Innovation Storyboard

[A Major Engineering Firm in the Middle East]

[Strategy Development by Conjoining Top-down Directives and Bottom-up Commitment: An

Innovative Approach]

[May 2010-June 2010]

[Strategy Masters]

About the Organization

• Case Study Organization (CSO) is a SBU of a $13B global group. CSO has installed more than 28,000 automation systems in more than 7,500 sites since 1974, representing a $17 billion installed base—one of the largest in the automation industry.

• CSO is headquartered in Abu Dhabi, UAE, is a subsidiary of global group. The operation of CSO covers various countries within the ME region.

Due to confidentiality the name of the organization not revealed

Opportunity for Innovation

• In April 2010 a New Engineering Manager was recruited for the CSO.

• In order to effectively run his function he wanted to formulate a strategy for Engineering Department for the next two years in line with the CSO’s corporate and business strategies.

• Our firm was selected for this project.

Opportunity for Innovation

• In August, 2009 the Manager Project Operations (MPO) of CSO formulated a strategy (top-down approach) for the overall Project Operations Department of which ED is a part.

• hardly any participation from ED (bottom-up involvement) .

• nobody in ED knew the existence of this strategy document.

Preliminary Research

• A recent survey by Harvard Business Review (March, 2010) corroborated this fact, companies are more top-down than bottom-up in their approach to strategy formulation

Who Gets to Shape Strategy?

(Source: Harvard Business

Review, July-August 2010, p. 74)

Preliminary Research

• It was quite akin to what HBR says, “A lot of people say they can’t [state their strategy].

• situation is particularly bad among those who aren’t involved in strategy development”

Can You State Your Strategy?

(Harvard Business Review, July-

August 2010, p. 74),

Opportunity for Innovation

• To be effective, a strategy has to be constructed and owned by those who will execute it, namely the line people.

• With its current skilled and experienced human capital base, ED can identify promising new strategic approaches by encouraging emergent strategizing (Kaplan 2008) and aligning it with the top-down directives.

• This was the first time this innovative approach for strategy making was applied in this CSO.

Stakeholder analysis and team selection

Context Setters

Unaffected

Players

Involved Actors

Crowd

Unaffected bystanders

Subjects

Involved bystanders

High Interest Low Interest

High Power

Low Power

Stakeholder analysis

Team Selection

ED Others (Projects, PCO and Management)

• Engineering Manager

(Process Owner)

• Senior Technical

Managers x 2

• Technical Managers x 3

• Regional General Manager (RGM)

(Sponsor)

• Manager Project Operations (MPO)

(Champion)

• Country Operations Manager (COM)

• Senior Project Manager

Process

• Primary data were collected over a period of two weeks using three methods of data collection:

– existing CSO strategy documents,

– interviews and (RGM and MPO of CSO )

– group discussions. (four workshops in which the key stakeholders of ED participated )

Objectives of TMT Interviews

• to get more information about the existing strategy of CSO

• to understand perceptions of the strategic issues facing ED with respect to its impact two years into the future

• to know their aspirations about ED’s performance.

• Each interview and workshop lasted for around one hour and three hours respectively

Objectives of the Workshop

Objectives of Workshop

ED’s Strategy

Top-down

Perspective

What does CSO

Wants ED to do?

Bottom-up

Perspective

What day-to-day

Experience suggests

ED should do?

Data Analysis

• cognitive mapping technique was followed to collect and analyze data.

• cognitive maps are tools for the representation of qualitative data.

• We utilized facilitator-operated causal mapping software (‘Decisions Explorer’ – Banxia 2000) for the workshops to capture the different issues and perceptions raised by the participation.

• Four workshops were conducted in a period of three weeks keeping in mind that the gap should be no more than a psychological week

Risk Management

• Though individual interviews allow the elicitation of deeper individualistic knowledge, it comes at the cost of creative group dynamics.

• Data comparability can also be an issue for open-ended semi-structured interviews which has to be managed through proper indexing of collected data and keeping notes of discussion points.

• To overcome this, we audio recorded the conversations apart from maintaining notes individually.

Risk Management

• Interviews were conducted with the RGM and MPO only.

• For the first three workshops, the participants were the managers from ED. The RGM and MPO were not included in the workshop so that the participants could bring out their issues more openly without any pressure during the discussions.

• However, in final workshop all of them (top and line managers) came together to develop strategy for ED.

Risk Management for workshops

• the participants were briefed on the subject of the workshop in advance

• ‘Round-robin’ was used to ensure all those participating are able to contribute

• participants were encouraged to ‘piggy back’ off one another’s views

• participants were explained the importance of thinking in terms of ‘yes and’ rather than ‘yes but’ to avoid shutting down others options and discouraging members

• participants were discouraged from removing one another’s contribution

• issues and goals from the top-management were used as ‘triggers’ to ensure strategic intent of ED fits within the organizational whole (form of political feasibility)

Workshop 1- Issue Map

Workshop 1- Issue Map

Classification of high priority issues

• ED lacks effective performance measurement system

• ineffective use of knowledge repository • training for engineers is inadequate • motivation of staff in ED is dropping • lack of uniform understanding of business

processes in CSO • lack of multicultural staff in ED • GES centers in China, Eastern Europe, South

