book called Maximizing Return on Investment Using ERP Applications. He is also an old friend and colleague who I met back in the 1980's when we both worked for a large Germany-based chemicals company.
The book, co-written with Thomas Weirich and Frank Andera, industry experts in business process improvement, looks at ways that enterprise resource planning (ERP) programs can drive business improvement and success.
I recently interviewed Art and we spoke about such things as organizational change, culture, systems thinking, leadership, and engagement.
Q. You talk about an integrated approach to business transformation. Can you be more specific about what you mean by, or include in, that comment?
A. Thanks, Terry. Our book “Maximizing Return on Investment Using Enterprise Resource Planning Applications” talks about the exposure of fundamental business logic across functions that becomes illuminated by adoption of integrated business systems. The premise is that there are institutional aspects of business that need to be looked at differently when looked at from a cross-functional perspective, and that the ability to change the cognitive view we have of business fundamentals is key to success.
This same paradigm change applies to most of the consulting specialties that have grown up over the years, like various statistical approaches, quality programs and Organizational Development/Organizational Change Management approaches and tools. All of these are very effective at addressing various aspects of business changes, yet, in my opinion, none of them are sufficient in and of themselves. The central goal of developing a change enabling mind-set cannot be any one program but must be around integrated business change that integrates not only functionality but also the consulting tools that we use to address specific issues as they are identified.
Q - What about culture change? So many organizations want to change their culture. What's your approach?
A. I think that this makes the case that I try to always keep in mind. It is important to note that my work revolves around the use of ERP systems and how these relate to producing tangible business benefits. In our case, the end results, expressed as financial results, become the goal and the organization, during the planning process, to define how the business components like culture, politics and organization can be used effectively to get decisions made along the critical path such that planned returns are achieved.
I have often found that the answer includes a recognition that the current culture prevents successful decision-making on a timely basis. Only then is the question of what to do about it asked. The difference is that at this point, the goal has been established and accepted as worthwhile, the cultural barriers identified and therefore cultural change becomes more measurable. It has always mystified me that major cultural change initiatives would be engaged without a clear view of the need, the failure mechanisms and financial measures of success. Viewing this through the prism of ERP implementations can bring insight into this phenomenon as well as to tie financial results to cultural change initiatives. As Covey said - "Begin with the End in Mind."
Q - Some say that the failure rate of large scale organizational change is as high as 70%. Do you agree with that? And what factors do you think cause failure in large scale changes?
A. From the perspective I have gained during more than 20 years of planning and leading transformational change in business organizations, I would put the number actually quite a bit higher, but that is probably because of how I would define success. If you are at point A and target point B, you can usually tell whether or not you got there. For example, if your goal is to focus on the customer because that has been identified as a key barrier to growth, then you can use surveys and the like to rate performance. If, on the other hand, you define your goal as to increase market share by reducing your internal costs and improve your quality and dependability such that you can price your product more competitively then you have entered a whole different arena. The latter will have to include significant IT applications changes, altered business processes, identification of cost targets, market analysis and many more. Doing these will challenge the existing culture, politics and organization and likely require specific work with executive groups and individuals to alter the cognitive paradigm around business fundamentals.
Q - What should a business leader take into account when he or she is thinking of undertaking a large scale change in their business?
A. A business has to be looked at as a “whole system” that has not only many operating parts (finance, sales & marketing, manufacturing operations), but also have many structural components (strategy of various types, workforce collective knowledge, business processes that are either designed or de facto and many more). Most companies today don’t have a clear view of how all of these cross-functional components operate or what the interaction is between functions and structures.
When I talk about not being able to develop clear personal change objectives until you have a clear view of the business reasons for the changes this is what I am referring to. This will require a change in our world view as it pertains to our business and from there needs to start with development of understanding the key components discussed in the book.
Q – How do leaders and leaders-in-waiting develop the knowledge to make these cognitive changes?
A. This is a core question, and the answer is not simple. Our book takes the approach that there are a few books over the past few decades that have caused major shifts in how we view business and business improvement. Among these, I would include books by W. Edward Deming and Michael Hammer, but there are a few others also. While these were each focused on one aspect of change, they introduced the concepts of paradigm change to the business lexicon. “Maximizing” also defines thought process change at the cognitive level.
One key aspect of this is that Universities reflect the functional business silo organizational structures (or the opposite may be true – the horse or the cart question) and perpetuate the problems. Using our book, at Central Michigan University we have created in our MBA curriculum a Concentration that teaches concepts of integrated business systems but also relates the technology and project management aspects to the business fundamentals that allow for improved business results using the technology as the enabler.
Q - What are some of the key capabilities that change leaders should be developing?
A. Everyone cannot be expert in everything. Our systems are simply not set up to encourage broadening experiences sufficient to bridge the gaps. However, everyone can understand that concepts of how the collective of business fundamentals are necessary for effective and lasting change to occur. For those components where the leader simply doesn’t have the experience to deal with them personally, it is necessary still to figure out how to address these needs. “Program du Jour” will, otherwise result.
If the entire executive suite discussed the concepts presented in the book and were required to honestly evaluate the effects on the organization and then develop practical approaches to address the issues identified, it would be possible to provide transformational project leaders the tools and executive access necessary to resolve issues that would not be anticipated and to keep programs on track and defined and measurable results.
Q - How important is the leader's ability to engage his or her people throughout the organization to realize the benefits of change?
A. As we discussed, while this is a process that must be led by a leader with a broader perspective of the integrated business issues, actual performance must be a collective issue. Key leaders need to take an approach that includes recognition of and adoption of the need for cross-functional designs and shared results. While this may be resolved through such actions as eliminating destructive incentives and involvement/empowerment programs, it is also possible that the executive may have to make personnel changes in some cases to create a work group aligned to the new transformation change objectives.
While this may seem like a lot of work to do, the fact of the matter is that this is not easy stuff and that it has to start with cognitive changes in our business world views. In the case of a consulting specialty, it is going to require that we develop the key leader who can navigate these issues, who has the strength to lead his/her executive suite through the process and that we stop expecting and accepting failure to produce the improved business results and create a culture of transformational change.
Q - Any final words, Art?
A. Yes, a final thought for leaders: You cannot lead the transformation of your business or your culture from a spreadsheet.
About the Author:
Art Worster is President of Worster Associates, LLC and Director, Applicability, Student Support, and Professional Specialist Acquisition at Central Michigan University. Art has more than 35 years of experience in manufacturing and logistics and 12 years of ERP implementation management experience. He is also a published expert in ROI calculation, business process management design, and IT strategy development.
Art’s new book, Maximizing Return on Investment Using ERP Applications, was published by John Wiley in October 2012 and is available in hardcover and Kindle editions at Amazon.com.
You can follow Art on Insider Learning Network, Twitter, and SCN or you may email him at firstname.lastname@example.org
Posted by Terrence Seamon on Tuesday December 11, 2012