The CEO’s role in leading transformation

Posted in Aktuellt, Board work / Styrelsearbete, Executive Coaching, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap on June 9th, 2017 by admin

The CEO helps a transformation succeed by communicating its significance, modeling the desired changes, building a strong top team, and getting personally involved.

In today’s business environment, companies cannot settle for incremental improvement; they must periodically undergo performance transformations to get, and stay, on top. But in the volumes of pages on how to go about implementing a transformation, surprisingly little addresses the role of one important person. What exactly should the CEO be doing, and how different is this role from that of the executive team or the initiative’s sponsors?

Based on a series of interviews we have conducted with nearly a dozen executives over the last couple of years—as well as our own experience working with companies—we believe there is no single model for success. Moreover, the exact nature of the CEO’s role will be influenced by the magnitude, urgency, and nature of the transformation; the capabilities and failings of the organization; and the personal style of the leader.

Despite these variations, our experience with scores of major transformation efforts, combined with research we have undertaken over the past decade, suggests that four key functions collectively define a successful role for the CEO in a transformation:

Making the transformation meaningful. People will go to extraordinary lengths for causes they believe in, and a powerful transformation story will create and reinforce their commitment. The ultimate impact of the story depends on the CEO’s willingness to make the transformation personal, to engage others openly, and to spotlight successes as they emerge.
Role-modeling desired mind-sets and behavior. Successful CEOs typically embark on their own personal transformation journey. Their actions encourage employees to support and practice the new types of behavior.
Building a strong and committed top team. To harness the transformative power of the top team, CEOs must make tough decisions about who has the ability and motivation to make the journey.
Relentlessly pursuing impact. There is no substitute for CEOs rolling up their sleeves and getting personally involved when significant financial and symbolic value is at stake.
Everyone has a role to play in a performance transformation. The role of CEOs is unique in that they stand at the top of the pyramid and all the other members of the organization take cues from them. CEOs who give only lip service to a transformation will find everyone else doing the same. Those who fail to model the desired mind-sets and behavior or who opt out of vital initiatives risk seeing the transformation lose focus. Only the boss of all bosses can ensure that the right people spend the right amount of time driving the necessary changes.

Making the transformation meaningful
Transformations require extraordinary energy: employees must fundamentally rethink and reshape the business while continuing to run it day to day. Where does this energy come from? A powerful transformation story helps employees believe in the effort by answering their big questions, which can range from how the transformation will affect the company down to how it will affect them. The story’s ultimate impact will depend on not just having compelling answers to these questions but also the CEO’s willingness and ability to make things personal, to engage others openly, and to spotlight successes as they emerge.

Adopt a personal approach
CEOs who take time to personalize the story of the transformation can unlock significantly more energy for it than those who dutifully present the PowerPoint slides that their working teams created for them. Personalizing the story forces CEOs to consider and share with others the answers to such questions as “Why are we changing?”; “How will we get there?”; and “How does this relate to me?”

Some leaders include experiences and anecdotes from their own lives to underline their determination and belief—and to demonstrate that obstacles can be overcome. Klaus Zumwinkel, the chairman and CEO of Deutsche Post, talked about his passion for mountain climbing, linking the experience of that sport and the effort it requires to the company’s transformation journey. John Hammergren, the CEO of McKesson, stressed that every employee was or would be a patient in the health care system and that this “larger purpose” made a difference. “Had we been in the ball-bearing business, I’m not sure it would have been as easy to personalize it,” he acknowledges.

Openly engage others
When a CEO’s version of the transformation story is clear, success comes from taking it to employees, encouraging debate about it, reinforcing it, and prompting people to infuse it with their own personal meaning. Most CEOs invest great effort in visibly and vocally presenting the transformation story. Julio Linares, the executive chairman of Telefónica de España, says the most important and hardest part of the transformation was “to convince people of the need for the program.”

Once the story is out, the CEO’s role becomes one of constant reinforcement. As P&G CEO Alan G. Lafley says, in “Leading change: An interview with the CEO of P&G,” “Excruciating repetition and clarity are important—employees have so many things going on in the operation of their daily business that they don’t always take the time to stop, think, and internalize.” Paolo Scaroni, who has led three public companies through various chapters of change, likes to find three or four strategic concepts that sum up the right direction for the company and then to “repeat, repeat, and repeat them throughout the organization.”

Reinforcement should come from outside as well. Passera notes, “If everyone keeps reading in the newspapers that the business is still a poor performer, not contributing to society, or is letting the country down, people will not believe you.”

Spotlight success
As the company’s transformation progresses, a powerful way to reinforce the story is to spotlight the successes. Sharing such stories helps crystallize the meaning of the transformation and gives people confidence that it will actually work. Murthy of Infosys describes how high-performing teams were invited to make presentations to larger audiences drawn from across the company, “to show other people that we value such behavior.”

Ravi Kant, the managing director of the integrated Indian auto business Tata Motors, deliberately identified people who would serve as examples to others. In “Leading change: An interview with the managing director of Tata Motors,” he talks about how he highlighted the achievements of one young man whose success on a risky project and subsequent promotion showed colleagues that talented and determined people can rise through the hierarchy.

Emphasizing the positive, behavioral research shows, is especially important. In 1982, University of Wisconsin researchers who were conducting a study of the adult-learning process videotaped two bowling teams during several games. The members of each team then studied their efforts on video to improve their skills. But the two videos had been edited differently. One team received a video showing only its mistakes; the other team’s video, by contrast, showed only the good performances. After studying the videos, both teams improved their game, but the team that studied its successes improved its score twice as much as the one that studied its mistakes. Evidently, focusing on the errors can generate feelings of fatigue, blame, and resistance. Emphasizing what works well and discussing how to get more out of those strengths taps into creativity, passion, and the desire to succeed.

Role-modeling desired mind-sets and behavior
Whether leaders realize it or not, they seem to be in front of the cameras when they speak or act. “Every move you make, everything you say, is visible to all. Therefore the best approach is to lead by example,” advises Joseph M. Tucci, CEO of EMC, the US-based information storage equipment business. Ultimately, employees will weigh the actions of their CEO to determine whether they believe in the story.

Transform yourself
Employees expect the CEO to live up to Mahatma Gandhi’s famous edict, “For things to change, first I must change.” The CEO is the organization’s chief role model.

Typically, a personal transformation journey involves 360-degree feedback on leadership behavior specific to the program’s objectives, diary analysis to reveal how time is spent on transformation priorities, a commitment to a short list of personal transformation objectives, and professional coaching toward these ends. CEOs generally report that the process is most powerful when all members of an executive team pursue their transformation journeys individually but collectively discuss and reinforce their personal objectives in order to create an environment “of challenge and support.

Murthy’s 2002 decision to take on the job title of chief mentor at Infosys, for example, meant that he had to reinvent himself, because he laid aside his formal managerial (CEO) authority at the same time. He explains, “You have to sacrifice yourself first for a big cause before you can ask others to do the same,” adding, “A good leader knows how to retreat into the background gracefully while encouraging his successor to become more and more successful in the job.”

Take symbolic action
The quickest way to send shock waves through an organization is to conceive and execute a series of symbolic acts signaling to employees that they should behave in ways appropriate to a transformation and support these types of behavior in others. For instance, C. John Wilder, CEO of the Texas energy utility TXU, gave a large bonus to a woman who had taken a clear leadership role in a very important business initiative. “This leader’s contributions generated real economic value to the bottom line,” he explains. “Of course, news of that raced through the whole organization, but it helped employees understand that rewards will be based on contributions and that ‘pay for performance’ could actually be put into practice.”

Building a strong and committed top team
The CEO’s team can and should be a valuable asset in leading any transformation. As Deutsche Post’s Zumwinkel suggests, “You need excellent individual players, but you also need players who are dedicated to playing as a team.” Sharing a meaningful story and modeling the right role will certainly increase the odds of getting the team on board, but it is also vital to invest time in building that team.

Assess and act
Successful CEOs take time to assess the abilities of individual members of the team and act swiftly on the result. In some cases, input from third parties (such as executive search firms) is sought to create a more objective fact base. Many CEOs find it useful to map team members on a matrix, with “business performance” on one axis and “role-modeling the desired behavior” on the other. Those in the top-right box (desired behavior, high performance) are the organization’s stars, and those in the bottom-left box (undesired behavior, low performance) should be motivated, developed, or dismissed. The greatest potential for sending signals involves the employees in the box of “undesired behavior, high performance.” When clear action is taken to improve or remove these managers, the team’s members know that role-modeling and teamwork matter. Banca Intesa’s Passera affirms that, “If necessary, you have to get rid of those individuals, even the talented ones, who quarrel and cannot work together.”

How do CEOs know when to intervene with the strugglers? They can reflect on the following questions:
Do team members clearly understand what is expected of each of them in relation to the transformation?
Is the CEO serving as a positive role model?
Does everyone recognize the downside and upside of getting on board and doing what is required?
Have struggling team members received a chance to build the needed skills?
If the answer to all of these questions is yes, decisive action is justified.

