Lessons from Wipro’s Tryst with Lean (TPS), Part-3 of 3

This is the concluding part of my previous posts: Wipro’s Tryst with Lean (Toyota Production System) and Lessons from Wipro’s Tryst with Lean (TPS), Part-1 of 3, and Lessons from Wipro’s Tryst with Lean (TPS), Part-2 of 3.

5.  Remember, a lean system takes years to build.

This is about planning and gearing up for an incremental journey.  Applying lean principles to knowledge work is not simply a matter of copying tools that have been successful in manufacturing.  Instead, you must use the contents of the toolbox to invent something new.  You probably won’t get it right on the first try, but over time you can put together a system of continual improvement by doing the following:

  • Start small.  Wipro launched 10 pilot projects to explore whether a lean approach was a viable option.  When 8 showed promising results, it tasked the productivity office with leading an enterprise-wide effort.  Bit by bit, the company learned which ideas worked, which ones needed refinement, and which should be discarded.  Today, of nearly 4000-5000 projects being delivered by Wipro, over 1600 projects are now Lean, bringing a minimum of 20% savings on an average.
  • Codify the lessons learned.  It’s important that someone in the organization have an overall view of the initiative; otherwise valuable learning could easily be lost.  Wipro’s ‘Productivity Office’ filled this role, reviewing every lean project, leading education efforts, and helping standardize practices.
  • Keep looking for new ways to work.  Although progress at Wipro was steady in terms of the number of lean projects undertaken, senior managers recognized that widespread adoption was only one measure of success and that implementation also needed to be deep.

Remember that the lean approach is not useful everywhere.  If the work at hand is visionary and experimental and requires inventing new ways to perform tasks, don’t try to apply lean principles everywhere.  Repetitive tasks within the work can and should be addressed with lean ideas.  But innovation will suffer if the time needed to come up with and test wild ideas is classified as waste and eliminated.

6.  Leaders must blaze the trail.

It is purely about engaging your managers.  In the long run, lean principles result in bottom-up improvement: Front-line people generate and implement new ideas, while managers play a supporting role.  But this is the end state; an organization rarely, if ever, starts there.  Middle and senior managers are critical in launching the process.

  • Project managers and other midlevel leaders must train and motivate their teams.  This requires a significant investment of management time.  At Wipro, it was found that teams that had leaders who were heavily engaged in the lean initiative—who educated their teams and persuaded them that lean efforts would improve performance—were more successful than teams whose leaders were not.  At Wipro, either the project manager or a certified lean instructor conducted the initial training.  Then it was up to the project manager to push the team to use the ideas .
  • Senior leaders must be long-term champions.  Many organizations suffer from ‘process improvementitis’.  Their leaders pay lip service to the initiative of the month—and, not surprisingly, people don’t take the initiatives very seriously.

Turning a knowledge organization into a lean system requires a grassroots reinvention of how work is performed.  That’s as true in knowledge work as in manufacturing.  The transformation demands sustained investment, a huge amount of training, a new culture, and new processes.  Senior leadership must treat it as a long-term change program.

Azim Premji, Wipro’s chairman, understood this well; he was deeply involved with his company’s initiative from the start.  He, Premji, was always aware and was even part of the Lean briefing sessions, it really helped drive this initiative.  He personally reviewed lean projects, consistently met with the leaders of the initiative, and spoke about it to the outside world.  His public commitment made clear to employees that the program was there to stay

 __________________________________

“Wipro’s example shows that Lean can work and become a critical success factor for organisations operating with projects to provide IT-based services, where substantial variability in customer demand, technology prerequisites, and human-centric intervention is common,” says Alexander Peters, Analyst at Forrester Research.

During recession of 2009, Wipro decided to apply Lean across all application maintenance projects and squeeze the cost out at a time when customers were asking for rate cuts and do more with less.

During last 2 years, Wipro has moved over 25-30 customers to the Lean model.  By using Lean principles, Wipro was able to transition projects from rival vendors to its own project teams in 100 days-a process that used to take up to six months earlier.

“Now, our projects, especially where a transition is involved, are becoming profitable much faster,” says Deb. This is because the transition time is reduced-the period when projects are not normally profitable. One of the top worries for any new outsourcing customer is the cost of switching between vendors. By using Lean, Wipro is now able to bring down that entry barrier and make it more attractive for customers to switch.

Alexander Peters of Forrester Research says that Wipro’s case study is a lesson for other organizations seeking to start a similar initiative.  Organizations embarking on the journey to Lean should follow– Wipro’s staged approach centred on the deployment of a ‘Lean productivity team (or centre of expertise)’ and ‘Unified Lean tool kit’ and ‘performance measurement system’ ………which they did with the help of devising a measure known as EI or ‘Excellence Index’.

At Wipro, they made a point to include various ‘Lean’ tools in their unified toolkit for each stage a project goes through.  For example, they embarked upon Dependency Structure Matrix (DSM) for prioritization of requirements, sequencing the test scenarios, analyzing the impact, competency management, forward engineering.  They emphasized upon mistake-proofing, Value stream mapping, Standardization, 5-S, automation, visual controls, workload leveling, concurrent engineering with the aim of waste elimination.  They used Pugh matrix or tradeoff matrix for the selection of designs.  They focused upon structured testing, orthogonal arrays, Single Minute Exchange of Dies (SMED), NHPP for test setup optimization.  Some other tools such as FMEA, statistical Tools, paired programming etc also made parts of their unified toolkits.  All these tools or categories of tools were given respective weights accordingly which eventually led them to obtain the excellence index for the projects in consideration.

In addition, PO, their productivity office, continued to monitor the impact of different tools.  They reported that, a few tools such as DSM, statistical analysis, and orthogonal arrays contributed significantly to increase the business value.

The PO and the EI tool kit are the visible elements of Wipro’s Lean framework, but equally important are the invisible parts:

1) Alignment with the company strategy;

2) The top-down enablement through senior management; and

3) Bottom-up employee behavior and engagement.

Wipro worked on both the visible and the invisible parts.

Wipro has successfully applied knowledge gained through its own internal Lean initiatives to clients via offerings from Wipro Consulting Services’ Process Excellence Practice.  The Practice utilizes Wipro’s intellectual property, lessons learned from internal Lean projects, Lean methodology and qualified, trained and experienced engagement teams.  Wipro has continuously developed its own Lean framework and has applied its improvement processes and tools into a strategic capability.

A Note to make:  Lean methods and Lean advisory services play a significant role in Wipro’s successful implementation of Process Excellence services. Lean principles are embedded into every Wipro engagement and allow the firm to help customers generate significant improvements in efficiency and effectiveness with IT departments. To help customers transition to a Lean organization, Wipro has developed a “4E” methodology, which takes customers through four key phases from the initial training, adoption and credibility-building around Lean adoption to a full-scale embracing of Lean-thinking across the organization, ultimately driving significant strategic benefits from a combination of customer, operational and financial improvements.

