The Winds of Change (and Opportunity) are Blowing for Professional Services

Had I been updating my blog I would have taken the opportunity to make a prediction.....that Ryanair would eventually abandon its hate campaign towards customers. I had come to that conclusion because it is unprecedented for a company to survive and prosper while declaring war on its customers.

What Ryanair managed to do was create so large a cost/price gap between itself and its competitors that its customers have been prepared to take an (almost) unlimited amount of abuse and humiliation in return for the cheap fares and large number of destinations on offer.

However it was inevitable that new competitors would enter the cheap airfares market and, while they may never close the gap fully, they have bridged the gap sufficiently to eat into Ryanair's market and cause them concern. In that context its no surprise to see their new about-face.

So let me test that same crystal ball and make a prediction about the Accountancy & Legal professions. Accustomed to billing by time spent on a case (usually in 6 minute increments !) it is inevitable that they will be pushed to provide fixed price quotations for many of their services. This in turn will force them to think about effectiveness and efficiency in their practices, words generally not found in their day to day vocabulary.

To date they have managed to avoid this by propagating the myth that they couldn't possibly anticipate all the complexities of their work and provide an accurate quotation in advance. However when you begin to examine this underlying complexity, what you find is that its source is directly attributable to the failure of the professions to adopt the disciplines necessary to adhere to a fixed price quotation.

Ironically, by developing the skills and management practices required to reliably provide fixed price quotations, such professional services firms can increase their profitability while reducing costs to customers, a true win-win scenario.

At present there is no incentive for them to effectively and efficiently manage their work as the more hours they consume the more revenue they generate. However this often leads to a great deal of haggling with clients, often resulting in serious conflict and a plethora of ad-hoc discounts being offered.

Furthermore this a difficult business model to scale as it requires ever more hours to sell if the business wants to grow. It also relies on a fresh supply of junior staff each year and the moving-on of some of the more costly seniors, a cycle that has slowed down significantly due to the current recession.

A profession whose underlying business model is based on the ability to offer fixed price quotations would develop a competitive advantage by becoming operationally excellent. Such a firm would be able to reduce its prices by 20% while reducing the costs of its services by 40% by eliminating much of the waste inherent in the current processes.

The big question is.....who will make this move first?

The bad news for the professions is that, in the light of the current focus on the cost of professional services in Ireland, its most likely to be a large customer with an ultimatum.

For more information visit us at www.kefronmclaw.com

High Performance Teams - Operational Excellence

Program Description: Building High Performance Teams

Despite proclaiming that their most valuable assets are their people, many organisations pay little attention to truly leveraging the power of their employees.

Often grouped in what are called “teams” many such groups fail to meet the minimum team standard of being a group of people linked by a common purpose.

Teams normally have members with complementary skills and they generate synergy through coordinated effort which allows each member to maximise his or her strengths and minimize his or her weaknesses.

A group therefore in itself does not necessarily constitute a team and some people use the word "team" when they really just mean "a group of employees."

Ensuring that your organisation consists of teams rather than groups requires the proactive effort of the organisations management.

Many organisations struggle to achieve this minimum standard and as a consequence leave untapped a vast reservoir of organisational resources.

Organisations who have truly recognized this potential have moved the boundary of team performance to the next frontier and are leveraging the power of High Performance Teams.

The key elements of a high performance team are:

1. They share the same goals and objectives.

2. They are self managing.

3. They are empowered, skilled and resourced to deliver.

4. They trust and support each other.

5. They practice continuous improvement and learning.

6. They deliver exceptional results, all the time.

Our foundation module, “Building a High Performance Team”, takes a group of people through the stages required to become a High Performance Team.

The program establishes the necessary core competences and behaviours of “High Performance” and it is the first module in our “Building a High Performance Organisation” program.

This program module is led by a practitioner- mentor who works with the team twice a week over a 3 month period. During this time the team develops the disciplines of operational excellence including the skills of continuous performance improvement.

The module begins by helping the team revisit and reframe their team objectives in support of the overall business strategy.

 Read full paper

Rebuilding Ireland Inc

As country we have grown up dramatically in the last 30 years but our political, legal & civil services have failed to keep pace. As a nation that aspires to “moving up the value chain” we need to find leaders who actually know what this means and who can make this happen. No longer are we prepared to accept “intellectually blank assertions” (no presentation of the analysis, evidence, data, or plan for consideration) from patronising politicians or clergy who seem to think that we are incapable of understanding what’s going on and what it takes to actually deliver for the country.

