Tag Archives: change management

A true story……

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Customer Focus

Customer Focus

Back in 2006 Reflex Semiconductor was a medium sized electronics business with Sales Revenue around $200 million and a respectable Net Profit of around $5 million.

The company had several hundred customers and  a diverse and mixed product range.

Unsatisfied with performace the Board decided to appoint a new President of Marketing.

This guy was called Max Cutter (I kid you not) and he summed up his philosophy in his joining speech.

” Guys, I want to re-focus on our core business. 80% of our profits come from 20% of our customers but 80% of our efforts are in supplying the lowest contributing 20%”  (He was obviously familiar with the Pareto rule)

“I want to re-focus our business (hang on Max, how long have you been here) by eliminating the lowest earning 20% and refocussing our efforts on the highest grossing 20% and watch this business GROW!!!”

When the clapping and cheering had subsided Max set about his business. Gathering together a multifunctional team of career oriented individuals from all levels of the organization (well, engineer level up anyway)

Pursuing a mantra of ‘All Change is Good’ they set about trimming the companies customer database, removing anyone who contributed less than 0.5% of Total Sales.

This carried on  for several months.

The Quaterly results were due to be published when Max announced he was leaving the Company for a better position. Despite much persuassion and the offer of a 30% increase in salary Max left anyway. He did get a nice leaving present of  a Rolex watch presented by the CEO.

The Quaterly results indicated that Sales were down to $140 million (-30%) and Profit was now a loss of $1.2 million.

Naturally, a Consultant was brought in to assess the situation and, after one weeks analysis, She reported that NO ONE CUSTOMER REPRESENTED MORE THAN 0.7% OF SALES.

The companies customer base was so diverse and its product range so varied the Good Old Pareto Rule didn’t apply in this case and Max and the team had successfully exterminated 30% of a perfectly good business.

Unfortunately Reflex Semiconductor never recovered and went bust a year later.

Max went on to get a job in investment banking and invented something called the “Credit Default Swap”….

chris@projectsguru.co.uk

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May the best team win………

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north-koreaWhilst the football may not have lived up to the hype so far we have still seen a couple of excellent team performances. So what is it that makes for a great team performance whatever the situation ?

* A leader who doesn’t just tell the team what to do but who provides a vision and who communicates that goal to the team by clearly outlining the task at hand and how it is to be achieved.

* The team are all pulling in the same direction putting individual disagreement behind them.

* The rewards of success are shared equally amongst the team members.

* There is no “finger pointing” if someone makes a mistake and the rest of the team rally round to support the individual.

* The Team leader provides all of the tools and instructions neccessary to complete the task.

As we enjoy the World Cup see which teams exhibit these qualities and measure their success.

The best team may not have the most outstanding individual players but the best team will win.

chris@projectsguru.co.uk

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Its all Greek to us……..

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The riots & violence in Greece are a possible foretaste of what is to come in the U.K as we stand on the brink of  the most important election for over 30 years.

Whoever wins we should not fool ourselves, we are in for a period of huge change with severe public spending restrictions which will affect millions of our citizens.

This is not the fault of any individual or even as a result of the actions of a bunch of investment bankers. Capitalism is cyclical in nature and some of us have seen it all before to one degree or another. Boom and bust is the nature of the game. We have been very fortunate to live through a period of sustained growth with low interest rates over the last 13 years.

However, inevitably, this created a huge bubble in the U.K & U.S housing markets which was built on highly leveraged debt.

It was inevitable that a crash would follow and now is the time to pay.

Let us hope that whoever wins the election apportions the pain equally & as fairly as possible and that we can avoid the tumult which is currently sweeping across Greece.

We certainly do live in interesting times.

chris@projectsguru.co.uk

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We’re flying tonight…

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BAplane2The planes are flying again over Europe as the restrictions imposed due to the Icelandic volcanic ash cloud have been lifted. But are the scenes experienced over the last few days a bleak glimpse into our collective futures ?

