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2011

The following is a report given by Deborah Mills-Scofiled on the event 'Practical Challenges of Global Innovation' organized by P&G Connect + Develop and Open Innovation partner Live Well Collaborative.This is part 2 of 2. (see part 1 of 2 here)  In the second session Deborah will summarize the second and third speakers at the event:

 

 

Live Well Collaborative for 50+ Market

 

 

The second speaker was Craig Vogel, president of the Live Well Collaborative out of the University of Cincinnati, with P&G. He is also associate dean of Cincinnati’s college of design, architecture art and planning. This is one of the top design schools in the country. He teaches there and has an extensive background.

 

They have created a unique model, starting with P&G, which is a collaborative of academia and industry. It includes companies like Kraft, Boeing, LG, several other consumer product and other types of companies. The school of medicine, the nursing school, etc. have all partnered together to focus on the over 50 year old consumer – Baby Boomers and over.

 

They are creating products and services so they can live well. They have done some interesting things with P&G. For example, they looked at bathing. As your skin ages, you have different needs. They worked with students there at the center, the Live Well Collaborative. They looked at some things which were done in Japan and Spas. They came up with a product for bathing which purifies water and also helps improve skin moisture. The collaborative has been so successful that P&G helped the Live Well Collaborative launch a new design center in Singapore this past September.

They are also doing some exciting things with Boeing, looking at how to make the planes more over 50 friendly.

 

Overall, it is a really interesting model for open innovation. Deborah found this to be an interesting discussion because there were not that many people who realized the amount of needs out there and how they are being addressed, as well as the power of collaborating, not just on the product or service but also front end open innovation aspects of the design and going out to do ethnographic studies together.

 

Working with IP Attorneys

 

The last speaker was Kelly McDow. She is legal counsel for open innovation at P&G. She gave a fabulous talk. She is a chemist and also got her law degree. She understands the business, chemistry and legal side – which is rather unique. She posed two questions to the audience:

 

1. How can your IP attorneys help foster an open innovation mindset? (which is not an oxymoron, although some may think it is)

2. How can you help your IP attorneys and your partners’ IP attorneys get to that mindset?

 

What IP attorneys are rewarded for is protecting intellectual property, not necessarily sharing it. It is therefore a very ‘nervous’ topic. Kelly gave 9 basic points or considerations which she said would help. Deborah’s own experience working with her IP attorneys while at Bell Labs is that she wishes she would have known and adopted these at that time.

 

1. Find an IP attorney that is flexible, collaborative and able to see both sides.

 

That may come as very much of a no brainer, which it is. The reality is that you don’t always have the luxury of doing this. If you are a big company your corporate attorneys may not have that mindset. If you are able to hire outside counsel you really need to look for this and make it a priority in selection.

 

Given this probably can’t happen you need to focus on how to get your IP attorneys to be more flexible and collaborative.

 

2. Help your open innovation partner either find or have their IP attorney become more collaborative.

 

3. Engage your IP attorney early and often in the innovation process.

 

In most companies you wait until you are done and have thought things through before bringing them in. As a result their reaction will be along the lines of how they are going to protect the IP. If you bring your IP staff in early on when you are just starting to think about these things they will get a better understanding of why it matters, why it is important, all that it can and cannot do, and probably get a better perspective of why thinking about sharing this or getting more IP from outside to complement it could be beneficial.

 

Deborah has seen this work when she worked with clients on the Finance side as well, where they would simply bring in the finance folks earlier.

Get the IP folks involved, don’t treat them as an adversary, treat them as a team player.

 

4. Be mindful of confidentiality.

 

Nothing will kill or slow down the deal like breaking that trust on confidentiality. What you learn from them and what your partner learns needs to be kept in confidence.

 

5. Know what you and your partner need to be successful.

 

Define success as clearly as you can. Don’t just view success as the first deal. Your first deal, the first technology you work on, may not work because those molecules may not work the way you want them to, not through anyone’s fault or blame. You want to focus on a long term relationship. What do we need to be successful over the long term, even if the technology deals in between may not succeed.

 

6. You don’t need to own anything.

 

Just look at what you need to own versus license. You want your partner to be successful so that they will still be around to provide you with great new ideas and technologies.

 

7. Do your due diligence and let your partner do theirs.

 

Generally, you may not like to be asked those questions but they are the same ones you want to ask. Also, be nice to their IP attorneys. One of the things Kelly made clear is that while you are sitting there negotiating and dealing you may think it is the business folks you are dealing with that have the final say. However, it really is the IP attorneys.

 

“If the IP folks say this ain’t gonna happen, then it ain’t gonna happen”.

 

You really need to make sure that you are being as positive and open with their IP attorney as possible, to get a clear understanding.

 

8. Don’t lose your temper.

 

These discussions can get very heated and Deborah has been in some where people have stormed out of meetings very angry. When it starts getting heating, just take a break, go huddle and talk. Kelly commented on a case they were working with where the other side left the room for an hour and a half. Once you lose control in front of a potential partner it will affect trust.

 

9. Plan for the marriage and the divorce.

 

This is the case where you do want a very good prenuptial agreement because things may not work out. It is much easier to figure out how you will end the relationship when it is at the beginning when you are calm, cool and collected. When something goes wrong and you are in the middle of it everyone is heating, emotions are flying, and trying to figure out how to break apart becomes much more difficult.

Kelly said it is really critical to take care of the marriage and the divorce up front when heads are calm, cool and collected.

 

Summary

 

There were a lot of really great questions from small companies such as: How do we get involved with big companies? If I am a small company I may have my business dependent on this, what happens when the big company takes 8 months to get back to me?

 

Chris Thoen replied that one of the things P&G is really working hard at is understanding this and getting back very fast to their partners.

There were some more issues around intellectual property, and a lot around how you create the culture because that is one of the key points and the most difficult.

 

In the afternoon they did a pilot. Baldwin-Wallace Center for Innovation & Growth has a few key partners. These are companies that have invested in the center to help it grow. They did mini open innovations there with P&G and the partners. The partners would present what they do really well, what technology or capabilities they offer, and what they are looking for. Everyone mingled and figured out who could work with whom. There were a few opportunities which came out of this. Depending on feedback this might be something they pursue and open up to a broader audience. Like innovation it is experimental. They are piloting it to see how it goes and if it will work.

 

See part 1 of 2 here

 

About Deborah

 

deb-small.jpg

 

Deborah’s background is from Bell Labs where she has a patent for some things she invented. She started asking questions about why customers wanted things which led her to corporate consulting for many multi-nationals dealing with next generation core networks and the Internet. She then left AT&T and started her consulting and strategy & innovation firm. She is also a partner at an early stage venture capital firm in Cleveland. Deborah also does a lot of mentoring at her alma mater at Brown and also with a local college Baldwin-Wallace: Center for Innovation & Growth where they are getting students involved in economic regional development in the area of innovation and growth.

 

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Practical Challenges of Global Open Innovation

 

The following is a report given by Deborah Mills-Scofiled on the event 'Practical Challenges of Global Innovation' organized by P&G Connect + Develop and Open Innovation partner Live Well Collaborative.This is part 1 of 2. (see Part 2 of 2 here) In the first session she will summarize the first speaker at the event, Chris Thoen:

 

 

 

The event was packed and way over subscribed. Chris Thoen opened up the section. Chris is the head of the Connect & Develop Program at P&G (which is what they call their open innovation platform). He talked about how P&G has been doing open innovation since it got started, although no one called it that back them. The company is 175 years old and the history involved two brother in laws, one was a candle maker and the other a soap maker. They were competing for raw materials and their father-in-law told them they were nuts. He suggested that if they worked together they would get better pricing. This is how they started collaborating.

 

Even early on, much of their product development came from technologies they licensed, borrowed or bought from other companies, going back 170 years.

 

About 10 years ago when Lafley took over as CEO he had a challenge he laid down whereby over half of their innovation had to come from outside their existing R&D. He saw that as a way to leverage the R&D they had but tremendously grow the company because they couldn’t afford to put more money into R&D. It didn’t make sense when there were so many ideas outside their hallowed halls.

 

Chris talked about open innovation being an ongoing journey. While P&G is looked at as a terrific example of open innovation, they are not done and never will be done. It is an ongoing journey and the basic premise is that with open innovation you can create value for yourself and your partners which neither of you could do without each other.

 

They have developed and put over 70 leaders around the world. They have 11 regional hubs in North America, Latin America, Europe, Israel, China, India, Japan etc. There are hundreds of networks. Many of the products that we know are a result of open innovation, such as Swiffer, Tide, the Mr. Clean Eraser, and Glad® ForceFlex® bags.

 

Glad® ForceFlex® bags is an example where P&G had come up with Press & Seal, if you buy Glad it is the type of film you use to cover things with and it sticks. This was a P&G technology, but they knew that to get it in and compete with Glad and others wasn’t worth it. It would cost way too much, along with other reasons. It made more sense for them to license.

 

Chris’ point was that you can even do open innovation with competitors.

 

Another interesting point is that their technology and IP which they licensed and shared with others has created $3 billion in sales for their open innovation partners. It is about both of you winning, as well as those you partner with. You want to help them grow and continue.

 

Chris summarized some key points they have learned through this journey which they are still traversing.

 

 

1. It must be driven by the top.

 

While you can have passion in the middle ranks, if you want to create a corporate wide culture of innovation, let alone open innovation, it must come from the top.

 

2. Need to build an open innovation culture.

 

This is not easy. One of the critical things for that is supporting and learning from failure. If you are not going to let people fail you are inhibiting the process right away. You need to fail, support it, learn and adapt.You need to communicate and help your people understand the innovation process. How do we get new ideas in? How do we invest? People need to be aware of these things.

 

You also need to reward people for their partnerships and results, not just for patents but for actually doing things.

 

3. Focusing on the hunt.

 

Your strategy needs to guide you. This is what should direct your open innovation information gathering. Who you look to partner with, how you mange it, etc.

 

4. Be where the action is.

 

For P&G this meant getting out of Cincinnati. You need to be in the developing markets and areas where there is a lot of venture capital activity such as Texas, California, etc. You need to be involved in social media, as well as start working with small and medium sized companies instead of just the big ones. You also need to work with others such as academia.

 

5. Build an efficient and effective knowledge management system.

 

People are going to be learning and making contacts. You need a way to organize that so you don’t repeat. You learn and leverage that learning across the company.

 

6. Obey the law of the land.

 

Take what you need, only what you need, and leave the rest. One of the things you see a lot, especially with big companies, is the strong need to control. Deborah saw this a lot in the past when with Bell Labs and AT&T. The control mentality thinks you need to own all of the IP, whether you need that or not.

 

Instead, for open innovation you focus on what you really need, rather than focusing on things you might not use.

 

7. Staffing for success.

 

In Deborah’s own experience doing open innovation and working with others is that it takes an interesting and unique type of person. You need technical skills and great people skills. Those are not always the same. You need to really look and deliberately hire people that will be good at understanding the technology side, know how to develop relationships, get along with and influence people, both inside and outside your company.

