This is a follow-up on my blog on the right brain chasm, which had a lot of traffic. Well, at least for my blog it had! I was also encouraged by an S&OP practitioner who told me that he was inspired by my lecture on this topic during a conference.
I think I have to set something straight. Some of the comments on my blog suggest that the right brain chasm issue is about clearly ‘owning’ the S&OP process at the most senior level and therefore put it in the simple ‘leadership’ bucket. Yes, I think we all agree that leadership is key in implementing S&OP or any change for that matter. My S&OP pulse check survey’s in 2010, 2011 and 2012 all indicate that senior leadership is the biggest roadblock in implementing S&OP. But that’s not what I’m talking about. ‘Owning’ the process by the most senior business leaders is just the start.
I’m talking about the biggest issue and opportunity business and thought leaders have to start addressing to make S&OP or business as a whole more effective.
The biggest opportunity is to find ways to build a business culture with critical mass of people who show cooperative behaviours, want to understand the other silo and are open to be influenced by the other silo’s, be it function or business unit, customer or supplier. Actively create groups that cross the silo’s and think holistic in ‘we’ and ‘us’, rather than in ‘I’ and ‘me’. Thinking holistic is a right brain activity. If we want to cross a silo effectively, we have to understand the other silo’s motivations, goals and feelings. We need to have empathy for the other silo. Feelings and empathy are right brain activities as well.
Crossing the right brain chasm is not an easy task for business leaders, as crossing the silos is hard for us humans. Historically we are wired to stay in our silo. That’s just our survival instincts. Staying in our own clan or herd, means risk reduction, certainty, safety and a higher change to survive. On top of this there is research that indicates that only 50% of people cooperate naturally and 30% behaves selfish. Fuelled by social networking we see evidence of more narcissism and ‘I’ and ‘me’ thinking. So the challenge to understand the other silo and think holistic only seems to get bigger.
Business leaders have to first understand the right brain chasm before addressing it. Business leaders then need to educate their people in understanding and using their right brain; if we want to start crossing the borders of our silo’s to start communicating and collaborating more efficiently. Building critical mass of people who have a developed right brain and are willing to use it is where the real value for businesses is. It will pay back through transparent, timely information sharing and speed and agility in decision making or correcting mistakes. And if done right, it will pay back more than any other investment in training, process or technology.
Business and supply chain leaders are mostly left brainers and don’t think (yet) like this. They think logic, KPI’s and analytics. They think left brain. This is how supply chain and S&OP have evolved the last 30 years and achieved great things. My point is; it’s time to change if we want to bring things to a whole new level. I can’t say that what I’m saying is totally new as Daniel Pink already described in ‘a whole new mind’ the importance of the right brain in today’s world. My angle is just slightly different from Pink’s.
For me crossing the right brain chasm is the only solution for real efficient horizontal business processes and the key for a collaborative environment.
As a follow up from my last blog on the right brain chasm in supply chain and S&OP, you can find here my presentation on Changing & sustaining S&OP from the March 2013 Australian S&OP conference. A quick guide to go with this presentation.
The biggest change required for proper S&OP or in general for agile decision making is horizontal thinking. Information never sits in one function, therefore we have to start understanding other functions and think more holistic. Thinking holistic and understanding feelings are right brain activities. The change to start crossing silo’s is hard because we’re wired to stay in our own tribes, where we feel save and secure.
We know change is hard in general. Kotter’s research in over 100 companies showed in 1996 that only 30% of change efforts is successful. McKinsey’s research amongst 3200 CEO’s confirmed this 30% again in 2009. In ‘good to great’, Collins researched 1400 companies over 40 years and found that nearly 1% was great. Great companies beat the market by 6.9 times. A feature of these companies is that they have ‘level 5 leadership’ and that ‘change comes automatically to them’. So great leadership makes change possible. Still, leadership has been indicated by practitioners as the #1 roadblock to implement S&OP.
As change is so hard, you first have to understand your change environment before you can think about sustaining S&OP. The only way to sustain S&OP is to create an S&OP culture. Culture is created by purpose, values & behaviours. Therefore we have to lead in effective S&OP behaviours and make them part of our DNA. Amongst effective S&OP behaviours are trust, communication, discipline and collaboration. The right brain is essential to be effective in these S&OP behaviours.
The S&OP leadership quadrant can help you to map S&OP support in process and behaviour and can give you insight in your change environment and your roadblocks to create a sustainable S&OP culture. There are many ways to improve your S&OP environment to make it sustainable. It will take years, but it can be done.
hope you like it
Earlier this year I spoke at the Australian S&OP forum 2013. On the first day of this event, Oliver Wight spoke on the evolution of S&OP and they discussed the ‘chasm’ in S&OP. The term ‘the chasm’ comes from the book ‘Crossing the chasm’ by Geoffrey Moore. Moore used the chasm to describe the difficulty in a (product) lifecycle go from early adopters or visionaries to the early majority. According to Oliver Wight S&OP has crossed the chasm of early adopters and is becoming mainstream and accepted as best practice. Although there are still too many different definitions of S&OP out there, I agree with Oliver Wight.
My presentation was about how to create and sustain a culture of S&OP and how we need to start using our right brain to do that. I tell you why we need our right brain more. The biggest change we have to go through when implementing S&OP is to start thinking horizontally rather than vertically. We have to start crossing the borders of our silo’s to start communicating and collaborating with other functions. Thinking horizontally means thinking holistic. Thinking holistic is a right brain activity.
