The 10 Essential Elements for Integrating the EnterpriSe
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The 10 Essential Elements for Integrating the Enterprise
In this episode, we will have none other than Tony Benedict. A C-level operating executive who has led step-change results in manufacturing-based companies in industries ranging from pharmaceuticals, semiconductors to healthcare, acknowledged for his exceptional ability to apply strategic principles and quickly grasped and totally new industries, presently the partner of Omnicom partners LLC, the interim CFO management and strategy operations advisory firm and a member of the National Association of Corporate Directors is the governance fellow.
You could characterize him as a chronic problem solver that is drawn to the types of challenges where rampant complexity requires simplification, with extensive multi-industry experience comes an outsider’s perspective on how growth can be achieved through new products and services or through acquisitions that leverage new technologies.
A bilingual Executive who can straddle the business and IT worlds to help translate and monetize technology and transformation for companies, building teams and mentoring future leaders is an essential capability that tends to be overlooked yet is part of my DNA to facilitate change that creates value & growth in these disruptive times. Bringing forward-thinking ideas honed over 20 years of global experience and leadership across the High Tech, Manufacturing, Life Sciences, and Healthcare industries.
Let us get to know more about Tony Benedict’s experiences and achievements and see how he became the man he is right now.
[00:00:00] Welcome to the business transformation podcast. I'm your host Heath Gascoigne. This is a show where I cut through all the hype and noise and get to the facts of what actually is business transformation. What is required, how to, and how not to do it. I've been talking to industry experts and professionals to share their stories, strategies, and insights to help you start to turn around or grow your business transformation
[00:00:26] By the end of this podcast, we have some practical tips to use to make your business transformation a success, whether you're just at the start of your journey or midway through, I hope you enjoy.
[00:00:41] Welcome ladies and gentlemen, my name is Heath Gascoigne I'm the host of the business transformation podcast. This is the show for business transformation who are part business strategists, part business designers, part collaborators, and part negotiators who moved from just design includes oversight of implementation and [00:01:00] transformation.
[00:01:01] This includes stakeholder management or coordination and negotiation. If you have worked in strategy, development and implementation, then you work to ensure that the strategy is aligned to the business design and. Then you're probably a business transmitter. This is the show where we speak to industry experts and professionals to share their stories, strategies, and insights to help you start, turn around and grow your business transformation.
[00:01:25] And this episode is exactly what we're here. We are speaking to Tony Benedick prison of the ABP and M international association of business process management professionals, international, among many other titles and hats at Tony's Wiz. Tony is a C-level operating executive who has led step change results in manufacturing base companies and industries ranging from pharmaceuticals, semiconductors to healthcare.
[00:01:49] He's acknowledged for his exceptional ability to apply strategic principles and quickly grasp entirely new industries. He has guided global fortune 500 companies [00:02:00] for 50 companies rather, from Blackstone SmithKline to Intel. He is presently the partner of Omnicon partners, LLC. The interim seek so management and strategy operations advisory firm, and a member of the national association of corporate directors is the governance fellow.
[00:02:18] Tony has served on the board of directors for the eight BPMNP P since 2003. He has held numerous board positions over the last 17 years, including VP relationships, VP marketing, operations, finance, and served as the president of AP MP since 2009, he was part of the original education team to develop the Nine knowledge areas of the BP mean a B P M C book version one since X exception and up into, and including vision for not only is Tony qualified.
[00:02:51] He's also holds his MBA in finance and operations, a University of Pittsburg, bachelor of science, psychobiology certified and planning and
[00:03:00] inventory management by the association of supply chain management, a certified business process leader by the association of business process management professionals and certified business process professional by the association of business process management professionals, Tony, it is an honor and a privilege to have you on the show.
[00:03:19] Thank you for your time. Now let's say it a little agenda to keep us on track. Is that experience and background that you have? We could literally talk for hours and I wouldn't let you stop the night. This night is we'll probably go down as a master class in the business process management. So to, set us off on the right foot, see if we can stick to a rough agenda, because if we can cover of
[00:03:46] three types of transformation, cause I'm sure you've seen them all. The elements that you see as critical in integrating the organization and why they're important and you meet it for successful there, that you've
[00:04:00] used this as is successfully lead those transformations. So before we start there, Tony at the very first, but there's, you've got this amazing background experience, but we did it all start.
[00:04:14] I wasn't expecting you to ask that. Thanks for having me. I, it all started back when I was working at Intel back in, 1997. And, I was there about two years and basically, got involved in, the operational side of the business, factory operations assembly test operations, which is all process, right?
[00:04:49] If you take a Silicon chip, you put it on a, what's called a substrate, you assemble it, you fuse it, you package it and then you ship it to, well, it [00:05:00] goes to a distribution center, then you ship it to a customer. And we were actually implementing a SAP ERP and we had to re-engineer all of our processes because they were horrible.
[00:05:12] And so at Intel, they have a concept called copy exactly. Which basically, you and I, and the BPM where I'll think of it as standardization. Right? So, copy exactly is basically every factory process is the same identical process across all the factories. If you have five factories, 10-25 factories, you literally will do the same process at all of them.
[00:05:47] And so, that really kinda got me really interested in business process re-engineering and then business process management as an [00:06:00] acronym and as a concept. I was just starting out back then. Yep. So a lot of books, you know, BPM the third way from Peter finger. , as well as some of the conferences that were put on by, Gartner, Forrester, et cetera.
[00:06:18] And eventually I was put in a position where I had to really manage a group of BPM professionals and was looking to train my folks as well as myself on how to do all this stuff. Right. So I went to a Gartner conference. I met the president of ABP MP and said, Hey You guys have a body of knowledge.
