“It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality.”

Harold S. Geneen

Solution OverviewDelivering Sustainable Results through Effective Performance Management: Vision or Reality?A paper by Hitachi Consulting

MCRS®

We make it happen. Better.

Improving performance can seem like a thankless and unending task. In today’s business world, every major company has Performance Management tools in place and endeavors to improve their business results. Of course that box is ticked, but in reality there is a huge difference between something being ‘in place’ and it being ‘in practice’ and working well.

What is needed is a comprehensive management system and disciplined decision-making process supplemented with results-oriented behaviors that cuts through the multitude of options and draws all the essential needed elements together, aligning your people and organization, business systems and processes to ensure the necessary focus on performance. For many years now Hitachi Consulting have deployed a proven approach to rationalize management decision making and bring rigor to execution at all levels.

Business performance improvement is managed on a continuous basis via the Hitachi Consulting MCRS® methodology, enabled via integrated Business Intelligence, Collaboration and Knowledge Management solutions and monitored through the use of robust & appropriate Key Performance Indicators.

How MCRS® Can Help Your Business For many years now Hitachi Consulting has deployed a proven approach to manage business performance by bringing rigor to execution and decision-making at all levels of an organization. MCRS® provides a framework based on KPIs, meetings and accountabilities that facilitates behavior change, collaboration and continuous improvement to allow an organization to achieve its business objectives. The approach, MCRS®, provides a comprehensive and disciplined process which can be tailored to effectively manage innovation projects in any industry.

Using MCRS® means you can begin with clear intent (Step 1). Business leaders can clarify their strategy and what will drive success. Facilitated discussions can then articulate corresponding intent and cascading priorities at all levels and across all functions and processes. The insights needed to understand internal business performances can then start to be captured alongside wider Business Intelligence (BI)1 priorities on areas such as customers, suppliers and competitors.

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• Develop more innovative solutions• Be recognized as technology leader• Reduce time to market

• Zero accidents• Align production foot print• Reduce material cost

• Pursuing organic growth• Refresh brand image• Collaboration between channels

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• Review progress against time / cost / performance (last week / this week/longer term outlook)• Address interface issues• Raise escalation issues/ support requirements• Identify risks• Address change requests and consequences

Chair: PD PMPD Engineers, Test Rep, NMO/NCO Lead, Production / Process Rep, Purchasing Rep, Quality RepOptional: PD Department Manager

1) High level project overview – issues / critical path and status of project KPIs (PD PM)2) Review performance against weekly detailed activity schedule – start with activities on critical path (All)3) Outlook – next TG or Technical Review (All)4) Review resource situation (All)5) Review high risks and status of mitigation actions (All)6) Review escalation points (All)

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Fig 1: The Six Step Approach to Deploy MCRS®

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1 Business intelligence (BI) is an umbrella term that includes the applications, infrastructure and tools, and best practices that enable access to and analysis of information to improve and optimise decisions and performance.

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The critical contributions needed from each area are next captured in key performance indicators (KPIs); a metric that measures a critical business activity or process (Step 2). Many companies already use KPIs or what they say are KPIs. However, often these KPIs are poorly defined without clear accountabilities assigned, too numerous in number, incorrectly reported on and mismanaged, and disconnected from the source data, limiting the ability to instantly drill down to understand the under-performing area of the business processes. The time to review, analyze and make a decision is either delayed or lost.

Many companies also implement KPIs in isolation and thus inadvertently reinforce silo thinking. As a result staff may still habitually default to emotion and ‘gut feel’ choices because their KPIs lack the clear relevance to command sustained attention. KPIs must be aligned with the business objectives and strategy, and measure the critical process steps that impact ultimate business success. Business areas need to work together to optimize their own KPIs and understand and align performance measures with other parts of the organization.

To drive results-oriented behaviors, clear KPI accountabilities need to be assigned at all levels to ensure employees manage their performances effectively and engage in rational decision making. Remember KPIs should not be used to punish people but as a tool to learn and adapt.

A commercial aircraft maintenance and supply firm achieved a $19 million inventory reduction and trimmed more than $1 million from its storage costs.

When deploying MCRS®, we coach your staff to craft KPIs that define organizational success. We ensure that data is unmistakably relevant as well as readily available. We also reinforce decision making based on data rather than emotion and ‘gut feel’ through the MCRS® clear system of reviews and accountabilities.

