March 21, 2014 Articles We all no doubt have our favourite leader whether that be a historical character- Wellington; from politics-Mandela; from the caring services-Florence Nightingale; from sport-Alex Ferguson; etc. Getting behind the perception of any particular leader, particularly in today’s media dominated environment is quite difficult, and one wonders whether the characteristics, traits and behaviours of successful leaders have changed over time, or is there something timeless about leadership that we would do well to learn? After all the business world spends a lot of time debating the leadership question and investing in leaders and there is more and more evidence that investing in leadership development gives a return on business performance-see below as well. Importantly leaders arise at all levels in a business, each making a leadership contribution aligned with the goals and objectives of the organisation. However how do those in a position of power and responsibility for leadership development such as CEO’s, senior leaders and HR professionals see the leadership challenge today? A recent research report conducted by the Conference Board and published under ‘DNA of Leaders. Leadership Development Secrets’ by Rebecca Ray and David Learmond’ published in 2013 sheds some light on this question. The authors examine some interesting aspects of leadership detailed by engaging with seventeen global companies (including Siemens, BASF, Caterpillar, etc.) Does Leadership Matter? Few would argue that the leadership of organisations is not important. There is now clear evidence detailed in the above report that CEO’s of companies that have enduring and sustainable approaches to leadership, rank the ‘Development of Human Capital’ as their most important issue to manage, and that within that over-arching statement, leadership development figures very highly. Interestingly, the authors also highlight from a variety of sources that the quality of leadership directly impacts company performance. This point brings the question of leadership and leadership development centre stage and is therefore of prime importance in any organisation. Leadership Values The global companies that participated in the report have consistently and sustainably invested in leadership development for the long term, and by engaging with Human Capital and Business-Line Executives the authors were able to distil out the underlying features of leadership development and values. Some findings were: A global mind set is the critical attribute for global leaders to embrace the diversity of opportunities available Regional differences still matter despite globalisation and a sensitivity and willingness to adjust to these is important The operating model for leaders evolves to a ‘freedom in a framework’ rather than a direction from HQ Leadership development programmes and processes have been significantly simplified and streamlined to better meet needs Clear focus on providing support at significant leadership transitions A shift away from relying on standardised ‘off the shelf’ development initiatives towards customised and experiential initiatives ‘Leaders as Teachers’ – recognition that senior leader should play a key role in mentoring coaching and promulgating key values to the business Twenty three leadership values were found to be part of the leadership development programmes in these companies: Leadership Value VISIONARY – Clarity and consistency about the kind of leaders to develop PROCESS ORIENTED – Identify talent early on and develop VALUES DRIVEN – Leadership development underpinned by company core values OPERATIONALLY EXCELLENT- Relentless focus on continual improvement DATA DRIVEN – Use data to determine succession planning COLLABORATIVE – Internal and external collaboration LEADER LED – Senior leaders own the leadership process INTEGRATED – Embed and align leadership development GLOBALLY FOCUSED – Global mind set CROSS-FUNCTIONAL – Develop cross functional capability DIVERSE – Develop diverse talent INTENTIONAL – Activities to develop exposure, education, and experience FUTURE FOCUSED – Relentless focus on the future MOBILE – Exposure of leaders to different cultures and environments ACTION ORIENTED – Use of customised rotations and action learning FLEXIBLE – Customised approach to leadership development ADAPTIVE – Adaptation of best practice HOLISTIC – Link leadership development to business strategy BIG – Scale useful to rotate leaders through developmental roles MATURE -Try, fail, regroup and relaunch SAVVY – Focus and target BOLD – Willing to take risks HUMBLE – Leadership development is a journey not a destination Further the companies participating in the report recognised that there is a never ending quest to secure the above values in the leadership cadre they are developing. Leadership Essentials Learmond has taken this work further combining the above findings with previous findings from the Conference Board report published in late 2010 ‘Go Where There be Dragons. Leadership Essentials for 2020 and Beyond’ by Mitchell and Learmond and suggests that there are six key leadership essentials as shown below. where developing a: Compelling Purpose Strong levels of Trust Effective Collaboration Embracing Diversity Distinctive Edge Resilience become essential activities for leaders to operate successfully in an increasingly volatile, uncertain, changing and ambiguous world. Consequences for Leaders and those responsible for Leadership Development Development of leaders and leadership capabilities is important to the future success and performance of any organisation. It is now clear what leadership values some of the best in class companies are pursuing. Whilst different weights will be given to these values in any business at a point in time the list of leadership values above provides a useful check for companies to see how these values are being developed in their organisation. How would your current leaders score against the above values and what steps could you take to bridge that gap in their development? How Industry Forum can help Industry Forum have a wealth of experience in assisting organisations in the development of their leaders which can take place either on a one to one, team or group basis. For more details please visit the Industry Forum Executive Coaching and Leadership Development web page. Further information: [email protected] +44 (0)121 717 6600 Download Article (pdf)
March 12, 2014 Articles A major business survey published last year found that employers in the UK are reducing training on teamwork and problem solving and putting more pressure on individuals to work harder. Does this mean that the lean approach has been exhausted and no longer offers a competitive payoff to firms? Powerful evidence to the contrary has just been published by McKinsey in a 140 page report, The Lean Management Enterprise. This is the third in a series of reports about how much lean transformation can achieve when it unleashes the potential of each individual, reinforcing management skills and unlocking employees’ problem-solving capabilities. This general approach is termed “lean management.” Lean may start as a small, isolated success story but it can reach the entire enterprise, including functions that had hitherto seemed too difficult to transform, such as IT, product development, finance, marketing and sales, and communications. McKinsey suggest that the ability to develop lean management has the potential to be a differentiator between manufacturing firms in advanced economies and those in emerging economies. There is a tendency to see lean as an approach which primarily pays off in manufacturing. McKinsey, on the other hand, have found that lean management has underpinned successful service organisations as well. For at least the last two decades productivity growth in manufacturing in the UK has been well ahead of the service sector. The more that value adding approaches can be spread throughout the service sector, the faster the productivity of the UK economy will recover from the dip that started in 2008. Four disciplines make up lean management: Delivering value efficiently to the customer Enabling people to lead and contribute to their fullest potential Discovering better ways of working Connecting strategy, goals and meaningful purpose Each of these is supported by a set of tools and techniques that shape day-to-day work for both managers and frontline employees throughout the organisation. By adapting and implementing the tools it is possible to introduce performance targets for transparent results, redesign processes to be more efficient from end to end and build organisational structures that encourage cooperation and capability building. A related piece of evidence in favour of this kind of transformation comes from the private equity (PE) industry. PE investors came out of the recession with a renewed focus on organic revenue growth, applying a more entrepreneurial mindset to working with their portfolio companies. Building organisational value within their portfolio companies has meant putting the right top management into each company plus ensuring that the new team follows a strategy of increased operational excellence. Private Equity International run a set of annual Operational Excellence Awards. In 2013 the winner of the Large Cap Award was Terra Firm Capital Partners and its involvement with Deutsche Annington (DAIG) which is now the largest privately owned residential landlord in Germany, housing around half a million customers. Terra Firma Capital Partners started the project in 2001 when DAIG was a set of 10 German Federal Rail housing portfolios with a disparate collection of real estate assets – comprising 64,000 units. The first step was to intergrate the various IT systems and create a pan-German customer care centre. DAIG then sought to grow its asset base through acquisitions. In 2005, the company secured another 138,000 further properties by buying Viterra, and in 2009 it added another 4,500 through the acquisition of Prima. This scale of operation allowed the firm to bring the caretaking and facilities management functions in-house, by hiring 370 