What game do your managers play? Cricket or Football ?

Tags

Agile Technology, Learning Organizations

Corporates of 90s play cricket and corporates of 2020 play football.

Cricket and Football, both are team games but are as different as Chalk and Cheese.

A Cricket team is collection of specialized skills, like bowling, batting or keeping wickets besides some general skills that everyone has, e.g. fielding and throwing a ball. Every player has a role and performs within the parameters set for it, to the best of his/her ability. For example, a bowler gets freedom to decide his field placing and how he would bowl. The captain has a key role and takes most of the decisions such as batting order, bowling changes and field placings. A captain who follows participative management style, may discuss with couple of his team mates, his seniors or his peers. Most members of the team may have some or limited say during team meetings when they may discuss strategies for various batsmen or bowlers. That is also a function of culture in the team. In some cases, only seniors join the discussions. Cricket also has different rewards, man of the match/tournament, batsman of the match/tournament or bowler of the match/tournament.

Football is a very different game. Most players have the basic skills related to ball control and passing such as dribbling. There are players who might have additional skills. Like cricket, football also has different roles such as goal keeper, striker, defender etc. but unlike cricket, the players often change their positions and take on different roles as per the need of the game. A striker may fall back to defend or in extreme situation, a goal keeper may go upfront to score a goal. Interesting thing is that in football, the captain does not direct or no one asks a captain before switching his role. There is fluidity and positions and roles change as per the need of the game. This is not to say, that the team does not meet prior to the game and has no strategy, but the strategy and tactics evolve or change during the game based on response from the opponent team. Football does not has individual rewards. Either the team wins or loses. Players may get rated for their performance, but there are no rewards for extraordinary performances or punishments for blunders. The biggest shame is facing your team or fans. It is collective win or loss. While a captain may get credit for win or blame for losing a match in Cricket, captains hardly find a mention in win or defeat in football. It is the coaches who are feted or blamed.

Corporate teams in 90s resembled cricket teams. People were drawn from different functional areas. Each person specialized in an area of knowledge. The team members were expected to contribute based on their knowledge and skill sets. The performance appraisal was that of individual with performance in the team as one of the criteria, it had no relationship with performance of the team as a whole. 

Football is very different. Every player understands the purpose of the team and has all information of the match. The person is able to take his own decisions and responds to the situation.  The business environment today resembles a football team. With advances in information technology, the information exchange is very fast and information asymmetry is minimal. The companies tend to lose any strategic advantage due to its innovations or strategic initiatives within a quarter or two. Market rewards companies that are nimble, responsive and can respond to tactical opportunities, like a football (https://rajneeshrastogi.wordpress.com/2017/02/26/what-corporate-managers-can-learn-from-football-teams/) .

The idea of structuring organizations and rewarding individuals is deeply ingrained. Unfortunately, most of the organizations have not been able to develop a culture of collaboration and cooperation and achieve the levels as seen in football. Besides appraisals systems, the organizations would have to change their work processes to empower teams that lead themselves ( https://rajneeshrastogi.wordpress.com/2017/03/18/building-football-teams-at-work/)

Cricket or football, whatever your game is, give it your best and enjoy.

Can we cross the hump and grow from small to large?

Tags

SMEs

Last Friday, I was talking with a friend of mine who owns a paper manufacturing company. On Saturday, I attended a conference of Garment Exporters. There was data presented on how Garment Industry is stagnant in India while Exporters in other countries like Sri Lanka, Bangladesh and Vietnam are making merry by cornering all the growth in the market. There was also a presentation on a Sri Lankan company, that has grown to 2 Bn USD with hundred thousand employees in a segment that was new to Sri Lankan exporters, swim wear. It was an inspiring story and made me think on how come we in India have very few stories to tell. Why is that most founders of our companies are not able to break the glass ceiling and grow from small to big? The answer could be one or a mix of the following:

