This is the second in a series of four articles on leading an effective S&OP/IBP culture. The first article was on S&OP/IBP behaviour. This second article is on leading S&OP/IBP change.
Leading S&OP / IBP change
Whilst implementing S&OP/IBP, you and your company will go through a change process. Leading S&OP/IBP is about leading change in processes, systems and behaviour and you need support to make that happen. In his book ‘Good to great’ Jim Collins describes companies that made it from good to greatness. Great companies showed an average return of 6.9 times greater then the market. One of the features of these companies is the leadership style. What Collins describes as level 5 leadership goes beyond effective leaders. Three characteristics these leaders have are competence, chemistry and character. These leaders furthermore were:
– setting their successors up for success
– give credit outside themselves when there was success, while taking responsibility when there was failure
– distinctive in their approach to the people they wanted in the company
– put their best people on their biggest opportunity, not their biggest problem
Another feature of these great companies is that change comes automatically to them. The culture and behaviours in these companies is one of discipline and change. They don’t need change management, because the right self-motivated employees that have been hired and promoted by the leadership just do change if required. They live it! Besides being highly competent and achieving, it seems that the leaders from great companies show human encouraging and affiliative behavioural styles as described by Cooke and Lafferty. On top of a great change environment, these behavioural styles will create a trusted and respectful environment where important behavioural S&OP/IBP principles like open and honest communication, transparency, conflict resolution, cross functional coaching and continuous improvement will flourish.
Unfortunately less then 1% of the companies investigated by Collins meets the criteria to be great. It is not very likely your company is amongst them! The more likely scenario you find yourself in from change management perspective comes from a groundbreaking 1996 change study – Leading Change – from John Kotter. His research showed that only 30% of change projects are successful. In 2008 a study from McKinsey amongst 3,199 executives around the world, concluded that still only 30% of change transformation are successful. If 30% has been the change success rate for the last 15 years, we can expect some challenges while leading S&OP/IBP change. If you’re not in a ‘great’ company or have dominant level 5 leadership in your company, you need some preparation in order to lead S&OP/IBP change. 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/IBP is senior leadership support. This suggests indeed that across geographies, survey participants are not working in an S&OP/IBP environment with dominant level 5, self-actualising, human encouraging and affiliative leadership styles.
Assuming change doesn’t come to you automatically in your organization, how can you to detect in what change environment you’re about to operate? When you are about to lead S&OP/IBP change, how can you know if you have any chance of being successful? In his book ‘Beyond the wall of resistance’, Rick Maurer gives three easy to understand levels on which people resist change:
- Level 1: I don’t get it: this involves facts, figures and ideas to understand S&OP/IBP. It’s the world of thinking and rational action. It is the world of presentations, diagrams, processes and logical arguments.
- Level 2: I don’t like it: this is an emotional reaction to the S&OP/IBP change. It is based on fear. People are afraid that this change will cause them to lose face, status, control, maybe even their jobs.
- Level 3: I don’t like you: maybe they do like you, but they don’t trust or have confidence in your S&OP/IBP leadership to make this work.
These levels of resistance can be present in every echelon in the organization. Yes indeed, don’t expect every senior leader or stakeholder to get S&OP/IBP, to like S&OP/IBP, or to like you! As a leader in S&OP/IBP change, you have to understand the dynamics of your change environment. Before you start your S&OP/IBP project, here are some tips to discover in what type of environment you are about to lead S&OP/IBP change:
- Proven change success: Have informal chats with S&OP/IBP stakeholders on the track record of change programs in the company and how they view this S&OP/IBP change. Does the company handle change well? How did that last IT implementation or business process redesign go?
- Business priorities: Do senior leaders provide the right focus and priorities? Verify how many strategic projects are on the list in the board room. There should be around four or five. If S&OP/IBP is not part of that, or if there are 30 strategic projects, expect priority issues that will delay your S&OP/IBP implementation.
- S&OP/IBP process: Have an informal chat with senior leaders if they ‘get’ and ‘like’ the S&OP/IBP process. This will tell you if they are committed to support it. You might pick up level 3 resistance too. Check for real evidence that they support the S&OP/IBP process and follow its rules, also when under pressure.
- S&OP/IBP behaviours: Ask the same senior leaders about their ideas on S&OP/IBP behaviours like transparency, conflict resolution, cross functional coaching and continuous improvement. Check for real life examples on how meetings are conducted and on cross functional communication and collaboration.
- Company culture: Get a broader feel for the company culture. Is it a command and control environment, where people are micromanaged, feedback is seen as a personal attack and trust is low? Are their many meeting after meetings? Is information withheld? Or is it a consensus or collaborative environment, where people are empowered, trustful and where cross functional feedback is seen as a ‘gift’ to improve people and process? Don’t stick to the company brochure. Talk to as many key people as you can from all functional areas. Ask them to describe the company culture and specifically ask them questions about work relations with other functional areas. Is there a common joke about the company culture? Usually, these are true.
Based on these steps, you can assess the environment where you have to lead S&OP/IBP change. If you’re in an organization that has a good record in change, that’s great for leading your S&OP/IBP project. If the company doesn’t have a great track record in change, don’t worry too much. Not all organizations can be great in change if 70% of change programs still fail! Too many strategic projects will give priority problems and will slow you down in leading S&OP/IBP change, but it can be dealt with through good project manaement. Level 1 resistance in supporting S&OP/IBP process and behaviours is hard work, but can be overcome by S&OP/IBP education and engagement sessions.
Change gets harder when you discover level 2 or level 3 resistance, especially on senior leadership level. If there is critical mass in senior leaders that do not support S&OP/IBP processes and behaviours, or the company culture is a non collaborative, low trust, command and control environment, leading S&OP/IBP change becomes nearly impossible. There will be no trusted and respectful environment where important behavioural S&OP/IBP principles like open and honest communication, transparency, conflict resolution, coaching and continuous improvement can flourish. In this situations you need to find partnerships on senior level to change your company culture. This can’t be solved by an S&OP/IBP implementation team only. Find partners in the highest echelons, preferable C-level to help you change and create a culture to support sustainable S&OP/IBP.
The third article in this series will provide a framework – the ‘S&OP leadership quadrant’- that can help you recognize and manage different S&OP/IBP leadership types. Furthermore examples will be provided of the different types of S&OP/IBP leadership.