PLM & OCM Ch. 5: Practices and Processes

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“How did the meeting go, Sarah?”

“First… first… FIRST! There was so much tension leading up to this meeting. There are four ‘tribes’ working on this project. Two in the US, one Acme and one Spacely, and two tribes at HQ, again one Acme and one Spacely. The US tribes are aligned, and the HQ tribes are aligned, but between the two continents, we literally can’t agree on the time of day.”

Prof laughs. “Do you think it is a US vs. Germany thing?”

“A little maybe, every country has its own culture and its own social norms. My Spacely counterpart in Germany, a person working for my own company, called me a ‘cowboy’. ?In the US, we all want to be thought of as cowboys - in a gender-neutral sort of way - but he doesn’t see it that way at all. Cowboys are a negative in Germany. But something interesting, and very valuable to me about this multi-national project, is to understand how other cultures work; it causes me to re-evaluate my own norms and expectations.”

“So, it’s all about the difference is in national cultures?”

“No, not at all. Well, a little, but there’s lots of factors. The US Acme division is focused on making money. They see their customers as having a fixed amount that they are willing to pay, and the division puts all their efforts into lowering costs through increased efficiency. They have competitors who are as technically strong as they are, and customers who are always striving to lower costs. Everyone is trying to squeak out every bit of efficiency they can find, so efficiency is what they focus on.”

“Yes, I remember your comment on US Directors fighting over a nickel they find on the floor. But I also recall a comment in the Lean treatise, The Machine That Changed the World, that the US Auto OEMs had driven any profit incentive away from their suppliers. This proved true in the Great Recession of 2008, when many, many of their suppliers went bankrupt. Is HQ driven by efficiency?”

“Really, they are driven more by innovation, and you can see it everywhere you look on their expansive campus. I so love going to Germany. I love the trains; I can walk everywhere in town but there are also light rail stops which can take me from my hotel to the front door of HQ. There is a Rathskeller at the base of the Rathausplatz that we head to frequently for brats and beer. My husband joined us at the end of one trip and we explored the Christkindlesmarkt. HQ’s offices are a nicer environment than the US offices, which are in a very industrial part of Detroit, and the daily experience at HQ is nicer than at US Acme, which I think creates a tension between the groups. The US generates a lot of corporate earnings, and they certainly think that they do, but HQ has nicer offices, an on-site cafeteria (which even serves beer at lunch!) They take regular coffee breaks, which are served in China cups by an attendant… it’s a very nice environment and I think the US is jealous.

“I enjoy Germany, too. But is the vision at HQ different than in Acme’s US offices?”

“Yes – they are less concerned about squeaking efficiency out of every project, and are more willing to take large-scale risks, like the major investment in the time, money, and organizational change involved in adopting worldwide PLM and ERP systems. I don’t think our friction is so much about national cultures, but is more that HQ is, well, the headquarters. Everyday there are people on that campus thinking ‘how can a global Acme work better five years from now?’ While the US thinks about ‘how can we increase our margins over the next 6 months?’”

Leveraging Past Insights

“I want to circle back on that, but first tell me how the meeting went. You said that Henry, Acme’s world-wide PLM program manager, called this meeting for you to explain yourself to his execs? Is that right?”

“Yes.”

“What led up to him calling this meeting? Were you challenging his authority?”

Sarah sighed. “I didn’t mean to, but a different person on the HQ team contacted Robin in the Supply Chain group; she didn’t like the outcome of the conversation, so she came to me. I sent an email back to the HQ person, and it spiraled out of control from there. Robin really didn’t like that HQ in Germany was telling her how to manage her group in the US, and Henry really didn’t like that I was sending messages to one of his reports.”

“Oh, yeah. That’s a problem. You are an outside consultant at a remote office challenging the authority of the HQ-based project manager on a multi-million Euro project?”

“Um… Oops.” Sarah sighed. “I didn’t mean for my comments to be scolding…” …and I wasn’t trying to challenge his authority, she thought to herself.

“Take a step back, tell me how the project has been going.”

“Henry is concerned that US and HQ are not making progress in aligning on a common corporate goal. ?I have that concern, but that’s a problem for next year. Now I can’t get the project to move anywhere! We’re just at this dead standstill.”

“I had a similar project at Cogswell. At first, I adopted a ‘Move the F#cker Forward” strategy, but then I decided I didn’t even care if it moved forward. I just wanted it to move period. Even if it was moving backwards or sideways, at least it was moving!”

Sarah laughed, “I know the feeling. But sometimes it’s like a car stuck in the mud –you need to rock it backward to move it forward.”

“Yes, good analogy. And from what you tell me, there was probably a general unease about progress, and I would guess that the conversation with Robin, followed by your response, was a trigger. Henry saw you as challenging his authority and might like to pin the blame for a lack of progress on you.”

“Yes, that is what it felt like, but the meeting was much more positive than I expected.”

“Cool! How did that happen?”