[00:06:48] Did he have any kind of training? I mean, I just took over a group and I want to get my people spun up. He said, no, but why don't you join our organization? And we'll put a body of knowledge [00:07:00] together. That was 2003. Yeah. So six years later we launched version one. We put it out for feedback and all that feedback was incorporated into version two.
[00:07:14] And we, we published, we developed the first certification, which has CBPP. And the rest is history. We're at version four now. We have two soon to be three certifications. And, I've been part of the whole process from the very beginning, and coauthor of all the bodies of knowledge. It's not just me.
[00:07:37] It's, there's a minimum of at least 20 people. And then we went global in 2009 and we brought in all of Europe, we brought in south America. And so you can imagine how long it takes to collaborate
[00:07:59] [00:08:00] because everybody has an opinion. Yes. And so getting people to focus on common practices is painful, but once you do it, you end up with a body of knowledge that says, Hey, 70% of the time, if you do this, you will be successful. And so that's what the body of knowledge is. It's I hate to, I hate the concept best practices.
[00:08:26] They're they're common practices that have been proven to be successful 70%. Or more of the time. So if it, if it hasn't proven to be successful, at least 70%, it's not in the body of knowledge. So you get a lot of people that say, Hey, well, I do this and I'm successful. Well, that's just you. Right. And so it's like, yeah, it's like a science experiment.
[00:08:54] Right. If somebody else could use your methodology and be successful. [00:09:00] Now, now we're talking about something, right? Yeah. Yeah. So, okay. So you you are literally out the pioneer, there's the front of the first co-author from the first version one, two, and currently, and still involved in it. And yeah, our, our original president was part of that Brett Champlin.
[00:09:21] He actually passed away. Yeah, Mo gosh, I I'm embarrassed, but last year and then Peter finger passed away this year. So some of the people that were my mentors and influencers passed away, but they leave a legacy. Yes. Oh yeah. Nice work. Okay. So you, you saw for your own experience doing, looking at process of process improvement, and then you saw, wait a minute, there's a bit of a science to this.
[00:09:51] There's a bit of a, maybe a, a structure or a defined process and thought, wait a minute. You and in my June, cause the different look for [00:10:00] how, how can, is there a industry adopted process? And then it's how you approach the then Sure. Well, and as you can imagine you learn more by doing right.
[00:10:18] You know, you can read as many books as you want and say, well, that makes sense. And you know, that, that sounds about right. But until you do it you can't really prove it, right? So the more you do, the more you do what I would call full business transformation, the better you will become at it. Right.
[00:10:40] And so I've done it enough to know what works and what doesn't. I can't sit here and tell you that every company is. That runs into problems. We'll have the same problem. There's common themes. Yep. So when you go into a situation, you have to assess, you know, what, what are they really doing wrong here besides everything, [00:11:00] right?
[00:11:01] I mean, you can't, you can't go in and make a list of 150 things they're doing wrong. You have to say, what, what are you really trying to accomplish? And based on what you're trying to accomplish, what is it you're doing? And do you have the right skill sets, you know, et cetera, et cetera. So, yep. So, so learning by doing, I'm still learning by doing, even though I've been doing this for 30 years.
[00:11:25] Yeah. Well this is it. The like yeah, the day you die is that they used. That's true. I truly believe that. Yeah. My father didn't stuff does German to me, but it's true. Yeah, absolutely. Okay. So we talked about full transformation, so it was all talk about the, the, the, the, the definition of transformation or business transformation, because there is I think it's like agile and there's many agile means different things to different people.
[00:11:57] And then, because it means different things. They apply it in different [00:12:00] way, or they save like agile is currently, why was the client I'm talking to or working with right now? They'll say some part of the business to say, agile is a excuse, not to do certain things. And those things are documentation, or, and they'll say, but now it gives us an excuse to do other things.
[00:12:18] Cutting out steps. So, so yeah. So in business transformation you've got different degrees or definitions of different types of transmissions. Sure. So back in 2016 Harvard business review, there was a great article in there that identified three types of transformation. And so that's the definition we use in the body of knowledge.
[00:12:43] And the three types are, there's an operational transformation. There's, what's called an operational model transformation and there's a strategic type. So I'll give you examples of all three. So an [00:13:00] operational transformation, it's basically a, what you're doing today. But you're, you're going to try to do it better, faster, cheaper, you know, et cetera.
[00:13:11] And many companies that say they're doing digital transformation are really trying to digitize what they do today without any improvement. So you tend to see a high failure rate, right? Cause if you, if you try to automate something that's performing poorly, it's, it's going to just do it faster. So, so then there's the operational model and you know, a great way to explain that is if you look at Netflix, when Netflix first came out they were competing with blockbuster, right? Blockbuster had. Stores, you went into the store, you picked out a video, you took it home, and then you brought it back within three days and Netflix did it by mail.
[00:13:59] Right? [00:14:00] You order online, they mail it to you. You watch it, get it back in three days, you don't get charged a late fee. Well, what did they do? Well, they changed their whole operational model and now they eliminated DVD and while they still do a mail order, but it's probably less than 20% of their business.
[00:14:22] They, you literally order the movie online and they stream it to whatever device you want. Yep. So the carrying inventory, warehousing distribution costs, you know, et cetera. So now it's really about. You know uptime on their data center and bandwidth for you, right? So that's it a complete operational model transformation from physical distribution of desk to a streaming over, you know fiber optic lines, right.
[00:14:53] From a physical to virtual model. Exactly. And then there's this strategic where [00:15:00] you literally change the essence of your organization. A great example. There is Amazon, you know, they went from being an online retailer while they went from an online bookseller to an online retail store like Walmart, right.
[00:15:18] To now they have this whole other business where they have Amazon web services. So they're literally a cloud computing company. Right. And they literally. Rent out their data center to companies like, you know, the, our federal government is one, one of their biggest customers that was a completely new business.
