Innovation and the art of Product Lifecycle Management

Dear Readers,

Earlier this year I was asked to write an article for Oracle on Innovation in relation to Product Lifecycle Management.  That article has now been published and so I thought I'd take the opportunity to share the original with you.  Of course this doesn't have all the nice graphics and pics of the finished article but it does have the unedited content.  I hope you enjoy it.

With the advent of the digital revolution has come a dramatic change in the way many businesses seek to source, fund and manage innovation.   Rather than simply relying on their own innovation processes or those of their traditional supply chain partners, many businesses are now aspiring to partner with entrepreneurial digital start ups (either directly or through technology ‘incubators’) in a concerted attempt to access digital expertise.  

Digital expertise is required to create, enhance and develop product sets and challenge business models.  In many cases these new partnerships are being championed by the Chief Marketing Officer who has lost a measure of faith in the ability of their own product development teams to create customer centric, digitally accessible products at speed. If proof were needed of this major shift one only needs to look at the exponential rise in the number of technology incubators offering to act as brokers between big business and entrepreneurial technology start ups. 

This is a big challenge for PLM and its associated tools, which, if we are being honest, have not always done the best job of supporting businesses in the effective management of the innovation processes at the very front end of the product development lifecycle. Too often the inception of product ideas is not linked to the product lifecycle. Instead inception is within the domain of an isolated team using stand-alone, hard-to-use and opaque systems. As a result the Chief Marketing Officer (CMO) often feels entirely justified in looking outside their own organization to plug into new sources of innovation.  What the CMOs need are tools that can provide them with a sufficient level of clarity on the quality and costs associated with the innovation process and more importantly on the visibility of the product innovation pipeline - including inception.

Therefore, PLM methods and tools currently face a double challenge, firstly to simply get better at managing the existing innovation process and the existing sources of innovation and secondly to adapt themselves to managing and extracting data from the newly emerging innovation ecosystems.

If PLM methods and tools cannot adapt to these changes then we are in danger of seeing a growing disconnect between the existing, data rich, PLM tools and the new product pipeline.   This will only add fuel to the fire of the power struggle between the Chief Marketing Officers driving the demand for new innovative digitally accessible products, the Chief Information Officers providing the infrastructure to support the product lifecycles and the Heads of Manufacturing and Supply Chain who are tasked with delivering the products at an optimum cost point and the CFO who is responsible for providing the investment funds.  Multiple and conflicting sources of data will continue to be developed with each senior executive not trusting the data provided by the others.

To bridge this growing schism requires work, but it is far from an impossible task. In fact the solutions seem to sit within the history of PLM itself and its approach to the supply chain.   We know the ability to deliver effective product lifecycle management blossomed when the full product supply chain and the external suppliers’ systems were bought within the scope of PLM thinking and methods; when their data was captured, their processes were improved and the interfaces between the suppliers’ business and the product development businesses were enhanced. What is now clear is that we need to treat the innovation eco-system, at the very front end of the PLM process, with the same type of diligent approach if we are to continue to see a steady increase in the benefits that accrue from effective PLM.

At the heart of the new thinking and tooling required is the recognition of a number of truths:

• That the sources of Innovation (in house R&D, supplier’s R&D, and digital incubators) can be effectively monitored, tracked and managed.
• That the process of Innovation can be effectively monitored, tracked and managed, it really is not a mystical process reliant upon some maverick genius. Innovation is a key business process and should be treated as such.
• That effectively managing the Innovation process is a key driver of competitive advantage.
• That managing the Innovation process requires effective collaboration between marketing, IT, manufacturing, supply chain management and finance.
• That there is a pressing need to access and utilize effective PLM tools that supply useful data and management information on the costs and quality of the innovation pipeline.

 Once we have taken onboard these truths we should be looking to create intelligent PLM tooling that delivers the following:

• Visibility of the innovation pipeline from all the sources of Innovation, including the emerging innovation ecosystems.
• An understanding of the real “cost of deployment” for products developed on standalone external systems, especially where the product is utilizing new technology or technology platforms.
• A rich source of data and the associated analytical tools that can spot and analyse trends in the innovation pipeline in e.g.:

1. Innovative Business model and operating model trends
2. Innovative Material and technology performance trends
3. Innovative Product distribution trends
4. Innovative Ecosystem trends
5. Innovative Service management trends

 Tools that are capable of delivering these outputs will ensure that a business investing in a PLM tool is investing in a tool that is capable of supplying the crucial strategic data required for managing the investment portfolio.

