“ I ” … in the union ... (Part 1)

7:00 PM … I walk out of the meeting with the trade union leader to the parking lot. No… I don’t want to drive … I walked down to the nearby bench to sit … painted brown now over years of dent its turned pale with some names scratched on the wood. The laptop bag slides from my shoulder, a cigarette butt lies next to my foot, still emitting a trace of smoke… the walk way perpendicular to my eyes never becomes salient coupled with the buzz of voices … people.. cars… nothing stops, everything around me is as usual but for few laborers fighting for their right. There is a hurricane of emotions I’m going thru as I watch a 52 year old right in front of me with eyelids dropping on his creased red face as he stirs his cup of coffee… all my excitement this morning to crack a union issue is drained into a war within unable to decide to take up this role further or go back to my manager and inform her what we are doing is wrong… and I don’t know if we really are wrong… the Union has its demands and the company has the policies… alas… the tragedy when two companies merge and the shareholders party in the night there is a home somewhere where a laborer loses his sleep to come in terms with the reality and start a job hunt watching his family sleeping as the candle light waddles the cold nights breeze…


This morning was a different Rajesh Mohandas… the man who is selected to be a part of the negotiation team to crack one of the major Industrial Relationship issues faced by the company. I was so excited. I could hardly breathe through the hour-long drive to be there… dreams filled my eyes and virtually coming close to the reality … cracking this issue will take me higher up in my career, very few at this juncture would have got a chance to be nominated by the management for such pressing issues. At one end is the media and press which closely monitors and interested in all the gossip the other end are the legal pundits advising at every step, the local politicians eye their own share in the pie, my very own collogues who were unable to get thru for this role… I am all geared up with bouts of extra energy adding momentum to reach my career aspirations in the leadership cedar.

I hurriedly parked my car and rushed in with all adrenaline and was greeted by the meeting coordinator at the door Good Morning… word barely audible. A fitted service shirt outlined his broad build. His facial features were of the average sort, but he had an allure about him, an unnamable quality one couldn’t dismiss. “Rajesh”… come here… this room… oh... I heard my name and it was Kavitha… the legal advisor… she stood at the end of his walkway, that one hand on a hip that was cocked a little to the side, giving her a jaunty air. Coupled with the knee-length flouncy skirt she wore and the low-heels that gave her legs a sweet curve, it made a pretty picture, I’ve to admit…

It was quite a house and the union leader right in front of us… Vishwanath … “Vishwa” so was he called. His face was ageless, neither old nor young, though in it was written the memory of many things both glad and sorrowful. His hair was dark as the shadows of twilight, and upon it was set a circlet of silver; his eyes were grey as a clear evening, and in them was a light like the light of stars… he stood and walked towards me … we shook hands and awaited the Industrial Relationship Leader Dr. Subramanian… often called “Subbu” the key person… was running late by a 100 meters away at the busy intersection almost visible to the naked eye and the traffic holding his automobile.

 

To Be Contd...

Bringing business and IT together

Feb 16^th 2004, a day I will always cherish, this was the day when I joined Hewlett Packard a now it’s been a decade long journey of bringing business and IT together.

My life in consulting started with HP and I believe this was the major breakthrough in my career, in the very early days I got an opportunity to work with the best of the leaders and mentors where I learned to excel in the consulting assignments being inclusive with all other management frameworks. This was the time when I was introduced into the world of Enterprise Architecture.

While there are hundreds of definitions of enterprise architecture, and each company adds its own flavour in this blog let me stick with the definition provided by Gartner.

“Enterprise architecture (EA) is the process of translating business vision and strategy into effective enterprise change by creating, communicating, and improving the key principles and models that describe the enterprise’s future state and enable its evolution”

This was the time when HP and Compaq merged into one and my initial days in this role were spent on engaging with leaders and draw communications to Initiate change from the top and remove barriers. Building out the foundation for execution requires investments in IT infrastructure, and as HP – Compaq came together I was working with the leaders who planned to build their foundations one project at a time, funding mechanisms often limit important investments in infrastructure and so was in this case too. When I look back today I believe I could have contributed a lot more… alas..! this is what experience is all about; it was the very beginning for me to understand how processes become complex when status quo gets challenged and the mergers often take its own time to stabilize before it starts performing.

I got an opportunity to work with a very polished leader, who stepped in and made it happen. Experimentation was the way, there is nothing right and wrong, you simply follow the PDSA (Plan, Do, Study, Act) cycles before coming up with the final process that will be digitized and take baby steps across the business before building the blueprint and gather buy in from all the stakeholders involved post which the architecture gets drawn, the IT collaborates with the business and decides on the technology suite which becomes the integral part supporting the day to day business operations the organization carries out.

Risk, Disaster recovery, IT Security, Web etc… were very new terms in those days, Cloud computing was in its infancy, the talk of the town revolved round the servers, this was the era when use architecture as a compass and communication tool to draw right investments and build the funding structure emerged.

I was a part of the team whose agenda was to identify the small set of key IT-related capabilities (IT-enabled processes, shared databases, standardized platforms) that are most critical to the company's operations. We all learn from mistakes, and our team too committed few, the kind of enthusiasm in us created a rush to move on to the next project without ensuring that the organization is deriving the benefits from the last project, here is when I learnt Enterprise architecture maps a path in which a company incrementally builds and then leverages capabilities.

