Driving Change. Fifteen Years. Five Points.

I’m often asked if Meridian has an official Change Management methodology.  The short answer is No.

I fear methodologies force-fit the same activities on every situation.  That does not work. 

Instead we’ve distilled a set of principles that accelerate the adoption of new methods, processes, and technologies.

1.  People Follow The Path of Least Resistance—So Your Desired Goal Had Better Be On It

People naturally seek the Path of Least Resistance--the pathway that provides the least resistance to forward motion.  A person taking the path of least resistance seeks to minimize personal effort and/or confrontation.

It’s imperative to credibly demonstrate how proposed change(s)  are on the Path of Least Resistance—that is, how a new technology is easier to use or offers more “reward” than current approaches (“reward” in this context has many definitions, not just money). 

Painting the picture that a “new and improved” process or technology is easier to use is a bit of an art.  You can’t just say “this is better, trust me”—people must come to the conclusion themselves.  Hands-on exposure to the new methods or technology is necessary.  Success stories that explain how the new method is easier and better help.  Credible supporters who point out how the new approach is on the right path are a requirement (see my next point). 

Despite your efforts a better approach can struggle to gain traction.  In this case it’s proven effective to directly ask “Why won’t you adopt our new approach?  Why isn’t it better than our current methods?  What will it take to get you to switch?”  It takes some courage to ask these questions—you might find that your next great idea is miles off the Path of Least Resistance—but it’s better to know.

2.       Tap The Power of PEERS

I am very interested in the science of Diffusion—understanding how innovations spread through a population.  A core beliefs in Diffusion science is The Principle of Homophily (Homophily = "Love of the Same").  Homophily is the tendency of individuals to associate and bond with people who are most like them.  Homophily plays a powerful role in the adoption of new practices because we learn best from someone who is like us.

Homophily means it’s imperative to find your experts amongst the population you are trying to change.  It’s important to ensure any and all contractors who are engaged to help you change are most like your own people.  It’s better to actually grow your own Change Leaders, selecting and supporting a sub-group of your people who score high on familiarity to lead your change.

3. There’s PRIORITY & POWER, And They Aren’t Owned By The Same People

Adoption happens when it is clear that acceptance of the new is a real organizational priority and equally that the person who has immediate power over me allows or encourages adoption.  Senior executives foster adoption by lending their personal credibility to programs, deciding which programs control the best resources, and determining the professional gains accruing to contributors.  But “executive priority” alone will not ensure adoption.

It’s rarely acknowledged but true:  Individual contributors who have been asked to change how they work need the permission of their immediate supervisor to make this change.  This ‘permission’ is subtle—I’m not going to ask, “Gee, can I use this new accounting system?” but it will be abundantly clear to me whether use of the new system is what the person who holds power over me wants or does not want.  Mid-management and supervisors thus wield considerable power during times of change.  Every successful change program must understand and manage mid-level support for the program.  

4.       Never Underestimate The Problems of the PAST

Expectations for current success are always based on perceptions of past efforts and outcomes—even if those past efforts and experiences are not directly applicable.

Think of your company’s history: How many projects were regarded as disasters?  How often do people mention these disasters when a new project is introduced?

In our work supporting clients striving for business change skepticism about past efforts has material impact on support at least 80% of the time.

A major study we completed contrasting a sample of successful and unsuccessful corporate initiatives showed that perceptions of past support for projects was the second most important determinant of program success (expectations for rewards was the most important determinant).

Common sense strongly suggests a history of past failures colors future plans, leading people to wonder, “So what’s different this time?”

And that’s precisely the point.  You must understand how people view past projects.  And you must credibly explain what’s different this time. 

Many organizations want to bury the past.  They regard it as ill-mannered to mention past failures.  They fear mentions of past projects will somehow compromise people’s support, as if organizations lack collective memory.

Not advised.  It’s important to allow people to express skepticism about past projects, within bounds.  It’s imperative to credibly and consistently show people how this effort is different, and especially how this program’s results will differ.

