Closework Magazine - Issue 5

september 2010

#05

CLOSEWORK

®

T h e

C e l e r a n t

C h a n g e

E x p e r i e n c e

When management dysfunctionality impedes good decisions Railway transportation: express to international markets Enabling growth and welcoming change Abu Dhabi: lessons for successful communication Guideline: Understanding and overcoming resistance to change

Abu Dhabi Amsterdam Boston Brussels

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Special focus: Lean operationalisation www.celerantconsulting.com

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Contents Guideline: Understanding and overcoming resistance to change Is resistance to change something we should actively oppose or is it a healthy, natural phenomenon?

p. 4 Management dysfunctionality: when power struggles get in the way of good decisions Management teams seldom run smoothly, and finding solutions can be challenging.

p. 6

The key to sustainable results lies in accelerating the pace of Lean operational transformation.

Railway transportation: express to international markets In a period of flux, the French railway sector looks to the European market for new growth opportunities.

p. 8 Special focus: Lean operationalisation Effective implementation of Lean tools helps companies achieve fast-paced change and survive market swings.

p. 10 Enabling growth and welcoming change “Closework® The Celerant Change Experience” is a magazine published by Celerant Publishing on behalf of Celerant Consulting.

Issue no.5 – September 2010 Director of publication: Thibaut Bataille Editor-in-chief: Sabrina Laborde Contributors: Sascha Grosskopf, Shane King, Caroline Mampaey, Dennis McRae, Charles Spofford, Danny Van D'huynslager Design/production: WordAppeal Printing: Imprimerie Edgar Photo credits for cover: iStockphoto, Fotosearch; p.2: Shutterstock; p.19: fotolia.

Reproduction is prohibited. The words, photos and images in this publication cannot be used without the express consent of the director of publication.

Businesses grow when leaders create a team-oriented environment and provide employees with a clear vision.

p. 14 Abu Dhabi: lessons for successful communication A communications expert provides his winning formula based on experience.

p. 16

Guideline

Understanding and overcoming resistance to change

Photo courtesy of Elie Matta

Resistance to change has been responsible for the failure of many reorganisations, but is it something we should actively oppose or is it a healthy, natural phenomenon?

Elie Matta, Associate Professor in the Human Resources Management Department at HEC Paris shares his view on the subject.

Elie Matta

has been

an Associate Professor in the Human Resources Management Department at HEC Paris since 2004. Previously, he worked in investment banking, notably for the Dutch group ABN AMRO. Mr. Matta graduated with a degree in Economics from the American University in Beirut (Lebanon) and holds a PhD in Business Administration from the University of Western Ontario (Canada).

Guideline

CLOSEWORK®

The Celerant Change Club Launched in 2008, the Celerant Change Club brings together change management professionals. The Club includes members from both multinationals and small and medium-sized French businesses.

Elie Matta supports the Celerant Change Club and regularly participates in workshops.

He explains what he believes makes the Club special.

“The Celerant Change Club welcomes people from all backgrounds: from the field, academia, media, and so on. There is true diversity in terms of experience and points of view. Even supporters and guests get involved; they’re not satisfied just giving a speech. Relationships between participants are casual and informal, which results in open, frank discussion.”

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seem uninvolved, having them participate in the project’s design can prove effective.

If a group within the organisation stands to lose something in the process and wields a potentially harmful influence, it’s a good idea to take time to negotiate and provide additional guarantees.”

“A suitable response from management must be provided for each individual reaction.”

“It may seem prohibitively time-consuming and costly, but working alongside employees remains one of the best ways to curb resistance.

Focusing on the employee’s personal experience lets the manager guide and adjust actions on a daily basis.

Photo: iStockphoto

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“Resistance to change has long been viewed in a negative light.”

“Resistance to change can take many forms, from the total absence of a reaction—inertia—to more aggressive responses like rebellion or sabotage.

It prompts reactions from the group and individuals within the group (fear of the unknown, loss of freedom, etc.).

Resistance to change is therefore a complex phenomenon.

Contrary to popular opinion, however, it’s not necessarily harmful. In fact, it might even be considered a requirement for change. Indeed, it provides an avenue for useful feedback.

It can also clear the path for adjustments that are necessary for the organisation to assimilate change. The real difficulty for those leading change is understanding the various forms of resistance, addressing aggressive or silent manifestations, and encouraging constructive ones.”

“The key to neutralising resistance is to involve those affected by the change.”

“Bring employees together, take time to explain the reasoning behind the change, ensure they are entrusted with more varied tasks, and position their manager as a communicator rather than a controller. Taking a participative approach during a period of change ensures that potential resistance is discovered early.

