Strategic Agility

Michael Ginger, head of finance at a multinational packaging company, shook his head as he looked at the corporate strategic plan for 2015. There were fifteen initiatives under way in process improvement, ten designed to turn the business into a world-class provider and five in master data. In addition, there were seventeen other strategic initiatives as well as all the new product development portfolio initiatives jostling for attention. All these initiatives affected the 37 market organizations around the world in one way or another, with lack of coordination being a particular complaint – sometimes up to eight initiatives would hit the markets at once. This in turn meant that the same people were under constant pressure because they were pushed to introduce all these initiatives in accordance with the corporate timeline. This had to stop. Michael looked at an overview of all the initiatives and found that for roughly 10% of them, limited data was available. Many of the other initiatives – some 45% – had no real business case. He also found that the initiatives would use between one and twenty full-time equivalents (FTEs), cost anywhere between €1 million and €20 million and take up to six years to implement. The total estimated initiative costs were around €190 million, with process and information technology (IT) implementations accounting for up to 60% of the costs for the business improvement initiatives. In addition, governance was at best scattered. Most had an initiative owner, a leader and milestones with end dates in place, yet about 30% had no steering group assigned and 25% did not track progress. As a result, the packaging company launched a portfolio management approach for strategic initiatives that would keep the development, launch and management of strategic initiatives separate from the management of the product portfolio. By 2017, Michael had put multi-layered governance in place with clear priorities. In addition, piloting had become a clear part of the implementation phase, as those initiatives, where first experiments and prototypes could be tested, were able to deliver on the financial and strategic benefits.

We keep re-inventing a wheel that is either not practical or flexible to ensure initiatives are managed effectively or efficiently. In order to ensure value generation, there is a need to shift priorities and attention to where it’s needed. This can improve overall initiative success and will save time and money.

As Peter started his role as the sponsor of the digitalization initiative, he was advised to avoid the five deadly sins of an execution leader: 1. Not knowing what you want strategically from the initiative. It is not enough to say, “I’ll recognize it when I see it.” 2. Not being able to make or be passionate about decisions. If you don’t care, why should they? 3. Being continually absent and unavailable to rehearse and learn with the team. So, you’re busy, who isn’t? 4. Assuming that the team can just get on with it on its own. More than 50% of the time it can’t. Are you prepared to play those odds? 5. Encouraging the team and seeing how things progress. You get what you invest.

Werner, a pilot initiative lead, reflected: “You know, it was a hard slog … we were coming from such a bad place from a systems point of view. Yet, from the initiative point of view, I think there was a lot of good buy-in and people thought, ‘Yes, it is a good idea, it makes sense.’ But then for them to get the data and analyze it, a lot of work had to be put into it, and as a result, I think it lost a lot of its flavor because they found, ‘Hey, this is really hard work! Yes, we understand we need to classify customers differently; yes, we want to prioritize differently and things like that, but boy, we would like to be able to press a button and, you know, have it done without all this hard work!’” And, unfortunately, there was a considerable amount of hard work.

William was responsible for introducing “Easy Design,” a single digital online design repository so that all customers, market companies, factories and suppliers could use the design repository in the production of products. Having the design centralized would facilitate faster communications with customers and speed up the time to take a product to market. It would also facilitate the transfer of work between factories, and for customers, it would translate into faster and cheaper products coming to market. The goal was that the tool would become a fundamental cornerstone of the design management system and an operational tool of the business. Since many of the local businesses already had local systems, the central team created a template based on Japan’s system to scale globally. The team initially launched the pilot in Sweden, but people complained that the system was not working. So senior management audited both the customer-driven and systems-driven processes and decided it had to go back to the drawing board. What had gone wrong?

Strategy execution is all about the speed of learning and making the right resource allocation decisions across a portfolio of business efficiency ...

Mark remembers a conversation with his colleague Peter shortly after the pilot to increase customer focus was completed: “I remember what happened to the pilot program that was initially implemented in Holland in 2017 to centralize customer calls. Just like you, the steering committee for that pilot assumed that if anything went seriously wrong, all would be forgiven because a pilot is just an experiment. But when customers started complaining about their calls getting misrouted and lost, it was amazing how quickly the country-market managers in Spain, Germany and France made up their minds that the initiative was a loser. From then on, they did everything they could to undermine it. You know the rest – it went down in flames. An experiment is low stakes. A pilot is high stakes, and people start to imagine what implementation would really look like. We must view a pilot as being like a campaign for obtaining proof. The point is to create widespread commitment to the initiative.” As Karsten, a sponsor of a quality improvement initiative recently said: “Failed diffusion does not mean that the new way of working was adopted by no one. But we had higher anticipation about the ability to get incremental performance improvements due to this initiative, but as market operations simply rejected the implementation of the template, we realized that we had to find other sources of improvements to reach our efficiency targets. The key lesson learned is that we did not prepare sufficiently for the transfer of the template after the pilot and did not introduce a methodology for knowledge transfer.”

Klaus Moeller from Hempel had just been tasked by the board to build a service business. Rather than offering paints to clients of oil and gas installations, marine ship owners or windmill owners, he was developing an offering that would allow revenue generation through long-term contracts with clients by ensuring that their assets were always well maintained. But given the risks and uncertainty this new offer entailed, he started out with only a small group of customers. He wanted to get feedback from these customers to develop a service that would ultimately be a revenue hit for the company. Starting small and learning from the initial steps was the way to go – he essentially piloted the new service offer.