5.       Sustain “Offensive” Support

Support equals the people and processes that move people from current practices to better processes.

Support usually happens after a problem occurs, rendering the support reactive or defensive.

Effective support should be “Offensive,” committed and to nipping problems early, often, and before they escalate.

“Offensive” support means telling people what is changing and why, addressing “what this means to me,” allowing errors during adoption, and providing mechanisms for eliminating errors over time.  Support should start early in the program and should sustain well past the formal “completion” or Go Live point.

Some examples of Offensive support include group and individual Information Sessions, Self-Guided Change Discussions, and increasingly online communities and forums.  Change Agents are critical—successful programs always deploy networks of people who are trained and tasked with providing hands-on, grass-root level support and leadership during times of change.

In Summary

Years of work supporting diverse change programs revealed the Five Principles we use to accelerate adoption of new technologies and methods. 

So I encourage you to consider all five when plotting your next organizational initiative.

But remember: While the principles are universal, the actions derived from them are always situational.  One size never fits all.

Survey Says! Consider The Cloud

The Oracle Applications User Group (OAUG) recently published a very insightful survey describing Cloud usage by Oracle customers.

The survey included over 360 responses from business and applications managers worldwide.  Survey respondents were segmented into those using one or more Cloud application for less than one year, for one to five years, and for more than five years.

I extracted five insights from the survey data about Cloud dynamics—how Cloud use changes over time.  Together these insights present a compelling case for committing to private and/or public Cloud applications and platforms now.

1.  No surprise, but cost savings remains important throughout the Cloud experience.

In my travels I meet two Cloud camps: those who focus largely on the cost benefits of Cloud, and those who put cost benefits second to other benefits like process standardization and simplification.

Survey respondents indicated cost benefits are consistently important over the Cloud Lifecycle.

• Cost reduction is clearly important when respondents were first considering a move to the Cloud

• Lower Cost of Ownership was equally important when they were evaluating Cloud proposals (though Vendor Reliability is the most important factor).

• And realized cost savings was the number one benefit received from current Cloud investments.

2.  Cloud users double the data they move to the Cloud over five years.

About one-quarter of survey respondents entrust Customer, Financial, and Employee data to the Cloud in their first year.  This commitment roughly doubles within five years.

One small surprise was the observation that survey respondents are least likely to commit Employee Data to the Cloud over the five year horizon.  This is a bit puzzling given the maturity and market acceptance of SaaS HR solutions.

3.     Benefits grow as experience with the Cloud grows.

Each set of columns show the percent of survey respondents who achieved the following benefits after five years of Cloud use.   

Over 40% of respondents reduced costs through standardization and consolidation after five years.   

More dramatic are the observed increases in Process Flexibility (first set of columns) and Security/Privacy (second set of columns).  For example only 3% of survey respondents indicated they had increased Business Process Flexibility in their first year, yet fully one-third of Cloud users had realized this important benefit within five years.

4.  Problems with Clouds look suspiciously like the problems people report with traditional on-premise software.

After five years of deployment almost 30% of Cloud users cite challenges with Cloud Integration, Vendor Lock-In, and Interoperability.  These issues mirror the issues we’ve heard from our clients who have adopted on-premise ERP systems over the past fifteen years.

5.  Two important Cloud challenges decrease over time, highlighting the business benefits gained from Cloud deployments.

Over 30% of survey respondents reported problems implementing New Processes/Policies/Roles and gaining Cross-Organizational Support in their first year of Cloud deployment.  After five years these challenges halve or more, with the challenge of gaining Cross-Organizational support decreasing to a trivial level.

Reported increases in support for Cross-Organizational Performance and new Processes/Roles suggest Cloud systems effectively change “how we operate, who we are” over time.  This ability to foster standardization is an important benefit—I know at least one global company who replaced their ERP system with a Cloud solution specifically to enhance global process consistency. 