If despite everything resistance still occurs, management must precede each initiative by identifying the exact causes of resistance. Once this work has been done, there are several possible solutions. In cases where not enough information has been made available and teams are expressing doubts about the usefulness of the upheaval underway, it’s wise to invest more time explaining the change and justifying its benefits. If teams

Céline Bareil, an Associate Professor at HEC Montreal, suggests using a model centred on the 7 stages of concern that every individual experiences when faced with change.

She also presents suitable actions for management to take. For example, if an employee is plagued with doubts about his or her ability to deal with change, the manager should play a supportive role. Training programmes could also be suggested.

If, on the other hand, an employee has doubts about the usefulness or benefits of the change, management should explain the significant measures that have been taken to ensure that the process is successful. The example set by management is critical.”

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Management Dysfunctionality:

Peter Hertinge As Vice President for Mack Trucks

when power struggles get in the way

in the EAME region, Peter Hertinge has led several major change management projects at ABB and Volvo and was responsible for the Australian merger between Volvo Trucks and Mack Trucks. He has a great deal of experience in managing dysfunctionality

of good decisions

in management teams.

Due to hidden agendas, internal politics and conflicting personalities, management teams seldom run smoothly. Even when an organisation is aware of a problem, finding solutions can still be challenging.

Peter Hertinge explains how to create a supportive environment where managers can freely discuss dysfunctionality and take steps to correct it.

Is management dysfunctionality a growing issue today?

“We’re working in a highly competitive global environment. Management has to excel as a team to achieve the results demanded by customers, employees, owners and other stakeholders.

Everything’s moving faster, and the consequences of dysfunctionality are greater.”

How can an organisation set the stage for cooperation?

Photo courtesy of Peter Hertinge

“Human interaction is not rocket science. A respectful, open and nonthreatening environment goes a long way. Handled inappropriately or not at all, however, dysfunctionality can impede good decision-making and inhibit success.

Gather your management team and make it clear that everyone has to support the company’s vision.

People often expect strong leaders to have all the answers, but that’s not a good idea. Involve the whole team, and they’ll be behind you and believe in that vision in the long run.”

Human interaction is not rocket science. A respectful, open and non-threatening environment goes a long way.

What is the role of the team leader?

“One key task is to watch the group’s interaction. Some need time to reflect on major decisions, while others speak out right away. Tools like the MyersBriggs Type Indicator are helpful for understanding different personalities.

While a team of similar or like-minded people might work well together, members are likely to have the same blind spots. A diverse team may have more conflicts, but it will benefit from a wider perspective and a broader skill set.

To encourage discussion about dysfunctionality, plan a quarterly meeting, where you ask: ‘What have we done as a team in the last three months that we’re proud of? Why were we successful?’ Once you’ve had a non-threatening discussion about your achievements, it’s easier to bring up the flip side: ‘What are we unsatisfied with?

Why did we fail?’

Although dysfunctionality is often handled internally, consultants can be a good support and allow leaders to take a more active role in the process. Team members are sometimes more likely to speak their minds with consultants.

Don’t forget, though, that consultants must then ensure that the team receives necessary feedback.”

What should you do if you detect dysfunctionality?

“Speak up! If you don’t deal with the problem right away, it can become a habit. You need to be open, honest and sometimes frank to make things happen.

As a rule of thumb, focus on behaviour instead of individuals within the group.

Make sure to explain your observations without pointing fingers, by including yourself in statements: ‘It seems to be me that we’re going around in circles here.’

Still, it’s okay to tell people that you’re disappointed in them or their performance, as long as you have strong arguments. Individuals who have performed poorly are almost always aware of it, and can use your criticism to improve. The key is to avoid threatening, blaming or judging. If the team leader doesn’t permit open discussion, find a new job! You need a manager who can talk about things that aren’t going well —for your own development and the company’s success.”

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Railway transportation:

public transportation network and—we hope—the Tours-Bordeaux LGV and Grand Paris projects are several reasons to be positive about the future. Generally speaking, the urban transportation market looks good in France’s Île-deFrance region [which includes Paris].

Photo: iStockphoto

express to international markets

Photo courtesy of Jean-Pierre Audoux

What is the state of the railway industry in France?

Jean-Pierre Audoux

has a PhD

in International Economics and has held several positions with the French Ministries of Defence and Industry and the Commercial Strategy Division of EDF, a French energy company. Since 1996, he has served as Delegate-General of the Fédération des Industries Ferroviaires (FIF), the French railway industry association, whose membership includes all French companies in the sector.

With the political, legal and economic environment in flux, the French railway sector is spreading to the European market to look for new growth opportunities.