I was then introduced to the world of Six Sigma, the strengthening rupee and the weakening dollar in India added a lot of pressure to the IT organization and there was quite a huge cost optimization drive, Consolidating servers, renegotiating contracts, introducing offshore outsourcing, and installing financial discipline, driving series of Six Sigma projects on the floor at all levels and the entire focus shifted from the top line to the operations and this showed up on the bottom line. While the EBITDA for our P&L was +ve the margins were very poor compared to the previous years, it was a time when the salary hikes to employees were –ve and it was required to rethink how to maneuver further.

We had a leader who built a team called Excelartors which stood for Excellence + Acceleration, this team was handpicked from each of the business unit with a focus on enabling core activities and providing useful data that can improve efficiency and creativity of the company's people coupled with rewards for enterprise wide thinking. Each leader drew a business plan and how it can collaborate with IT, data and metrics played a very interesting role, new dimension of the business shaped up which was supported by the IT. Various TCE&Q (Total Customer Experience and Quality) initiatives were led which I was a part of and the energy resonated in each of the top leader I did interact with. Smaller groups functioned and the execution was carried out seamlessly. A lot of work was also outsourced with Wipro who helped enable the business with digitizing the balance scorecard and analytics.

What I learnt at HP about EA can be summarized looking at this simple video on youtube

https://www.youtube.com/watch?v=d1MPEmMBqc0

Treat your customer like DOGS…

The starting point of success is the customer for any business. Social media coupled with CRM solutions and various technological advances have brought us very close to our customers only to know we do exactly opposite in reality then the theories we have learnt. We are in business only because of the customer… we earn because customer pays us… its single most important advice given by most of the experts to focus on customer satisfaction and it will bring in more business…

I have an acronym DOGS … “Delightful Opportunity God has Sent” posted on my desk and virtually everywhere when I interact with a customer, may be internal to the organization or an external one.

This opportunity is something I need to capitalize on … and the power of Social CRM (SCRM) coupled with the framework of CCRRM (Consultative Customer Relevant Relationship Management) will help the companies accomplish the goals set and take a leap beyond the competition to dominate the market place… as the saying goes Knowledge is Power the companies today can leverage every minute details of the customer with Social media monitoring tools, social media engagement software’s and social analytics… I will leverage the social media both for observing and engaging with the customer and establish the right chord at a lightning speed…

Compared to the traditional CRM approach of the late 90’s and early years of the 21^st century the next few decades are going to focus on Social CRM … the difference is clearly visible … while the traditional CRM relayed on historical data and previous buying cycles and data captured by some third party vendors and which was a one way engagement model the Social CRM incorporates real time information, the approach is futuristic and focuses on understanding the wants and desires of the customers tracking what the customer likes and follows or comments and is active on the social sites … this gives an edge for the companies to engage closely with the customer and is an instant two way engagement model.

As LinkedIn Facebook and Twitter grew its presence and virtually made one and all addicted to them companies have defined newer ways to measure their success on the social media. The early practitioners who measured the number of hits and likes have moved into a consolidated approach measuring all the three channels put together… don’t forget the YouTube fever that is catching up quick and fast with the cost of data usage becoming more economical and the smart handheld devices capturing the markets. I have defined a quick acronym “LIFT YOU” … which stands for LinkedIn + Facebook + Twitter + YouTube  and measures for various sub categories not limited to number of connections, likes, subscriptions, shares etc… the “ER SCORE” is yet another metric which I like as a personal brand for both individuals and the leaders which is but nothing the Endorsements and Recommendations score… how many customers or clients or people who you as in individual or company have interacted Endorsed you and recommend you… in fact everything matters…

One of the statistic shows the sales of CRM solutions have gone up by 18 times in 2007 compared to a decade back in 1997, every second company wants to embrace the CRM framework and the software’s or platforms to improve their sales nonetheless the difference is the quality of the solution and approach or the roadmap matters a lot and so I believe CRM can be further enhanced if we add an extra “C” and an extra “R” which stand for Consulting and Relevance… unlike a replicating a solution from a competitor it’s more important to understand the internal and external forces that are unique to the company and define a solution that is more relevant with the goals established thus stands the CCRRM … Consultative Customer Relevant Relationship Management …

The central theme in this framework one is engaging with the customer in a consultative mode which address and meets the customer needs and expectations. Now go beyond and move from the consulting into a consultative selling mode and solution the roadmap that is relevant to both the costumer and company you represent can integrate backwards to the offering and strengths of the organization thus making both the customer and the company profitable ….

 

Many organizations focus on internal metrics like satisfaction, awareness, loyalty, churn, leads, recall, revenue growth, margin improvement etc… and there is very less focus on MARKET SHARE as a metric and this becomes a very very important measure in a consulting role to draw the customers attention and help understand how CRM programs and campaigns directly impact the revenues compared to the competition… and perhaps dominate the market place… here are some observations drawn surfing some sites on the net look impressive to act upon right away…

•          It typically costs 5-10 times as much to acquire a new customer as it does to retain an existing one.

•          “Some companies can boost profits by almost 100% by retaining just 5% more of their customers.” Harvard Business Review (Reicheld & Sasser)

•          A recent McKinsey study showed that the average new customer spends $24.50 at a given web site in the first 3 months as a shopper. The average repeat customer spends $52.50 every 3 months.

•          Most companies lose 50% of  their customers in 5 years (Harvard University)

•          70% of repeat purchases are made out of indifference to the seller, NOT loyalty. (eLoyalty) 

These above statements make it very essential for the business owner if wants to grow and outperform the market he has to work on his internal operations and the starting point is to integrate Sales, Marketing, Strategy, Process, People and Technology… to maximize customer acquisition, value, loyalty and relationship embarking a total customer experience.