TURNING a manufacturing plant or Knowledge Operations into a lean system requires enormous, relentless effort.  Persistence, not genius, is the key.  Turning a knowledge operation, which has far fewer repetitive codifiable processes, into a lean system is harder still.  But as we have witnessed, it can be done.  And the very difficulty means the system will be tough for a competitor to replicate.  This is its power.

************

“The “Toyota” principles can also be effective in operations involving judgment and expertise.”

Bradley R. Staats & David M. Upton

I hope that you would have liked this whole compilation about Wipro’s tryst with TPS and lessons derived.  You are welcomed to leave your comments here.

With thanks,

Rajneesh Kumar
Mobile: +91 98106-63271
Join my network of Leaders, Managers, Sales Professionals, Educationists, Trainers, CLO, Management Consultants, Six Sigma Professionals, Marketing Professionals, etc at: http://in.linkedin.com/in/rajneeshkumar1

Related Articles:

  1. Wipro’s Tryst with Lean (Toyota Production System)
  2. Lessons from Wipro’s Tryst with Lean (TPS), Part-1 of 3
  3. Lessons from Wipro’s Tryst with Lean (TPS), Part-2 of 3
  4. When Jack Welch set out GE’s Quality Vision 2000
  5. A 30,000-Feet Perspective Of Six Sigma
  6. GE’s Early Days With Six Sigma
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Lessons from Wipro’s Tryst with Lean (TPS), Part-2 of 3

The following section is devoted to the lessons that can be derived from the success of Lean principles at Wipro and applied in any of Knowledge industry–be it telecom, insurance or legal services etc.  It’s an extension of my previous posts: Wipro’s Tryst with Lean (Toyota Production System) and Lessons from Wipro’s Tryst with Lean (TPS), Part-1 of 3

3.  Specify how workers should communicate with one another.

It is about structured communications.  Since multiple people are involved in a process, effective communication becomes imperative—especially because teams may have members all over the world.  A lean system can promote good communication by articulating the ways in which it should be carried out.  Here’s how:

  • Define who should be communicating, how often, and what.  Knowledge workers need to understand who will use their output.  When the supplier of the work is in direct contact with the “customer” (typically someone on the same team), the two can collaborate to ensure that the output performs as expected.  If frequent communication generates a rich flow of information, problems can be spotted and fixed early on.  And when the desired content of communication is spelled out, people get the information they need and don’t have to waste time trying to figure out what others are saying.

One tool Wipro adopted to aid communications was the Design Structure Matrix’.  In a DSM, a project’s tasks are listed along the rows and columns of a matrix, and the team marks whether each item is related to the others, designating each relationship as either a direct dependency or a feedback loop.  This Matrix can then create a recommended order for the tasks, and Wipro used a simplified spreadsheet version that any team could understand.  With one push of a button, the program ranked the tasks and identified which team members needed to interact about each one and when.

  • Create a shared understanding.  Members of knowledge teams increasingly work across geographic, cultural, linguistic, and functional boundaries.  This means they may not have the same take on what is being communicated; the same words may have different meanings to different people.  Mind it!
  • Resolve disagreements with facts, not opinions.  This can be an especially big problem when the work involves tacit knowledge, because it’s often not at all clear how an expert arrived at a particular decision and to what degree that decision was based on intuition or emotion versus facts.

One of Wipro’s lean projects illustrates the challenge and benefit of unambiguous communication within a team.  The team in question had implemented a system of regularly scheduled reviews in which more-experienced members evaluated software code written by their less-experienced colleagues.  The reviewer for each junior member was different each time.  Unfortunately, the senior reviewers used different standards and communicated assessments differently.  What was good code writing to one might be an error to another.  Even when reviewers agreed on what constituted an error, they often called it different things.  The lack of common standards and communication hurt junior employees’ morale.  One of the reviewers spotted the problem and called the team together to discuss it.  The group recognized that it had an opportunity to standardize communications as well as the primary work.  Some of the senior members put together a fist of common errors and their definitions, for all the reviewers to use.  The exercise led the team to realize that many mistakes they had considered to be fuzzy errors-issues involving such things as how variables were defined and how explanations were embedded into code—were actually quite concrete.  And once these things were spelled out, the errors could be systematically fixed.  The team’s language soon became so precise that even a machine could understand it:  The code-writing program could automatically evaluate whether members had followed the guidelines and would raise a red flag if they had not.  In the end the team found itself spending less time fighting over what was an error and more time working on preventing errors in the first place.  The incidence of errors dropped dramatically as a result.

4.  Use the scientific method to solve problems as soon as possible*

The people who created the problem should fix it*

It is about addressing problems quickly and ‘directly’.   One of the fundamental goals of the Toyota Production System is to turn an operation into a ‘problem-solving engine’.  The core of that engine is the scientific method.  But there’s much more to it than that.  Here’s how to adapt the scientific method in a knowledge setting:

  • If a problem arises, ideally the person who created it should fix it.  Problems can crop up because the work process is flawed or because the worker has made a mistake.  In either case, involving the worker in solving the problem usually results in a quicker solution, because the people closest to a problem typically know the most about it.  If this isn’t feasible, the worker should participate in applying the fix.  Recall that at Wipro, the senior members of a software team would check the code written by novices.  If an error was found, the novices, not the experts, were responsible for fixing it, with help from their senior colleagues when needed.  This ensured that the novices knew when they had made a mistake and understood what had gone wrong, reducing the likelihood of their making similar mistakes in the future.
  • Problems should be solved where they occur.  Location provides important contextual information.  Without that information, those trying to solve a problem can’t reproduce exactly what happened and are much less likely to succeed.

In an era when team members are often spread throughout the world, the lean idea that everyone trying to solve a problem should be able to see it firsthand might seem unfeasible.  But modern technology makes it eminently possible.  For example, some members of one Wipro team were responsible for testing software at a U.S. customer’s site;  other members, based in India, were responsible for fixing any bugs that emerged.  In this case the team members weren’t just in different locations—they were in different time zones.  One group was typically sleeping while the other worked.

Sometimes the engineers in India couldn’t replicate the errors that their colleagues in the U.S. had found and therefore couldn’t fix them.  Ultimately, the team decided to have the U.S. group use web-video tools to record the steps they took and the system configurations that had produced an error;  this made it much easier for the engineers in India to identify the causes and fix the problem.