Crossing the silos is hard for us, as historically we are wired to stay in our silo. That’s just our survival instincts. Staying in our own clan or herd, means risk reduction, certainty, safety and a higher change to survive. Only when our survival is threatened we will go outside our herds, take risks to try and survive. Our survival in business is now threatened if we don’t cross the borders and exchange better and more complete information for agile, fast decision making. If we want to cross a silo effectively, we have to understand the other silo’s motivations, goals and feelings. We need to have empathy for the other silo. Feelings and empathy are right brain activities.
The last thirty years we have made great progress in developing supply chain management and S&OP form a left brain perspective. As I described three years ago, it is now time for the behavioural supply chain , or the ‘right brain’ supply chain. We’re three years on and unfortunately I don’t see many signs that we’re getting closer in crossing the chasm from left brain to right brain supply chain thinking.
This blog was recently published in the FPA_March2013 newsletter
A recently released white paper from the Association for Finance Professionals (AFP) shows that amongst other things, it is extremely important for finance professionals to have advanced excel skills and the ability to validate data. I couldn’t agree more. Advanced Excel knowledge is a must for every finance professional. Even in businesses with advanced IT environments and with seamlessly integrated systems, the spread sheet is still the most flexible piece of calculating software.
There is no better way to quickly gather some information from different people around the business and calculate some numbers. There is no easier way to simulate opportunity and risk scenario’s in a P&L and discuss and communicate the results across functional areas. And the basics are really easy to learn. This ease of use and flexibility must be the reason that more than 30 years after the introduction of Lotus 1-2-3 from IBM and Excel from Microsoft, the spread sheet is still king. Some of my own research on planning suggests that 85% of users still use the good old spread sheet. Other surveys show similar results between 60% and 90%. In my role as integrated business planning manager, I monthly present an 18 months rolling EBIT number to our managing director. A lot of cross functional information needs to be gathered for this, but all the P&L lines come together in a spread sheet and that’s where the EBIT number is calculated.
Having said all this, we have to understand the risks of using spread sheets and more important, the finance professional has to understand the world beyond the spread sheets and the numbers. The risk of spread sheets are many and not limited to non-centralized data, multiple numbers and plans rather than one integrated plan, formulas that are only understood by the creator and can’t be re-engineered or non-compatible Excel versions. Still, with good version management and documentation on how the spread sheets and processes works, many of these risks can be limited, and the spread sheets can thrive as an add-on reporting tool on top of the enterprise or business intelligence systems.
What is more important to understand for the finance professional, is that at a certain point in time, it is not only about the numbers anymore. Sometimes the information or the numbers are simply not there, as there is uncertainty in the world around us and assumptions and rough estimates have to be made. These estimates and assumptions often have to be agreed with a functional owner to come to an integrated consensus. Assumptions on sales volumes and price points, production yields, material consumptions, market growth or truck utilization cannot be made by finance professionals only.
This is where finance business partnering, relationship management and influencing of the functional owner or business unit comes in. This is also where the usually logical, analytical left brain finance professional has to tap in to right brain and understand the emotions and behaviours in decision-making and how they can be impacted by different people and cultures. It is important to realize that under pressure of time and politics decisions are often not rational. Furthermore perceptions on quality, prices and performance differ from person to person within a company and even more in different geographical locations where different cultures, values and motivations play a role.
Before you make a report or go in to a presentation, of course you have to triple check the outcome of your spread sheet and make sure the numbers add up. It is as important to have aligned your assumptions with functional business owners, understand time pressures, politics and your cultural environment. If you didn’t take the time to business partner, influence and understand perceptions of your stakeholders, you might find yourself in the situation where your spread sheet was right, but your advice was disregarded and the decision went in the exact opposite decision.
That’s when you realize you had to think beyond the spread sheet!
Sustainable S&OP can only be established when an S&OP culture is created. To create an S&OP culture, effective S&OP behaviours like discipline, common goals, trust, communication and collaboration need to become part of a company DNA. This presentation links some literature on this behaviour with results from my S&OP pulse check 2012. It furthermore provides some tips on how to create an effective S&OP culture.
The presentation is closely linked with my article on Global S&OP and leadership and I will use it as basis for when I speak in March at the Australian S&OP conference 2013. I hope you enjoy it. Let me know what you think. Is the right culture important to sustain S&OP and survive strategy changes, merges and acquisitions and management changes?
find here my article that was published in the 2012 fall edition of the Journal of Business forecasting. Choose a rainy day to read it as it is pretty long! Enjoy and I’m interested in your thoughts and feedback
It must be one of the longest article titles in the history of the Journal of Business Forecasting but I’m pleased that my article has finally been published. It is even the leading article, lucky me. The article is actually a combination of 4 blogs I wrote about 1.5 years ago on the impact of company culture on S&OP. You can find those here
I first wrote about the behavioural supply chain almost 3 years ago and still believe this is an undervalued aspect in the supply chain and not touched by many thought leaders. I like to point out Sean Culey from who I know passionately believes in this and whom I’ve been bouncing ideas of. Check out his work! You can start here
Culture and behaviour are not often things one reads about in supply chain or S&OP articles. It has my special interest for the last 5 years as I’ve come to the conclusion that this is where the real value lies in S&OP or supply chain transformations. For the last 20 years it has shown that in businesses only 30% of change efforts succeed. I think a big part of this low success rate is due to culture and behaviour. As I said supply chain literature hardly covers this aspect and I’m pleased that I have been given the opportunity to contribute to this topic.
With the writing of this article, which has been with the editor for over a year, I also made a presentation on how to create a sustainable S&OP culture. I will publish that probably in the early new year. This presentation will discuss what effective behaviours drive the right S&OP culture. I believe those to be Trust, Communication, Discipline and Collaboration.
For now enjoy the summer break (yes it is summer here in Melbourne) – or Xmas break – with your friends and family