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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Tuesday, September 12, 2006

Creating a performance culture

The Island: 11/09/2006"

Every journey begins with a single step. With lower costs, higher quality and greater public satisfaction. Corporate Sri Lanka has always been resilient in tough times. Should we not take that first step today? Say’s Rohantha Athukorala.

For an organization to be lean is the buzzword in today’s business world. The strategic reason being, when an organization is lean it can drive productivity up resulting a stronger bottom line that can drive up shareholder value significantly. Citi Bank is a classic example where in 2002 the global sales revenue dropped by six per cent to 94.7 billion dollars but the profit growth was a staggering 16.7 per cent and brand equity growing by eight percent to 19.9 billion dollars (Source: Inter Brand survey 2002) However, during the process of an organization becoming lean it does not mean that one must practice mean tactics. Specially in a country like Sri Lanka where emotional attachment is a stronger reason to work than the masculine reasons like achievement, challenge and victory that exists in the west.

When we analyze successful organizations like Dialog or Unilever in Sri Lanka we see that for a ‘lean’ organization to exist there has to be lean processes, a proven technique even when applied by government. A typical ‘lean process’ can help create a performance based culture within an organization due to the clear responsibilities and accountability that one carries in a modern organization. The best case in point is Royal Mail in the U.K where the processes are so sharply formulated that a letter mailed from Scotland that needs to be delivered in London within 3 days has a specific coloured letter box which drives a chain of people in collecting, sorting and the delivery of that letter in the stipulated time. Hence we see that a ‘Lean process formulated to consumer requirements’ delivers value to the consumer.

This constitutes a system that requires that all processes are reconsidered and carefully integrated to obviateity of customer service. If we take Federal Express who is a leader in the courier business has 247 planes that land from around the world in Mississippi airport between midnight and 3 am and then with a semi automated sorting out process a parcel is delivered the next day to a door-step of an office. For governments this can mean a sea change in attitude with the citizens being regarded as the customer of government, however when applied it really works. In Sri Lanka, we see the Passport office coming up to this standard based on the need for same day passport or a passport within 3 days. However, it is good leadership together with a strong rewards strategy that a performance culture can be developed and sustained.

Customer centricity

The ongoing success of corporations such as Toyota, the corporation that introduced and developed ‘Lean Manufacturing’ has been based on defining processes on the basis of their ability to deliver customer value and excising those that do not. As a by product, of sometimes ruthlessly, pruning those processes will deliver customer value to companies and be able to reduce costs more substantially than through cost cutting exercises that many companies embark. If we take a leading hotel like Cinnamon Grand in Sri Lanka, customer satisfaction at every stage of every transaction is drilled with a focused training programme called Cinnamon Magic. This has enhanced employee satisfaction and commitment too, whist making a customer experience unique. In short, "lean Processes" have delivered a business culture which results in the ultimate win/win situation.

Culture change

Organizational culture has frequently been simplified and expressed as "the way we do things here". It is more than that. It is perhaps above all else, an expression of the values that drive all activities within an organization and the norms or rules that ensure that those values are implemented in practiced. At a retail store like Wal-Mart, values of the company receive more than lip service from the senior management and employees alike. During the times of their founder CEO was alive; he was at the shop floors talking to the customers to understand how better this No 1 retail store in the world can delight a customer. Let me site an example. He found out that most housewives equate ‘Fresh Fish’ when having to purchase a whole fish taken out of an Ice bath and not when it is packed in trays. So today, Wal-Mart has fish in baths of ice, in line with customer perceptions of what fresh means. Hence we see culture driving behaviour and it lies at the heart of performance. Re addressing processes provides a unique opportunity to emphasize the values and norms that lie behind them to ensure that they are shared across the organization in a company or a department in a government. The good news is that the work becomes enriched through customer centric processes leading to the performance culture becoming deep –rooted.

Involvement

W. Edward Demming said, "What cannot be measured cannot be managed". In order to ensure that lean processes deliver as expected. Measurement is required. Strategic objectives need to be broken down to tactical measures of performance that all involved must understand, accept and achieve. In Sri Lanka Pizza Hut is a typical organization that monitors performance. If a Pizza is not delivered to a table within 15 minute after placing the order, the Pizza is free to the customer.

However, we must note that when targets are imposed people find ways of satisfying them on ‘paper’ that often have an adverse effect on performance. If people are to take responsibility for performance at every level they need an opportunity, together with management to set their own targets based on the strategic demands of the organization. Research has revealed time and time again that when people are given the opportunity of setting their own objectives the role of management becomes more a task of injecting ‘reality’ than having to encourage them to achieve more. Involvement increases commitment, efficiency and morale. Experiences in both companies and government departments have shown that everyone helps solve problems. If performance falls, when there has been a cohesive team that has build the targets in a culture with lean processes the turnaround is faster and stronger. The case in point is the British government which has achieved an increase of productivity of 60 per cent.

No rose garden

Nobody should assume that Identifying and developing a true performance culture is necessarily easy. There may be significant existing cultural barriers to be overcome. Especially in government departments in particular the view that "the way we have always done things must be right" can be entrenched. The good news is, that experience has shown that once people in an organization begins to enjoy the benefits of "working lean" new attitudes become grained and unshakable in an amazingly short time.

It is not only in the public sector but in which resistance to any thing different can be seen but also in the private sector. Even in the public sector - my experience as the Chairman of an apex Export institution was, if the leadership is seen credible and financially discipline change can happen with least resistance. If this is achieved in the private sector it will lead to stronger profits whilst in the government sector it will be a higher productivity and stronger economic growth.

Effective leadership is a prerequisite for success. Unless the top management is prepared to lead by example, addressing where necessary existing leadership problems, there is limited hope that even the most committed employees can achieve. Li Kuan Yu was the best example of where a visionary leader led a country to achieve heights by addressing the key issues of corporate Singapore. We in Sri Lanka have many a examples in the small and medium enterprises who have demonstrated leadership which has transformed a company to build a culture that drives people to higher performance – Siddalepa, Kandygs Handlooms, Odel, House Fashion to mention a few. Lean demands that leaders have the courage to identify and resolve deep-seated organizational problems. It is not a quick fix. It is a strategic and tactical tool that must be applied consistently through out the organization.

We all have a role

Politicians, business leaders, senior public servants, academics and consultants all have a role in clarifying the benefits of lean processes. The public both in the role of customers and employees need to be convinced that the approach offers them advantages now and in the future. All stakeholders need to understand that early benefits are not the end of the story. Pepsi Cola is classic example where the turnover growth in 2002 was only 7.6 per cent to 26.9 billion dollars but the profit growth was a staggering 70 per cent whilst the Brand Equity growth was up 4 per cent to 12 billion dollars the same year.

Toyota is another example where initial developers of lean manufacturing took years to reach the crescendo position that they have achieved today. They have now pushed companies like Ford and General Motors to achieve dominance over time. Turnover of Toyota exceeds 153 billion dollars whilst the brand equity growth has gone up to 20 billion dollars at nine percent growth. This performance has become the benchmark in the industry today, including customer satisfaction levels. Organizations have enjoyed the accruals of the benefits along the way, but it is a long journey. Every journey begins with a single step. With lower costs, higher quality and greater public satisfaction should we not take the first step today?


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