constructing high performing organisations - building blocks, structures, and culture

CONSTRUCTING HIGH-PERFORMING ORGANISATIONS: Building Blocks, Structures, And Culture Case Study, Concepts and Debatable Ideas

Kenny OngCNI Holdings Berhad

www.myCNI.com.my www.OOBEY.com

http://www.mycni.com.my/

http://www.oobey.com/

Workforce Psychology

“Cow don’t drink water cannot

push cow head down”

Workforce Psychology

Behavior

Influence

Decision Making

Direct

Communication

In-Direct

Environment

Summary: Today’s presentation

1. Business Model

2. Building Blocks




1. Get the right Business Model first




• How to fail without trying

1. Wrong Business Model




The Roadmap to Failure

Fred Wiersema and Mike TreacyP

erf

orm

ance

Time

Clear Sailing

Today’s performance

Ad-hoc Tactics

Denial & Defense

Doom Projections

Overdue Failure

The Moment of Truth

X

Performance Freefall

Tomorrow’s actual

performance

Downpresure of Unclear Strategy




Denial and Defense

• “It’s not really good value our competitor is offering, because it doesn’t include a lot of our features.” - ABC vs Air Asia

• “It’s good value but not in our preferred customer market.” - ABC vs Toyota

• “Sure they’re hurting us, but with their unfair advantage, what can we do?” – ABC vs MILO

• “The rules we are playing by have always worked before” – AMEX vs VISA






erf

orm

ance

Time

Clear Sailing


Ad-hoc Tactics

Denial & Defense

Doom Projections

Overdue Failure

The Moment of Truth

X


Tomorrow’s actual

performance





Ad Hoc Tactics• Selectively hold discounts to hold business that has

started to go elsewhere• Introduce new promotions, terms, conditions, and offers to

confuse and cloud the market• Beef up customer service by adding people to fix mess-

ups and quicken delayed shipments• Delay capital investments and adjust accounting methods

to portray quarterly financial results more favorably• Introduce “new and improved” products that are new in

form, but not in substantive ways that are of consequence to purchasers

• Introduce Balanced Scorecards and Performance Management Systems






erf

orm

ance

Time

Clear Sailing


Ad-hoc Tactics

Denial & Defense

Doom Projections

Overdue Failure

The Moment of Truth

X


Tomorrow’s actual

performance





“What is the moral of the story?”




What is the Business Model?

USP

Market Discipline

Profit Model




Intro: Market Discipline

• Mamak stall





"They are the most innovative"

"Constantly renewing and creative"

"Always on the leading edge"

"A great deal!"

Excellent/attractive price

Minimal acquisition cost and hassle

Lowest overall cost of ownership

"A no-hassles firm"

Convenience and speed

Reliable product and service

"Exactly what I need"

Customized products

Personalized communications

"They're very responsive"

Preferential service and flexibility

Recommends what I need

"I'm very loyal to them"

Helps us to be a success

Product Leadership

OperationalExcellence

CustomerIntimacy




Operational Excellence(low cost producer)

Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995

Product Leadership(best product)

Customer Intimacy(best total solution)

Strategy: Disciplines





* Treacy & Wiersema, The Discipline of Market Leaders, 1995

Product/Service Attributes Relationship Image






Product/Service Attributes

Price

Quality

Time

Selection

√

√

Smart Shopper

Relationship Image

Operational Excellence: Quality and selection in key categories with unbeatable prices







√

Brand

Time

Function

√

√

Best Product

Relationship Image

Product Leadership: Unique products and services that push the standards







√

√

√

√

Service Trusted Brand

Relationship Image

Customer Intimacy: Personal service tailored to produce results for customer and build long-term relationships

Relations




Summary: Today’s presentation

1. Business Model

2. Building Blocks

Done




2. Strategies, Structures, Culture




Dangers of Best Practice and Benchmarking…

“Abraham Wald’s Work on Aircraft Survivability”, M. Mangel and F.J. Samaniego

Where would you focus reinforcement?




http://images.google.com/imgres?imgurl=http://quest.arc.nasa.gov/aero/wright/teachers/wfomanual/science/glider4.gif&imgrefurl=http://quest.arc.nasa.gov/aero/wright/teachers/wfomanual/science/glider.html&h=180&w=110&sz=1&hl=en&start=15&um=1&tbnid=qZFTpDS3yrAFMM:&tbnh=101&tbnw=62&prev=/images%3Fq%3Dplane%2Boutline%26ndsp%3D18%26um%3D1%26hl%3Den%26rls%3Dcom.microsoft:en-us%26sa%3DN



Company Performance

high

low

‘Best Practice’ theories

low high

zero Performance

Trend line

“Selection Bias and the Perils of Benchmarking”, Jerker Denrell, Harvard Business Review 2005



How about Competencies?