 If the PLM industry does not respond to the challenges provided by the developments in Innovation then PLM tools will still provide a valuable source of intelligence on the manufacturing process but will not continue their impressive progress towards holding centre stage in the Boardroom as a rich source of data, trusted by all members of the senior executive team, upon which key strategic business decisions can be based.

Compliance Breaches will continue until the UK’s Financial Institutions finally put delivering positive customer outcomes as their primary objective

Last month’s FOREX ruling in the UK and US against a cadre of the best known names in banking saw the issuance of some of the largest fines to date yet for regulatory breaches in the Financial Services sector.  

Whilst the wanton act of corruption is, in itself, deeply disturbing, what makes it particularly shocking is that it was happening at a time when many of the senior executives in the banking sector were opining that the industry, whilst not yet being perfect, had significantly cleaned up its act and was now once again trustworthy.   It hadn’t and it wasn’t. 

So were the apologist executives actively lying about the state of their industry or were they just as in the dark as the rest of us as to the shady goings on within their institutions.   Outside of a court of law I guess we will never know the answer, however, I would not be surprised to find that a number of them were even more surprised and disappointed by the actions of the FOREX traders than the general public.   Why?   Because I think a number of them genuinely believed they had done all that was necessary to protect their Bank from serious compliance breaches.   However, based on the evidence and supporting anecdotes all they had done was to ensure that the compliance boxes were ticked.  What they had struggled to deal with, in any meaningful way, was the same pernicious culture of “bankers self interests” that had underpinned the 2008 crash.

Strangely, contrary to public opinion most Banks believe themselves to be over run by compliance and risk staff – the people whose job it is to spot and stop errant behaviours.  Bankers are forever being asked to complete mandatory compliance training, complete risk assessments and participate in internal audit activities. So how on earth, at some of the most “protected” banks, (i.e. those with the largest risk and compliance departments) can such a massive set of non-compliant behaviours not get picked up and stopped at a much earlier stage?   How is it possible, given the compliant exhortations and sentiments of the Chief Executives, that FOREX traders still think it is OK to form a cartel and fix the exchange rates to the detriment of their customers?   

The answer is relatively simple to articulate and elusively challenging to enact.   Culture change.

The FCA are now very fond of reminding their regulated firms and those applying for regulation, that complying with regulation, both the spirit and the letter of it, maintaining a “culture of compliance” and delivering fair customer outcomes (and nothing less) is what they are expecting.

However, from my most recent experiences of working within major financial institutions it still appears to me as though the Banks are missing the point on what the FCA is actually looking for.

As part of a recent assignment I had to complete a series of mandatory training modules on compliance and risk in order to be able to work within a particular bank.  I believe that the total time required for me to complete the training was approximately 6 hours.  The modules covered the banks approach to risk, compliance, fraud, bribery anti-money laundering etc, etc and were very comprehensive.  Surely the bank could do no more in preparing me to work in a compliant way?  Well yes and no. 

What struck me as odd as I worked my way through the well prepared materials was the focus of the training.   Almost all the modules concentrated on informing me of the actions that I needed to take to protect the bank from financial and reputational risk – not a bad thing in itself – but what almost all the training modules failed to do was emphasise the need to do the right thing for the customer and to drive positive customer outcomes.   In essence, there was still a faint whiff of the old masters of the universe thinking in the materials. Banking is for bankers.

In my opinion, if the banking industry is truly going to adopt a culture of compliance then they will have to navigate away from the bank and bankers being the primus inter pares to the customer and the customer’s outcomes taking that position.  Until that place is reached there will continue to be a regular (all be it somewhat reduced) flow of breaches and scandals that will have the Chief Executives of banks wringing their hands and scratching their heads.

So how do they get there?  Unsurprisingly there are a myriad of actions required over an extended period of time.  However, here are a few that appear obvious to me.

1.   Ensure the voice of the customer is prominent in all compliance training

2.     Review technology, products, processes and policies from an end to end viewpoint to ensure that they are actually delivering positive customer outcomes

3.     Invest in a targeted culture change programme to increase the focus on the customer

4.     Spend more time listening to the voice of the customer at senior manager level

      There are a course a million others but that’s for another blog.  Do get in touch if there’s anything you’d like to agree or disagree with in the blog or whether you recognise the issues in your Bank and would value some advice and support.

