Focused Management - Essential Capability for Suceeding in Today's Business Environment

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Focused Management
Essential Soft Capability for
Delivering Hard Results

3 Forces Blocking Growth*
…Often they come together
Complexity
Uncertainty
Ambiguity
Too many things to handle
Unknown Probability of
Occurrence
Multiple viable options
*Ref: Management Attention by Rami, 2011

Manifestation of 3 Forces
…They come in different forms
• Growing Complexity :
– More resources, Larger Infrastructure, Larger portfolio of products and
projects, More Locations, More and Diversified Customers, Fierce
Competition, Excessive Management Attention and Time, Increasing
Costs, Delayed ROI, Fire Fighting as a Norm
• Unrelenting Uncertainty :
– Increasingly Uncertain Forecasting, Fluctuating Demand, Changing
Plans, Shifting Priorities, High Employee Attrition, Large and Uncertain
Resource Bench, Delayed Fulfillments, Choosy Customers
• Increasing Conflicts:
– In Resource Allocation, in Funds Management, in Finding Optimum
Solution, Between management and staff, Between functions,
Between two right choices
28-04-2014 3

Real Undesired Effect
Management Attention is Constantly Challenged
Work on New
Products
Work on
Commercial
Orders
Increase
Deliveries
Improve
Quality
Reduce
Expenses
Protect Jobs
Increase
Stocks
Reduce Cost
Accept Scope
Changes
Protect dates &
BudgetAdopt New
System
Manage with
Current Way
In order to meet growing expectations in the new environment
Managers need NEW capabilities!!!
Focus on
Growth
Focus on
Stability
Focus on
Now
Focus on
Future

Traditional Way of Management
…Devastating Results
Complexity
Uncertainty
Ambiguity
Divide into Parts &
Improve Every Part
Impose Certainty on
Uncertainty
Compromise
Exhaustion, Chaos,
Firefighting
Gross Errors and
Enormous Waste
Status Quo and
Resistance to Change
Traditional Way ResultsForces

New Capability for New Situation
Focused Management
• When there is so much complexity and chaos all around,
Focusing on right things is the right strategy.
• Focused Management*: The Revenue focused approach
that gave astonishing results despite uncertain
environment
– In IBM, Micro Soft, TATA, Mazda, P&G, BP, Godrej, Ericsson, L&T,
Infosys, ABB, Mahindra and Mahindra, Dr. Reddy’s etc.
– Based on the insight that an organization is like a chain whose
strength is decided by the weakest link.
• That is, in order to dramatically improve performance, an
organization must focus on the weakest link than trying to improve
each and every part.
28-04-2014 6
* Also called TOC, Theory of Constraints or Constraint Management

Focused Approach
Dramatic + Quick + Cost Effective Results
Complexity
Uncertainty
Ambiguity
Focus on Core Problem
Provide Strategic
Slackness
Resolve Conflict
Dramatic Improvement
while being cost effective
Growth with Stability
Business Innovation
Focused Approach ResultsForces

Focused Management
Also called Theory of Constraints, TOC
• Employed for solving management problems of today’s
environment and quickly improve business results by an
order of magnitude, for example,
– Dramatic improvement in throughput (capacity) without costly
investment
– Shorter lead times without increasing operating expenses
– Radical improvement in productivity without creating chaos
– Consistent fulfillment of SLAs cost effectively
– Optimum resource management at Enterprise Level
• Provides direct impact of people’s effort on business results
and thus makes people central to organization’s strategy
28-04-2014 8
Without causing costly trade-offs and burn-outs of traditional
management approaches!

Applying Focused Management
Example 1: Business Operations
• Challenge:
– Ever Improving Throughput (Capacity) while improving Productivity
– Shrinking Response (lead) time
– Meeting SLAs consistently
– Too many things to be improved too fast
• Core Problem
– Over whelming size and scope of activities
• Current Approach
– Improve each and every process (The Whole is equal to sum of parts)
• New Approach:
– Management by constraint (Strength of the chain is no stronger than the Weakest Link)
• Typical Results:
– Dramatic improvement in capacity, compliance to SLAs and shorter response time ,
while achieving higher productivity by 30-70% in a very short time
28-04-2014 9
Business Process, Delivery Management,
Production, Development Centers

Focus on Constraint , NOT on Everything
Traditional Approach New Approach
Improve each and every part of the System Focus on just few Constraints that
limit the capacity of the System
A Chain is no
stronger than its
Weakest Link
28-04-2014 10
A
B C D
The Whole is
equal to Sum of
Parts

Example 2: Project Management
• Challenges:
– Managing Multiple Projects
– Achieving consistently high On time Delivery without compromising on scope and cost
– Improving Productivity of project management function
• Core Problem:
– Projects belong to probabilistic domain but are managed deterministically
• Current Approach:
– Buffer Estimation at each Task
– Monitor and Review Project at each task
• New Approach:
– Aggregate Variability and incorporate people behavior in project planning and execution
– Complete most of the projects in time and with higher productivity (more projects per year).
– On Time Performance >95%
– Lead time reduction 15-50%
– Project Management Productivity 10-50%
28-04-2014 11
Product Development, NPI, Engineering,
R&D, Construction, Projects