Success

high

low

‘Superior’ Competencies

low high

zero Performance

Trend line




Dangers of ‘Superior’ Competencies…


Success

high

low

‘Superior’ Competencies

low high

zero Performance

Trend line





Selection Bias:

1. Success Traits = Failure Traits

2. Successful Cases + Failure Cases

3. Worst effects in ‘Old’ industries

4. Overvalue ‘best practice’ theories

5. Current accomplishments unfairly magnified by past achievements

6. Reverse Causal





Also known as ‘Beware of Consultants’:

1. Selection Bias

2. Big vs. Small company

3. Selective success stories

4. Correlation vs. Causal

5. Survey problems

6. Practical vs. Glamour-to-have

7. Leaders who benchmark




Financial

“To satisfy our stakeholders, what Financial objectives must we accomplish?”

Internal Process

“To satisfy our customers, in which internal business processes must we excel?"

Customer

“Who are our target customers?

What is our value proposition?”

Learning & Growth

“What capabilities and tools do our employees require to help them execute our strategy?

Focus: Corporate Alignment




Revenue Growth

Base Retention

Share Gain Positioning Adjacent Market

New Business

Operational Excellence

Product Leadership

Customer Intimacy

Competencies Information Systems

Motivation, empowerment,

alignment

Financial

Learning & Growth

Internal Process

Customers

Investment Strategy

Productivity Market Value

Linking BSC to Strategy




Financial

Learning & Growth

Internal Process

Customers / Distributors

Revenue Growth

ProductivityMarket Value

Department Operations

Supplier & Alliances

External Involvement

Target Markets

Products/ Services

Channel Strategies

Human Resources

Technology

Information & IntelligenceSystems &

Processes

Focus: Corporate Alignment




Alignment: 4-Wheels Model

Culture

Business

ModelStrategic Planning

StructurePerson

Leadership

Resources




Alignment: Framework

• Focus point• Alignment• Quality• Innovation & Differentiation• Risk taking• Performance Management• Corporate obsession• Decision making

Culture




Alignment: Framework

• Org Structure• Job Design• C&B• Policies & procedures• Decision making• Job fit• Management Systems• BSC and KPIs• Decentralized & Empower

Structure




Strategy: Framework

• Role modeling• Vision/Mission/Philosophy• Leadership Style• Delegation & Empowerment• C&B, Promotions• Sense of Urgency• Speak regularly about Performance

Leadership




Strategy: Framework

• Recognition• Recruitment• Training• Profit sharing• Values• Motivation• Self Efficacy• Awareness• Useful Competencies• Career aspirations• Attribution (control)

Person




Strategy: Framework

Enablers• Technology• Equipment• Materials• Human• Intellectual

Property• Partners• Property

Resources

Funding • CAPEX• OPEX




Alignment: 4-Wheels Model

Culture

Business

ModelStrategic Planning

StructurePerson

Leadership

Resources




The New Rules of Market Competition

• Rule 1–Provide the best offering in the marketplace by excelling in ONE specific dimension of value






Market Disciplines




•Rule 2–Maintain ‘market standards’ on the other two disciplines of value



•Rule 3–Dominate your market by improving value year after year



•Rule 4–Build a well-tuned operating model dedicated to delivering unmatched value


Each Value Discipline Requires Different Emphasis


• Production, Logistics, Finance

• Order fulfillment, Resource stewardship

• Transactions, costs, time

• Costs, quality, speed

• Trends (past), Transactions Employee tools/tasks


• Production, Logistics, Finance

• Order fulfillment, Resource stewardship

• Transactions, costs, time

• Costs, quality, speed

• Trends (past), Transactions Employee tools/tasks

CustomerIntimacy

• Marketing Sales, Service

• Market mgmt, Customer satisfaction

• Customers, analysis, linkages

• Satisfaction, cust. success, share, anecdotes

• Today, Relation-ships, Employee empowerment

CustomerIntimacy

• Marketing Sales, Service

• Market mgmt, Customer satisfaction

• Customers, analysis, linkages

• Satisfaction, cust. success, share, anecdotes

• Today, Relation-ships, Employee empowerment

Product Leadership• R&D, Legal

(Licenses), Engineering

• Product development, Concept-to- Customer

• Linkages, insight, comm, groupware

• Ideas-thru- funnel, patents, etc.

• Tomorrow, Product Portfolio, Ideas and Risks

Product Leadership• R&D, Legal

(Licenses), Engineering

• Product development, Concept-to- Customer

• Linkages, insight, comm, groupware

• Ideas-thru- funnel, patents, etc.

