A lot gets written about S&OP maturity and how S&OP has soft benefits like improved teamwork and collaboration. Soft S&OP benefits like leadership, cultural and behavioral changes related to S&OP are important. In the end, S&OP is just a bunch of processes, meetings and information which has to be given meaning by people to get value out of it.
A lot of the S&OP improvements information is anecdotal, especially when you read about soft benefits. A little bit like he said…she said. To go beyond the anecdotal evidence and to provide a little bit more substance, I researched the raw data from the 2011 S&OP pulse check. This is the only open source S&OP survey for which the anonymous raw data is publicly available.
The survey had input from 143 participants, which could be split up by S&OP experience. Hundred participants had S&OP for less than five years in their business. Forty three participants had S&OP for more than five years in their business. Based on the answers from those groups, what follows are three important soft benefits you get with S&OP experience.
Increased Strategy Alignment
Participants were asked to choose which key action are taken every period in their S&OP process. They could choose multiple key actions which are shown in the graph below. The key action with the most significant difference was ‘Stay Aligned with the company strategy on monthly basis’. Survey participants who had S&OP in their business for more than 5 years were over 50% more likely to have this key action in their S&OP process than participants who had S&OP implemented less than 5 years.
Improved alignment and common strategic goal orientation is an important ingredients for cross functional collaboration and decision making. Furthermore strategy alignment is key for successful strategy deployment, the ultimate goal of S&OP.
Improved Trust & Communication
Participants were asked on their satisfaction in the levels of trust and communication between functional areas. Survey participants who had S&OP in their business for more than 5 years were 37% more likely to be satisfied with the level communication than participants who had S&OP implemented less than 2 years. For these same groups there was a 23% improvement in satisfaction on trust between functions.
The significance of improved trust and communication can’t be underestimated. In the ‘The Speed of Trust’ Stephen Covey shares many examples how speed goes up and costs go down when trust increases in a businesses. Trust has been suggested as one of the most important predictors of positive organizational outcomes and is also linked to positively effect psychological well-being.
Communication and information flow is more and more linked to successful strategy execution. It has been dubbed a top three reason for successful business transformations by McKinsey. In a study over over 100 businesses in Poland, information flow showed a significant correlation with good strategy execution and increased company revenue.
More Empowered Decision Making
Participants were asked on what they thought were the main cultural differences due to implementing S&OP. Survey participants who had S&OP in their business for more than 5 years were 94% more likely to choose ‘More empowered decision making’ than participants who had S&OP implemented less than 5 years.
Empowerment is one of those things business intuitively know is right, they talk about it, but find it hard to get right. It might be that over time, senior leaders see proof in S&OP meetings that their subordinates know pretty well what they are doing and can let go of control.
In his book ‘Drive’, Dan Pink suggest that there are three drivers for motivation; mastery, purpose and autonomy. Empowerment gives employees the autonomy to make their own decisions and hence can be expected to increase motivation.
Although we don’t know exactly what the drivers are, the survey data shows us there is a perceived difference in important soft elements that comes with S&OP experience. The increased strategy alignment, improved perception of trust and communication and more empowered decision making, is an incredible potent mix that impacts both employee and business well-being and performance.
The empowered employees will feel more motivated and go the extra mile to achieve strategic objectives. Increased levels of trust have a positive effect on employee mental well-being. A clear alignment with a company strategy can increases the sense of belonging to the cause and direction of the business.
For the business, empowerment facilitates decisions being made at a lower level in the organization, increasing agility and speed of decisions. Alignment on strategic goals give employees a common goal and provides guidance to solve inter functional issues, increasing collaboration. Increased speed and transparency of information due to trust between functions, will increase problem solving and decision making capability.
In our ever faster changing and turbulent world with ever increasing customer demands, strategy alignment, trust, communication and employee empowerment are surely ingredients that can make a difference.
Niels is an S&OP expert at Truebridges in Melbourne Australia. He developed an innovative and holistic S&OP improvement model to help his clients improve their end to end business planning.
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