1. Proactive Leadership – Building a good company is also a vision. The founders of Google, Facebook or MAS holdings had a vision that went beyond market opportunities. Just like they pushed their employees into delivering high quality products, they worked to deliver a high-quality company/ companies. That is, companies where people had a purpose, people learnt from other companies and industries and had a quest to improve, to work towards perfection.
2. Flexible mindsets – The leaders need a flexible mindset to adopt change and technology. The assumptions that worked in yester years have to change. Instead of inward focussed, the founders and CEOs have to look outside the company and industry for inspirations and learnings.  Most importantly they have to change and lead the change. http://mentorsunlocked.com/business/getting-personal-about-change/
3. Win-win situations – Most medium sized business owners still operate with assumptions of past. They see their business as zero sum game where they would make more money only by reducing costs. This results in very transactional relationships with vendors and employees instead of creating an environment of co-operation and collaboration. It could be employees collaborating with each other or vendors collaborating with the company or the company collaborating with its customers. The biggest casualty in transactional relationships is lack of experimentation and hence innovations. For example, employees are hesitant to try new things, lest they fail or told that they are going beyond their brief.
4. Delegate and build teams – Most of the owners or founders of mid-sized companies are still hands-on. They are not able to make the transition from hands-on management to metrices driven management. Hence, they are not able to delegate and build teams, build a group of people who are empowered to take decisions, or who have high level of ownership etc, a group of people driven with purpose and not obeying commands.
5.  Walk the talk – Invest money in vision of company. A company that is growing and ever-changing needs money. Business owners have to plan their investments needs. They need to divide the profits in four pockets that is,
   1. Reinvestment
   1. Contingency fund
   1. Distribute it amongst stake holders
      1. Share holders
      1. Employees

While all other steps are not difficult, the first one is where the journey has to start from. The business owners have to think themselves as business leaders-people with a vision, instead of business owners. This belief will automatically help them develop a vision and rest all will follow.

Reviews – are key to learning and success

Tags

Business Systems, Learning Organizations, Management, Strategic Management

Most business owners are involved in all aspects of their business and know every small thing in their business. That’s like knowing the wood or in other words, knowing all trees intimately in a jungle. That’s why most business owners get flummoxed when told that they should conduct reviews. The typical response being, why do I need reviews when I already know everything in my business?

A review allows us an opportunity to detach ourselves from the business and look at it from a distance. While engaged in day to day operations, we are getting a 30 feet view of our business, a review helps us step backward and get a 30,000 feet view of our business. We are able to see the forest instead of trees. Hence we get a more holistic view of our business. For example, how our credit policy is affecting not only our sales but also our cash flow.

Periodic Reviews also help us gauge scale of movement and hence provide inputs in planning course correction(s) and in gauging impact of new initiative(s). For example, how costs have changed in last few years.

A review would typically start with a comparison. Mostly it is comparison of budget vs actuals. The review could also be a comparison of performance in current period with that of a past period. Most organizations use budget vs actuals for reviews. This helps them gauge progress against plan. It also allows companies to revisit assumptions that they made in their plans. The assumptions could be related to any aspect of sales or costs. For example, percentage bids won or lost, number of inquiries generated or average order size.  This allows companies to revise their assumptions and make course corrections.

Good planning processes and reviews allow managers to zero in on problem areas and move from 30,000 feet to 30 feet. This reduces there day to day involvement in operations and allows them to delegate.

Given the importance of reviews, it is important that they are conducted in a friendly and positive atmosphere, are scheduled on regular periodic intervals. Most importantly, they should be structured in a way that they help us learn and take action.

Some ground rules for review meeting

1. Psychological safety – for a meaningful review, it is important that employees feel comfortable in speaking up. It is important that employer provides a psychological safety. As Amy Edmondson, Professor at Harvard says, “Psychological safety is a belief that one will not be punished or humiliated for speaking up with ideas, questions, concerns or mistakes.”
2. Everyone has equal voice. Everyone can raise an issue and respond to an issue. Listen with an open mind and remember that everyone’s experience is valid.
3. Don’t make it personal, don’t take it personally.
4. Avoid blame game. Take learnings and think of improvements. Look forward and Think Positive

 

Structure of reviews

It is necessary to ask three questions in reviews

1 . What has worked for us?  What is it that we need to do more?

2. What did not work for us? What is that we should change or avoid doing?
3. What should be next steps? What should be our action plan with time frame?

Plan and review. Your business will go places.