[00:15:41] And they changed the whole idea of what Amazon really is. Right. So that was very strategic was technology. Well, let me, let me go back. If you look at all three types, technology is used as an enabler and [00:16:00] absolutely it is, it is not the reason why you're, you're doing the transformation. Right. You have to actually say, what are we going to do here?
[00:16:12] Right. And so we use those three definitions. And then when you say digital transformation, it's how you apply. Various technologies. There's loads of technologies out there. It's how you apply it to each type of business transformation, the operational, the operational model and the strategic. And so and you could see that there, there could be a failure rate for any one of those types.
[00:16:45] Right? You could fail at the operational transformation. You could try to transform your operational model and completely fail. Right. And then you could try to start a whole new business like Amazon did and [00:17:00] completely fail. Right. And so it's really focusing on what, and, and, you know, we, I, I bring in what I call the 10 elements of integrating the enterprise.
[00:17:16] So you have to say what are those elements? And these are actually in the order in which I approach it. And what is recommended or what will be recommended for the highest level of certification, which is the certified business process leader. Number one is strategy. What is your strategy? Are you competitive?
[00:17:43] Right. We won't get into a whole treaty treaties on strategy, but you kind of know what it is. There's a whole analysis that you do, then you have to go to customer experience and say, what does that look like? Is there, is [00:18:00] there one customer journey? Are there many customer journeys? Are you, are you a product company?
[00:18:06] Are you a service company? Are you both, what does that look like for, for the customer experience? And then you look at number three, which is business performance. How are we performing in the eyes of the customer?
[00:18:23] Right? Is our performance meeting customer expectations. That's one dimension. The other dimension is, are we doing it better than all of our competitors in that space? So there's the customer happy and are we doing it? So our competitor. Can't keep up with us. Right? So that's business performance and then number four, number five, number four is organizational structure.
[00:18:54] And number five is human capital. So that when you look at [00:19:00] those two, those are, those are the people's side, right? So once you figure out strategy and customer experience and performance, now you have to focus on people. So the, the organizational structure is roles, responsibilities. Do you have the right incentives in place to incentivize the right behaviors to perform?
[00:19:24] And then the human capital is, do we have the right competencies skills? Do we have enough capacity, right? Do we have enough PTO? And back to the behaviors, are we incentivizing the right behaviors? And then number six and number seven are like two heads of the same. It's like heads and tails of the same coin.
[00:19:46] It's a business, it's a business process and it's data or information. Right? So what processes are really driving the performance to the customer and what information do we [00:20:00] need to gain customer insight to satisfy that customer? And then eight and nine is really you could call it your technology, but it's also you're supporting infrastructure, right?
[00:20:14] A data center is as a facility right first, and then what's in, it is equipment. And how many you have our locations. And then the enabling technologies are your software development capabilities, your software applications, your data warehouses, et cetera. It's all the components that go into that data center.
[00:20:41] And number 10 is your policy and rules, right? Regulations. Are you constrained by the government? Do you have your own policies that drive conformance and compliance to regulations and then there's your business rules? Right? If, if you're bringing on new customer, do you do a credit check?[00:21:00]
[00:21:00] Right? As a, as an example. So strategy, customer experience, business performance, organizational structure, human capital business process information. Supporting infrastructure, enabling technologies, policies, and rules. That's the order in which you should approach transformation. There's, there's one important thing I will say about process and information.
[00:21:28] I think it's very important. One is that take two and we call them value streams. So there's, there's a couple of, there's a couple of schools of thought out there that says, well, business processes, workflow, and business architecture is capabilities and it's higher level and blah, blah, blah. Right?
[00:21:50] Yep. We don't view it that way. Business architecture and business process are the same. It's a question of the level of detail. [00:22:00] There's this architecture as a higher level of detail of value stream, for example, ordered a cat. Right or, or order fulfillment, you break it down into you, take an order. And when do you get paid?
[00:22:15] Right? Procure, procure to pay or requisition to payments. You need to buy something from a supplier. You requisition, they go through the whole process with you to deliver the product, the invoice you, then you pay them. Those are major cross-functional processes that drive value order a cash drives, customer satisfaction, order fulfillment and revenue.
[00:22:46] And then procure to pay is the expense side. So order to cash brings money in procure to pay, sends money out. So those are the two things, anybody, especially private [00:23:00] equity people or your, or chief financial officer, and even your CEO, where's the money coming in and where's the money going out and are we making, are we making money?
[00:23:10] Right? So when you look at the full cross-functional nature of those two processes, true transformation looks at those major cross-functional processes, not just a little work. Hey, you know, the, the supplier sent us an invoice and one of the line items on the PO was wrong. Let's fix it. That's not transformation.
[00:23:37] Yeah, right. That's continuous improvement. We're going to fix something within that major cross-functional process. So that's a good point. You make there about continuous improvement. I think maybe a lot of maybe clients they think that doing transformation or the want to do transformation, but they end up doing a [00:24:00] continuous improvement of what they currently got.
[00:24:02] Right. So, so think of that, the first two types of transformation, the operational, which is, Hey, here's what we're doing, but are we really doing it? Well, well, don't know we need to, we need to improve it. Or the operational model take Netflix. Right? So the operational model that take an order, ship, a DVD track.
[00:24:29] It. Let the customer watch the movie and then have them mail it back. That that major cross-functional process is done a certain way in the physical world. But Netflix had to go and literally redesign what that would look like in a virtual world, because they're not shipping anything. Right. They're going to bill you for streaming a movie that you chose.
[00:24:56] Yep. So that whole cross-functional [00:25:00] process is very different in a streaming model than it is in a physical ship, the DVD model. And then on the strategic side with Amazon, they had to completely design from scratch what Amazon web services is going to look like from the perspective of a customer. Right.