“First, it was a weird dynamic in the room, that I am only putting together in retrospect. To recap, HQ’s Henry was unhappy with me, and was making a case that the integration problems were Spacely’s fault – and especially my fault. So, the responsibility fell to Spacely to come up with a new vision for moving the project forward.”

“What was Henry’s vision for moving the project forwards?”

“From the beginning, before I was involved, Acme HQ… and I think it was Henry… wanted to implement the project using Agile. In fact, that is why I was assigned to it. Spacely doesn’t have a great deal of experience in Agile, or an overlapping approach called’Scrum’, but it was well known within Spacely that I like it. In any event, HQ developed a rigid structure to follow; there were dozens of steps, and it was hard to even figure out what step we were on at that moment. It was supposed to be Scrum, but really it was Waterfall. And a confusing waterfall at that. The book I’m using, called Essential Scrum by Kenneth S. Rubin, calls this “‘Scrummerfall’, and it’s the worst of both worlds.”

“Rigidity is the opposite of Agility. So, what is the Spacely vision for this project?”

“Dennis, my pre-sales colleague from Spacely, and I worked on this, developed a ‘Smart Meeting Plan’ and our Arrow Diagram, and this was delivered by Dennis’ VP. We had nearly two weeks between developing the Arrow and this meeting, and Gary and Mitch…”

“The US project managers who are your points of contact?”

“Yes… during this time they spent a lot of time with me to understand high-level PLM strategy and how Spacely would apply that theory to Arrow Diagram. They would then discuss it with Dirk, US Acme’s CEO, and while I was aware that they were talking, I didn’t pay that much attention. I didn’t realize how important these discussions would be until the meeting occurred.”

“How so?”

“It was a Zoom between the US and Germany, with Henry and his execs from HQ, as well as my counterpart from Spacely in Germany. In the US, there was me, Dennis, and Dennis’s VP, who presented the classic 6-slide executive briefing. Gary and Mitch were there, as well as their boss. I wasn’t expecting Dirk to be in the meeting, but he appeared a few minutes after it started, and not only did he validate our vision, but the concepts he used to make his points to Henry were the same concepts that Gary, Mitch and I had been discussing over the previous week. It was like I was listening to myself.”

“Oh, really! That’s a good sign! So, as you were helping Gary and Mitch to learn, they were using your words to educate their top exec. Did that feel good?”

“Oh, my gosh! And I had never met Dirk in person, prior to this, but he was making my arguments for me.”

“How did the meeting end?”

“On one hand it worked well, but on the other it was inconclusive. Henry accepted that he couldn’t control the US group, not tightly anyway, and we learned that we had Dirk’s support. But still, the US is moving in a different direction than HQ, and while I am convinced that Spacely can make the US better, I’m not sure what to do about HQ, or the global plan.”

“Based on the meeting, the US established a level of autonomy, which they need, but the direction that the US will take is inconsistent with long-term corporate goals for a common PLM strategy. Hmm… In the world of Acme’s corporate hierarchy, how does Dirk relate to Henry?”

“Let’s see. The corporate Chief Financial Officer kicked off global implementations of both PLM and ERP, and he brought Henry onto his team to run the PLM project. Dirk is the CEO for North and South American operations, so he probably reports to the corporate CEO? In theory, that would make Dirk at the same level as the global CFO, who is Henry’s boss.”

“Yeah, and at that point, the hierarchy of the org. chart is just a guideline. Power and influence ebbs and flows based on the networking, relationships, and incentives that happen at executive retreats and via their annual performance metrics. Not to mention differing personal agendas and cultural norms.” Prof went on, “and did you say last week that US Acme was once its own company?”

“Yes.”

“That may play into it also. Even if Dirk is committed to a global vision, US Acme’s culture sees itself as autonomous. And the trigger which led to this big meeting with Henry was Robin’s unhappiness at being told what to do by a different person at HQ. Your meeting established that the US needed more autonomy than Henry had wanted to allow, but it ended without a solid conclusion about a global vision. And the situation remains ambiguous, is that right?”

“Yes. After the meeting ended, the US team had an ‘after-meeting meeting’, in Dirk’s office. At this point it was only Dennis and I from Spacely, with Dirk, Gary, and Mitch. After a while the conversation wandered, I was a little frustrated, and there was this big 30-second pause where no one spoke. A little under my breath I said, ‘I want a race!’, and Dirk immediately said, ‘So do I!’ At that moment, right there, decided ‘we’re all going to be cowboys!’ And if we can quickly show success in the US, we can maintain our autonomy.”

“Wow!” Prof said laughing, “That was bold. But you understood the room and said just the right thing at just the right moment.”

“And there was another good thing that happened. US Acme is quite frustrated with HQ, and Gary and Mitch continually made the point in the after-meeting that ‘We need to let Spacely lead.’ They want to delegate project leadership to Spacely.”

“You’re right, and that goes back to the insight you have been delivering over the past few weeks. You are fitting into the Challenger mold.”