MCRS® also organizes KPIs into KPI trees to provide clear visualization of how KPIs interact across functions, and to link all organizational levels to the business strategy. KPI trees show people that every choice is important and highlights how the underlying data that drives each KPI. This reinforces a satisfying sense that work is meaningful, fosters self-accountability, and discourages intuitive decision making. People are far more likely to rely on facts when they see how much truly rides on their choices (Step 3).

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Decision making based on clear data instead of emotion and ‘gut feel’

Fit for Purpose Business Intelligence

Reports are designed to simply and visually convey whether areas are meeting targets as per the defined KPIs. The data in these reports are reliable, timely and woven into the fabric of the organization, because the numbers are gathered directly from source systems or from your people in the course of everyday operations.

Reports and meetings are core mechanisms familiar to everyone in business. Of course, some reports and meetings can be of questionable value, usually because they lack clear purpose. In contrast, the MCRS® reports and meetings demonstrably help staff at every level to access immediately useful data, quickly discern problems and issues, detect trends, choose effective courses of action and coordinate efforts (Step 4).

In today’s data rich world, many organizations are lost in the possibilities that data can bring. Reports are everywhere and on everything, data is lying about in unconnected silos and analysts are fighting time pressures to complete their work-loads. However this need not be the case: leveraging data automatically and delivering insights to managers when and where they need it is now possible. Hitachi Consulting’s MCRS® solution delivers the necessary access to KPIs, access to supporting drill-down data, feedback reports and dashboard warnings and actions via a tailored solution appropriate to your business.

The latest drill-down capabilities are harnessed in the solutions we deploy; exploiting for you the best analytical capabilities now possible from today’s reporting solutions to allow the consumers of BI in your organization to see at a click not only the high-level business measures but also to access the related individual transaction-level details. BI solutions are designed with the end-consumers in mind; for example, ensuring access to relevant BI reports and dashboards from mobile devices for staff and managers on the move. Latest BI deployment strategies are also harnessed to ensure most effective use is made of IT budgets; for example, using cloud-based technology infrastructures and software as a service.

Relevant analytics can also be applied to data to support and drive business decision making: readily identifying patterns in historic data, identifying key influences and performance drivers within data-sets and predicting trends and anticipated future performances for the business. Data science adds new insights and value to data; for example, monitoring customer spend patterns and identifying likely demand for future purchases.

Meetings within MCRS® are keyed to the reports and are similarly designed to be fit for purpose; ensuring that the right information is conveyed to the right people at the right time to help them have the right discussions, ask the right questions, to make better fact-based decisions and to quantify resulting performance improvements.

Each meeting is governed by guidelines that answer... What is this meeting’s objective? Who should participate? What actions are required captured and to whom are they assigned? What data/information is required to conduct the meeting effectively? Who will provide the data? What critical questions will be explored here? How will participants ensure productive dialogue and decision making? Who will ensure follow through on the decisions reached here? Clear guidelines bring rigor to your meetings and maintain their focus over time (Step 5).

Meetings are integrated within functions and across the organization to create one routine system through which decisions work together rather than at cross purposes. Synchronized meetings are another strong counter to ‘gut feel’ decision making. The decisions reached in any one meeting will visibly affect decisions reached in the next. Meeting participants are thus braced by the knowledge that their decisions must be defensible... that is, based on valid data, logical analysis, and realistic assumptions... to stand up to the scrutiny of an integrated decision making system that is firmly governed by an overarching business strategy.

A major manufacturer realised $13 million in ongoing annual savings from inventory right-sizing and product rationalization, eliminated more than $5 million in non-value added activities, and saved more than $4 million in railcar leases.

Similarly, MCRS® reports are produced not for the sake of producing a report, but because they add-value to a business decision that has or may have to be taken. In this way, one immediately visible benefit is that proliferation and fire-fighting is reduced. Indeed, carefully sequenced meetings and the disciplined review logic of MCRS® ensures that variances in KPI performance are addressed early - long before they become fires. Solutions are also implemented at the right level of control and with a focus on root causes, so insights are provides early and problems can be mitigated before they flare-up.

Just as important, reports are made available and meetings are timed to take place at logical intervals under MCRS®. The timing of KPI reviews is critical. Short-interval control keeps front line operations on track. Work teams may review their operating data hourly, or following every shift. Senior leaders, in contrast, may review aggregated business performance data monthly. The correct frequency is whatever allows those participating in meetings to sustain control over the metrics for which they’re accountable.

