All improvement projects may not add value
It is not uncommon for companies to have multiple improvement initiatives/transformation programs underway at the same time. Most of these are initiated by leaders with a clear view of their benefits to the company. But at the end of the day most of these projects don’t finish, take too long or don’t deliver the results they want! So does that mean the company leadership should not initiate any improvement projects? Of course not. To understand more about why less is more when it comes to improvement projects read: https://www.vectorconsulting.in/blog/systems-thinking-innovation/too-many-cooks-spoil-the-growth/
|Shubham Agarwal :||Hello and a very warm welcome to the 43rd episode on Counterpoint podcast. I am Shubham and we are going to talk about improvement projects on the podcast today|
|Kiran Kothekar :||It is not uncommon for companies to have multiple improvement initiatives/transformation programs underway at the same time. Most of these are initiated by leaders with a clear view of their benefits to the company. But at the end of the day most of these projects don’t finish, take too long or don’t deliver the results they want! So does that mean the company leadership should not initiate any improvement projects? Of course not! Lets ask our guest today, Kiran Kothekar why so many improvement initiatives fail and what leaders should do to get quantum improvements to happen in their organizations in the shortest possible time?|
|Shubham Agarwal :||– Hi Kiran. You are a founding director of Vector Consulting Group and everyone knows that Vector has helped many companies successfully take up transformational projects. But tell us first why so many improvement initiatives don’t deliver results? Is it a leadership failure?|
|Kiran Kothekar :||Leaders have to take decisions and many times many people think that leaders are born. They have this natural talent or natural instincts to take correct decisions. Can this whole process be converted into a scientific way of thinking? That means we don’t require natural leaders. Can normal leaders also take the correct decisions? There is a way of looking at it this. I was on a flight and sitting next to a MD – owner of a very large company.|
|Shubham Agarwal :||We got talking. So I asked him, “How do you know that your company’s making progress?” – a very innocuous question. And he said, “Of course, when the numbers are better, the profits are going up, sales going up, ROC get better etc..” I asked him, “Is there any period during which your numbers are not going up, they’re flat or even they are declining? Are you worried about that period”?|
|Shubham Agarwal :||That’s an interesting question. What did he say?|
|Kiran Kothekar :||– He said, “Yes, there are periods -some of them are bad but some of those periods I’m not really worried about because I know where we are doing something and that should give us results. Sometime later”|
|Kiran Kothekar :||– “Essentially what you’re saying is that there is some projects that you’ve taken up and when they finish, you will get better results?” he said. “Yes.” “So that’s my definition of how I decide when a company is making progress or not. It’s when important improvement projects are finished. By important projects I mean new markets launch of new products reorganizing the company a new ERP new CapEx etc.. When these projects are finished there is an effect on the company- company’s numbers”.
He said, “That’s a very interesting definition and I like it.” So the next question I asked him is, “ If this is what you like then probably you are making fantastic progress on improvement projects? So how many projects did you finish in the last week?” He said, “None”. “How many projects got completed in the last month?”. He thought for a while and said, “None!”. “Last quarter?”. And he said “None!!”.
And then he went silent for a minute.