[00:25:26] Hey, we, we, we don't, we can't afford to build our own data center, but we need a data center for what we do. Hey, Amazon, how can you help us? So they literally designed that from the beginning. And I just, I was talking to a friend of mine a couple of days ago. And I know it's expensive, but he told me to build a data center today.
[00:25:49] It's about $750 million. Yeah. So how many people can afford to do that? Or how many, how many companies, right. [00:26:00] Unless you're probably doing about 5 billion a year in revenue, you can't afford it. Right. So, so the idea of data center as a service was very innovative and very strategic for Amazon. So That, that kind of ties your 10 elements together with the types of transformation, because if you really think about it and let's take one example, that's going on right now in the world, right?
[00:26:33] So if you're a car manufacturer, if you're a cell phone manufacturer, if you're a computer manufacturer and you need a semiconductor chips, guess what? There's a shortage, right? Across the board. And I don't care if you're Samsung or Intel or apple or whomever, you have a hard problem getting chips.
[00:26:58] Right? So [00:27:00] take the 10 elements. Let's just talk through it a little bit here. The first thing is there's a capacity problem. You need to build more factories in order to make more chips to manage that the mountains. So that's, that's supporting infrastructure. That's literally facilities and locations, right.
[00:27:20] And equipment capital equipment that actually makes the chip. Okay. So you're going to build more factories. Guess what you need to hire more people that know how to operate a factory that's human capital as organizational structure. The other thing is. You need to know if you're gonna do the Intel way, which is copy exactly where every factory will have the same exact processes or every factory is going to be different.
[00:27:48] Again, depends on who you are. Right. I could tell you TSMC liked what app, what liked, what Intel did, and they kind of do the same thing, right? So there's [00:28:00] a business process and the data and you know, where you put that factory is going to be based on tax incentives, government regulations, et cetera.
[00:28:12] So there's policies and rules, right? So then and then obviously you have your, your data center. You're going to be running ERP systems, your shop floor control, production systems, you know, et cetera, et cetera. So, so you'll look at all that. Yep. All of that has to be integrated in order to build more capacity, to make more chips, to satisfy customer demand for I-phones for cars, for everything that makes a chip compute computers.
[00:28:48] Right? So, so Dell and HP are, are in the same kind of situation as IBM apple GE general motors Toyota, right? [00:29:00] They don't have chips. So you have to bring all that together, right? That's a full building, a whole new set of factory capacity is is a major transformation. Now, if you've done it before you have a proven playbook and a framework to do it.
[00:29:21] And so that's a, that's a life cycle framework, right? When we, when we build a new factory, These are all the things we need to do, strategically plan for it, to design it, to build it, to test it, to implement it and then run it. Right. And so that's a life cycle framework and we have, we have a BPM life cycle framework as well.
[00:29:47] That takes all 10 elements and aligns them with a major focus on strategic Alliance. And architecting, you're designing for change, right? You stay here in [00:30:00] my language there. I could take them for change. They, it is architecting for change. What I quake great court. That one is, I could say thing for change.
[00:30:09] So tell me when you go to is for the team, the 10 elements and you go see a client for the first time, and they're saying, well, how do you start those conversations with them? And they go, we want to change words and efficient what we do today. We're losing market. We want to go into a new, sick, then your industry, or to make some new products.
[00:30:25] We see our competitors doing this. And how do you, you started that conversation. Was this, this between you and I, we, we understand this language, but to the client that this is so foreign to them. And probably hearing that from there might be thinking it's either a a Wolf in sheep's clothing that this thing is, sounds like it's very complicated and it's gonna like take forever and ever, and ever, and we may not even get what.
[00:30:50] Right. Right. So again 30 years experience learning by doing right at first, first [00:31:00] thing is as human beings, we're resistant to change. Right? We love what we love, what we know we can do. We're afraid to try something new. Most people are.
[00:31:15] So I'm surprised at, and this is not isolated to company size either. I'm surprised how many companies don't do strategic plans. So if you don't have a strategic plan, it's like, it's like, Hey we're going to go on vacation and you don't have a map. So, if you don't have a map, then it doesn't matter where you go.
[00:31:45] That's what that strategic plan is. And so that's the first thing I kind of asked for. And surprisingly, you know, a lot of CEOs will say, well, I've been in this industry for 30 years and blah, blah, [00:32:00] blah. And I don't need a strategic plan. Well, okay. Then what are your objectives for the year? Yep. And, and, and maybe, maybe that's a good starting point.
[00:32:12] Yeah. And so if you focus on what are the objectives for the year that, that, that can get them focused and yeah. And it has to be more than just financial. You can't say, well, we're just trying to increase revenue 20%. Come on. It's more than that. Right? So there's a whole exercise you have to do at a, at an executive level because they need to understand that, Hey, maybe you're missing something and you have to do it in a, in a way where you're not telling them that they're stupid.
[00:32:50] Right. You're just, Hey, you know, did you think about this? Do you think about that? Did you document it does, is everybody in your [00:33:00] executive team? Are they aligned to those objectives? Yeah. Right. Because if your CEO's out there doing something completely different and driving a different objective and is not communicating that back, that's going to be a problem, right?
[00:33:16] Yeah. So getting, getting, getting alignment, strategic alignment, Is so important in it. And again, it's across all 10 elements, right? Yep. So you can't, you can't just say, Hey, it's all about performance business performance. Well, how are you defining business performance? It means different like different things to different people.
[00:33:42] Right? Right. So if, if you're an operations that performance might be different than somebody in marketing. Right. Versus somebody in HR versus somebody you know, in the, it. So, what does that alignment look [00:34:00] like? And so if you're a fan of Peter Drucker, he, he used, he used to do a management by objectives.