  • Solve problems as soon as possible after they emerge.  The fresher the information about a problem, the less subject it is to distortion, and the easier it becomes to find the cause.  Attacking a problem early on also helps you make the most of the incident as a learning opportunity.  This is why Toyota has employees ‘pull and on’ cords to sound the alarm when a problem occurs.  Even if installing similar alarm systems in, say, a law firm or pharmaceutical lab isn’t feasible, applying the principle behind them is.  With this in mind, one Wipro team that had been checking its newly written code weekly switched to having frontline engineers check one another’s work day, while team leaders reviewed the group’s work every two or three days.  The incidence of errors dropped.

By using the scientific method and having whoever caused an error fix it where and when it occurred, a knowledge organization can build a problem-solving engine that drives continual improvement.

With thanks,

Rajneesh Kumar
Mobile: +91 98106-63271
Join my network of Leaders, Managers, Sales Professionals, Educationists, Trainers, CLO, Management Consultants, Six Sigma Professionals, Marketing Professionals, etc at: http://in.linkedin.com/in/rajneeshkumar1

Related Articles:

  1. Wipro’s Tryst with Lean (Toyota Production System)
  2. Lessons from Wipro’s Tryst with Lean (TPS), Part-1 of 3
  3. Lessons from Wipro’s Tryst with Lean (TPS), Part-3 of 3
  4. When Jack Welch set out GE’s Quality Vision 2000
  5. A 30,000-Feet Perspective Of Six Sigma
  6. GE’s Early Days With Six Sigma
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Lessons from Wipro’s Tryst with Lean (TPS), Part-1 of 3

The following section is devoted to the lessons that can be derived from the success of Lean principles at Wipro and applied in any of Knowledge industry–be it telecom, insurance or legal services etc.  It’s an extension of my previous post: Wipro’s Tryst with Lean (Toyota Production System)

1.  Continually rooting out waste should be an integral part of every Knowledge Worker’s job.

There are “Seven Wastes (MUDAs)” that everyone in any set of operations should strive to eliminate–over-production, unnecessary transportation, inventory, and worker motion, defects, over-processing, and waiting.  These 7-wastes are quite well known in the world of manufacturing.   But, typical knowledge work sites are also loaded with these wastes.  Indeed, knowledge work includes many routine activities that don’t involve judgment or expertise and can eat up huge amounts of time, such as printing documents, requesting information needed to make a decision, and setting up meetings, to name just a few.

The key is to get everyone in the organization to systematically make waste visible and do something about it.

Here’s how to enlist people in your cause:

  • Teach everyone to ask the 5-Why’s.  5-Why’s is a process of continually asking questions until you get to the root cause of every activity performed.  Why am I attending this meeting?  Why am I filling out this report?  Why am I standing at the printer?
  • Encourage everyone to look for small forms of waste, not just big ones.  Most successful companies have already eliminated large, obvious forms of waste, but the floors of knowledge operations are typically littered with nickels that no one has bothered to pick up.  Think about your own workplace.  How many e-mails clutter your in-box because someone cc’d you unnecessarily?  How long did you have to wait to start a regularly scheduled meeting because attendees slowly trickled in? How many reports are created that nobody reads?  Why have your people to wait standing around the printing machine?  The Value-stream mapping is great technique as it can highlight several more forms of waste.  You must track each step it takes and ask, “Why did we do that?”  This allows you to create a prioritized list of elements that can be eliminated.
  • Periodically review the structure and content of every job.  Many knowledge jobs are unstructured and broad.  They tend to expand gradually as one activity after another is added.  People can end up with too much on their plates and too much time devoted to low-value tasks.  Managers should regularly assess their employees’ tasks, including how much time is spent on each.  You may well found that task creep, inadequate prioritization of assignments, and a lack of understanding of what made up a full workload had created a situation in which your people typically had twice as much work as they could realistically perform.  This may be causing significant bottlenecks, excessive switching between tasks, missed deadlines, and employee burnout.  You may have to make hard choices.  However, employees’ productivity and satisfaction would certainly increase.

2.  Strive to make tacit knowledge ‘explicit’.

It is about the practice of writing down exactly how to perform a task—clearly defining the substance, order, timing, and desired result.  This practice has delivered significant value to manufacturers.  It allows you to compare the actual and expected outputs, and take the corrective actions subsequently.

Don’t think that this approach may not be relevant to your knowledge operations.  Many of the processes in knowledge operations are worked out inside an employee’s head; they may be invisible to others and hard to articulate into concrete, replicable steps.  For an example, an investment banker, may not be able to easily explain how he persuaded someone to accept a deal.

Yes, it is correct that the work in a knowledge operation may change rapidly, and on any given day people may do a mix of tasks—some that require judgment or intuition, and some that could be reduced to a protocol because the problem and the best ways to address it, are well understood.  Precisely because people typically perform both kinds of work, don’t assume that many tasks that could be standardized, can’t be.

Despite the challenges, a surprisingly large amount of knowledge work can be specified.  And once it has been, it can be continually improved.   The key is to challenge the assumption that all knowledge is inherently tacit.

  • Look for repeatable parts of the process and codify them.  Almost all areas of knowledge work have more commonality than meets the naked eye.  At Wipro, teams found it difficult to specify the overall code-writing process, because it often involved one-time novel solutions.  But when they reframed the question to ask “What do we do repeatedly?”, they realized that many aspects of the process, including peer review, daily-builds (integrating all the pieces of code written that day into the program), testing, and customer reviews all occurred frequently within a project and across projects and could be standardized.
  • Don’t try to specify everything initially, if ever.  Some tasks occur so rarely that the investment needed to specify them is not worthwhile.  And sometimes a problem is so poorly understood that an expert must advise about how best to address it.  However, even in these instances parts of the process can be specified.
  • Use data to get buy-in.  A major benefit of specifying repeatable processes is that knowledge workers are then freed up to focus on the parts of the job where they can create the most value.  But many highly trained professionals don’t believe that their work can be made explicit.  For example, although specifying work can improve outcomes in medicine, doctors often vigorously resist, arguing that their judgment and expertise cannot be reduced to a set of rules.

Because successful specification of work often depends on workers’ involvement, overcoming such resistance is crucial.  Proving the effectiveness of the process is the key to overcoming such resistance.   Wipro recognized this early on and began tracking where and how the specification of tasks was boosting performance.  It quickly saw that specification was particularly beneficial to projects running behind schedule.  Managers were then able to use the data on these projects’ improvements to win over other parts of the organization.

  • Keep studying the work that has been designated as tacit.  Even if work isn’t specified today, that doesn’t mean that it can’t be tomorrow.   What is currently an uncommon event may happen frequently in the future.  And the understanding of complicated problems can grow over time.