Experienced CEOs attest to the positive impact this can have on the rest of the company. EMC’s Tucci says he had to take “public” action to tackle the “whiff of arrogance” that used to characterize certain parts of the company. TXU’s Wilder recalls that “When we did a cultural audit, we found that the number-one complaint was that management was not dealing with employees that everyone knew weren’t carrying their load.“

Invest team time
Even with the right team in place, it takes time for a group of highly intelligent, ambitious, and independent people to align themselves in a clear direction. Typically, the first order of business is for members to agree on what they can achieve as a team (not as individuals), how often the team should meet, what transformation issues should be discussed, and what behavior the team expects (and won’t tolerate). These agreements are often summarized in a “team charter” for leading the transformation, and the CEO can periodically use the charter to ensure that the team is on the right track.

Intesa’s Passera speaks of how he brought his team together regularly to “share almost everything,” to make it “clear to everyone who is doing what,” and to “keep the transformation initiatives, budgets, and financial targets knitted together.” P&G’s Lafley emphasizes the importance of spending the time together wisely: “You need to understand how to enroll the leadership team.” As a rule of thumb, 80 percent of the team’s time should be devoted to dialogue, with the remaining 20 percent invested in being “presented to.”

Effective dialogue requires a well-structured agenda, which typically ensures that ample time is spent in personal reflection (to ensure that each person forms an independent point of view from the outset), discussion in pairs or small groups (refining the thinking and exploring second- and third-level assumptions), and discussion by the full team before final decisions are made. In this process, little tolerance should be shown for minutiae (losing the forest for the trees) and for any lack of engagement. Face-to-face meetings, as opposed to conference calls, greatly enhance the effectiveness of team dialogue.

Relentlessly pursuing impact
Organizational energy—collective motivation, enthusiasm, and intense commitment—is a crucial ingredient of a successful transformation. There is no substitute for a CEO directing his or her personal energy toward ensuring that the company’s efforts have an impact.

Roll up your sleeves
Initiatives with a significant financial or symbolic value require the CEO’s personal involvement for maximum impact. There may be several beneficial effects, among them ensuring that important decisions are made quickly—without sacrificing the value of collective debate—and sowing the seeds of a culture of candor and decisiveness.

Leaders must be willing to leave the executive suite and help resolve difficult operational issues. Peter Gossas, president of Sandvik Materials Technology and a man with lifelong experience in the steel industry, observes, “If there’s a problem, it can be helpful if I come to the work floor, step up on a crate so that everyone can see me, and hold a discussion with a shift unit that may be negative to change.” He adds, “It’s hard for me to walk into a melt shop and not begin discussing ways to solve operational problems.”

Hold leaders accountable
Successful CEOs never lose sight of their management responsibility to chair review forums. Through these, they compare the results of the transformation program with the original plan, identify the root causes of any deviations, celebrate successes, help fix problems, and hold leaders accountable for keeping the transformation on track, both in activities (are people doing what they said they would?) and impact (will the program create the value we anticipated?). A central role for the CEO during these review forums is to ensure that decision making stays grounded in the facts. As Narayana Murthy wryly observes, “We have embraced the adage ‘In God we trust; everyone else brings data to the table.’”

The CEO also plays a critical role in ensuring an appropriate balance between near-term profit initiatives (those that deliver performance today) and organizational-health initiatives (those that build the capacity to deliver tomorrow’s results). This is a lesson applied by John Varley, CEO of Barclays: “For several years, the focus on initiatives to improve financial performance dramatically crowded out attention on franchise health, leaving us with a set of issues in some businesses that needed urgent attention. We are addressing those issues.” During the transformation, some CEOs even choose to hold separate review meetings for short- and long-term objectives in order to ensure that companies maintain a balance between operational improvement (tactical strategies, wage management, productivity, and asset management) and long-term growth (revenue and volume growth through market share, new products, channels and marketing, M&A, talent, and capability management).

For CEOs leading a transformation, no single model guarantees success. But they can improve the odds by targeting leadership functions: making the transformation meaningful, modeling the desired mind-sets and behavior, building a strong and committed team, and relentlessly pursuing impact. Together, these can powerfully generate the energy needed to achieve a successful performance transformation.

Source: McKinsey.com, June 2017
Authors: Carolyn Aiken and Scott Keller.
About the authors: Carolyn Aiken is a consultant in McKinsey’s Toronto office, and Scott Keller is a principal in the Chicago office.
Link

Det här lockar unga talanger till ert företag!

Posted in Aktuellt, Allmänt, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap on May 2nd, 2017 by admin

Förmåner som hög lön och tjänstebil räcker inte.
Här är fyra mer oväntade sätt som kan locka talanger till ert företag.

I dag jobbar var tredje anställd svensk regelbundet på distans. Med hjälp av laptop, smartphone eller surfplatta samt bra molntjänster och digitala verktyg kan vi samarbeta smidigt – oavsett var kollegorna befinner sig.
– Om tio år kommer distansarbete att vara betydligt vanligare, säger Oscar Varga, Eurofound, en av författarna bakom en ny rapport om distansarbete i EU, ”Working anytime, anywhere”.

Den generation som kommer ut på arbetsmarknaden inom de närmsta tio åren kan nämligen hantera den digitala tekniken på ett helt nytt och mer självständigt sätt, menar författarna till rapporten.

Johanna Håkansson, HR Manager på Telenor Företag, ser en tydlig trend bland dessa unga: De som söker jobb i dag – särskilt de mest ambitiösa och eftertraktade – ställer större krav på arbetsgivaren än vad deras föräldrar gjorde.
– De funderar mer på vad arbetsgivaren kan göra för dem för att de ska hitta en bra balans mellan arbetet och sina fritidsintressen. De vill ha en större frihet att utföra sina arbetsuppgifter på tider som passar dem. Att de får bra digitala arbetsverktyg och vettiga tjänster kopplade till verktygen tar de för givet.

ladda ned (2)
Många arbetsgivare har hittills lockat till sig de främsta talangerna mycket tack vare sitt varumärke. Men nu räcker det inte med att erbjuda en hög lön och karriärmöjligheter – det måste till något mer, enligt Johanna Håkansson:
– Lön är fortfarande betydelsefullt, men viktigare är att medarbetaren ser möjligheter att själv styra över sin utveckling på företaget.

Till de företag som på allvar vill konkurrera om de bästa talangerna har hon följande råd:

1. Snabb och tät återkoppling
Skapa en ledarkultur som präglas av närvaro, coachning och snabb återkoppling. Unga är vana vid att få en omedelbar feedback, exempelvis i social medier, och ser denna regelbundna respons som en självklarhet.

2. Palett av utbildningar
Se till att era medarbetare har möjlighet att snabbt lära sig nya saker, på flera olika nivåer. Dels att det finns löpande utbildningar för den personliga utvecklingen, kombinerat med exempelvis ett mentorskap. Dels att det finns chans till kompetensutveckling, till exempel i hur man hanterar nya digitala verktyg och tjänster.

3. Miljö och värdegrund som matchar ett modernt arbetssätt
Om ni erbjuder möjligheten till ett friare arbetssätt så tänk på att anpassa både arbetsmiljön och företagets värdegrund till detta. Tänk exempelvis igenom hur kontoret är utformat – skapa kreativa rum, olika zoner och så vidare. Och tänk på hur ni beter er mot varandra i vardagen så att det blir både acceptabelt och hållbart att arbeta mer flexibelt för alla som vill det.

4. Digital infrastruktur – anpassad till just er arbetsplats
Hur bygger man en effektiv digital infrastruktur? Vilka tjänster och verktyg kan underlätta arbetet och samarbetet på just ert företag – och göra det mer attraktivt?

Källa: DI.se, maj 2017
Länk

Transformation with a capital T

Posted in Aktuellt, Board work / Styrelsearbete, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap on December 12th, 2016 by admin

Companies must be prepared to tear themselves away from routine thinking and behavior.

Imagine. You lead a large basic-resources business. For the past decade, the global commodities supercycle has fueled volume growth and higher prices, shaping your company’s processes and culture and defining its outlook. Most of the top team cannot remember a time when the business priorities were different. Then one day it dawns on you that the party is over.

Or imagine again. You run a retail bank with a solid strategy, a strong brand, a well-positioned branch network, and a loyal customer base. But a growing and fast-moving ecosystem of fintech players—microloan sites, peer-to-peer lenders, algorithm-based financial advisers—is starting to nibble at your franchise. The board feels anxious about what no longer seems to be a marginal threat. It worries that management has grown complacent.

In industry after industry, scenarios that once appeared improbable are becoming all too real, prompting boards and CEOs of flagging (or perhaps merely drifting) businesses to embrace the T-word: transformation.

transform-3Transformation is perhaps the most overused term in business. Often, companies apply it loosely—too loosely—to any form of change, however minor or routine. There are organizational transformations (otherwise known as org redesigns), when businesses redraw organizational roles and accountabilities. Strategic transformations imply a change in the business model. The term transformation is also increasingly used for a digital reinvention: companies fundamentally reworking the way they’re wired and, in particular, how they go to market.

What we’re focused on here—and what businesses like the previously mentioned bank and basic-resource companies need—is something different: a transformation with a capital T, which we define as an intense, organization-wide program to enhance performance (an earnings improvement of 25 percent or more, for example) and to boost organizational health. When such transformations succeed, they radically improve the important business drivers, such as topline growth, capital productivity, cost efficiency, operational effectiveness, customer satisfaction, and sales excellence. Because such transformations instill the importance of internal alignment around a common vision and strategy, increase the capacity for renewal, and develop superior execution skills, they enable companies to go on improving their results in sustainable ways year after year. These sorts of transformations may well involve exploiting new digital opportunities or accompany a strategic rethink. But in essence, they are largely about delivering the full potential of what’s already there.

