The Day Job and the Change Job

Yesterday The Times reported

"Taxpayers will foot the bill for a further £2 billion on a failed NHS IT project even though the Government has already pulled the plug on it."

It is reported that it is such a huge contractual mess that there is now no way out of it.

Now, we are told. the reform of the NHS is under way. The cost of the change process is now estimated at £3.4 billion. It is staggering, breathtaking - and appalling.

Any business management that is just managing to survive the present economic storm is learning what those that are already prospering and growing (sometimes at their expense) know. They are learning that you have to combine your Day Job (running the business - delivering service, products, customer satisfaction) with the Change Job (reducing waste, improving performance, re-structuring, introducing new technologies, operating smarter- etc.). They cannot afford to sit around and splash out big bucks for someone else to do it for them. They cannot afford to hire extra staff to "give themselves the time" (ah diddums) to do the Change Job. They have their hands on and in it up to their elbows - and their minds on making it better.

One of our clients put it perfectly "I expect the people to run the business, and my managers to improve it"

Until the Public sector learns this lesson, nothing will change.

We know how to enable this to happen. It is so frustrating to see no sign whatsoever that anyone in Government or Public Sector leadership recognises the need to build the Change Job into the Day Job.

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson partners in Achievement Coaching Internationalwhere we help businesses to learn different thinking to enabledifferent actions that deliver thedifferentresults that Make a Big Difference.. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at"Business Bloop Award", "You're having a laugh ... seriously?"and "Capitalism or ... Common Sense".

IT Turkeys act as Black Swans

Big IT projects are spiralling out of control, costing shareholders and taxpayers billions of pounds, according to new research published this week in the Harvard Business Review,

In a study of about 1,500 projects, Oxford University and McKinsey & Co, the management consultants, found that one in six grew so massively out of control that they threatened the survival of the companies that commissioned them. These so-called “black swans” were so disastrous that, on average, they ran 200 per cent over budget and 70 per cent over schedule, the researchers found

The researchers said that the average cost overrun for all the IT projects was 27 per cent, but it was there was a minority of cases with the biggest budget blowouts accounting for most of the losses however, the percentage of problem projects was 20 times higher than they expected to find. They cited the example of Auto Windscreens, in 2006, the second-largest car glass company in the UK with sales of £63 million and 1,100 employees, which changed its financial IT system. By the end of last year, it had been forced into bankruptcy by a combination of falling sales, problems managing its inventory and overspending on the IT project.

The project leader, Bent Flyvbjerg, of Oxford’s Said Business School, said: “We were shocked when the data came in. IT projects are now so big and touch so many aspects of business, government and citizens’ lives that this poses a singular new challenge for top managers".

We wonder to what extent these shocking (but not surprising) results reflect the prevailing fashion in Management to de-skill and de-humanise business operations? Substituting "process" for individual competence and responsibility appears to be widely seen as "good practice".

The resulting levels of over-elaboration and over-definition generate complexity at exponential rates. So if the same mind numbing approach is used in the IT development itself, this is a Management Culture failure as much as anything else, so it is hardly surprising that dumb gets dumber and chaos ensues.

We were not surprised by this report, we have heard too many anecdotal stories of such tragedies (many sheltering under threat of libel action if publically reported) and recall one CEO stating "We are betting the Corporation on XXXXX" when he invested nearly 30% of his business' net worth in "an IT revolution". That bet was nearly terminal for the company, and definitely for that CEO. We recall one of our clients realising that a £2 million investment in "doing the same again but with more complexity" could be massively reduced so that they could "do it very different and simple" with just 4 PC's!

We think that it is time Managers reversed this slide into mediocrity and re-learned how to allow people to manage their own jobs; that is what the exceptional organisations do (you know, like Autonomy). They are the ones with the employee satisfaction awards and the excellence awards - oh yes, and the outstanding profitability and massive Comparative Competitive Strength.

It is interesting that this news should follow so closely on our previous blog about the effects of this insidious de-braining approach on the Probation Service. If you treat people as stupid then, first, they will respond accordingly and second, what perhaps might that tell the world about you?

So, once again, we repeat that is is the attitudes, behaviours and beliefs of a business leadership and management that determines the performance of the organisation. It looks as though this research shows that if you are dumb enough to think that a monster IT investment in complex systematisation will act as a substitute for competence in leading and managing your people, you will get exactly what you deserve.

The tragedy is that your employees, suppliers and shareholders do not deserve to lose so much.

