Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

Focused Management

Essential Soft Capability for Delivering Hard Results

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

3 Forces Blocking Growth*…Often they come together

Complexity

Uncertainty

Ambiguity

Too many things to handle

Unknown Probability of Occurrence

Multiple viable options

*Ref: Management Attention by Rami, 2011

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

3

Manifestation of 3 Forces…They come in different forms

• Growing Complexity : – More resources, Larger Infrastructure, Larger portfolio of products and

projects, More Locations, More and Diversified Customers, Fierce Competition, Excessive Management Attention and Time, Increasing Costs, Delayed ROI, Fire Fighting as a Norm

• Unrelenting Uncertainty : – Increasingly Uncertain Forecasting, Fluctuating Demand, Changing

Plans, Shifting Priorities, High Employee Attrition, Large and Uncertain Resource Bench, Delayed Fulfillments, Choosy Customers

• Increasing Conflicts:– In Resource Allocation, in Funds Management, in Finding Optimum

Solution, Between management and staff, Between functions, Between two right choices

28-04-2014

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

Real Undesired Effect Management Attention is Constantly Challenged

Focus on

Revenue

Focus on

Profitability

Work on New Products

Work on Commercial Orders

Increase Deliveries

Improve Quality

Reduce Expenses

Protect Jobs

Increase Stocks

Reduce Cost

Approve

CAPEX

Manage with

OPEX

Accept Scope Changes

Protect dates & BudgetAdopt New

System

Manage with Current Way

In order to meet growing expectations in the new environment Managers need NEW capabilities!!!

Focus on Growth

Focus on Stability

Focus on Now

Focus on Future

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

Traditional Way of Management…Devastating Results

Complexity

Uncertainty

Ambiguity

Divide into Parts & Improve Every Part

Impose Certainty on Uncertainty

Compromise

Exhaustion, Chaos, Firefighting

Gross Errors and Enormous Waste

Status Quo and Resistance to Change

Traditional Way ResultsForces

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

6

New Capability for New SituationFocused Management

• When there is so much complexity and chaos all around, Focusing on right things is the right strategy.

• Focused Management*: The Revenue focused approach that gave astonishing results despite uncertain environment– In IBM, Micro Soft, TATA, Mazda, P&G, BP, Godrej, Ericsson, L&T,

Infosys, ABB, Mahindra and Mahindra, Dr. Reddy’s etc.– Based on the insight that an organization is like a chain whose

strength is decided by the weakest link. • That is, in order to dramatically improve performance, an organization

must focus on the weakest link than trying to improve each and every part.

28-04-2014* Also called TOC, Theory of Constraints or Constraint Management

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

Focused ApproachDramatic + Quick + Cost Effective Results

Complexity

Uncertainty

Ambiguity

Focus on Core Problem

Provide Strategic Slackness

Resolve Conflict

Dramatic Improvement while being cost effective

Growth with Stability

Business Innovation

Focused Approach ResultsForces

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

8

Focused ManagementAlso called Theory of Constraints, TOC

• Employed for solving management problems of today’s environment and quickly improve business results by an order of magnitude, for example,– Dramatic improvement in throughput (capacity) without costly

investment– Shorter lead times without increasing operating expenses– Radical improvement in productivity without creating chaos– Consistent fulfillment of SLAs cost effectively– Optimum resource management at Enterprise Level

• Provides direct impact of people’s effort on business results and thus makes people central to organization’s strategy

28-04-2014

Without causing costly trade-offs and burn-outs of traditional management approaches!

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

9

Applying Focused Management Example 1: Business Operations

• Challenge: – Ever Improving Throughput (Capacity) while improving Productivity– Shrinking Response (lead) time– Meeting SLAs consistently– Too many things to be improved too fast

• Core Problem– Over whelming size and scope of activities

• Current Approach– Improve each and every process (The Whole is equal to sum of parts)

• New Approach: – Management by constraint (Strength of the chain is no stronger than the Weakest Link)

• Typical Results: – Dramatic improvement in capacity, compliance to SLAs and shorter response time ,

while achieving higher productivity by 30-70% in a very short time

28-04-2014

Business Process, Delivery Management, Production, Development Centers

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

10

Focus on Constraint , NOT on Everything

Traditional Approach New ApproachImprove each and every part of the System Focus on just few Constraints that

limit the capacity of the System

A Chain is no stronger than its

Weakest Link28-04-2014

A

B C DThe Whole is

equal to Sum of Parts

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

11

Applying Focused Management Example 2: Project Management

• Challenges: – Managing Multiple Projects– Achieving consistently high On time Delivery without compromising on scope and cost– Improving Productivity of project management function

• Core Problem:– Projects belong to probabilistic domain but are managed deterministically

• Current Approach:– Buffer Estimation at each Task– Monitor and Review Project at each task

• New Approach: – Aggregate Variability and incorporate people behavior in project planning and execution