For more about the benefits public and private Clouds offer, and how these benefits will lead SOON to rapid expansion of the entire Cloud world, I encourage you to read my February post “Cloud Will Be REALLY Big: Three Reasons Why” at http://tinyurl.com/6md5j5x. 

As always I'd love to learn what you think and what you're doing with Cloud applications and platforms.

The Service Imperative: Delivery UP, Expenses DOWN!

Over the years I’ve enjoyed numerous opportunities to help Services Organizations improve performance while holding the line, even reducing, operating and capital expenses.

These Services Organization include Finance, Information Technology, Human Resources, and Procurement organizations, whether operating as stand-alone units or as parts of a Shared Services Center.

These units provide vital support to their organizations.  They are high performers, providing far better service and value than could be obtained through outsourcing.

But each faces a similar challenge, a challenge that is central for Services Organizations of every stripe.

“How can we provide superior service, in-house, while growing appreciably slower than our overall company?”

Let me offer some examples of organizations meeting this challenge.

• A CFO Function supporting a company growing 15% per year challenged itself to hold increases in CFO expenses to less than 5% per year.

• An HR organization supporting a fast-growing, global technology company enjoying double digit growth had no change in staffing or expenses over two years.

These Service Organizations do not work magic, nor do they drive their people into the ground with unreasonable workloads.  

Instead they drive continuous improvements in Service Productivity, creating capacity to serve while concurrently delivering higher levels of service.

It’s a bit like taking parts off the plane, decreasing weight and thus increasing speed, while soaring ever upward.

Which sounds good, but how?

Growing businesses have dynamic support demands.  Most Services Organizations reflexively commit to new work, often failing to prune much of the work that is no longer needed.  Chaos follows when new corporate and unit-level technologies are introduced and oftentimes layered on old technologies. 

Meridian helps leaders achieve step-changes in Service Productivity.  We provide special expertise eliminating waste and non-value added work, allowing your Services Organization to deliver superior support while holding the line on expenses.

Based on our experience we are especially committed to:

• Increasing time people spend interacting with customers; 

• Eliminating time consumed by waste and non-value added work;  

• Identifying opportunities for rationalizing the technologies that support your work, ensuring people effectively use the technologies you have and helping you identify technologies that will drive further efficiencies and service quality.

We accomplish these improvements by working with individuals, supervisors, and managers across your Services Organization to understand what is done, by whom, for whom, and why.  With these insights we lead Service personnel to identify the obvious changes in work, policies, and procedures that increase capacity to serve while further identifying the non-FTE costs that can be pruned or eliminated.

The scope and magnitude of your results will be what you want them to be, but it’s a lock that your Services Organization will more efficiently support company growth at the end of this short, focused initiative.

Meridian's Services Map: It's What We Do!

Meridian’s 2012 Services Map summarizes our core services.

There are three trends or “demand drivers” in our Services Map. Meridian is configured to support these trends.

• Technology: Clients continue to implement Commercial Off-The-Shelf Software (COTS), principally Enterprise Resource Planning (ERP) suites; to develop and implement Custom Software, typically using Agile, Traditional Waterfall, or some blended development approach; and are increasingly considering the cloud—Software as a Service (SaaS) offerings.

• Process:  Clients will forever need to improve process performance, most often by adopting some elements of the LEAN Process Improvement approach.

• People:  Clients pursue diverse programmatic change to improve organizational performance and efficiency, including mergers & acquisitions, organizational re-alignments, the creation of shared services centers, and the deployment of new sales, delivery, and support models.

Meridian offers five services that support Technology, Process, and People programs.

Strategic Tech Advisory: Meridian helps organizations create their Strategic Technology Roadmap comprising enterprise, cloud, mobile, and social technologies.  We facilitate your efforts to define business requirements and to choose technology partners.  We offer over twenty years experience planning technology and process improvement programs.

