steering the strategic direction of the organisation. Both are critical to successfully seek out future opportunities or threats.
How do I know if I’ve got it?
If compression is the issue, what are the symptoms? Fire-fighting, blame, poor data, bad information, a lack of decision-making, to name just a few! In short, a perpetual spiral of activity that you never seem to be able to get out of, because you’re always just focused on that short-term.
Lack of trust
Often, compression is a result of a pervading lack of trust. If the CEO doesn’t trust senior management with business planning and in turn, the senior management team doesn’t trust the middle management supposed to be managing the execution, there will be an inevitable collapse into the short-term.
Naturally, trust is mutual; the workforce needs to trust the middle management team and CEO as much as the CEO and middle management team trust their workforce. Without this mutual trust, not only is there an internal disconnect, but a serious risk of demotivating the workforce which potentially will prevent them from fulfilling their potential, as well as dissuading them from taking ownership and responsibility.
However, mistrust may not necessarily be directed at the people and their skills per se; the root cause may be in the quality of the data they are working with. This possibility has to be isolated in the first instance, so that competence can be fairly judged. Data is the basis for information, information leads to knowledge and knowledge enables good decision-making. If accuracy of data isn’t maintained through ownership and control processes, people will not trust the data or information they are working with, and will instead go in search of ‘the truth’ themselves.
The wrong people in the wrong jobs
Part of decompression is also to match people with the right roles. In some cases, this will require external recruitment, but not necessarily; positions can be filled internally through structured education and aligning roles and responsibilities to the requirements of the business, and this is the place to start. For example, Oliver Wight worked with one pumps and turbine manufacturer who, as part of its IBP process, created a number of new roles such as Demand Planner and Supply Chain Manager. Not only were they recruited from within the business, but both employees were originally in administrative roles – proof that change generates opportunities for existing staff who are truly engaged and invested in decompression.
How do I get rid of it?
Before you can move forward, you need to pinpoint exactly where you are in terms of maturity and what is causing the compression through an independent external assessment, such as an Oliver Wight diagnostic. The assessment considers the nuances of the issues causing compression and measures the effectiveness of processes and performance, before making recommendations for the business, alongside a road map for improvement.
Crucially, organisations must plan to have the right capability rather than a ‘quick-fix’ capability, and to decide what to address first. For some, this will be implementing a programme of Planning & Control first to fix the short-term, as well as long-term processes, because if the short-term is not functional, organisations will compress to deal with the short-term problems. Some will prioritise IBP, because that forces people out of the short-term and into managing the future, so when the future moves into the short term, appropriate decisions have already been made.
Training & education
Knowledge empowers people to motivate change, which is why it’s crucial to educate employees from the outset. It is important to educate people as teams and help the team apply that specific knowledge to the company as shared knowledge creates greater benefit in the organisation overall. Companies with a body of knowledge offer individuals a broader view of what needs to happen and where they fit in, and are more successful than those where people just have understanding of the specific role they are performing. This is because the roles become less people-dependent and more process dependent. A people-dependent organisation usually means that processes are broken and results in a business dependent on a particular person or people. If they move on, the body of knowledge – unfortunately – moves with them.
Decompression = progression
As decompression improves, the leadership team will be able to empower more levels of the organisation as trust in data, processes and people improves. This will change the ‘eyes-down-look-in’ approach to eyes-up-look-out, allowing the CEO and leadership team to focus on strategic and business planning, which is absolutely fundamental to every world-class organisation. Done well, strategic planning brings shared ownership of the business direction, and its challenges and opportunities, right across the organisation. It also provides increased knowledge and shared understanding throughout in the entire business, supporting empowerment and the required decision-making capability to create an environment for continuous improvement.
Lloyd Snowden is a Partner at Oliver Wight EAME, and this article was based on his white paper, ‘Unshackling your organisation through business decompression’ which is available for free download at www.oliverwight-eame.com.
At Oliver Wight, we believe sustainable business improvement can only be delivered by your own people; so, unlike other consultancy firms, we transfer our knowledge to you. Pioneers of Sales and Operations Planning and originators of the fundamentals behind supply chain planning, Oliver Wight professionals are the acknowledged industry thought leaders for Integrated Business Planning (IBP). With a track record of more than 50 years of helping some of the world’s best-known organisations, Oliver Wight will help you define your company’s vision for the future and deliver performance and financial results that last.