The reported failure rate of large-scale change programs has hovered around 70 percent over many years. In 2010, conscious of the special challenges and disappointed expectations of many businesses embarking on transformations, McKinsey set up a group to focus exclusively on this sort of effort. In six years, our Recovery & Transformation Services (RTS) unit has worked with more than 100 companies, covering almost every geography and industry around the world. These cases—both the successes and the efforts that fell short—helped us distill a set of empirical insights about improving the odds of success. Combined with the right strategic choices, a transformation can turn a mediocre (or good) business into a world-class one.

Why transformations fail
Transformations as we define them take up a surprisingly large share of a leadership’s and an organization’s time and attention. They require enormous energy to realize the necessary degree of change. Herein lie the seeds of disappointment. Our most fundamental lesson from the past half-dozen years is that average companies rarely have the combination of skills, mind-sets, and ongoing commitment needed to pull off a large-scale transformation.

It’s true that across the economy as a whole, “creative destruction” has been a constant, since at least 1942, when Joseph Schumpeter coined the term. But for individual organizations and their leaders, disruption is episodic and sufficiently infrequent that most CEOs and top-management teams are more accomplished at running businesses in stable environments than in changing ones. Odds are that their training and practical experience predominantly take place in times when extensive, deep-rooted, and rapid changes aren’t necessary. For many organizations, this relatively placid experience leads to a “steady state” of stable structures, regular budgeting, incremental targets, quarterly reviews, and modest reward systems. All that makes leaders poorly prepared for the much faster-paced, more bruising work of a transformation. Intensive exposure to such efforts has taught us that many executives struggle to change gears and can be reluctant to lead rather than delegate when they face external disruption, successive quarters of flagging performance, or just an opportunity to up a company’s game.

Executives embarking on a transformation can resemble career commercial air pilots thrust into the cockpit of a fighter jet. They are still flying a plane, but they have been trained to prioritize safety, stability, and efficiency and therefore lack the tools and pattern-recognition experience to respond appropriately to the demands of combat. Yet because they are still behind the controls, they do not recognize the different threats and requirements the new situation presents. One manufacturing executive whose company learned that lesson the hard way told us, “I just put my head down and worked harder. But while this had got us out of tight spots in the past, extra effort, on its own, was not enough this time.”

Tilting the odds toward success
The most important starting point of a transformation, and the best predictor of success, is a CEO who recognizes that only a new approach will dramatically improve the company’s performance. No matter how powerful the aspirations, conviction, and sheer determination of the CEO, though, our experience suggests that companies must also get five other important dimensions right if they are to overcome organizational inertia, shed deeply ingrained steady-state habits, and create a new long-term upward momentum. They must identify the company’s full potential; set a new pace through a transformation office (TO) that is empowered to make decisions; reinforce the executive team with a chief transformation officer (CTO); change employee and managerial mind-sets that are holding the organization back; and embed a new culture of execution throughout the business to sustain the transformation. The last is in some ways the most difficult task of all.

Stretch for the full potential
Targets in most corporations emerge from negotiations. Leaders and line managers go back and forth: the former invariably push for more, while the latter point out all the reasons why the proposed targets are unachievable. Inevitably, the same dynamic applies during transformation efforts, and this leads to compromises and incremental changes rather than radical improvements. When managers at one company in a highly competitive, asset-intense industry were shown strong external evidence that they could add £250 million in revenuetransform-2 above what they themselves had identified, for example, they immediately talked down the proposed targets. For them, targets meant accountability—and, when missed, adverse consequences for their own compensation. Their default reaction was “let’s underpromise and overdeliver.”

To counter this natural tendency, CEOs should demand a clear analysis of the company’s full value-creation potential: specific revenue and cost goals backed up by well-grounded facts. We have found it helpful for the CEO and top team to assume the mind-set, independence, and tool kit of an activist investor or private-equity acquirer. To do so, they must step outside the self-imposed constraints and define what’s truly achievable. The message: it’s time to take a single self-confident leap rather than a series of incremental steps that don’t lead very far. In our experience, targets that are two to three times a company’s initial estimates of its potential are routinely achievable—not the exception.

Change the cadence
Experience has taught us that it’s essential to create a hub to oversee the transformation and to drive a cadence markedly different from the normal day-to-day one. We call this hub the transformation office.

What makes a TO work? One company with a program to boost EBITDA1 by more than $1 billion set up an unusual but highly effective TO. For a start, it was located in a circular room that had no chairs—only standing room. Around the wall was what came to be known, throughout the business, as “the snake”: a weekly tracker that marked progress toward the goal. By the end of the process, the snake had eaten its own tail as the company materially exceeded its financial target.

Each Tuesday, at the weekly TO meeting, work-stream leaders and their teams reviewed progress on the tasks they had committed themselves (the previous week) to complete and made measurable commitments for the next week in front of their peers. They used only handwritten whiteboard notes—no PowerPoint presentations—and had just 15 minutes apiece to make their points. Owners of individual initiatives within each work stream reviewed their specific initiatives on a rotating basis, so third- or fourth-level managers met the top leaders, further increasing ownership and accountability. Even the divisional CEO made a point of attending these TO meetings each time he visited the business, an experience that in hindsight convinced him that the TO process was more crucial than anything else to shifting the company’s culture.

For senior leaders, distraction is the constant enemy. Most prefer talking about new customers, M&A opportunities, or fresh strategic choices—hence the temptation at the top to delegate responsibility to a steering committee or an old-style program-management office charged with providing periodic updates. When top management’s attention is diverted elsewhere, line managers will emulate that behavior when they choose their own priorities.

Given these distractions, many initiatives move too slowly. Parkinson’s law states that work expands to fill the time available, and business managers aren’t immune: given a month to complete a project requiring a week’s worth of effort, they will generally start working on it a week before the deadline. In successful transformations, a week means a week, and the transformation office constantly asks, “how can you move more swiftly?” and “what do you need to make things happen?” This faster clock speed is one of the most defining characteristics of successful transformations.

Collaborating with senior leaders across the entire business, the TO must have the grit, discipline, energy, and focus to drive forward perhaps five to eight major work streams. All of them are further divided into perhaps hundreds (even the low thousands) of separate initiatives, each with a specific owner and a detailed, fully costed bottom-up plan. Above all, the TO must constantly push for decisions so that the organization is conscious of any foot dragging when progress stalls.

Bring on the CTO
Managing a complex enterprise-wide transformation is a full-time executive-level job. It should be filled by someone with the clear authority to push the organization to its full potential, as well as the skills, experience, and even personality of a seasoned fighter pilot, to use our earlier analogy.

The chief transformation officer’s job is to question, push, praise, prod, cajole, and otherwise irritate an organization that needs to think and act differently. One CEO introduced a new CTO to his top team by saying, “Bill’s job is to make you and me feel uncomfortable. If we aren’t feeling uncomfortable, then he’s not doing his job.” Of course, the CTO shouldn’t take the place of the CEO, who (on the contrary) must be front and center, continually reinforcing the idea that this is my transformation.

Many leaders of traditional program-management offices are strong on processes but unable or unwilling to push the CEO and top team. The right CTO can sometimes come from within the organization. But one of the biggest mistakes we see companies making in the early stages is to choose the CTO only from an internal slate of candidates. The CTO must be dynamic, respected, unafraid of confrontation, and willing to challenge corporate orthodoxies. These qualities are harder to find among people concerned about protecting their legacy, pursuing their next role, or tiptoeing around long-simmering internal political tensions.

What does a CTO actually do? Consider what happened at one company mounting a billion-dollar productivity program. The new CTO became exasperated as executives focused on individual technical problems rather than the worsening cost and schedule slippage. Although he lacked any background in the program’s technical aspects, he called out the facts, warning the members of the operations team that they would lose their jobs—and the whole project would close—unless things got back on track within the next 30 days. The conversation then shifted, resources were reallocated, and the operations team planned and executed a new approach. Within two weeks, the project was indeed back on track. Without the CTO’s independent perspective and candor, none of that would have happened.

Remove barriers, create incentives
Many companies perform under their full potential not because of structural disadvantages but rather through a combination of poor leadership, a deficient culture and capabilities, and misaligned incentives. In good or even average times, when businesses can get away with trundling along, these barriers may be manageable. But the transformation will reach full potential only if they are addressed early transform-4and explicitly. Common problematic mind-sets we encounter include prioritizing the “tribe” (local unit) over the “nation” (the business as a whole), being too proud to ask for help, and blaming the external world “because it is not under our control.”

One public utility we know was paralyzed because its employees were passively “waiting to be told” rather than taking the initiative. Given its history, they had unconsciously decided that there was no advantage in taking action, because if they did and made a mistake, the results would make the front pages of newspapers. A bureaucratic culture had hidden the underlying cause of paralysis. To make progress, the company had to counter this very real and well-founded fear.

McKinsey’s influence model, one proven tool for helping to change such mind-sets, emphasizes telling a compelling change story, role modeling by the senior team, building reinforcement mechanisms, and providing employees with the skills to change. While all four of these interventions are important in a transformation, companies must address the change story and reinforcement mechanisms (particularly incentives) at the outset.