Service Systems: Meridian has the experience and methods to help you measurably improve Services Productivity, especially in CIO, CFO, and HR organizations.  We have an especially powerful approach to understanding services expectations and requirements.  We also offer extensive experience developing Shared Services Centers.

Program Management: Meridian provides experienced Program Managers who can drive your workplan, team, and partners to the success you seek.

Change Management: Meridian offers two decades Change Management experience.  We accelerate your adoption of new technologies, leading the important tasks of streamlining and standardizing business processes and teaching and supporting people’s day-to-day use of your new processes and technologies.

Delivery Assurance:  We've been engaged by clients and vendors to evaluate and turn-around at-risk programs.  Meridian provides expert, experienced analysis of program shortcomings and risks.  We re-plan and re-purpose your program so that it is back on track.  

Our expert resources can be engaged through consulting teams or through individual contract services.

Cloud Will Soon Be REALLY Big: Three Reasons Why

Since my last blog post the ERP heavyweights spent $6.8 billion purchasing providers of cloud services.

You could say Oracle and SAP’s investments indicate this ‘cloud thing’ is real.  I slightly disagree.  I think the heavyweights’ purchases are intelligent hedges—neither is going to give up their lucrative on-premise software business, nor should they.  Despite the hype on-premise ERP software is not going away.  It’s only going to get better.

But I believe a parallel universe of pure-play cloud companies will emerge to challenge our ERP leaders.  I cannot say who these cloud competitors will be.  They’ll rival SAP and Oracle in size.  And they’ll get there very quickly.

There are at least three reasons why Oracle and SAP will soon face worthy pure-play cloud competitors.

Cost Curves

Cloud is a scale business—the larger your operation, the lower your cost for acquiring and supporting customers.  It’s called a “cost curve,” and for asset-intensive industries like cloud the cost curve will be steep.  The firms who take the early lead growing their customer bases will leave slower growing competitors in the dust. 

Standardization

Cloud’s real advantage is not cost.  Sure cost matters, but the cloud companies who really rip the roof will be those who deliver true process standardization.

Let’s be blunt, ERP promised standardization but a host of factors meant most companies implemented multiple “flavors” of ERP across their operations.  It all made sense—what started with real regulatory differences often led to the accommodation of business “needs” which led to a very hybrid ERP landscape. 

Cloud eliminates this dynamic—there's one way to do thing across a company, globally, and that’s it.  And standardization substantially reduces cost and complexity, which explains why cloud is taking off in functions that do not offer competitive advantage but can offer cost advantages: think HR, Procurement, Sales, Marketing, and Service.

Improvement Cycles

The most decided advantage cloud companies have over their on-premise ERP competitors is grounded in the way cloud companies offer new functionality. 

ERP companies traditionally package functionality improvements in version releases.  Version releases are doled out across months and years.

Cloud company update their functionality on the fly—what’s requested by customers can become widely available in months, even weeks.  As an IT leader at Kimberly-Clark noted (talking about the HR cloud company Workday, but the point is universal), 

“Workday listens to what customers want, and the product gets updated based on that input. What you need is actually delivered, which is quite amazing.”

Cloud companies should also benefit from terrific network effects.  The notion behind network effects is the value of a network is a result of the number of people in the network.  Large networks are “richer”—more diverse, deeper, and ultimately more valuable to their members.  So as cloud companies ramp their customer counts network effects will take hold.  The company with the largest, richest customer bases (networks) will have distinct advantage over all other competitors, offering better, deeper, and more valuable improvements to its customers. 

 

The Beginning of a New Game

The combination of rapidly declining costs and consistently improving functionality will separate a few large cloud competitors from the pack, leading to a handful—think two or three—capable challengers to the current ERP leaders.

And the ERP leaders will be challenged by their own internal tensions.  Embrace the cloud?  Protect the on-premise franchise? Find some magical balance between cloud and on-premise?   

I have no idea where SAP and Oracle will go.

But it will be interesting.