|Shubham Agarwal :||Oh, oh, what happened then?|
|Kiran Kothekar :||Then I asked him “How many projects did you start in the last management review that you had with your senior management?” He said “ya, I think we started two of them. One is to improve the forecasting and other is to change the way we are organized in sales because we are not actually getting good numbers in sales”. “Okay, what about the last management review meeting?” He said, “Yeah. We must have launched some projects and in the one before that as well”. But then he said, “That’s not the only time I launch projects you know I go meet some colleagues of mine in the fraternity or I go to expos or conferences or I read something and then I get ideas and then I launch projects”. “So, essentially you are launching a number of projects, is it?”. “Yes”. “So, the rate at which projects are flowing into your system is significantly higher than the rate at which the projects are coming out? And what if you had completed these projects- you would get fantastic results?” He said “Yes, of course”.|
|Shubham Agarwal :||hmm|
|Kiran Kothekar :||– “Have you experienced that when you focus on a project and you relentlessly push it -that means you review nearly every day, – the project finishes in abnormal times? He said, “Yes, six months project finishes in one month!” “Which essentially means that if you don’t do this, all the projects are getting delayed and you get the results after a year or two years. (scenario 1) But if you push a project finish in one month, you’ll start seeing the benefits, the revenues, the numbers after a month So what is a better way of doing things?|
|Shubham Agarwal :||How did he respond?|
|Kiran Kothekar :||– He said, “Ya, Now I understand. If I take one project finish it off, I get some money then I take another project finish it off, I still get some money rather than waiting for a year or two years.Then the next question that comes up is if I want to stop all the other projects which is the only project that I should take? Hmm. That’s tough question, can he stop all but one project? what did he say? He said, “No, I can’t do that because each and every project is a very important project! I don’t launch a project just for the sake of launching projects. There is an important idea or an important issue or an important obstacle that I’m solving. That’s why I launch these projects”. “Oh! Okay”. So, I said, “Let’s do a small simulation”. And fortunately for me he was from an FMCG company. So, I said “Okay your sales are not growing. What projects should you launch? Do more schemes? do more marketing? give your salespeople more incentives?”“Yeah. This is something that we are thinking about” “What if you are losing 20 percent of the orders because of your supply chain? The forecasting accuracy is at 80 percent your fill rates are at 80 percent. What should we be doing?” “Then I think first project I should do is in supply chain”. “So now you get my point? If I know this logical thinking, I can decide what not to do and what I should be doing”.Hmm.ok
“So in this case we are talking about doing a supply chain project before getting into sales because if I don’t improve the supply chain and launch a marketing campaign I still will not get the increase in sales because my product is not there at the retail shop”. “Yeah, I understand”
|Shubham Agarwal :||Hmm “So, now we decided that we launch an improvement project in supply chain. Now, what is it that you want to change? You have inventory issues, you have availability issues, your freight cost is not satisfactory, a month end spike and half truckloads going all around the places, firefighting… What is that project you will take up?” He thought for a while and said, “As a matter of fact we have actually taken a project for each of these cases and we have so many projects going on”.|
|Shubham Agarwal :||Hmm, what he has said is what most companies do. Is there a different way to approach this decision?“Yes.” “Now let’s start thinking scientifically just like physicists or say doctors think. You go to a doctor you talk about some problems of yours. The doctor asks you -do you have any other issues, and he collect all set of problems. But ultimately what does he decide? He decides there is one disease that you have and gives you one medicine. Say, it’s like malaria. He’ll give an antidote for malaria and he doesn’t try to treat your headache by giving a crocin. So, this is the approach we should bring into management. This is based on the principle of convergence.|
|Shubham Agarwal :||: Could you please explain the principle of convergence? What is different about the doctor’s approach?|
|Kiran Kothekar :||He believes that all these problems are linked to one another and there is one core problem or a root problem which results in all this.
What I’m saying is that what we are seeing around us is are symptoms they are not the problems- inventory delivery issues, freight cost going haywire, trucks not being available, spike at month end- these are all symptoms. The problem is that you are following a forecasting system and the market is very dynamic that results in all these other issues. Now what if you take one project which is to build a system which does not use forecasting but uses a method by which you are reacting to market demand. Then you have solved all the issues. So that should be the first project to take”.
|Shubham Agarwal :||It is starting to make a lot more sense now. What you are saying is that like the doctor linked up all the symptoms and found the real disease to treat, symptomatic issues in companies can be eliminated if the core problem is addressed.
|Shubham Agarwal :||Ok what should be done once the supply chain project is done, can the same approach be used to improve sales?|
|Kiran Kothekar :||“Many people say let’s improve the incentive structure; Let’s launch better schemes and so and so forth. But if you look at where the maximum sales is leaking, you are a universe a one lakh retailers and you are present at 30000. And, your customers walking in into all those retailers! The first project should be how do how do I get there. How do I get into the 70000 retailers? All other projects don’t matter! So, this is what I mean by bringing in the scientific way or a logical way of deciding what you need to do.) This essentially means that we have to find out that one thing we need to do which is getting more with less”.|
|Shubham Agarwal :||This is great Kiran. Your story has given us a completely different perspective to how improvement projects should be looked at. I am sure this would help the listeners and they can start to analyze the projects currently running with this line of thought to do more with less.|
|Kiran Kothekar :||Thank you.|
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