[00:34:08] So you should be able to cascade down from strategy to operations, to execution, and everybody's performance indicators should align to the strategy. Yep. That's probably one of the most common problems, which is a misalignment between those levels strategy, operations execution. And whether you have a strategic plan or not, if you're not doing that alignment, that's what I learned.
[00:34:43] Right, because that tells me all 10 elements or out of whack. So if I could get alignment, then I can design or architect the change to get all 10 elements together and integrate that enterprise. And [00:35:00] then I have a plan to move the organization forward. So that's kind of, I mean, that's, I mean, it sounds really easy, but it's not, well, there is a, yeah, I think there's a thing it's like they it's like, I try to explain that the person similar posts, so I have, and it's the process is simple, but the execution isn't.
[00:35:23] Yeah. So, yeah. So yeah. So the you, you mentioned the, when you talk about the strategy being aligned, then you're talking to the C level, executive level. I'm assuming that you put a little weight on having senior leaders buy into this whole thing. Yeah. So there's a series of workshops that you could do to really build out what I would call the alignment to strategy and PR and business performance.
[00:35:52] Right. So do you have all the right measurements in place for the 10 elements? [00:36:00] And in other words, you may, you may have, and, and it, I mean, this is true across the board is a lot of the performance metrics tend to be financial in nature and that's fine. But if you're in HR, what does that mean? Right.
[00:36:17] If you're, if you're the factory manager, what does that mean? Yeah, right. So you really have to explain to them that if you don't have enough people with the right skills and competencies for, let's say using newer technologies, right. To enable your let's call it business transformation, digital transformation, you've got to go either hire consultants or better yet hire people with the skill sets and train everybody else.
[00:36:53] Right? Well, you could put a metric to that. And HR could really March to that metric because they [00:37:00] could say, Hey, my goal is to get people trained in the next two months so that these people are ready to hit the ground running and that's to align to the overall strategy of what we're trying to do here.
[00:37:13] Right. So. That's how the other elements like organizational structure, human capital come into play. And are you, are you organized for success, right? Where does customer service set? Does it sit in the sales department or does it sit in supply chain and operations? Where does it set and is it the right place, right?
[00:37:38] Yup. Good question. And I can tell you again, it's, it's a mixed bag, right? Sales people care about what sale they don't want it. They don't want to take care of customer problems,
[00:37:54] customer services and sales. That could be a problem, right? [00:38:00] If it's in supply chain operations, Hey, might be a better place because they're used to fixing problems every single day, because. They run the operation and they keep the factories running to keep the warehouses running, you know, et cetera. It's a mixed bag.
[00:38:18] I've seen it work both ways. There's different ways to do it, but you kind of get the idea here of alignment structure, you know, are people incentivized to behave in a way? Do they have the skill sets? And so I, and by the way, I I'll send you a slide deck. You could post it for people to download, but there's five orders of change, right?
[00:38:44] There's the process, there's the product, there's the purpose. There's people, there's the place and there's the time period. Right. And so when all all of those. [00:39:00] Six elements of change are involved. There's a high risk for failure, right? Yeah. So, so you can imagine when Amazon decided to be a data center company, right.
[00:39:17] That was all six elements, man. There was process or is product, there was purpose there's people, there was place and there was time period. Right. I think when you look at what Netflix did with streaming, right, probably a, you know, a third or fourth order of change, right. You had maybe four out of six or five out of six of those elements that had to change.
[00:39:41] Right. And again, it's, it's, it's, you're really an orchestra conductor figure out how to get every one of those elements. To play the same sheet music at the right time. Yup. Yup. And then, you know, again, I go back to the 10 elements of integrating the enterprise. It's it's [00:40:00] focusing on that plus all the elements of change.
[00:40:04] Right. So would you say then the key, maybe the key as for that alignment, there's a the one, is it, what is the key? Is it the true north or the vision? They, they get some all on the same page and they go, this is where we want to focus. This is where we're going. And then the strategy is the implementation of that vision.
[00:40:25] So, yeah. Again I think you could, you could say it a couple of different ways, right? I'll stick with the 10 elements and strategy. Is the, is the vision, is the why, why are we here? Strategy is where are we going? Right. And beyond that the customer experience is part of that. Where are we taking the customer?
[00:40:49] And then when you get to the remaining elements you're really organizing and aligning all those elements for operational execution. And [00:41:00] so it's, it's again, not easy to do. It's easy to say, but not
[00:41:08] having a framework to get all those 10 elements aligned. And then, and then bringing the change. The change management into it. And again, the again, I hate the word best practice, but the, the common practice that leads to high rates of success is to have your own people engage, trained, and engaged in facilitating the change instead of bringing consultants.
[00:41:38] W we, you know, that we've seen from the same hymn sheet, there I am. I'm the same opinion. It differently. That's going to embed the change right there, because it's there. Yeah. How will they have a stake? They have a stake in it. And guess what, if you do the right incentive program and everybody gets a bonus for being successful.
[00:41:59] Hey [00:42:00] that program's going to be successful, isn't it? Yeah. Yeah, you're just paying consultants by the hour, right? They have no stay, have no skin in the game if you're successful or not. Yeah. So that's a, it's a good point there that skin in the game thing is win. When the business has no skin in the game, I've seen, I've seen big meetings with senior level people and even the consultants come in and they, they're saying a lot of impressive things and the businesses going, I'm not sure what they're saying, but if we just nod our heads and approve this, they'll go away soon and we can get on with our own job.
[00:42:40] And then the project runs or one or two years, and then they deliver and then the business go, wasn't exactly what we wanted. And so they find a work around and then they don't get the full value of the transformation and the theme of failure, because. That's right. And somewhere along the line, they lost [00:43:00] track of the performance.