CRM plays a very vital role as a foundation to the entire customer lifecycle management and one need a very robust yet easy to work CRM solution.

Many a organizations have invested on bulky servers and CRM software’s and still operate on a spread sheet mode to make decisions … the year 1999 will be marked in history for the dawn of a breakthrough solution in the CRM space which is growing too fast a one stop solution that utilizes the power of Cloud coupled with concepts of SaaS and PaaS is the SALESFORCE.COM

Various modules in the SFDC today help the organization benefit in areas of Customer Acquisition, Retention, Loyalty, Evangelism and above all Cost Reduction…

My decade long experience working on Analytics and Six Sigma have thought me a very easy formula that works in all areas … Y = f(x) … the key CTQs which are available with me can be classified as Suspects, Visitors, Prospects, Subscribers, Patrons, Members, Ticket Buyers, Users, Consumers, VIPs, Volunteers, Annual / Major Donors, Advisors, Advocates, Legislators, Strategic Partners, Sponsors, etc…

and what do we know about them thru various channels online and offline are Problems, Pains, Fears, Needs, Wants, Likes, Goals, Influences, Relationships, Affiliations, Alliances, Experiences, Aspirations, Options, Expectations, Questions, Knowledge, Skills, Activities, Attention, Communications, Interactions, Emotions, Memories, Satisfaction, Perceptions, Beliefs, Admirations, Attitudes, Opinions, Values, Learning, Ideas, Motivations, Objections, Priorities, Choices, Behaviors, Personality, Self-Concepts, Trust, Loyalty, Attention, Recognition, Time, Energy, Risks, Investments, Rewards, ROI, Lifestyle, Lifecycle Stage, Social Class, Culture, Sub-culture, Age, Family, Education, Hobbies, Interests…?

One of the key roles of a CRM consultant will to establish the relationship and define key metrics for the scorecard that the company should look at to make decisions … with the help of Exact Target Marketing Cloud app it becomes very easy to implement the social analytics / engagements / campaigns thru various channels like emails, e-survey, viral marketing, web, blog, online communities, e-commerce etc… to create richer relationships with the customer.

The very next step once the data and analytics is established is to look back at the customer management business processes to redefine where CRM can and should provide the greatest value, may be use a pareto principle … the 80-20 rule and shortlist the top areas and incrementally implement the CRM in these targeted processes.       

Here is when the Solutioning is drawn and the technology partners will be engaged actively and use the cloud and salesforce platform to bring into life the process shaped by the company working with the CRM consultant... post go live a continued support from the back office cements a lifelong rendezvous in this journey… J

EBITDA Improvement thru Cost Optimization

 

Engendering justifiable savings and optimizing cost is not about  reducing daily costs (coffee, toiletries , transport) or supplier margins, and much less thru layoffs, what is required is a transformation and a BIG change yet meet the objective.

Often we get caught with incremental improvements and focus on variation or waste without looking at the big picture. I have seen during FY 14 a rush of energy and enthusiasm where every tom dick and harry wares a consultant cap and is giving all the gyan on cutting down costs without a focus on understanding the downstream impact it may leave on employees, suppliers and customers…

We had almost lost sight on looking at the big picture and understand what do we spend on, how do we plan it and how do we control it… the data clearly shows when utility decreases despite increasing sales, it is probably due to increased costs which impacts the EBITDA.

The organization has a clear mandate and the goal set to be having a 0 EBITDA difference with the closest competitor and the objective shared with me and my team was EBITDA improvement thru a cost optimization of $ 60 Million for FY15 and I picked a stretched target of a $ 100 Million optimization.

FY 14 initiatives were around the low-hanging fruits that were picked, and cost savings to quite a good extent found... and for this year it was, in other words, a need for a new, more comprehensive approach to cost containment that looked beyond the obvious and delved deeper into the organization spends and the cost incurred … lessons learnt from FY14 pushed me to think differently and as a first step (you may read in my previous blogs) cleaned up the way we operate and the tools we use to operate… I did swim thru the organization resistance and was successful in incepting an idea to operate in a factory model within our own team and use tools like TRIZ and CAP beyond the traditional lean six sigma tools and focus more on breakthrough projects instead of incremental improvements…. an argument and the ethos of leaders lead to a series of debates and a lot of reluctance on ground in embracing the approach whole heartedly, nonetheless I was able to  build the optimism and resonate the energy with all the leaders and help build the frequency that we vibrate at operate in the same spectrum…  and kicked off in this journey build my sub team owning a target of $ 50 Million from breakthrough improvements and the other two leaders own rest of the cost target following incremental improvements.

The target is big and my very first step was to meet face to face with the top management and key leaders to ensure a ‘dedicated’ participation, budget and sign-offs on implementable ideas. I did plan and hire a dedicated MIS person and equipped with right set of tools and build a robust tracking and monitoring mechanism to ensure systematic implementation and savings accruals.

The very next thing in the line of actions performed were to work very closely with the finance MIS team and build the cost classification table what I call as a CTQ tree… to clearly understand how the cost gets rolled up and where does the maximum come from… once we have this number we will drill down into the processes associated with them to understand WHY the costs are so...  the below image is a sample... a further breakdown with details is recommended to be built which becomes the backbone of the Cost Optimization initiative...