With thanks,

Rajneesh Kumar
Mobile: +91 98106-63271
Join my network of Leaders, Managers, Sales Professionals, Educationists, Trainers, CLO, Management Consultants, Six Sigma Professionals, Marketing Professionals, etc at: http://in.linkedin.com/in/rajneeshkumar1

Related Articles:

  1. Wipro’s Tryst with Lean (Toyota Production System)
  2. Lessons from Wipro’s Tryst with Lean (TPS), Part-2 of 3
  3. Lessons from Wipro’s Tryst with Lean (TPS), Part-3 of 3
  4. When Jack Welch set out GE’s Quality Vision 2000
  5. A 30,000-Feet Perspective Of Six Sigma
  6. GE’s Early Days With Six Sigma
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Paradigm Of Personal ‘Ownership’ in Business: An Elusive Dream

15 years back I came across a thought in a world-class management literature which made a great sense to me.  The thought then echoed my own sensibilities to the maximum. Though long periods of time had passed by, but I could never ever get this out of my thought system, my psyche.  Here it was:

 

And more and more I worked in my professional career, the more this thought became an ‘enigma’ to me.  What resonated so deep in me, had no buyer in corporate.

I witnessed so much of potential, efforts, talent, endeavor going waste day in and day out, that it made me bleed.  I witnessed them being myopic with much of penny-oriented preoccupations.  I witnessed them doing jugglery with every marketing idea of the day, every trick of the trade, boosting of every new fad of management, but without any meaningful or sustainable success, no exception.

This whole act of observation always created ripples inside me, but I had no words to express…………. as I never found them being able to investigate—Why don’t they realize better of what they were set out to achieve?  Can they ever cross the threshold of what they call in fascination ’employee engagement’ or ’employee empowerment’?  Can’t they enter into the realm of where they find ways & means of instilling genuine ‘personal ownership’ among their people?  What does actually hinder them?

I felt that everybody is lost in a ‘maze’ of so called marketing warfare, killer-ideas, online business potential, leadership or management terminologies, certification of all types, and so much………………, but some people in business world had done it before.

Today, I am of the opinion that the whole thought in itself, is an indicator of a complete paradigm.  If a ‘paradigm’ is a set of accepted theories, values, scientific practices, within which a particular field of science operates………..then, how to unlock this paradigm of ‘Personal Ownership’ in business?

I solicit the knowledge, information, wisdom of the fellow professionals who can assist in unlocking this paradigm from their multiple vantage points.  If you think that you have something to contribute, please feel welcomed.  Every reader of this post may be obliged to you.

With thanks,

Rajneesh Kumar
Mobile: +91 98106-63271
Join my network of Leaders, Managers, Sales Professionals, Educationists, Trainers, CLO, Management Consultants, Six Sigma Professionals, Marketing Professionals, etc at: http://in.linkedin.com/in/rajneeshkumar1

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  4. The Role of HR
  5. The Most Basic Rule Of Management
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Wipro’s Tryst with Lean (Toyota Production System)

The Toyota Production System, better known as Lean, is arguably the most important invention in operations since Henry Ford’s Model-T began rolling off the production line.  In manufacturing, there is a common understanding of how to make an operation lean, and many of the same techniques can be employed in different organizations.  This is not the case in knowledge work.  Nonetheless, researchers have found that lean principles can be applied in some form to almost all kinds of knowledge work (IT, financial, engineering, and legal services etc.) and can generate significant benefits: faster response time, higher quality and creativity, lower costs, reduced drudgery and frustration, and greater job satisfaction.

Based in Bangalore, India, Wipro is one of the largest IT services and product engineering companies in the world.  It has more than 100,000+ employees and 70+ delivery centers in 55+ countries.

Wipro’s quest of looking to other industries for solving problems unique to the IT sector can easily be traced back to 1997, when Wipro became the first IT Company to replicate Motorola’s Six Sigma in a software services business.  The operations they are engaged into are about building complex custom software.  And, they nowhere look like a manufacturing-assembly line.

They were deliberating upon at options that included the Malcolm Baldridge National Quality Award criteria, TRIZ (short for Theory of Inventive Problem Solving in Russian), and Toyota’s Lean, Wipro finally decided to pick a leaf from the automaker’s production system.

It was 2004 when Wipro’s leaders decided to build a lean system, in search of a sustainable advantage.  Initially, they also struggled to find any parallel between manufacturing cars and writing hundreds of lines of codes for customers you do not even get to see till the project gets over.  Although they recognized that this approach was unproven in knowledge work and would require a profound transformation of the company, they believed that the potential payoff—the ability to improve faster than their competitors—was worth the risk.

So Sambuddha Deb, now the chief global delivery officer, then the senior manager in charge of operations, assembled nine other Wipro managers.  The group gathered around a conference table and asked a simple question: “How do we do it?”  Their answer: “We’ll educate ourselves.  We’ll come up with our own ideas for adapting lean to a large-scale software operation, and then we’ll try them out.”

The managers began studying how the lean approach had been applied in manufacturing.  They pored over all the written material they could find.  Wipro’s managers were unable to find companies that had used lean techniques to produce custom software on a vast scale.  And they discovered that even leading strategy consultancies lacked relevant experience.  They toured various lean factories in Japan.  Initially, Wipro could not get to visit a Toyota factory, they managed to visit one of the world’s biggest engine makers for tractors based in Japan. “They were making 200 variants of engines on a single assembly line-that was unbelievable,” says Sambuddha Deb.

In another such visit to a Japanese factory some five years ago, Deb studied how a company was producing 3-4 variants of one excavator machine every eleven minutes.  Later, Toyota invited Wipro’s billionaire founder Azim Premji to visit the company’s manufacturing plant in India. “What we saw was Corolla and Innova were mixed and were being produced on the same line, but the catch was that nearly 70% of both the variants are same so you can use the same line,” he says.

Everything, except main engine and chassis, including seat management system, electrical system and braking system are same for both the variants. “One of the most brilliant things Toyota has done is that almost 70% of all their cars are built using standard platforms-they are designed for Lean,” Deb says.

They also conferred with a former Toyota guru, Hiroyuki Hirano.  Then they brainstormed about how to use what they had learned; each picked an existing project to test their ideas on.  Gradually they identified practices that worked.

What started in 2004-2005 as a 10-projects pilot to apply the automaker’s legendary system invented for eliminating all wasted material and labor is now helping India’s third biggest software exporter make savings of up to 60% in outsourcing projects, and even win new consulting contracts from customers such as Nationwide Insurance. Picking the first eight projects didn’t take long, and only six live projects ended up being successful, bringing a minimum of 20% savings on an average.  During 2004-2005 Wipro had around 50 projects on Lean, by 2010, nearly 1,645 projects were live with Toyota’s Lean principles.

According to research, for every $1, Wipro makes savings of 20 cents on an average. For one of the customers, the gains stretched to over 70% after they used Lean for minimizing efforts (read engineers’ effort) while delivering the project.