An engaging change story. Most companies underestimate the importance of communicating the “why” of a transformation; too often, they assume that a letter from the CEO and a corporate slide pack will secure organizational engagement. But it’s not enough to say “we aren’t making our budget plan” or “we must be more competitive.” Engagement with employees and managers needs to have a context, a vision, and a call to action that will resonate with each person individually. This kind of personalization is what motivates a workforce.

At one agribusiness, for example, someone not known for speaking out stood up at the launch of its transformation program and talked about growing up on a family farm, suffering the consequences of worsening market conditions, and observing his father’s struggle as he had to postpone retirement. The son’s vision was to transform the company’s performance out of a sense of obligation to those who had come before him and a desire to be a strong partner to farmers. The other workers rallied round his story much more than the financially based argument from the CEO.

Incentives. Incentives are especially important in changing behavior. In our experience, traditional incentive plans, with multiple variables and weightings—say, six to ten objectives with average weights of 10 to 15 percent each—are too complicated. In a transformation, the incentive plan should have no more than three objectives, with an outsized payout for outsized performance; the period of transformation, after all, is likely to be one of the most difficult and demanding of any professional career. The usual excuses (such as “our incentive program is already set” or “our people don’t need special incentives to give their best”) should not deter leaders from revisiting this critical reinforcement tool.

Nonmonetary incentives are also vital. One CEO made a point, each week, of writing a short handwritten note to a different employee involved in the transformation effort. This cost nothing but had an almost magical effect on morale. In another company, an employee went far beyond normal expectations to deliver a particularly challenging initiative. The CEO heard about this and gathered a group, including the employee’s wife and two children, for a surprise party. Within 24 hours, the story of this celebration had spread throughout the company.

No going back
Transformations typically degrade rather than visibly fail. Leaders and their employees summon up a huge initial effort; corporate results improve, sometimes dramatically; and those involved pat themselves on the back and declare victory. Then, slowly but surely, the company slips back into its old ways. How many times have frontline managers told us things like “we have undergone three transformations in the last eight years, and each time we were back where we started 18 months later”?

The true test of a transformation, therefore, is what happens when the TO is disbanded and life reverts to a more normal rhythm. What’s critical is that leaders try to bottle the lessons of the transformation as it moves along and to ingrain, within the organization, a repeatable process to deliver better and better results long after it formally ends. This often means, for example, applying the TO meetings’ cadence and robust style to financial reviews, annual budget cycles, even daily performance meetings—the basic routines of the business. It’s no good starting this effort near the end of the program. Embedding the processes and working approaches of the transformation into everyday activities should start much earlier to ensure that the momentum of performance continues to accelerate after the transformation is over.

Companies that create this sort of momentum stand out—so much that we’ve come to view the interlocking processes, skills, and attitudes needed to achieve it as a distinct source of power, one we call an “execution engine.” Organizations with an effective execution engine transform-1conspicuously continue to challenge everything, using an independent perspective. They act like investors—all employees treat company money as if it were their own. They ensure that accountability remains in the line, not in a central team or external advisers. Their focus on execution remains relentless even as results improve, and they are always seeking new ways to motivate their employees to keep striving for more. By contrast, companies doomed to fail tend to revert to high-level targets assigned to the line, with a minimal focus on execution or on tapping the energy and ideas of employees. They often lose the talented people responsible for the initial achievements to headhunters or other internal jobs before the processes are ingrained. To avoid this, leaders must take care to retain the enthusiasm, commitment, and focus of these key employees until the execution engine is fully embedded.

Consider the experience of one company that had realized a $4 billion (40 percent) bottom-line improvement over several years. The impetus to “go back to the well” for a new round of improvements, far from being a top-leadership initiative, came out of a series of conversations at performance-review meetings where line leaders had become energized about new opportunities previously considered out of reach. The result was an additional billion dollars of savings over the next year.

Nothing about our approach to transformations is especially novel or complex. It is not a formula reserved for the most able people and companies, but we know from experience that it works only for the most willing. Our key insight is that to achieve a transformational improvement, companies need to raise their ambitions, develop different skills, challenge existing mind-sets, and commit fully to execution. Doing all this can produce extraordinary and sustainable results.

Source: McKInsey.com.
Authors: Michael Bucy, Stephen Hall and Doug Yakola
About the authors: Michael Bucy is a partner in McKinsey’s Charlotte office; Stephen Hall is a senior partner in the London office; Doug Yakola is a senior partner of McKinsey’s Recovery & Transformation Services group and is based in the Boston office.
Link

Ten good pieces of economic data from all over the world

Posted in Aktuellt, Allmänt, Board work / Styrelsearbete, Executive Team / Ledningsgruppsarbete on December 8th, 2016 by admin

In spite of what we read every day in the newspapers, there’s a lot of positive news out there.

740x-1

It’s been a big week for bullish economic data across the globe, from South Korean exports to European manufacturing figures.
The most important …

What it takes to understand your customers today

Posted in Aktuellt, Board work / Styrelsearbete, Customer care / Kundvård, Executive Team / Ledningsgruppsarbete on November 19th, 2016 by admin

Companies that know how and when to use the wide array of research tools available today have a big competitive advantage in generating insights that lead to new organic growth.

What do Unilever, Philips, Amazon, and Netflix have in common? At first sight, nothing much. They compete in very different industries, and while Unilever and Philips are firmly rooted in the 19th century, Amazon and Netflix are unthinkable without the Internet.

What they have in common, though, is that they drive growth by meeting consumer needs better than their competitors do. Core to this consumer focus is a strong belief in insights, and in the active use of a diverse mix of insight tools—new and old, qualitative and quantitative, digital and analog—to get better answers.

Unilever, for example, has successfully engaged in consumer cocreation to launch TRESemmé, a fast-growing dry-shampoo brand that is now one of the best-selling mass hair-care products in the US. Philips has achieved major market-share gains in highly contested home-appliance categories through city-level growth analysis. Thanks to its data-driven recommendation engine, Amazon attributes more than one third of its revenue to cross-selling,
and Netflix saw its subscribers triple between 2011 and 2015, largely because of its ability to develop hit shows such as House of Cards, based on advanced analysis of subscribers’ past viewing behavior.

images-1Developing a better understanding of customers is increasingly a strategic necessity, because fast-moving markets, new technologies, and new business models are changing what customers want and how they shop. Yet many companies still spend the bulk of their research budget on traditional techniques (e.g., focus groups, interviews, and surveys), or treat insights as an afterthought, which leaves them with a limited and often incorrect view of what customers want. That is a recipe for obsolescence in today’s economy.

Market research has traditionally been a linear and sometimes slow process. In the past, it wasn’t uncommon for attitudinal research to take three months and innovation investigation as long as year. This is changing rapidly in response to demands to keep up with the accelerating pace of business and thanks to digitally enabled techniques, which are bringing greater flexibility, effectiveness, and speed.

Consumers have ongoing digital interactions with brands and about brands, which can be observed continuously. Online focus groups can be assembled in 10 minutes. Mobile ethnographies can be completed in a weekend. Rapid quantitative surveys can be fielded and analyzed in days or weeks, rather than months. These developments are allowing marketers to create more targeted and relevant insights programs, tailoring the technique and questions to the right consumers at the right time.

Such speed and targeting has made insights generation both faster and cheaper, allowing marketers to get to “good enough” insights before moving to real-time testing and iterating in their marketing pilots and campaigns.

While there is a vast array of marketing analytics and insights capabilities, this article focuses on those tools, techniques, and approaches that specifically lead to new commercial growth, i.e., new products, services, or markets. (An insight is defined as the discovery of a fundamental consumer need that companies can use to create value for the customer and the business.)
A new approach to insights

Getting to a level of understanding about what customers really want requires the ability to understand what motivates consumers, as well as how they shop and make decisions. Based on our work with leading companies and innovative insights vendors, as well as proprietary research, we have identified five research approaches that are best suited for generating the kinds of insights that lead to new growth opportunities.

1. Observe consumers ‘in the field’
Observing consumers as they shop or use a product is often deeply revealing about their behaviors and motivations. This kind of research is closely tied to behavioral economics, a school of thought that seeks to understand the way consumers actually make decisions. It’s also a pillar of design thinking, which puts the customer at the center of a system of interactions with the brand.

As business leaders think about developing an insight engine for their organization, we recommend reflecting on five questions:
• What modern insight technologies and sources have you invested in and developed over the past 24 months?
•ƒƒ What are the primary blockers that slow down the delivery of a relevant and actionable insight to the right decision maker?
• ƒƒWhat percentage of your insights are counterintuitive and lead to different decisions from those made in the past?
• ƒƒWhich business leaders, both inside and outside of marketing, are actively using customer insights to make better decisions?
•ƒƒ Which insights developed in the last 12 months have been used to accelerate growth and make efficiency gains?

John Kearon, the founder of UK-based agency BrainJuicer, a two-time winner of Esomar’s Best Methodology award and a leading provider of observational and ethnographic research, believes that “anything based on observation of what people really do is massively more accurate than what people say they do—or the reasons they give for saying it.”

One international food company, for example, was seeking to introduce European markets to a new product: a dip that could also be spread on bread. The CEO believed that countries like France or Italy would be ideal pilot markets, given the countries’ obsession with good food. To test this hypothesis, a team of ethnographic researchers conducted “dine-alongs,” where they joined subjects in five countries both in restaurants and in private homes.

