Transformation projects within the operations space – supply chain, procurement, and manufacturing – can greatly contribute to how well entire businesses set themselves up for the future and outpace their competitors. Today’s VUCA world characterized by volatility, uncertainty, complexity, and ambiguity (as evidenced by the recent COVID disruption) only emphasizes the importance of transformation. Additional factors such as the need to build a robust environmental, social, and governance (ESG) strategy have also starkly highlighted the need to launch transformation projects rather sooner than later. However, despite often high levels of motivation, the reality is that many projects in this area will fail.
How to up the odds of success of your transformation projects within operations? Project management best-practices will get you so far but leading from the front and boosting morale are more challenging. We believe there are several elements that will set transformational leaders (and their teams) apart. Our CLIMB approach outlines five complementary ways businesses can build transformation muscle (See Exhibit 1):
1. Clarify – Purpose is the backbone
Many operations projects start off with well-intentioned goals, such as generating savings, reducing inventories, or improving category management. The problem is that many organizations don’t invest sufficient time up front to think about why they are undertaking projects in the first place.
The direction and purpose of the transformation has to be set by top management, clearly communicating their vision and desired outcomes, which will allow teams to pivot, improvise, and adapt when necessary through the project. This strong sense of collective purpose and belonging also helps to motivate your people to take on tasks and objectives that go well beyond daily work. To do this, leaders should think about how they articulate a narrative around the transformation story before the project starts. Why is this change needed? What is the impact expected from the change? How does this help the entire business?
When it comes to operations projects, one common issue is that operations function often struggle to be perceived as fully-fledged strategic business partners, in the same way as areas such as for instance sales and marketing. This means they might have a hard time being heard outside their core mandates of purchasing, producing, and delivering. For this reason, reinforcing a strong sense of purpose will be vital to remind the team about the strategic importance of the project for the function and the company, and the positive impact it will have across the business.
2. Learn – Combine "operating model work" and "immediate impact"
Operations transformations need to do two things: they need to transform the ways of working in the operating model and they need to generate immediate impact. To see the full change benefits during a transformation project, these two complementary elements should be tackled in combination.
While operating model topics (such as redefining a Supply Chain team’s core processes, functions or roles and responsibilities) trigger deep and embarking evolutions in the ways of working, immediate impact approaches (for example identifying, assessing, and implementing procurement savings levers) drive short term enhancements of key performance indicators (KPIs) (such as savings or inventory levels). In our experience, the latter is the best way to apply in concrete impact workshops that what has been prescribed by the former as a best practice to be applied in future ways of working. Tackling both components in parallel in the same project is hence the best way to create a virtuous learning loop and boost change. One consumer goods company worked for instance across functions and sites on procurement savings, applying in practice a key future way of working defined in the operating model part of the project. In operations, this combination during a project is even more important given operations very concrete roots: working only on an operating model could take the project to far away from daily realities and from the impact that operations are supposed to generate. Our recommendation is to treat the operating model components holistically without neglecting any of its components, such as vision/mandate, organization, processes, HR / competencies, data and tools, as they are all contributing to the transformation in a complementary way.
3. Interact – Be "hands-on" every day
Human nature is such that we are often inclined to think the worst, particularly given that historically transformations projects indeed not always succeed. If stakeholders, particularly managers, embark on projects with limited expectations of success based on tainted previous attempts, the chances of failure will increase. The longer negative beliefs and perceptions are left unaddressed, the greater the potential is for damage to the project.
Firstly, take time to listen and understand what is behind these beliefs. What happened the last time? Was there adequate buy-in from senior management? Did all the key stakeholders participate? Were all the promises fulfilled? Secondly, address these doubts through dialogue and provide proof that supports why this time will be a success.
One industrial company had been experiencing specific process bottlenecks for several years. The breakthrough came after the agreement of senior management to recruit additional resources to address these very specific shortages. The signal sent to teams was extremely positive and powerful, showing that things had changed, that this project would be different from previous ones.
