Focused Management - Essential Capability for Suceeding in Today's Business Environment
Click here to load reader
-
Upload
shridhar-lolla -
Category
Business
-
view
1.631 -
download
0
Transcript of Focused Management - Essential Capability for Suceeding in Today's Business Environment
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
Focused Management
Essential Soft Capability for Delivering Hard Results
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
3 Forces Blocking Growth*…Often they come together
Complexity
Uncertainty
Ambiguity
Too many things to handle
Unknown Probability of Occurrence
Multiple viable options
*Ref: Management Attention by Rami, 2011
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
3
Manifestation of 3 Forces…They come in different forms
• Growing Complexity : – More resources, Larger Infrastructure, Larger portfolio of products and
projects, More Locations, More and Diversified Customers, Fierce Competition, Excessive Management Attention and Time, Increasing Costs, Delayed ROI, Fire Fighting as a Norm
• Unrelenting Uncertainty : – Increasingly Uncertain Forecasting, Fluctuating Demand, Changing
Plans, Shifting Priorities, High Employee Attrition, Large and Uncertain Resource Bench, Delayed Fulfillments, Choosy Customers
• Increasing Conflicts:– In Resource Allocation, in Funds Management, in Finding Optimum
Solution, Between management and staff, Between functions, Between two right choices
28-04-2014
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
Real Undesired Effect Management Attention is Constantly Challenged
Focus on
Revenue
Focus on
Profitability
Work on New Products
Work on Commercial Orders
Increase Deliveries
Improve Quality
Reduce Expenses
Protect Jobs
Increase Stocks
Reduce Cost
Approve
CAPEX
Manage with
OPEX
Accept Scope Changes
Protect dates & BudgetAdopt New
System
Manage with Current Way
In order to meet growing expectations in the new environment Managers need NEW capabilities!!!
Focus on Growth
Focus on Stability
Focus on Now
Focus on Future
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
Traditional Way of Management…Devastating Results
Complexity
Uncertainty
Ambiguity
Divide into Parts & Improve Every Part
Impose Certainty on Uncertainty
Compromise
Exhaustion, Chaos, Firefighting
Gross Errors and Enormous Waste
Status Quo and Resistance to Change
Traditional Way ResultsForces
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
6
New Capability for New SituationFocused Management
• When there is so much complexity and chaos all around, Focusing on right things is the right strategy.
• Focused Management*: The Revenue focused approach that gave astonishing results despite uncertain environment– In IBM, Micro Soft, TATA, Mazda, P&G, BP, Godrej, Ericsson, L&T,
Infosys, ABB, Mahindra and Mahindra, Dr. Reddy’s etc.– Based on the insight that an organization is like a chain whose
strength is decided by the weakest link. • That is, in order to dramatically improve performance, an organization
must focus on the weakest link than trying to improve each and every part.
28-04-2014* Also called TOC, Theory of Constraints or Constraint Management
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
Focused ApproachDramatic + Quick + Cost Effective Results
Complexity
Uncertainty
Ambiguity
Focus on Core Problem
Provide Strategic Slackness
Resolve Conflict
Dramatic Improvement while being cost effective
Growth with Stability
Business Innovation
Focused Approach ResultsForces
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
8
Focused ManagementAlso called Theory of Constraints, TOC
• Employed for solving management problems of today’s environment and quickly improve business results by an order of magnitude, for example,– Dramatic improvement in throughput (capacity) without costly
investment– Shorter lead times without increasing operating expenses– Radical improvement in productivity without creating chaos– Consistent fulfillment of SLAs cost effectively– Optimum resource management at Enterprise Level
• Provides direct impact of people’s effort on business results and thus makes people central to organization’s strategy
28-04-2014
Without causing costly trade-offs and burn-outs of traditional management approaches!