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson partners in Achievement Coaching Internationalwhere we help businesses to learn different thinking to enabledifferent actions that deliver thedifferentresults that Make a Big Difference.. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at "Business Bloop Award", "You're having a laugh ... seriously?" and "Capitalism or ... Common Sense".

Formula One ideas can transform Probation Service!

Last weekend I watched Lewis Hamilton drive his McLaren right round Fernando Alonso on the outside of a bend (wonderful mastery) on his way to win the German Grand Prix. Behind him two dozen Formula 1 engines spent over 100 minutes each revving up to 18,000 rpm or more for the whole 60 laps – and yet only 3 cars retired for mechanical reasons. And Lewis drove better than he knew how!

It offered an penetrating insight to Thursday’s radio news when I listened to Kenneth Clarke, the Justice Secretary, vowing to end the "tickbox, bean-counting culture" of the probation service after MPs revealed that officers spend as much as 75% of their work time on administrative duties rather than dealing directly with offenders. The MP’s report said that micro-management is continuing. It said NOMS (National Offender Management Service) is currently attempting to detail every component of every aspect of prison and probation work, measuring the time it takes to complete and then costing it.

It is abundantly clear that the top team in NOMS certainly cannot even spell “Management” or “Service”. Even now, in the 21^st century , we see a public sector leadership bogged down in the prehistoric “work study” management approach (and even making a mess of that). There has been a complete revolution in management knowledge and competence since the 1970’s – but not in Whitehall. NOMS is just one tip of the iceberg of ignorance that permeates so much of UK management practice – and journalism (the silly questions Clarke was asked!).

Every organisation is a machine – a mechanism for converting funds into outcomes. The job of operational management is to design a viable mechanism and then operate it effectively. The “Scientific Management” methodologies of the 1970’s understood this badly, teaching the type of approach that we see from NOMS. Systemisation, detailed tasking, tight targeting and intense measurement were to be the keys to successful operational performance – except they proved not to be. The approach ignored the uncomfortable fact that the mechanism of organisation contains some essential components that are neither mechanical nor systemised – people. It has taken us nearly 40 years to discover how to surmount this.

“What on earth has this to do with Formula 1 engines?”, you may ask.

Many years ago I met one of the leading engineers in Cosworth Racing, at the time when their engines dominated Formula 1. He told me something so amazing that I never forgot it. It should amaze you too. I guess we all assume that our car engines are great solid lumps of metal with bits whizzing around inside – and that the same is true of pretty much all the machines we come across. And so, we might assume, all the bits in these machines fit together much the same when they are stationary as when they are working. So, when managers think about organisations – the mechanisms for converting funds into outcomes – they may make the same assumption. And then specify all the components accordingly – wrong!

The Cosworth chief engineer told me that their race engine increased and contracted in height by 0.030 inches (1/32 inch, or 0.762 millimetres) during every single engine rotation and that this was at a different time for each of the 8 cylinders so the height varied along the cylinder block. Consequently every other component (piston, connecting rod, crankshaft etc) also stretched and compressed to match, and all of this happened at 18,000 rpm, so that the whole engine was in fact like a great elastic vibrating jelly. All of the components stretch and compress to work together perfectly. Wow! What an amazing and scary fact.

The difference between an engine and an organisation is that, in the organisational mechanism, a high proportion of the components are people – and unlike in the engine, these parts are intelligent, flexible and adaptable. Smart leaders and managers have learned how to combine robust operational systems with the best of human adaptability and flexibility. And, unlike machine parts, people can learn how to perform better all the time. That is how the very best companies massively outperform the average – they are not only built better, they think better too, from top to bottom. Winning mechanisms are flexible, champion organisations learn to be better all the time. Unlike the mechanism that NOMS is building which will be rigid, proscribed and of course will have eliminated “thinking” altogether. An approach that has been proven many times to fail .

It’s not just us saying this. There is a long line of research stretching back to the late 1980s that supports our conclusions. My partners and I are excited, and flattered, to see that McKinsey have just published research that once again confirms our own long held knowledge that peoples’ attitudes, behaviours and beliefs profoundly affect business performance – exactly as proved by Dr Vinod Singhal in 2001 and used as the basis for our Competitive Strength analysis published in 2003. McKinsey’s Scott Keller and Colin Price have coined the phrase “Organisational Health” to describe this; unfortunately, they offer no details of how it might be measured, but outline their strategy by which the necessary transformation may be achieved. Four years ago we launched our Competitive Strength Report to objectively measure exactly this dimension, and with a proven process to achieve the transformation needed. However, our approach will not compare with McKinsey’s as ours is incredibly rapid and very inexpensive.