The Key to Corporate Success - The Leadership Spine

In the UK we have just seen the closure of the mid season, soccer transfer “window”.  Traditionally this window, and especially the last day of it, provides a perfect opportunity for club owners and managers to participate in a spot of over-priced, panic buying in order to bolster their squads for the rest of the season, as they bid to either avoid relegation or enhance their promotion or league/trophy winning potential.

This season’s merry-go-round has been much calmer than normal but that hasn’t stopped the usual flood of media rumour and counter rumour as agents and clubs look to bolster their positions in the market.   Interestingly there is always constant argument between the pundits and commentators as to the merits and demerits of each individual player and their “fit” with the new club’s pattern of play and the likelihood of the player single-handedly delivering success.  However, one thing that is almost universally acknowledged by the pundits, is that the successful clubs are those that have quality leaders and that those clubs that are very successful have a “spine of leadership” (both on and off the field). 

Now when it comes to defining the specifics of what is meant by “leadership” or even a “spine of leadership” in the context of a football club, it is again a matter of great debate.  However, what is clear is that it is generally agreed that having a spine of leadership is about the creation of positive relationships between individual leaders that runs from the Boardroom onto the pitch.   It is therefore not just the quality of the individual leaders but also the quality of the relationships between the leaders that is the determinant of overall success.   A club will not be very successful if it merely has good individual leaders who are locked in constant ego battles and arguments with each other – it needs to generate positive, value adding relationships between the leaders.

Now, this concept of a leadership spine provides a rich theme for discussion and analysis when applied in a business context.   It really does suggest that the key to running an effective business is to ensure that you have “good” leaders deployed from the Boardroom, through the C-suite and out into the functions charged with the day-to-day delivery of the business.

Imagine an enterprise where, not only are individuals recruited at all levels based on a combination of their individual technical capabilities, their leadership capabilities and their ability to work as leaders up and down the organization, but also an enterprise where the development of positive bonds and interactions between the leaders at all levels is developed and managed.   These would be the enterprises that are truly investing in developing a leadership spine and sustainable success.

However, what I can quite happily say, without fear of too much contradiction, is the holistic view required to recruit and develop the leadership spine is as haphazard within the corporate enterprise as it appears to be within so many of the UK’s leading football clubs.  Why?  Well I guess it all gets a bit hard, particularly given the demands on both the senior executives/Chairmen to demonstrate success almost instantaneously.  Unsurprisingly it therefore becomes much more prudent to attempt to sign a single new messianic leader, who can deliver results from day one, rather than look to build a balanced, leadership team and ethic throughout the business.   With this approach the good news is that when it fails there is already a built in scapegoat to take the blame.

How to Reengineer the Corporate Vision & Values

Let me just come right out and say it.  I love the idea of a business that is inspired by an irresistible and worthy vision, that lives out a set of compelling, wholesome values and that is governed by a powerful customer centric philosophy.  And call me naïve if you like, but, I believe that businesses work best for all their stakeholders and are at their most sustainable when set up in this manner.  What is somewhat startling but also very reassuring is that the writers of pretty much all the leading business/management development literature over the last 40 years seem to agree with me too.  These researchers and authors also think it’s a great way to run a business.  Well that’s all fabulous news then – but there’s a hitch – this is not what I see in reality. 

So why (according to their customers and staff) are so few businesses operating in this manner?   In this blog I’ll be drawing on my 25 years of consulting experience to offer a rationale for why the quixotic dream of creating a powerful, uplifting and inspiring vision and value set so often evaporates in practice to be replaced with the energy sapping corporate flannel and mealy-mouthed doublespeak that is the daily diet of most employees.

Now before we all jump to conclusions and belabour the shortcomings of our corporate leaders I’d like to suggest that in order to deliver the kind of organisations we crave we have to be honest about the organisations we have and the visions and values that actually drive employee behaviours and customer outcomes.

