Traditional Corporate companies are behaving like machines and follow a “predict and control” approach. Issues are addressed, assuming that everything can be fixed as soon as the “cause and effect” relationship is understood. This approach works fine to master complicated issues, but that is not good enough to master complex challenges.
Corporate companies are complex, and they often co-exist in the middle of complex environments. A lot can be learnt from (complex) living organisms or biological ecosystems where the interdependencies between the individual parts are determining the structure of the organism. Having the right amount of structure to funnel the energy in the system is critical but, having too much may slow down adaption and learning.
We have discussed 10 critical paradigm shifts towards “Sense and Respond” in the IBSing* pioneer group, coming to an optimistic conclusion that the glass is half full.
- The examples demonstrate that consciousness is increasing in the corporate companies and they are moving towards a “sense and respond” approach.
- Many improvements are emerging out of a pain-point or crisis which is leading to different ways of working.
- Some improvements are driven by visionary leaders that are holding the space for positive change.
Examples of the 10 critical paradigm shifts towards “Sense and Respond” shared by IBSing pioneers
Moving from “Extrinsic Motivation” to “Intrinsic Motivation”
The “Credo” of Johnson and Johnson, crafted in 1943, has been named in our first IBSing pioneers call as a shining example, where responsibility towards patients, employees, communities, and stockholders are defined in that order. Sustainable “Financial Health” is a consequence of activities based on a deeper purpose. Since then, more and more companies have defined their purpose and are using it as basis for operational decision-making. When we are driven by a strong sense of purpose, we are inclined to be far more productive and this can also allow us to break through previously held paradigms.
Moving from “Ego-System” to “Eco-System”
When an organization moves from “silo thinking” to doing what is rather best for the entire organisation, businesses are more effective and efficient. A colleague who previously worked in the telecommunication industry provided an example about CPFR* with suppliers to reduce obsolescence risk and inventory cost whilst keeping customer service high. First concerns about confidentiality related to price negotiations disappeared quickly after great improvements in fully transparent KPIs driven by accurate data openly shared between divisions. Having clear alignment on targets and open communication channels. The suppliers were reacting quicker to the business needs, advancing and postponing shipments where needed and even offering incentives to support subsidy or promotional activities for slow movers.
*Collaborative Planning, Forecasting and Replenishment
Moving from “Avoiding Conflicts” to “Leveraging Conflicts”
A typical source of conflict in S&OP meetings are top down sales plans with ambitious growth targets that need to be baked into an “as accurate as possible” sales forecast. A Supply Chain leader from an FMCG company has resolved that dilemma by offering education about the importance of accurate forecasting for demand and supply balancing. Including providing transparency and reliability with statistical forecasts and standard processes. An S&OP lead from the Machinery industry has focused on an open dialogue, alignment on goals, balanced KPIs, rules for collaboration and a common set of values.
Moving from “Withholding Information” to “Full Transparency”
Not surprisingly many examples highlight improvements in E2E transparency after implementation of S&OP. The functions are moving out of their silos and Supply Chain, Finance, Commercial, Manufacturing and other teams are working from the same set of numbers. E2E Planning System implementations (with scenario planning capabilities) have contributed significantly to improving the visibility of risks and opportunities. A colleague from the Medical Device Industry has shared significant improvements because of the implementation of a “risk management processes”, where transparency is rewarded, and leaders are offering support to mitigate risks. An example was shared from a representative of the food industry. On the advice from the sales teams, the decisions of the IBP meeting are now shared transparently across the organisation, so that everybody can make the adjustments in their own area of responsibility. Better email writing can improve transparency as well, instead of spending valuable time making sense from a long ping-pong email, a clear, comprehensive and concise description of a critical issue can be improved and thus speed up the resolution.
Moving from “Consensus” to “Consent”
A Supply Chain lead from a Medical Device company has implemented the consent decision process within the team. The result is that the speed of decision-making has increased significantly. Moreover, people have been acting like entrepreneurs and taking ownership of the risks in their realm of responsibility.
Moving from “Power Over” to “Power With”
In several companies represented in the IBSing group, “Safe Behaviour” programs have been organized, where all colleagues have been trained on providing “constructive feedback” and “positive feedback” to colleagues in a non-judgemental way. Examples were shared where operators successfully provided constructive feedback to colleagues in leadership positions and helped them to adjust behaviour and to avoid unnecessary safety risks.
Moving from “Firefighting” to “Essential Intent”
What often creates dysfunction in businesses is when they adopt a firefighting and a “escalation by decibel” approach. Blaming other departments for mistakes or extrapolating the future from the past (“That will never work!”). A colleague from the Electronics Industry is reporting that instead of “post-mortem” analysis regarding capital expenditure spend, they started to reflect on the real purpose and organisational intent of the investments. They succeeded to develop predictive models enabled by an open mind, curiosity and the effort to build new models.
Moving from “Top Down Strategy” to “Self-Correction”
This approach is gaining momentum in organisations. Process improvement tools such as PDCA are already consistently being adopted in some companies. There is also a trend to move away from too rigid monthly cycle structures to weekly and ad hoc initiatives. Governance meetings are implemented, to embed learnings from the Operational processes into the organisation. This allows corporations to break from outdated rules, silos and sequential processes which in turn leads to higher agility and better organisational learning.