Over the last two years, at executive networking sessions, I have heard hundreds of executives describe themselves as being excellent at turnarounds.
As I listened, I realized that they were describing their process improvement skills, not their organizational turnaround abilities. Mainly, they were talking about fixing up part of the whole, not turning around the whole organization when it was under threat of death.
Then, one morning while driving, I heard a professional house “re-newer” describe he what did. He took care to distinguish what he did from folks who called themselves “renovators” but were really “parts of a house” fixer uppers.
“When I renovate a place, the only things that will stay the same about the house are its external and its internal supporting walls. I pretty well gut everything else. When I am through, it’s a very different place to live in. It is a much more effective and efficient house. It operates better as a home, and costs much less to run.”
What an insight! I immediately understood the difference between all those executives I have been listening to and organization turnaround experts.
Make improvements to 1 or more existing processes through improving automation or re-organizing work flow.
Address what needs to happen to ensure this organization survives and dramatically improves its results. Figure out how to do it without destroying organization (i.e. without tearing down “external and internal supporting walls” = destroying customer relationships or financial viability while change is occurring.)
Fit improvement into the “day to day” normal way of doing other work in organization/
Tackle all processes in the organization and re-do them to achieve dramatic success.
Do so a way that ensures that organization survives while dramatic internal change is on-going (i.e. org continues to serve customers, provide services or make products, pay bills)
Help existing staff learn new improved processes
Challenge existing staff to come up to the new performance bench marks. If they don’t, bring in people who do integrate them into team.
The metrics that are used in contracting with an executive for the improvement of existing process are straight forward. Processes do something. They produce output of some kind (e.g. service transactions, produces, units of information ….). They take energy to do (e.g. people hours, head count, …).
To develop a metric all you have to do is count the output and the input reliably. Put units of output over units of input and you a useful “point in time” metric for that process. Add a relevant time unit. Then watch the trend over time. The result is a clean, clear performance metric. Here are some classic examples:
- bank customers served per month / teller hours per month;
- airline passenger miles per month / air crew hours per month,
- Widgets produced per day / manufacturing staff hours per day.
In each case, the trend will tell you if the executive is “improving” the process.
You cannot take this approach when you contract with a Organization Renovation™ leader and team. Every process inside the organization will be different by the time they are done their work, just like the entire interior of a house will be different by the time house renovators are through are done
Organization Renovation™ involves great urgency to make change under conditions of organizational stress.
Sometimes, part of the change goes backward for a time, in order for the whole change to go forward. (See The Reality of Enterprise Turnaround for more insight into these dynamics.)
So how do you “measure” the performance success of an Organization Renovation™ leader and team? You need to take a much broader approach than you do when contract for process improvement. You need to do four things.
- Use metrics that look at the organization from the outside in.
- An example is “$revenue produced / $dollar of operating expense” per month. All kinds of process changes things can be happening inside the organization. But the overall pattern of positive change will be reflected in such “from outside the organization looking in” metrics.
- Expect the Organization Renovation™ leader and team to show how they are making both short term immediate changes and long term changes at the same time.
- Listen to them as they talk about this with you on a regular basis. If they cannot show how they are doing this then this absence is in itself a “negative metric”.
- Contract for these regular “review” sessions. Then expect the leader and the team to “initiate” on having them. Expect them to initiate on the development of process specific metrics that show what is happening as a result of these changes.
- Expect negative trends in some of the process specific metrics while you are seeing positive trends in others.
- The turbulence experienced during Organization Renovation™ can means that things can look worse before they look better. Just imagine what the inside of a “renovated” house looks like before house renovators start building the new wall
- Work with the Organization Renovation™ leader and team to identify the “supporting walls” for this organization – the key things that must continue to be in place while the change is happening.
- Develop metrics for each one. “Revenue per customer” and “customer engagement” are two examples for a customer service organization.
- Watch the reaction of Organization Renovation™ to any negative sustained trends in these metrics. They are about the organization’s survival.
- Expect the Organization Renovation™ leader and team to understand the importance of these metrics, and take negative trends in these key “survival” metrics extremely seriously. They need urgent corrective action. Build this expectation into your performance contract with the leader and team.
Organization renovation is change management on the broadest scale. When completed successfully the organization is a very different place – much more effective and efficient. It operates better as an organization, and costs much less to run.