Jean-Pierre Audoux, DelegateGeneral of the Fédération des Industries Ferroviaires (FIF), the French railway industry association, explains the strategy.

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CLOSEWORK®

“This mode of transportation was endorsed by France’s Grenelle Environment Round Table, which committed to a total infrastructure investment of €100 billion between now and 2040. However, the sector is going through a real period of transition.

It began in the 1990s with the first European regulations, and continued as French railway markets, initially reticent, gradually shifted their sights from the domestic market to the global economy.

As a result, the railway industry is now open to competition throughout Europe.

By 2020, the same will be true for both heavy-haul and passenger networks.

In addition to these structural changes, the economic recession slowed growth and dried up financing. Labour conflicts also weighed heavily on SNCF’s books.

The French public railway company’s heavy-haul activity lost €1 billion in 2009.”

What are the growth prospects for sector players, both new and established?

“For the heavy-haul market, one hope lies in the emergence of new local operators that are able to perform consolidation and break-bulk on train cars over a distance of 10-100 kilometres for transporters— ‘established’ companies (SNCF, Deutsche Bahn, etc.), new market players or even road transporters. It’s a fantastic challenge and opportunity for local regions! The Germans pioneered this field by making their supply chain more competitive.

On the passenger side, growth in international traffic will depend on the distribution of ‘slots’ (as in the airline industry), with the primary challenges being service quality and schedule coordination. The future is also uncertain when it comes to railway infrastructure and equipment. At first glance, the prospects are positive in the infrastructure sector. The near simultaneous construction of three high-speed lines (LGV), the railway revival plan, a fivefold expansion of the exclusive right-of-way

The forecast is less promising for heavy-haul and major passenger line equipment manufacturing. Due to the economic downturn, SNCF was forced to cancel its purchase of 200-300 new TGV train cars and will have to do the same for 200 diesel locomotives ordered from Alstom and Siemens.”

Is European industrial cooperation, along the lines of the Airbus model, a possible way to cope with competition?

“Until recently, Alstom, Siemens and Bombardier dominated the global market, which gave the impression that competition between these three groups constituted the entire global railway industry.

Things are changing though. Japan (Kawasaki HI and Hitachi), South Korea (Hyundai Rotem) and particularly China (CSR and CNR for train cars, CRCC and CERC for infrastructure) are growing more powerful.

These companies have already matched the size of their Western competitors, with annual growth in turnover of 30-50%!

Some think that technology transfers could cause the Chinese market to shrink, in which case Chinese competition would turn to European markets.Will we be forced to create transcontinental or European alliances to deal with this possibility? Only time will tell.”

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SPECIAL FOCUS

Special Focus: Lean operationalisation

through Lean operationalisation Lean tools are designed to identify weak links in the value chain. Effective implementation of these tools can help companies achieve fast-paced change and build value, but how can firms truly operationalise Lean to generate sustainable results ?

Dennis McRae, Vice President at Celerant Americas, offers his perspective.

sustainable results and creating value for customers and shareholders. This model relies on finding the right fit, charting the roadmap, measuring success and closing the loop.

Photo courtesy of Dennis McRae

Generating sustainable results

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Dennis McRae Vice President, Celerant Americas

Implementing Lean The Lean approach considers four steps in the product/service value stream: sourcing, making, distributing, and managing customer relations. The goal for businesses is to make this endto-end process as quick and efficient as possible, while minimising the amount of cash tied up in inventory. The faster and more effectively that Lean tools can be integrated into operations and transformation can occur, the greater value the firm will realise.

Successful companies implement an operational Lean process that leads to real transformation, driving

Finding the right fit First, an organisation must assess where it needs to go by identifying programmes that have the potential to create the greatest strategic value.

A rationalisation and prioritisation framework enables businesses to evaluate improvement opportunities in terms of benefits and complexity.

The importance of a particular initiative is determined by assigning each a valuation based upon quantitative criteria linked to business strategy.

The valuation must be quantitative, so everyone in the organisation will buy in. By identifying which opportunities fit best and engaging the employees in the process, all departments and levels of management can be aligned to achieve common goals.

Charting the roadmap A capability roadmap helps organisations gauge their progress at any point in time, and determine what resources—people, skills and assets—are required to move forward.

Management and employees alike

need to know how to interpret data, set KPIs and other performance metrics, and conduct business reviews in order to build the right company culture.

A Lean transformation takes time— between four and eight years on average. When done correctly it can be compressed to less than two. A capability roadmap that is well integrated into the operational value stream is the link to the emergence of a culture that embraces change, encourages employee development and supports achievement of company goals.