Figure 1 - EBITDA CTQ TREE

 


Figure 2 - Direct Cost CTQ TREE Drill Down

Figure 3: Sales Cost CTQ TREE Drill Down

Figure 4 : G & A Cost CTQ TREE Drill Down

 

As another parallel track I took the lead on pushing for a VOC gathering exercise thru a Focus group of leaders associated with each of the cost CTQ listed above and understand the pain area and also gather suggestions and recommendations from each of the leaders …

The ideas storming exercise will definitely pop up a lot of areas to focus up on which will be both incremental and breakthrough in nature … all the feasible ideas which will be incremental in nature will be run as YB and GB projects and the ones that are larger than life transformation kind ones will  be taken up by special task force for execution…

In the next few blogs as I write will walk thru on the challenges faced in the large transformation journey and how I tackled them to accomplish the cost optimization goal I have taken up…

Going beyond the orthodox approach… for a $ 100 million savings

If you're after big goals, you don't want to settle for the ordinary, extreme success is by definition outside the realm of normal ways of doing things and so I decided to propose something different to accomplish the set goals…I started a dream journey on a $ 100 Million savings for the organization to accomplish the bigger Vision set by the management and solve the problems it encounters during this Mission using tools and frameworks like Lean Six Sigma, TRIZ, CAP, Theory of Constraints etc…

 It’s impossible to get the exact reasons why people fail and others succeed knowing the exact formula to solve problems would have been an awesome state to be in but in vain, we are all human and very unique… so are the problems we encounter are unique in nature…

The organization has hired a set of Black Belts and Master Black Belts and the team is scattered across the organization hunting for small and big projects … a pipeline of ideas from various corners and a DNA building … and so on and so on… not everyone is Jack Welch and not every organization that picks up the journey of Lean Six Sigma has accomplished the monitory results and benefits to the extent they plan for… the challenge for this fiscal year is a big one… savings to a tune of $ 100 Million and will be quite an interesting journey to get this outcome.

While we talk about change and transformation, I did something different…, out of box… and proposed the following model to accomplish the desired benefit compared to the traditional approach where the BB / GB is the only person doing all the things the project requires…

In my approach the phases of a typical projects will be broken such that the team will not be only of MBBs and BBs and they will not be playing the role of a Mentor in getting the GBs do the projects… if at all they do it will be limited to a set of few early and less experienced folks spending time on building the momentum and training GBs and mentoring them on small projects very much in their scope and control… and the rest of the folks will move into a stronger approach to tackle the issue and embrace a factory model…

We will have one team called the IDEATION team who will be responsible to generate and gather ideas from various ends of the organization, this team will be playing a typical presales / marketing kind of role involved in researching industry best practices, building case studies, running champions workshops, conducting trainings, using organization wide tools to generate ideas, talking with people at CxO level and identifying opportunities for improvement.

The second team will predominantly work and focus only on the Define Phase of the project; this team will be assigned ideas from the Ideation team and will connect with the person generating the idea and facilitate the discussion with the people who are the owners of the function… for example if an idea is to reduce energy consumption across the organization this team will facilitate the discussion with the engineering and maintenance team to take it fwd. This Define Team will also be responsible in building the project charter, defining the business case, drawing the problem statement, benchmarking the current levels and  setting the goals in discussion with the champion and key stakeholder, planning, budgeting, initial communications, spending time with the subject matter experts gathering an understanding of the process and draw the as is process maps.

The Third team will be the data analysis team, this team will get the inputs from the Define team and start working on the measures, draw a data collection plan looking at the process and sub processes, perform the Gage R & R studies, get the measurement system right, set the operational definitions in place and perform all the functions of the measure phase, the very important role and function of this team will be to ensure data accuracy and data completeness, prepare the raw data on a spread sheet and draw the initial cuts with some pivots and slice and dice to represent various views of the data as per the data plan.

The inputs form the Team 2 (Define Team) and Team 3 (Measure Team) will flow into the Analysis team, this team will be responsible to come up with inferences post analysing the process and datasets using tools like Minitab and various other analysis tools that the Six Sigma framework offer, this team will liaison with the business leaders, function leaders and all other teams as and when necessary to come up with the inferences based on the analysis.

The final team … or what I call as the real change agents, the momentum builders, the go getters the core execution team will be the one who will use this data, inferences and all the hard work done by the others and play a true consulting role with the function and business leaders in shaping the change and meet the desired outcome. The brainstorming’s, POCs, Pilots, liaising with the internal IT team for rising the change request and building the systems cementing the structures and all other improvement activities. Post implementation this team will also work with the finance to help showcase the savings and benefits to the organization from the improvement project.

Exploring a Roadmap to $ 100 Million Corporate Excellence …

Organizations today have evolved and with all the expertise and years of experience making leaders fascinated to theories of Six Sigma built during 1980’s and try to replicate something similar to knock the door of an overlooked opportunity…

Large transformation and cost optimization thru change projects cannot be accomplished only with incremental efforts although they are very important to build the organization DNA, breakthrough improvement should be the focus and grab all opportunities with both hands wide open…

My objective was to go beyond the orthodox methods and focus on experiments, unless one experiments with various models it’s very difficult to get the breakthrough. Conceptually I found everyone in agreement with my proposal to experiment and hardly anyone agreeing to budget and fund it … alas … have I wished I was elsewhere … nonetheless I did not lose heart and continued to play more of a sales man role instead with a focus to get the budget for experimenting.

With a lot of travels and a series of meetings I found a cloud with a silver lining and the hope grew positive as I finally found one person to invest in my pilot.