Through observation and casual conversation, the team found that consumers in two other countries were actually more open than those in France and Italy to international cuisines and new flavors, and would be more receptive to the company’s product. Based on this research, the company changed their market-entry priorities and increased their launch targets to more than a 10 percent share in the category, which unlocked additional sales of more than $10 million annually.

2. Digitize the daily diary
While consumer diaries—literally a written record someone creates to track their daily decisions and purchases—have been around for some time, digital advances and mobile devices have made this kind of research much more versatile, accurate, and accessible. Typical applications include video recording, photographs, and blog posting of food or beverage consumption, media usage, patient journeys, or compliance with medical prescriptions and therapies. What’s more, the results are available within days, if not in real time, rather than after weeks or months.

In a pioneering case, a maker of pharmaceuticals and medical devices used digital diaries to better understand how arthritis patients self-administered injections several times a day. Participating patients used mobile devices to film themselves performing these tasks. Additionally, researchers observed patients at home. The research revealed that some patients skip injections because of the discomfort and pain they cause or the anxiety patients feel. Not all patients, however, admit such qualms to their physicians, who then will frequently prescribe higher dosages of pain medication. A member of the observation team said, “Until now, we have never seen how patients live in their day-to-day lives.”

To address this issue and increase patients’ compliance with the prescription regimen, the company is working on a needle-free drug delivery system as well as other ideas for new products and services that would make the life of arthritis patients a lot easier. The total opportunity has been valued at almost $100 million in incremental revenue.

3. Use advanced analytics to get much more granular insights
Today, the mass of data about consumer behavior allows marketers to get past broad and often deceptive averages to dive into much more granular levels of insight that can unlock new opportunities. Those who invest in big data and advanced analytics often achieve up to 10 percent sales growth, up to 5 percent higher return on sales, and a margin uplift of 1 to 2 percent.
A next-generation car-rental company with ambitious growth plans, for example, used advanced data-mining techniques to target new customers more effectively. It started by analyzing its database of driver profiles and trips to identify distinct groups of customer archetypes. The team then pulled in external data from a variety of sources to build a scoring model to identify drivers in a given city or neighborhood who fit one of the ten archetypes the business had developed. They then tailored offers and communications to each of those segments. Within one year, the company grew its customer base by more than 10 percent and increased its revenues by almost 20 percent.

Philips US applied advanced analytics to simulate the market potential for various combinations of price tiers, channels, and product portfolios—not at a country or even regional level, but city by city in dynamic markets.

With that information in hand, the marketing team created offers that targeted the most promising segments in each city. The market share in relevant product categories increased from 15 percent to 19 percent, and the EBIT for the company’s consumer lifestyle division jumped from 8 percent to 14 percent. Says Pieter Nota, CEO for Philips Consumer Lifestyle: “Based on the global growth analysis, we devised a plan to double revenues over the course of less than a decade without compromising profit margins, partly driven by product innovation in two highly dynamic categories.”

4. Better listening and learning with social media

Social media allows companies to listen in on unfiltered conversations consumers are having about their preferences, experiences, and habits. Many services exist, such as Hyve, Winkle, BrandWatch, Synthesio, or Google Analytics, to unlock insights from analysis of online discussions, consumer reviews, topical blogs, and keyword-driven trend analysis. Active listening enables companies to detect relevant buzz early on (be it positive, neutral, or negative), react swiftly, and unearth clues that can lead to innovations.

imagesBeiersdorf, the personal-care company and owner of the Nivea brand, tapped into an ongoing social-media conversation to develop a completely new product line. Using Hyve’s Netnography Insights software, the company found that consumers were complaining in multiple online forums such as beautyjunkies.de that deodorant leaves stains on textiles. Further analysis revealed that the issue was widely discussed and that users shared advice on how to remove various types of stains.

In response, the company developed a new type of deodorant that prevented yellow stains on white clothes. To test the concept, Beiersdorf turned to almost 2,000 dedicated followers of the Nivea brand. It turned out that consumers were not only concerned about yellow stains on white clothes but also about white stains on dark-colored clothes. Beiersdorf refined the concept and marketed it as “Nivea invisible for black & white,” stressing that “white stays white and black stays black.”

Ansgar Hölscher, in charge of consumer insights for the Nivea brand, says, “Thanks to social listening and online consumer cocreation, Nivea Black & White became the most successful product launch for Beiersdorf in ten years.”

5. Cocreate with consumers on digital platforms
Manufacturers of consumer products are inviting their customers to generate new ideas to advance their product development and gather feedback on new products, even before launch. This goes beyond just listening to customer preferences and bringing them into the creative and development process. When done well, cocreation can reduce market-research costs, increase customer loyalty, and develop the products and services that customers want. Leading vendors in this field include CrowdWorx, Innocentive, Synthetron, noo F/X, and Lunar, the award-winning design firm recently acquired by McKinsey. Procter & Gamble became a high-profile proponent of this approach when it launched its Connect+Develop program, which aimed to leverage external idea generation for future product development. One of the innovations that originated from this program was the Swiffer range of cleaning products that collectively contribute about a billion dollars in annual sales.
More recently, Unilever made headlines when it created a new hair-care range, TRESemmé Fresh Start Dry Shampoo, with the help of consumers. It learned that half of US women do not wash their hair every day, even though many of them feel insecure on the days when they don’t.

To learn more, Unilever engaged with women in My Beauty Café, an online community dedicated to hair care and beauty regimens. Community members contributed to every step of product development, from initial ideation and concept refinement to sample testing, packaging, and advertising. Launched in 2010, the new range generated first-year sales of almost $8 million. Subsequently, Unilever’s share of the US mass hair-care market jumped from 9 to almost 16 percent. Today, Fresh Start Dry Shampoo is one of the ten best-selling products in the overall styling category in the US mass market. Generating insights is a vital, iterative process. Testing and learning, adding innovative methodologies to your tool kit, and discarding techniques that no longer add value have become core insights disciplines. While reengineering how companies generate insights is crucial to finding new growth, how effective it is relies on an approach that is as dynamic as the market itself.

Source: McKinsey.com, November 2016
Link
Authors: Jonathan Gordon, Volker Grüntges , Vicki Smith and Yvonne Staack
About the authors: Jonathan Gordon is a partner in McKinsey’s New York office, Volker Grüntges is a senior partner in the Munich office, Vicki Smith is a senior expert in the Chicago office, and Yvonne Staack is a senior expert in the Hamburg office.

Transforming operations management for a digital world

Posted in Aktuellt, Board work / Styrelsearbete, Digitalisering / Internet, Executive Team / Ledningsgruppsarbete, Strategy implementation / Strategiimplementering, Technology on October 13th, 2016 by admin

When combined, digital innovation and operations-management discipline boost organizations’ performance higher, faster, and to greater scale than has previously been possible.

In every industry, customers’ digital expectations are rising, both directly for digital products and services and indirectly for the speed, accuracy, productivity, and convenience that digital makes possible. But the promise of digital raises new questions for the role of operations management—questions that are particularly important given the significant time, resources, and leadership attention that organizations have already devoted to improving how they manage their operations.

At the extremes, it can sound as if digitization is such a break from prior experience that little of this history will help. Some executives have asked us point blank: “If so much of what we do today is going to be automated—if straight-through processing takes over our operations, for example—what will be left to manage?” The answer, we believe, is “quite a lot.”

More digital, more human
Digital capabilities are indeed quite new. But even as organizations balance lower investment in traditional operations against greater investment in digital, the need for operations management will hardly disappear. In fact, we believe the need will be more profound than ever, but for a type of operations management that offers not only stability—which 20th-century management culture provided in spades—but also the agility and responsiveness that digital demands.

The reasons we believe this are simple. First, at least for the next few years, to fully exploit digital capabilities most organizations will continue to depend on people. Early data suggestdw1 that human skills are actually becoming more critical in the digital world, not less. As tasks are automated, they tend to become commoditized; a “cutting edge” technology such as smartphone submission of insurance claims quickly becomes almost ubiquitous. In many contexts, therefore, competitive advantage is likely to depend even more on human capacity: on providing thoughtful advice to an investor saving for retirement or calm guidance to an insurance customer after an accident.

That leads us to our second reason for focusing on this type of operations management: building people’s capabilities. Once limited to repetitive tasks, machines are increasingly capable of complex activities, such as allocating work or even developing algorithms for mathematical modeling. As technologies such as machine learning provide ever more personalization, the role of the human will change, requiring new skills. A claims adjuster may start by using software to supplement her judgments, then help add new features to the software, and eventually may find ways to make that software more predictive and easier to use.

Acquiring new talents such as these is hard enough at the individual level. Multiplied across an organization it becomes exponentially more difficult, requiring constant cycles of experimentation, testing, and learning anew—a commitment that only the most resilient operations-management systems can support.

Seizing the digital moment
And if digital needs operations management, we believe it’s equally true that operations management needs digital. Digital advances are already making the management of operations more effective. Continually updated dashboards let leaders adjust people’s workloads instantly, while automated data analysis frees managers to spend more time with their teams.

The biggest breakthroughs, however, come from the biggest commitment: to embrace digital innovation and operations-management discipline at the same time. That’s how a few early leaders are becoming better performers faster than they ever thought possible. At a large North American property-and-casualty insurer, for example, a revamped digital channel has reduced call-center demand by 30 percent in less than a year, while improved management of the call-center teams has reduced workloads an additional 25 percent.