The common mistake when looking to reenergise an organisation with a new vision and values is to assume that the organisation does not already possess a very powerful raison d’etre and a dominant set of pervasive values.   They do.  The thing is that these incumbent elements are not usually the ones that have been developed as part of an executive away day and published in the annual report.   They are the “shadow” vision and values.  These shadows have real teeth and are the real behavioural drivers behind most of our organizational lives.  They are not written down and are most often illuminated on the drawing boards of the corporate satirists.  They are almost universal and are rewarded and encouraged in almost all organisations.  So, to be able to put in place the compelling vision and values we all want to see, we first have to shed light on the shadow vision and the shadow values, expose them for what they are and embrace them or change them where appropriate.

So let me deal first with the “shadow” vision.  The shadow vision is pretty much the same for all organisations and it is really simple.  It is as follows: “Make more money for the shareholders each month/quarter”.  Not surprising is it, nor is It complicated or difficult to understand.  How do I know it’s the real vision for the organization?  Simple - It is the subject that is discussed for the vast majority of the time in the vast majority of Boardrooms up and down the country.  It gets massively more executive airtime than customers, employees or any other corporate element and it is the subject of the greatest number of Board reports.   It’s also what executive reward packages are usually linked to.  Now leaving aside the rights and wrongs of the shadow vision, the failure to recognize it as the real vision of the organization is likely to create all manner of organizational inefficiencies.  Misguided employees will occasionally try and act in line with the “published” vision statements that often encourage innovation, courage, customer centricity etc and this will cause corporate chaos.   So to drive out the inefficiencies related to having two potentially misaligned visions (shadow and published) the organization needs to either be honest and declare the shadow vision to be the “published” vision or it needs to tackle the shadow vision and reengineer the workings of the business to better line up with the elements of a compelling “published” vision.

So let’s move onto the “shadow” values.   There are four main “shadow” values (although you can always find others) and they are well suited to supporting the “shadow” vision.  Again they are pretty universal in larger organistions and represent the concepts and behaviours that are truly valued by the organisation.   They are as follows:

1. Profit – This organisation values profit and encourages all its employees to make decisions and take actions that deliver the greatest level of profit this month/quarter
2. Predictability – This organisation values predictability and encourages all its employees to only make decisions and take actions that are in line with what was expected of them and previously forecast
3. Prudence – This organisation values prudence and encourages all its employees to make decisions and take actions that require no extra investment of resource and carry no risks that may adversely affect the delivery of predictable outcomes.
4. Propriety – This organisation values propriety and encourages all of its employees not to challenge the status quo and established ways of working as it can cause corporate embarrassment or attract adverse PR.  It particularly encourages all employees to ensure there is executive plausible deniability for any “off piste” actions they may wish to take in pursuance of the corporate vision

Again, leaving aside the rights and wrongs of the “shadow” values the fact is, that from observing the behaviours of employees in large organisations over the last 25 years, one has to conclude that they exist and are well supported by the corporate performance management systems.  They are also highly likely to be at odds with the “published” values.  So again, as with the shadow vision if we are to reduce inefficiency and direct our employees far more clearly then we have to admit they exist and either embrace them or reengineer the organization to support the delivery of different values.  Either way I’d like to make a plea that organisations stop confusing their employees by publishing values and visions that are not aligned to the behaviours that they would really like to see as it really cheeses me off.  

And before you right me off as a tree-hugging lunatic, I for one would be delighted to see “profit” as a value for most organisations.  Let’s put it out there and be honest – we value profit.  There I said it.  Now let’s work out what else we value.

To conclude, if you want your programme of re-envisioning the organisation and overhauling the corporate values to go well you will need to identify and deal with the shadow vision and values with as much passion and rigour as you employ to generate the new vision and values.  To fail to do this is to doom the programme to failure.  It’s the equivalent of putting on your finest designer suit or dress, all ready for a glamorous evening out, over the top of your gardening clothes.   Not a good look and a bit mad.

10 signs you've been drinking the Corporate Kool-Aid

Over the past few years I have had the opportunity to observe, in some cases at first hand, the falls from grace of a number of the UK’s most vaunted businesses.  This has not been a pleasure.   In fact it has been all too painful to watch.  However, as I have had the chance to reflect on these corporate “crash and burn” scenarios, there are a series of observable patterns, that indicate to the wise the likelihood that burning ambition and ego are about to take down another erstwhile corporate hero.  

So if there are observable patterns why does nobody manage to intervene?  I’m blaming the corporate Kool-Aid* (see below) – the ability of an organisation to delude itself over a long period of time by constantly reminding itself of its perceived corporate brilliance.  It is the creation of a self-destructive mass delusion on a grand scale, usually perpetrated by an unfettered charismatic leader and it really does happen.