It is commonly acknowledged that oil reserves will not last forever but maybe less well known that the period of peak oil production is upon us and in the near future demand will begin to exceed supply. So what are the possible consequences:-

oilgraph1) Oil is like any other commodity and as demand exceeds supply price will increase. This was seen before the financial crash of 2008 when Oil peaked at $147 per barrell. It is current around $82 per barrell.

2) GDP growth is directly dependent on oil supply. China is currently growing at around 10% per annum – this cannot continue.

3) There is no readily available alternative. Biofuels represent a tiny percentage of total fuel volumes and use up valuable land resource which could be used to grow food.

4) We will experience increasing cost of food and other essentials.

5) Air travel will become the preserve of the rich. This can already be seen in the UK with vastly fewer people taking foreign holidays following the financial crash.

6) Our world will shrink; the global village we have experienced since the 1960’s will shrink as travel costs reduce our ability to roam.

7) There will probably be more conflict on a global scale as States compete for scarce resources.

This all sounds like bad news but there will be positive outcomes:-

1) Reduced consumption of Oil will reduce the amount of carbon generation and lessen the risk of global warming.

2) The crisis will force us to develop alternate energy strategies.

3) Being less dependent on “the black stuff” will enable us to take independent geo-political decisions less hindered by our current needs.

4) We will be more concious about re-use and less wasteful of resources.

We live in interesting times.

chris@projectsguru.co.uk

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All change at British Airways..

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bacrashIs the current industrial strife at British Airways indicative of a poorly managed change process ?

Change which is imposed rather than negotiated is rarely successful. In fact any change process needs to go through fundamental stages to succeed and the unrest at B.A would suggest that these key stages have been ignored.

Change is inevitable but its successful implementation requires real management skills.

chris@projectsguru.co.uk
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Greedy greedy Cadbury, greedy Cadbury..

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chocolateThat was the chant that went up around the U.K following the decision by the Cadbury board to recommend the latest offer from the American company Kraft for the U.K confectionary manufacturer.

Surely, however, the Cadbury board was only acting in its shareholders best interests – and what’s wrong with that ?

Perhaps objectors could answer the following simple questions:-

If you sold your house would you a) get the maximum price you could or b) sell it to the nicest person for a much lower figure ?

If your boss offered you a 20% pay rise would you decline in the better interests of the Company which employs you ?

Thought so.

Why are people who consistently act in their own material interests find objection when others do the same ?

There are genuine concerns that the Kraft takeover will have a negative impact on Cadbury workers jobs, but those workers do not own Cadbury’s they are employed by them and as a result receive generous financial reward; if they are not happy with the results of the takeover they are free to sell their skills and abilities elsewhere.

It may also be the case that Kraft should not be too surprised if their workforce seek and pursue a substantial pay claim, if neccessary employing industrial action to force their claim.

Maybe if we all acknowledged our own material instincts we could be more understanding of the actions of others.

chris@projectsguru.co.uk

www.projectsguru.co.uk

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Now we’re Insourcing……………………

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reengineeringFriday’s News that Automotive component supplier Bosch is closing its plant in South Wales and moving manufacturing to Hungary was grim news for employees.

However, this action is actually bucking the latest trend.

A recent survey by manufacturing group EEF revealed that one in seven companies had moved manufacturing back to the U.K in the last 2 years.

Nearly seven in ten agreed that the U.K was now a competitive place for manufacturing.

The falling price of sterling, increased cost of freight, repeated quality concerns and time to market issues have combined to make the U.K increasingly attractive.

The biggest issue is in obtaining personnel with the knowledge and skills required to establish successful manufacturing lines.

This is being addressed by hiring interims with the experience to deliver results by ‘hitting the ground running’

chris@projectsguru.co.uk

www.projectsguru.co.uk

Fancy a change ?……….

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managingchange

If your Organization is embarking on a major change program the methods you adopt to bring about the change will determine the level of success achieved.

The change management process is well defined and comprises the following key stages:-

• Identify the key thing which needs changing – the change object.

• Identify the key reasons for change.

• Communicate the change.

• Force Field Analysis, identifying the forces for and against change.

• The change process.

• Freeze the change.

Chris@projectsguru.co.uk

www.projectsguru.co.uk