 

Chris’ last point was basically what Deborah calls the Golden Rule “Be the partner you are looking for”. Celebrate your partners. Look beyond the first deal. The first deal may not work because the technology isn’t working the way you think it could. This doesn’t mean it is the last deal with them. You need to look at your partners from a relational standpoint, not just transactional. Treat your partners as you would like to be treated. This may seem obvious, but isn’t always how it is actually done.

 

See part 2 of 2 Here

 

About Deborah

 

deb-small.jpg

 

Deborah’s background is from Bell Labs where she has a patent for some things she invented. She started asking questions about why customers wanted things which led her to corporate consulting for many multi-nationals dealing with next generation core networks and the Internet. She then left AT&T and started her consulting and strategy & innovation firm. She is also a partner at an early stage venture capital firm in Cleveland. Deborah also does a lot of mentoring at her alma mater at Brown and also with a local college Baldwin-Wallace: Center for Innovation & Growth where they are getting students involved in economic regional development in the area of innovation and growth.

 

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How can social media be used to help small businesses?

 

As Rick sees it, the primary way social media is useful for small businesses is that it is a combination of marketing and customer relationship management. The term that is used now is engagement. Social media certainly provides small businesses to engage online with customers in ways they couldn’t do before. For example, restaurants are a large primary area for small businesses. There is a lot of turnover with these restaurants. A good restaurant owner will engage in person with his or her customers during a course of a meal or when they come to visit. There has not been a way to do this other than outbound advertising.

 

Now they have the ability to, for example Yelp is a widely used service now where people are writing reviews. There is still a lot of resistance among restaurant owners who don’t want to get involved with it. Rick tries to remind these business owners that it is important to get involved with these conversations and there are ways to do it that make it fairly easy.

 

Mostly it is a combination of marketing and customer relationship management. Most small businesses are not really big enough to use social media for internal communications. This is less useful in a small business like a restaurant where you won’t see waiters recording their best practices.

 

How can social media be used to help large organizations?

 

Ricks’ main experience was at Pratt & Whitney Rocketdyne, a 3,500 person organization which was actually much larger such as during the Apollo days where they had 15,000 people. Large organizations are microcosms of the Internet, otherwise referred to as an intranet. Rick believes many of the tools that exist, as well as the design concepts referred to as web 2.0, can be put to good use inside the firewall of a company for people to communicate with each other, share knowledge and keep up with what is going on. If you think of Twitter as micro-blogging, micro-blogging can be very valuable within an organization. For example, if you have a team working together and spread out geographically, they can communicate with each other in ways they couldn’t do before.

 

Rick was on a team at one time that had to meet every morning. It wasn’t until the meeting was over that it was clear most of the people there didn’t have to be there because there wasn’t anything they needed to know. If there were a status update, micro-blogging capability, people would have known whether they had to be at the meeting. In fact, many would find they didn’t have to be at the meetings. When you have 20 people in a meeting and consider the rap rate for their time is $150/hr, that can get very expensive over time.

 

There are all kinds of ways social media can be valuable. Rick believes it is what knowledge management has become and what it always should have been. They often say in the knowledge management world that 80% of the knowledge is tied up between the ears of employees. Anything you can do to facilitate the communication of that knowledge between people in the company, so that you can find an answer to the question you have, or find people with the knowledge of a particular subject, etc. All of this can be made easier with the judicious use of social media within the firewall.

 

Rick’s experiences with social media

 

For a period of roughly 9 years Rick was involved with the piloting and introduction of the roll-out to the whole organization of AskMe Enterprise. At first this didn’t even include a blogging capability, but it did include the ability to ask questions and search expertise based on profiles. The experience that stands out the most for Rick was the difficulty they had in moving people from email to AskMe. The reason he wanted to do this was because email, while a good communication tools, it is not a good way to record or capture communication. If an engineer had a conversation with another engineer or rocket scientist, people with very specific and deep complex knowledge on subjects within their field, the conversation was encapsulated on their computers and there was no way for anyone else to find it. In many instances people couldn’t find their own emails.

 

Furthermore, if you had a conversation with more than two people and someone forgot to click reply all, which happens quite frequently, from then on the conversation becomes compromises and you can’t be certain of the integrity of an answer or a thread that addresses an issue you are interested in. Things ended up getting repeated over and over again, and this is something knowledge management tried to avoid.

 

Rick’s experience was that even though there were really compelling reasons for moving, people don’t do it very easily. Absent a complete buy in and affirmative support from management, mere tacit acceptance is not good enough. Rick believes a tipping point has been reached and a lot of organizations are beginning to change. However, he still questions how well they are doing it. They know the musical score but they have not yet learned how to dance to it.

 

You can work really hard, offer a compelling reason why people should change their work habits, but getting them to do that is quite another story.

 

 

About Rick Ladd

 

 

RickLadd.jpgMost recently, about 1 year ago Rick took an early retirement package from Pratt & Whitney Rocketdyne, working primarily on the Space Shuttle main engine program for the last 20 years. He was the lead for knowledge management for the Space Shuttle main engine team and was also on the division-wide KM team. He was also the project manager for a piece of software called AskMe Enterprise, which he had first introduced to the company in 2001 as an expertise locator. Rick came to realize it was a social media tool. They started to market it this way.

 

Prior to this Rick was in small business for over 20 years. He spent a lot of time in the wholesale food business, as well as various different jobs. Rick is now providing social media marketing strategy services as we re-invents himself.

 

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What makes your book different to other texts on SCM?

 

The book 'Supply Chain Management in the Drug Industry: Delivering Patient Value for Pharmaceuticals and Biologics' is very much about the patient. Patients have taken the back seat to the science for developing the drugs given to patients for the past 60 years or more. Hedley says they find that these days, a lot of drugs are not really made with the patient in mind. There is a lot of history and culture associated with that. During the time he worked in pharmaceutical supply chains he was disappointed that other sectors worked totally different. If you look at Toyota and the way they develop their products they engage early with their customers, use concurrent design processes, and include their suppliers at the early stages. They do all the things which we know are the right things to do in production systems.

 

If you look at pharmaceuticals, the actual supply chain does not get considered until about six months before the drug is launched. Then we find there are a lot of issues in terms of suppliers on board, poor yields and efficiencies, and a whole raft of issues. Hedley feels passionate that pharma needs to design their supply chains much earlier, including procurement and manufacturing people. They need to really start designing drugs rather than finding them by accident, which has widely been the case in the past.

 

Hedley received an email from a publisher who said he saw his online training and believed it would convert very well into a book. Hedley spent 2 years writing the book. The book launched in February. It has received strong reviews, surprisingly even from the person who almost wrote the book on Food and Drug Administration Law. He said he had never seen production and supply chain in the detail and the light which Hedley included in the book. Hedley received really strong reviews from the industry itself.

 

The point he likes to make is that the book takes a novel approach to supply chain management, where he positions it as a competitive weapon, rather than a tactical ‘moving boxes around the world type of activity’. SCM properly done, really can have a big impact on the strategic ability of a company in terms of its competitive positioning. Hedley used the value chain model of Michael Porter and his concept of linkages to actually weave a model that divides SCM into 5 separate areas, which all link together very closely to form an holistic that fits perfectly in with the business itself. It is written in the language of business schools. Porter has a concept of linkages where he says you create competitive advantage and you link within your own organization other organizations. If you find innovative suppliers and link your organization to your suppliers, you will dramatically improve the competitive advantage of your company.

 

Hedley focused very much on this to position SCM as strategic, integrated and vital to the success of any company. If you look at companies that are good at SCM, like Dell and Japanese companies, they really understand how to integrate the supply chain into their business offering. The book looks at the industry which is badly in need of change in terms of supply chain processes and disciplines. It also looks at supply chain management and how it needs to be made a much more strategic activity.

 

Is it only suitable for those working in the pharmaceutical industry?

 

No, a lot of SCM processes are transferrable across all sectors. Anyone practicing supply chain management in a particular sector has to take account of the specifics of that sector. For example, in certain sectors there may be more emphasis on strategic procurement where there tends to be a lot of outsourcing. There needs to be more focus on management of strategic relations etc, and less on production control.

 

In Hedley's opinion, every sector needs the five disciplines which are 1. Production & Inventory Control, 2. Strategic Procurement, 3. Transport Storage & Distribution, 4. Information Systems, and 5. Improvement.

 

These 5 disciplines really make up a strategic activity set which fits very well into the business. Any sector can take these sets and turn them into powerful tools.

 

What do you hope the book will contribute to the world of pharmaceuticals?

 

Pharmaceuticals is currently in turmoil. We see at the moment the FDA raised a consent decree against Johnson & Johnson and McNeil. They found severe supply chain issues which is actually going through close scrutiny by the FDA and even a congressional investigation into it.

 

This is just one example of how much pharmaceuticals has neglected its supply chains in the pursuit of blockbuster drugs. In his book Hedley hopes to show there is a real need for root and branch change, not just cosmetic changes. There is a real need to change the way we develop drugs from the earlier stage we need to properly build supply relationships, streamline our supply networks, work closely with our suppliers, look for innovation in the supply chain and productivity improvement. All of these things need to be seen as important in pharmaceuticals because at the moment the focus is not on efficient supply chains. We are living with the results of this.

 

Hedley has a LinkedIn Group called ‘Friends of Modernization of the Drug Industry’. It contains about 150 people who include current and former FDA, patient advocacy groups, lawyers, scientists - people who are desperate to see change in pharmaceuticals. There is a real desire from many quarters to see change. Hedley hopes that in some small way he can help and catalyze more debate on the topic.

 

Conclusion

 

The FDA and the regulators around the world are guiding the industry towards ‘modernization’, which is made up of designing products with quality in mind from the early stages. ‘Process analytical technology’ is a way of understanding your input materials and processes much more deeply, so that you create a much higher quality product. It is called 21st century modernization by the FDA. There are a lot of gifted people working on it, but industry is not really taking much notice of it. It is trying to do in pharmaceuticals which other sectors did 40 years ago in the face of Japanese competition from the East. They realized you couldn’t inspect quality into the product. They actually put the responsibility of quality on those producing the product. They dismantled their large quality control organizations and turned them into quality engineers and other more value adding disciplines. Defects levels were reduced significantly.

 

However, the issues still remain in pharmaceuticals. Therefore, there are new supply chain initiatives trying to get a hold in pharmaceuticals.

 

 

About Hedley Rees

 

Hedleypic2.jpgCurrently, Hedley runs a small consulting and training company called Biotech PharmaFlow Ltd. He has been running the business for approximately 6 years. He basically works with virtual development drug companies, meaning their whole supply chain will be outsourced to contract manufacturers and distributors. They tend not to have their own infrastructure of supply chain experts or people. Hedley works with them to build supply chains that bring drugs either to clinical trial sites or to market.

