By Mick Holly
You probably went through an exhausting process carefully crafting your 2018 annual operating plan.
The question is how confident are you that the performance improvement goals you have built into it will turn into a reality?
If you are like most of the 700 clients we have worked with last 20 years, you will have a gap between strategic aspiration and day-to-day execution.
Here is the funny thing. In those 700 instances we identified a phenomenon:
When business complexity and human endeavor meet, the same patterns of human behavior always manifest themselves.
We see common patterns. When strategic goals get translated and passed down the organization, by the time they get to the execution level they have been distorted, confused and compromised.
Maybe that’s your salespeople out in the field. Maybe that’s your back office business processing organization, or maybe it’s your manufacturing floor or your distribution chain. We find that there is much more chaos in that environment. If you’ve ever done Physics 101, and I’m sure that you have, one of the factors is entropy, and that is the tendency towards disorder.
When you’ve got a very complex environment, it will start to perturb. It will start to deviate and chaos will reign. The more the butterfly beats its wings in one area, the more the hurricane manifests in the other area which is at the point of execution.
It doesn’t take much of a butterfly effect to dramatically change the performance of an organization.
For example, I was in a factory the other day that was supplying parts to the aircraft industry, and they enjoyed a 10% uplift in demand. That factory had been making a set number of units like clockwork every month and were doing a very, very good job of it. Making good profits. Their customer was happy. Quality was where it needed to be.
Recently demand increased and production was ratcheted up by 10%.
The new orders came in with slightly different variations, and production started to get a little bit more erratic. The process no longer flowed. A lot of inventory was held back, and it really caused chaos.
They hired 30% more production people to cope with a 10% increase in demand, and were still unable to bring a level of control into that environment.
Why? Because the link between the plan and shop floor execution was tenuously connected by tribal knowledge. Workers who had been there for 20, 30, 40 years followed known but unspoken protocols. Yes, of course they had standard operating procedures, but with very, very highly experienced workers building the same kind of output every day, they didn’t always look at those SOPs.
A common perturbation in effective behavior often occurs at the first line supervisory level. It is both the mechanism for excellence and the last line of defense.
When disorder sets in the amount of active supervision plummets. In the aircraft factory it fell to less than 18%. The rest of the time they were chasing parts, chasing tools. People aren’t at their station. They are not fulfilling the vital role of understanding cause and effect, ferreting out those problems and eradicating root causes.
This is not a critique of this talented group—it is the place where the chaos is most easily seen.
I’ll often walk into an environment, and they’ll have some kind of operating system. There’ll be a beautiful pyramid chart as you walk in listing the levels and huddles for communication and performance management. The reality is always different.
This is another big area of behavioral dysfunction. The Management Operating System has clear annual goals, usually well translated into quarterly metrics.
There is a plethora of reports (after action, monthly variances).
There is little in daily and hourly performance. When the butterfly flaps its wings there is little to temper the hurricane and behaviors are dictated by the tyranny of the urgent.
Organizational entropy, the tendency towards disorder is manifest in all organizations.
It’s not anything new. We’ve seen it over the last 20 years of SBTI in 700 companies.
It exists in your environment, and we can probably help your people drive improvement more robustly with great rigor. It won’t require you to invest money in capital. It won’t require you to invest money in a new ERP or technology fix. It will be an investment in your people so that they can perform at a higher level, and we can build what I call a legion of difference makers.
SBTI is all about delivering results, a return on the investment, building organizational capability, building and developing leaders and skills in your organization.
You can find out more about our approach by downloading a paper, Closing the Execution Gap, which will bring this subject into more detail.
If you have any questions, you can contact me, Mick Holly at SBTI. My telephone number is 704-904-0994, or you can email me at firstname.lastname@example.org.