facility managers across its sites, and set up two joint ventures with local services provider B&O. In 2012, 200,000 small repairs were completed and almost 4,500 vacant flats refurbished. DAIG also targeted greater energy efficiency – via extra insulation, window replacement and new heating systems, which reduced the company’s carbon footprint and its tenants’ energy bills. Effort also went into making apartments more habitable for the elderly, through improvements to building infrastructure, such as adding elevators, as well as installing more accessible showers. Other initiatives were intended to make apartments more attractive to all tenants, like installing balconies to let in more light or partnering with Deutsche Telekom to equip flats with fibre optic technology. DAIG teamed up with the German Foreigner Association to offer free German language courses, designed to provide tenants and non-tenants with basic language skills. While DAIG is primarily a housing company it invested heavily in developing additional services to provide value to customers. “Terra Firma clearly did a lot of work here in professionalising what had previously been a quasi-state organisation,” said PEI Award judge David Currie. “They made some acquisitions along the way, but they also did quite a lot of work on improving management and the company’s service to clients.” In July 2013 DAIG made its public market debut on the Frankfurt stock market floating 15.5 percent of its shares and raising €575 million in the process. This case clearly shows that lean management and operational excellence are virtually identical. A third term which can add to confusion is High Performance Working (HPW), an approach which is advocated by the UK Commission on Employment and Skills. An important part of accelerating the spread of lean thinking across the enterprise is to bring the HR department into the project as a partner in the early stages. It is almost always a mistake to start taking decisions that involve employees without getting HR involved. HPW effectively sets an agenda for HR involvement in this way. For example, before launching a lean-management transformation, the enterprise must establish a central team to plan and coordinate the transformation and provide oversight for working-level change teams who will guide business and functional areas through the transformation. These teams will need top talent, both to meet the managerial demands inherent in a transformation, and to underscore the priority that leaders are giving to the transformation. High performing staff are always in demand across an organisation and HR usually has valuable experience in identifying the relevant staff and managing the conflicting claims for their deployment. Pursuing operational excellence often means creating new roles and changing old ones significantly as the organisation breaks down internal walls and redesigns its operating patterns. This redeployment of both managers and employees will require extensive HR collaboration. The new way is likely to involve a new emphasis on coaching and feedback and these are skills that are probably best understood by some HR staff who will be major assets in spreading them across the organisation. The required changes in leadership, team structure, and performance management can be deeply stressful for frontline employees and middle managers. HR’s expertise will be crucial in communicating the transformation, monitoring employee reactions to it and addressing concerns that will inevitably arise. The work on this must start at the earliest stages of a transformation, one through the development of a communications plan. Such plan has to be tailored to employee sensitivities and to contractual and statutory requirements, areas that HR professionals understand well. Sustaining the lean-management knowledge base and transmitting the mind-sets to current and future workers will depend on HR’s talent systems for recruiting, training, people development, and compensation. Major adjustment to these systems may be needed as part of the progress towards operational excellence and if these adjustments are to achieve the desired results HR must be fully involved from the start in the redesign and roll-out. Industry Forum has extensive experience of the design and implementation of cross organisational transformation and is always available to companies who want to take the next step to advise and help execute the changes needed. Further information: [email protected] +44 (0)121 717 6600 Download Article (pdf)
February 7, 2014 Articles In 2014 the global aerospace manufacturing market is expected to maintain the overall 5% growth rate that has been seen in 2012 and 2013. The growth will be driven by the continued expansion of the civil aviation sector while the military sector is expected to continue its contraction. Boeing forecast a long-term demand in global civil aviation for 35,280 new aeroplanes between 2013 and 2032, valued at $4.8 trillion. 14,350 of these new aeroplanes will replace older, less efficient aeroplanes. The remaining 20,930 aeroplanes will be for fleet growth, stimulating expansion in emerging markets and innovative airline business models. Approximately 24,670 aeroplanes (70 percent of new deliveries) will be single-aisle aeroplanes, reflecting growth in emerging markets such as China, and the continued expansion of low-cost carriers throughout the world. Widebody share will also increase, from 23 percent of today’s fleet to 24 percent in 2032. With these growth rates there is a possibility that a new major manufacturer may enter the civil aviation market based in one of the emerging economies. The anticipated rate of expansion in civil aviation will pose significant challenges for the supply chain across the global economy including in the UK. In 2014 the recent rate of revenue contraction for defence contractors of around 2% p.a. may well be sustained. European defence equipment manufacturers face particular problems – McKinsey has estimated that European governments could save over 30% by joint procurement of equipment and services. Defence programmes have become extraordinarily expensive and affordability has become a major issue. Next generation technologies must be developed and maintained in service at a much lower cost than hitherto. According to Deloittes, the UK industry has utilised two major business model innovations to help fund new requirements in this challenging environment – public private financing initiatives and performance based logistics – which are making acquisitions more affordable. Some defence companies have also been anticipating defence budget cuts by reducing staff, cutting overhead costs, and getting lean. Automation is being used to reduce labour costs. Digital product development and computer aided design are creating significant efficiencies in product development. Lean manufacturing and Six Sigma have cut waste in the production process. Such initiatives will almost certainly accelerate in 2014 as companies in the defence sector seek to maintain margins and profitability. The UK has the second largest aerospace industry in the world but faces fierce competition from across the world. In a government/industry collaboration which started in 2013, 100 bursaries have been awarded to employees and graduates to study Masters level degrees in aerospace engineering to help the sector develop the high-level skills needed to compete globally. Industry and government have each committed £3 million over three years to help recruit 500 talented people who want to build careers in aerospace, but need financial backing to study at Masters level. The Royal Academy of Engineering and The Royal Aeronautical Society are overseeing the programme. One aim of this initiative is that a more diverse range of people should reach Chartered Engineer status and to work in the aerospace sector. The scheme supports the up-skilling of current aerospace employees already qualified to graduate level, and BSc students currently studying at university. They will be encouraged to make direct links with aerospace businesses to undertake projects to address the challenges faced by industry and secure opportunities for work experience and future employment. The sponsor companies are BAE Systems, Bombardier Aerospace, EADS/Airbus, Finmeccanica UK, GKN, MBDA Missile Systems, Messier-Bugatti-Dowty, Rolls-Royce and Spirit AeroSystems. The Headquarters of a new Aerospace Technology Institute (ATI) based at Cranfield Technology is now operational, with a core team of around thirty who are setting the strategy for the ATI-funded research and technology programmes to be carried out across the country by industrial and academic partners. These programmes will be jointly funded with £2 billion over seven years from government and industry to develop the technologies required for the next generation of aircraft. The ATI will provide better alignment between early research supported by the Engineering and Physical Sciences Research Council and cross-sectoral R&D innovation delivered through the Technology Strategy Board. Larger scale projects are being delivered through the Technology Strategy Board by collaborative groups from industry and academia and some projects will be carried out in the High Value Manufacturing Catapult centres. Sharing in Growth (SIG) is another ambitious programme to raise the capability of UK Aerospace and Civil Nuclear suppliers so they can share in the anticipated growth of global markets and win business in other associated high value manufacturing sectors. The programme provides concentrated training and development aimed at driving up competitive capability to tackle barriers to growth, boost exports and grow the number of high value jobs in the UK. Finance is provided via the Regional Growth Fund. Companies will receive a four-year programme of business development and training tailored to the specific needs of their business. This includes shopfloor manufacturing improvement, process improvement, leadership development and specific nuclear sector knowledge. Participating companies need to commit resources of a matching value. Within the SIG programme SMMT