Excited with the initial investment and support I set forth with the plans in place just to meet the end very soon and saw the initiative reaching its unexpected failure…, things did not go as planned and money wasted… I almost lost faith and my face value only to find the sponsor is interested in the idea and wanted to fund more … Surprise Surprise … ! … Thank god… my days look bright…

I did find an interesting and matured leader who joined hands to champion the efforts as a co-owned project execution being a strong promoter… we started it all over again and this time all the knots tied with roles and responsibilities not only aligned but tracked … the team members were from lower bands much hands on SMEs unlike the leadership bands who we had on our team previously, we had a very different strategy and focus was on straight forward execution instead of a traditional approach of gathering buy in and selling the idea … engagement etc… it was very clear… either do what is told or look at different opportunities for yourself.., a lot of strong decisions were taken and of course there were people who got irked and watched us with eyebrows raised… three months of the pilot and from the fourth month we started to see the results … overwhelmed we started to dream if this can be extrapolated across the organization we will easily make a savings of $ 23 Million YOY … multiplication is a very good mathematical application and in all practical purposes should not be used loosely… our experiences held us back and reminded it’s only the pilot which is successful … now with this success we should go to the world out there to build momentum  and gather buy in… 

Unlike me there are lot of people bubbling with energy, top leaders with more experience than me and not to be surprised while I find my creativity God’s Gift there are few leaders who consider themselves as God. Manoeuvring thru the egos and ethos proving people with a lot of case studies, Industry best practices and expert transcripts helped me propose a structure to be put in place and projects be picked up which will help accomplish the goal… while traditional Lean and Six Sigma team will continue to focus on incremental improvements and cycle time improvement where the gains are intangible and notional we will need another team focusing on accelerating the Change … the real multi dollar gains will come from large transformational projects using the principles of TRIZ coupled with tools of Lean Six Sigma and change acceleration. The thought process was very simple … address the wants instead of the need…!
 

With the key pillars and approaches identified, I moved on proposing the team structure. This is the most important part of the proposal; while I was clear that each of the pillars be run by a separate leader and roll up to the program there were few suggestions which were of an all-rounder approach… every one doing everything. I don’t deny this approach, but at least in the initial stages it is important to establish clarity and set the right direction and I chose the following team structure.

  

 Once we have the team and concepts agreed approved stamped and communicated and get the house in order … the next step is to connect with folks at the CxO level to brainstorm ideas for larger transformations… while at the downstream similar brainstorming will continue at all levels till the bottom node to identify areas of improvement …

Dilemma of a decision maker

There are no cookie-cutter answers when posed to top leaders who have accomplished the position they today are, most of the success stories are told after they have reached the peak … there is no one leader I have met so far in the last four decades right from my early days of infancy who can predict the outcome of an action to the path of success…

Nonetheless… one thing common I have noticed reading the autobiography of most admired leaders across the world is they knew when to move out … they knew where to stop… they knew when to say no… similar to a good leader is a gambler who knows when to get out of the table when he is on a winning streak…

This is an anecdote I remember right from my early college days… which our professor echoed time and again and emphasised on when exactly one should get out of a situation good or bad…

Human Beings and frogs are the two creatures in nature carrying tremendous power to adapt… Put a frog in a vessel of water and start heating the water...as the temperature of the water rises, the frog is able to adjust its body temperature accordingly...

The frog keeps on adjusting with increase in temperature... Just when the water is about to reach boiling point, the frog is not able to adjust anymore and at that point the frog decides to jump out...

The frog tries to jump but is unable to do so, because it lost all its strength in adjusting with the water temperature... Very soon the frog dies.

What killed the frog ?

Many of us would say the boiling water... and the truth is what killed the frog was its own inability to decide when it had to jump out... we all need to adjust with people and situations, but we need to be sure when we need to adjust and when we need to decide it’s time to when to jump...

The decision making process tends to generate dogmatism … Leaders with superiority often overpower their peer group and the very charisma they carry coupled with biases in making decision and overlooking the facts either delays the decisions or end up making wrong decisions and pay the price for it… fall back and read the history they are filled with consequences bared  and suffered because of delayed decisions… the history of mankind is filled with many examples where monarchs and top leaders have delayed decisions which are catastrophic.

Just like the most fertile soil does not necessarily produce the most abundant harvest the most experienced need not be the best decision makers … the problem is they often delay the decisions especially in the corporate world that I am exposed to have seen the best of the leaders in the top management sitting on matters long enough that the time flies and the opportunity lost… and then the blame game and downstream corrective actions start… the question is why did you sleep over the matter so long without making any decision…

If I fall back and look at the leaders I have worked with in the corporate world between 1999 and 2014… one very common observation is the leadership values seemed to apply in good times when the economy was blooming and the world was optimistic on India reporting a double digit GDP, but all these values seem to dwindle or even disappear during stress post Lehman issue…

I have seen the best of the leaders under stress loosing long term focus and the temporary problem overpowers the senses and the very human nature filled with interference and insecurities takes over… no matter how resilient one is the environment acts such that the leader is unable to give up or move on and goes on taking decisions thru his gut and not the facts supporting which often blow the problem out of proportion.