The days when the bank manager, the politician, the parish priest, the solicitor or the doctor are the only educated people in town are long since over and that smoozing and pulling strokes was how we measured political success. Politicians in general and Fianna Fail in particular however have failed to recognise this passing. In the same way that Lehman Brothers and other Financial Institutions have suddenly disappeared off the face of the earth, so will go our current political parties unless they recognise and lead by example, the modern, well educated people that is Ireland Inc.

I grew up in the Ballyfermot of the 60’s and 70’s. On my way to secondary school I passed the local “FAS” centre (then ANCO) and watched through the large glass windows, years and years of lads being taught how to lay bricks, build a wall and knocking it down only to build it up again.............and this at a time when the only building jobs were in England!!

Our current “solutions” border on the same level of limited thinking..............more training (necessary but insufficient and definitely not a short to medium term solution) and “moving up the value
chain” (what about the 20-30% who will never be knowledge workers capable of moving up the value chain, at least not for the next 50 years or never if we fail to help those with special needs!

I have long believed that coalition of experienced business executives could add some tremendous value to building and better shaping Ireland Inc. than many of the people currently tasked with this challenge.

In light of current events I thought it might be a good time to try something along these lines and we have set up a group on the business networking site, LinkedIn, which seems a perfect place to get things started. To date we have had a huge response and many of the national radio stations have picked up on it including Mid West Radio who did an on-air interview with myself on their current affairs program, “Tommy Marren” this morning.

Given my own particular interests, I believe that we have a tremendous competence in the private sector of managing large, complex national and multinational business but the evidence as presented in our public sector shows us to be bordering on a third world country.

With all due respect to the political, academic and consulting advisors who provide certain but insufficient expertise, I’d like to see a “board of expert practitioners” available to the government to bring real expertise to solving many of the problems that exist in the economy.

I have set up a Blog http://rebuildingirelandinc.blogspot.com/ and a group on Linkedin http://www.linkedin.com/groups?gid=1801970&trk=hb_side_g

The Fallacy of Moving Up the Value Chain for Ireland Inc.

Much has been written and spoken about Ireland Inc’s plans to “move up the value chain” as the future saviour of our economy. Unfortunately most of it is coming from people who wouldn't recognise a value chain if it was sitting beside them.



The Value Chain concept was popularised by Michael Porter in his 1985 book “Competitive Advantage,” where he defined value as the amount buyers are willing to pay for what an organisation provides. He defined the Value Chain as the combination of steps within an organisation that together provide value to customers.



As few modern organisations are completely self contained they rely on Suppliers (Supply Chain) and Distributors (Demand Chain) to compete successfully.



This “Chain of Value Chains” forms a Value System where ideally each organisations specialises in a value aspect, creating an optimised Value Systems or Value Chain.



Implicit in the notion of “moving up the value chain” is that there is a “hierarchy of value” running through the Value Chain (from left to right in the graphic above taken from the Value Chain Group) with R&D being the highest form of value adding activity and on down to Building, Fulfilling, Sales & Support being the lower value activities.



Assuming for the moment that this is true ( and there is much evidence to the contrary), the problem for an economy such as Ireland in pursuing a “move up the Value Chain” strategy is that it does nothing for providing jobs for the large part of our workforce who are never going to be able to fill these so called high value adding roles.



What seems to be forgotten is that the Value Chain is more like a “Value Pyramid” when viewed from a job creation perspective.



Only a relatively small number of jobs are available in the high value creation activities as against the larger volume of jobs available in the so-called lower value added activities.
For Ireland Inc. to focus the bulk of our efforts and future on chasing these high value added jobs is a bit like Toyota deciding its only going to make Lexus cars and ignoring the other market segments.



Unless we plan to abandon those people who for the foreseeable future are going to remain (unless we radically change our childcare, welfare and education systems) a large minority, if not a majority of the workforce, then we have to find a portfolio of solutions that cater for the diverse competencies that exist in the Irish labour force now and in the future.



Telling the 1,900 people (3,000 high value add jobs were retained) who were made redundant at the Dell plant in Limerick that our national strategy is to move up the value chain is to condemn them and many of their children to a life of unemployment.

Obliterate Costs, Don't Just Manage Them.

