MIT Sloan Executive Education innovation@work Blog 08-26

If you think process improvement only works on the factory floor, think again

                                                  

If you’ve attempted to apply process improvement techniques in your workplace, only to see it fail, you’re not alone. Attempts to drive more order and productivity in the office often use process-focused improvement techniques such as Lean or the Toyota Production System that were originally developed to improve the physical, highly repetitive work found in factories. Unfortunately, such interventions are often resisted and rarely produce significant gains.

“When we work with doctors, lawyers, finance professionals, engineers, and designers, we often hear statements like, ‘my work is different from what happens in a factory, you can’t standardize it,’” says Don Kieffer, Senior Lecturer in Operations Management at MIT and Managing Partner of ShiftGear Work Design. “Intellectual work is different. But contrary to the argument that process improvement ‘only works in the factory,’ my experience is that, when properly applied, the concepts and principles underpinning Toyota and Lean methods produce more powerful results and far more quickly in the office.”

While engineering, finance, or IT can’t be standardized in the same way as a production operation, Kieffer believes it can be understood and dramatically improved through Dynamic Work Design. “ShiftGear’s approach is to understand the work using principles of work design, propose tools and methods that fit that work, and engage the people doing the work to quickly discover the next best way, not impose it upon them from a different kind of work or organization.”

In their MIT Sloan Executive Education program, Implementing Improvement Strategies: Dynamic Work Design, Kieffer and ShiftGear Partners Nelson Reppening (an MIT Sloan Professor) and Sheila Dodge present practical tools and methods for sustainable improvement efforts of any scale, in any industry, and in any function. Their method has proven to work in businesses as diverse as oil and gas, DNA sequencing, and engineering, at the scale of discrete problems or enterprise-wide strategic efforts.

The four principles of Dynamic Work Design

More than 20 years of research, consulting, and collaboration has led Keiffer and his colleagues to four principles that, in their view, “raise the game” on how to design and improve work, no matter what type of work it may be:

Reconcile activity and intent: Get crystal clear on the vision, mission, and targets, and then optimize the set of activities needed to accomplish those targets. Work should be designed so every activity is tied together to meet the targets.

Connect the human chain through triggers and checks: Without pre-specified rules, people usually wait too long to ask for help, and leaders don’t check in frequently enough. Good work design incorporates triggers and checks that signal teams and managers to meet to resolve ambiguity and fix problems, often in real time.

Structured problem-solving and creativity: Structured problem-solving methods mitigate our inherent desire to jump to solutions and encourage us to do a proper analysis using both data and investigation.

Optimal Challenge: Systems don’t work if they have too little or too much work in them. Putting the right amount of stress into the work system helps surface problems while allowing enough time to resolve them.

Whether you have 50, 500, or 5,000 employees, these principles can help you connect all of them to the flow of work that meets your organization’s targets.

Reproduced from MIT Management Executive Education

The Next Wave of Business Models in Asia 01-03

There’s a new generation of sophisticated entrepreneurial growth companies in Asia — and they’re competing by  reconfiguring business models. 

Image credit : Shyam's Innovation Library

THE SOUTH KOREAN television drama “My Love From the Star” features a dashing, 400-yearold alien who falls in love with an actress. The plot isn’t difficult to grasp. It’s essentially a boy-meets-girl story with an interstellar twist. The global appetite for such Korean entertainment — movies, TV shows, and music videos — has exploded in recent years. For non-Korean-speaking viewers, subtitles are crucial to the experience. Enter Viki Inc., a company that hosts content for streaming and provides subtitles and closed captions. Viki both eliminates language barriers and introduces the content to an otherwise unserved audience. Traditionally, subtitles are created by a bilingual translator hired by the producer or broadcaster. But the process is expensive and slow to scale. To overcome these challenges, Viki developed a business model leveraging a community of more than 150,000 volunteers.

This model allows Viki to crowdsource subtitles for Asian content in numerous languages.1 Viki rewards volunteers with gamified badges, the ability to view videos not otherwise available in their region, early access to new shows, and an advertising-free, high-definition experience of the content. As it happens, the market is ripe for services like Viki’s. In fact, the combination of rapidly increasing internet video adoption rates and a greater appetite for foreign content — both in Asia and globally — has become a big opportunity for Viki, which was acquired by Tokyo-based Rakuten Inc. for a reported price of $200 million in 2013.2

Two Business Model Waves From our perspective, as a consultancy that analyzes business model innovation across the globe, Viki’s story exemplifies a larger trend playing out in Asia. We see Viki as an archetype of a new generation of companies emerging in Asia and leveraging business model innovation to drive growth in the region. But to understand this type of business model innovation in its proper context, it’s important to understand Viki’s forerunners. Our research into business model innovation in Asia uncovered two distinct, yet overlapping, waves of innovation: one decades old and still going, and one that includes Viki and is evolving now. (See “About the Research.”) The first wave, as we call it, primarily exploited differences in labor and other input costs between developed and developing markets. By contrast, 

the second wave is driven primarily by business model innovation and typically leverages new technology. These companies are characterized by extensive and often radical reconfigurations of the profit formula, resources, processes, and relationships within a broader stakeholder ecosystem. They may have a sophisticated global orientation from the start; for example, in Viki’s case, the company was “born global,” beginning as a class project by graduate students who were studying in the United States but who later moved the company to Singapore.3