 

Prior to this Hedley worked in the biotech industry where he launched a drug called Tarceva. He also launched a drug called Frovatriptan. Both of these companies were based in San Francisco. His skill set is what he would call fully integrated supply chain management, end to end from the start of the process at raw materials to the launch into markets, in a very patient/customer centric way and aligned with the Lean philosophy with value from the point of view of the end customer.

 

Prior to this he worked for Bayer in manufacturing and supply chain. Hedley learned and went through MRP1, MRP2, ERP, S&OP – the whole range of big pharma systems. By discipline he is an industrial engineer. He learned the tools, techniques and methods of Lean/Six Sigma, before they were popularized. He worked with things such as work measurement and method study. Hedley has also done a lot of process excellence, including his time at Johnson & Johnson Ortho-Clinical Diagnostics in the manufacturing supply chain.

 

Although he mainly works in life sciences, Hedley has always taken a strong interest in other sectors such as automotive, aerospace and semiconductors. Hedeley has closely followed people such as Dan Jones, Peter Heines and people like Ian Glenday who is not so well known but who is a Shingo prize winner as well.

 

Hedley is pretty passionate about supply chains being complex, interrelated systems where there is no quick fix. It is difficult to implement new ways of working in supply chain.

 

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The need for multi-disciplinary approaches to solving business problems

 

There is a need for a multi-disciplinary approach because when you look at business at the macro or micro level, being able to understand both aspects helps you plan a little better.  You also have a better understanding of the individual or group of individuals that are working for you. If you have a small group or large group it is hard to facilitate communication, collaboration, transfer of knowledge, etc. You also need to better understand your clients and suppliers. Multi-disciplinary approaches are definitely needed.

 

It is not only each business owner or director that can have all the knowledge. What is important is that he/she gathers people around who have that knowledge and are looking at different problems and solutions. They can analyze solutions through different lenses to make a better decision.

Examples of applying a multi-disciplinary approach in business

 

Canada exports a lot of products to the US, which appears to be a good reciprocal relationship. However, from another perspective this can be a weakness because if something such as a trade and tariff conflict occurred exporters will have to look at other opportunities. Knowing what is happening at the macro level is also important.

 

Denis works with a lot of businesses and believes that not understanding your client is a fundamental element you must have. To understand who your clients are and what they need is important. Understanding your suppliers is also important. In order to give good quality you need to rely on good suppliers. In order to do this you need to fully evaluate the suppliers as well as your client’s needs.

 

Having the right information is crucial for making the right decisions. This will affect your business finances and personnel because if you make the wrong decisions they will leave your company. The same holds true for suppliers and clients.

 

To be able to understand all the different facets of your business is important.

 

 

Developing the multi-disciplinary approach

 

People need to take time out of their day to look at information coming from different sources. One of the things people could do is have a business that does this for you. You receive an email each day and they give you specific information about your markets, clients, suppliers, economic forecasts etc. By taking 10-15 minutes per day this will give you a good idea of what is going on. You can slowly build up knowledge.

 

About Denis

 

DenisPageau.jpg

 

Denis is first and foremost a generalist with a bachelors degree in psychology, a certificate in public administration, an MBA in e-business. He has a wide range of formal knowledge in addition to other types of knowledge including being in the social and government fields.

 

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How did you get involved with systems thinking?

 

Back in the early days of working with DHL in the early 1990s Nigel was trying to figure out how to tackle end-to-end delivery processes across more than 200 different countries. The problem was that they recognized that traditional business process models tend to break down when you are looking at federated business models. There really isn’t a single owner to an end-to-end process and it required a different way of seeing the world.

 

Nigel started reading some books around systems thinking. In particular he read a book by Fritjof Capra who is a nuclear physicist and wrote the book called the Dao of Physics. Interestingly, as Nigel was sitting on an airplane going from London to Hong Kong he started recognizing a number of patterns he was describing which might be useful to understanding how distribution networks might work and how we might understand them.

 

Nigel started to apply this thinking across the value chains within DHL. He focused on the interactions between the different systems that made up the distribution network globally. Specifically he started looking at the dimensions of values, polices, events, content and trust. He started to develop a thinking framework which allowed him to understand all of the interacting components of the value system of distribution, without actually thinking about the processes as such.

 

 

What have you been doing in business to apply systems thinking?

 

Nigel has been applying this same thinking model within criminal justice in the UK, looking at joining the value systems of the police force with the value systems of the prosecution service and understanding the issues of trust between those different value systems and how we then need to understand and reinterpret the meaning of events as they unfold between those different value systems. It was very much in the vein of systems thinking and what you might call a complex adaptive pattern, where we don’t necessarily have a clear understanding of a mechanical process.

 

We can’t look at these problems as if they are machines. We find that reductionist thinking doesn’t work. You can’t Six Sigma everything. You have to look at the softer value systems involved and the more behavioral aspects of the whole system, as it reacts to world events as they unfold. Looking at things such as anti-terrorism at post 911 is also all about the ‘known knowns and the known unknowns’, the famous Donald Rumsfeld statement.

 

You can take this into more standard business models where Nigel has been applying the thinking in airline support systems. More recently, Nigel has been developing new event based business and technology models for potential new startups in the B2C retail industry.

 

 

Can you talk about your book?

 

The book is called ‘Lost In Translation: A handbook for information systems in the 21st century’, (the book is available on Amazon as a paperback or Kindle edition) not to be confused with the famous film. It looks at all of the things mentioned above in terms of describing some of the techniques they developed to help them find pragmatic ways to apply systems thinking to businesses and government organizations and tackle some of the common business IT problems. The loss in translation is referring to the loss in translation between business objectives and the IT solutions that we so often see.

 

Within the book they describe the framework mentioned earlier with the snappy name of VPEC-T, which stands for Values, Policies, Events, Content, and Trust. The VPEC-T framework is actually being adopted globally by various different organizations and groups. You can learn more by looking it up on Wikipedia.

 

In the book they also emphasize the importance of keeping business and technology aligned and in step as we go through large scale business change, and how we must think through the adoption of business change throughout the solution lifecycle.

 

Adoption is a very critical aspect of the way we see systems developing and interacting over time.

 

 

Where are you taking the thinking next?

 

Nigel is currently working with clients to combine systems thinking with the technologies and patterns of the Web. For quite a long time they have been seeing a correlation between a lot of the patterns that come from systems theory, complexity theory, cybernetics – that broad church of what Nigel would call systems thinking, and how they apply to the way the web works. For example, with clients these days they ask themselves the question, when looking at predominantly IT within an organization, “what would the Web do?”.

 

This gives you a new way of understanding of the way we might use information technology within the four walls of the enterprise, but also how we might use it in interesting new mash-ups with customers, partners and other parties in the broader Web. They are creating these combinations of systems thinking patterns and interaction patterns with the more traditional transaction based systems within IT.

 

They are also taking systems thinking into the boardroom, interestingly by not talking about systems thinking. Discussions around systems thinking itself tend to be too dry and academic. They find they can introduce some of those concepts by talking about the importance of values in play and the trust relationships between parties when we are thinking about large scale business change.

 

They are focusing on the importance of the focusing on early adoption of communities and the visibility of events and how they trigger action with and between systems at play over a broader landscape of business and technology.

 

Nigel and his team are also developing simple frameworks for how to manage business change and embedding systems thinking into the business change cycle. They are also including in this framework some concepts from design thinking. This focuses on the importance of applying systems thinking techniques at the early stages of large scale business change.

 

Nigel is also ‘eating his own dogfood’ by taking a complex adaptive approach to the development of the thinking. He is testing simple thinking frameworks and seeing which ones work and which don’t, and killing off the ones that don’t work. He is building patterns and anti-patterns of real-world examples. Nigel is actually building collateral with real clients.

 

Nigel has been thinking about writing a follow-up book which may happen later this year or into the next year. However, at the moment he would rather focus on applying the thinking in real businesses and have real anecdotes to share with the world.

 

 

About Nigel Green

 

 

Green_Nigel.jpgNigel Green is an IS advisor and author who specialises in the conception, management and delivery of business-led IT solutions. He is fascinated by two things: the way people actually use IT and how well IT reflects real-world behaviour. His list of favourite authors hints at his values: philosophers, economists, architects, physicists, anthropologists, entrepreneurs, technologists and systems theory thought leaders are on that list. A business/IT translator for over 25 years, Nigel specializes in large organizations with complex and distributed operating models.

 

 

Nigel has been in the IT industry for more than 15 years, mainly in supply chain, logistics and distribution. He has broadly been involved in ‘federated situations’.  He spent 11 years at DHL both in the UK and the Asia Pacific. He has been specializing in ‘event based architectures’ and systems that work across extremely federated situations where it is very hard to define an end to end process. His role has been mostly within IT, but more of a business/IT hybrid. Recently, he has been referred to as an enterprise architect. His background is in business analysis and process modeling.

 

You can follow Nigel on Twitter taotwit or at www.5dinnovation.com

 

 

Nigel invites others to join his network of systems thinkers and practitioners and find organizations with big messy problems where traditional approaches have failed.

 

1. What differences have you seen in culture between work in the US and Europe?

 

The culture in the United Kingdom and Europe is quite similar to the US. However, one thing David noticed was that the European culture is less serious at work, compared to the US. David found that in Europe it is ok to joke around and say wacky things in general. However, when it comes down to doing business, it is just as serious as the US. In the US you will oftentimes find people working above and beyond the required amount of hours. In Europe there is a more of a focus on getting away at times and tending to other needs besides just work.

 

2. What are prediction markets and what potential applications can they have for corporations?

 

David published a study when he set up a prediction market at a local hospital in the UK that predicted with 99.7% accuracy the admissions in a given week. There are a lot of ways this can be applied for corporations. Predication markets are a way of aggregating collective knowledge or collective wisdom. David sees potential applications in forecasting and budgeting. Oftentimes in procurement the forecasting is off and you can’t base any decisions on the forecast that is provided.

 

A lot of time and money is spent on developing something which is not that accurate. Prediction markets can save time and money and provides something more accurate. It may also help in the budgeting process.

 

In terms of project planning oftentimes we are very optimistic with our project plans. Prediction markets can be a way of tempering this optimism, making ourselves more realistic.

 

3. What makes online training effective?

 

As part of the academy offering which David is heading up, e-learning, or online training is provided. The use of varied content is one particular aspect which makes online training effective. This includes things such as video and audio. While power-points are included, David feels you need to go beyond that because as people are clicking through your presentations they can get bored fairly easily if you don’t bring the material to life.

 

Another key is to actually give people practical take-aways once they have done some e-learning. Oftentimes, people will do some training online and it will seem very disconnected from what they do on a day to day basis.

 

You need to do the training and provide the tools and templates to match which are seen as relevant to helping people do their jobs better. This will make people excited about learning.

 

David thinks people are only not excited about doing online learning and training is when they don’t see the connection with how it applies to their everyday job.