Another very common issues one ends up adding cycle time to the decision making process is lack of communication, what I have seen in a decade long experience is people tend to communicate less during bad times, when in actuality, they need to communicate even more…, this fallacy leads to grapevine and gossips tend to picture themselves as facts making the employees take decisions which otherwise with sound communication and clarity wouldn’t have…. I have seen fear and greed dominating the human behavior forcing one in a see-saw journey of decision making…

Wait for something good to happen, a very funny things but yes, that’s true… many organizations wait for an economic and business turnaround and wait for quite long a time to make decisions which should be actually other way round… as a leader one should be making sound decisions during bad times so that the opportunity can be grabbed by both hands during good times…

Decision making is one of the remarkable qualities what leaders are identified possessing that sets them apart from others, the decision made may be bad or good… what is more important is to make one…. delaying making decision will attract an end to the person similar to the frog in the boiling vessel

EBITDA and SG&A Improvement… the cash flow story (Part 2)

Every penny of revenue leakage fixed and an invalid cost eliminated has a direct impact on EBITDA… after my early journey working on projects which were of the very nature of Quick fix and implementation of best practices and the organization tasted the success to quite a good extent savings few million dollars the next big project I picked up and built a focused team was to Identify every opportunity of Revenue Leakage and fix it.

We identified all areas both in delivery and support functions the potential candidates of revenue leakage and start collecting data around it. It took more than a couple of months to streamline the operational definition for revenue leakage and a series of meetings with various stakeholders and the user community we finally agreed on the common operational definition  and what finance team will sign off (this was very important step) as savings generated by fixing the revenue leakage.

We defined Revenue Leakage as “Money not recovered on time either from the customer or the vendor or employee. Any outward cash flow as a deviation or exception to the set policy or process in place will be considered as Leakage”

Clear instruction on this project was no notional savings will be considered unlike other projects where cycle time savings were multiplied with a volume number and quoted as notional savings.

We picked up the following three areas to fix in this fiscal where an opportunity for leakage occurs…

1.       Days Out Standing / Accounts receivables

2.       Recovering Advance Payments from employees (ForEx and Travel related)

3.       Leave management in T & M assignments 

As a next step we started measuring to baseline where we stand internally and in comparison with industry benchmark. A dedicated team of data analysts were hooked up with the finance team to conduct a data collection exercise and we engaged with a third party consulting firm to benchmark our company with the competition to understand the variation.

While this exercise consumed time there was a definitive number that popped out, of course it was not easy to gather consensus from all and again a series of brainstorming sessions following with what is in scope and out of scope, what should and should not be a part of the data and the further debates took about a few fortnights to finalize. In this entire endeavour while the support from the senior management continued to exist it was a herculean task to gather the support and time from middle management and build the momentum. Mobilizing commitment looked very bleak at the very beginning of the exercise and we had to struggle to get the information from all sources and plug into an excel tracker before coming up with a baseline number … The irony is that the very people you need on the ground hands on are already overburdened with so many activities and tasks that often makes it very challenging to accomplish some simple tasks…. Nonetheless we did it…

The next step that we took based on the inputs from the subject matter experts and the inputs provided by the third party consulting firm who did come up with initial recommendations after the bench marking exercise was to look at the entire set of events and classify them into three broad categories and established role / process clarity to address the situation…

1.      Risk Management : The role of this group was to look at every opportunity and map it with the existing processes and identify possible risks and then address them appropriately as per the risk matrix

2.      Leakage Management: The very role of this team was to constantly look at all opportunities in the existing mechanism the possible leakages and overcome them. Under the umbrella of leakage management we had a couple more sub teams formed to strengthen governance and compliance especially around the SLA Clarity and automation. A separate operations team looked at contracts, warranties, and entitlements. We strengthened our internal interdependencies and raised the need to connect them together… data always exists but is difficult to access… by connecting and overcoming the dependencies and the strengthening the online repository which connects the business operations, sales, compliance, finance, and the delivery with PMO and Governance team working hand in glove was quite a challenging tasks that took sometime to shape up quite well and now we have a strong recommendation in place to have a team of dedicated and focused group of experts who look at wing-to-wing service life cycle

3.      Leakage Prevention: The very challenge we faced in this situation is educating the folks on the difference between customer satisfaction and billable assignments… while it’s important to address the needs of the customer, it’s important to educate the customer the services offered will come at a certain cost especially in a T&M mode where every minute is billed. When brainstormed further we discovered the root cause is the contract document availability and access to the engineers on the field onsite with the customer who are unable to understand if the piece of work they are doing is covered under the terms and conditions or the post maintenance activities or not… there was a huge cry on confidentiality and other such stuff during the arguments which many initially made a noise and finally agreed on the sharing the contract knowledge to ensure things fall in place…. What the very human nature filled with unknown insecurities stops the CRM software’s help the folks onsite with the customer and a very learning we discovered is having access to critical customer data helped cross-selling and upselling thus helps the revenue stream...

Very strong and stringent monitoring of advance payment collections and associated tools which connect the pay-outs and collections were put in place and the IT Team started working on the tool enhancements

Inputs were shared with the HR team on the leave management policies to be revisited which can help the revenue leakage, a set of senior department heads with the HR team coupled together to come up with a policy around the same, addressing employee related sensitive areas need extra time and caution on the roll out of the policy and so measures and steps were put in place to ensure the communication is seamless…

Analytics with dashboards showing Red , Amber, Green (RAG) status are in place, the team will continue to monitor the progress periodically and few months down the line I will again engage with the team to see if the controls put in place are adequate enough or additional things are required to be done…

In a nutshell my learning out of this episode can be summarized as below…

1.       Human nature is the most important one to focus up on; we already know all the solutions but lack action to accomplish it… processes have to flex with the business when ever business and the people running the business demand it

2.       My facilitations skills matured further working with folks from various teams and getting them all together in sync and signing off an agreement on the new process

3.       Digitizing the solutions and cementing the structure using an IT Tool is the only way to strengthen the control… nonetheless we live in an excel based world and exceptions are a part of it, no matter what controls one puts in, someday the exceptions and ad-hoc processes will overcome the discipline and one needs to revisit for continuous improvement that is incremental in nature…

A potential cash flow greater than USD 5 Million year on year is the initial estimate with the recommendations and process changes put in place…

EBITDA and SG&A Improvement… the cash flow story (Part 1)

26^th June 2013, the day two giant IT Companies merged officially and the market stopped tracking Mahindra Satyam and the only entity continued to exist is TechMahindra.