The First Wave The first wave of contemporary business innovation emerged in Asia during the post-World War II era. It became a tidal wave from China following Deng Xiaoping’s 1978 “open door” policy, which changed the competitive landscape of global manufacturing. Another sea change involved opening and deregulation in India in the 1990s, which transformed the global services industry. These changes have been explored before. For example, C.K. Prahalad and Stuart L. Hart pioneered research on the opportunities at the “bottom of the pyramid” in emerging markets.4 John Seely Brown and John Hagel III also investigated product and process innovation practices from Asia.5 In a similar vein, Vijay Govindarajan and Chris Trimble’s

ABOUT THE RESEARCH To chart the emerging wave of business model innovation in Asia, we applied a four-step process. First,  we reviewed 27 lists of the most innovative global companies, compiled during the past year in publications such as Forbes, MIT Technology Review, and Fast Company. These lists emphasize measures such as  patents filed, revenues, and spending on research and development. To complement the lists, we sought input from our venture capital arm, Innosight Ventures, on relevant startups. In addition, we reached out through our networks to identify other innovative companies.

All told, this resulted in a list of roughly 200 companies operating in Asia. In step two, we filtered this list based on business models. We evaluated the business models on several parameters, including the extent to which they address important and unmet customer jobs to be done; the complexity of resource and process configuration; the novelty of the profit model; the leveraging of technology; the reduction of barriers to adoption through simplicity, convenience, accessibility, and affordability; and the applicability to emerging market circumstances.

We also gauged the business models by the companies’ demonstrated growth so far and by their potential, in our view, to become globally disruptive. In step three, we synthesized these findings and categorized the companies based on their business models. In step four, we selected representative companies for both waves, and we interviewed company executives to develop further insights into their business models. An overwhelming majority of the companies we reviewed were incumbents or low-cost innovators that we categorized as first-wave innovators. However, we saw evidence of a distinct category that we subsequently labeled second-wave innovators. The success of these companies is built upon the reconfiguration of their business model components. From the second-wave companies, we selected two illustrative examples out of a handful.

The Surprising Secret of Business Resilience 08-28

Executives dream of insulating their companies from all risks, both natural and manmade, making their company’s revenues impervious to the vicissitudes of a capricious world. This is also the implicit goal of most business strategies, achieved through the use of resource control through vertical integration, supplier dominance through buying power, persuasive political influence through lobbying and campaign finance, and of course, good ol’ market monopolies, among other things. The idea is that by gaining control of your destiny, you foster complete commercial independence.
This dream is popular, but it is, of course, a fallacy. The surprising secret is that dependence, not independence, is the way to protect the organization against risks.

The concept of resilience offers a window into the fallacy. Like the term “sustainability,” resilience has become a standard at global confabs and — as with sustainability — it is a term that means different things to different people. Experts often talk in terms of personal “psychological resilience,” referring to the ability of individuals to bounce back after being hit with disappointments, shocks, or traumatic events. This is an important perspective, and corporate wellbeing specialists have begun developing resilience practices for workers.

But a less-understood perspective is “business resilience,” that is, how to ensure your company can continue creating value in the face of disasters, both natural and manmade.

A good place to learn about business resilience is Indonesia, and a good guide is Karin Reiter, Group Corporate Responsibility Manager at Zurich Insurance Group. I met Karin at the Aspen Institute’s First Mover Summit, and she offered a compelling example.

“Indonesia is often referred to as supermarket for natural disasters,” explains Reiter, “particularly for flooding.” As an insurer, Zurich had exposure to many companies in Indonesia. One customer in particular experienced a severe flooding event and was heavily damaged. In order to reduce future losses, Zurich risk engineers were called in to recommend how to make the factory more resilient to future shocks. Protective improvements such as moving stocks off of the ground floor and building berms to divert floodwaters were made, which would substantially insulate the factory during the next flooding event.

Not surprisingly, Indonesia experienced another flood not too much later. This time, however, the factory was protected thanks to the improvements. “So you would expect that the next day the company would be up and running again at full speed,” says Reiter.

It wasn’t. Instead it stayed shuttered, just like after the last storm.

But if the company had successfully insulated their facility from a natural disaster risk — an executive’s dream — why were they unable to operate? The reason lies in the secret of business resilience. Resilience is not a condition of any single factory. It is a systems condition. It is a community condition. It is a condition of interdependence, not independence.

