FROM RE-ACTIVE TO PRO-ACTIVE 2: FROM STRATAGY TO IMPLEMENTATION
It is my experience that pro-activity in behaviour does not just happen, it is more than just and attitude, it is, in addition, a system, a process which is organized to happen on an ongoing basis driven by top management. In this article, I want to look at the parts of the system which many pro-active organisations have put in place in order to win Continuous or Continual Improvement.
This is the second in a series of three articles on getting the management of a business to be pro-active. It is my experience that pro-activity in behaviour does not just happen, it is more than just and attitude, it is, in addition, a system, a process which is organized to happen on an ongoing basis driven by top management. In this article, I want to look at the parts of the system which many pro-active organisations have put in place in order to win continuous improvement. What follows below is a list of ‘mechanisms’ which should add up to some thing near to efficient perpetual motion in performance management.
Before going down that list, here are some habits of the typical re-active organisation. I hope it does not describe your organisation, but I promise you these tendencies are not uncommon in SMEs at least to some extent.
- Priorities are being pulled around by customer demands, upon which daily ‘work plans’ right to the top are based (if you can call them work plans). The customer always comes first and the organisation always comes last.
- The work cycle is not a cycle, it is ‘plan, do, do, do, do, and if the wheel comes off, firefight’. If the wheel does not come off, there may be some time for a spasmodic improvement campaign, but only if the workload lets you.
- Meetings to solve problems are quite hard to organize and can easily be cancelled or suffer from absentees or unprepared attendees.
- Decisions made at those meetings prove very hard to implement and the ones who fail are usually the same old people.
- What happens then is an organizational lack of confidence takes over and some people give up trying to solve problems.
- On a different matter, good quality monitoring information is hard to get at. (You may say that this is a cause not an effect). Important indicators do not fall out of the process easily. There is much workload to get information and then it does not seem to be accurate and secure. It does not stack up. It is ‘ad hoc’.
- There may be a grand plan and indeed a definite strategy, but people cannot always see it and there does not seem to be a linkage between the plan and the month to month priorities. The plan may be in someone’s head.
- There are departmental barriers because few are successful in optimising the whole process
The above scenario is more likely to exist in an SME where there is a semi-autocratic culture, depending on a small number of owner-managers. Again in my experience, where there is re-activity in a medium sector business, the issue is not so much management dysfunction, but complacency and laissez faire.
Elements ofa pro-active culture
1) Starting at the top, ….Strategy. Confusius said “when you don’t know where you’re going all roads lead there”
At certain points during the year there is an annual review process, looking at what products the business is in, what market sectors it is in and what is the shape of the facilities, assets, or productive capability. This usually includes a SWOT exercise to objectively assess the strengths and weaknesses of the business as it stands and the opportunities and threats which are approaching from the outside and in the future.
There are various methods for going through this SWOTS and Strategic planning workshop process and some tips are.
- Use an outsider unless you have a very capable insider to facilitate the annual workshop. You need your own people to be free to contribute rather than tying up the MD or Chairman with facilitation which is a task in itself
- List of strengths and weaknesses should be short, important reasonably deep rooted items, not transient and should be honest
- Involve at least eight people with various standpoints if you can
- Run one, then undertake research and then re-convene two weeks later to finalise. The strategy must be based on good external market intelligence in most organisations as well as inside observations.
The result is new sales targets by product group and market sector and, perhaps an operations strategy to change the productive or supply capability.
2) The next element is the Business Plan
In an ongoing business the business plan does not mean the same as it does to the banker, although there are lots of similarities. As part of this pro-activity mechanism a document is needed to translate the three year strategy into the actions and targets to be achieved over the next year. They can be worked through steadily across the year and in the right order in addition to ongoing improvements
Therefore a business plan is likely to take the form of a document containing at least the following:-
- The sales and marketing position and rationale with targets for turnover and gross margin by market sector and product group, phased across the year
- High level targets for each area of the business using all of the main numeric Key Performance Indicators
- High level action plans listing actions which have to be achieved, described in words, not figures. (e.g. Review the coverage in the contact management database, implement new stock software). I call these tick-box targets
- A financial evaluation of the above showing forecast Profit and Loss statement and Balance Sheet together with the resultant Cash Flow, month by month.
- I have seen business plans which were more and less comprehensive than the above but the key point is that we must link the ‘thinking’ to the doing. We therefore need a control document proving that we have planned in reasonable detail and can monitor progress along the way. This makes us work to our own priorities instead of being pulled around or distracted.
3) Obviously the final part of the mechanism is to review against the plan, or elements of it.
There may be a monthly management meeting to summarise progress across the business in one meeting, but the main drive of pro-activity is to get the grass roots to be constantly looking at where there is opportunity to improve in their area. Front line management should be looking at least weekly and possibly more frequently at their own KPIs and targets and against any high level action points which they have to achieve according to the business plan, i.e. in line with the strategy
To be fair, this part of the overall mechanism works even without a business plan as long as the right behaviours are in place. The existence of a business plan injects the targets and the impetus to do things differently in the process, maybe to re-engineer. But if there is no business plan, the front line people can still make a major contribution to the health of the business by measuring various aspects of performance, plus leakage and waste in the process whatever the process is. But this would be independent from the agreed strategy, as if all of the strategic thinking had not happened. In practice the review process is the hardest one to create from scratch. If you were to create this, you would soon recognise the added value to be derived from targets.
To complete this list here are some tips about the review meetings, to make them successful and keep them fresh:-
- Make them frequent and short, maybe 20 minutes, maybe twice a week
- Have a fixed agenda and fixed attendees who know the process in question
- Use the KPIs and Action Logs from the previous meetings
- (Obviously) create Action Logs which record who said they would do what by the next meeting
- Become good at doing actions by thanking people who do their actions.
- Do not try to solve problems in this meeting (except for two minute problems), you will have the wrong people there, some of the right ones missing and you will hi-jack the meeting and kill it
- If there is a project or a problem to solve, arrange for the right people to meet and solve that ONE problem and report back. Then on to the next one.
- Have a central log for Action Logs so that anyone can see that the process is achieving forward motion
- Publicise successes and failures
Those are the main elements of a process for assuring pro-activity.
There are some important behaviours and human relations issues which would make this process work well. I will cover them in another article.