The Power of the Words in Business.

“Words are, of course, the most powerful drug used by mankind.” 
― Rudyard Kipling

I have seen a common problem in different businesses, and that problem is the lack of a common understanding of the terms used for the business strategy and execution, and in other cases, terms used in a wrong way. Although is not necessary that all employees have a thesaurus in their heads, it is important to select and have a common understanding of the key words for the business.

Key words are those that we have to guarantee that employees understand in the same way. These key words are important in the business strategy definition and in its implementation. Also, I have found that when a business uses properly a term and the variations of such term, tends to have a better framing of the opportunities they have.

I work mostly in Supply Chain and BPM projects, so we guarantee that everybody understand quite well what "inventory" and "process" mean, as an example. If we look for the definition of "inventory" we may find that is:

"The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale."(1)

However, if we look at the APICS dictionary, we may find 137 terms related to the word: safety stock, base stock, make-to-stock, pipeline stock, etc. We can get lost in this amount of terms, so in an initial stage, we need to have a selection of key words for the business.

We can face this problem in different ways. Some of the recommendations are:

- Use clear and unambiguos words in the Vision and Mission declaration statements. Make them short and easy to remember.

- Select the key words for your business. Link them to the business strategy and the key operations outcomes you want to achieve.

- When initiating a project, execute a training on basics and key concepts before starting the core work. Make sure everybody in the project understand the same. Use certification or exams to calibrate the understanding of the concepts.

- Use training as a tool to gain maturity. For example, Accenture has a set of on-line academies used extensively and massively to gain momentum in business concepts and practices.

- Measure maturity growth periodically.

More information:

http://www.accenture.com/us-en/Pages/service-accenture-academy.aspx
http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_Supply_Chain_Academy_height.pdf
http://newsroom.accenture.com/article_display.cfm?article_id=4182


Sources:(1) http://www.investopedia.com/terms/i/inventory.asp

So your company is starting a "Transformation Program"?

Transformation: In an organizational context, a process of profound and radical change that orients an organizationn in a new direction and takes it to an entirely different level of effectiveness. 

Source: http://www.businessdictionary.com/definition/transformation.html#ixzz2Yvvu4IG3


Due to the costants changes in the market, in the consumers, in the world in general, once a while companies start a "Transformation Program". It looks the right way to approach major changes, like we do when we have gained too much weight and start a diet, but not necesarilly we achieve (like with the diet...) the outcomes we expect.

Typically, a company starts a Transformation Program when some of this phenomena is taking place:

- Profitability is going south, or revenues are diminishing or cost are increasing (or all of them).
- After the acquisition of a company, to seize the opportunity to make long time postponed changes and achieve the expected sinergies.
- The implementation of a major enterprise system (i.e. an ERP) or a major application.
- A major change in the Operating Model (i.e. a transformation in the Supply Chain, the implementation of Shared Services, outsourcing initiatives, etc.)
- Standardization/armonization/homologation of different operations (i.e. a multicountry operation).
- Innovation and growth initiatives in the company.

In a study of Accenture, we found that most of the Transformation Programs are reactive and created to reduce costs, and not neccesarilly to strength the "Competitive Essence" of the company. Also, the proactive and innovative changes with an idea of a transformation culture are rare. On the other hand, the study shows that only 4% achieved ALLthe benefits expected for the Transformation Program, and 40% achieved the majority of them.

How to avoid these pitfalls?

There is no silver bullet because every Transformation Program has its own peculiarities. However, there are some recommendations that apply to most of them:

1) Start with a goal in mind. It implies taking your time to define clearly the objectives (including targets and time to achieve them), a compelling business case (with the commitment of the key actors) and a clear roadmap (a thought plan) to achieve the objectives.

2) Define "smart" KPIs. Again, with a baseline and target, and clear accountability of who is responsible to achieve it.

3) Align the objectives of the key actors. It means not only defining them, but also linking them to the pockets of the key actors.

4) Monitor the progress and the benefits, and adjust accordingly. Establish a clear Governance Model, and follow the journey till the end. Capture and show benefits, and seize the opportunity to identify new ones.

5) Identify and implement quick improvements. Show that the boat is moving and not stranded in the sea.

6) Sell the benefits, constantly. Like Moses in the dessert, if you don´t show benefits the crowd will desperate.

Collaboration: A New Paradigm.

Typically, we understand collaboration in the value chain as initiatives performed jointly between manufacturers and retailers, like CPFR (Collaborative Planning, Forecasting and Replenishment), EDI, VMI, etc. However, Collaboration goes beyond that. For us, Collaboration are all capabilities developed jointly with your partners in the value network (i.e. providers, manufacturers, retailers, and even clients) in order to conquer and satisfy the needs of the consumer. It means that the Collaboration should not have the old approach of "let´s work together and save some cost to share the money saved between us". This old approach lead us to lack of trust, absence of a win-win mentality and even losing focus on what is important: the consumer.

In a recent study we did for Mexico jointly with GS1 Mexico, ANTAD (Mexico´s retailer association) and CONMEXICO (Mexico´s manufacturers association), we wanted to understand the level of Collaboration´s culture, processes and technologies in order to understand the gap and defined required actions for the industry. For this analysis, we based the study in a very complete framework for Collaboration of Accenture, shown below:

In our study, we had the response to 266 surveys, covering almost every area in the consumer goods sector and almost all retailers formats. The study is quite detailed, but some of the main conclusions are:

. The Collaboration practices adoption in Mexico are in a consolidation stage (it means, most of the practices are in the "mainstream" area of the framework). Manufacturers show a better level of maturity compared with Retailers.
- Collaboration is considered important, however the level of adoption limites the execution.
- There is a partial understanding of Collaboration. For example, the win-win aspect of the Collaboration appears in sixth place.
- The knowledge about the Collaboration practices is correlated with the adoption. It may be obvious, but it implies that the industry should understand better what it is before implementing enabling technologies.
- Collaboration is perceived as a required capability to have a competitive advantage in the near future.

In the study, we have shown that implementing some practices of Collaboration, we may have a potential of 3.6 Billions USD to unlock, and they will represent an increase of 0.5 to 1 points in the net marging of both retailers and manufactures. As a result of the effort, the main industry associations are starting initiatives to develop Collaboration in Mexico.

You may find more detail (in spanish) in the following publication:

http://www.accenture.com/mx-es/Pages/insight-strategic-pulse-high-performance.aspx