Industry Forum’s expertise and experience in supply chain development has secured the prestigious position of ‘First Provider’ for Supplier Development Leaders and ‘Sole Provider’ for employee engagement in Business Improvement Techniques. The SIG programme is sponsored by Rolls-Royce plc and there are a number of other providers in addition to SMMT Industry Forum. In co-operation with the other selected delivery partners, SMMT Industry Forum will be involved in programmes with up to 55 UK suppliers. In each programme SMMT Industry Forum will support them through in improving their competitiveness via a structured programme with three main stages: 1. Engage – A comprehensive business diagnostic leading to a robust 4 year business case. 2. Develop – Tailored, high intensity training for Management and Staff including: Leadership Business Improvement Techniques Lean production Modern manufacturing Sub-tier management Cost management 3. Sustain – Ongoing support to ensure that the business case is realised and improvements sustained. A range of effective programmes will be needed if the UK is to maintain its leading position in the aerospace sector. Several emerging economies are funding ambitious programmes through organisations such as the Indian Space Research Organisation, RKA in Russia , SUPARCO in Pakistan, the Iranian Space Agency and the Korea Aerospace Research Institute . China is the world’s second largest national air travel market and around 200 new passenger jets are bought every year, about one-eighth the world’s total demand. This constitutes a huge domestic market for an emerging civil aviation manufacturing sector to build on. The A320 final assembly line in Tianjin began operations during September 2008 as a joint venture between Airbus and a Chinese consortium of Tianjin Free Trade Zone (TJFTZ) and China Aviation Industry Corporation (AVIC). It has delivered more than 125 aircraft as of mid-2013. AVIC has a high-level research network including 33 research institutes. In a discussion paper published by the Royal Aeronautical Society in 2013, the head of research, Professor Keith Hayward concluded that China has several important deficiencies in key aerospace technologies which are major impediments in mounting a global challenge in the civil sector although these might be mitigated through collaboration. Haywood suggests that some Western companies may also be reluctant to invest so heavily in China in case of unleashing a competitor. Nonetheless, building up the aerospace sector remains a major goal for China and several Chinese firms in various sectors have a strong record in absorbing and applying technologies developed elsewhere to become global majors. The strategic programmes being developed in the UK represent a sensible investment in the face of this and other potential competitive threats. Further information: [email protected] +44 (0)121 717 6600 Download Article (pdf)
January 15, 2014 Articles Manufacturing and services have long been linked together in certain industry sectors. For example automotive manufacturing firms are closely linked to financial services, retailing and maintenance firms as well as partners for the disposal and recycling required by the End of Life Vehicles Directive. In the consumer products area currently, product design must extend well beyond physical and functional characteristics of the product and cover more subjective aspects such as branding, corporate identity, packaging, symbolism, advice and guidance. Product management often draws on engineering, ecology, psychology, economics, anthropology, IT, Human Resource Management, operations management, finance, graphic design etc. A 2005 OECD study found that the distinction between manufacturing and services was becoming increasingly blurred. The services sector is more independent from other industries than manufacturing. Manufacturing industries interact much more strongly with other industries, both as providers and as users of intermediate inputs. At the European level, manufacturing firms have been increasingly offering services along with physical products. Between 1995 and 2005, the share of services in the output of manufacturing industries increased in most European countries. The highest service shares are found in small countries with high R&D intensities whose service output consists mostly of knowledge-intensive services. Manufacturing sectors with high innovation intensity also have the highest share of firms offering services, the highest turnover gained from services and the highest number of different services offered by the average firm. Examples of these industries are electrical and optical equipment, machinery and the chemical and pharmaceutical industries. Firms which have launched products new to the market during the last two years are more likely to have higher shares of turnover from services compared to companies with no products new to the market. Companies which generate a high proportion of revenue from services include: Rolls Royce (49%); ST-Ericsson (38%); Atlas Copco Group (43%); Tyco (40%); Alstom (26%) and Arcelor Mittal (29%). These themes are developed in a major report from the UK Government Office for Science published at the end of 2013, The Future of Manufacturing: A new era of opportunity and challenge for the UK. The report identifies the megatrends that are bringing manufacturing and service together: the increasing demand for sophisticated solutions rather than simple products the increasing demand for outcomes rather than outputs the replacement of transactions by relationships the move from supply chains to value networks McKinsey Global Industries suggest that future expanding markets in the global economy will be driven by an increasing number of middle class consumers who will want individualised products and whose tastes will change rapidly. These consumers will use online technologies, especially mobile, to search markets and to make purchases. The networks which will satisfy these expanding markets will use technology to boost their agility. In December 2013 the Office of National Statistics published some interesting results about the impact of e-commerce on the UK economy. The manufacturing sector is a leading user of e-commerce. Between 2010 and 2012 the value of e-commerce sales by manufacturing increased so that it is only just behind the leading UK sector – the wholesale sector. Both are well ahead of the retail sector. Manufacturing accounts for nearly half of the sales in the UK using Electronic Data Interchange with a total of £145bn of EDI sales. The UK is near the top of the EU ranking for the proportion of total turnover taken by e-commerce. In terms of the MGI vision of growth markets, the increasing involvement of UK manufacturers in e-commerce is very much a positive development. The Centre for International Manufacturing (CIM) at Cambridge has carried out important research on the development of the service dimensions of product offerings and have found that this often involves the development of a network of multiple partners. The researchers have found that different partners in these networks may well have a very different view of strategy and key operational processes from the other members. CIM suggest that network leaders should explicitly develop their strategy so that they build a network which genuinely meets customers’ service needs linked to their products. To achieve shared goals and objectives across the network there needs to be a common vision and a common language. The relationships in the network should be built on trust and specific role definitions. Mechanisms have to be put in place for the joint ownership of decisions and collective responsibility of outcomes. Across the network there should be co-ordinated workflow and synchronised planning. Value stream mapping is an important tool for achieving overall service improvement. Networks should be agile with the capability to meet individual customer requirements. CIM conclude: The ability to identify and manage‘capability’ has become increasingly important, especially with these ‘capabilities’ playing a critical role in the acquisition process. A lot of acquisitions fail because the assessment of capabilities and the approach taken during the acquisition process towards capabilities is inadequate. ….. Capability features such as skills, knowledge, technology and organisational processes are an integral part of the emerging framework, within the industrial service network design context. Aston Business School have also researched the integration of manufacturing and service functions. While manufacturers focus on quality cost and delivery, advanced services contracts are about performance, availability, reliability and cost. Aston conclude that manufacturing companies moving into services should retain capabilities in design and production to keep costs under control, manage assets effectively and ensure responsiveness to changing user needs. The UK economy is well placed to construct product/service networks given the size and strength of its business and professional services sector. This sector is approximately the same size as UK manufacturing and accounts for about 11% of the UK economy. It is forecast to expand by 4% per annum up to 2020. Globally it is second only to the United States and has an annual trade surplus of £20bn. In 2013 the Coalition published a national strategy for professional and business services. Industry Forum has extensive experience in improving networks which span manufacturing and service operations and can deploy effectively a variety of performance measures and standards which address key aspects of each. Further information: [email protected] +44 (0)121 717 6600 Download Article (pdf)