• Typical Results: – Complete most of the projects in time and with higher productivity (more projects per year).– On Time Performance >95%– Lead time reduction 15-50%– Project Management Productivity 10-50%

28-04-2014

Product Development, NPI, Engineering, R&D, Construction, Projects

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

12

Buffer the Project, NOT TasksCritical Path

TOC uses Aggregated Project Buffer and uses only this buffer to monitor and control project

Task Task Task Task Project Buffer

Each Task of Critical Path has significant buffer and each task is monitored and controlled

Traditional Approach

New Approach

Lead Time Reduction Even

at Planning Stage

28-04-2014

Improved project reliability during

Execution

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

13

Applying Focused Management Example 3: Supply Chain

• Challenge: – Supply of right quantity of right product at right place at minimum cost

• Core Problem– Stock-out and Overstock occur at same time– Demand uncertainty

• Current Approach– Forecasting– High reliability of supply can only be achieved with higher inventory

• New Approach: – Demand Driven Synchronized Supply Chain

• Typical Results: – High On Time Delivery at lower inventory and operating expenses

28-04-2014

Supply Chain, Management, Distribution, Logistics Management

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

14

Synchronize, NOT Forecast

Traditional Approach New ApproachLong term Forecast and fire fighting Synchronize supply to actual demand

A demand driven synchronized supply chain provides exceptional delivery

service at lower cost and enhanced agility

28-04-2014

Based on the belief that for excellent delivery service high inventory and

operating expense is necessary.

Plant/WH

1 2 4 5

A 1 3 4

B 3 4 5

C 1 3 4

D 5 3 4

E 7 3 2

Forecast

Plant/WH

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

15

Applying Focused Management Example 4: Enterprise-wide Resource Allocation

• Challenge: – Managing Resource as per demand– Often Resources required now are not available while those not required now are

aplenty, leading to loss of revenues on one hand and blocked investment on the other hand

• Core Problem:– Sub optimal and low responsive resource management system

• Current Approach– Current Practice of Hire to Deal, Hire to Forecast and Supply Demand Matching

• New Approach: – Benefit of Aggregation; and Management by Size and Time Buffer

• Typical Results: – High availability of resources together with overall thinner bench strength – Reduction Lead time by 20-40%– Improvement in on time availability of resources by 20-30%– Reduction in bench strength by 5-15%,

28-04-2014

Large Consulting, BPO, IT and Service Organizations , Outsourcing centers

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

16

Hire to Buffer, NOT to Forecast

Practice

DepartmentSkill Groups

Project

Process

Project

Process

Traditional Approach New Approach High Availability and Thinner Bench!

Long term Forecasting + Disaggregate recruitment and allocation of resources28-04-2014

Closer to Demand + Benefit of Aggregation based recruitment and allocation of resources

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

17

Real Benefits.. Overall Impact

Apr.02.2013

Lead Times

70%

Cycle Times

65%

InventoryLevels 49%

44%On-Time Delivery,Availability

63%73%

Revenue,Throughput

CombinedFinancial

Source: The World of Theory of Constraints, Vicky Mabin & Steven Balderstone

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

18

Summary

• No matter which function you belong to and however, complex business environment becomes, building your team’s capability in focused management will dramatically improve impact of its effort on business results.

• In fact, no function is a cost center; rather every function has a role in dramatically improving business results!!!

• Quick and Dramatic improvement in business results is possible on an ongoing basis without incurring costly trade-offs and burn-outs!!!

28-04-2014

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

19

Workshop on Focused ManagementDramatically Improving Impact of management effort on Business Results

without incurring costly trade-offs and Burn-outs

- Understanding Complexity- Accepting Inherent Simplicity- Theory of Constraints- Case Studies- Internalizing Concepts of TOC-The Process of Ongoing Improvement

For Level-1 team of your organization / function

Content

Attendee

• Equip Managers with New Capability• Learn How TOC is helping

organizations in Dramatically improving their performance

• Relate and Identify Applicability of TOC concepts in your Organization

• Get Started with Proof of Concept

Take Away

Fast paced, Interactive Workshop with management games, discussions, videos and presentations.

Format

28-04-2014

Copy

right

s © 2

014

Shr

idha

r Lol

la, A

ll Ri

ghts

Res

erve

d

20

By: Shridhar Lolla

Shridhar is a practitioner of Organizational Effectiveness and handholds management teams in dramatically improving impact of their effort on business results. He holds a PhD degree from IIT Delhi. Early in his career Shridhar worked with ABB, Sify, KEC and Tecumseh in R&D, Manufacturing and Service functions. His last assignment was with ABB as a member of the management committee and as the Head of Application and Solutions Group at its global R&D Center in Bangalore. Shridhar has authored two contemporary books on Theory of Constraints, TOC. He lives in Bangalore and is reachable at lolla@cvmark.com and +91 9448 07008128-04-2014