Buffer the Project, NOT Tasks
Critical Path
TOC uses Aggregated Project Buffer and uses only this
buffer to monitor and control project
Task Task Task Task Project Buffer
Each Task of Critical Path has significant buffer and each task is
monitored and controlled
Traditional
Approach
New
Approach
Lead Time
Reduction Even
at Planning
Stage
28-04-2014 12
Improved project
reliability during
Execution

Example 3: Supply Chain
• Challenge:
– Supply of right quantity of right product at right place at minimum cost
• Core Problem
– Stock-out and Overstock occur at same time
– Demand uncertainty
– Forecasting
– High reliability of supply can only be achieved with higher inventory
• New Approach:
– Demand Driven Synchronized Supply Chain
– High On Time Delivery at lower inventory and operating expenses
28-04-2014 13
Supply Chain, Management, Distribution,
Logistics Management

Synchronize, NOT Forecast
Traditional Approach New Approach
Long term Forecast and fire fighting Synchronize supply to actual demand
A demand driven synchronized supply
chain provides exceptional delivery
service at lower cost and enhanced agility
28-04-2014 14
Based on the belief that for excellent
delivery service high inventory and
operating expense is necessary.
Plant/
WH
1 2 4 5
A 1 3 4
B 3 4 5
C 1 3 4
D 5 3 4
E 7 3 2
Forecast
Plant/
WH

Example 4: Enterprise-wide Resource Allocation
• Challenge:
– Managing Resource as per demand
– Often Resources required now are not available while those not required now are
aplenty, leading to loss of revenues on one hand and blocked investment on the other
hand
• Core Problem:
– Sub optimal and low responsive resource management system
– Current Practice of Hire to Deal, Hire to Forecast and Supply Demand Matching
• New Approach:
– Benefit of Aggregation; and Management by Size and Time Buffer
– High availability of resources together with overall thinner bench strength
– Reduction Lead time by 20-40%
– Improvement in on time availability of resources by 20-30%
– Reduction in bench strength by 5-15%,
28-04-2014 15
Large Consulting, BPO, IT and Service
Organizations , Outsourcing centers

Hire to Buffer, NOT to Forecast
Practice
Department
Skill Groups
Project
Process
Project
Process
Traditional Approach New Approach High
Availability and
Thinner Bench!
Long term Forecasting + Disaggregate
recruitment and allocation of
resources28-04-2014 16
Closer to Demand + Benefit of
Aggregation based recruitment and
allocation of resources

Real Benefits.. Overall Impact
Apr.02.2013 17
Lead
Times
70%
Cycle
Times
65%
Inventory
Levels 49%
44%On-Time Delivery,
Availability
63%
73%
Revenue,
Throughput
Combined
Financial
Source: The World of Theory of Constraints, Vicky Mabin & Steven Balderstone

Summary
• No matter which function you belong to and however,
complex business environment becomes, building your
team’s capability in focused management will dramatically
improve impact of its effort on business results.
• In fact, no function is a cost center; rather every function has
a role in dramatically improving business results!!!
• Quick and Dramatic improvement in business results is
possible on an ongoing basis without incurring costly trade-
offs and burn-outs!!!
28-04-2014 18

Workshop on Focused Management
Dramatically Improving Impact of management effort on Business
Results without incurring costly trade-offs and Burn-outs
- Understanding Complexity
- Accepting Inherent Simplicity
- Theory of Constraints
- Case Studies
- Internalizing Concepts of TOC
-The Process of Ongoing Improvement
For Level-1 team of your
organization / function
Content
Attendee
• Equip Managers with New Capability
• Learn How TOC is helping
organizations in Dramatically
improving their performance
• Relate and Identify Applicability of
TOC concepts in your Organization
• Get Started with Proof of Concept
Take Away
Fast paced, Interactive Workshop
with management games,
discussions, videos and
presentations.
Format
28-04-2014 19

By: Shridhar Lolla
Shridhar is a practitioner of Organizational
Effectiveness and handholds management
teams in dramatically improving impact of
their effort on business results. He holds a PhD
degree from IIT Delhi.
Early in his career Shridhar worked with ABB,
Sify, KEC and Tecumseh in R&D, Manufacturing
and Service functions. His last assignment was
with ABB as a member of the management
committee and as the Head of Application and
Solutions Group at its global R&D Center in
Bangalore.
Shridhar has authored two contemporary
books on Theory of Constraints, TOC.
He lives in Bangalore and is reachable at
lolla@cvmark.com and +91 9448 070081
28-04-2014 20

Focused Management - Essential Capability for Suceeding in Today's Business Environment

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Focused Management - Essential Capability for Suceeding in Today's Business Environment