Learning Organization: Structures that facilitate learning

Tags

Human Resource Management, Learning Organizations, Organisation Structure, Strategic Management, Teams

There is an idiom in English language. “All good things must come to an end”. That is nothing great will last forever. And so it is with civilisations, countries and organizations including companies. Civilisations like Greek, Indian and Egypt have lost their status and so have countries like England, France and Germany. Tom Peters and Robert Waterman researched and put together a list of organizations that they said were excellent (Please refer to the book “In Search of Excellence”). They put together a list of companies they felt were great but by the end of 10 years, 7 out of 10 companies had lost their status. Companies like Nokia, Firestone and Toshiba which were industry leaders are now struggling to survive.

A key question that keeps on bugging us is that can we design Learning Organisations? Smart machines are machines that can think, that is they can process new data and adapt themselves based on the incoming data. Can we, human beings design organisations that change with time?

This should be feasible provided we can break “The Trap of Success”. Success is the biggest block to learning. Success reinforces our mind-sets and reinforces our beliefs. It makes us repeat what we did before in a changing environment while the competitors try new things and hence one day competitors overtake successful companies till the time, another company comes and changes the rules of the game. How can companies avoid this trap?

The key to avoiding trap of success is to keep on questioning our mind-sets especially the mental models that helped us win. We all are more comfortable with and like people who share our mental models. But this creates a trap. Its like everyone is looking in same direction and the group fails to watch its back. We all have blinders, a group with same set of blinders would fail to look at 360 degrees.

The easiest way to look at 360 degrees is by allowing a diverse group of people to challenge our mindsets. That is have teams of peers with no hierarchy so that people can challenge each other’s mindsets and the team would not only be taking optimal decisions but would also be creative or innovative. For this we need to structure an organization around teams (https://rajneeshrastogi.wordpress.com/2015/02/26/team-based-on-organisations-a-new-organisation-structure/ )

Teams allow us to develop an organisation without hierarchy and where people can question each other and challenge each other’s mindsets. This not only improves quality of decision making in the teams but also makes them more creative and innovative. Teams built around roles and without hierarchy would encourage people to take on roles of others just like in a game of football or basket- ball unlike Cricket where the captain takes all the decisions (https://rajneeshrastogi.wordpress.com/2017/03/18/building-football-teams-at-work/). An unlikely fallout of it is increased ownership of employees, which in a competitive market is a big advantage.

We can design a learning organization by designing an organization around teams and

• building a culture where people affected by a decision or people taking a decision can participate in decision making. Decision making is by and large by consensus.
• Providing psychological safety to staff and assuring them that they would not be punished for calling out if they are affected by a decision or in a discussion, and https://rajneeshrastogi.wordpress.com/2017/03/15/indian-experience-with-democracy-2/
• promoting diversity. Diversity not only in demographics but also diversity in thoughts.
• Processes that facilitate team members to cooperate and collaborate and not compete with each other.

Is that all what we need to develop learning organizations? There is more to it but then teams is a good starting point.

Why SMEs find it difficult to scale up

After working with SMEs for last few years, one of the reasons why most SMEs are not able to scale up their operations is because the day is usually spent in firefighting. A typical day may start at 8.30 AM or 9.0 AM with messages from customers, vendors etc. By the time, the person reaches his office, his day is almost cut out for him. He has to find resources and soothe his customers. I describe it as “Vicious Circle”

One of the reasons why SMEs struggle is because they lack a team. A team that can take responsibilities and deliver them instead of taking on tasks. This is due to many factors. One is poor risk taking appetite where the entrepreneurs. Some entrepreneurs do not want to incur or want to avoid cost of learning. Some are very hands on and find it difficult to delegate. So they typically end up working with under-qualified staff.

But increasingly I am finding that they realise that they have reached the critical mass but now cannot scale up as their employees are not confident to take responsibilities. The cost of new hires with relevant skills becomes a deterrent for the entrepreneur. (S)he is afraid of the new hires not delivering.

This vicious circle can be broken only once the entrepreneur starts developing a business plan. Take time off, reflect and work on the roadmap for next two to three years with an operational plan for the first year. This also provides clarity of thought on manpower and other resources required, expectations from them and a framework ( how to monitor and when to monitor) to gauge company’s progress and monitor performance of the employees. The “Vicious Circle” would not turn to “Virtuous Circle.

Planning, developing robust systems that are customised to the culture they want to develop and needs of their business can help the business men scale their companies.