Nationwide Insurance, America’s fourth largest auto insurer is among customers now applying Lean with Wipro’s help. The insurance firm, which started with around 17 Lean projects two years ago, has seen $2 million payback from the initiative.

(In the next post or posts, I would elaborate upon the lessons which can be learned from this ‘lean’ journey of Wipro.)

With thanks,

Rajneesh Kumar
Mobile: +91 98106-63271
Join my network of Leaders, Managers, Sales Professionals, Educationists, Trainers, CLO, Management Consultants, Six Sigma Professionals, Marketing Professionals, etc at: http://in.linkedin.com/in/rajneeshkumar1

Related Articles:

  1. Lessons from Wipro’s Tryst with Lean (TPS), Part-1 of 3
  2. Lessons from Wipro’s Tryst with Lean (TPS), Part-2 of 3
  3. Lessons from Wipro’s Tryst with Lean (TPS), Part-3 of 3
  4. When Jack Welch set out GE’s Quality Vision 2000
  5. A 30,000-Feet Perspective Of Six Sigma
  6. GE’s Early Days With Six Sigma
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2011 in review

The WordPress.com stats helper monkeys prepared a 2011 annual report for this blog.

Here’s an excerpt:

A New York City subway train holds 1,200 people. This blog was viewed about 3,700 times in 2011. If it were a NYC subway train, it would take about 3 trips to carry that many people.

Click here to see the complete report.

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The Idea of Ideas : A Great Leadership Thought

“Because a leader is human and fallible, his and her leadership is in one sense finite–constrained by mortality and human imperfections.

In another sense the leader’s influence is almost limitless.  He and she can spread hope, lend courage, kindle confidence, impart knowledge, give heart, instill spirit, elevate standards, display vision, set direction, and call for action today and each tomorrow.

The frequency with which one can perform these leadership functions seems without measure.  His or her effectiveness and personal resources, rather than attenuating with use, amplify; and he and she reuse and extend the skills.  Like a tree whose shadow falls where the tree is not, the consequence of the leader’s act radiates beyond the fondest perception Again we see the paradox of the leader – a finite person with an apparent infinite influence.”

“……… A leader is decisive, is called on to make many critical choices, and then thrive on the power and the attention of that decision-making role.  Yet ‘the leader of leaders’ moves progressively away from that role.  Yes, he or she can be decisive and command as required.  Yet that leader’s prime responsibility is not to decide or direct but to create and maintain an evocative situation, stimulating an atmosphere of objective participation, keeping the goal in sight, recognizing valid consensus, inviting unequivocal recommendation and finally vesting increasingly in others the privilege to learn through their own decisions.

A wiser man put it thus:  “We measure the effectiveness of the true leader not in terms of the leadership he exercises but in terms of the leadership he evokes; not in terms of his power over others, but in terms of the power he releases in others; not in terms of the goals he sets and the directions he gives but in terms of the plans of action others work out for themselves with his help; not in terms of decisions made, events completed and the inevitable success and growth that follow from such released energy but in terms of growth in competence, sense of responsibility and in personal satisfaction among many participants.”

Under this kind of leadership it may not always be clear at any given moment just who is leading.  Nor is this important.  What is important is that others are learning to lead well.

The compliment to that paradox is that:  the growth that such leadership stimulates generates an ever-growing institution and an ever-increasing number of critical choices, more than enough of which fall squarely back on the shoulders of the leader who trained and willingly shared decision making with others.”

……….And there are others which, if not paradoxes, at least are incongruities.  Have we not witnessed some who have claimed leadership yet never fully achieved it?  Have we not observed others who have shunned leadership only to have it thrust upon them?

Each of us is at once part leader and part follower as we play our roles in life.  Fortunately there is a spark of leadership quality in many men and women, and most fortunately the flame of future leadership burns brightly in many.  It is this wellspring from which we will draw and which gives us confidence for the continued advance of society. Walter Lippmann once observed:   “The final test of a leader is that he leaves behind in other men the conviction and will to carry on.”

–Robert (Bob) Galvin, Former CEO, Motorola

(From External Source)

With thanks,

Rajneesh Kumar
Mobile: +91 98106-63271
Join my network of Leaders, Managers, Sales Professionals, Educationists, Trainers, CLO, Management Consultants, Six Sigma Professionals, Marketing Professionals, etc at: http://in.linkedin.com/in/rajneeshkumar1

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When Jack Welch set out GE’s Quality Vision 2000

I recently came across a question on a website about Six Sigma: What should be the primary objective – customer satisfaction or cost reduction?  The question still causes a lot of confusion which is quite prevailing among the Six Sigma practitioners.  I pondered upon the same and found that I am quite not agree with the question itself.

I realized that being on the technical side of Six Sigma, it always seems to make more sense to carry Six Sigma undertakings for the purpose of reducing costs. Then thinking of passing on the benefits incurred to the customers and strive to enhance customer satisfaction. If we make progress along this thought-line, then no doubt there would be cost-reduction benefits obtained.

Yet this is the same thought-line which, after giving initial cost-reduction advantages, has failed either to provide sustenance of benefits, or bring about desired change in overall culture of organization. There are profound examples of companies which adopted six sigma, but failed to become truly Six Sigma companies. They’ve always wondered–how other companies like GE, Motorola (with its second avatar of Six Sigma practices) have been far more successful in this arena of Six Sigma.

The prime-most reason has been that they focused most of their Six Sigma efforts/initiatives and projects on less-important Y’s driving their companies. They failed to correctly embrace Six Sigma from right vantage points.

First, they didn’t realize that it should stem from company’s Big Y‘s where customer’s successes (even more than satisfaction or loyalty) is paramount to the company itself.

Second, they failed to see their process from the point of view of– ‘Where’ and ‘how’ their own processes adds & contributes to customers’ successes.

Well, they must learn to forget viewing their own processes as internal processes and essentially see them as small processes in the scheme of things at their customers. This understanding is far more broader and enriching than their current understanding of VOC as they know it. And they should design their Big Y’s from this understanding and all the projects or drill-down metrics should be derived from that only.

The following text has been collected and published only to clarify the real Six Sigma approach to question.

______________________________________________________

(Jack  Welch, was chairman and CEO of GE Corporation. His speech was presented at the GE 1996 Annual Meeting in Charlottesville, Virginia, on April 24, 1996, and published in the August/September issue of Executive Speeches, 1996. This speech is regarded as a milestone of Six Sigma history in the world. The part of his speech which is related to quality and Six Sigma is given here.)