“From the Challenger books we discussed a few weeks ago?”

“Yes. Definitely. The Challenger approach is based on the idea that customers aren’t looking to buy, so much as they are looking to learn.” Prof paused. “Prior to this role, you were writing customization scripts, right? What is more important to you now, scripting skills, or leadership skills?”

“Oh my gosh, leadership. The coding skills that got me into this role are not helping me now.”

“Sure, but it’s a big opportunity for you. Do you have a few more minutes? I want to cover something that may come up soon.”

“Yes! I learned last time to eat my tuna sandwich before our call, and I have 20 minutes until my next meeting.”

Practices and Processes

“Good move.” Prof continued, “Okay… in Virtually Perfect, Grieves refers to Practices and Processes, and in The Innovator’s Dilemma, Christensen refers to Modularity and Interdependence. They are not the same, but there is a lot of conceptual overlaps.”

“Such as?”

“Practices are about innovation, and accomplishing some goal which has never been achieved before. Processes are about efficiency, and continually improving towards a known goal. As you said, HQ is HQ, they are driven by innovation, while the US group is driven by efficiency. But for HQ to have the financial resources to be innovative… to try things which may not work out, they need the other divisions to efficiently generate earnings. Here, I have a slide on this.”

“You always seem to have a slide on something…”

“Ha! You’re right. You know how people think in their native language? My native language is PowerPoint slides… Okay, here we go.”

Prof continued, “on the left, you can see the attributes of a practice-based environment, which seeks some goal never achieved before. But we can’t always predict the outcome, so we negotiate, we argue, and there can be lots of friction. Sound familiar?”

Sarah, “You mean like medical practice? Yes, we want to be efficient – kinda – but our true goal is to for the patient get healthy, whatever it takes to do it.”

“Right, especially for something like surgery or oncology. But think of routine medical procedures, like a blood test or a teeth cleaning. They are much more process based. A better example is a coffee shop. If you ask for a latte, you’ll have it within minutes, but if you ask for Eggs Benedict, they’ll be stumped. A process-based organization is very good at doing what they do, and very bad at doing anything for which they don’t have processes to match. We use practices to satisfy some new goal, and they require a high level of interdependence between the various stakeholders. Once the practice, the innovation, proves that we can satisfy the goal, processes are about reaching that goal efficiently. Processes are modular, they’re routine, predictable, frictionless, etc.”

There is No Process for Innovation

“Aren’t processes inherently a good thing? Lean is all about processes. Don’t we want to be Lean?”

“I want to come back to that when we have more time, but Lean is not the right approach for innovation, and Christensen discusses this in The Innovator’s Dilemma: When a company forms it does whatever it needs to survive, and their successful actions become processes, and the processes become embedded in the corporate culture. But that culture defines what the company is unable to do.”

Sarah thought about this. “Hmm… and by dividing innovation and efficiency onto different continents, is Acme reinforcing dissenting cultural norms? Reinforcing differences in practice and process that are six time zones apart?”

Prof let out a sigh. “Yep! Good luck! Gotta go! Bye!”

“No, no, no! I need to talk about this!”

“Yes, of course. I’m teasing you. But the dissension in ideas, in mental models, in approaches, all create context for the tension that you saw building up to last week’s meeting, doesn’t it?”

“I hadn’t thought of that.”

“Despite HQ having the more innovative corporate mandate, Henry is using a process-based approach to manage this project. But his processes are not aligned to the US Acme culture, and now you are moving into a more loosely defined practice stage, where you seek to accomplish something never done before, at least by Acme. Your insights have provided the backing and momentum to do something new, and Gary, Mitch, and Dirk are asking you to lead. They are expecting you to do something new. Take advantage of this to introduce a practice-based approach.”

Sarah needed to think about this. “Thank you so much! I have ideas, but I need to jump to a meeting, and my schedule is a mess. Can we talk in a week or two?”

“Absolutely! I’m too engaged in this drama to give up on it now. But, because I am a professor, let me give you a homework assignment.”

Sarah smiled. “Yes. That is your way.”

“Yeah, yeah, okay. I’ll own that. But take a look at these lectures in Practices, Processes, and the Pain of Change (patrickhillberg.com). See you in a couple of weeks.”

“Thanks! I’ll send an invite.”

Learning Goals:

• In this chapter, Sarah benefits from the insights she provided in earlier chapters, as they reached executive management who argues her case for her. Credible insight will expand in unexpected ways. (This is a true story.)
• As an organization grows, its processes develop into its culture, and the organization becomes very efficient within those processes. But culture also defines what the organization cannot do.
• Practice and Process is a balance. It's effectively not possible (well, very limiting) to attempt to innovate via a process. True innovation will require that you unwind existing processes, accomplish something new via a practice phase, and use the outcome of your practice phase to develop new processes.
• But as will be discussed in a future chapter, change is painful, and will be resisted.