December 12, 2013 Articles Cost reduction is a serious concern for most players across the global economy. A variety of approaches have been developed over the years in different communities. This article considers Value Analysis/Value Engineering and Cost Innovation as strategic tools. Value Analysis/Value Engineering (VA/VE) was originally conceived during World War II in the United States when critical material shortages forced many manufacturers to substitute materials and designs. When the General Electric Company found that many of the substitutes were providing equal or better performance at less cost, it launched an effort in 1947 led by Lawrence D. Miles (1904-1987) to improve product efficiency by systematically developing less costly alternatives. Miles was a vacuum tube design engineer who had developed a number of patents. He combined several ideas and techniques to develop a successful method for ensuring value in a product. The overall goal of Miles’s technique was to produce a functional product without compromising on its quality. In 1961 Miles wrote the definitive book on the subject, Techniques of Value Analysis and Engineering. The Lawrence D. Miles Value Engineering Reference Center is now in the Engineering School at the University of Wisconsin and was created to fund ongoing efforts to preserve and extend VA/VE work. VA/VE proposes that a project be managed in eight phases: Orientation, Information, Function Analysis, Creative, Evaluation, Development, Presentation and Implementation. The first phase involves careful identification of the problems to be addressed, breaking down the issues step by step into their constituents to assess potential gains and establish priorities. At the end of the Information phase the scope project is refined on the basis of all the data gathered. This makes up the input to the Functional Analysis – one of the distinctive elements in VA/VE. The functions of the entity are classified and their inter-relationship determined prior to costing each function. The scope of the project is then refined further in the light of the analysis. The alternative ideas generated in the Creative phase are assessed and prioritised in the following phase with the appointment of Idea Champions for each viable avenue. At the end of this phase the best ideas are put into Development where life cycle costs are determined to see if the potential benefits outweigh the costs. Major risks are identified and ways found to mitigate them. The Presentation phase is the start of the organisational approval process. The presentation should ideally be less than half an hour and should: Describe the workshop objectives and scope Identify the team members and recognize their contributions Describe the “before” and “after” conditions for each alternative Present the costs and benefits, advantages and disadvantages, and impact of each alternative Identify strategies to overcome roadblocks Demonstrate the validity of the data sources Suggest an action plan and implementation schedule In the Implementation phase final approval is secured on the basis of a written report and steps are taken to enhance the prospects of success. Early disclosure is recommended to warn the originators of any objections to the proposal elsewhere in the organisation. This early warning gives the originators an opportunity to incorporate explanations and details into the final report to overcome the objections. These preliminary discussions often produce additional suggestions that improve the proposal and enable the decision-maker to contribute directly. Implementation depends on the rapid approval by the decision-makers for each organizational component affected by the proposal. The VA/VE team members should serve as liaison between decision-makers and other stakeholders by preparing information that weighs the risks against the potential rewards and by identifying potential roadblocks and solutions. From this quick review we can see that VA/VE involves careful iterative development of the problem to be addressed and careful management of the organisational dimension of making the proposed changes. A major turning point in the development of VA/VE came in 1963 when a function-logic diagramming procedure called “Function Analysis System Technique” (FAST) was created by Charles W. Bytheway. In 1959 the Society of American Value Engineers or “SAVE” was incorporated. SAVE International® is the main international society for the advancement and promotion of the value methodology with members in more than 35 countries working in a variety of fields, including construction, product design and manufacturing, transportation, health care, government and environmental engineering. SAVE covers education and training, publications, tools for promoting the value methodology, certification, networking and recognition. In 1973, SAVE embarked upon a formal certification program for the competence of professionals value engineers which has evolved to include three levels of certifications. The first federal law in the USA requiring value engineering was passed in 1981: The Clean Water Active. Subsequent success of application of value engineering resulted in the first issuance of Circular A-131 by the Office of Management & Budget in 1988 which requires Federal Departments and Agencies to use value engineering as a management tool to reduce program and acquisition costs. That was followed by Public Law P104-106 in 1996 covering the acquisition of IT by defence agencies. The head of each executive agency must design and implement process for maximizing the value and assessing and managing the risks of the information technology acquisitions. Legal requirements for VA/VE are now quite common in the US. Value Analysis first came to the UK in 1957 and the Value Engineering Association was formed in 1966 as an initiative by the Ministry of Technology. It became the Institute of Value Management in 1971. There is a European Association for the Management of Training and Certification in Value Management with a European Governing Board which was founded following an initiative by the European Council of Ministers to strengthen Europe’s innovative capacity and competitiveness. The European Standard EN 12973 provides a benchmark of good practice in VA/VE in Europe. It describes a range of tools and encourages the selection of the most appropriate methods. Guidance on the functional expression of the need and functional performance specification are set out in EN 16271 which covers Functional Need Analysis, Functional Need Expression and Functional Performance Specification. In the US, VA/VE is strong in the defence industries and in 2010 the Department of Defense funded the Institute of Defense Analyses to explore the synergy between VA/VE and Lean Six Sigma. This study concluded that opportunities for synergy between the two approaches include the following: Function analysis and the FAST diagram. The disciplined use of function analysis is the principal feature that distinguishes the VA/VE methodology from other improvement methods. Function analysis challenges requirements by questioning the existing system, encouraging critical thinking, and developing innovative solutions. Cost focus. VA/VE only develops alternatives that provide the necessary functions. By examining only those functions that cost more than they are worth and identifying the total cost of each alternative, VE explicitly lowers cost and increases value. The IDA authors suggested that VE does not take the place of Lean Six Sigma (LSS) efforts, but it does present significant opportunities to enhance LSS. They recommended that LSS training be augmented to include the VE approach to function analysis, creativity, and associated elements of evaluation and development. At first glance VA/VE looks like an important means of cost innovation. While this may be literally true the strategy of Cost Innovation has come to have a specialised meaning in the last few years. Thanks to Ming Zeng and Peter J Williamson, Cost Innovation has been identified as a competitiveness strategy followed by some Chinese firms to globalize. Their book Dragons at Your Door has popularised the Chinese approach to Cost Innovation. Zeng and Williamson discuss the case of the China International Marine Containers Group (CIMG) which was founded in 1980. It has adopted the slogan – learn, improve, disrupt. It licensed its first refrigeration technology from Graaff in 1993 at the same time that it acquired the innovative UK container firm, Clive-Smith Cowley. By 2005 Graaff was bankrupt and CIMG acquired its 77 patents. In 1999 global competition in container manufacturing was particularly intense. CIMG which already had a low cost base decided that this was the time to drive costs even lower. It streamlined its raw material procurement, benchmarked and rationalised its production and used foreign capital to make parts of its production more capital intensive. In all it took 46% of the cost out of manufacturing and overheads. CIMG developed a cost Innovation strategy to move upmarket. Graaff was once again the source of new technology but CIMG used its lower cost design and engineering capabilities to improve on the new technologies. This drive went on to tackle the replacement of expensive aluminium in its refrigerated containers with cheaper steel. Taking steel treatment technology from Germany it was able to improve the performance of steel until it matched the performance of aluminium. The result was that between 1997 and 2003 production of refrigerated containers went up sevenfold. The next stage meant increasing the variety of products offered to customers at low cost. For example, CIMG were able to reduce the set-up time for model changes in production from twenty to five minutes. Currently CIMG has over 40% market share in the international container business and 56% market share in the dry marine container market. It has 12 production bases in South, East and North of China. Zeng and Williamson have collected a number of similar Chinese case studies in different sectors including, Lenovo in IT, Pearl River Piano and Wanxiang in automotive universal joints. These developments are set in a wider context in a major study that has just been published by Nesta, China’s Absorptive State: Research, innovation and the prospects for China-UK collaboration. This report lists ten key finding: the first is that China is increasingly adept at profiting from global knowledge and networks. Secondly China is maintaining its overall priority of becoming a more innovative economy under its new