 

4. Why do you believe traditional hierarchical structures are not effective?

 

In the business world today people say they are moving away from hierarchies; however hierarchies are still ingrained in how we have always done things and how we think. Oftentimes there are better ways to organize ourselves. When talking about specific projects you clearly need a project leader who is driving the project forward, making people accountable, thinking about moving the different parts that are going on, etc.

 

However, in terms of the way organizations are structured hierarchies oftentimes move too slowly and oftentimes have one person making decisions at the top, creating instability due to relying on the opinion of one person. The way to counter this firstly is to have good people because if people are going to make decisions at a lower level they need to be thinking, intelligent and well trained types of people. You can’t just stick anyone into a role and tell them to make decisions and expect good results.

 

Oftentimes, if we are talking about purchasing, category managers have such in-depth knowledge of all the details of their category that for them to be overridden or have their positions undermined by someone up the chain does not establish a lot of trust with their people. It doesn’t motivate them to look for the breakthrough successes that we are really looking for.

 

Hierarchies oftentimes involve a manager who only sees a small piece of the work that is being done, but he/she believes they can make a decision based upon that. Hierarchies move slowly because if you have to go up to the manager for every decision it creates a big bottleneck. Additionally, the depth of knowledge that you need to unlock a category in terms of purchasing cannot be accomplished through your traditional hierarchy, unlike where there are people who are checking that the process rigor is in place but they are not requiring every decision to go through them.


 

About David Rajakovich

 

DavidRajakovich.jpgDavid works for a company called Positive Purchasing, a niche consultancy providing training and consultancy for procurement organizations worldwide for very large Fortune 100 companies. David is heading up the company’s online learning academy offering. They have a tool which provides e-learning, access to tools and templates and research and collaboration tools. The company has client specific academies as well as their own academies.

 

LinkedIn Profile

 

The dictionary defines Innovation as “The introduction of something new” Introduction in product development means delivering to the customer, as opposed to inventing, where new technology may never be introduced to a customer.

 

Functionality and reliability are implicit customer needs. If the product does not perform as it was intended, it is useless to the customer. If it does not continue to perform for the expected time, the customer will be unhappy. Many times customers will use the term quality to actually describe reliability.

 

Much like a business plan is developed to provide a path to achieve business goals, product development planning provides a path to reaching functionality and reliability goals.

 

When is the best time to start reliability planning in the development process?

 

Depending on the technology – the earlier the better

 

With high risk technology like medical devices or where temperature, motion or explosive gases are concerned, there needs to be very early good practices employed for safety and compliance reasons. Large, complex systems will have more affect on cost.

 

Employing reliability tools like Failure Modes and Effects Analysis, Fault Tree Analysis and Reliability Block Diagrams early, forces developers to systematically think through the system from different angles to uncover potential failure points and resolve them before hardware is ordered and assembled.

 

These activities can also provide better component selection or identify further development needs for components that are de-rated where they are operated at the limits of their specifications.

 

Early system testing is important to expose additional failure points that may be related to system interactions, but the closer you can get the first design to a true functional state, the more likely the system will meet downstream reliability goals.

 

Also the closer the early designs are configured like a product, less risk will be introduced as the development proceeds. Testing to expected operating environments is also important, It is common to begin testing in a lab environment, but when conducting system testing, real world operating conditions will produce real world results.

 

Are their other methods to reduce development cycles and improve reliability?

 

Good record keeping is key to reducing cycle time.System data integrity is important and Reliability tracking tools like FRACAS (Failure Review, Analysis, and Corrective action systems) provide records of failures and a closed loop process to confirm that the correction has achieved the desired results.

 

When a team of several people are involved and responsible for testing, operation and design improvements, it provides a history to reduce repetitive actions and develops consensus to employ resolutions. Just like any other data collection GIGO applies and it is common that the most frequently observed failures do not get recorded properly and are easily overlooked.

 

Reliability growth predictions also provide an insight to how effective a team performs is in resolving failures.

 

Predictive modeling tools like Finite Element Analysis and Computational Fluid Dynamics need to be employed early and frequently as designs are modified. The design in test needs to be controlled well to ensure the model results are truly indicative of the equipment being manufactured.

 

Monte Carlo simulations can also be a good predictive tool in design.

 

Can the requirements of codes and standards affect reliability?

 

Yes – design requirements may affect component placement, safety circuits, materials, and configuration. Understanding the compliance requirements will assist in guiding the design to meet the safety demands that may introduce other issues that affect component or system capabilities. Placing these constraints on the design may require additional research time or finding alternative components to meet safety requirements. Re-designing to meet compliance can be costly and very time consuming.

 

Designs to improve maintainability, serviceability, and manufacturability also need to considered as an effect on reliability. Features that make a design easier to install, disassemble, or repair can affect configuration, and possibly inhibit reliability.

 

Other thoughts on reliability in innovation

 

Time to market is becoming more critical as technology development is accelerating.To deliver the best product to a customer in less time, the amount of upfront work performed will directly impact downstream results.

 

Customer activities like Quality Function Deployment will help better define design requirements. But also and good understanding of potential environmental effects where the systems may be installed along with how it affects the operating conditions will best define reliability goals.

 

Setting hard, reliability goals up-front in the development process will best prepare designs for the later phases of development. There are times when barriers in reliability growth are experienced and breaking through those barriers may require a lot of dedication. Revising reliability goals to meet stated time goals may be very costly later in the process, and may become extremely costly when it reaches a customer.

 

 

 

About James Jendrzejewski

 

James Suit LinkedIN2b.jpgJames Jendrzejewski is the president and principal engineer at Applied Product Development Solutions, a New Hampshire based engineering firm.

 

His company provides engineering services in product design risk management, compliance and process improvement. They bring the experience of manufacturing, product development and service into the early development stages to reduce development time and number of design iterations.

James' background is in chemical engineering His experience in electro-mechanical process systems extends from hydrogen systems development and deployment around the world to new product introduction and optimization in existing manufacturing processes.

 

LinkedIn Profile

The recession is a perfect example of the "no pain, no gain" theory, and Richard Sherman believes more gain than pain has to be demonstrated for new ideas and new process improvements to take place. Richard Sherman sees a renewed focus on inventory management as a positive consequence of the recession, and says it has led to more collaboration, increased emphasis on demand planning, and better use of business intelligence. Companies are looking for, and finding, new decision support tools and systems, as well as new ways to help their people make better, more informed, and more collaborative decisions.

 

 

 

 

Recession -- No Pain, No Gain

 

 

 

In terms of innovation, Richard Sherman advices companies to look at the innovation adoption theory, which says the degree to which an innovation is perceived as being better than the idea it supercedes has a direct impact on the likelihood of adoption. Essentially, Richard believes the recession is a "no pain, no gain" situation, and people resist change -- the status quo is okay, but change is very hard work. So in Richard's opinion, more gain than pain has to be demonstrated for new ideas and new process improvements to take place. And certainly, in a recessionary period such as we’ve experienced over the past couple years, there is a lot more gain to be had.

 

 

 

The recession has kind of dragged people kicking and screaming into the world of change management because they’re under severe pressures to cut costs. There is also fierce competition for capital, and as a result, Richard Sherman is seeing a lot of innovation in best practices, relative to inventory management in particular. "In a recessionary period," Richard said, "companies are really forced to review their current processes and find every way possible to squeeze more cost out of those processes to make them more efficient and effective, to embrace new technologies, and we’re certainly seeing that across the board."

 

 

 

The Recession as a Catalyst for Collaboration

 

 

 

Richard Sherman sees a renewed focus on inventory management as a positive consequence of the recession. Every supply chain manager has been charged with improving efficiency and reducing costs, and the competition for capital has led to intense scrutiny of material flows, enabling postponement theories and an increased emphasis on demand planning. Consequently, Richard says he is seeing companies embracing sales and operations planning processes more than ever before, which has resulted in a lot more focus on collaboration, both internally and externally.

 

 

 

The recession has been a catalyst for collaboration on a number of fronts. The financial condition of many companies has resulted in a closer collaboration between suppliers and customers at both ends of the supply chain as companies work to reduce the cost of supply. Sadly, a number of shipping firms did not survive the recession, and those that did have pulled back on launching new ships, or at the very least, removed ships from their fleets. As we emerge from recession, there is much less capacity in the transportation system -- but there is a silver lining, because companies are focusing on innovative transportation solutions, such as consolidating loads and embracing the notion of outsourcing to reduce risks.

 

 

 

The recession has also caused most companies to reevaluate their overall supply network. Richard Sherman says he is seeing companies looking to outsource more value-added type services. Historically, 3PLs have provided commodity services relative to transportation and warehousing, but today companies are working to outsource packaging, assembly, reverse logistics, returns processing and service parts management.

 

 

 

By looking more closely at the supply chain processes that comprise the overall supply chain network, companies are better able to find redundancies and manage buffers. Where the recession has left us better off, Richard says, is that companies are embracing the concept of synchronization. They are removing inventory buffers by improving collaboration, applying better collaborative technologies to their supply chains, and creating an overall reduction in inventory, as opposed to just pushing inventory back on a supplier or moving inventory around. “So, I think for the first time, we’re seeing a reduction in total inventories. If you look at the current State of Logistics Report published by CSCMP, a lot of that is due to lower demand, but a lot of it is actually coming across as improved inventory flows through innovative best practices,” Richard added.

 

 

 

Learning to Live Without Supply Chain Luxuries

 

 

 

In supply chain, we have always been asked to do more with less. Now, even as we see signs of economic improvement, we are being asked to do even more with less. In today's business environment, we are learning to live without the luxury of excess inventory, and without a large workforce. Richard says companies are looking at all of their channel relationships, both from the distribution perspective as well as the customer perspective, and everyone is reevaluating supplier capabilities.

 

 

 

“Clearly, the recession has put a focus on risk management, as we talked about in our previous discussion," Richard said, "and companies are seeking innovative ways to mitigate the risk of suppliers going out of business. The good news in all of this is the companies are looking at ways to leverage their supply chain to increase revenue opportunities by moving into new markets, particularly in emerging and developing countries.”

 

 

 

Moving from ERP Systems to Business Intelligence

 

 

 

Over the last ten years, Richard Sherman has watched companies shift to new ERP systems, but says many companies have not seen the return on investment they anticipated because ERP systems are more transactional in nature. Today, he says, companies are searching for new decision support tools and systems, and new ways to help their people make better, more informed, and more collaborative decisions.

 

 

 

Many companies are struggling with forecasting in the new economy, and are looking for systems that can forecast the impact of any given decision. To that end, Richard says he is seeing new emphasis on business intelligence, inventory optimization and collaborative technologies. For example, Richard sits on the board of directors of a company called Lead Time Technology, which provides end-to-end operational, inventory optimization, and event scheduling and planning, and says their pipelines are growing because companies now recognize that they can’t support their operational decisions using islands of custom Excel spreadsheets.

 

 

 

As a result, Richard says, companies are beginning to invest more in decision support and business intelligence, and are working toward more collaboration with external partners, both on the customer side and the supply side. The goal is to capture and overcome capacity constraints in production, transportation and warehousing, and to improve the overall material flow. "So clearly," Richard said, "we’re seeing a new path forward and serious market growth in the area of decision support and business intelligence.”

