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OCM_dilbertFellow ERP consultants Panorama Consulting wrote awhile back about the importance of change management (here), particularly for companies in the process of implementing ERP.  According to a recent post by manager Eric Kimberling, here are three important questions to ask if you are a CIO, IT manager or project manager trying to decide how much to invest in an effective organizational change management strategy:

  1. How big of a role will organizational change management play in your ERP implementation success? A recent Panorama report noted that “100% of organizations experience some sort of material operational disruption at the time of go-live, such as not being able to ship products or close the books. Nearly half of those organizations experienced disruptions that lasted more than four weeks.”  The reasons have little to do with ERP itself.  Instead, they had to do with people and processes.  Most organizations (63%) reported finding changes to process difficult.   “Given these statistics, it is clear that organizational change management is very important to project success.”
  1. Are you more focused on short-term or long-term implementation costs? Because so many ERP projects go over budget, “many project managers are tempted to cut organizational change management activities to finish their initiatives as close to on time and on budget as possible,” notes Panorama.  They go on to say: “However, those that cut critical change management activities typically find that it actually takes them more time and money to implement than if they hadn’t cut those areas of focus in the first place. Simply put, companies that experience broken business processes and confused employees at the time of go-live are going to spend exponentially more on their ERP implementations than if they had invested in organizational change management in the first place.”
  1. Which exact organizational change management components are important to your project? OCM is not just an “exercise” in end-user training that happens just before you ‘go live.’  It’s more complex than that, involving people, processes and sometimes difficult change.  It requires a strategy.  Focus group, emails to employees, team meetings, scrums and status meetings can all be useful to help smooth the flow of change and implementation.  The most successful projects “leverage change impact assessments, process training and communications, and organizational risk assessments.”  As Panorama concludes: how successful do you want your ERP implementation to be?  “Organizational change management is the most likely determinant of success or failure, so the most effective project managers choose to invest in organizational change.”

martin_baily

In our previous post, we noted some truths about manufacturing myths in need of correcting.  In today’s post, we reveal another way to look at the state of U.S. manufacturing today.

An article in a June 3rd Wall Street Journal report (“Unleashing Innovations”) points up a disruptive revolution underway in U.S. manufacturing that, they say, we need to stop fighting and start admitting.  The age-old premise that a high-school education will lead to a high paying manufacturing job is a thing of the past.  According to the Bureau of Labor Statistics, of the 5.7 million manufacturing jobs lost since 2000, only 870,000 have returned.  As “The Boss” once said, “Those jobs are gone boys, and they ain’t comin’ back.”

The truth is this: Manufacturing will be crucial to the U.S. economy in the future “not for its ability to create jobs but for its potential to drive innovation and productivity growth, and for its role in international trade and competitiveness,” according to Martin Baily, the chairman in economic policy development at the Brookings Institution in Washington.

Baily says it’s time we stop measuring success by the number of jobs in the sector and start supporting “the technological advancements that are making factories productive, competitive and innovative.”  True, this will result in fewer factory jobs, but that’s already a fait accompli.  The shift to improved technology is already being powered by three key developments.

The first is the Internet of Things, which we’ve spoken here about often.  That’s the interconnectedness of objects and machines with the web, i.e., machine to machine communication.

The second is advanced manufacturing, like 3-D printing, new materials, and advanced digitization of product development and production.

The third is distributed innovation, where ‘crowdsourcing’ is used “to find radical solutions to technical challenges much more quickly and cheaply than traditional in-house R&D.”

These are difficult challenges, not least because they favor innovation over job counts, productivity over politics, and the pursuit of advanced technologies like robots and others noted above.  But failing to do these things could have even worse consequences.  And the fact is, there will be good jobs in manufacturing – even if not as many as in the past – especially for those with big-data, programming and other specialized skills.  If anything, the real challenge will be finding the talent organizations need to surmount these challenges.

As Baily describes it, “It is hard to let go of old ways of thinking, but continuing to chase yesterday’s goals only puts off the inevitable.”  Instead of dragging out the fight, he argues, we need to “focus on speeding up the manufacturing revolution, funding basic science and engineering, and ensuring that tech talent and best practice companies want to product in the United States.”

 

mythsvsfactsSince most of our clients are Midwestern manufacturers, today we look at three myths about manufacturing.

Michael Hicks is a professor of economics and director of the Center for Business and Economic Research at Ball State University in Muncie, Indiana.  He recently commented in an article in the June 15th South Bend Tribune about Indiana’s recent annual report card and an attempt to debunk some pervasive myths about manufacturing in general throughout the United States.

In the Good News department, Indiana continues to do well, “earning a top spot.”  The state improved in key areas including human capital, unfunded liabilities and maintaining a strong fiscal environment.  On the downside, our state saw an increase in health premiums relative to other states.

Of greater interest though were some of the myths needing to be dispelled.