Measuring success Companies must also operationalise their business plans and integrate accountability into their culture through behavioural-based performance management systems.

By identifying the levers that drive successful initiatives and linking them to process, business and personal goals, companies can build an effective management system that not only improves performance but also drives continuous improvement and sustainability of results.

If this process is transparent, linked to the performance framework and tied to rewards for goal achievement, it will become ingrained in how the company does business.

Closing the loop A big part of the Lean process is continually establishing a baseline, and determining what improvements need to be made in order to rise to the next level. True Lean transformation takes place within a complicated network of departments, geographies and levels of management.

Providing a forum to reflect on previous implementations and learn from these experiences is critical. The quicker these learnings can be disseminated and operationalised, the greater value the organisation will derive.

Value velocity The key to building sustainable results lies in accelerating the pace of Lean operational transformation. This idea is central to the value velocity concept.

In order to deliver value more quickly, a company must understand its operational cycle.

The company that accurately identifies opportunities, engages its workforce, and builds the right systems to measure performance and ensure continuous improvement can iterate the operational value stream cycle faster, thereby getting more out of its workforce over time and attaining its top value velocity.

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Photo: Fotolia

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SPECIAL FOCUS

Staying lean through market ups and downs

Where does the chemical industry stand today?

“Asia is booming again, with companies back at their 2008 levels. That region aside, however, the overall picture is very mixed and it really depends what sector you’re in.

Companies can really stand to learn from our experience.

Photo: Celerant Consulting SAS

At Lanxess Butyl, business has been very good since about June 2009.

The challenge for us last year was to remain flexible enough to respond to the market’s needs while continuing to drive down costs to match plant capacity utilisation. The initiatives put in place resulted in €170 million of cost savings for Lanxess Butyl.”

Dr. Ron Commander reflects on the chemical industry’s recovery from the recent economic downturn and explains how the Lanxess Butyl business unit used a Lean programme to ride out the tough times and return to growth on the other side.

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SPECIAL FOCUS

CLOSEWORK®

the results it has targeted. Standing still, however, is a good way to ensure you’ll get left behind. Companies must always strive to reduce costs, to squeeze out more, to work more efficiently. It’s simply good management, really.

Lanxess Butyl has been using Lean for a long time in Sarnia, Canada.

As a result, we saw significant cost savings between 2008 and 2010.”

Where do Lean programmes work best?

Have Lean programmes undergone a “revival” as a result of the economic crisis?

“Lean has been extremely helpful for us in manufacturing, and has the potential to work well in areas like business innovation, product development and supply chain management too. Speed to market is essential, and your product development partner plays a vital role. Although that may not be Lean in the traditional sense, it’s certainly key to getting the product from the lab to the commercial phase.

“It’s not really a question of economic climate: Lean is a continuous process that makes sense in both good times and bad. By consistently applying Lean principles, a company will achieve

Generally speaking, Lean is harder to apply in administrative areas.

Identifying processes is more difficult and people are often not used to measuring process efficiency.”

Dr. Ron Commander

studied in the United Kingdom, where he earned a Ph.D. in

chemical engineering. He has served as Head of the Lanxess Group’s Butyl Rubber business unit since 2004. Before taking on his current role, Dr. Commander worked in research and development, production, and technical service for Bayer AG, in its former Rubber business group, and in business development at Bayer Polymers Shanghai.

What is the key to successful implementation?

“In order to continuously improve upon efficiency, companies must involve as many people as possible in the process. Management doesn’t have all of the answers. Everybody has ideas, and it’s the company’s responsibility to ask for their input, listen to what they have to say, and then do something about it. You can’t let good ideas disappear into a black hole.

Lean programmes are a lot of work and require involvement from more people than you’d think to be successful. Without strong commitment, your programme is bound to fail.

If you’re unable or unwilling to put in the effort, then don’t start!”

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Photo courtesy of Dr. Ron Commander

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Enabling growth and welcoming change How does a national manufacturing company lean on its workforce to become a global, service-oriented organisation?

“The transition begins with a strong vision and a plan of action that is both thorough and measurable. At DSM, we are keen to deliver what we promise, so sticking to that plan is quite important.

You must start with a good, cooperative core team. Most importantly, in order to drive change, you need people who are willing to follow you down that path.”

How does a leader enable growth?

“Within an organisation, there are many different types of people —some work in marketing, others in R&D or operations. In order to grow, the company must create conditions that enable these groups to interact and develop a collective energy Photo courtesy of Michel de Lepper

Businesses grow when leaders create a team-oriented environment and provide employees with a clear vision.