Simplifying Agile Story Points

Tags

Agile Technology, Management, Software Development

One of my client was struggling with a huge backlog. His teams were not able to prioritise their tasks. The estimations were going haywire and productivity was low. The concept of story points (used in Agile Technologies) did not help them much as it was too abstract for them. Each story or task was different and hence they were not able to relate them in levels of difficulty. Because the idea of story was abstract, it was also not easy for them to compare stories with same points in different sprints.

Then I developed a framework to understand the stories and improve time estimations. The three parameters used were

1. Understanding of business needs
2. Complexity of tasks
3. Difficulty of task and volume of work

The easiest tasks to estimate are the ones that are fully understood both in terms of what the customer wants and in terms of steps to be taken to complete the tasks. A task where the customer himself is not sure of what he wants or a technical task for which the engineer himself is not able to develop a road map would need more time in analysis. Either way the estimations for the time would be way off. Effort and time would be required in analysing and breaking the task into smaller tasks or sub-tasks.

Once the tasks are understood and broken into task with steps needed to accomplish it are defined, the estimations would be a function of difficulty and volume of work.

It works actually like story points does in Agile. The stories can be placed on matrix based on story points. It would be easier to develop time estimates for stories with lower story points and hence they are prioritised to be picked up. The above model can also be used for prioritising projects in case of a clogged pipeline. The teams would also be able to compare stories across sprints based on difficulty level.

Please do wait for an illustrated example of this in next blog post.

ERP does not build systems, It only digitises them

Tags

Business Process re-engineering, Business Systems, ERP

One of the common quick fix solutions I hear from business owners of small to medium sized entities is to get an ERP installed and it will fix their broken and in some cases, non-existing systems. Their expectation from the technology is that it will bring in the required discipline besides implementing readymade systems. Unfortunately a software is as disciplined as the humans who drive it. In real life, it is common to see people develop work arounds or defeat the systems. For example in one case, salesmen would put a dummy entries with negative value in sales orders when they were close to exhaustion instead of repeating the whole process of creating a new sales order. It is also equally common to see shared passwords, especially in accounts where access to certain data cannot be provided to temporary resources. The most interesting was a case where a person would only make summary entries in ERP and maintain elaborate segment wise books of accounts in Excel.

Enterprise Resource Planning (ERP) started as a material planning software that helped managers in getting real time information in different functional areas such as inventories of raw material, finished goods and work in progress in different stages of production etc. Soon ERPs went beyond database management and integrated key processes such as procurement to payment, order to cash and thereby reducing errors and improving efficiencies.

Different companies have different workflows and business rules depending on how they evolved and developed. A good ERP is flexible enough to accommodate different workflows and procedures. But unfortunately, it also makes such ERPs more complex and expensive. One risk of changing existing systems to suit ERP or utilize specified workflows in ERP is that it may result in loss of competitive advantage. There would also be additional cost of learning a new way of working. A corollary is that ERPs do not help in designing of systems, yes they can offer options that a company can choose provided the implementation agency has the patience to educate.

Before a company goes in for ERP, it would help if it documents its systems. That is, it should have defined workflows, practices, controls such as authorization levels for reviews and approvals. This would not only smoothen the process of implementation but also reduce the number of conversations that end in frustration for both the customer and for the ERP implementing agency. One of the biggest frustration for implementers is reconciling different versions of same process from different stakeholders and verifying that they got it correct.

The key thing that a company has to focus on is how to remove redundancies and avoid duplication of documentation in cross functional processes. For example, in most companies, invoices of vendors are still received in procurement. Procurement department reviews them and then forwards a copy to accounts for payment. Both departments end up storing a copy. A good control will be that invoices are received directly by accounts. Accounts conducts three way match, ideally four way if hard copies are also included, and raises queries, if any. Something similar happens on sales sides, where sales invoices are reviewed by Sales department and then forwarded to the customers. It also generates twice the amount of paper copies.

Business men may want to implement ERPs in their companies for the efficiencies and better controls the software would bring in while equally mindful of the risks of unauthorised practices. ERPs bring in its own set of discipline like respecting access roles and authorisations. It would work better for companies to formulate a cross functional team for implementation of ERPs. The team would document the existing systems, research and work with implementer in configuring so as to minimise customisation.
To recapitulate. Implementing ERP would standardise workflows, improve quality of data, quality of reports, efficiency and collaboration but not checks and balances.

If you are evaluating ERPs, Best of luck.