 

 

 

Real World Examples of Real Business Intelligence

 

 

 

Richard Sherman recently chaired a conference focused on supply chain management in the high-tech industries, and one of the more fascinating presentations he saw was delivered by a representative from NETGEAR. "They've got Oracle, they’ve got Demantra, they’ve got a lot of spreadsheets, they’ve implemented a fairly strong sales and operations planning process, but what really stood out to me was NETGEAR'S heavy focus on external market and economic data in their overall forecasting process." Richard explained.

 

 

 

In the high-tech industry, most sourcing is focused on Asia, Eastern Europe, South America, Latin America, and more recently, Africa. NETGEAR, Richard said, uses an external research organization to provide information about global market trends, economic trends and general trends within the high-tech industry. As a result, NETGEAR was able to identify the recessionary period in August of 2008. By gathering external market information and trends, and then comparing the intelligence to their own historical trends, NETGEAR was able to forecast a recessionary period, which allowed them to tailor their production and supply chain as they entered into the recession.

 

 

 

NETGEAR responded to the information by reducing the number of channel inventories that moved product to retailers. One of the positive results, if you will, was when Circuit City declared bankruptcy, NETGEAR had less channel inventory risk in their system, which allowed them to absorb the hit better than their competitors.

 

 

 

The lesson learned, Richard said, is realizing that we have to pay attention, not only to what we are doing and what our competition is doing, but what the overall market is doing. If we can incorporate all of that intelligence into our planning processes, we can begin to set inventory levels, set production levels, set transportation requirements much more in line with trends in the economy.

 

 

 

At present, NETGEAR's market data intelligence indicates that we are coming out of the recession, and the company is in the process of gearing up to respond. As a result, NETGEAR will be ahead of the curve and ahead of competitors who are not investing in innovative planning processes.

 

 

 

Richard Sherman also shared another example of business intelligence that came from a supplier who attended the aforementioned conference. According to the supplier, an Australian company that manages a number of retail and duty-free outlets in airports across the world recently found an innovative method of forecasting demand. In addition to leveraging their own point-of-sale analysis, they collaborated with the airlines to secure arrival and departure schedules as a means of forecasting traffic patterns, and then took the concept one step further by analyzing weather conditions at the various airports to determine where there would be delays. Knowing when and where there would be passengers spending excess time in airports allowed the company to adjust their inventories and pricing to match traffic trends.

 

 

 

The result, Richard said, was improved profitability, improved customer service and greater customer satisfaction -- all achieved by taking a truly innovative approach to demand planning and forecasting through better business intelligence.

 

 

 

 

 

 

 

About Richard Sherman

 

 

 

President

 

Gold and Domas Research

 

 

 

Rich Sherman.jpg

Richard Sherman is the president of Gold and Domas Research, an independent research firm that provides companies with white papers, strategy consulting, messaging and positioning. Richard has worked with a number of technology companies over the years, both large and small; he was most recently with Microsoft, but also with Numetrix and AMR Research, where he  founded the firm's research advisory services for supply chain in the early ’90s. Richard was also one of the founding team members for the Supply Chain Council, and currently represents the Council as a board emeritus, helping to promote its SCOR® model.

 

 

LinkedIn Profile

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The market is just waiting for someone to step up and take the lead. According to Carlos Rohas, the 4PL market in Mexico is still in its infancy.The opportunity for developing 4PL business, not just in Mexico, but also in Latin America, is great, Carlos believes, providing companies have the know-how. Slowly, but surely, Carlos is seeing more emphasis on logistics within universities, which is creating a larger pool of educated young people who will one day fill the gaps.

 

 

The need for solid 4PL offering in Mexico exists, but the challenge is going into the market and convincing key decision-makers of the benefits. Discover what Carlos Rohas sees as the barriers to entry and what enterprising individuals and companies could be doing to launch a successful 4PL in the region.

 

 

According to Carlos Rohas, the 4PL market in Mexico is still in its infancy. And while some inroads have been made by big players like DHL, their efforts have primarily been in the 3PL business mode. The opportunity for developing 4PL business, not just in Mexico, but also in Latin America, is great, Carlos believes, providing companies have the know-how. Lack of strategy, constant personnel changes due to high rates of turnover, lack of incentives, and a general unwillingness to collaborate with different partners to provide integrated services in the market are just some of the issues Carlos sees as barriers.

 

 

In the last 25 years, most developments in Mexico's 4PL market have been in the freight forwarding industry. In order to offer a complete solution to a given importer or exporter, freight forwarders typically manage a customs broker, a transportation company, a packager and sometimes a labeling operation due to changing customs regulations at the border. The missing link in the offering, Carlos says, is the know-how. In other words, the basic tools and strategic logistics operations that would allow them to integrate all services into one comprehensive package. Still, he believes freight forwarders are in the best position to start offering 4PL services in the future.

 

 

Some companies claim to have 4PL capabilities within their business portfolios, yet Carlos says he has yet to find one that can definitively say, ‘Yes, we have a 4PL team within our 3PL company.’ Theoretically, the need exists, but the challenge is going into the market and convincing key decision-makers of the benefits. Most companies already have owned or leased facilities, a customs broker, a freight forwarder, someone servicing their import-export points, et-cetera, but they aren't comfortable with the idea of handing those responsibilities over to a single provider, Carlos said.

 

 

Slowly, but surely, Carlos is seeing more emphasis on logistics within universities, which is creating a larger pool of educated young people who will one day fill the gaps. "The reality is, in order to build a strong 4PL offer, you have to have a lot of experience, and for young individuals coming out of university," Carlos said, "it will be several years after they graduate before the market will understand the knowledge they bring to the industry."

 

For professionals already in the market, especially those with experience in all facets of international or domestic supply chain, now is the time to make a value offer and quite possibly capture some business in the small to medium-sized business arena, Carlos advised.

 

 

Critical Factors for Successful 4PL Implementation

 

Carlos Rohas says the first step in selling 4PL services is to understand your customer's strategies, including their short, medium and long-term goals. When he approaches a customer for the first time, his objective is to translate their goals into a strategic logistics plan.

 

 

More often than not, especially in smaller companies, there is no solid strategy in place. In that case, Carlos says he takes one step back to help his customer build a strategic plan for the business, and then develops a logistics plan based on the agreed strategy. "The one thing I've learned in logistics, and as the Joe Jackson song says, 'You can't get what you want, till you know what you want,' and many customers are in that phase," Carlos remarked. The problem is not unique to small businesses -- Carlos has seen it in many large businesses as well.

 

 

Another important factor to consider is that fact that companies are trying to do more with less. In this case, the role of the 4PL provider and the supply chain architect is to build a supply chain structure and solution that is fits within the customer's budget.

 

 

Finally, Carlos Rohas says it is vital to consider your customer's corporate culture. Working with a family owned business can be particularly challenging, because there are often as many strategies as there are brothers in the business, Carlos quipped. Small and medium-size companies are often structured this way, but Carlos knows from experience that when the challenges are identified and properly managed it is possible to build a successful 4PL solution.

 

 

 

About Carlos Rohas

 

Managing Director

BPIA Consulting

LinkedIn Profile

 

CarlosIrvingRohas.jpgCarlos has held top executive positions with Fortune 100 companies, including DHL Exel Supply Chain, Sony, Polaroid and Nissan Motor Company. He has developed, lead and managed large scale supply chain organizations of top companies in Mexico's technology sector, and has successfully implemented supply chain management and supplier development programs in the Americas, Europe and South East Asia. Today, Carlos is the Managing Directorof BPIA Consulting, which specializes in managing diverse logistics and supply chain projects in Mexico and Latin America.

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What is your experience with command and control organizations?

 

Tim believes it is like a situation would run into almost without regards to the type of change involving converting operations not only to Lean manufacturing.

 

The best ideas for process improvement usually come from people that do the job.

 

They know it best and Tim has found in a few situations in Houston that they had people who held on to the old ways. They also drove the employees insane. It was frustrating to watch. In one case Tim took a manager aside and discussed promoting change and process improvements with his employees. However, he always kept something in mind that he wanted. These people [employees] come up with some really good ideas but if it wasn’t exactly what he was looking for he would send them back to the drawing board. After a while Tim asked this individual to just tell them what you want because this was turning into a real charade.

 

It is getting managers to let go of that control and to trust in their employees. This can be pretty tough sometimes. A lot of people feel they know better in their positions. They don’t listen to their subordinates. It can be in any field or position.

 

Recommendations for managers on giving more control to their subordinates

 

If you have someone who can observe this objectively and present a case to the manager they will hopefully open their minds and take it to heart. They will let people try things and celebrate their success. Tim has seen things both ways where guys were hesitant to give up control and then when the successes started to hit they were really able to step back and just let the process improvements. The process improvements snowballed throughout the entire factory.

 

In another case it was just never going to happen. Basically, you had the control freak who had to have a thumb on everything and who stifled innovation and process improvement because he was trying to have too much control.

 

Even going back to implementing Lean manufacturing, a few companies including one in which Tim did some consulting for, had an inherent distrust of labor. Managers felt the need to have accountability for people’s time, all the time. They spent a lot of effort on labor tracking throughout the process. One company asked Tim to come down to the Pittsburg area. They were doing about 100 hours a week in overtime. When they looked at their labor tracking it turned out they were using about 100 man hours per week just to enter all of this information. There were a lot of mistakes, such as wrong times for the wrong jobs, etc. which needed to be reconciled. Tim asked the people in Finance…”on the whole when you have your processes credited… and you have your payroll, how do those two match up? “

 

Their answer was that the two were always very close. Tim then questioned why they were spending so much time and effort to chase down a problem that doesn’t exist. They were spending hundreds of hours every month on data collection and reconciliation. However, in the big picture everything was fine.

 

In terms of control, when converting to Lean and empowering employees, you start hitting on areas where control is a big issue, such as with the Accounting people. It is difficult convincing them that less control is more because you spend less time on chasing down things that don’t matter.

 

Conclusion

 

Tim thinks the management side of things may have been driven into our heads from childhood, business schools, etc. One of the big companies Tim worked with held a general distrust of labor by management. They felt that the hourly people were always trying to get away with whatever they could. In Tim’s experience there is nothing further from the truth. When you look to people to do the job every day for their inputs, they feel more vested in the whole company and their daily lives. When you give them control over their own destiny, you treat them as any manager would like to be treated. We don’t want a hovering boss looking over us and controlling our every move. Most people want to be given a job and to be allowed to go do it, with support provided when needed. Tim believes this is the recipe for success. Management’s job is really to be there to support their people, not just to provide guidance.