leadership with more emphasis on quality, efficiency and evaluation. Having reviewed the evidence Nesta concludes that China is embracing diverse innovation paths. Nonetheless in the last five years a number of Chinese multinationals have emerged as global majors and China’s capability for incremental re-innovation has become a major national asset. The report sets out the advantages of UK collaboration with China on science and innovation and the timing of its publication ties in with a major visit to China by David Cameron. The top five Chinese R&D spenders are Huawei Technologies, China Mobile Communications Corporation, China Aerospace Science and Technologies Corporation, China National Petroleum Corporation and Shanghai Automotive Industry Corporation. This means the China’s innovation strategy is directly relevant to several strong UK sectors featuring in our national strategy. We don’t know whether Chinese majors have adopted a systematic approach equivalent to VA/VE but it is clear that VA/VE remains a useful tool within the strategic armoury of Western firms, particularly when it is integrated with lean. There are also relevant parallels with frugal engineering and frugal innovation. It is important to recognise that VA/VE looks at a given functional spec as the source of value. Lean start-up on the other hand brings any such assumption into question – insisting that customers’ perceptions and reactions whether functional or more subjective are the ultimate source of value. As such it may be especially useful within a strategy that aims to keep up with changing consumer tastes. Further information: [email protected] +44 (0)121 717 6600 Download Article (pdf)
November 7, 2013 Articles In the last five years the ‘lean’ metaphor has been developed in a new arena – business start-ups. A major factor in the growth of this approach has been the thinking and publications of Eric Ries, a Silicon Valley entrepreneur. With this background the lean start-up approach has been used in many digital sector start-ups. An important concept in this approach is the Minimum Viable Product (MVP). This is defined as the version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort. Underneath the MVP concept is the fundamental idea of the value stream where value is seen in the eyes of the customer. Clearly no business start-up will succeed unless it is generating a value stream in these terms. But the initial vision of the start-up may well not embody a feasible value stream – rather it may be mostly guess-work. Within the MVP concept is a process of testing the validity of the value stream vision by repeated learning cycles. Again the connection with traditional lean thinking is clear – particularly the Deming Cycle, Plan, Do, Check, Act. This process of value stream development should be guided by real metrics. Another aspect of lean start-up is the approach to capital utilisation. In the classic dot.com boom startup, large sums would be made available by venture capitalists which would be ‘burnt off’ by the start-up team. There would be talk of the burn rate for example. Understandably the lean start-up model uses a different approach designed to reduce waste and based on the familiar lean idea of pull. Smaller tranches of capital are pulled by the start-up team from the VC on the basis of need. Ries taught the lean start-up model at Stanford – the prestige university close to Silicon Valley. He found that it was a real challenge to make the students actually experience how confusing and frustrating start-up environments are. In these circumstances, Ries suggests, one can only learn from being wrong. When something works, it’s too easy to invent a story about how that was your intention all along. Ries suggests that the key lessons are that: Regular checking in with and regular talking to customers surfaces bogus theories pretty fast Cross-functional teams tend to examine their assumptions harder and with more scepticism than purely single-function teams Working in small batches tends to make it less likely that you’ll attribute big results to small changes (because the fact that small changes sometimes do lead to big results is counter-intuitive) Rapid iteration makes it easy to test and re-test your assumptions to give you many opportunities to drive out superstition In 2010 Ries wrote a piece for the Harvard Business Review Blog entitled ‘The Five Whys for Start-ups’. He explains this by reference to his reading of the Toyota Production System whereby what appear to be technical problems are really human problems. The Five Whys technique is a way of drilling down to the underlying human problem whether the issue is improving a manufacturing process or validating a digital service start-up. The lean start-up approach is linked to another non-traditional arena where lean ideas have been utilised – Lean Software Development (LSD). The term was first coined as the title for a conference organised by the ESPRIT initiative of the European Union, in Stuttgart Germany, October 1992. Independently, the following year, Robert Charette suggested the concept of “Lean Software Development” as part of his work exploring better ways of managing risk in software projects. LSD is one of a family of development approaches which fall under the heading ‘agile software development’. These approaches use an iterative and incremental development process, where requirements and solutions evolve through collaboration between self-organising, cross-functional teams. In February 2001, 17 software developers met at the Snowbird, Utah to discuss lightweight development methods. They published the Manifesto for Agile Software Development. Since 2007, within the agile portfolio, the emergence of lean as a new force in the progress of the software development profession has been focussed on improving flow, managing risk, and improving decision making. This has included kanban as a major enabler for Lean initiatives in IT-related work. The focus on flow, rather than waste elimination, has proved a better catalyst for continuous improvement. Following a series of project failures the Civil Service is now adopting an agile software development approach led by the Government Digital Service (GDS). The GDS is a unit of the UK Government’s Cabinet Office tasked with transforming the provision of government digital services. It was formed in April 2011 to implement the ‘Digital by Default’ strategy proposed by the report ‘Directgov 2010 and beyond: revolution not evolution’. The GDS approach to agile involves teams working in short sprints, typically a week long, to see what they can achieve in that time. Once the team gets to a ‘minimum viable product’ – whether it’s an app, a digital service, or anything else – it is made available for testing by users and feedback is collected by the product design team. This feedback and analysis of users’ behaviour informs the next stages of development across further ‘sprints’. The product is refined by analysis of all this user data and released again, then refined and released again, in an iterative process. This approach is very similar to the classic lean start-up model. The decision to go agile was taken by the Coalition at the centre of Government and so the task of rolling this design approach across departments is a major undertaking and GDS admits that getting user research into agile teams in a way that is timely, relevant and actionable is a challenge. Rather than a team of researchers taking research briefs from lots of project teams, each project team has a dedicated researcher working closely with the team of designers, developers, content designers and product owners. This allows the team to be closer to the product design and adopt a more ‘experimental’ approach – hypothesising about what design or content approaches might work and designing ways to measure what is more or less successful. GDS believe that it is easy for teams to get comfortable with a small set of research methods and to use those for everything. In contrast, an experimental mind-set means always looking for better ways and a more varied research toolkit to help secure a richer and more accurate understanding of users needs. GDS uses a mix of qualitative and quantitative methods. Researchers work closely with their web analytics colleagues to achieve better understanding of how people respond to interface design and content using A/B testing and detailed path analysis. They have concluded that getting interesting insights from research isn’t hard. Getting those insights into the design of products can be surprisingly tricky. It looks as if more initiatives are likely in the UK civil service possibly extending as far as policy development. Some writers have suggested that lean and agile are alternative paradigms. In start-ups and in software development and digital services, a different pattern seems to apply. Lean start-up has been articulated as a coherent paradigm by Ries with clear links back to classic lean. Ries’ influence has extended readily to Silicon Valley. It is easy to underestimate the prestige which lean enjoys in the United States, especially with the Shingo Prize, the manufacturing Oscars. Taking the GDS agile approach as an example of UK practice – where the programme must tackle major issues in public sector IT – we can see that elements of the LSD paradigm have been incorporated and rolled out but not under a lean banner. The rollout challenge remains whatever flags are used to describe the required methodology especially as in the case of GDS where major change is expected on political time scales. At Industry Forum we have in depth experience of achieving changes on this scale and our approach has been founded on learning by doing. This approach is likely to be effective with these newer development methods. Further information: [email protected] +44 (0)121 717 6600 Download Article (pdf)