Cloudy In San Francisco? My Oracle OpenWorld Report

Over 50,000 people enjoyed Oracle’s OpenWorld conference in San Francisco this month.   

One take-away, shared broadly by bloggers and analysts in attendance: Oracle has so many fingers in so many technology pies that there is no single OpenWorld experience.  Oracle today comprises hardware, storage, databases, middleware, and virtually every Application not named Microsoft, SAP, or Infor.

My interest is squarely on the Applications side.  Let’s start with Fusion.

Fusion is Oracle’s 6+ year initiative to provide its next generation ERP application suite.  What started as an effort to ‘fuse’ functionality from acquired ERP packages morphed into a truly next-generation approach to ERP.

Oracle offers over 100 Fusion modules, covering the ERP waterfront.  Fusion apps are whizzy, with integrated analytics, an appealing interface, and de rigueur ability to support mobile devices.  Oracle did a great job explaining how Fusion apps natively integrate with existing ERPs and showing how Fusion apps can be implemented on-premise or accessed via the Cloud.

Fusion was important to Oracle’s Application messaging during OpenWorld but didn’t warrant a Keynote address.

Larry Ellison, Oracle’s Founder and CEO, provided two Keynote addresses. 

The first Keynote was devoted to hardware, or more accurately “Hardware and Software Engineered to Work Together.”  Neat but not my thing.

The second Keynote was used to bestow Ellison’s personal stamp of approval on the “Oracle Public Cloud” and the “Oracle Social Network.”

The Oracle Public Cloud is a “broad set of best-in-class, integrated services that provide customers with subscription-based, self-service access to Oracle Fusion Applications, Oracle Fusion Middleware and Oracle Database, all completely managed, hosted and supported by Oracle.” 

The Oracle Social Network is “is seamlessly integrated with Oracle Fusion Applications, business intelligence, and business processes,” allowing “business users to collaborate with each other using a broad range of collaboration tools.”

We’ve heard this before.  Like this Summer, at Salesforce.com’s Dreamforce event.

So why is Larry Ellison putting his considerable heft behind these offerings?

For two reasons, I believe (note everything hereafter is pure speculation). 

First, I think social media is a bet everyone is hedging today.  It’s conceptually compelling, scads of people effectively working together across space and time.  Thus the major vendors now offer some sort of Facebook-like technology to promote collaboration.  The question is will customers care.  I think yes, eventually, but I don’t see Oracle’s Social Network, or Salesforce.com’s Chatter, or SAP’s StreamWork going mainstream overnight.

Second, and more important, I think Oracle has officially blessed the Cloud.  And I believe that’s very good news for the Cloud’s immediate future.

Oracle has been a ‘fast-follower’ most of its life, entering markets once they're established, oftentimes via acquisition.  


Oracle is positioning hard against Salesforce.com, warning customers about “False Clouds”—Clouds and applications that lock customers in by eschewing open standards.  

Oracle’s Public Cloud could prove key to promoting Fusion apps—why would anyone rip out proven, on-premise ERP software unless they saw steep savings, whether through an “on-demand” pricing model or through the elimination of infrastructure costs.

And Oracle spent $1.5 billion today to purchase RightNow, a provider of Cloud-based customer service functionality that adds new value to Oracle’s Public Cloud.

I think Oracle is uniquely agnostic about their product stable—they’ll ride the horse customers want. 

Larry Ellison used one of two personal Keynotes to tell us that he think this Cloud thing will fly. 

I'm listening.

The Re-engineering RE-Revolution Will Deliver Process Value

I expect many people may recoil from, even dismiss my suggestion that we re-visit the Re-engineering Revolution.

That’s understandable.  In its most debased form the term Re-engineering was thoroughly corrupted, becoming a code word for indiscriminate downsizing

But I believe the concepts underpinning Re-engineering remain valid, even essential in today’s difficult business environment.

The recent (perhaps ongoing) Great Recession has taught us many things, especially the importance of delivering real value to customers while paring costs that don't contribute to value creation.