Achieving these outcomes requires organizations to tackle four major shifts.

Digital and analog, reinforcing each other
Digitization can be dangerous if it eliminates opportunities for productive human (or “analog”) intervention. The goal instead should be to find out where digital and analog can each contribute most.

That was the challenge for a B2B data-services provider, whose customized reports were an essential part of its white-glove business model. Rather than simply abandon digitization, however, the company enlisted both customers and frontline employees to determine which reports could be turned into automated products that customers could generate at will.

Working quickly via agile “sprints,” developers tested products with the front line, which was charged with teaching customers how to use the automated versions and gathering feedback on how they worked. The ongoing dialogue among customers, frontline employees, and the developer team now means the company can quickly develop and test almost any automated report, and successfully roll it out in record time.

Driving digital, enterprise-wide
Developing new digital products is only the beginning, as a global bank found when it launched an online portal. Most customers kept to their branch-banking habits—even for simple transactions and purchases that the portal could handle much more quickly and cheaply.

Building the portal wasn’t enough, nor was training branch associates to show customers how to use it. The whole bank needed to reorient its activities to showcase and sustain digital. That meant modifying roles for everyone from tellers to investment advisers, with new communications to anticipate people’s concerns during the transition and explain how customer service was evolving. New feedback mechanisms now ensure that developers hear when customers tell branch staff that the app doesn’t read their checks properly.

Within the first few months, use of the new portal increased 70 percent, while reductions in costly manual processing means bringing new customers on board is now 60 percent faster. And throughout the changes, employee engagement has actually improved.

Realigning from the customer back
The next shift redesigns internal roles so that they support the way customers work with the organization. That was the lesson a major European asset manager learned as it set out on a digital redesign of its complex, manual processes for accepting payments and for payouts on maturity. The entire organization consisted of small silos based on individual steps in each process, such as document review or payment processing—with no real correlation to what customers wanted to accomplish. The resulting mismatch wasted time and effort for customers, associates, and managers alike.

The company saw that to digitize successfully, it would have to rethink its structure so that customers could easily move through each phase of fulfilling a basic need: for instance, “I’ve retired and want my annuity to start paying out.” The critical change was to assign a single person to redesign each “customer journey,” with responsibility not only for overseeing its digital elements but also for working hand in glove with operations managers to ensure the entire journey worked seamlessly. The resulting reconfiguration of the organization and operations-management systems reduced handoffs by more than 90 percent and cycle times by more than half, effectively doubling total capacity.

Making better leaders through digital
The final shift is the furthest reaching: digital’s speed requires leaders and managers to develop much stronger day-to-day skills in working with their teams. Too often, even substantial dw2behavior changes don’t last. That’s when digital actually becomes part of the solution.

About two years after a top-to-bottom transformation, cracks began to show at a large North American property-and-casualty insurer. Competitors began to catch up as associate performance slipped. Managers and leaders reported high levels of stress and turnover.

A detailed assessment found that the new practices leaders had adopted—the cycle of daily huddles, problem-solving sessions, and check-ins to confirm processes were working—were losing their punch. Leaders were paying too little attention to the quality of these interactions, which were becoming ritualized. Their people responded by investing less as well.

Digital provided a way for leaders to recommit. An online portal now provides a central view of the leadership activities of managers at all levels. Master calendars let leaders prioritize their on-the-ground work with their teams over other interruptions. Redefined targets for each management tier are now measured on a daily basis. The resulting transparency has already increased engagement among managers, while raising retention rates for frontline associates.

Organizations investing in human and digital capabilities can start by asking themselves several critical questions:

Do we really understand how customers interact with us now, and how they want to in the future?

How can we give customers the experience they want, no matter which digital and human channels they use?

How can we speed our metabolism so we can uncover new opportunities for better performance?

Can our culture become flexible enough for us to collaborate effectively with our customers through constant change?

Capturing the digital opportunity will require even greater operations-management discipline. But digital also makes this discipline easier to sustain. Adding the two together creates a powerful combination.

Source: McKinsey.com, October 2016
By: Albert Bollard, Alex Singla, Rohit Sood, and Jasper van Ouwerkerk
About the authors: Albert Bollard is an associate partner in McKinsey’s New York office, Alex Singla is a senior partner in the Chicago office, Rohit Sood is a partner in the Toronto office, and Jasper van Ouwerkerk is a senior partner in the Amsterdam office.
Link

Ledarskap för digitalisering

Posted in Aktuellt, Board work / Styrelsearbete, Digitalisering / Internet, Executive Team / Ledningsgruppsarbete, Technology on October 5th, 2016 by admin

Frågan den som vill stresstesta sin egen organisation bör besvara är om det i dagsläget finns ett ledarskap och en kultur som krävs för att möta den förändring digitaliseringen för med sig, t ex dra full nytta av digitaliseringens möjligheter. En av de viktigaste grundbultarna som lyfts fram i studier om digital transformation av verksamheter är att det är en fråga för VD:n och styrelsen och att de inte får lämpa över ett så viktigt arbete till IT-chefen.

Att ställa om en organisation till digitalt leder oundvikligen till en del smärtsamma omställningar för individer i organisationen. Det handlar om roller som får mindre att tycka till om, om chefer som får mindre makt, om resurser som styrs om och om större krav på snabbrörlighet i organisationen. Denna ledarskapsutmaning är i sig ett tecken på det som karaktäriserar den digitaldisrupdigitala omställningen – den bryter upp de silos där vi är trygga och tvingar oss alla ut på djupt vatten.

Nära hälften av alla chefer, oavsett om de har en IT-roll eller inte, har varit med och fattat strategiska beslut kring digitalisering. Det kommer inte som någon överraskning att över hälften av dessa chefer (chefer som varit delaktiga i IT-beslut men som inte formellt har en roll inom IT) säger att de inte känner sig ha tillräckligt med kompetens för att fatta sådana beslut . Oavsett om man känner sig redo eller inte kommer fler och fler chefer bli inblandade i beslut som rör digitalisering. Det blir därför en kärnfråga att utbilda alla beslutsfattare i de villkor och möjligheter som digitaliseringen för med sig. Men hur ska man då vara och agera för att vara en bra digital ledare?

Fyra nycklar för digitala ledare
Idealt är det VD som tar täten i omställningen mot att bli en sant digital organisation. Att driva en sådan omvälvande förändring kräver ett starkt och uthålligt ledarskap som vågar ta obekväma beslut och driva igenom nödvändiga organisationsförändringar, maktförskjutningar och kulturskiften . Men samtidigt som VD behövs för att digitaliseringen ska lyckas sätter transformationen också press på alla ledare i verksamheten att ställa om till ett digitalt och innovativt mindset.
Fyra nyckelfaktorer kan ringas in när det gäller ledarskap för digital transformation.

1. Helhetsperspektiv
Skaffa er en samlad helhetsbild över vart utvecklingen är på väg. Bryt silos, lös upp revir och anställ generalister som förstår helhet och affär för att leda förändringen mot digitalt.

2. Säg hej då till det gamla
Var snabb när det gäller att förstå vilka kompetenser och avdelningar som blir obsoleta i det nya paradigmet och satsa på att skola om dem. Det blir för dyrt och trögt att hålla fast vid det gamla.

3. Snabbhet och innovation
Se till att dina gamla processer inte sinkar den digitala utvecklingen. Digital innovation kan gå snabbare än innovation i hårdvara och förväntas därför göra det. Eftersom digitaliseringen kommer genomsyra hela verksamheten kommer också innovation förväntas av alla.

4. Vision och strategi framför kontroll
Visioner, strategier och ramverk främjar innovation – kontroll dämpar. Sätt upp ambitiösa mål som inspirerar till helt nya sätt att jobba. Gör alla ledare till innovationsledare.

Källa: Kairosfuture.som, 5 oktober 2016
Del av artikel. Läs h e l a artikeln här.
Läs mer om Kairos Future här

Generation Z – hur kommunicerar vi med generationen som föddes med mobilen i handen?

Posted in Aktuellt, Allmänt, Board work / Styrelsearbete, Customer care / Kundvård, Digitalisering / Internet, Executive Team / Ledningsgruppsarbete, Försäljning / Sales on October 3rd, 2016 by admin

Snapchat, Youtube, Musical.ly. Jo, det är viktigt att vara där målgruppen är! Hur många gånger har du inte hört det och hur många gånger har du inte känt dig stressad över alla nya appar och tjänster du behöver lära dig?
Strunta i det! Det var budskapet idag på ett frukostseminarium som Cision ordnade med antropologen Katarina Graffman och två representanter från generation Z, 11-åringarna Tilda och Linnéa. De tillhör en mycket integritetskänslig grupp som snarare flyr än följer dig tillbaka när du stalkar dem i sociala medier. De föddes bokstavligen med ipaden i hand. För dem har mobiltelefoner och ipads alltid funnits och de brukar allt det vi vuxna lite slarvigt buntar ihop sociala medier på helt andra sätt än vi gör.