October 21, 2013 Articles About 5.7 million people are currently employed in the renewable energy sector globally, with a growth rate since 2010 of over 15% per annum. Some estimates anticipate that global employment in 2020 might reach 15 million. In the UK this rate of expansion is evident in the market for jobs in offshore wind, particularly for experienced graduates. Offshore wind employers are also actively recruiting staff from the stream of military leavers resulting from the defence cuts, as their experience and attitude are often in tune with employers’ needs. This Summer the Coalition launched the UK Offshore Wind Industrial Strategy. The strategy is based on the commitment by Industry and Government to work together to build a competitive and innovative UK supply chain that delivers and sustains jobs, exports and economic benefits for the UK. The strategy vision is to secure: economic growth creating tens of thousands of long term UK jobs a clear and sustainable project pipeline major manufacturing facilities in the UK the development of a competitive UK-based supply chain a cost-competitive low carbon technology The achievement of these goals depends on the availability of suitable skills but overall the UK labour market in the energy sector has the following skills challenges: meeting the current and future need for engineering and technician skills insufficient management skills competition for talent in the domestic and global labour market an ageing workforce reliance on other sectors for a skilled workforce The strategy also warns that there are other challenges if the UK supply chain is to benefit significantly from future offshore wind deployment as there is well-established competition in other countries. The UK must: increase the visibility of the pipeline of future projects and the likely size and timing of future market demand, particularly past 2020 ensure potential inward investors understand the benefit of locating manufacturing facilities in the UK so that tier one equipment suppliers ,particularly turbine manufacturers, set up operations in the UK enable UK supply chain companies to develop the capability to meet the requirements of developers and top tier manufacturers compete globally on cost and quality and overcome barriers to development and of the next generation of turbines, foundations and components which are needed to drive down costs The top tier of the existing supply chain is mostly owned by overseas companies and so inward investment in production and installation facilities and the wider supply chain is key to achieving the strategy vision. The new Offshore Wind Investment Office will focus on this. There will also be a £20m three year programme to build the competitiveness of the supply chain in England. The MAS Offshore Wind Supply Chain Growth Programme is a new service delivered by the Manufacturing Advisory Service with Grant Thornton, Renewable UK and the Advanced Manufacturing Research Centre, supported by the Regional Growth Fund. It will focus on SMEs already in the sector looking to increase capacity and those with the capability to enter the offshore wind manufacturing supply chain and provide them with market insight into customer needs. Support will be tailored and could take the form to improve positioning for new contract opportunities, an innovative design project or access to investment finance. Overall this is a very ambitious strategy and to meet its goals it will have to be followed consistently over the medium and longer term. This requirement will be subject to various political risks. Last month the Coalition published a volume of analytical insights from the 11 sector strategies. The analysis found that there is significant current and potential future demand for skills across many of the sectors due to retirement, and in some cases, strong sector growth. The current low level of skills shortages in the UK is impacting on firm performance and the economy’s overall competitiveness, and this is increasingly likely to do so as demand for skills grows. The analysis finds lack of supply partly reflects unsuitable qualifications and courses where education has not kept pace with developments in the industry. It is suggested that attracting sufficient numbers of suitably qualified individuals will mean that firms must think more strategically about their skills resources, improving the level of management skills to ensure that the best use is made of existing skills. This is unlikely to be taken up by the UK offshore wind sector where most firms are too small to adopt such an approach. The new analysis emphasises that many sectors need to do more to improve their appeal to a wider section of society, particularly in terms of gender and socio-economic background. This will mean a more concerted and co-ordinated effort to change the image of their sector and to engage with potential sources of talent, some of which will not be from traditional sources. This certainly does apply to offshore wind. The analysis admits that in the offshore wind sector and nuclear where demand has until recently been at a low level, significant skills needs could become apparent in a very short time if further investments are forthcoming. In the civil nuclear sector a large scale programme is already in place to understand what shape future skills demand might take but there is nothing similar for offshore wind. This all poses the question of how at national level the offshore wind sector can develop its talent strategy as part of the agreed strategy in a way to attract the interest of global majors in investing in the UK. One answer is suggested by the recent news that DONG engery is to co-operate with three leading universities – Oxford, Imperial and University College Dublin. The aim is to solve various problems concerning turbine foundations. This project is being run under the framework of the Carbon Trust Offshore Wind Accelerator. It also involves RWE, Statoil, Statkraft, SSE, Scottish Power and Vattenfall. DONG have said that this project has a major potential for helping achieve the goal of reducing the price of offshore wind electricity by 35-40% by 2020. Perhaps the strongest UK asset for building dynamic relationships with global offshore wind majors is through the capabilities of our leading technological universities via R&D projects, short courses and masters levels degrees. This could also help foster global excellence in technician training. However there will need to be effective national co-ordination to make progress in this way. Utilising knowledge and expertise developed through automotive and aerospace supply chain activities, Industry Forum is active in this sector through companies such as Vestas. Industry Forum’s global reach and continuing relationships with our founding supporters including General Motors, Honda, Nissan, Toyota and Volkswagen ensure we have the capability and culture to welcome and work with inward investors to the UK. Industry Forum is working in partnership with other bodies and government departments to develop engineering and manufacturing talent, capability and capacity at a national level to support this inward investment. Further information: [email protected] +44 (0)121 717 6600 Download Article (pdf)
September 16, 2013 Articles Between 2000 and the start of the recession in 2008, the global market for medical equipment expanded at an average rate of 7% per annum. In the remaining part of this decade the expansion rate could be even higher per annum from a current market size in excess of $200bn with new medical technologies, emerging economies and demographic change as major factors in this future growth. The USA currently accounts for about 40% of the global spend on medical equipment. Germany, Japan, France and Italy all account for more than the UK spend which is around 3% of the total global spend, taking into account NHS, private health and home spend. Globally, the leading manufacturers reflect this market pattern with the majority of leading firms being US based. Important firms globally are also based in Japan, Germany and Switzerland. The ONS provides statistics for the UK sector and the latest figures for ‘Manufacture of medical and dental instruments and suppliers’ show that between 2008 and 2011 employment fell from 47k to 41k – so that it is currently about 1.5% of UK manufacturing employment. However value added per person employed in the sector increased steadily from £39k to £55k over the same period – an impressive compound rate in excess of 10% per annum. This is encouraging but it leaves the sector still at 90% of the UK manufacturing average on this measure. One might judge that medical equipment is part of UK advanced manufacturing but an important part of advanced manufacturing is the generation of higher than average value added and on this evidence the sector has not yet achieved this benchmark. A D Little undertook a very thorough examination of the competitiveness of the UK medical equipment sector for the DTI which was published in May 2005. While this is slightly out of date, no equivalent study has been done since and the findings make interesting reading. A D Little homed in on six subsectors: Medical Imaging, Diagnostic Equipment and Materials, Active and Passive Implantables, Radiotherapy Equipment, Electromedical/Respiratory and Advanced Wound Management. They suggested that given the pace of global consolidation, commercial success for the UK relied on continuing investment in R&D, skilled labour, specialist infrastructure plus specialist sales teams. They found that the UK possessed few important R&D or manufacturing centres in mature subsectors. A D Little suggested that the best opportunities for the UK would be in emerging subsectors where the process of global consolidation was less advanced. The UK procurement system was found to be largely risk-averse, under high cost cutting constraints and not adapted to evaluate and acknowledge the benefits of new products. A D Little suggested that improvements in the design of clinical trials in the UK would help to improve the competitiveness of the sector. An improved commercial clinical trials environment would help attract globally mobile R&D to the UK. Within the Coalition’s Industrial Strategy the medical equipment sector is covered by the Life Sciences Strategy, which was published in December 2011 as the first sector strategy. Ministers made a commitment to develop an infrastructure