As Reiter explains, “The challenge was that roads were destroyed and employees couldn’t go to work. And they needed to look after saving their own lives, saving their families’ lives. They were really trying to save all their assets within their community.” An insulated fortress factory in the middle of a devastated community turned out to be worthless. The resilience of the company’s operations was dependent on the resilience of the community in which they operated.
“Look deep into nature,” said Albert Einstein, “and then you will understand everything better.” The secret of resilience can be found in nature. Individual species do not exist in isolation but are part of interdependent ecological webs. Food webs, trophic pyramids, symbiotic mutualisms — all of these relationships are vital to the health and resilience of biological communities. It is the dynamic flow and exchange — as when trees transpire the oxygen needed by animals and the animals respire the carbon dioxide needed by the trees — that makes the biosphere both possible and resilient. The same is true for business.

And, as in nature, the business relationship requires mutuality. Just as the factory was dependent on the resilience of the community, so was the community dependent on the factory. As Reiter explains, a factory closure “has a huge impact on the communities, because if the employees can’t work, they are no longer able to generate income. If they don’t have an income, they can’t invest in their communities, they can’t pay taxes, they don’t have any savings for their children to be sent to school. If flooding happens frequently, then there’s a cycle of poverty that just continues.” And, of course, as the cycle persists, the disruptions for factories and their supply chains persist.

Most business leaders would prefer to isolate themselves from worrying about these dependencies. But gone are the days of Ford when a company could vertically integrate and control everything from iron mines to Model-T dealerships. The alternative is to recognize that independence is a chimera and embrace our interdependencies.

Reproduced from MIT Sloan Management Review

Equipping the Sustainability Insurgency.04-21

Equipping the Sustainability Insurgency.

An environmentalist and an MBA team up to develop a network of sustainability champions.
Sustainability World Wildlife Foundation.

Image Credit : Shyam's Imagination Library


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As this series has documented, Sustainability Insurgents are professional insiders driven by a higher purpose. While loyally serving their employers, they also pursue a higher ideal: aligning their organizations with a global vision of a peaceful, prosperous, and sustainable world. This article explores how two insurgents, working for dramatically different organizations, partnered to save the planet — and in doing so spread the sustainability insurgency to thousands of individuals and dozens of organizations.

The unlikely duo is Frances Edmonds, an environmental scientist, and Adrienne Lo, an MBA. They hail from the conservation non-profit WWF and the tech leader HP Canada. But, in a twist increasingly common to the insurgency, the environmentalist works for the business, and the MBA works for the non-profit.

What brought this odd couple together? A shared belief that saving the planet depends on engaging and rallying as many people as possible to action. Their target audience: Nascent Sustainability Insurgents, whom they call “champions,” in companies around the globe. Champions are employees who see opportunities for positive change, but aren’t tasked by their company’s official CSR function to act.

Their model of change is peer-to-peer engagement, which they see as the most effective way to support champions and encourage them to take actions that can foster new sustainable norms at work.

Edmonds and Lo knew from experience that champions operate on a volunteer basis, stepping up to the challenge largely because it makes their job more meaningful and personally fulfilling. This intrinsic motivation is vital because insurgents swim against the organizational current. They get told “no” often.

It’s not that the companies don’t want to improve their sustainability performance: No executive gets up in the morning and asks, “How can I destroy the planet today?” But, according to Lo, established corporate processes, systems, and policies are difficult to change — and often, no single person or department has the power to act alone. Corralling and convincing all the needed people requires unique skills and organizational knowledge that are not readily available, nor taught in traditional management programs.

This is where our duo steps in. They wanted a way to provide the know-how and tools champions need to advance the sustainability insurgency in their organizations. But more important, they knew that a supportive peer network of like-minded insurgents would empower champions and give them the courage to persist in the face of inevitable resistance.

The result of their vision is a web-enabled system launched by WWF Canada called Living Planet @ Work, a free, one-stop-shop that provides insurgents with the resources, inspiration, and support they need to become sustainability champions in their company. The website also works to overcome the dismal rate of charitable giving to environmental causes, which is less than 5% in Canada, by encouraging users to support important WWF campaigns like Arctic conservation (see the video).

Living Planet @ Work’s online tools include how-to guides for reducing the workplace environmental footprint and advice on engaging colleagues around sustainability. But beyond information, the site fosters an engaged, peer-to-peer network where members support each other in navigating the organizational obstacle course. As Frances puts it, “There is nothing more motivating than knowing that you’re not alone.”

Since Living Planet @ Work launched 5 years ago, more than 1,200 champions have joined. The website documents examples of insurgents making their offices more energy efficient, reducing the landfill waste, organizing e-waste drives, and more. While these tangible outcomes are important, it is the growing organizational capacity to act on sustainability that ultimately counts. With each successful initiative, champions demonstrate to themselves, their peers, and company executives how corporate social responsibility can have an impact on important managerial issues like employee engagement, operational efficiency, and corporate purpose.

Living Planet @ Work website captures the vision this way: “We know that meaningful change comes from within an organization, and the more help you can get to build support across teams and employees, the better.” This is where change begins, but the end game of these bottom-up victories must be an executive embrace of sustainability and a commitment to embedding corporate responsibility into every function of the organization. Luckily, with champions like these populating the company, executives will find an established network ready and willing to support a coherent and compelling sustainability strategy.