• Tomorrow, Product Portfolio, Ideas and Risks

Functional emphasis

Process Emphasis

Information emphasis

Key metrics

Key concerns




Customer Intimacy

Customer Intimacy

Product Leadership

Product Leadership

Organization, jobs,skills

Management systems

Information and systems

Culture, values,norms

Each Discipline Requires Different Priorities & Resources





•Central authority, low level of empowerment•High skills at the core of the organization

•Disciplined Teamwork•Process, product- driven•Conformance, 'one size fits all' mindset

• Integrated, low cost transaction systems•The system is the process

•Command and control•Quality management


•Central authority, low level of empowerment•High skills at the core of the organization

•Disciplined Teamwork•Process, product- driven•Conformance, 'one size fits all' mindset

• Integrated, low cost transaction systems•The system is the process

•Command and control•Quality management

Organization, jobs, skills

Management systems








Management systems



Product Leadership

•Ad hoc, organic and cellular•High skills abound in loose-knit structures

•Concept, future-driven•Experimentation and 'out of the box' mindset

•Person-to-person communications systems•Technologies enabling cooperation

•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability

Product Leadership

•Ad hoc, organic and cellular•High skills abound in loose-knit structures

•Concept, future-driven•Experimentation and 'out of the box' mindset

•Person-to-person communications systems•Technologies enabling cooperation

•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability






Management systems



Customer Intimacy

•Empowerment close to point of customer contact•High skills in the field and front-line

•Customer-driven•Variation and 'have it your way' mindset

•Strong customer databases, linking internal and external information

•Strong analytical tools

•Customer equity measures like life time value•Satisfaction and share management•Focus on ‘Share of Wallet’

Customer Intimacy

•Empowerment close to point of customer contact•High skills in the field and front-line

•Customer-driven•Variation and 'have it your way' mindset

•Strong customer databases, linking internal and external information

•Strong analytical tools

•Customer equity measures like life time value•Satisfaction and share management•Focus on ‘Share of Wallet’





Core Processes for Each Discipline


1. Product Delivery and basic service cycle

2. Built on standard, no frills fixed assets


1. Product Delivery and basic service cycle

2. Built on standard, no frills fixed assets

Customer Intimacy

Client acquisition and development

1. Solution Development

2. Flexible and responsive work procedures

Customer Intimacy

Client acquisition and development

1. Solution Development

2. Flexible and responsive work procedures

Product Leadership

1. Invention, commercialization

2. Market exploitation

3. Disjoint work procedures

Product Leadership

1. Invention, commercialization

2. Market exploitation

3. Disjoint work procedures


Sample KPIs for Each Discipline


• Price• Selection• Convenience• Zero Defects• Growth


• Price• Selection• Convenience• Zero Defects• Growth

Customer Intimacy

• Customer Knowledge

• Solutions Offered• Penetration• Customer Data• Customer-

success focus

Customer Intimacy

• Customer Knowledge

• Solutions Offered• Penetration• Customer Data• Customer-

success focus

Product Leadership

• Marketing• Functionality• # of Successes• # of Failures• Learn from key

users• Interdisciplinary

teams• Pipeline

Product Leadership

• Marketing• Functionality• # of Successes• # of Failures• Learn from key

users• Interdisciplinary

teams• Pipeline


• Operational Excellence• Move know-how from top performing

units to others• Benchmark against best in class• Ensure operations training for all

employees• Use disciplines like TQM for continuous

learning to reduce costs and improve quality

Strategy: Value Disciplines



• Customer Intimacy• Capture knowledge about customers• Understand customer needs• Empower front line employees• Ensure that everyone knows the

customer• Make company knowledge available to

customers


• Product Leadership• Reduce time to market• Commercialize new products fast• Ensure that ideas flow• Reuse what other parts of the company

have already learned• Ensure there are multiple sources of

funding



The Final Lever: PAY

• Pay for Service

• Pay for Job

• Pay for Performance

• Pay for Competency




What’s the Difference?

• Increment

• Bonus

• Promotion




Employee Distinction

Group I

(Talent Pool)

Group II

( Potential)

Group III

( Performance)

Group IV

(Counseling)

2 3 4 5

23

45

PE

RF

OR

MA

NC

E

POTENTIAL• Identify




Curse of the Bell Curve

‘A’ Staff

‘B’ Staff

‘D’ Staff

‘E’ Staff

‘C’ Staff




http://upload.wikimedia.org/wikipedia/commons/8/8c/Standard_deviation_diagram.svg

Reminder…

• Great Wall of China– humans are the weakest link– bad treatment of staff will lead to weak link i.e.

easier to bribe, easier to con, etc; – bad treatment examples: insulting, lose face,

broken promises, no dignity, public criticism, restructure without communication


Other thoughts…

1. Big matters/Small Matters

2. Differentiate of Die

3. Define “Talent”

4. No “Jerk” rule

5. Flat Structure?

6. The Jerk Boss

7. All aspects

8. Hire Strict


Thank You.

soft copy of slides: www.totallyunrelatedrandomanddebatable.

blogspot.com

constructing high performing organisations - building blocks, structures, and culture

Business

mike treacy performance

performance management

failure fred wiersema

right business model

wrong business model

abc vs milo

todays presentation

market beef