 

About Tim Donaghey

 

TimDonaghey.jpg

 

Tim came up through the materials side of manufacturing out of college. He started as a stock room supervisor, a shipping manager, traffic manger, and then moved to a few jobs. Around 1985 Tim was with a company called Applicon, the second largest CAD/CAM business at that time. That was his first exposure to converting an organization to what we now call Lean. At that time it was referred to as JIT. It was a huge success, they took out 21 million dollars of inventory and lead time went from 2 months to about 2 days. All materials we at point of use work cells with complete pull systems. They borrowed this method from Hewlett Packard.

 

Tim took this knowledge with him to a small telecom company which was called Perception Technology and set manufacturing up there. Then he went to Kay Instruments and had similar success where it was a marginally profitable business. When they were acquired by GE a few years later they were 30% profit before tax. They had extremely high accuracy rates for inventory, at 99.97%. It was a pure pull system that eliminated all unnecessary material handling. It was a very customer focused organization.

 

After being acquired by GE, Tim moved to Houston Texas and ran a pressure instrumentation business for GE. He saw similar results moving them from a stock room based work-order, typical of many manufacturing companies. He started converting lines to pull point of use inventory. This was a business that only made $10,000 profit for the whole year prior. Within 9 months they improved to almost 14% and on time deliveries went from the low 20% to about 80% and they still had not converted the whole floor. Roughly $640,000 was taken out of inventory. This was a fairly small operation and GE has since sold it off.

 

For personal reasons Tim left Texas and needed to get back home due to parent’s health concerns.  He then decided to buy a liquor store.

 

 

LinkedIn Profile

 

How did your interest in leadership development come about and why is your focus relevant to logistics and supply chain professionals that aspire to be industry thought leaders?

 

Kitty realized over time that a lot of people looked miserable, not just at the department but also on the train after work etc. She thought this was terrible because we spend the best 40-50 hours per week spent at the office. To think negatively about your work is terrible. Her agency sent her to a leadership development program called the Excellence in Government Fellows. This was an interesting year for Kitty and she learned a lot.

 

Kitty found that most people she knew who went through the program went back to doing things they was they did before. They thought the same way as before they started the program. Kitty thought this was sad in light of the fact that if she would ask someone what they got out of the program, the person would respond that nothing ever came of it.

 

Kitty questioned why this was so. She started doing things at night. She had a dinner in Arlington to speak with someone who was doing fabulous things with the IRS. She invited some other senior fellows to have dinner with this person. After a few weeks someone called Kitty and asked her to do it again. Kitty continued to invent things and people kept showing up. Currently, the events include people interested in the topic. People have discussions and become refreshed, even after coming to the event in the evenings after work hours at 9pm at night.

 

Kitty has done 42 of these events since mid 2003. The network which has evolved has become very interesting. Kitty believes this is relevant to everyone because networks are really where a lot of things are going. Relationships which successful supply chain managers have built over the years have helped set them up for success. In 2008, Kitty noticed that Wharton School Publishing published a book called ‘Competing in a Flat World, Building Enterprises for a Borderless World’. The authors were Victor K. Fung, William K. Fung and Jerry Wind. Their business involves global supply chain networks, of which they are very good at.

 

Kitty found the book to make a lot of sense to her. She believes if you use networks to get a better work outcome, orchestrating networks for results and pulling people together out networks to get things to happen, it is relevant to everyone.

 

What characteristics or competencies will help members of this community thrive in coming years?

 

Kitty believes there are some general characteristics which apply to nearly everyone. She believes there are some characteristics which apply to government and can equally be applied to supply chain thought leaders. People have to be agile. A person has to develop one’s own agility and resilience, which can serve people well to play in the networks and figure out how to be happy and feel safe, alive and learning, able to add value in a network situation, not only in a hierarchical situation. In other words, it is not that hierarchies are bad, but they get ossified.

 

Kitty’s question has been how to bring those capacities that networked behavior conveys to the hierarchy. She thinks of herself as doing work at the intersection of hierarchy and networks. She questions how things can be done differently.

 

More importantly is what Gartner Research called a Versitilist in 2005. It is what IDEO, the design firm in California calls a T-shaped person. You can think of an X and Y axis for the Gartner Versitalists, a vertical and horizontal axis where you have a triangle. Alternatively, you can think of a T-shaped person where you have the cross bar going left and right and the body of the T going up down. What both are talking about is that it really serves you to become both broad and deep. Not just being a specialist (deep), but also a generalist (broad).

 

The problem is that you cannot really know everything. What both groups are talking about is not trying to know everything, but you are trying to be deep enough in one or two things. Being broad is to understand the connections, knowing a little and learning how to do market industry analysis, strategic thinking, even though you may not be the Chief Financial Officer. What do you know about those other disciplines and how they interact with each other and their customers? What do you know about where things come from that wind up as finished products that you are selling, if you are a retail business? What do you know about accounts payable, what happens when you pay in 10 days versus 40 days? What do you know about your plant?

 

The idea is that the more you know about the big picture, the more you have a framework to hang things on. The more you do this the more traction you get either in the hierarchical organization or in the network because you understand how things relate to each other. Once you start to get how this works then you are off to the races because you can always learn more.

 

Suggestions for further action that will help others develop their career and business potential

 

Kitty believes the single biggest thing, which Peter Drucker said, is ‘learn how to learn’. While we may think we are learning all the time, in fact many people don’t. She senses this is what is happening. People really think they have arrived just because they have their PhD or have become a general manager. You need to keep thinking about what will create a sense of flow in your daily work. What makes you curious? You need to pay attention to those things and follow them up. You will then not only become more capable and available for opportunities that come along, but you will also have a better time. Your being will come across as healthier and more engaged with the world. This creates new opportunities.

 

About Kitty Wooley

 

 

kitty2.jpgKitty Wooley is a management and program analyst at the US Department of Education working in Washington DC.  Kitty spent 8 to 9 years in Federal Student Aid, as a college financial aid director at 3 colleges in Nebraska and California. One of the colleges was an aviation school across the bay from the San Francisco airport. This is where Kitty first encountered supply chain management because the school was always sourcing aircraft parts for its instructional program for mechanics.

 

Kitty currently does information technology investment management, which has nothing to do with the student aid job. In her free time Kitty produces events for continuing professional development primarily for federal employees or anyone else in the Washington DC area interesting in developing themselves and employees and leaders in their respective industries. Kitty fell into this government position as a financial aid director when her school closed in 1994 in California. It was a recession at that point. She finally landed and the US Department of Education where she was reviewing operations and making sure the money was going to students and that the program was managed properly.

 

The lessons Kitty has learned were very processed oriented. Other lessons were about knowledge management or creating one-off solutions for specific problems that no one has been able to deal with yet. She connects people across boundaries in order to get new things to happen which area better for the public they serve.

 

http://www.linkedin.com/in/kitty

 

In response to the recent LinkedIn discussion in response to the interview Command and control is a walking corpse that hasn't realized it's dead yet!, by Robin Cook…Motty Perel commented that the Chaordic System is useful in organizations where employees are interested in maximization of efficiency. These are Non-Profit organizations, learning organizations and maybe government organizations to some extent and in some places.

 

For the Chaotic System to be useful in For-Profit organizations though, one has to make sure employees and their employer have shared values. When management announces shared values and posts them on the wall, employees only joke about the stupidity of the management.

 

Today’s enterprise is so well equipped with modern gadgets that the workforce can easily increase productivity manifold. The great effort takes keeping the productivity down to corporate survival level, because all the employee needs is to keep his job. Excessive productivity is vigorously discouraged by peers and often by foremen as well. Take the word of an employee that held over 22 jobs in four countries. I never encountered anything different.

 

Hence, if an employer wants to introduce the Chaordic System, his first step should be to stop pocketing profit on his workforce’s labour. The employee is not a slave who could be bought body-soul-and labour for the wage. The wage is paid for coming to work. Then the employee invests his labour into the production process. This investment, just as the investment of the employer into means of production, is entitled to profit. Today this profit is pocketed by the employer. Hence the adversarial employee/employer relationship: the employer wants to make profit on labour, while the employee wants to invest less labour and get as much pay as he can get.

 

Where are the shared values? There are none.

 

According to Motty, the employee would become an entrepreneur at his work place. Instead of being paid just for the labor, the employee will be exposed to the market just like his employer. They will then become partners for maximization of productivity and profitability.

 

Today the employer is trying to get maximum productivity and profitability. The employee is paid only for his labor and does not make any profit on this labor. The employee is trying to keep the company alive, otherwise he will lose his job. He is not interested in maximization. If there are individuals who are interested in maximization, they are the most talented and how can produce the maximum profit for the company. They are approached by their peers who slow them down. The peers slow them down and if they don’t obey by putting such conditions pressuring them to comply or leave.

 

As a result, the employer is losing the best, most talented and eager employees.

 

We are living with inflation, high taxes, and the prospects of a depression which in Motty’s view is inevitable. We are not living in a society without taxes and with money printed that does not create inflation. If the government prints just enough money to be in step with productivity and with productivity growing very fast, the government would not need to collect taxes because there would already be enough money to sustain the government.

 

We would have a completely different life. There would be progress in every possible way, in Arts, Music, Literature, etc, just like it happened in the past when employment was introduced over 300 years ago. We currently don’t have music which is better than that created by Beethoven and others during that time period. We also don’t have literature with such great brilliance. All of these things started when in some places slavery and feudalism were replaced by capitalism and employment.

 

Capitalism and employment were a tremendous step forward from slavery and feudalism. We can see what happens now in third world countries where they still use slavery and feudalism. Their productivity and technology is low.

 

However, at the beginning of employment people were working in a manual fashion, meaning they worked with their hands only. Employees were working under the supervision of very strict supervisors who watched how they worked. The productivity actually depended on the ability of the person to produce. The employee would work at the maximum of his ability, otherwise he would be fired. He would obviously not have employment insurance and without a house or roof over his head. It was a horrible situation which resulted in maximum productivity at the time because they did not have machinery.

 

Then the employers started buying more sophisticated machinery and productivity began increasing. However, the expenses of the machinery, better housing at the factories etc. also started growing. At the beginning of employment labor costs were 80-90%. The other major expense was raw materials. As a result, the highest productivity of the time was negligible in comparison with today’s productivity and today’s ability of productivity, which is many times higher than actual productivity.

 

When a slave master was maintaining the life of a slave he could expect from the slave maximum loyalty, and diligence because he could just kill the slave if the slave didn’t comply. With employers you have a different situation, especially with employees who operate machinery. No matter how closely he is supervised, the worker can be as productive as he wants. No one can force the employee to double their productivity. If someone operates machinery all he can do is prevent the machine from breaking. Employees should make a market profit on his/her labor. Motty provides a simply mathematical formula for this in his book. If the employee is not deprived of the profit he produces on his labor and if he gets the full extent of the profit on his labor, then the employee will be in exactly the same situation as his employer.

 

Obviously, the employer will make much more money because he/she invests in all the means of production. In the past the expenses for labor and raw materials may be up to 80%. Currently, the expenses for labor are up to 20%! If the employer will make an agreement with the workers whereby the profit on labor and their wages will belong only to them, they will never agree to have up to 5% profit on their labor. They will push for more. They will utilize machinery in the best possible way. The machinery will benefit from this. The employer will benefit. The country will benefit.