America underutilized

Workshop 2- Goal Map

Workshop 2- Goal Map

Comparison of TMT Goals and Emerged ED Goals

Project Operations Goals Emerged ED Goals

Improve one CSO scope by 20% • achieve sustainable business growth

• achieve continued business from existing customers

through add-ons

Become more cost competitive on projects and across

all business functions

• reduce blended cost of engineering services

• reduce end to end lead time of project deliverables

Simplify the way we do things so customers find it

easier to do business with us

• provide innovative solutions to customers

Leverage global capabilities and resources more

effectively

• achieve uninterrupted availability of services from

BO

Strengthen the business by continuing to improve

working capital

• sustain 100% billability of ED staff in FO

Improve end-to-end quality in everything we do for

our customers (internal and external)

• achieve improved quality of project deliverables

Comparison of TMT Goals and Emerged ED Goals

Deliver flawless execution on all projects • deliver effective solution in an efficient manner

• achieve consistency in project implementation

Establish world-class supply chain • integrate existing and emerging technology seamlessly

Engage employees in understanding and helping drive

change that improves the business

• improve skill set of engineers

• retain key talents within ED

• achieve employee satisfaction in ED

Recognize employees who demonstrate the focus

behaviors and reward outstanding business results

• rewards and recognition for ED engineers for their

successful contribution

• promote multi-perspective approach in dealing with

engineering issues

• achieve scale in knowledge reuse

• retrieve codified knowledge without having to contact

the person who originally developed it

Workshop 3- Competencies

Map

Workshop 4- Business Model

Workshop 5- Strategy Map

Strategic Intent

• Effectively implement HOS and Functional Transformation through Six sigma

• Develop and implement a strategic performance measurement system

• Recruit and retain engineers from multi-cultural background • Impart appropriate training for engineers to enhance their technical

and non-technical skills • Roll out a comprehensive program in collaboration with HR to

improve staff motivation • Develop and implement an electronic document system that

codifies, stores, disseminates, and allows reuse of knowledge • Develop and implement a sustainable 'FO-in-BO' delivery model to

improve utilization of GES centers world-wide

Statement of Strategic Intent

Deciding What to Measure

• We identified measure that was important along with structured set of measures

• Used existing strategic/business objectives to help provide a focus

• Used stakeholder judgements to help decide what’s important

• Used a Scorecard to help with the overall framework

Structure for Performance Measurement

• Focused on outcomes, results, deliverables Objectives

• Focused on identifying the right indicators KPI

• Focused on end-state Targets

• Focused on what you do Key activities

• Focused on what you need (Process, Resources) Enablers

Structure for Performance Measurement

• Effective Implementation of HOS & Lean Six Sigma Initiatives Objectives

• Improvement in Process Effectiveness & Efficiency

• Reduction in Process Waste & Variations KPI

• Achieve a minimum of 4.5 sigma levels Targets

• Appropriate project selection. Key activities

• Identify PIT, train them in lean six sigma methodologies, appoint consultants. Enablers

The key differentiating factors of the innovative

approach • firstly it focused on the day-to-day realities of management

especially the strategic issues and concerns that managers believe they faced.

• In the bargain, the key stakeholders recognized and appreciated that in most situations incremental change is more realistic than wide-ranging and deep-seated change.

• Further, the key stakeholders discovered ED’s core distinctive competences through their combined efforts rather than just being plainly stated or assumed; and

• finally, it focused on conjoining top-down directives with bottom-up commitment, and in the bargain a robust business model evolved for the Engineering Department of HPSME.

Key Learning

• The learning and adjustment of strategy during the process produced a series of logical increments towards ED’s strategies.

• The very process of consultation involving higher level strategic issues created its own positive dynamics. For instance, one of the line managers at the end of the second workshop commented that ‘this exercise is first of its kind wherein our views would go into formulating strategy for ED’.

• The overall sense of ownership that the process created was palpable. We are unsure how exactly the process we have started would unfold and this is not worrisome.

Key Learning

• It is important for ED to continually test the emergent strategies through improved quality of information and feedback for future decision making. This will complement its efforts in successful implementation of strategies.

• The group processes that have been set up already at ED through the consultative group processes during the workshops are harbingers of institutionalization.

• These processes can be characterized as commitment, ownership, procedural justice, procedural rationality, open communication and collaborative learning.

Key Learning

• the strategy-making process suggested here would require the participants to understand the importance of double-loop learning.

• This may not always be a free of tension. However, the very process of recognizing tension and surfacing conflicts (where there is, for instance, procedural justice) would generate creative solutions.

• The multiple realities that apply to diverse individuals in the group indeed are in negotiation with each other in many senses; psychological, emotional and social.

• This view is in conflict with traditional positivistic approaches that managers have hitherto been adopting.

Limitations

• After each workshop we sat down to tidy up the maps. This was indeed a very time consuming and challenging process.

• We realized that we were trying to over-analyze the data which was consuming up our most important resources, time and patience.

• The most important realization was that the data analysis is a means to an end and not an end in itself.

• Availability if Power-Brokers due to their travel schedules. However, this was well managed as the RGM got personally involved.

Way Forward

• The CSO has institutionalized this methodology.

• Feedback from one of Project Manager

“Congratulations to AFOES for conducting a very productive workshop on the Engineering department emergent strategies. I thought it was very professionally conducted and facilitated free flow of thoughts. Sri (that’s me!) was outstanding in the way he facilitated this workshop and Peter (Engineering Manager), as is well known, showed 100% commitment. Every point was deliberated appropriately without taking any on their face value”. This was indeed gratifying to me personally.

Q & A

Thank You