The business performance of 222,000 employees worldwide has made us very proud as well. 1995 was another outstanding year for the company by any measure: a 17% growth in revenues to $70 billion, 11% earnings growth to $6.6 billion, and earnings per share up 13%. Our shareowners had a 45% return on their investment in 1995. GE, whose market capitalization already was the highest in the U.S., achieved that status globally in 1995, and is now the world’s most valuable company.

Self-confidence and stretch thinking were two of the key factors that encouraged us to launch, in 1995, the most challenging stretch goal of all the biggest opportunity for growth, increased profitability and individual employee satisfaction in the history of our company. We have set for ourselves the goal of becoming, by the year 2000, a Six Sigma quality company, which means a company that produces virtually defect-free products, services and transactions. Six sigma is a level of quality that to date has been approached by only a handful of companies, among them several in Japan, with Motorola being the acknowledged leader in this country.

GE today is a quality company. It has always been a quality company. Quality improvement at GE has never taken a back seat. We have operated under the theory that if we improved our speed, our productivity, our employee and supplier involvement, and pursued other business and cultural initiatives, quality would be a natural by product. And it has been. It’s gotten better with each succeeding generation of product and service. But it has not improved enough to get us to the quality levels of that small circle of excellent global companies that had survived the intense competitive assault by themselves, achieving new levels of quality.

This Six Sigma journey will change the paradigm from fixing products so that they are perfect to fixing processes so that they produce nothing but perfection, or close to it. Typical processes at GE generate about 35,000 defects per million, which sounds like a lot, and is a lot, but it is consistent with the defect levels of most successful companies. The number of defects per million is referred to in the very precise jargon of statistics as about three and one-half sigma. For those of you who flew to Charlottesville, you are sitting here in your seats today because the airlines’ record in getting passengers safely from one place to another is even better than six sigma, with less than one-half failure per million. However, if your bags did not arrive with you, it’s because airline baggage operations are in the 35,000 to 50,000 defect range, which is typical of manufacturing and service operations, as well as other human activities such as writing up restaurant bills, payroll processing, and prescription writing by doctors.

The experience of others indicates that the cost of this three to four sigma quality is typically 10%–15% of revenues. In GE’s case, with over $70 billion in revenues, that amounts to some $7–10 billion annually, mostly in scrap, reworking of parts and rectifying mistakes in transactions. So the financial rationale for embarking on this quality journey is clear. But beyond the pure financials, there are even more important rewards that will come with dramatically improved quality. Among them: the unlimited growth from selling products and services universally recognized by customers as being on a completely different plane of quality than those of our competitors; and the resulting pride, job satisfaction and job security from this volume growth for GE employees.

Six Sigma will be an exciting journey and the most difficult and invigorating stretch goal we have ever undertaken.  The magnitude of the challenge of going from 35,000 defects per million to fewer than four defects is huge. It will require us to reduce defects rates 10,000 fold – about 84% per year for five consecutive years – an enormous task, one that stretches even the concept of stretch behavior.

Motorola has defined a rigorous and proven process for improving each of the tens of millions of processes that produce the goods and services a company provides. The methodology is called the Six Sigma process and involves four simple but rigorous steps: first, measuring every process and transaction, then analyzing each of them, then painstakingly improving them, and finally rigorously controlling them for consistency once they have been improved.

Following Motorola’s experience closely, we have selected, trained and put in place the key people to lead this Six Sigma effort. We’ve selected our “Champions” – senior managers who define the projects. We’ve trained 200 “Master Black Belts” – full-time teachers with heavy quantitative skills as well as teaching and leadership ability. We’ve selected and trained 800 “Black Belts” – full-time quality executives who lead teams and focus on key processes, reporting the results back to the Champions. We are beginning to train each of our 20,000 engineers so that all of our new products and services will be designed for Six Sigma production. And we have, at our Leadership Development Institute at Crotonville and at our businesses, an unmatched educational capability to train all 222,000 GE people in Six Sigma methodology.

We have a work-out culture in place at GE that is ideal for highly collaborative action-based team efforts, which will enhance our Six Sigma programs. To emphasize the importance of this initiative, we have weighted 40% of the bonus compensation for our managers on the intensity of their efforts and their progress toward Six Sigma quality in their operations. To date, we have committed $200 million to this effort, and we have the balance sheet that will permit us to spend whatever is required to get to our goal. The return on this investment will be enormous. Very little of this requires invention. We have taken a proven methodology, adapted it to a boundaryless culture, and are providing our teams every resource they will need to win.

Six Sigma – GE Quality 2000 – will be the biggest, the most personally rewarding and, in the end, the most profitable undertaking in our history. GE today is the world’s most valuable company. The numbers tell us that. We are the most exciting global company to work for. Our associates tell us that. By 2000, we want to be an even better company, a company not just better in quality than its competitors – we are that today – but a company 10,000 times better than its competitors. That recognition will come not from us but from our customers.

Six Sigma – GE Quality 2000 – is a dream, but a dream with a plan behind it. It is a dream that is increasingly inspiring and exciting everyone in this company. We have the resources, the will, and above all, the greatest people in world business who will make it come true.

(From External Source)

____________________________________________________

My point of view is that until and unless, companies embrace the similar approach for their Six Sigma endeavors, they won’t be able to think of high-hanging fruits, forget even to touch those. I’m of the opinion that the quest for cost reduction is just like loosing the entire dimensions of Six Sigma in the maze of lowly-hanging fruits.

With thanks,

Rajneesh Kumar
Mobile: +91 98106-63271
Join my network of Leaders, Managers, Sales Professionals, Educationists, Trainers, CLO, Management Consultants, Six Sigma Professionals, Marketing Professionals, etc at: http://in.linkedin.com/in/rajneeshkumar1

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  3. Lessons from Wipro’s Tryst with Lean (TPS), Part-2 of 3
  4. Lessons from Wipro’s Tryst with Lean (TPS), Part-3 of 3
  5. A 30,000-Feet Perspective Of Six Sigma
  6. GE’s Early Days With Six Sigma


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Scout For Your Secret Change Agents !

Every business hosts a plethora of problems—for example, its employees working at half of their potential; never ending conflicts between various departments and recurring turf-wars, and tumultuous market conditions so on and so forth.   But if you choose to look closely, you will find that this tyranny of averages always conceals sparkling exceptions to the rule. Somehow, a few isolated groups and individuals, operating with the same constraints and resources as everyone else, yet prevail against the odds.

This article is absolutely about them and what they hold for your fortunes.  Somewhere in your organization also, groups of people are already doing things differently and better. If you wish to create lasting change, then go and find these areas of positive deviance and fan their flames.  You only need to discover the process of bringing the isolated success strategies of these “positive deviants” into the mainstream.

Remember, the ordinary change management methods won’t do a very good job at that.  You managers may overlook the isolated successes which take place under their noses.  Or even if they have spotted them, they may repackage the discoveries as templates of success and disseminate them from the top.  This seldom generates the enthusiasm necessary to create change.