This was the day I took over a role as a Sr. Consultant in the business and process space to contribute towards driving continuous improvement projects to enable free cash flow thus improve the EBITDA (earnings before interest, taxes, depreciation, and amortization) … one of the most critical measure of the company's valuation tracked in the capital markets by the financial experts.

As a first step we spent time with the business leaders who looked to maximize the return on investments evaluate impact of operating the business on free cash flow. In an environment of maximizing value, it was important to review all business expenses and conduct a profitability analysis across all the projects. In so doing we discovered at the project level the contributors who impact EBITDA, which increases the value of your business and the ones who are pulling it down. As a next step I and my team lead by the best of the leadership worked hard to help understand sales, general, and administrative (SG&A) and look to maximize those costs as a percentage of revenue.

 It’s a known fact that High operating costs lower your EBITDA… one of the things that I have done in the past is to quickly identify all value enabling activities and digitize them those that will need people involvement outsource them to low cost channels. I carry a very strong philosophy from my past experience that my people will work only on the value added tasks and process rest all value enabling tasks be outsourced and kill the non-value add. The first few suggestion made people hesitant to entertain the idea of lowering operating costs because they immediately equate it with lying off employees. It took quite some time to educate the crowd that there are a lot of other ways to lower your operating costs without reducing staff. Could be as simple as turning off your machines and lights to save energy, wastage of food and the network usage to start with the journey of Lean following the principles of HoShin KanRi and go with the policy implementation.

Ideas and best practices picked up from the experience of the past helped spin a quick fix just do it kind of projects around Cycle time improvement that directly impacts billability. Two teams were given tasks to build the six sigma culture as a DNA in the organization.  8 – 10 leaders in a consulting role attached themselves with each business group.

I owned the entire set of support functions and kicked off the improvement path by checking for areas of inefficiency that can be corrected with new policies and procedures … focus was to be lean and quick on the solution front without spending a lot of time on data collection and data analysis, because it’s a known issues to all just an as is process / value stream map is good enough to identify waste and eliminate it strengthening policies and procedures.

Wing to Wing financial analysis of each support function opened a wide set of opportunities to focus up on… Cab usage, arrival pattern and employee commutation costs were identified to fix asap and then engaged a team from facilities to pull down the power tariff and work towards improving efficiency on energy usage. Companies like GE and Philips were consulted and engaged in the solutioning and implementation of ideas.

Visa Cycle time and Air Travel was another big ticket item that was looked at. No doubt that a growing company will have a growing spend on the travel and the ticket prices are equally volaitile, but there were a lot of opportunities like blocking the ticket 6 hours in advance, reducing approval cycle time w.r.t. travel request, choice of travel class (Economy / Business), Travel mode like Air, Road or Train, effective use of technology like telepresence and video conferencing, strengthened planning to reduce the last minute cancellations, overcome date changes in travel. Policies governing around international travel and the per diems associated etc… accounted a good round of savings.

Infrastructure spend was another big-ticket item on the list which owned a lion’s share of the budget, with growth comes the overheads related to network and datacentres, storage and spend on TSP. Reducing the call volume and number of service requests was another area that improved productivity, reducing the approval cycle time and simplifying the approval matrix made the operations lean.

Projects were spinned around DSO… days out standing … the accounts payable and receivable cycle time, employee reimbursements, finance ERPs, invoicing defects and delays and wing to wing cycle time at the collections front added more savings and directly impacted the bottom-line which was an icing on the cake resolving quite a good amount of issues related to the cash flow.

Optimizing the wing to wing resource supply chain and hiring cycle time, enabling ease w.r.t. joining formalities made life more comfortable adding at least 35 days of additional billability and improving the revenue stream added a new flavour all together to the program.

While you have read the positives and the things done we encountered a situation where like any other company the execution looked bleak, as long as there was focus things were moving and as the focus shifted there variation crept in. IT Systems and structures did not help much. Performance targets were poorly defined we lacked insights into the long term levers, while the near term picture looked great there were concerns around the sustainability and long term results were questionable.

This is a time when we looked like being exhausted with the ideas and best practice picked up from the market and most of the things already implemented, there was nothing new to identify from a cost optimization whereas there were a lot of opportunities around cycle time improvement that will lead only to notional cost compared to hard savings that could impact the bottom line.

It was a time to rethink on what I was actually doing, initial enthusiasm and quick fix projects from the past experience will not help in the long term and I need to now strike the right balance between targeted reductions, re-allocation and re-investment in areas that can driver higher overall expense productivity over time. It was very important to establish benchmarks that are truly “apples-to-apples” and start looking at highly-granular spending breakdowns; more importantly clear understanding of the strategic, tactical and organizational “drivers” of world-class cost structure performance is something I started to focus up on.

Days passed by and a series of brainstorming session threw light on prioritizing the strategic goals, relooking at the degree of centralization and empowerment to local teams, funding mechanisms, vendor rationalization, realigning roles and responsibilities, hierarchy … head to tail ratios, opportunities of outsourcing as a new set of projects to focus up on in the coming year….