[00:43:01] Right? What, what are we, what are we really trying to improve from an objective point of view? Right? Profitability revenue or, or whatever it is, right. They lose track of those objectives, right? Because they didn't incentivize forum. And then the consultants just trying to teach them how to do change management without any, you know, foresight into, what are you trying to do here?
[00:43:30] What are your objectives they never asked. Right. I get to see a change management consultant ask about what the corporate objectives are. I've I've yet to see, not to say it could never happen. They're really focused on their methodology, which is, which is fine. Right. That's what you're sort of paying, but teach my people how to do it.
[00:43:57] And then I'll incentivize my, our, our [00:44:00] people to you know, embedded yeah. Embed in the organizations and get it done. Right. Because they're incentivized to make it work if they you, you, you said it quickly at this before about cross-functional and then I think particularly around business process.
[00:44:20] Can you I think there's, you know, you've got a four as if we talking architecture process architecture level four process, and you've got, you know, you're, if you put in swim lanes and you've got interaction between different stakeholders or different groups, but it is really that interaction between one division or handover across if it's the user journey, how, how, what sort of importance that you put on that cross-functional element of the transformation?
[00:44:54] Yeah. Yeah. There's. There's a great book out there called [00:45:00] improving performance, managing the white space in my Gary rumbler and Alan brace. So Gary trained me. I brought him into Intel. Yeah. He's a PhD in industrial engineering. He actually, he, he taught Motorola about six Sigma and that's how six Sigma took off.
[00:45:26] However, The point he makes is business as a system. And it's a human performance system and process is how people get their work done. Right? So people make companies, processes the work that they do. Technology doesn't make a company. Right. It means meaning buy it and, and implement it. Right? It's the people part [00:46:00] of it, which is why that is higher up in the integration elements of integrating the enterprise is you got to get the people part, right?
[00:46:10] The people aren't right. I guarantee you you're going to fail because people always revert back to their old habits because they're creatures of habit. So explaining. Value stream, which is a again, there are varying opinions, a level one, or a level two in terms of detail, right? Yep. Yep. Ordered a cash, right?
[00:46:36] It, it crosses over sales. It crosses over marketing. It crosses over operations across as over manufacturing. It crosses over customer service. Those departments are resource management departments. They're not processed departments, right. Even though they sort of have names marketing as a [00:47:00] process, right.
[00:47:01] But order to cash is that cross-functional, it cuts across all those departments. And that's a big part of the education that needs to be explained to people so that when you look at performance improvement, you're improving. The entire order to cash process, not just, not just sales, the sales departments piece of it.
[00:47:25] Right. Because well, you probably heard of Eli gold rat you know, the goal, the book, the goal, is it? Yeah. Yeah. And he he talked about suboptimum means, right. If you, if you go and optimize what the salespeople do, you're, sub-optimizing the entire order to cash process. The whole story, really, you really have to look at the entire order to cash and the performance of it.
[00:47:56] So really say we're, we're doing a [00:48:00] transformation here, whether it's operational. Or it's an operational model change or whatever, where you're designing a brand new order to cash process. Like the strategic type you've got to do the whole thing. You don't do one piece and then another piece. And then another piece we do the whole thing.
[00:48:18] And that's where, that's where I think. And I hate to say this and I'm not criticizing my fellow BPM professionals out there, but there's a tendency to focus on one or two pieces and not the full cross-functional.
[00:48:38] And one of the other things I'll mention, and this is important. There's a lot of really good BPMs programs, software programs out there. Right. They do everything. They'll model they'll SIM they'll simulate. They'll do process mining. They'll do case management. They'll do task mining, they'll do [00:49:00] robotic process automation, whatever.
[00:49:01] Right? A lot of what the software companies do is they train people to be proficient in their software and the software without being proficient as a BPM professional and the practice and discipline. Right? So that's why, when you look at our, our, our body of knowledge for BPM, there's nine knowledge areas.
[00:49:27] Technology is just one governance, governance, and enterprise process management are two that everybody forgets. Right? So it's important to really understand that when you do the cross-functional process, you have to, you have to govern it. Somebody has to own it. And monitor the performance of it. And when it's not performing, they need to really have a call to action, to do something about it.[00:50:00]
[00:50:00] Especially if you're losing customers or your customer metrics are starting to go south on you or your competitors are starting to steal market share, whatever. Right? So that governance piece is important in the enterprise process. Management is managing the entire cross functional performance of that process.
[00:50:31] And I always use order to cash because it touches the customer. Right. Yup. Yep. But I'll tell you if you don't have good suppliers and I don't care if you have your own factories and you make your own products or you outsource it to somebody else, right. You're still making a product. And, and either way you have to manage suppliers to a performance level in order to meet the customer performance level.
[00:50:59] Right? [00:51:00] So in a way, order to cash and procure to pay are tied together. It's an even longer. Right. Integrated process. So anyway, I hope, I hope I clarified. I see the, the cross-functional one is and you touched on the part about the HR and about their role with. I've, I've recently done a transportation program for UK government and HR.
[00:51:28] And they, the vision was to be a, the strategic people partner to help the business continuously improve. That was the future vision. The current vision was really a transactional support model or role in the organization. And that was maybe what you'd say is a strategic transformation. They were fundamentally changing for what they saw themselves as being a support, then really been an enabler for the for the business to continuously improve.
[00:51:54] And so they ha they had a lot of, a lot of self-reflection and understanding what they did. And [00:52:00] the, the, the, I think the, the turning point that got everyone on board was that one thing you talked about the vision and how, and how can you measure. And success for them as a division was fundamentally different to what it means for the rest of the business.
[00:52:18] So starting that conversation was interesting and the needed to get there, to teach it what we talk about, the strategic buy-in to get them, you know, and, and, and I, I agree. And I, I do similar thing about you. You gotta go softly softly with the, the language that you use, if the, you don't want to tell them off this.