So as I heard Kenneth Clarke, with the MP’s, railing at the incompetence of his management, I had an immediate mental picture of Lewis Hamilton exceeding his own expectations in front of all those extraordinary engine components.

Passing the competition round the outside of the bend – that is Beyond Excellence. You and your organisation can do it too, even the probation service might do it, but not with NOMS involved.

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson partners in Achievement Coaching Internationalwhere we help businesses to learn different thinking to enabledifferent actions that deliver the differentresults that Make a Big Difference.. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at "Business Bloop Award", "You're having a laugh ... seriously?" and "Capitalism or ... Common Sense".

Network Rail - Waterlogged or Sinking?

Network Rail says bad reputation means that it just can’t get the staff

Excerpt from The Times July 22 2011 – by David Robertson

Chief says company is seen as a stain on the CV

Network Rail has claimed that it is struggling to hire talented managers because some people believe that their careers could be damaged by the company’s reputation.

David Higgins, chief executive, said, at Network Rail’s annual meeting in Birmingham yesterday, that ensuring the company had high-quality people to manage the UK’s rail system was the single biggest issue he faced. ………..

Mr Higgins said: “We are just not an attractive organisation with all the turmoil that has been going on. We are not seen as a good company for people to have on the CV.”

This recruitment crisis has been brought to the fore as Network Rail moves from a centralised management model to a regional one.

It is recruiting ten route managing directors, who will have oversight for a particular rail network. These route managing directors will be supported by five or six key executives who will be responsible for areas such as safety, maintenance and punctuality.

“We have been out in the market to get route MDs but we have been unsuccessful. We may get only one out of ten route MDs externally,” Mr Higgins said. “We need 60 or 70 people as we devolve route responsibility. We have to go to people in our organisation and take a risk with them. We have enough experienced people to monitor them. Finding quality people is the single biggest issue this company faces.”

We all now know that the biggest single factor affecting difference in business performance is the people in the business - their behaviour, attitudes and values. Network Rail has a long history of leadership that has demonstrated zero competence in this area; its culture remains stuck in its past.

Until they deal with this, nothing will change - nothing can change.

It does not have to be expensive Mr Higgins - but it will be mighty uncomfortable. Sadly, changing the organisation chart and recruiting new faces will change nothing - except to damage the recruits' careers (as they obviously have spotted).

So, Mr Higgins, you need to start with the attitudes, behaviours and beliefs of your top team - "the recruiters". You need different thinking to drive different actions that will deliver different results.

Only then perhaps, at last, you may start to achieve the real transformation of performance that we all need to see.

Some of your suppliers learned to do this, once upon a time - so it is not impossible in the Rail Industry.

Here is a starter question - Do you think you might first need to become a sufficiently attractive Leadership Team to attract and then retain the quality of management you seek?

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson partners in Achievement Coaching Internationalwhere we help businesses to learn different thinking to enabledifferent actions that deliver the different results that Make a Big Difference.. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at "Business Bloop Award", "You're having a laugh ... seriously?" and "Capitalism or ... Common Sense".

Merrill Lynch - Wrong Thinking Wrong Conclusions

Last week, Merrill Lynch admitted it had been wrong to hold an “underperform” rating on ARM the Cambridge based technology company since November 2009. Over that period the value of ARM’s shares tripled and they have broken into the FTSE 100!

In a note published last week (entitled “ARM Wrestling”) Merrill admit that they “… had underestimated the potential for royalty rates to increase … and the sheer pace of end market growth addressable by ARM’s customers … and failed to appreciate the impact of Microsoft selecting ARM’s designs as the basis for the next generation if its Windows software …”.

How did they get it so wrong and for so long? This is the inevitable outcome of using conventional financial and business analysis to attempt to pick the next winner in an increasingly unconventional world. This way of thinking also assumes that all businesses perform in a conventional way and will therefore perform broadly in line with market conditions rather than outperform or underperform.

However ARM is not a conventional business in the way it thinks and behaves. If we apply the Competitive Strength perspective we can see that ARM have achieved a Competitive Strength condition of Excellent and may even have progressed to Free. Quite simply this means they are able to do things that other businesses with weaker conditions of competitive strength cannot. In this case the outcomes are higher royalty levels, customers who have exceptional rates of end market growth, major breakthrough deals with the likes of Microsoft and so on.