While the first year was a cake walk with quite a good amount of savings making the bottom-line healthier and reaching the set goal, it’s in this coming fiscal that a lot of people in raising eyebrows to ideas being brainstormed and extending surface level … people involved at middle and lower management feeling insecure as soon as talks w.r.t. outsourcing and role rationalization were being discussed … nonetheless a lot of support from the Sr. Management is adding a lot of confidence to the program and the determined will and focus is helping me overcome all hurdles and moving forward to accomplish the goal…  truely a great expriance and awesome company to work with :-)

Beyond the bottom line …

I am hired as an expert in a consulting assignment to work with the business manager and help him improve his EBITDA and impact the bottom line.

While I start my data analysis and quickly identify key improvement themes that will help improve the operational efficiency, build strategies where the value enabling tasks can be digitized and move some of the processes  to low cost channels and effectively use the power of outsourcing and impact the margins there is much more one should do.

My conversation with a Sr. Vice President brought in a 360 degree transformation to the whole art and science of operational excellence. No doubt that the cost optimization drives, business efficiency projects and process excellence are the keys which all business houses have successfully deployed and tasted the results there are a hand full of organization which go beyond these initiatives and move towards employee ENGAGEMENT…. EMPOWERMENT … and EXECTUION …

During my HP days I had a chance to work with the best of the CXO’s and Directors, each one is a gem in the crown of the Sr. Management who was on a path less travelled to meet the goals set and demonstrated unclenching behavioural anchors and maintained composure during the most stressful days and the only and only point each one of them articulated clearly and echoed in every talk is a threefold model of Engagement… Empowerment… and Execution.

One of the directors of HP who did play a role of my mentor and coach for my tenure in HP made a point very clear… Execution is not a leadership trait, it’s a basic essential that is required in each and every employee hired in the organization, every employee should exactly know what the output he/she generates is. … WOW… a good learning… all the books I had read on execution talked more from a leadership end … here is something new I discovered … He went on adding and giving example on how execution can be seen in every walk of our life and every member of the society, the world is a well-oiled engine and everyone is able to deliver … your spouse prepares a bed tea and wakes you up is only because the milkman delivers the milk on time… that’s execution… she prepares the kids to school and drops them to the school bus… that’s execution… the school van picks up kids on time and drops them to school and brings them back home on time… that’s execution… open your eyes and see … you will see execution in every walk of life … this is a basic essential …

Why do we fail to execute if this is so basic trait…?

When I popped up this question to him he said… my friend.., you can successfully execute if you are empowered to… what your spouse can do… your maid cannot unless she is empowered… WOW.. now see the connection… execution is linked to empowerment…

Nonetheless, he went on to add… it’s not only empowerment … you may empower your maid to dress up your kids and ensure they reach the school bus at the gate and this may slip … it may not happen daily… or your will face issues here… now this is linked to Engagement…

How are you engaging with your maid and make her feel responsible and take the ownership…

My conversation went on and on with a lot of examples and real life situations that can be easily understood … I am convinced… and I still face a challenge keeping my team motivated enough and engaged …

Now there are a lot of factors that impact this concept in the corporate world… as we grow the leadership sessions, trainings and talks revolve more on understanding the finances and the financial ratios… the additions and subtractions… gains … profits and losses… etc… and in a five day leadership training there will be a couple of workshops for half a day on employee engagement … personal branding etc… I am not complaining … there are trainers who do stress at every point that you should keep people engaged and empowered but I have not seen it really happening at all levels…  

Real, tangible, quantitative data confirms that happy and engaged employees lead to greater profits and higher stock prices, a friend of mine used to work for NETAPP and this company has a very simple practice of engaging employee and empowering them with a reward program called as “CIO FOR A DAY” where the CIO goes to each and every employee after the annual results are posted and thanks them for the good work they have done. He carries real examples and appreciation emails and tells them how much it matters for him and the team.

People quit managers and not companies is a quote everyone is aware about and very less effort is put in to really build the human capital. It’s not only the leadership talks or shows that matter what really matters is have you touched everyone in the organization.  A CEO of a large company makes a very impressive speech … but this does not reach as a benefit the end employee who is just a few years of experience in the company and doing the real execution … may be testing, coding, building, designing etc… as you grow up the management ladder you are but nothing building strategies and seeing the plans come thru.

While you can be successful in engaging the employee… but I have not seen any behaviour demonstrating empowerment. Decision making can happen only if you are empowered, your spouse can take a decision to perform a task later or forgo to cut down the time to prepare the kids to reach the school van is your maid performing the same set of activities empowered to do so…

Empowerment can come only and only if you can willing to take the responsibility and are accountable for the actions, I have seen only in few occasions the Sr. Manager and AVPs although entitled hold back to sign off for various reasons and pass the buck on … is this a trait you have anchored into your behaviour right from your child days… I believe so… fall back on the families of people who you have seen making decisions… forget good or bad … but they make decisions and you can relate them roots into their childhood … culture they are brought up in or education…

Well… there is a long long way for the Indian corporate to go and understand how to really engage and empower which in turn improves execution that leads to customer satisfaction and repeat business or more business.

In principle and theory everyone agrees to but the very human nature that is filled with insecurities and commitments will fancy on titles like VP, AVP, Sr. Manager, GM, MD etc… and lacks the ability to engage and empower fails to execute and one fine day will stand at the bottom … and will continue to see the bottom-line number diminish ….