 

To begin with they will make a profit on their labor, which is not 5%, which they currently produce for their employer. They will probably produce 5% or more very year. It will be a completely different level of well being in the country. The level of wealth will grow. The workers will be able to buy what they produce. Today we have overproduction, recessions and depressions because the workers and not the employers are the buyers of what is produced. The workers are more numerous and an employer who can buy 50 suits, buys only 3 to 5. The employee has one suit and would like to buy another 2. The employer can buy 500 cars, but only buys three. The employee has one car and wants to buy at least one more.

 

The economic problem in our society is that employees cannot buy what they produce. This is what creates over production. If the employees make a profit on their labor their income will grow so fast and will be so productive that they will be able to buy much more, which will eliminate or at least reduce economic depressions and recessions.

 

Another thing which is very painful today is that the employers are exporting jobs while we have unemployment in the country. With the new arrangement, which Motty calls ‘The Next Mode of Labor Utilization’, which is capitalism in the work place. The employee will be making a profit on his labor, just like his employer. In this situation, unemployment in the country will reach zero.

 

The productivity abroad is actually 2 times lower than in North America. However, because the wages abroad are 10 times lower employers continue to export jobs. When there are not enough people in the domestic market for 100% employment, then part of the labor will be to be outsourced overseas.

 

The more talented employees will contribute not only to the profitability of the employer but also to the profitability of his peers at work. However, today these people are ostracized. In the next mode of labor utilization these people will be respected and their wages will grow because their peers will press the employer to raise the talented employees’ wages because they will be afraid of losing the person to another employer, thus losing the profit. The relationship between the workers and the employer will be capitalist relationships. Everybody invests and tries to make maximum profit on his investment.

 

The economic activity will increase so much as result the government will have to print money to avoid deflation. There will be so much money needed for the extra economic activity that taxes will not be necessary. Today we have double taxation. One is income tax and the other is printing money by the government. It will be enough for the government to print money which will not cause inflation, but just avoid deflation. Social forces will force the government to stop taxation.

 

Income tax in the US started in 1915 and in Canada in 1947. The government was still there without taxes because the ratio between productivity and the buying ability of the population was much lower. The population could buy what they produced. Today the population cannot buy what it produces. This is what brings us recession, inflation and high taxes. This is all on the macro-level. On the micro-level inside the enterprise the majority of workers hate the workplace so much that they don’t even want to think about it on the weekends. With the change to the New Mode of Labor Utilization the workers will spend all of their time including weekends and vacations thinking about what they can come up with to raise productivity, especially the more talented workers. The motivation will not just be for money, but also they will gain respect from their peers for the fact that they raised productivity and profit for their peers as well. This will be a tremendous push for the talented workers to raise productivity.

 

The employer will make a profit on the means of production and the employee will make a profit on their labor. They will work together, not one against the other. Today we have an adversarial relationship between the employer and employees. This will disappear and they will work together in order to create as much profitability as possible, at the same level for the employers and workers.

 


Conclusion

 

The future eventually will be bright when we go to the next Mode of Labor Utilization. Capitalism will finally enter the work place. Motty believes this is inevitable. The situation is getting worse and productivity is increasingly stagnant. The workers hate their employers, instead of working together with them for the common benefit.

 

Motty’s book is titled ‘Smiling for Profit’. It can be purchased on Amazon.com. Motty’s website is http://profitonjob.com/ .

 

 

 

About Motty Perel

 

Motty.jpg

 

Motty spent 15 years to come up with his ideas and conclusions. After stumbling upon his discovery he went to the university and spent 2 years studying this topic, including industrial relations, human relations, etc. After verifying his theories with professors who had already been researching the topic, he started to promote his ideas. He first tried to promote the ideas at his job with the intention of using it within his department.

 

As a result, he was fired from a job in which he was extremely successful. The people working within Motty’s department were depressed. The problem was with president of the company, Motty’s boss. Motty wanted to allow people to make a profit on their labor and wages.

 

 

mottyperel@rogers.com

 

LinkedIn Profile

 

Joe Ralstin believes that cross-functional expertise is the beginning to end planning and execution of the distribution of a product starting from the back-end. He provides an example of how, in spite of having all of the best resources available, a lack of the overall understanding of beginning to end expertise resulted in the failure a major project. He then explains how, during his last job, he was able to examine the process as it existed and then use the beginning to end review to create efficiencies resulting in an annual savings of $353,000 in the first year.

 

What does cross functional expertise in the supply chain mean to you?

 

Cross functional expertise is possessing the experience that creates the ability to drive efficiency of the process by viewing the overall process, starting at the back end.  The process from a general perspective can be broken into 3 main segments:

 

1. Pre-production

2. Production

3. Post production

 

Having an understanding of all of these segments and how they interact can allow for the development of process efficiency.  However, the view should always start under the process. The following is an example of the impact of not starting from the back end:

 

“ I was listening to a radio broadcast about how the Bill and Melinda Gates Foundation was working on a project to help alleviate AIDS in third world countries. They researched medicines that would be the most effective and decided on the medicines that once produced would require refrigeration.

 

The pharmaceutical company cranked up operations. They manufactured medicine. They packaged it in cartons, loaded pallets, loaded trucks. The shipments reached a place where the roads ended and found that the final leg of the transportation to the end user would have to be made by pack mule. Since the medicine was not packaged to be distributed in small coolers on the back of pack mules, the final leg of the transportation never happened and the project failed.

 

The project, even though it was sufficiently funded, lacked the foresight to start the planning from the back end of the process. I am sure there is a lesson to learn from this.”

 

Could you give me a real life example of how cross-functional expertise can affect the beginning to end overview leading to efficiencies in the process?

 

Joe was hired by a publisher who produced guides for students preparing for college. The publisher produced 23 different titles. There was a total print quantity of 350,000 copies annually. The titles were segmented into 3 primary groups. 16 were undergraduate, 3 were graduate, and 4 were international. Joe decided to start with the largest group of undergraduate which represented the majority of the print.  He did an overall view of the current procedures which showed that each title was printed, packaged and sent to their fulfillment distribution center. The distribution lists for each title was sent to the fulfillment vendor where the guide would be unpacked, counted, re-packed according to the quantities listed in the distribution list. The packages were then sent via a ground package carrier to the final destination.

 

Looking at each segment individually, each part of the process was being completed somewhat adequately based on requirements. By using his backend needs to drive front end methodology, Joe started to look at the destination criteria first. By reviewing the 60 different distribution lists he discovered there was a lot of duplication. Different titles had common destinations. The next step was to combine the 16 lists into one master database. This was the first critical step in reducing duplication of effort.

 

The next focus was on the quality per destination. The quality seemed to vary quite a bit by destination. Joe scheduled a meeting to discuss this with the student marketing manager to get a better understanding of the rationale behind the problems. It turned out that the quantities were assigned arbitrarily by the marketing manager.

 

After some discussion, Joe convinced the marketing manager to standardize distribution quantity. This resulted in roughly 80% of the print being packaged to better meet the distribution. The next step was to discuss having the products packaged in 20 to 25 per carton to better meet the distribution requirements.

 

The first reaction was that this would increase the packaging costs. This is one of the hurdles of developing supply chain efficiencies, convincing individual parts of the process to agree to increase their costs. Joe had the advantage of working with someone who could understand the concept of overall savings and that person agreed.

 

They reduced the duplication within the distribution list and coordinated the packaging quantity to better meet the distribution requirements, reducing fulfillment labor and packaging costs. By reducing the quantity per carton for the printer they actually increased the number of cartons that would ship. This would normally increase the transportation costs. However, by reducing the quantity per carton they brought the carton weight below the 15 pound maximum for bound printed matter. By shifting the transportation from one of the major carriers to the postal service for bound printed matter, they were able to save a substantial amount in transportation costs.

 

The end result in spending a little extra in packaging at the printer and combining distribution lists was a saving in fulfillment, labor, packaging and transportation costs. These efforts resulted in savings of about $353,000 over the previous year’s spend.

 

There is not one magic formula that will work in all applications. However, with some understanding of the overall process, and by starting at the back end, you should be able to use your cross-functional experience to implement efficiencies in your process.

 

About Joe Ralstin

 

Joeralstin.jpg

 

Joe has been in and around distribution, fulfillment and transportation for the majority of his life, roughly going back 30-35 years. He started in warehousing which lead into distribution, small package, truckload LTL. He got into the mailing industry in the mid 1980s where he got a taste of high volume processing and distribution working for a high volume mailer. This led into parcel consolidation and distribution. Joe has touched on a lot of different types of processes all tied around manufacturing production and distribution.

 

LinkedIn Profile

 

Jeff Prillaman considers himself to be a social entrepreneur. He is a performing operatic tenor who did his masters degree at the Julliard School and then continued on into the business world where he worked for major financials at a Fortune 200 financial. He now works for a top 5 tech company. Jeff’s passion is the intersection of business and the arts. He is the co-founder, along with his wife, of a community based music school in the Richmond Virginia region called the De Capo Institute where they are attempting to innovate how arts advocacy is done both at an educational and performance level.

 

Jeff thinks there is a ton of overlap between the business world and performing arts and wishes more people could see it

 

 

The intersection of arts and business

 

There are a lot of people who think that business and arts are not related. In the book Atlas Shrugged there is a great quote about one of the characters who is a composer Richard Halley which says…” there is more tragic a fool than the business man who doesn’t know he is an exponent of man’s highest creative spirit. It is the artist who thinks that the business man is his enemy.”

 

Jeff thinks we tend to end up in a culture these days that indicts business as not being creative or innovative when the opposite is correct. Entrepreneurial spirit, flexibility, the ability to have relationships with your customers, these are all key concepts for successful businesses.

In the arts world Jeff sees that we are all doing the same thing, delivering products. The arts world seeks and emotional relationships driven connection with an audience, whether it is through a painting, musical performance, etc.

 

The business world seeks a transactional value exchange with the customer. The reality of course is that neither can exist without the other. This overlap creates an opportunity where artists can serve as outstanding businessmen and businessmen can be tremendous artists.  Corporate buzz words like ‘creativity’ and ‘innovation’, are frequently used. However, you need to think about what exactly this means.

 

Innovation is basically a new method, product or idea. It is not just about creating. It can be about improving or re-thinking, finding a new application for an old tool, etc. This is exactly what a musician does. Musicians sometimes create their own music and may work with composers or actually be composers.

 

However, a lot of times they are taking an existing construct, re-using imagination and original ideas and bringing a part of themselves to it to explore the opportunities and the applications of that music in reaching an audience. A really successful musician reaches an audience that is willing to pay for it.