For one, a lot of otherwise smart people think the manufacturing base is shrinking which, Hicks notes, is simply not true.  “On an inflation-adjusted basis, last year was the record year for manufacturing production in the United States.”  And we’re on track to surpass that record in 2015.  Hicks points out that the data are “stunningly simple to obtain” from the Dept. of Commerce website.

A second myth he debunks is “that we are losing huge numbers of jobs to foreign trade.”  Hicks points out that, in the first decade of the 21st century, we saw the largest declines of manufacturing employment in history.  But after applying some math, it turns out that “87% of job losses in the last decade were due to productivity gains.”  As Hicks points out, “we are simply very good and getting better at manufacturing, and trade deficits accounted for no more than 0.08% of annual job losses per year over the last decade.”

Finally, Hicks dispels the myth that new manufacturing jobs pay less.  The average new hire in manufacturing in Indiana makes over $20/hour.  While that may be less than the pay rates of today’s retiring plant workers, it’s simply a reflection of the fact that younger millennials are replacing older, higher-paid boomers, and the new manufacturing jobs are still by today’s standards very high-paying opportunities.  It’s still good money.

Manufacturing production is growing and, after accounting for retirements, Indiana alone will have 125,000 manufacturing job openings every year for the next ten years.  By way of comparison, Hicks points out, we will have only 70,000 high school graduates per year.

So while we may have work to do on issues from taxes to trade to currency manipulation, still, Midwestern manufacturers – and their employees – appear to have much for which to be thankful.

In the end, as Hicks notes, the “real problem may be the need to better prepare folks to take these jobs.”

In keeping with our theme of ‘manufacturing’ for just one more post, in our next post we’ll see what a noted policy maker says about how U.S. manufacturing policy is getting it all wrong, and what we must do about it.  Stay tuned…

youre doing it wrongWith apologies to fans of the film Mr. Mom, it turns out many of us are doing it wrong.  What’s it?  Our email signoffs.  A University of Pennsylvania study in 2003 found that only 5% of email writers closed with the signoff “best”.  In those days, it was surpassed by closings like “thank you” and “regards.”

According to Rebecca Greenfield in an article in Bloomberg BusinessWeek, today no one says regards anymore and everyone says best.

In email’s early days (the 90s), Greenfield notes, “most users wanted to abandon the formalities of letter writing altogether so they omitted signoffs.”  There was no salutation or closing – it was like a memo.  But as emails started to function and look more like letters, people reverted to formal, familiar behavior.  Now, according to Barbara Pachter, a business etiquette coach (didn’t know there was such a thing did you?), “there is a whole hierarchy of closings.”

She goes on to note that “Yours” sounds too Hallmark… “Warmest regards” is too effusive.  “Thanks” is fine but often used when no gratitude is necessary… “Cheers” sound elitist… “Sincerely” is just fake.

At least “Best” is benign, at least according to Judith Kallos, an email etiquette consultant (which, if you didn’t know there was such a thing as a ‘business etiquette coach, you sure didn’t know there was such as thing as).  Apparently, “Best” works, well, um… best, when you “apparently don’t know what else to use,” says Kallos.  Others have been less kind, calling it charmless, pallid, impersonal or abrupt.

Best has even been mutated, (like a virus) into “All my best,” “all best,” “very best,” and so on.

Fact is, “Best wishes” goes back centuries but first appeared as a standalone in 1922.  F. Scott Fitzgerald was an early fan.  “Ever since the 18th century, the English speaking have been busy pruning away all ornament of expression,” wrote no less a mother of etiquette than Emily Post that year.  “Leaving us nothing but an abrupt ‘Yours truly’.”

And so Greenfield suggests we have been bullied into using empty words.  Turns out, according to her very unscientific survey of friends, that 75% use best or thanks.

So if not best, what?

Well, apparently… nothing.  Don’t sign off at all.  As email becomes more chat-like and functions like instant messaging (think texting), it’s become even more informal.  Tacking a “best” onto the end of an email can read as archaic, like a mom-style voice mail, notes Greenfield.  Signoffs interrupt the flow of conversation, and they’re “not reflective of the normal way we have conversation,” according to Liz Danzico, creative director at NPR.

Danzico ends all her emails, even professional ones, with the period on the last sentence.  No signoff, no name… just a blank white screen.

All the best.

mckinsey_logoGiven the transformational implications of an ERP solution, perhaps it’s only fitting as implementers of such systems to take a moment to see what America’s top consulting firm, McKinsey & Co., had to say on the topic of “transformation” recently.  From a rather detailed article (well, it is McKinsey after all…) found here we’ll distill it down to a few key takeaways.

To start, McKinsey points out that only about one-fourth of all executives say that their companies’ efforts at organizational transformation actually succeeded.  That’s a pretty poor rate, but the good news is that it’s actually up from 3 years prior, when only one in five said they’d succeeded.