Flyttar sig från medium till medium
Generation Z hänger mest på Youtube, Instagram och just nu på karaoke-appen Musical.ly. Instagram används inte främst för att posta bilder utan för att kommunicera med sina kompisar och chatta. Facebook och e-post använder de överhuvudtaget inte, eller väldigt sällan. Ibland har skolan eller idrottslaget en facebook-grupp som lärarna eller ledarna postar information så då måste de gå in där och läsa. I övrigt är Facebook ett medium för vuxna, där föräldrarna hänger och precis som vi inte ville hänga där våra föräldrar hängde, förflyttar sig generation Z från medium till medium när de vuxna hänger efter. Snapchat håller redan på att ebba ut nu när allt fler äldre hittar dit.
z
Alltid underhållen
Utmärkande för generation Z är att de alltid är vana att bli underhållna. De präglas av det Katarina Graffman kallar paus-beteende. De är vana att kunna sätta saker på paus för att ta upp tråden senare. Det gör att det ibland kan vara svårt att hänga med i en hel skollektion på 40-50 minuter. Det är inte helt ovanligt att barnen pausar för att en timma senare vilja lösa färdigt det där mattetalet men då är lektionen slut sen länge. Det här beteendet visar sig också då de ber sina föräldrar eller kompisar att pausa något för att kunna återuppta senare vilket kan skapa problem i relationer till andra människor.

Ombytta definitioner av utryck
Katarina Graffman har frågat barn och ungdomar i olika samhällsklasser och i olika länder vad medier och sociala medier är och samtliga svarar att media handlar om att ha kontakt med sina vänner och omvärlden. Att koppla appar och tjänster som sociala medier är inga uttryck de använder. I stället är ”sociala medier” när de sitter tillsammans och kollar på TV-teven, eftersom då är man social tillsammans.

Youtube före TV-teve

Att Youtube är den största sökmotorn hos generation Z är länge känt. Gruppen youtubar hellre än googlar. De följer personer som Beyoncé, Messi, Clara Henry, Hampus Hedström och Keyyo och har hög medvetenhet om sponsring och kan skilja på sponsrat material och icke-sponsrat och rör sig obehindrat mellan de båda.
40% av målgruppen definierar sig som gamers och kollar gärna när andra spelar Counterstrike eller Minecraft på samma sätt som vuxna kollar på fotboll eller längdskidor på TV-teven. Att Youtube är det första stället man söker på påverkar såklart också hur man upplever ord och text. Många ser till exempel gärna filmen först (om det finns en sån) för att få större förståelse när de läser en bok.

Stark integritet
Den här generationen har en stark digital integritet. Gruppen är väldigt medveten om hur de framställer sig själva på nätet och föredrar att skicka bilder och texter privat i privata chattar eller i tjänster som Snapchat där bilderna försvinner efter en tid. Den här generationen lägger inte ut särskilt mycket selfies. De hittar nya uttryck för att kommunicera. Ett exempel är smileyn som för den här gruppen är ett urvattnat sätt att kommunicera. Man skickar hellre en bild på sig själv med ett känslouttryck istället för att kommunicera via emojjis och de väljer aktivt tjänster där de får vara i fred och är inte lojala utan byter tjänster ofta. Att då ständigt följa efter dem gör att deras integritet kränks och då förlorar du målgruppen. De har större delen av sin identitet i den digitala verkligheten och istället för att springa efter bör organisationer och företag idag fokusera på hur de blir tillräckligt relevanta för att få dem att komma till dig.

Varumärket är viktigt
När Leksands knäckebröd ville marknadsföra sin knäckepizza och tog de hjälp gaminggruppen Ninjas In Pyjamas för att marknadsföra sin produkt som en nyttigare variant av snabbmat. Det var ett sätt att få målgruppen att identifiera sig med varumärket på ett nytt sätt istället för traditionell reklam. Ett annat exempel är Redbull som istället för att marknadsföra sin dryck, lyfter extremidrottare och extremsport som livsstil och lockar mängder av fans till sin sida. Var lyhörd för hur målgruppen använder just ditt varumärke och var öppen för hur de omtolkar det och gör det till sitt.

Slutligen, ha en inte en digitala strategi för samtliga plattformar. Varje plats eller app fyller olika funktioner och relationer för målgruppen. Våga välja bort kanaler och glöm inte att telefonen är deras viktigaste verktyg och den har de alltid med sig som en förlängd del av kroppen och hjärnan!

Källa:Linkedin.com, 2016
Av: Petra Jankov
Link

Digital in industry: From buzzword to value creation

Posted in Aktuellt, Board work / Styrelsearbete, Digitalisering / Internet, Executive Team / Ledningsgruppsarbete, Försäljning / Sales, Strategy implementation / Strategiimplementering on August 28th, 2016 by admin

From supply chains to production to customer experience, digitization is transforming the way industry functions—and unleashing global opportunities for value creation.

In the past few years, we have seen digitization bring its first benefits to the industrial sector, particularly in processing and manufacturing, yet enormous untapped potential remains. Digital capabilities such as e-commerce platforms can significantly improve traditional customer-supplier experiences. Additional advances in automation, big data and analytics, and the Internet of Things create additional opportunities for substantial gains along the entire industry value chain.

Another industrial revolution

Early signs of the digital revolution are already here. Amazon Business, a B2B e-commerce platform launched in April 2015, turned over $1 billion in sales in its first year, growing at an going D 1impressive 20 percent per month. B2B buyers increasingly prefer digital, with 94 percent conducting some form of online research before purchase.

Further changing the rules of the game are the decreasing costs of new processing technologies such as additive manufacturing and advanced robotics. For example, 3-D printing costs came down by 60 percent between 1990 and 2014, and industrial robot costs decreased 5 percent annually between 2000 and 2012.

Put concretely, what does digital bring in terms of performance jump across functions? Let’s start by looking at operations, where our experts have recently shown that the impact potential is significant across all functions.

And this is not science fiction! Pockets of excellence exist across industrial sectors that have proven it can be done.
•In the oil and gas industry, predictive maintenance is eradicating unplanned downtime and costly repairs. Connected plants use remote sensors to forecast and report on the condition and performance of machinery. Early signs of problems are detected and corrected, maintenance resources are directed at the areas of greatest need, and machinery availability is maximized.
•The pulp and paper industry has seen significant increases in productivity through the use of remote temperature monitoring. Kiln sensors monitor lime mud temperature, a leading indicator of calcination. Sophisticated tools aggregate and analyze the temperature readings and automatically optimize the shape and intensity of the flame driving heat through the kiln. The process has resulted in fuel savings as high as 6 percent and a lime throughput increase of 16 percent.
•In manufacturing, repetitive, strenuous, and complex tasks are performed by robots working alongside operators on the shop floor. The operators themselves spend less time waiting for goods or processes or filling in routine documentation, because information systems optimize materials flows and track key performance indicators. Real-time analytics and advanced process control enable errors and quality lapses to be picked up immediately, minimizing rework and scrap, and automated inventory systems—such as wireless-connected boxes with cameras that automatically reorder when their fill level drops below a certain limit—ensure that inventories are accurate, goods can be easily located, and safety stocks are adequate but not excessive.

Advanced modeling techniques for optimizing complex manufacturing sites and supply chains

Working with a basic-chemicals manufacturer with complex operations, we designed an end-to-end advanced model that generates a holistic optimization of the entire supply chain from procurement to commercial. By incorporating detailed price and cost curves into this model and leveraging the latest advanced optimization engines, we developed a systematic optimization tool that was embedded into the company business process.

The company saw a recurring EBITDA margin increase of roughly 5 percent, equal to approximately 6 percent of overall manufacturing, logistic, and raw-material costs. Application of these techniques on more than ten other cases in the process industry suggests a recurring EBITDA margin increase in the range of two to five percentage points, with value creation being proportional to supply-chain complexity.

Let’s not forget the customer: digital has the potential to profoundly reshape the way industrial companies interact with and serve their customers. Let’s have a closer look:
•Where customer access was once constrained by minimum order sizes and the cost to serve in a particular market, e-commerce and web shops allow companies to reach customers they could nevergoing D 2 have reached before; hence cost to serve can be cut by 50 to 70 percent. Online marketplaces such as Amazon Business and Alibaba virtually connect unlimited buyers and sellers, and established players like Grainger are leading the way with their own platforms, capitalizing on 2015’s estimated $1 trillion in B2B digital commerce sales in the United States.
•Suppliers who once relied on subjective analysis and historical knowledge to determine prices can now use faster, data-driven tools to optimize pricing. For example, a leading technical gases company with a large and highly fragmented product portfolio used advanced data analytics and modeling to design a more strategic and logical approach to pricing. The newly developed value-based pricing led to an increased return on sales of 5 percentage points (see sidebar “Pricing”). Emerging markets can tap the potential of digital in the food chain through innovations such as precision agriculture, supply-chain efficiencies, and agriculture-focused payment systems.
•Sales directors can make smarter resource-allocation decisions based on timely inputs from sales reps, individual performance data, and automated recommendations from tools. Reps making sales recommendations no longer have to rely on hunches about what their customers want, but instead make use of targeted insights about products to sell, customers’ success stories, and simulations run with the customer during the sales visit. The ability to attract new customers, improve cross-selling, and reduce leakage can increase revenues by 5 to 15 percent, while customer satisfaction can be increased by 20 to 30 percent.

Digital’s disruptive power

But digital is not only a means to optimize a company’s existing operations. It also gives both attackers and incumbents the power to disrupt value chains, enter new sectors, and create innovative business models. Established companies face threats from new competitors like Amazon Business, which offers millions of products, from automotive components, industrial lifts, and ramps to lab products, protective gear, and electrical equipment.