So, what to do then?

The key is–to engage the members of the community you want to change in the process of ‘discovery’, making them the evangelists of their own conversion experience.

This means that as a leader, you will take on a very different role from the one you have played in previous change management scenarios.

It is about uncovering these positive deviants— who are usually individuals on the periphery of their organizations or societies and are far removed from the orthodoxies of mainstream change endeavors. These innovators’ uncommon practices and behaviors enable them to find better solutions to problems than others in their communities. They are the key to this approach to change.

Before you feel skeptical about this ‘positive deviants’, you need to get assured that the positive deviance model works. Its results are verifiable, replicable, and scalable. Millions of individuals around the world have been its beneficiaries.  For example—

  • Goldman Sachs used it to transform the practices of its nationwide force of investment advisers.
  • Engineers at Hewlett-Packard used it to tackle technical challenges.
  • At Genentech, two positive deviants outperformed the median results of the company’s national sales force by a factor of 20:1.
  • Merck and Novartis had experimented successfully with the model as well.

How this model could be activated in your company or organization?

Step 1: Make the group the guru.

In the positive deviance model, problem identification, ownership, and action begin in and remain with the community. Because the innovators are members of the community who are “just like us,” disbelief and resistance are easier to overcome.

By contrast, it is a design that allows a community to learn from its own hidden wisdom is, among other things, respectful. Innovator and adopter share the same DNA. Community members invest sweat equity in discovering the positive deviants, and, in the process, they become partners to change.

Step 2: Reframe through facts.

Inside-the-box definitions of problems guarantee inside-the-box solutions. Restating the problem shifts attention to fertile new ground and opens minds to new possibilities. If there is an art form to facilitating a positive deviance inquiry, it lies in ferreting out and framing the real challenge at hand, as opposed to reverting to tired clichés and pseudochallenges.

By casting a problem in a different light and by using hard data to confront orthodoxies, a community can be encouraged to discover whether there are exceptions to the status quo and, if so, how those exceptions came about.

Reframing a problem entails three steps.

First, grasp its conventional presentation (“The sorcerer’s curse makes our children sick”).

Second, find out if there are exceptions to the norm, people in identical circumstances who seem to be coping especially well.

Third, re-frame the problem to focus attention on the exceptions.

And remember, there’s value in looking at things in a different way and getting beyond gut feelings to hard facts.

Step 3: Make it safe to learn.

These ‘positive deviants’ may fear being exposed, ridiculed, or subjected to retaliation if their newly enhanced influence challenges the status of others. Authority figures may feel threatened by a process that invites them to learn rather than just have all the answers or, that dis-empowers them altogether. Likewise, the others in the group may fear that acknowledging a problem implicates them in it.

Only when people feel safe enough to discuss a taboo and when the community has been sufficiently invested in for finding solutions, can the prospect of an alternative reality appear.

Corporations have their own sets of unspoken taboos that, if not addressed, can develop into problems of Enronesque proportions.  Thus it is imperative to kicks off ‘positive deviants’ by emphasizing the importance of confronting problems squarely and of learning from past failures. The focus is on identifying and removing obstacles, not killing messengers. Candor is crucial to this work.

Step 4: Make the problem concrete.

Corporations are awash in meaningless discourse. While words are exchanged and heads are nodded, a great deal of signal distortion is happening between sender and receiver. Because of unwritten social codes meant to keep individuals from being put on the spot, people aren’t forced to speak concretely—in fact, they’re often discouraged from doing so. These abstractions do a lot to obscure insight.

Consider, for example, how the format of Power-Point can blur or hide hard facts: Before NASA’s devastating loss of the Columbia space shuttle, engineers from Martin Marietta and Boeing buried the imminent risks to the spacecraft’s protective ceramic tiles within the complicated, nested, ten-point-font bullet points of their PowerPoint presentation.

A firm grasp over reality removes vague assumptions and helps focus attention on what’s really working. It asks you to deal directly with an uncomfortable truth.  It requires you to state it concretely so that there is no way to duck the challenge at hand. This is not merely a matter of being specific. It also entails portraying or dramatizing a pivotal issue in a compelling way.

Step 5: Leverage social proof.

The old adage “Seeing is believing” has particular potency when it comes to change.  And ‘social proof’ is the lifeblood of the support group movement.  The substantiated proof of how other are achieving exceptions in their own community is the key here.  Leverage it.  You must create a movement around it.

Step 6: Confound the immune defense response.

Newton was right: Every action has an equal and opposite reaction. In organizations, that reaction comes in the form of avoidance, resistance, and exceptionalism. But when you fan the embers within a community rather than rely on firebrands from headquarters or outside the group (experts), the change would feel very natural.

Internally developed solutions always circumvent transplant rejection, since the change agents share the same DNA as the host. The trick is to introduce already existing ideas into the mainstream without excessive use of authority. Why use a sledgehammer when a feather will do?

You’ve a new role as a leader!

The positive deviance approach requires a role reversal in which experts become learners, teachers become students, and leaders become followers. Leaders must relinquish to the community the job of chief discoverer. This isn’t easy, for it requires you to set aside your egos and habitual identities (being the go-to guy, the decision maker who knows what to do). What, then, becomes of you–the leader?

While you seemingly abdicate the traditional role of discoverer, important work remains to be done. You still have four primary tasks: management of attention, allocation of scarce resources, reinforcement to sustain the momentum of inquiry, and application of score-keeping mechanisms to sustain attention and ensure progress toward goals once the community has chosen its course of action.

Instead of being the “CEO”—chief expert officer—you become the “CFO”—chief facilitation officer—your job is to guide the positive deviance process as it unfolds. This role is as radically different from traditional leadership practices as the technique itself is from standard approaches.

The method works best when behavioral and attitudinal changes are called for—that is, when there is no apparent off-the-shelf remedy and successful coping strategies remain isolated and concealed. In such cases, change from within, discovered, celebrated, and implemented by the people who need to do the changing, is a sure shot win.

A Snapshot of Fundamental Difference

Traditional change efforts are typically top-down, outside in, and deficit based. They focus on fixing what’s wrong or not working. They also assume a reasonable degree of predictability and control during the change initiative. Unintended consequences are rarely anticipated. Once a solution is chosen, the change program is communicated and rolled out through the ranks. The positive deviance approach to change, by contrast, is bottom-up, inside out, and asset based. It powers change from within by identifying and leveraging innovators. This method diminishes the social distance that often blocks acceptance.

The Taoist sage Lao-tzu captures the essence of the positive deviance approach with eloquent simplicity:

“Learn from the people, plan with the people, begin with what they have, build on what they know; of the best leaders when the task is accomplished, the people all remark–we have done it ourselves.”