But there was some good advice found in the responses from those who had succeeded.  While no single action explains the difference between success and failure, several factors in the aggregate tend to make it clear, like:

  • Companies that succeed generally took more action steps than those that did not, and
  • In particular, four of those practices as exhibited by key managers appeared to be key:
    1. Communicating effectively
    2. Leading actively
    3. Empowering employees
    4. Creating an environment of continuous improvement

All told, McKinsey asked executive respondents about 24 specific actions that support a transformation and found that “when organizations follow a rigorous approach and pursue all of these actions during a transformation, the overall success rate more than doubles from the average.”  And for completed transformation it was triple the average.

Success was thus indeed possible, but clearly required active, vigorous and focused attention by key managers on the people in the organization.  In fact, McKinsey summarizes their findings as follows (this is an abbreviated rendering; see the full article for details):

Focus on people, not the project. Transformations are about the people in the organization as much as they’re about the initiatives. The long-term sustainability of a transformation requires companies to engage enthusiastic high-potential employees, equip them with skills, and hold them accountable for—as well as celebrate—their contributions to the effort.

Communicate continually. When embarking on a transformation, executives should not underestimate the power of communication and role modeling. The results suggest that continually telling an engaging, tailored story about the changes that are under way—and being transparent about the transformation’s implications—has substantially more impact on an effort’s outcome than more programmatic elements, such as performance management or capability building.

Take more action. Transformation is hard work, and the changes made during the transformation process must be sustained for the organization to keep improving. There is no silver bullet.

 

roi_imabeInside-ERP writes, at Toolbox.com, of the eight key things companies can do that will give them the best yield on their system investment.  In view of the many failed implementations – most of which failed because they ignored one or more of these – we offer them in simple form today.

Once you have a team of key senior stakeholders in place who set project expectations and ensure that all team members are aware of the plan, they should follow these best practices:

  1. Build a strong internal implementation team by finding and empowering a qualified project manager with strong technical and communications skills.
  2. Refine business requirements before the actual software implementation begins to avoid confusion. This can be easily done by conducting workshops with the internal team and vendor partner to finalize the necessary process requirements in advance.
  3. Get buy-in from the executive team on the project, then have regular check-ins with the executives to keep them apprised of ongoing progress.
  4. Actively identify areas of the business where ROI can be best achieved, particularly where the new ERP software can make the most difference.
  5. Develop a detailed implementation plan that outlines all resources required to complete the project along with a timeline and budget.
  6. Offer training programs to employees at all levels to uncover efficient solutions for workflow gaps that arise during the implementation phase.
  7. Once the implementation phase is completed, organizations should have a change management plan in place to track changes to project tasks and ensure that the changes are not the result of end-user resistance to the new software.
  8. Commit to conference room testing prior to go-live where end-users can test process flows and integrate with all external applications.

Every step above is important, and we believe companies fail to follow them at their own risk.  The full article can be found here.

 

 

Pan_MfgSince our specialty is implementing ERP for manufacturers in particular, we thought we’d share another provider’s thoughts on some of the traits of successful manufacturing companies, versus those not quite so successful.  The opinions come from a recent article from Panorama Consulting Solutions.  We think they ring true and are worth a recap.  The original article can be found here.

Panorama starts by noting that the benefits of technology, ERP and automation solutions are not evenly distributed across the manufacturing landscape.  Yet regardless of industry niche, it seems the most successful manufacturers are better able to handle five key challenges better than their counterparts:

  1. More flexibility. Buyers have come to expect flexibility, and those manufacturers who can provide it win.  More modern systems, whether they be workflows, equipment, educated people or the software that runs your business… all can and should contribute to that enhanced flexibility.
  2. Better integration of data. We’ve been collecting data for years.  Only lately have companies demanded, and ERP vendors provided, better tools to leverage this data, and thus turn data into verifiable conclusions leading to meaningful action.  The most successful manufacturers figure out how to do this.  It needs to be well-defined, repeatable and scalable.  Panorama gives the example of demand forecasting and advanced planning processes, which are much more effective when they effectively integrate inventory and sales information.  In other words, real
  3. Leveraging the “Internet of Things”. The IoT is a common buzzword these days.  We’ve written about it several times here.  It’s all about “leveraging data from multiple sources and devices.”  Tablets, scanners and all manner of remote communication devices will increasingly become a part of the fabric of manufacturing data and manufacturing execution systems.  Companies who do it sooner and better will be the winners, both more flexible and better integrated to the benefit of their customers.
  4. More clearly defined business processes. This is business process reengineering.  We preach this constantly, and find that it’s a critical component of an ERP implementation.  Successful companies take this stuff seriously and pay attention to it as a matter of continuous improvement.  Laggards fumble their way through but too often fail to leverage new technologies in meaningful ways.
  5. Better use of organizational change management. “New business processes means lots of change for employees,” notes Panorama.  Most people don’t take well to change.  There are many tactics and tools that can and should be used to leverage positive change and new systems into better operations.  Organizational change – all too often ignored or swept under the carpet unfortunately – is an enabling tool for companies who wish to succeed.  It’s one more way in manufacturing of separating winners from also-rans.

 

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