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
9
Applying Focused Management Example 1: Business Operations
• Challenge: – Ever Improving Throughput (Capacity) while improving Productivity– Shrinking Response (lead) time– Meeting SLAs consistently– Too many things to be improved too fast
• Core Problem– Over whelming size and scope of activities
• Current Approach– Improve each and every process (The Whole is equal to sum of parts)
• New Approach: – Management by constraint (Strength of the chain is no stronger than the Weakest Link)
• Typical Results: – Dramatic improvement in capacity, compliance to SLAs and shorter response time ,
while achieving higher productivity by 30-70% in a very short time
28-04-2014
Business Process, Delivery Management, Production, Development Centers
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
10
Focus on Constraint , NOT on Everything
Traditional Approach New ApproachImprove each and every part of the System Focus on just few Constraints that
limit the capacity of the System
A Chain is no stronger than its
Weakest Link28-04-2014
A
B C DThe Whole is
equal to Sum of Parts
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
11
Applying Focused Management Example 2: Project Management
• Challenges: – Managing Multiple Projects– Achieving consistently high On time Delivery without compromising on scope and cost– Improving Productivity of project management function
• Core Problem:– Projects belong to probabilistic domain but are managed deterministically
• Current Approach:– Buffer Estimation at each Task– Monitor and Review Project at each task
• New Approach: – Aggregate Variability and incorporate people behavior in project planning and execution
• Typical Results: – Complete most of the projects in time and with higher productivity (more projects per year).– On Time Performance >95%– Lead time reduction 15-50%– Project Management Productivity 10-50%
28-04-2014
Product Development, NPI, Engineering, R&D, Construction, Projects
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
12
Buffer the Project, NOT TasksCritical Path
TOC uses Aggregated Project Buffer and uses only this buffer to monitor and control project
Task Task Task Task Project Buffer
Each Task of Critical Path has significant buffer and each task is monitored and controlled
Traditional Approach
New Approach
Lead Time Reduction Even
at Planning Stage
28-04-2014
Improved project reliability during
Execution
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
13
Applying Focused Management Example 3: Supply Chain
• Challenge: – Supply of right quantity of right product at right place at minimum cost
• Core Problem– Stock-out and Overstock occur at same time– Demand uncertainty
• Current Approach– Forecasting– High reliability of supply can only be achieved with higher inventory
• New Approach: – Demand Driven Synchronized Supply Chain
• Typical Results: – High On Time Delivery at lower inventory and operating expenses
28-04-2014
Supply Chain, Management, Distribution, Logistics Management
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
14
Synchronize, NOT Forecast
Traditional Approach New ApproachLong term Forecast and fire fighting Synchronize supply to actual demand
A demand driven synchronized supply chain provides exceptional delivery
service at lower cost and enhanced agility
28-04-2014
Based on the belief that for excellent delivery service high inventory and
operating expense is necessary.
Plant/WH
1 2 4 5
A 1 3 4
B 3 4 5
C 1 3 4
D 5 3 4
E 7 3 2
Forecast
Plant/WH
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
15
Applying Focused Management Example 4: Enterprise-wide Resource Allocation
• Challenge: – Managing Resource as per demand– Often Resources required now are not available while those not required now are
aplenty, leading to loss of revenues on one hand and blocked investment on the other hand
• Core Problem:– Sub optimal and low responsive resource management system
• Current Approach– Current Practice of Hire to Deal, Hire to Forecast and Supply Demand Matching
• New Approach: – Benefit of Aggregation; and Management by Size and Time Buffer
• Typical Results: – High availability of resources together with overall thinner bench strength – Reduction Lead time by 20-40%– Improvement in on time availability of resources by 20-30%– Reduction in bench strength by 5-15%,
28-04-2014
Large Consulting, BPO, IT and Service Organizations , Outsourcing centers
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
16
Hire to Buffer, NOT to Forecast
Practice
DepartmentSkill Groups
Project
Process
Project
Process
Traditional Approach New Approach High Availability and Thinner Bench!
Long term Forecasting + Disaggregate recruitment and allocation of resources28-04-2014
Closer to Demand + Benefit of Aggregation based recruitment and allocation of resources
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
17
Real Benefits.. Overall Impact
Apr.02.2013
Lead Times
70%
Cycle Times
65%
InventoryLevels 49%
44%On-Time Delivery,Availability
63%73%
Revenue,Throughput
CombinedFinancial
Source: The World of Theory of Constraints, Vicky Mabin & Steven Balderstone
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
18
Summary
• No matter which function you belong to and however, complex business environment becomes, building your team’s capability in focused management will dramatically improve impact of its effort on business results.
• In fact, no function is a cost center; rather every function has a role in dramatically improving business results!!!
• Quick and Dramatic improvement in business results is possible on an ongoing basis without incurring costly trade-offs and burn-outs!!!
28-04-2014
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
19
Workshop on Focused ManagementDramatically Improving Impact of management effort on Business Results
without incurring costly trade-offs and Burn-outs
- Understanding Complexity- Accepting Inherent Simplicity- Theory of Constraints- Case Studies- Internalizing Concepts of TOC-The Process of Ongoing Improvement
For Level-1 team of your organization / function
Content
Attendee
• Equip Managers with New Capability• Learn How TOC is helping
organizations in Dramatically improving their performance
• Relate and Identify Applicability of TOC concepts in your Organization
• Get Started with Proof of Concept
Take Away
Fast paced, Interactive Workshop with management games, discussions, videos and presentations.
Format
28-04-2014
Copy
right
s © 2
014
Shr
idha
r Lol
la, A
ll Ri
ghts
Res
erve
d
20
By: Shridhar Lolla
Shridhar is a practitioner of Organizational Effectiveness and handholds management teams in dramatically improving impact of their effort on business results. He holds a PhD degree from IIT Delhi. Early in his career Shridhar worked with ABB, Sify, KEC and Tecumseh in R&D, Manufacturing and Service functions. His last assignment was with ABB as a member of the management committee and as the Head of Application and Solutions Group at its global R&D Center in Bangalore. Shridhar has authored two contemporary books on Theory of Constraints, TOC. He lives in Bangalore and is reachable at [email protected] and +91 9448 07008128-04-2014