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Collaboration is at the Heart of MCRS®

The success of any enterprise relies in no small part on systems and processes that facilitate communication and collaboration. Today, given the ever more dispersed and mobile work force, Hitachi Consulting offers a collaboration platform that integrates well with existing line-of-business applications to manage and co-ordinate the MCRS®.

This versatile solution lets your business maximise the efficiency of business processes and improve meeting productivity, whilst also adding a layer of security and business continuity. By storing files that can be accessed easily and quickly by team members, and providing access and revision control for documents, in a single document library, the solution allows your teams and individuals to effectively collaborate, create, share and manage files.

MCRS® provides a framework based on KPIs, meetings and accountabilities that align different functions along an organization’s value stream. The MCRS® provides enhanced functionality, best of breed knowledge management and embedded BI capabilities, to enable management, control and reporting on multiple meetings and actions, wherever their geographical location. The integral visual management aspect gives users the powers to intuitively determine what to do and what to prioritize and proactively monitor outcomes.

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Fig 2: MCRS® Core Elements Focussing on Collaboration and Organizational Alignment to Deliver Sustainable Results

Fig 3: A Structured Approach to Assess the Degree of Transformation within an Organization

Measured Transformation

The MCRS® is more than just a technology solution. At Hitachi Consulting we understand that in addition to making the right data available and KPIs to support fact based decision making, influencing and changing people’s behaviors, and setting clear roles, responsibilities and accountabilities are critical to delivering sustainable results and performance improvements.

The MCRS® programme incorporates implementation and coaching support to deliver the right performance management framework to help business and operational users to analyze data, to identify root causes and take corrective actions and decisions (Step 6).

About the Authors

As the EMEA Business Intelligence and Performance Management Capability lead he is responsible for the design and delivery of business solutions that drive performance improvements for our clients.

Richard specialises in managing projects in product development, business intelligence and application design for various industries, including public sector, consumer and financial services and hi-tech / software

As the EMEA MCRS® Capability Lead in Hitachi Jörg has helped a large number of clients in different industries to analyse and improve their management systems and achieve sustainable results.

Jörg is also a subject matter expert in product development and engineering. Jörg holds a doctorate in Innovation Management focussing on performance management in new product development projects.

The performance gains realized MCRS® are permanent, because MCRS® changes the culture of your organization. You can measure the progress of the cultural transformation as it occurs by tracking observable changes in behaviors toward which your people are being actively coached and systematically reinforced.

As people across your organization work together to build and implement your management systems using MCRS®, data-driven decision making and increased accountability for follow through will become the norm. People learn not to fear the facts. Failures become a trigger for self correction, not punishment. Your people gain the courage to delve into root causes rather than settle for surface solutions. Innovation increases exponentially. Everyone in your organization becomes an agent of change, relying on facts and consistently coordinating their efforts to raise your business to much higher levels of performance.

Ultimately the MCRS® can permanently enhance your company’s performance management culture and build competitive advantage through successful innovation.

Why Hitachi Consulting?Hitachi Consulting is the global management consulting and IT services business of Hitachi Ltd., a global technology leader and a catalyst of sustainable societal change. In that same spirit—and building on its technology heritage—Hitachi Consulting is a catalyst of positive business change, propelling companies ahead by enabling superior operational performance. Working within their existing processes and focusing on targeted functional challenges, we help our clients respond to dynamic global change with insight and agility. Our unique approach delivers measurable, sustainable business results and a better consulting experience.

For more information please visit www.hitachiconsulting.com Email: info@hitachiconsulting.com

The MCRS® management system changes the culture of the organisation

Hitachi Consulting is the global management consulting and IT services business of Hitachi Ltd., a global technology leader and a catalyst of sustainable societal change. In that same spirit - and building on its technology heritage - Hitachi Consulting is a catalyst of positive business change, propelling companies ahead by enabling superior operational performance. Working within their existing processes and focusing on targeted functional challenges, we help our clients respond to dynamic global change with insight and agility. Our unique approach delivers measurable, sustainable business results and a better consulting experience.

www.hitachiconsulting.com

Richard Osbourn is a Director with the Hitachi UK MC&I practice.

Dr. Jörg Putzer is a Manager within the Hitachi UK MC&I practice.