As much as 80% of the costs incurred by service and knowledge worker organisations are non-value adding and can be eliminated .

Not only can they be eliminated but doing so improves the organisations service, quality, profitability, revenues, customer and employee satisfaction.

The reason for this is very simple, service and knowledge worker organisations in the main have failed to value and build a core competence in the Discipline of Operations Management which, when practised in its highest form, is referred to as Operational Excellence.

Operations is the engine of execution in an organisation and after many years of promoting a “winning strategy” as the holy grail of management, the business and academic world are now recognising that organisations who can execute extraordinarily well, will out-perform those who don’t, regardless of their strategy.

This is because true Operational Excellence executes in both directions, delivering products and services to customers and providing feedback on business performance. Immediate and reliable feedback allows an organisation with a weak strategy, product or service to adjust quickly to the external environment.

Many organisations, now recognising this deficit are looking at some of the advanced operational concepts such as Lean and Six Sigma. While this is to be welcomed, organisations with little existing formal operational training are struggling, finding that the gap between where they are and where these methodologies aspire to take them, daunting.

Unfortunately many consulting businesses whose main competence is in providing advice (strategy) fail to recognise the enormity of the gap and how clients are supposed to bridge it (execution).

A new breed of organisation has now evolved to provide organisations with the practical support necessary to build Operational Excellence as a core competence.

Known as Master Practitioners, these companies are owned and resourced by Operational Excellence practitioners with many years of training & experience in developing these competencies in all types of organisations.

Organisations who have worked with Master Practitioners in Operational Excellence have seen reductions in costs of 15%-35% in less than 9 months while seeing their customer service and staff satisfaction ratings soar.

Despite the apparent contradiction, staff morale and customer satisfaction are inversely correlated with excess cost. This is because many organisations, despite their best intentions , throw resources at problems rather than eliminate problems at source.

Managers who have not been trained in Operational Excellence have a tendency to break the organisation into small teams to better manage and control. Despite its apparent attraction, such decisions are at the root of creating the hidden high costs of complexity and coordination.

True Operational Excellence empowers staff and managers to realise their tremendous potential by eliminating the barriers to excellences which are usually, albeit unknowingly, self inflicted.

Building High Performance Teams

Despite proclaiming that their most valuable assets are their people, many organisations pay little attention to truly leveraging the power of their employees.

Often grouped in what are called “teams” many such groups fail to meet the minimum team standard of being a group of people linked by a common purpose.

Teams normally have members with complementary skills and they generate synergy through coordinated effort which allows each member to maximise his or her strengths and minimize his or her weaknesses.

A group therefore in itself does not necessarily constitute a team and some people use the word "team" when they really just mean "a group of employees."

Ensuring that your organisation consists of teams rather than groups requires the proactive effort of the organisations management.

Many organisations struggle to achieve this minimum standard and as a consequence leave untapped a vast reservoir of organisational resources.

Organisations who have truly recognized this potential have moved the boundary of team performance to the next frontier and are leveraging the power of High Performance Teams.

The key elements of a high performance team are:
1. They share the same goals and objectives.
2. They are self managing.
3. They are empowered, skilled and resourced to deliver.
4. They trust and support each other.
5. They practice continuous improvement and learning.
6. They deliver exceptional results, all the time.

Our foundation module, “Building a High Performance Team”, takes a group of people through the stages required to become a High Performance Team.

The program establishes the necessary core competences and behaviours of “High Performance” and it is the first module in our “Building a High Performance Organisation” program.

This program module is led by a practitioner-mentor who works with the team twice a week over a 3 month period.

During this time the team develops the disciplines of operational excellence including the skills of continuous performance improvement.

The module begins by helping the team revisit and reframe their team objectives in support of the overall business strategy.

The team builds an Operations Model and Performance Dashboard for their own area that provides the evidence as to how effectively and efficiently they are currently managing their demand, capacity, service and quality levels.

They examine the teams current skill levels and identify any gaps at the individual and team level given the need to perform at the highest level all the time.

With these gaps identified they devise a prioritized development program to bridge the gaps.

With these new learning's the team are now in a position to redesign their day to day activities to begin practicing the art and science of being a high performance team.

Recognition that the group has transitioned to a high performance team will be evidenced by demonstrable changes in behaviour across the key elements of a high performance team.