which connected academics, industry, investors, clinicians and the NHS. The Strategy promised to review regulations that impact the life sciences sector generally and held back innovation – a general approach which is in tune with A D Little’s recommendations. In December 2012 a review of the progress in the first year of the Life Sciences Strategy was published. This included a number of major inward investment projects involving Johnson & Johnson, Eli Lilly, GSK, Eisai, Pfizer, Novartis, Piramal and Sanofi. In addition a number of awards had been made from the Regional Growth Fund involving Redx Pharma, SCM Pharma, Astra Zeneca, De Puy Synthes and BCM. These lists suggest that within the overall Life Sciences umbrella pharma will inevitably overshadow medical equipment. In August 2012 the Wellcome Trust and EPSRC announced the launch of a joint £30m initiative to find biomedical engineering solutions to challenging healthcare problems. The ‘Innovative Engineering for Health’ initiative provides funding for a limited number of long-term projects designed to address a specific healthcare need for which current solutions are inadequate. Up to £10m is available for each project, providing the resources to conduct high quality basic research and to enable its adoption into clinical or public health practice. Applications are invited for projects that will address the problems of the highest priority in healthcare or public health for which solutions are not obvious with the current state of technology. The National Institute for Health Research has committed £6.4m to fund eight new Healthcare Technology Co-operatives within the NHS as centres of expertise in developing new concepts, demonstrating proof of principle and devising research protocols for new medical devices and healthcare technologies. These centres will work on themes such as chronic gastrointestinal disease, brain injury, heart disease, wound management and mental health. These are all conditions of high morbidity and unmet need for NHS patients and healthcare technology users, which have not to date benefited from a high degree of innovation. In May this year, NHS England announced that it has designed and licensed 15 new Academic Health Science Networks (AHSNs) which are formed to act as a collaboration between the NHS, academia and industry. They are to improve health and create wealth by delivering a step-change in the way the NHS identifies, develops, adopts and spreads new innovations. The aim is both to improve healthcare outcomes for patients and drive economic growth. The AHSNs, which are paid for by NHS England, will look to ensure collaboration and build strong relationships with regional scientific and academic communities and industry. The 15 AHSNs will cover the whole of England and have been welcomed by industry. The Association of British Healthcare Industries will ensure that in every AHSN there is an understanding of the medical technology development process and that AHSNs maximise the potential of partnering with medical technology companies to facilitate knowledge of emerging innovations. One important element in the Life Sciences Strategy is the desire to reach out to SMEs in the expectation that a growing number of SMEs playing a leading role in driving growth. The strategy review found that in 2012, over 380 pharmaceutical companies were based in the UK, employing nearly 70,000 people, with an annual turnover of £30bn. The medical technology and medical biotechnology sectors are estimated at over 4,100 companies employing over 96,000 people. This means that the average size of the pharmaceutical firms in the UK is eight times larger than the technology firms. Large global firms have the capability to connect easily with national strategies especially where there is the incentive of capital and R&D grants. Dedicated outreach is needed to engage SMEs. The opportunities for medical technology SMEs that have been offered so far within the Life Sciences Strategy require them to have sophisticated capabilities. Rather than joining a supply chain they are being offered the chance to become part of a value network and to benefit in this way the firms’ employees require a much richer skillset. The timescale for the innovation sequence envisaged by the new programmes announced under the strategy may be several years long which is a further obstacle to SME participation. In the automotive and aerospace sectors specialist global quality standards have been an important instrument in driving up the capabilities of the supply chain. The global medical equipment industry has produced its own standard – ISO 13485. Promoting this more strongly in the UK medical equipment SME sector may well provide quicker returns for the firms than the longer term innovation programmes that are being developed within the Life Sciences Strategy. On 11 September, Vince Cable announced supply chain development funding for the life sciences sector under the Advanced Manufacturing Supply Chain Initiative (AMSCI). He announced £115m help for suppliers of advanced manufacturing assemblies and products at the Government and CBI’s Industrial Strategy Conference. The target is suppliers in the UK who nearly qualify to supply big manufacturers so that the get onto the approved procurement lists of those big firms. CBI director-general John Cridland said: “We are calling for industrial strategy to focus on strengthening UK supply chains and this initiative is one of the best ways to deliver this. Industry Forum has extensive experience of using global quality standards to improve supply chain firms’ competitiveness and has in depth experience of helping firms design and deliver successful AMSCI programmes. Further information: [email protected] +44 (0)121 717 6600 Download Article (pdf)
August 15, 2013 Articles The last couple of months have seen important developments in the UK Industrial Strategy. A number of sector strategies have been published which now fall into three groups; Advanced Manufacturing, Enabling Sectors and Knowledge Services. Under Advanced Manufacturing there is Automotive Manufacturing, Aerospace, Life Sciences and Agricultural Technologies. The so-called ‘enabling sectors’ cover three energy sectors, Offshore Wind, Civil Nuclear plus Oil and Gas and Construction. In addition there are three sectors grouped under Knowledge Services, International Education, Information Economy plus Professional and Business Services. Each sector has been selected on account of its future growth potential. The Government’s overall economic objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. The suite of sectoral strategies are an important step forward in achieving this goal. However this will require a high standard of implementation and continuity of purpose in the medium and long term. Project and programme management capability and skills in both the public and private sectors will also be a major success factor. Indeed skills have emerged as a strategic issue in every sector strategy. As far as the Civil Service involvement in Industrial Strategy Is concerned, the CS Reform Plan prioritises the Coalition’s commitment to improving project capability and skills. There is a new Major Projects Authority and within that a Major Projects Leadership Academy set up at Said Business School in Oxford to address the issues of development and retention of the skills of senior project leaders across the civil service with a focus on leadership. In the future, no one will be able to lead a major government project without completing the Academy. The aim is to have had all major project leaders started on the Academy’s programme by 2015. However it is not clear whether these initiatives will be in time to support the implementation of the sector strategies. The reaction of larger firms to the strategy has been positive. Toby Peyton-Jones, the HR Director for Siemens in the UK and North West Europe, has commented on the Offshore Wind Strategy in a UKCES blog, ‘Offshore wind may occupy a small share of the wider energy sector, but recently it has seen a surge in employment, rising four times to what it was from 2007 to 2010. This growth is set to continue, as wind power offers a clean way of generating energy and reducing harmful greenhouse emissions. This week the Department for Business, Innovation and Skills published its industrial strategy for offshore wind. Its focus is on building up a capable and skilled workforce to capitalise on this growth and encourage innovation in the sector. In particular, maximising opportunities for offshore wind generation requires high-level STEM skills for areas such as electricity generation and working with turbines. Similarly it requires attracting more talented individuals into the sector.’ Peyton-Jones refers to ‘crippling skills shortages limiting growth in the sector.’ This is partly a matter of a lack of specialist skills, but there is also problem of the image of the sector. The availability of STEM skills is relevant to a number of the Sector Strategies, the Advanced Manufacturing sectors, the energy sectors , Information Economy and Professional and Business Services. All these sectors will be competing in a global economy for talent where the skills the UK needs are similar to those sought by other major players in the global economy. According to Deloittes the availability of skills and talent is rising up the agenda of boards of major international companies. They point out that in a recent Public Company Governance Survey conducted by the National Association of Corporate Directors in the US, executive talent management and leadership development were ranked as one of the board’s top five priorities, ahead of CEO succession. Deloittes suggest that talent is being seen as a core component of a company’s risk profile, including reputational risk, operational risk, regulatory risk, and financial risk. As the board’s oversight responsibilities for risk-management increase, boards are working proactively with the heads of HR to ensure organizations have the infrastructure and programs in place to minimize talent-related risks. High-performing boards are asking HR heads whether their organizations have the talent in place to deliver sustainable performance and execute the business strategy. Attracting, developing and retaining talent has become a major factor in all capital investment decisions, business strategic planning and organisational growth initiatives. The supply of STEM talent is also emerging globally as a major factor in national competitiveness. McKinsey have just published an analysis of the 5 key factors that can boost the US economy in the medium and longer term. One of these is a more effective US system of talent development. At the postsecondary level, McKinsey recommend expanding industry-specific training and increasing the number of graduates in the fields of science, technology, engineering and math to build a more competitive workforce. There is also a need to enhance classroom instruction in the US, turning around under performing high schools and introducing digital learning tools which can boost student achievement. McKinsey estimate that these initiatives could raise GDP by as much as $265 billion by 2020—and achieve a dramatic “liftoff” effect by 2030, adding as much as $1.7 trillion to annual GDP. Against this background, the UK debate on the strategic role of STEM knowledge and skills formation in economic growth is continuing even as the sector strategies start to be implemented. At the end of July the CBI published Tomorrow’s Growth , a report which argues that the UK will fail to close its chronic skills gaps without urgent action to boost advanced ‘learn as you earn’ training and more business-designed degrees. The CBI suggest that relying alone on traditional university courses will not meet the growing demand for degree-level, technical skills in key sectors like manufacturing, construction, IT and engineering. The CBI warns businesses need to tackle the perception that A-levels followed by a three-year residential course is the only route to a good career. Universities need to boost the number of employer-backed “sandwich” courses and compressed or part-time degrees, which give students practical work experience or allow them to support their studies. Businesses need to expand their commitment to high-quality training schemes such as higher & advanced apprenticeships, work-based training, and fast-track schemes aimed at school leavers, alongside traditional degrees. Industry Forum has a comprehensive skills development offering which is described in our recent article ‘Equipping Executive Leaders and Their Teams to Meet Today’s Challenges.’ Further information: [email protected] +44 (0)121 717 6600 Download Document (pdf)
August 1, 2013 Articles We all recall the financial crisis and indeed it is now long enough ago to be falling into popular history, but its effects rumble on around the world. Pundits variously predict a further five years of austerity, but many business leaders worked out early on that business as usual was probably never going to occur again and they had better prepare for a different future. What would that future be like? Who would be the winners and who would be the losers? What could any leader hope to do in the face of such a new, varying and confusing business environment? An interesting insight into this situation was contained in a report from the Conference Board published in late 2010 ‘Go Where There be Dragons. Leadership Essentials for 2020 and Beyond by Mitchell and Learmond’. Based upon the contribution of many leaders and CEO’s across a wide range of sectors and geography the consensus was that the ‘CEO as Rock Star is dead’ and that the business world needed a ‘leadership correction’. Gone would be the ‘excess of arrogance and scandal, a dearth of flexibility, trust, worldliness and diversity of thought. The next generation of leaders, and those charged with their development, would face a significant challenge-keeping pace with evolving economic, social and technical norms, would require additional competencies, an understanding of a diverse and fragmented world, and a keen sense of self-awareness and humility’. There is much in the report and you can read more at www.conferenceboard.org From an Executive Leadership perspective there is therefore much to address. Business as usual will not be sufficient and leaders will need to be better equipped to know themselves, know their teams and colleagues, know their business and its environment, and know and participate in the society in which their business operates. How to prepare Executive Leaders for such challenges? Preparing Executive Leaders for Today’s Challenges Self-Awareness Executive Leaders are dealing with more uncertainty, change and risk than the generation before. They will need a keener self-awareness in order to be robust about decision making and be well ‘grounded’ in their decision making. It is evident that you cannot lead others until you can lead yourself. Understanding yourself and how you prefer to behave in certain circumstances and what you might do to modify those behaviours are critical competencies to be a successful leader. One to One Executive Coaching assignments provide a useful route to addressing understanding of self-awareness and the behaviours that go with that, together with managing to deliver outcomes in different scenarios. Assignments can be supported with the use of approaches and tools such as the Myers Briggs Type Indicator® and there are well defined matrices of leadership styles e.g. Hay Group Inventory of Leadership Styles. The goal is to understand your preferences and then be able to flex to meet different circumstances. Teams Most teams underperform versus their potential. As most Executive Leaders operate through teams and indeed are part of a team themselves the importance of operating in and with teams becomes a critical leadership skill. The more networked world in which we are operating, the deployment of enabling technology, and the development of more virtual teams across value chains all increases focus on team working. Given the rate of change in the external environment members of teams will need to be operating at peak performance and focused on team goals to better achieve business success. Becoming a High Performing Team is underpinned by research that shows that the best teams have Clear purpose Aligned goals Consistent behaviours Effective processes On-going development Executive Coaching and Development interventions can be transformational to team performance. Many leaders will be familiar with the Belbin tool concerning team roles. Using the Myers Briggs Type Indicator® or the Margerison McCann Team Management Tool can provide further insights into team roles and how to optimise team interactions. Importantly the evolution of a team through various distinct stages can also guide actions as the team matures. Patrick Lencioni’s ‘Overcoming the Five Dysfunctions of a Team’ provides an insight as to how to drive up team performance. At the base of all good team performance is Trust and for a good reference here is ‘The Extra Mile. How to Engage your People and Win’ by David Macleod and Chris Brady. Blending the above approaches to meet the specific requirements of a team can help transform an ordinary team into a high performing team. Groups Members of a group do not necessarily share all of the same goals and objectives. However groups in a business are guided by the over-arching objective of that business and at the same time will address goals closer to their respective team base. Within the diversity of the group there are common leadership and team skills that need to be mastered by Executive Leaders. Executive Group Leadership Development programmes and initiatives are designed to address these challenges and deliver clear outcomes. For example following significant growth of a business, or after a restructuring plan has been initiated, it becomes clear that a wider group of leaders other than a specific team will need to ‘step-up’ and take on new responsibilities that they have not assume beforehand. Interventions used in Executive Team Coaching and Development can be helpful in energising the development of a wider cohort of leaders in a business. Many of the techniques deployed for teams can be useful for groups allowing for the diversity of interests present. Deployment Many great initiatives founder on the rock of ‘non-alignment’ with the rest of the organisation either before or after completion. It is therefore important that initiatives are aligned with business strategy, goals are defined, target audiences identified, and budgets and resources etc. secured. Learning and Development can be varied, flexible and fun according to the needs of the client and as learning occurs in different ways for individuals a variety of approaches can be useful. Traditional classroom based learning can still be useful, but additionally one can consider: Coaching either of individuals, teams or groups. Coaching classically delivered will leave the content with the person, team or group whilst the coach looks after the process. Coaching works because ownership by the client is high and learning and retention is then much enhanced. Action based learning programmes based upon receiving information and then acting on that information to embed the learning. There is a significant improvement in learning and retention over traditional classroom based learning. Experiential learning. We all recall ‘mother’s cooking’ and if one can link learning to an evocative situation or memory then learning and retention can be very high indeed. In the business context think of the benefits of linking team performance with what flying Apache attack helicopters? Distance learning tools and approaches which become more ‘realistic’ as technology develops Industry Forum has extensive experience of improving workplaces using coaching team working and problem solving as a foundation. This approach improves the quality of output and the total output relative to the size of the team is also significantly enhanced. The success of the automotive sector in the last decade reflects significant investment in this approach. Further information: [email protected] +44 (0)121 717 6600 Download Information (pdf)