With thanks,

Rajneesh Kumar
Mobile: +91 98106-63271
Join my network of Leaders, Managers, Sales Professionals, Educationists, Trainers, CLO, Management Consultants, Six Sigma Professionals, Marketing Professionals, etc at: http://in.linkedin.com/in/rajneeshkumar1

 

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  1. Real Champions Of Change…..10% only !!!
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Competitive Intelligence: Needed A New Way Of Thinking About Competition

Today’s marketplace is about the landscape where competition is the predominant factor. Companies can now no longer rely on ‘market growth’ to propel their sales and profits to higher levels.  They must gain market share at the expense of competitors and prevent their enemies from raiding their own positions.  Competition thus should be the central focus of business strategy in today’s environment.  The informal, ad hoc approach to competition in general, and information gathering in particular, is no longer adequate for success in today’s crowded and aggressive marketplace.

Most companies are facing the same problem: how to improve profitability in the face of competitive forces that work against profit growth.

The outlook for the coming business environment presents the prospect of even more intense competition, so it is vital that those firms seeking a long-term market presence appreciate the significance of transferring market share from their competitors.  Those that don’t, could become tomorrow’s casualties.

A new approach is required now:  systemized and organized for winning at the expense of competitors in the ‘Zero Sum Game’, in which someone must lose if another is to win.  It calls forth the need to address the following issues:

  • Determining who are your current and future competitors, and choosing which ones to analyze in detail
  • Developing a competitive intelligence system
  • Understanding which data sources are available for ethical and legitimate use
  • Establishing ‘who’ should gather ‘what’ information and ‘how’ it should be analyzed
  • Examining competitors’ strategies
  • Anticipating competitors activities, initiating competitive thrusts and finding new ways to achieve a competitive advantage
  • Focusing resources so that minimal additional manpower or effort is required to undertake these tasks.

You need to understand that the frameworks provided by academics would not work here.  Competitive Intelligence is not about having an informal eye on the competition; it is not about knowing something about your competitor’s management, their plant locations, products and services, etc.

Even if they know something, the executives, however, very infrequently apply their knowledge in an organized, systematic and formal manner to achieve a competitive advantage.  Instead, they focus their attention on market issues, changing things a little here and a little there, attending to internal pressures and customers’ requirements.  In doing so, many are fighting today’s wars with yesterday’s thinking.

The challenge to increase market share implies that companies should have a ‘Competitive Orientation’ as well as a ‘Customer Focus’—perhaps it should be given even greater emphasis.  Companies those would do well to accelerate their progress in order to be ready sooner for the next stage of evolution for their firms—from being an exclusively market-driven company to becoming a competitor-oriented and market-driven company. They should be planning a transition to a more competitive enterprise.  The principal focus of this re-orientation will be the competitive intelligence and strategy development functions, which –particularly in the case of competitive intelligence—will need to be formalized and systemized in accordance with clearly defined responsibilities, timing, and outputs.

Competitive Intelligence is grounded in reality—in what is going on in the marketplace, what will be happening in the marketplace, and what needs to be done to ensure that the aggressive company increases the percentage of transactions directed in its favor.

In a way, one very critical goal of companies should be to transfer market share profitability from competitors.  A company can accomplish this by improving its position in the minds of its key stakeholders—including customers, intermediaries, employees, bankers, suppliers and stockholders.  This is the territory from which the company—like a country at war—should be seeking to rid the competitor.  But it cannot be done without a more meaningful recognition of the role of competitors.

Executives & managers would be better served by guiding themselves according to the ‘Competitive Concept’, which may be defined as –identifying customers’ needs that either are not served by competitors, or are inadequately or insufficiently addressed, and then satisfying these needs at a profit or consistently with the organization’s objectives.  This would require that firms explore the competitive battleground—the customer’s mind—for relevant needs and the degree to which competitors are satisfying them.  This would require that they develop appropriate winning strategies to counter competitive threats and transfer market share profitably from competitors to their own firms.  This is exactly the principal objective of competitive intelligence and competitor analysis—to develop strategies to transfer market share profitably.  All data gathering should be geared to this end.  If it is not, such competitive information as is generated will fall into the category of ‘nice to know’ without having much strategic impact.

The second implication is that examination of competitors should take place principally at the business unit levels and product-line levels, because these are where market share is won or lost; not at the corporate level, which serves primarily as a banking and directional board for the business unit.    To this end, corporate examination is, of course, required.  In addition, corporate level assessments are required to establish:

  • What are the expectations and support available from Business units and product-lines?
  • What is the level of resources available to business units and product-lines?
  • What are the returns expected from the business units and product-lines?

All data gathering, information derived, the work involved in the process of competitive intelligence and the output or analyses, must lead to the development of competitive strategy, profiles of prime competitors, and the Competitive Advantage of transferring markets share consistently and irrevocably, trending towards monopoly.

Remember:  High market share is a good thing, but higher market share is even better!  Whatever the reason, it is clear that the higher the market share, the greater is the likelihood of increased profitability.

Well, competitive intelligence must feed into the ‘market and strategic planning cycles’ and result in modification to an organization’s thrust or it should result in confirmation of its thrust.  Thus competitive intelligence should not be regarded as a disjointed, ad hoc activity, but should receive the active support and co-operation from the individuals who are conducting product and business planning, typically the line management.  That makes the case for—Competitive intelligence should not be conducted in response to one apparent competitive threat or opportunity, but on an on-going basis to achieve a sustainable advantage.

One more thing, before you conduct competitive intelligence, you need to understand ‘the critical success factors’ in your industry.  It may require an astute examination of industry concentration, scale, scope and economics—including proximity to raw materials or markets—and issues such as the availability of a quality labor pool and the process of innovation and commercialization in the industry, etc.  Having identified these factors, examine how competitors are positioned in respect of each factor.

Never forget to draw the line between competitive intelligence and industrial espionage.  Remember: Competitive Intelligence is the process of obtaining and analyzing publically available data.  It is the public availability of data that distinguishes the two.  Always discuss any area of concern with your legal department.

Competitive Intelligence uses both categories of information sources (internal and external) and does not need to depend upon unethical data.  All that is needed to obtain a competitive advantage is readily available from a wide variety of legitimate sources.  No one needs to crawl through the competitor’s plant in the dead of night clutching a flashlight and spy camera!

However, it is thousand times more than just googling .

With thanks,

Rajneesh Kumar
Mobile: +91 98106-63271
Join my network of Leaders, Managers, Sales Professionals, Educationists, Trainers, CLO, Management Consultants, Six Sigma Professionals, Marketing Professionals, etc at: http://in.linkedin.com/in/rajneeshkumar1

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