Organisations who have deployed our program have show dramatic improvements in the productivity, quality and service levels of their teams.

The teams themselves have welcomed their new found skills and work practices, commenting positively on the new insight and control they have gained of their environment.

They feel more engaged and connected with the objectives of the organisation and are better able to contribute.

Organisations themselves see the benefits, not just in the increased performance of the teams at their local level , but also in the new found ability of the teams to provide value added feedback on the effectiveness of the organisations strategy, given their experience in the front line.

Many teams suffer from working with poor processes, tools and technologies.

High Performance Teams are better equipped to identify and articulate their needs and this results in a more effective return on investments when high performance teams are engaged in these investment decisions .

Finally, High Performance Teams are better equipped to support enterprise change and performance improvement programs.

With a data driven approach to managing their own area and their awareness of how they connect with their fellow teams in the delivery of excellence, High Performance Teams are vital cogs in the pursuit embedding of high performance in the organisation.

Building High Performance Processes

High performance processes are heavily dependent on the capabilities of the people working in them both in their partaking in the process and in their contribution to its design and management.

Ensuring that the people working in the process are members of high performance teams therefore is a powerful first step in creating high performance processes.

High performance processes are in turn a major requirement in creating a high performance organisation and together they provide a powerful performance advantage.

All teams serve either internal customers ( other teams in the organization), end customers or channel partners who in turn serve the end users.

In order to do this effectively and efficiently while delivering exceptional performance, the team needs to understand the needs and requirements of the customer, have the necessary tools and technologies to do so and work in high performance processes.

High performance processes have the capability to effectively and efficiently connect the extended team members (inside and outside of the organization) who together combine to deliver excellent services and products to customers.

High performance processes have zero waste and time delays and will be self monitoring.

Self monitoring processes indicate at all times their adherence to expected service, quality, cost, performance and risk criteria.

High Performance Organizations and Teams practice the Disciplines of Operational Excellence, a corner stone of which is Lean Thinking.

The 5 core principles of Lean Thinking are:
1. Specify what creates value from the customers perspective
2. Identify all the steps in the process chain
3. Make those value-added processes steps flow without interruption
4. Make only what is requested (pulled) by the customer
5. Strive for perfection by continually removing wastes

Building a High Performance Process therefore starts with identifying what it is that the customers of the process need and value.

Mapping the steps in the process and determining the level of value they contribute is the second step.

Targeting the reduction and elimination of those steps that do not add value and bringing those that do closer together without interruption (creating Flow) begins the transformation to a high performance process.

Creating a “Future State Map” of the process that mirrors perfection (or is a significant step towards perfection) is crucial to setting the expectation of perfection for the team.

With this Future State Map in hand the team can then begin the process of prioritising the effort needed to achieve their vision of perfection.

Embedding these skills in the organisation is key to developing and sustaining high performance processes.

Deciding on where in the organisation to develop and embed these skills is a key decision for the organisation.

For organisations that have a traditional Operations Function the decision is more straight forward.

Many service and knowledge worker organisations however have no dedicated Operations function and this makes the development and sustainment of a high performance capability more difficult.

Even where a dedicated Operations function exists, decisions need to be made for those areas outside of the Operations area (Sales, Finance, HR etc) as to the depth and breadth of up-skilling that is acceptable and can be sustained going forward.

At McLaw we have worked with a wide variety of organisations and we know that this is a decision that is unique for every organisation.

Recognising the need to do so can be the most difficult hurdle for many organisations or teams, particularly those in non-transactional and project based businesses such as financial services, professional service firms, the construction industry and the health sector.

Often such organisations or teams cannot see the value in the management tools, methodologies and frameworks that are primarily practised in the industrial sectors.

Regardless of the industry however, the biggest issue facing any organisations is their failure to execute their business model at the highest level.

Well executed business models will soon find the weaknesses in a poor strategy whereas a great strategy poorly executed will never achieve its true potential.

Our “Developing High Performance Process” program module assists the organisation in developing high performance processes and deciding on how best to maintain and embed this competence in the organisation.

Starting with one or all core processes, our practitioner-mentor teams will work with your management team to design a strategy and action plan that suits your level of ambition and pace.

Once formulated we work with the organisations management and operational teams to develop the skills, competences and tools necessary to deploy and sustain high performance business processes.

Organisations who have follow this path have dramatically improved their performance at all levels and continue to drive for perfection.