Michel de Lepper, Director of Corporate Manufacturing for global Life Sciences and Material Sciences company DSM, discusses how strong and effective leadership can help companies transition successfully into new areas and markets.

Michel de Lepper

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In order to drive change, you need people who are willing to follow you down that path.

or desire to move forward. The key is to aim for growth without explicitly concentrating on growth. If the conditions are right, it will happen organically because people want it to.”

Generation Y employees into the workforce, present opportunities that we can use to our advantage. We can capitalise on the flow of fresh ideas and new energy of our teams.”

How do you move beyond growth to become a visionary company?

How do you translate inspirational leadership into tangible results and roi?

“Companies usually measure their growth in terms of KPIs. What we’ve discovered—and are now beginning to capitalise on—are the hidden benefits of these KPIs. If your goal is to have a certain percentage of female managers, it’s easy to measure your progress quantitatively. The benefits of diverse management, however, unfold over time. Recognising this is critical for propelling the company forward.

The future requires looking at both internal and external force to move towards where we want to go. Innovations such as social media, as well as the integration of

is Director of Corporate Manufacturing at DSM. In this role,

he is currently working on an advanced manufacturing programme, using tools such as Six Sigma and Lean to identify and increase value in manufacturing. He joined DSM as Manufacturing Director in 2002 after spending 17 years at Heineken.

“Leaders start with a vision, but the challenge is to communicate that idea and, in doing so, move from ‘I’ to ‘we’. A leader who can accomplish this will have happier, more productive teams that produce concrete results —like improving the organisation’s stability, creating new products or entering new markets. This, in turn, will make the company more attractive to young talent in the workforce.

Some companies deal with each of these functions in separate or distinct departments. Others, like us, see how these elements are all interconnected and use that to create a competitive advantage.”

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Knowing your audience:

“Balancing past experience with openness to a different culture is critical.”

lessons for successful communication in Abu

Dhabi and beyond How can companies contribute to Abu Dhabi’s growth?

Robert Gardener works for Bell Pottinger Middle East, a strategic communications consultancy, as Director of the firm’s Abu Dhabi office.

He offers his perspective on the keys to successful communication in the region.

“You should of course draw on past experience and knowledge when arriving here from other parts of the world, but you also need to consider this specific audience. Know what you want to say, and tailor that message for the people of Abu Dhabi. Whenever you land in a new country, you can’t just pull a package off the shelf because it might have worked in another time and place, and then apply it to the new situation.

Most of the companies that come to Abu Dhabi and fail do so because they try to do things here exactly as they did elsewhere.

There are, of course, some best practices that can be carried over, but it’s about finding a balance between expertise and experience on the one hand, and openness to the local market’s needs and culture on the other.”

“Reaching leaders is essential.”

Photo courtesy of Robert Gardener

“In Abu Dhabi, personal trust is absolutely integral to every aspect of business. Executives who want to present their company’s services to top business leaders and government officials must first prove their trustworthiness. In the West, management delegates authority far more than it does in this part of the world. Here, it’s imperative that you make your business case

Robert Gardener

to the highest levels possible. A direct personal briefing to leaders and advisers is the most effective way for a firm to present its case. In doing so, one should also highlight how the business will contribute towards the country’s development.

In addition to traditional media outreach, it’s important to participate in the majlis to gain access to decision makers and introduce your business. An old Arab tradition, majlis are meetings of people and minds, where political and economic issues are discussed and decisions are made. Majlis are hosted by all sorts of families, from all social levels. They’re by far the most effective way of presenting your credentials in Abu Dhabi.”

“Companies must be prepared to transfer knowledge and skills.”

“It’s up to the company to demonstrate that it’s transferring skills, empowering the Emirati workforce, and contributing to Abu Dhabi’s long-term development.

Those in a consulting role must remember that they won’t be on site forever. Fairly early on in the process, you need to help the client hire staff who can be trained and prepared for the eventual transfer of your experience and knowledge. The vision from government is that experts coming to work in Abu Dhabi share their expertise.

If you come to Abu Dhabi to build a bridge, you need to teach local partners and clients how to build their own bridges in the future.”

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is Director of the Abu Dhabi office for Bell Pottinger Middle

East, the region’s leading strategic communications consultancy. Before joining the firm, he spent seven years in London advising FTSE 100 companies and large public organisations in the United Kingdom’s Cabinet Office as a policy adviser to the Cabinet Secretary and in the Office of the Private Secretary to HM The Queen at Buckingham Palace.

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* Kennedy Information OM market trends 2009-2012 ** The Economist Intelligence Unit 2009 global survey *** Based on payment of client success fees