BPR may be corrupted but businesses today desperately need to become LEAN.

Lean is a philosophy and set of practices used to relentlessly improve Process Value while eliminating waste.  Lean approaches were honed by Toyota and have been refined and adopted for decades.  Both Lean and BPR seek the same goal—measurably improve process value. 

Meridian program for growing process value departs from traditional Lean/BPR approaches through our emphasis on implementation, and especially our commitment to making people a more effective part of your value improvement process.  Our approach has proven effective in manufacturing and service operations.

Mission

Meridian’s approach and traditional Lean approaches agree: Step one is to delineate how you will continually improve the value you deliver to customers.  Mission is a moving target, evolving over time in response to changing taste and competitive pressures, but should be specific and executable.  This is not an involved exercise—most organizations have some sense of Mission, though all find value in succinctly re-visiting their mandate before remaking their operations.

Work

It’s amazing how difficult it is to understand what people actually do day-to-day, hour-to-hour.  Sure there are job descriptions, but these artifacts rarely describe reality.

The key to changing work is to really understand what people do.  It’s not easy—even the simplest query “What are the five key things you do each day,” inevitably leads to a laundry list of actions and exceptions.

We’ve discovered the best route to productive discussions about work center on tangibles—on the inputs, work products, and deliverables people receive, process, and forward as part of their jobs.  In our experience people can pretty completely inventory the tangibles they routinely and exceptionally handle. 

The next level of analysis looks at the actions people take with each tangible—do they transform or improve the tangible, find and fix errors, or is the work purely administrative.  We’ve developed a set of definitions that facilitate effective characterization of all types of work.

Cataloging tangibles and evaluating the actions surrounding each tangible provide a compelling picture of work.  We use this snapshot to collectively evaluate the value of work while simultaneously looking for waste.  This vetting leads to ideas how work can be improved, automated, or eliminated; a roster of Quick Hit work improvements that can be implemented immediately; and a view as to what your Process Value might look like following work changes.

Commitment

This is the point where traditional Re-engineering programs fell apart.  Elite teams birthed brilliant designs that withered because there was no commitment to really changing work.

At this point in Meridian’s process we will have a roster of work changes and improvement opportunities.  We will also know what types and levels of investments will be required.

But to succeed we need to build a broad commitment to implement.

The first task is to build support amongst Directors and Managers—the people with immediate responsibility for managing your production and service personnel.  Directors and Managers really shape how work is accomplished.  Change is not achieved without their support.

We believe the best way to gain support is to ask your Managers or Directors to establish implementation priorities.  Allow them to build their Re-engineering agenda.  Ask them to sell their agenda up and down the hierarchy, engaging both the people who work for them and the people for whom they work.  There is no better way to put your Process Value initiative on a solid footing.

The second task is to translate work improvements into concrete steps.  Many Re-engineering teams lacked what we call “first step vision”—they can see the grand design, and can forecast multiple methods for improving value, but they are hard pressed to describe the simple first steps implementers need to take.

To avoid this common malady we devised “Stop-Start-Change” forms. 

A Stop-Start-Change (SSC) form makes explicit how work needs to change for every role touched by your value improvement program.  It delineates which existing tasks should be stopped, which new tasks should be started, and when today’s approaches to work should be changed.

SSC forms accelerate the rate at which new work procedures are adopted, hastening your program’s return on investment.

Implementation

It’s important to attach measurable impacts to work changes—especially reductions in waste.  In the Lean world waste is anything that does not add value to customers.  The accepted definitions of manufacturing waste, and Meridian’s definitions of services waste, are shown in the following table.  These categories provide the basis for charting results from your Process Value initiative.

In Closing

I admit this post went far longer than originally planned.  Allow me to end with two overarching thoughts.

Whether you use Meridian’s approach or more traditional Lean/BPR approaches,

Continuous Improvement is today’s unavoidable imperative.    

If not underway please consider taking your first steps toward a higher value, lower waste future today.