[00:52:35] Yeah. It's how have you approached it? Well, I'll tell you there's a HR should be a strategic function. I'll give you two, I'll give you two perspectives. I worked in healthcare off and on For a lot of years. And when you get into the hospital environment there's, what's called patient engagement and there's employee engagement.
[00:52:59] Well, if you [00:53:00] want to improve patient engagement, you have to improve employee engagement. If employees are conscientious and they're really happy doing their job, and they engage with patients and patients are engaged and patients will be happy, right. Because you know, you don't go to a hospital when you feel great, right.
[00:53:22] You go there because you feel terrible or you need a knee replaced or you have back pain and they need to take a disc out or whatever. Right. So you kind of go in miserable. And you might come out feeling a little better, but you're not feeling a hundred percent better, right. Until you heal. So the whole experience of being in a hospital is based on employees.
[00:53:44] So why do I bring up employee engagement? Well, who really owns it? Well in healthcare, it should be HR. Right. But in healthcare, especially not-for-profit healthcare, there's [00:54:00] usually accountability problems. And so you'll see they'll appoint somebody like a chief, chief patient officer or something like that.
[00:54:09] Right. And sometimes it's a doctor and sometimes it's a nurse and they don't know how to do it. Right. So bottom line is you don't really have the employee engagement to get the patient engagement. That's a fundamental problem. The reason why I bring it up is there's a great book. And I, life of me, I can't remember the name of it, but the person who wrote it is Patty McCord, M C C O R D.
[00:54:37] Patty McCord. She was a chief people officer for guests to Netflix. Oh, no way. Yeah. So she's got a great book out there and there's a couple of great Ted talks from her on YouTube, but you can check out Eddie McCord. You really check out what she's saying about employee [00:55:00] engagement, because that's how Netflix went.
[00:55:03] Well, that's how Netflix started out. They didn't have retail locations. They were competing with blockbuster without retail locations. Right. Right. And then they went from mailing DVDs to streaming, right? Yep. So she literally was the chief people officer and figure it out how to engage employees and build a culture of being more innovative to do those kinds of transformations.
[00:55:36] So she's a phenomenal speaker. Her book is awesome. I know I have it. It's called powerful. I have the book in my office here and that's what she talks about. Right. So really taking HR and making them a strategic department. Again, easy to say, hard to do [00:56:00] most HR departments. What do they do? They post jobs, they write job descriptions.
[00:56:04] They post them on the internet. They estimate how much money they make trying to recruit people. And they never recruit, you know, talented people. They always recruit people that are willing to accept the money they're willing to pack.
[00:56:21] I'm kind of hammering on HR a little bit, but you understand that there's a strategic nature for HR and there are sort of the transactional nature and going from transactional to strategic again, I would suggest petty court McCord's book because he's done it, right? Yeah. You're a big fan then of the people element and transformation projects and programs, a hundred percent, a hundred person.
[00:56:51] Where, where there's been huge successes, there's been a overarching focus on people and where there's been huge failures. [00:57:00] There's been less of a focus on people, more on technology, less on people. And I think we all kind of know how that goes, right? It's not like taking a. Well, it used to be, you buy a, a D a CD with software.
[00:57:18] You put it in your computer and install it. Yeah. You download it and install it. It's not that simple right there. There's training, there's education, there's adoption. There's a new process. People need to learn. The software is only a part of that. It's not a hundred percent of that. Yep. So for, for our guests putting that in context, because you've done have evolved in some pretty pro projects, but also large, which would be M and A's mergers and acquisitions of large companies and large programs of work, so that you would have seen there of two cultures even coming together.
[00:57:57] And then in order for that to [00:58:00] be successful, then, you know, you've got to play to the people part. Yeah. I've, I've I've been through enough mergers and acquisitions with Companies that are say 500 million in revenue all the way up to in the billions 7, 8, 9, 10 billion you know, market market caps, 20 billion and, and what's common is it's always us versus them who took over who, right.
[00:58:28] So if we bought you it's us because we bought you, right? Yeah. That's the cultural thing. And then think about it again. We do it this way. You do it that way. We have two different processes for everything order to cash, procure to pay at blah, blah, blah. Right. And then you have a think about your technology environments.
[00:58:54] We use SAP, you guys use Oracle, but we don't need to an ERP system [00:59:00] if you're in healthcare, right. You know electronic health record, you know, we have epic and you have McKesson. We have Cerner and you have epic. Which one is it doing? Both is, is a recipe for disaster because the processes are different.
[00:59:22] The training and education and the skills and competencies that people need to have are different. And you're, you're never gonna merge cultures, right? You got to start with the people first and then the technology becomes easier to do, but there's big, there's big decisions to be made, right? You don't need to have everything.
[00:59:41] You need one culture, one, whatever ERP or EHR system. You know, one one set of processes for everything you do every
[00:59:56] right. You know, the M and A's have [01:00:00] a high failure rate to over 70% going, going on 20 plus years failure rate because there's less of a focus on people. There's more on financial metrics. Again, it's really a transformation in my humble opinion when you're buying, when you buy another company, merged with another company that that is a, an operational model change for both companies.
[01:00:35] Yeah, right. Because you may decide that, Hey, we're going to do, we're not doing it your way and we're not doing it our way. We're going to do it a completely different way, the third way. Right. Or you say, well, we're doing it our way because we bought you right. Either way, it's an operational model transformation for the people that are being acquired or for everybody, if you're doing a whole new [01:01:00] model.
[01:01:03] So now that you've been through the, this, you know, you've, you've still got years and years or decades of experience and many more to come. What would you say now would be the hedging now and now what you knew back then, what you know now, what would you have done different. I become a jazz musician,
[01:01:33] piano, man. You know, it I, if I had to go back to, when you said, how did you start out? Yeah. It would have been great if the body of knowledge was there existed and you could kind of say, these are all the things I need to know. And, you know, here's sort of all the training and education and take it in this [01:02:00] sequence and then go out and start doing it and get good at doing it and learn that every situation's different, right.
