Many articles and whitepapers have been written on how to overcome the process and technology aspects of S&OP. Not many S&OP whitepapers have been written on how to include and overcome behavioural and cultural aspects of S&OP. I will write four articles that will provide you with some thoughts and guidance to address behavioural and leadership challenges when implementing and sustaining effective S&OP. In my third article I will share with you the ‘S&OP leadership quadrant’ that can help you recognize and manage S&OP leadership types. This first article will introduce important behavioral aspects of effective S&OP/IBP.
Effective S&OP/IBP behaviour
Globalization is pushing companies to plan and operate more and more across the borders of their country of origin. This also has impact on sales and operations planning (S&OP) processes. Companies that once started S&OP locally are now rolling out S&OP across geographies, sometimes even globally. This means that S&OP stakeholders have to overcome an increasing set of geographical driven social and cultural differences in the S&OP implementation. In the S&OP meeting cycle they need to handle different cultural perspectives, disagreements and come to consensus. To handle this, S&OP managers and senior leaders have to be aware of their own company culture, understand geographical cultural environments and show leadership to establish the right cultural environment to drive effective S&OP.
According to Collins and Porras, a company culture is created from its core purpose and values. The core purpose is the reason for being; it captures the soul of the organization. Where you can fulfil a strategy, you can’t fulfil a purpose. Core values define what the company stands for. A company will stick to them, even if it became a competitive disadvantage in certain situations. Well defined, integrated and truly lived, purpose and values will drive companywide behaviour. Imbedded company behaviours will drive a sustainable company culture, which will last over time. White their sphere of influence, senior leaders are in the best position to show the right behaviours and create this sustainable culture.
When implementing S&OP a company will face behavioural challenges as well. Long imbedded company behaviours might not necessarily be favourable for S&OP. Although the core of the S&OP process is about cross functional collaboration, recent studies show that actually only 50% of people systematically and predictably behave cooperatively. About 30% behave as though they were selfish. Having a critical mass of co-operators and collaborators in your S&OP process is critical to make it effective. Dr Adizes, the author of the book mastering change, argues that collaboration might occur when there is mutual respect. ‘Once respect exists, the condition for learning from each other is established. At that point, if the parties have something to contribute to each other, collaboration might happen.’ “Might happen”, because for collaboration to happen, a supportive positive environment is also necessary. A respectful and supportive environment has to be created by passionate leaders that believe there is more then only hard business goals to achieve. These leaders know there has to be a purpose, an emotional component and the right behaviours to drive a supportive, positive and achieving environment. As P&G CEO Bob McDonald said in the Harvard Business Review on innovation at P&G; ‘People will innovate for financial gain or for competitive advantage, but this can be self limiting, there is a need for a emotional component as well – a source of inspiration that motivates people’
Research from Cooke and Lafferty shows that there are four main constructive behaviours, which seem to support effective management across geographical boundaries. In what they call Life Styles Inventory (LSI) they define these constructive behaviours as; achievement, self-actualising, humanistic encouraging and affiliation.This is supported by their database with information from over 1 million managers and 12,000 organisations worldwide. Cooke and Lafferty seem to have evidence that achievement needs to be supported by other –softer- styles, which are more focused on the person behind the achievement. They describe these styles as follows:
Self-actualising: People with this style demonstrate a strong desire to learn and experience things, creative yet realistic thinking and a balanced concern for people and tasks
Humanistic Encouraging: People with this style devote energy to coaching and counselling others, are thoughtful and considerate and provide people with support and encouragement.
Affiliative: People with this style share their thoughts and feelings, are friendly and cooperative and make others feel a part of things.
Company cultures that lead in these behavioural styles will create a trusted and respectful environment where important behavioural S&OP principles like open and honest communication, transparency, conflict resolution, cross functional coaching and continuous improvement will flourish. If an existing company culture doesn’t live these behavioural styles and S&OP principles, the company culture will be a roadblock to implement effective S&OP.
There are two main ways in which company culture has impact on implementing S&OP; in change management during the S&OP implementation and in sustaining S&OP once the initial S&OP project is finished and is handed over to business as usual for continuous improvement. In my online survey the S&OP pulse check II 2011 , 142 participants from over 30 countries indicated that the top roadblock to implement S&OP is senior leadership support. As senior leaders drive company culture, they also impact both change management during the S&OP project as well as the creation of a sustainable S&OP culture. The impact of leadership on both changing S&OP and sustaining S&OP will be discussed in my next two articles.