Debunking Five Common Myths About 80/20
Dear 80/20 Mentor,
I work for large manufacturing company. I’ve been with the company for a couple of years. One of the reasons I was brought on was to execute a major tech transformation. It’s desperately needed; the company is in the dark ages when it comes to data and tech.
I have leadership buy-in, but the rest of the company?
Progress is slow, and I honestly don't see a lot of effort. People agree to the
strategy and the action plan in meetings, but nothing is happening. I have had
so many people enthusiastically agree to take action, but then it doesn’t
happen (there’s typically some kind of excuse). Most of the team has been there
for over 10 years, and I fear they are stuck in their comfort zone. The
usual change management tactics are not working. The strategy, plan, and
benefits are irrefutable. But, I need help with buy-in and adoption.
- In the Dark Ages
Dear In the Dark Ages,
There is a fair amount to unpack here.
First, the problems noted regarding change resistance are widespread. This is particularly true for large companies and very often when the change involves tech.
However, it is unusual to experience this when there is leadership buy-in, which you say exists. What this typically reveals is that there is less leadership buy-in than believed.
So, recommendation number 1: Go to Leadership
"Don't be afraid to climb those golden stairs."
Go to leadership, explain clearly what's been done and not done, what's been committed to without results, and what "exactly specifically precisely" the ask is. Include in that ask that leadership "Go to Gemba." Set up steering committee meetings. And request that the leaders attend several execution-level meetings. Leadership is not something well-executed by remote control. Obvious to most (yet disappointingly to many), leadership requires presence and clear direction. In the vast majority of companies, discussion is democracy, and decision is dictatorship.
Recommendation number 2: Simplify the Ask
These cautionary tales are of businesses that came to serve their tech, rather than the other way around, as it is supposed to be.
What makes technology transformations so difficult (and expensive) is that they tend to be systemic and complex. Some universal guidance for a "major tech transformation" is to use the USa process...Understand, Simplify, automate...where automation is the inglorious tail to the "Understand and Simplify" kite.
We see it time and again. Companies attempt to execute major tech transformations without truly understanding where the value is in applying the tech, and the result is that, without simplification, it is applied everywhere—at great cost, with great business upset, and ultimately at great peril. We know of companies who, upon their major tech transformation, could not enter orders into their system for over a year. We know of companies that spent millions of dollars automating processes that were entirely unnecessary. These cautionary tales are of businesses that came to serve their tech, rather than the other way around, as it is supposed to be.
Hence, simplify the ask. Simplify the business. Use 80/20, be brave on paper, and see what it would cost, how long it would take, and how easy it would be to apply tech if we only did this for the critical few customers and products that we frequently run for long periods of time…in other words, the 20% of products and customers that provide 80% of the revenues. The guess here is that the "brave on paper" approach will be revealing and compelling; once seen by all, resistance will fade quickly, with leadership much more inclined to get excited about the program and get behind it.
Finally, recommendation number 3: Make the Program Less Systemic.
If possible, break the "large manufacturing company" down into smaller, more decentralized, market-focused segments that are fully functional and control their own destinies. Again, using 80/20 will allow this to occur without any of the cost redundancies people fear about such an approach, and the result will be segments that are not only closer to the customer with better growth prospects, but also smaller entities that accept tech engagement with more speed, more effectiveness, less cost, and far less angst.