Succeeding in a transformative project is a continuous journey and requires transparency and trust. Leaders must invest considerable time to regularly communicating the project’s objectives and be prepared to answer diverse questions and address doubts every day. Taking the time to listen to the operations team, to project stakeholders in general and deal with concerns as soon as they arise will help to overcome immediate roadblocks and avoid friction later on.
Likewise, it’s important to take on board a balanced range of views, including those who express opposing opinions. In our experience, project “opponents” will become even more defensive and “neutral” participants will tend to migrate towards being “opponents” if there is a perception that their voices are not being heard. In fact, transformation projects should be viewed as opportunities to break down boundaries and encourage new ways to collaborate. Nobody should be left behind, even if it can seem easier at the project’s start.
Taking the example of procurement, it will be essential to deeply involve for instance functions like Research & Development, production, supply chain and finance weather the target is to define new processes or evidence performance levers: procurement alone will achieve only a fraction of its potential.
4. Modify – Accept and adapt to survive
A transformative journey is not a linear process, and most likely will be characterized by periods of frustration, firefighting, and struggles. It’s likely that the time will come when project participants will feel adrift, lose their initial understanding of the journey, embrace again their limiting beliefs, and even sometimes question once more the purpose of the project itself. Participation might decrease and some team members could become defensive reflecting the feeling of not being able to foresee a successful end to the project despite the deep efforts that were conceded. When setbacks occur, it’s important to accept the idea that projects will not necessarily progress according to plan and that a team’s ability to adapt is a key strength to ensure success. Important also that top management always holds its ground asserting the crucial importance of the project for the company, reminding its purpose and hence supports the project’s leadership teams and participants.
Furthermore, a true transformation should not be managed with a rigid “on – off” switch and its content should not be carved in stone. Constant listening and adapting will be key. For instance, when the core project streams arrive at an “official” ending point, the monitoring should however continue, by observing if results are reached, gathering feedback and being ready to jump in if required. In the same respect, we sometimes notice missing project modules only after the project has already started as specific issues surfaced only late. In this respect it’s important to be flexible also during the project and make the changes necessary to the initial scope. Adaptation is key.
Complexity can rapidly increase and become difficult to cope with on operations projects. One solution is to break down topics into sub-sets, for example purchasing categories, supply chain in-bound versus. out-bound flows, product types, clients, and geographies, and to tackle these sub-sets in consecutive project waves. Besides making the project management more efficient, another advantage of this approach is the rising efficiency of the project from one wave to another as well as the incremental time given to participants to learn and live the methodology.
The goal of transformation is to prepare for the future, therefore use projects to train and build competencies, identifying and nurturing the talent that will form the future wave of operations leaders. This can be through a top-down process of education, or a bottom-up approach of learning as-you-go, enabling the team to gather knowledge and experience. Take care to also balance details and overall direction to build accountability and confidence.
5. Build – Measure, communicate and celebrate
Measuring the progress of a given project compared to initial targets is paramount to see what has really changed in the ways of working or targets achieved. There should be clear performance metrics, with their associated responsibilities and incentives that reflect organization’s goals. It is surprising how often the topic of performance management is overlooked, even though it should, in our view, be the backbone of any change. Measuring performance should not be limited to cost reduction, but rather should be viewed through a broader lens, including also for example ESG and innovation.
In our operations work, we regularly see the value of helping business leaders rethink their performance dashboards with a wide range of diverse and prioritized metrics. This should be complemented by the definition of an enhanced strategic performance management process, including objective setting, related incentives, monitoring, and reporting. The performance management process is essential as it brings the dashboard alive and involves all business partners and top management in an aligned and regular way of working.
Above all, don’t take success for granted, rather communicate and celebrate it with enthusiasm. Take time out to recognize and reward the team and participants for their hard work and commitment. For operations transformations more specifically, celebrating teams at Comex level, emphasizes that procurement, supply chain or manufacturing topics are viewed as top management priorities.
Transformations in the field of operations are, and will become, more frequent in years to come, driven by the growing need for organizations to adapt to rapidly changing business environments. Using our CLIMB approach complementary to more traditional best practice project management standards, transformational leaders can enhance morale and motivation with their teams, and work towards an inspired, collective goal that will set the business up for future success.