[01:02:10] Of the, of the. What type of transformation, isn't it are all 10 of the elements for integrating the enterprise out of sync or out of alignment or just three of them or whatever. You know, knowing all that 20, 30 years ago would, would catapult anybody, I think, to a place where. Companies, it would become second nature where everybody could have that same level of education and understanding and the skill set to do this and make things easier.
[01:02:48] Right. Yeah. Okay. So if we go back in time, then, then that would have been ideal that you had the, the, the C book on, on on hand and then gone in there [01:03:00] and delivered quicker. Know maybe engaged got everyone. So today the last question I had from you is all I have for you is you've talked a lot about people would say I'm a big fan of these transformations.
[01:03:14] They marketed or pitch there's digital transformations. But really, I think as you said at the top of the hour was about, you know, if you were just changing technology, you're really just doing continuous improvement. And sometimes if you are not careful, you might just be faster at putting in a rubbish in rubbish out.
[01:03:31] So the, I think what you're saying and, and, and some part of culture and and people, is it like the cliche Sage said culture eats strategy for breakfast. Is this true? I do agree with that, but you need both. Oh, yeah. Right. Culture without strategy is like taking a vacation without a map.
[01:03:57] Yeah. So, but [01:04:00] you need to have a strong culture because that's, that's literally the infrastructure for execution of your strategy, right? You don't have a strong culture, especially one that's biased towards alignment and execution. You're going to have a problem in it. And any strategy you have won't work because your culture can execute it.
[01:04:25] I think that's a big reason why a lot of M and A's fail because they don't focus on culture at all. They don't focus on people when people there, again, Patty McCord's book people engage in behaviors. And what drives behaviors will values the values of the company, drive your behaviors and your behaviors drive your performance.
[01:04:53] And that's what really is the foundation for culture. And so if you don't [01:05:00] have strong values that everybody buys into your, and you and, and incentives to get the right behaviors, then you're not going to get a strong culture and you're not going to be able to execute. Right. I mean, look at look at the the company, the shoe company, the online shoe company, Amazon bought them.
[01:05:23] I can't remember the name of the company, but they were all about culture. Yeah. Yeah. And I can't remember the name. I think it was a young guys, young guy, but he sold the company not long ago. We've fulfilled millions. Yeah. Oh, he, he sold it for like a billion dollars and Amazon bought it. Right.
[01:05:40] And, and I can't think of the name of the company. Yeah. He was accredited for the culture actually. Yeah. I think it was Chinese. Yeah. He was a, it was an Asian guy and built this really, really super strong culture. They executed flawlessly obviously, you know, [01:06:00] became hugely successful selling shoes online and then Amazon bought them.
[01:06:05] Right. So culture is important, but he had a strategy to right. He, he wanted to sell shoes online. He had a purpose. There was values associated with, you know, building this culture and they were able to execute flawlessly. To, to the point where they became a highly valuable company, that Amazon was willing to pay over a billion.
[01:06:31] Yeah, yeah, yeah. From, from culture. Okay. So, so the, the, the, the takeaway for there's your job, a lot of teams here, Tony, like, and I think, I think everyone needs to go, we'll put the show notes in the bottom of the of the podcasts of all the references you've dropped in the books that we need to go read.
[01:06:49] And the Netflix we've got to get on the YouTube and particularly payday code. I'm the chief people officer for Netflix. So. They, I think a good type of way for as well [01:07:00] as the, you know, the, the approach that you've got, the 10 elements you need to consider the three different types of transformation you know, and having that conversation with, from the strategic operations and execution level.
[01:07:10] But the key part, I think of what you're saying as if everything is, you know, you cannot estimate in these big transformation programs that people element yeah, that would be sort of the major take home from today is it's, it's always people first then process and technology. And I know that sounds cliche, but if you learn by doing and you've done it enough and you've been successful, it's intuitive.
[01:07:38] Yes. Yeah. For a veteran like you, it is. So for all of us, other than we need to learn. And so, okay. So we'll put, we'll put it in the show notes, how we can go to hell, hell. And and if you could share that presentation with me that I can share with the viewers, the slide deck, I sent you the [01:08:00] PDF. Oh, I love it.
[01:08:02] Thank you very much, attorney. I'll share that with everyone and also your contact details. If they want to get in touch with you how they can find out more about the the a, B, M P a C book, the common book, knowledge for business process management. They know how to get in touch with you. And the growing practice.
[01:08:21] So Tony, we'll rip it out there. Thank you very much for your time. And the insights have been invaluable. I wish I had bought a high, but you know, after my, my time, which is only half the time, it's not even that of your experience. So thank you very, very much. Well, thank you, Heath pleasure. Doing your podcasts and anytime any topic.
[01:08:47] Absolutely. Absolutely. Well, I think we could talk for hours actually. Yeah, I will be in touch for the next topic. So ladies and gentlemen, we'll wrap it up there, Tony. Thank you very much for your time. All the way from Arizona. Okay. [01:09:00] Thank you. Okay. All of this, what is business transformation? This is a two-part.
[01:09:07] What is business transformation? When is the change. The organization goes through deemed a transformation. Firstly, the definition, this is a transformation as were a business changes the way it does business. That is, it changes how it creates and delivers its products and services at CVP it's customer value proposition to its customers.
[01:09:30] It doesn't necessarily change what it does, but it changes how it.
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Hi, I’m Heath, the founder of HOBA TECH and host of The Business Transformation Podcast. I help Business Transformation Consultants, Business Designers and Business Architects transform their and their clients’ business and join the 30% club that succeed. Join me on this journey.