The question that most participants and commentators alike have on their lips at the time of the crash and burn is almost always – “Why did we/they not see this coming?”   An overarching sense of bewilderment and betrayal can often pervade the thoughts of those involved.  As one senior executive told me, “When I finally understood the new information we were being presented with it was as if I was waking up from a dream and finally seeing the business for what it really was.  It was as though we had all been living in an alternate reality.”   This reported state of corporate trance is a common feature amongst the disillusioned executives and staff at the failing institutions.  So how does it occur?   How can we tell if we and the other corporate stakeholders are “Drinking our own corporate Kool-Aid”* and slowly anaesthetising and blinding ourselves to the malpractice and misbehaviour of our leaders and peers?  Is there a way to tell if we are on the path to wrack and ruin?  Well it’s not scientific but for me the list below gives a pretty good indication of whether or not your business is about to combust. 

N.B. If you have been drinking the corporate Kool-Aid you will simply believe that the warning signs below are misconceived and couldn’t possibly relate to your own fabulous corporate colossus.

10 signs you’re company has been drinking their own brand of corporate Kool-Aid.  Score 1 point for each statement that applies to your company.

     1)   Your company has just moved to a swanky new corporate HQ that is lavishly furnished making it look more like a 5 star hotel in places than an office.

  

     2)   Your charismatic CEO is now making multiple appearances in lifestyle magazines and on both serious business TV and the lighthearted breakfast TV “sofa”.

     3)   Your CEO deploys an autocratic style – it’s just how he/she works.  There are other senior executives around but they are mostly there to do the bidding of the CEO. Bidding that can often be idiosyncratic and whimsical.

     4)   Your company pays really well.  It probably pays better than many other similar companies (not, of course, that any company is at all similar to your unique enterprise)

     5)   Your company doesn’t use consultants or advisors.  It’s a matter of principle and an article of faith.  Your company has a unique culture and vision that simply cannot be helped by “old school” advisors.

     6)   Your company also has an “interesting” Board structure.  The Non-Executive Directors (if they are present) are probably friends of the founder or distant investors and may have little to no experience of the industry your business is in.

     7)   Your company is lawyered up.  You’re not sure what they do or what they are working on but they are always around having intense meetings with senior executives and there are lots of them.

     8)  Your company has a culture where everyone works really long hours but participates in the wildest corporate parties.  It’s a work hard/play hard philosophy and if you’re not up for it you’d better leave.

     9)   Whilst we are on the subject of benefits your company has a fabulous employee share scheme that you’d be mad not to invest your hard earned cash back into.   The business is going to make you a millionaire despite the fact you currently have a middle manager role in Finance.

     10)  Your company is a self-proclaimed innovative business.  Not a day goes by when the CEO or someone else in management doesn’t mention how innovative a company you are a part of.   Your company may only really have one basic product and a few variants but you are undoubtedly an innovative company.

If you scored 3 or less – relax – your company is just drinking good old still water

If you scored 4 or 5 - panic not – your company is just drinking sparkling water

If you scored 6 or 7 - review your options – your company is drinking something decidedly exotic

If you scored 8 or more – run for the hills – sell your stock and shred anything with your name on it – your company is drinking the Kool-Aid and is in for some serious trouble.

Unfortunately, once the corporate Kool-Aid is on the menu it is very difficult to persuade the organisation of the need to change.  Like the Titanic the business is destined to hit the ice-berg – it’s only a matter of timing.

That said, if you are worried about the corporate risks your business is employing or would like a diagnostic view and assessment then please do get in touch – I’d be happy to help.

*"Drinking the Corporate Kool-Aid" is a figure of speech commonly used in the United States that refers to a person or group holding an unquestioned belief, argument, or philosophy without critical examination. It could also refer to knowingly going along with a doomed or dangerous idea because of peer pressure. The phrase typically carries a negative connotation when applied to an individual or group. The phrase derives from the November 1978 Jonestown deaths where members of the People’s Temple, who were followers of the Reverend Jim Jones, committed suicide by drinking a mixture of a powdered soft drink flavoring agent laced with cyanide. Although the powder used in the incident included Flavor Aid, it was commonly referred to as Kool-Aid due to its status as a generic trademark. - Wikipedia