Strategic Innovation Newsletter – November 2009

Welcome to the November 2009 edition of Strategic Innovation newsletter, a free monthly newsletter on leadership, strategy and innovation. Delivered on the first Tuesday of each month.

Back issues are archived for free downloading at www.DanielLockConsulting.com.

Tips for improving business processes

Duplication of data from different parts of the organization can produce conflicting data and lead to the unbalancing of the organization. For example sales may generate a monthly customer production ship forecast and production control distributes a completely different forecast.

• Accrual means the value of the end product exceeds the accumulated costs. Value added=value after processing – value before processing.
• Value added assessment is an analysis of every activity in the business process to determine its contribution to meet end-customer expectations.
• Value is defined from the point of view of the end customer or the business process.

Empowerment; More than a buzz word

Empowerment is more than a buzz word, it is a real management tool that is pragmatic and must be implemented if you are to build a high performing organisation.

Why does empowerment have a bad name? Probably because of silly pop psychology techniques such left-brain/right-brain thinking. And there are many others.

A definition: that employees are able to make decisions that are important to the results of his or her work. Or put another way, that authority is in line with accountability.

Why is empowerment important?

For two reason, one, that it achieves better results (more on this later). The second reason is that it builds employee self-esteem, and intrinsic motivation.

Builds Trust

In Covey’s famous book 7 Habits, he talks of trust, and building trust bank account. We all know that trust is often circumspect between management and employees.

A major reason for this is that employees don’t feel as if management trust them, and this is manifest in the misalignment between authority and accountability.

How can employees be expected to achieve the outcomes for which they have accountability if they don’t have the authority to make those decisions.

An Example:

Imagine an environment where an order for a client has gone missing, the shipping manager is responsible for getting the order to the client on time, but the only person who can call the client is the account manager, who at this time is out of reach.

A simple example where the shipping manager must now go to is boss for approval to do his job and make a simple call to the client to verify an order or sort out confusion.

Creates Better Outcomes

Toyota is a great example of an empowered organisation. Employees on the production line have the authority to stop he entire line if they see a defect. This reduces failure work, and a whole car being built which can’t be sold.

Or a completely different company, 3M, which empowers its people to take risks in designing new products, giving them the freedom to fail.

I understand 3M to have a corporate metric to the effect that 25% of this years sales should be from products that didn’t exist 5 years ago.

How to Develop an Empowered Organisation:

Set boundariesDevelop the skillsIntrinsic motivationBuild the systems:

Design the systems and culture that will allow people to flourish, if people make mistakes are they made to be wrong, or do address it as learning and review the decision process.

Employees maybe sceptical at first, they may infer you are asking them to take on more responsibility with out more pay for example.

Assuming this isn’t the case, demonstrate how their lives will be made easier and the customer will be taken care of. Demonstrate how it is in their best interest to be able to make these decisions. 

Train your people, your people probably have the product knowledge, but a front line staff may need training in dealing with conflict and problem solving skills.

Empowerment is a real world tool for a more effective organisation. With a pragmatic approach, any manager no matter if they implement in a pocket will improve their results by empowering their people.

People wont give away the farm, this is the often cited defence against empowerment. This thinking sends a clear message that you don’t your employees. They will get it.

If customer interactions are part of the job, then it is the job of the manager to empower the person to do the job.

Technique of the month: Get to know your people

Empowering your people, is a process of finding out what they value. This way you can appeal to their rational self-interest to find intrinsic motivation.

Here’s 3 tips on how to find put what people value:

• Talk to them about their private life, don’t become the best friend necessarily, but get to know them more personally. Show an interest.
• Observe their behaviour over time (don’t take one example as a given, watch for a pattern), listen to how they speak, what examples they use and so on.
• Analyse their successes and failures, why did they succeeded or fail in one setting and not another

We all need boundaries from with in which we operate. Review the arbitrarily set boundaries and re-set them with rationally set boundaries. Challenge why these authority levels exist.

For example why is it that an employee can only reverse fees of $20, when the average fee size for their customers is $100.