How to avoid the collapsing soufflé and other Supply Chain Challenges
November 21st, 2011 12:20 pm Category: Global Supply Chain, Network Design, Optimization, Risk Management, Scheduling, Supply Chain Agility, Supply Chain Improvement, Supply Chain Planning, Sustainability, by: Jim Piermarini
Change is hard.
In the businesses that I help, change comes for several reasons. It may be thrust upon the business from the outside, a change in the competitive landscape for instance, or a new regulation. It may come from some innovative source within the company, looking for cost savings to increase profitability of productivity, or a new process or product with increased productivity. Change can come from the top down, or from the bottom up. Change can come in a directed way, as part of a larger program, or organically as part of a larger cultural shift. Change can come that makes your work easier, or harder, and may even eliminate a portion (or all) of the job that you were doing. Change can come to increase the bottom line or the top line. But primarily change comes to continue the adaptation of the company to the business environment. Change is the response to the Darwinian selector for businesses. Adapt or decline. Change is necessary. It is clear to me from my experience that businesses need to change to stay relevant.
This may seem trite or trivial, but accepting that change is not only inevitable, but that it is good, is the shift in attitude that separates the best companies (and best employees) from the others.
So, you say, I see the need to change, it is not the change itself that is so difficult, but rather the way that it is inflicted upon us that makes it hard. So, why does it have to be so hard? Good question.
Effective managers know that change is necessary but hard. They are wary of making changes, and rightly so. Most change projects fail. People generally just don’t like it. Netflix is a great example. Recently, Netflix separated their streaming movie service from their DVD rental business. After what I am sure must have been careful planning, they announced the change, and formed Quikster, the DVD rental site, and the response from the customer base was awful. As you likely know, Netflix, faced with the terrible reception from their customer base and stockholders, reversed their decision to separate streaming from DVDs. What was likely planned as a very important change, failed dead. Dead, dead, dead. Change can be risky too.
If change is necessary, but hard and risky… how can you tame this unruly beast?
The secret of change is that it relies on three things: People, Process, and Technology. I name them in the order in which they are important.
People are the most important agents relative to change, since they are the one who decide on the success or failure of the change. People decided that the Netflix change was dead. People decide all the time about whether to adopt change. And people can be capricious and fickle. People are sensitive to the delivery of the change. They peer into the future to try to understand the affect it will have on them, and if they do not like what they see… It is the real people in the organization who have to live with the change, who have to make it work, and learn the new, and unlearn the old. It is likely the very same people who have proudly constructed the current situation that will have to let go of their ‘old’ way of doing things to adopt to the new. Barriers to change exist in many directions in the minds of people. I know this to be true… in making change happen, if you are not sensitive to the people who you are asking to change, and address their fears and concerns, the change will never be accepted. If you do not give them a clear sense of the future state and where they will be in it, and why it is a better place, they will resist the change and have a very high likely hood of stopping the change, either openly, or more likely passively and quietly, and you may never know why the fabulously planned for change project failed.
Process is the next aspect of a change project that matters. A better business process is what drives costs down. Avoiding duplication of efforts, and removing extra steps. Looking at alternatives in a ‘what-if’ manner, in order to make better decisions, these are what make businesses smarter, faster, better. A better business process is like getting a better recipe for the kitchen. Yet, no matter how good a recipe; it still relies on the chef to execute it and the ovens to perform properly. Every business is looking for better business processes, just as every Chef is looking for new recipes. But putting an expert soufflé recipe, where the soufflé riser higher, in the hands of an inexperienced Chef does not always yield a better soufflé. People really do matter more than the process.
Technology is the last aspect of the three that effect change. Better technology enables better processes. A better oven does not make a Chef better. The Chef gets better when they learn to use the new oven in better ways, when they change the way they make the soufflé, since the oven can do it. A better oven does not do it by itself. An oven is just an oven. In the same way, better technology is still just technology. It by itself changes nothing. New processes can be built that use it, and people can be encouraged to use it in the new process. Technology changes are the least difficult to implement, and it is likely due to this fact that they are often fixed upon as the simple answer to what are complex business problems requiring a comprehensive approach to changing the business via it people, process, and technology.
Change is necessary, but hard and risky. Without change businesses will miss opportunities to adapt to the unforgiving business world, and decline. However, change can be tamed if the attitude towards it is changed to be considered a good thing, and is addressed with a focus on people, process and technology, in that order. Done right, you can implement the change that will increase the bottom line and avoid a collapse of your soufflé.