 

Examples

 

Jeff is an example of a performing artist working in the business world. He has a 20 year career working in the business world while at the same time performing. Jeff thinks many would be stunned to see how many musicians are out there, particularly in the IT space. Jeff recently saw a segment on MSNBC a few days ago where one of the astronauts was playing a flute. She was told she could bring five things and she brought her flutes with her. It is interesting to see someone really exceptional at what they do who is also a musician and avid artist.

 

Recommendations for intersecting arts into business

 

You must be willing to try and fail. At the De Capo Institute they use a process called to Capo Way which is about passion, discipline and application.

If you are going to be successful at anything you have to merge passion and discipline with application and results.

 

Most business people get the idea that we need results. They need a gateway and opportunity. Jeff encourages them to engage with their kids, their families, their churches etc. It starts with finding your passion. It may be painting, singing, playing an instrument, etc. If you ask a lot of people what one of the hallmark elements of their school and career and what they really liked, they may say something such as “I liked playing in the band or singing in choirs”. If you ask them why they don’t do that now their reply is that they don’t have time.

 

If you are talking to a business person you can say to that person…”with all due respect sir, you have time for what you choose to have time for. If you believe that it has value to you then why wouldn’t you do it?” This creates an intellectual exercise for them where they say…”huh..that actually is interesting to me”.

 

At De Capo they offer group collaborative models where you bring people together. It is so reinforcing so that people are able to make music together with one another and get better. A lot of people will just say they are not good enough. This just isn’t true.

 

You don’t have to be a Paparati, a Michael Jackson or Elton John to make music and enjoy making music. It has value because of the process mentioned previously. When you are learning this discipline, the passion creates creativity in your thinking models. You can bring those same “tools” into your business world. When you solve business problems with people, process, perspective and the application of tools and resources whether money, technology etc ...this is how you solve business problems.

This is the same way you create music in the arts.

 

About Jeff Prillaman

 

JeffPrilman.jpg

 

Social Entrepreneur and Executive Director of De Capo - Virginia

 

Jeff describes himself as a social entrepreneur. To learn more about him both as an artist and leader, review his personal site at http://web.me.com/jeffp and a brief review of DaCapova at http://dacapova.org . DaCapo is an example of a chaordic organization... built from the ground up.

 

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On Twitter: @vatenor

On YouTube: http://youtube.com/vatenor

Blog: Virginia Tenor: http://vatenor.blogspot.com

The best organizations are conversing organizations. If they are conversing organizations they become learning organizations because out of the conversations emerge new insights regarding opportunities and threats in the external environment. There is a better understanding of their competencies and potential for competitive advantage. There is better collaboration within and without with customers and suppliers.

 

 

What are knowledge cafes?

 

Knowledge cafes are a great method to create conversations on questions which matter in large groups. This is very important because we know that people support what they help create. If we want to engage many people and create solutions to complex problems and if we want multiple perspectives, then we want many people involved. If you just put many people in a big room and try to have a conversation, it won’t be a real dialogue where people can intimately explore the space of possibilities, and learn together to come up with different alternatives, choose them etc.

 

The inspiration of knowledge cafes is the coffee shop. The coffee shop for example, at the end of the 19th century in Vienna, Austria people would come together – scientists, writers, etc would come together to have conversations with a cup of coffee. You don’t go to a coffee shop for the coffee but to have good conversations.

 

In the early 1990s Edna became involved with a group of intellectual capital entrepreneurs. The most important capital in organizations is no longer tangible, but intangible. Intangible capital is what we call intellectual capital. They started to look into the issues of knowledge management, innovation management, and started to talk about human capital, innovation capital, etc. They were a very small group of about 20 to 30 people from all over the world.

 

In one of the meetings the idea was to move into small groups of 4 or 5 people to look at the same issue, but in little groups. They would ask the same questions and then move from one table to the next to weave the solutions between the tables. This creates the conversation of the large group and slowly allows the understanding to emerge and solutions to evolve.

 

The first moment Edna was introduced to the method, she had to give credit to Dr. Charles Savage who was the first one to move in this direction. Everyone in the original group knew that knowledge cafes create conversations in big organizations with big groups. The biggest group which Edna organized was 800 people. Everyone from the company got together in one big hall. Everyone was sitting around small tables. Edna was the hostess of the big conversation. She explained the rules of the knowledge café and presented the main question which everyone was to discuss. She took the time to navigate the conversations, etc.

 

The knowledge cafes are always successful because people are very hungry for such conversations. They are very willing to contribute. It always works like a miracle. The knowledge cafes are done in all processes and all organizations. The ideas which emerge out of these large conversations become the alternative which a smaller executive or project team can use as a basis for future decision making. Everyone remembers when the decisions are presented that they had an opportunity to have an impact on them. The decisions and strategies emerge out of the original knowledge cafes. Since they had the opportunity to be involved they can happily join in the implementation.

 

Creating better teamwork through dialogue

 

Everyone speaks about organizational structure. Edna recently had a client who was a CEO of a company. She is challenged with the question of how to organize the executive team in a better way. Edna suggested investing some time to get to know the people through dialogue to get an understanding of the work and the organization. Then they had a dialogue where they would agree on the challenges they would have to meet, their goals to achieve. They then create a commitment to the goals. Conversations are then held to see the best way to divide the work amongst them. Everyone had the opportunity to voice their views. Out of these conversations the organizational structure is being agreed upon, where the fine tuning isn’t obvious. It emerges out of the conversation.

 

Conclusion

 

Edna invites anyone who is interested to visit her website . She hopes through the website new ideas and collaborations will emerge. Their company is currently involved in 2 new things:

 

1. Edna co-authored with a client a book titled ‘Complete Guide to Knowledge Management’ It is about how to leverage your organizational intellectual capital. The stories of knowledge cafes and innovation are part of this book.

 

2. Edna and her team has won the bid for the International 4th Knowledge Cities World Summit which will be hosted in Israel in November.  Edna will be the chair of the local committee. A professor from NYU, who is considered to be an international expert on measuring intangibles, will be the global chair.

 

About Edna Pasher

 

Edna.jpg

 

Edna Pasher is the owner of a management consulting firm called Edna Pasher PhD & Associates. The firm specializes in strategic renewal of organizations. They help organizations re-invent themselves. They also focus on innovation management because without innovation there is no renewal. The company also believes innovation emerges out of a conversation. The work they do includes ‘knowledge cafes’ and ‘strategic processes’ and they design all kinds of dialogue within organizations, creating better team work in supply chains through dialogue. Finally, they believe the way to renew is to constantly learn both at the level of the individual and of the organization. Learning occurs in dialogue.

 

Edna has a PhD in Communications from NYU from a very special program called Media Ecology. This was a very pioneering program developed in the 1970s which looked at the interface between technology and society.  Edna considers herself to be a media ecologist, which means she is fascinated with the potential of technology to do both good and bad for people and organizations.

 

In 1978 Edna took this academic background and turned it into practice. She started a company specializing in management consulting using what she knew from research to build the most important element of organizations, namely conversations. Organizations are people who define what they need to do and who does what, in what process, both alone and together, all of which is an emergent process of conversation.

 

Why should one learn innovation? Can innovation be learned?

 

About 8 years ago Praveen recognized we are approaching the knowledge age with mass customization. As a result, we need to be more innovative and personalize things such as the sales and purchasing process. Innovation will become a business process where you will have a Chief Innovation Officer, Innovation managers, and innovation professionals. Praveen saw a need to develop the science and engineering of innovation so that it can be learned and made more efficient, productive and predictable.

 

As a result, he benchmarked the best innovators of the last century and beyond and developed a system to make innovation a learnable skill.

 

Why should one learn about innovation science?

 

Why should one innovate? The simple answer is that the basic purpose of innovation is growth – personal, financial and professional. Businesses today are in much need of growth, rather than making a profit. The result of our executives focusing on profit is the use of improvement techniques and cost cutting methods. However, this is not sustainable. Executives must focus on sustaining profitable growth. This will require innovation.


How do you teach people to be more innovative?

 

Creativity is a skill which we all possess and are gifted with. However, somehow we do not use it. When taking the classes we learn differences between creativity, invention and innovation.

 

Creativity is an idea. Invention is making it once. Innovation is making it many times so that people can use it over and over and create more value.

 

Innovation is like applied creativity. Praveen’s curriculum builds on basic skills in creativity and innovation process. He has learned that many R&D driven innovations are failures. The success rate of R&D innovation is roughly 5 to 10%. Praveen and his team recognize that the innovation process has a long way to go before it can be called efficient. They developed a methodology called TEDOC. (Target Explore Develop Optimize and Commercialize) He teaches the methodology and basic concepts. They then have projects where students learn to practice in the classroom.

 

What is Brinnovation™?

 

Brinnovation™ is an overall framework for innovation. In order to develop this Praveen and his team first identified what was unknown about the innovation process, science or system. All of the answers are bundled into a framework called Breakthrough Innovation, abbreviated as Brinnovation™.

 

How should an organization start its innovation initiative?

 

There are two ways you can deploy innovation. The first is internally to improve profitability. The second is externally by developing new products and services to increase revenue. In other words, innovation can help to improve the bottom line as well as the top line. Using innovation to improve the top line is the major objective of leaders. Once the leadership focuses on profitable growth it will require the innovation process. This will lead to action items and a strategy by executives focused on innovation.

 

How do your methods differ from other innovation methods?

 

There are many methods, but most of the methods such as Open Innovation, Crowd Sourcing, Stage Gate, etc. are all contingent upon searching for innovation. When you search for innovation the chances of finding it are one in a million. What Praveen and his team have done is instead is to help people create innovative solutions rapidly. They have received feedback whereby a process which may have previously taken 1.5 years has been done in 3 days, 6 months, over a weekend, etc. Praveen believes their process of creating innovative solutions is an order of magnitude faster than conventional methods of innovation.

 

 

How do you measure or ensure return on innovation?

 

The primary measure of the return on innovation or the success of innovation really is revenue growth and profitable growth. If a company is growing revenue it means that they are selling more of their innovative solutions. If innovation is managed well it then becomes productive and distributes to the bottom line as well.

 

Three simple measures for innovation are:

 

1. Leadership. The CEO drives innovation for the organization.

3. Inspiring people to be intellectually engaged and contributing ideas.

4. Revenue

 

With these3 you can have very predictable measures of innovation.

 

About Praveen Gupta

 

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Praveen Gupta is an electrical engineer who used to work at Motorolla and AT&T Bell Labs. For the last 25 years he has been doing management consulting. He is an entrepreneur who launched a dot.com business. After its demise, he went back to consulting and starting questioning management principles in our modern age. As a result he developed principles including one for innovation. He teaches innovation at the University of Illinois – Chicago. The course is offered at a few other universities and institutions around the country.

 

Praveen’s current passion is innovation, teaching for developing innovation competency in knowledge economy, and deploying at corporations for creating growth opportunities. Creating new jobs requires more people to become innovators and entrepreneurs.

 

As a fact of matter, Praveen believes his team is the only one or the first ones who believe in science and engineering of innovation. They developed a framework that is teachable and it is being taught at multiple universities and Junior Colleges.

 

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