Impact of value-based pricing

Working with a basic-chemicals manufacturer with complex operations, we designed an end-to-end advanced model that generates a holistic optimization of the entire supply chain from procurement to commercial. By incorporating detailed price and cost curves into this model and leveraging the latest advanced optimization engines, we developed a systematic optimization tool that was embedded into the company business process.

The company saw a recurring EBITDA margin increase of roughly 5 percent, equal to approximately 6 percent of overall manufacturing, logistic, and raw-material costs. Application of these techniques on more than ten other cases in the process industry suggests a recurring EBITDA margin increase in the range of two to five percentage points, with value creation being proportional to supply-chain complexity.

To get ahead of threats like this, industrial companies can use digital to transform and extend their own business models before change is imposed on them by attackers reshaping their industry. Some incumbents are joining digital platforms and B2B marketplaces to aggregate demand and sell direct to end users. BASF, for example, was the first chemicals company to sell products online through Alibaba. Other businesses, such as the 3-D printing start-up Sculpteo, are selling services rather than products. Still others are offering their manufacturing capacity as a service to third parties.

But are companies ready?
Compelling though the opportunities are, our analysis indicates that industrial sectors in general are lagging behind other sectors in terms of digitization: the MGI Industry Digitization shows that while advanced manufacturing and the oil and gas sectors have already gone some way in their digitization journeys, basic goods manufacturing and chemicals and pharmaceuticals are still in the early stages.

Moreover, the McKinsey Industry 4.0 survey of more than 300 manufacturing experts in Germany, Japan, and the United States from January 2016 shows that only 16 percent of manufacturers have an overall Industry 4.0 strategy in place, and just 24 percent have assigned clear responsibilities to implement it.

Five priorities for competing in an era of digital globalization

Five ways to win
Companies that want to get ahead of the digital pack would be wise to take five key steps:
1. Prioritize and scale up. Use structural assessments to determine the customer appetite versus willingness to pay by using mockups to conduct interviews with potential customers and external experts. In addition, weigh the potential impact against the ease of implementation by assessing the degree of innovation or disruption (Is it a substitute? an extension? a breakthrough?), defining the scalability, studying the feasibility of the pilot and full solution, and ascertaining the fit with existing assets and capabilities.

2. Adopt a test-and-learn approach. As technology-driven change accelerates, forecasting and planning are becoming less relevant and reliable. Agility—remaining open to learning and experimentation—is key. And it is crucial when investing in digital solutions to adopt the mind-set of a venture capitalist. This includes trying out ideas quickly with target customers as going D 3soon as they exist to check market interest and price points. It also means being ruthless: if the idea isn’t worth it, kill it immediately. In addition, successful ventures think about monetization potential as soon as interactions with potential customers start, and they proudly copy from other sectors. A focus on scale is also essential, with the ambition being a tenfold increase.

3. Put foundations in place. To maintain the efficiency and stability of existing operations while providing the processing capacity and speed required by new data-driven activities, smart companies move to a two-speed IT infrastructure—overlaying a fast, next- generation cloud-based IT system on their secure, robust, resilient legacy systems. New talent is another priority, especially data and process experts who can connect up various functions, systems, and levels of management; draw insights from all the information generated across the enterprise; and use their knowledge of the whole production chain to help design new products. Meanwhile, job profiles must be rethought to meet new needs, such as maintenance staff who oversee predictive maintenance rather than acting as troubleshooters, and quality specialists who intercept quality issues online rather than detecting faulty parts after production.

4.Treat data as a competitive advantage. Data fuels the algorithms that provide insights into markets, customers, and business processes, so ensure that data management has a clear structure and governance. And considering that even tech giants such as Google have been vulnerable to malicious attacks, be sure to put cybersecurity high on your management agenda. Physical targets such as connected machinery and systems installed for remote access could also be highly susceptible to sabotage by hackers and other attacks.

5. Work across functions, and manage change in the organization. Digitization requires that all departments work together to capture joint benefits for the whole business. Moreover, because these innovations have a major impact on how people work, it is essential to anticipate concerns and build a persuasive case for the employees.
When thinking about digital priorities, identify the technologies and applications that would have the greatest potential impact. But also make sure not to ignore possible barriers to adoption: devise a plan for helping employees use the new technologies and the related new methodologies most effectively. Remember that no organization achieves a successful digital transformation without taking a thoughtful approach to change management, and that it’s the people applying the technology in their daily jobs who will create the additional value.

Digital’s potential in industry is massive, not only in operations, but across all functions of the sector, and the levers that make the most difference to a company’s bottom line vary—from e-commerce to automation to advanced analytics. But industrial companies must begin taking advantage of digital opportunities in order to avoid losing the value to others. A commitment to digitization from top management is critical to succeeding, as is a systematic method of defining priorities and the ability to leverage early success to drive change.

Source: McKinsey.com, August 2016
Authors: Paul-Louise Caylar, Kedar Naik and Oliver Noterdaeme
About the authors: Paul-Louis Caylar is a partner in the Paris office and a coleader of Digital McKinsey in France. Kedar Naik is an associate partner in the Brussels office, where Olivier Noterdaeme is a partner.
Link

7 things every leader should know about strategy!

Posted in Board work / Styrelsearbete, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap, Strategy implementation / Strategiimplementering on June 29th, 2016 by admin

1. Business Strategy = compete to be unique, not to be the best
Strategy is not about being the best, but about being unique. Competing to be the best in business is one of the major misconceptions about strategy.

And if you only remember one tip from this list, it should be this one. Many leaders compare competition in business with the world of sports. There can only be one winner. But competing in business is more complex. There can be several winners. It does not have to be a zero sum game – you win, I lose or vice versa.

Within a single industry, you can have several companies beating the industry average, each with a distinctive, different strategy. They are no direct threat to each other. There can be several winners. So the worst possible approach to strategy is to seek out the biggest player in the industry and try to copy everything they do.

2. Business Strategy = compete for profit

Business is not about having the largest market share or about growing fast. It’s about making money.

‘I want to grow my business’ is not a strategy. ‘I want to grow my business’ is the same as saying, ‘I want to be rich’. Those things (unfortunately) don’t happen by themselves. Growing is not a strategy, it’s a consequence. When someone includes growth in their strategy, there should be an orange light starting to blink.

That does not mean that you cannot use the word ‘growth’. I use it a lot in the analysis phase – for example, when you talk about growth areas of the business or when you look for growth platforms – areas where you can reach potential that will give you additional profit.

3. Know your industry before you develop your business strategy
A company is not an island – it’s part of a larger ecosystem, an industry. Each industry has its own characteristics, its own structure. This structure and the relative position your companystrategy has within the industry determines profitability. Certain industries have a higher return than others. Your thinking about the industry and industry competition will determine your thinking about your strategy – how you are going to compete within the industry.

The better you know and understand the industry, the better you will be able to determine elements that will make you stand out, be unique and reap a higher average return than the industry average.

4. Business Strategy = Choice
In my eyes, this is the most simple strategy definition. You need a clear choice of WHO you are going to serve and a clear choice of HOW you are going to serve those clients. It’s about connecting the outside world – the demand side – with your company – the supply side. Or in fancy terms: you need a value proposition for a specific customer segment and to develop unique activities in the value chain to serve them.

The key word is ‘choice’.

You cannot be everything to everybody. You want to target a limited segment of potential buyers with the same needs. Next, you are going to tailor your activities in such a way that they meet these needs. Or in fancy terms: you want to tailor your value chain – your company’s activities – to your value proposition. Strategic innovation is the process to make those choices – defining a new who and how for the organisation.

5. A good business strategy requires you to say NO often
If you have clearly defined what you go for – a clear value proposition for a specific client segment (who) and a set of distinct, unique activities in your value chain to offer the needs of this client group (what), you will find out that there are lots of things that you are not going to do. There will be customers that you are not going to serve, activities that you are not going to perform and services/products that you will not be offering. In strategy, choosing what not to do is equally important.

Using the words of the founding father of modern strategy thinking, Michael Porter: “The essence of strategy is choosing what not to do”. Each business strategy should also have a section where it clearly states the noes.

6. A good business strategy requires you to keep moving
Having a good business strategy means that you have arrived. Competitors move, customers’ needs and behaviors change, technology evolves. One crucial element to determine a future path for your company is to predict these evolutions and trends and incorporate this thinking into the business strategy-building process.

If you don’t, you can miss out on new value that is created in the industry or even left behind and get into trouble.

Think about the smart phone and Nokia and you’ll understand.

7. Scenario thinking is an important strategy tool
The last one of the business strategy principles is not the least important. I don’t have to tell you that facts and figures can only go so far. You need to turn data into assumptions that will fuel your reflection process. The standard way to work with assumptions in a structured way is by scenario thinking – fix some parameters and let other vary. This technique helps your reflection process by offering you possible future routes (read: strategic options) for the company.

I believe that scenario thinking is a crucial skill for anyone who wants to deal with business strategy. Every leader should at least master the basics so that they don’t need a strategy consultant for every reflection process or at least to help them challenge the scenario models that the strategy consultant presents.

Source: jeroen-de-flander.com, April 2016
Author: Jeroen de Flander
Link