Merrill’s conventional approach is trying to spot the golden eggs, which goose is likely to lay them, as well as where and when. The Competitive Strength perspective identifies which geese have the capability to lay golden eggs because, as the Competitive Strength research base shows, that is invariably what they do. Can you also spot which is likely to to be the short term and which the long term investment perspective?

In spite of Merrill’s wrong call the market as a whole appears to recognise what ARM were capable of, though how many of the investment decision makers involved really know why is still a question in our view.

Can ARM do now wrong? Well watch out for any conventional sounding statements from the company, any sense of complacency and that they feel they have cracked it (no pun on the egg theme intended) and have become unassailable. This can be a sign that the Competitive Strength condition, how they think and behave, is slipping towards the Comfortable condition, where they will become vulnerable to external forces.

What about Merrill? They have now upgraded their stance on ARM to “neutral”. This indicates they are still using conventional thinking and analysis and/or maybe “neutral” is about exciting as it gets at Merrill Lynch these days.

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson partners in Achievement Coaching International where we help businesses to learn different thinking to enable different actions that deliver the different results that Make a Big Difference.. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at "Business Bloop Award", "You're having a laugh ... seriously?" and "Capitalism or ... Common Sense".

Flying Blind - again

Administrators called in at Auto Windscreens

The Times - Marcus Leroux

Last updated February 15 2011 12:01AM

One of Britain’s largest windscreen repair companies collapsed into administration yesterday without enough cash to pay its 1,100 workers.

Deloitte was called in as administrator after the company received a winding-up petition from Revenue & Customs over unpaid tax bills. Lloyds Banking Group, the state-backed lender, had earlier appointed Deloitte to try to find a buyer in an attempt to limit its exposure.

Matt Cowlishaw, a Deloitte partner, said: “It is extremely disappointing to see such a well-known business enter administration. The company worked extremely hard to try to recapitalise the business, but unfortunately this could not be achieved in the time available.We are now in urgent discussions with the key stakeholders and interested parties in an attempt to save the business.”

The company, the largest in the market after Autoglass, was well known to football followers as the sponsor of the Auto Windscreens Shield in the 1990s. It turned over £63 million last year. In 2009, the last year for which records are available, it lost £5.3 million on revenue of £77 million, compared with losses of £18.7 million on revenue of £99 million in 2008.

Sad, but from the figures quoted here, inevitable. They fail the common sense test.

With sales at £57,000 per employee, how might anyone expect this type of business (operators in vans with stock) not to lose money? And how can "re-capitalisation" be relevant when the cost base is so obviously too high and the revenue line too low?

This is a company with low Comparative Competitive Strength, and it has been so for some time. And now, inevitably, it has hit The Abyss. An objective view of its Competitive Strength could have seen this coming at least 4 years ago, time to have done something effective.

Probably an unnecessary failure, so it is sad for the employees, they have been badly failed by their management. Once again it looks as though the people on the flight deck have deluded themselves that all is OK, the wings have not fallen off, the fuel tanks have not run dry and the oh too solid ground is not 2 feet below them and approaching fast – “all we need is a little more time” (i.e. new wings, fuel , airspace = someone else’s money).

How often do we see management teams in failing businesses convincing themselves that they are “OK Really” when they really are not? How many allegedly professional advisors support such leaderships in this wishful thinking because, let’s not beat about the bush here, this is where their fees come from?

However, bankers, accountants, financiers and creditors could have looked at their Competitive Strength long ago, and taken precautions. They did not, so they deserve no sympathy.

Actually they should be hung, drawn and quartered for Wasting our Nation’s Wealth

The funds they have allowed to be squandered here could have been used to support other companies with the High Competitive Strength that can grow the economy and create jobs. So they have not only kept afloat a ship that should have sunk – but denied opportunities for success to others who deserve, and who we all need, to succeed

Until the financial decision makers and key influencers grow up from their dependency on accountancy practices and traditional indicators, they will forever be looking backwards. That means that they will continue to focus on the craft that haven’t crashed yet, watching where they have been to guess where they are going. This is because they don’t know how to look forward, how to recognise those businesses that can and will soar.

The Comparative Competitive Strength point of view can sound tough, but it does look forward not backwards.

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson partners in ChangeWORLD & Achievement Coaching International where we help businesses to learn different thinking to enable different actions that deliver the different results that Make a Big Difference.. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at "Business Bloop Award", "You're having a laugh ... seriously?" and "Capitalism or ... Common Sense".