Starting the Change - Reorientation Implementation
Scott Warren, October 14, 2007
Starting the Change
Changing from a centrally controlled management model such as we’ve endured or the last decade to an empowered regionally based model will take time, and by time I mean years. We will begin seeing some relatively short term benefits from improving our operations and customer service the first year or two, but the bulk of the benefits will not be realized for several years and we won’t have the changes imbedded into our culture for several more years. We can and must design short, medium and long term wins into our approach to show that we are making progress.
Supporting Documentation Improvement Areas and Gains
The following figure by Kaplan and Norton (Strategy Maps, Converting Intangible Assets into Tangible Outcomes) demonstrates the relationship between process improvements and gains. Short Wave gains which result from improvements in operational effectiveness should be expected within the first 6 months to one year. Improvements in customer service and management makeup the bulk of the gains in the second and third year, and product improvement gains come in years four and five.
Figure 1 Processes Improvement over Time
We can not go into this change thinking that we will see an instant return on investments across the board. If we consider the three or four main investment areas discussed by Kaplan and Norton [1) Operations Management, 2) Customer Management, 3) Innovation and 4) Regulatory/Social (see Figure 1)], we can see that some investments will begin showing a return relatively quickly while others may not show a return for many years. But not making the early investments in the Long Wave processes will have devastating effect on our overall change effort. Based on Kaplan and Norton’s interpretation, investments in Operations Management Process improvement will return the short term wins necessary to keep the change alive in the first year or so. We will continue to reap benefits from these investments for many years to come. Investments in Customer Management Processes will not provide early gains, but will begin returning added gains in year two, supplementing the gains made by improving Operational Process Management. Finally, after three or four years we will begin reaping benefits from the early investments we made in Innovation and Regulatory and Social Processes.
Areas of Improvement
Looking deeper, we can see that Kaplan and Norton defined and integrated the four investment areas into the Internal Perspective of the Balanced Score Card (BSC) (Strategy, page 66). The investment areas were subdivided into critical functions to demonstrate important functions for consideration identified during their research. Table 1 (below) outlines the investment areas and the critical functions for consideration.
Table 1 Investment Areas
Investment Area / Process Purpose / FunctionsOperations Mgmt. Processes / Produce and deliver products and services / · Supply
· Production
· Distribution
· Risk Management
Customer Mgmt. Processes / Enhance customer value / · Selection
· Acquisition
· Retention
· Growth
Innovation Processes / Create new products and services / · Opportunity ID
· R and D Portfolio
· Design/Develop
· Launch
Regulatory and Social Processes / Improve communities and the Environment / · Environment
· Safety and Health
· Employment
· Community
This implementation discussion will briefly introduce and discuss the Investment Areas shown above and evaluate ways to reduce this waste and improve the efficiency of our work. Each of the critical functions should be addressed independently, in each Region.
Figure 2, (below) presents a modified reproduction of Figure’s 2-6 and 3-1 from Kaplan and Norton’s book; Strategy. The figure demonstrates relationships and between different BSC perspectives and the critical functions and processes they impact. This figure provides a wealth of information and should be studied at length. The Processes listed also show general themes that run through the BSC. The themes are the processes (Operations management Processes, Customer Management Processes, etc.) are the vertical integration and alignment, while the Perspectives (Financial Perspective, Customer/Donor Perspective etc.) are the horizontal integration. They must go hand in hand.
Figure 2 Operations Management
The following four sections will briefly discuss each individual process area depicted in Figure 2. For our purposes, I’ve started the process with the Customer Management Process and I will then move to the Operations Management Process. I changed the order to focus on the customer first, because the Operations Management Process is dependant on the customer.
Customer Management Processes
Customer management is a relatively new concept in business. In general, customer management consists of the four generic processes, outlined below:
1) Identify and select customer segments attractive to the organization,
2) Acquire customers,
3) Retain the customers,
4) Grow relationships with customers.
The customer selection process begins by segmenting the market into niches with distinguishing characteristics (Strategy, page 109). Once the market is divided, the executive team or in our case, the Regional Executive Director and the executive team selects the target segments, ie. We should avoid the trap of trying to be the best supplier to all possible customers and target the customers we want. One may say that we have no choice in whom our customers are, and that has some truth to it, but we can select the target market we want to focus on; the most desirable customers.
Customer segmentation should be based on the Customer Value Proposition so we can group customers based on the frequency of interaction or use, type of project, end use desired etc. The choice of customers can impact the resources, capabilities, processes and strategy we use. The goal will be to increase value in the service we provide.
Operations Management Processes
Operating processes produce and deliver goods and services to customers. According to Kaplan and Norton (Strategy, page 65) Operations Management generally encompasses four important areas. The four areas are:
1) Develop and sustain supplier relations,
2) Produce products and services,
3) Distribute and deliver Products and services to customers,
4) Manage risk.
According to Kaplan and Norton (Strategy, page 68), “Companies, such as Toyota and Wal-Mart depend on their suppliers to produce high-quality products on short notice and deliver them reliably to their point of use.” One objective for both parties is to lower the “cost of ownership” which is the total cost of obtaining the goods, materials or services.
On first glance, this statement does not appear to relate to us, but on closer examination, we have a similar relationship. Project proponents (PPs) and Responsible Parties (RPs) bring us projects and bring us supplies in the form of Work Plans and Reports. The type of project motivation of the PP or RP and the supplies provided to us have a huge impact on our end product, so in effect, the PPs and RPs are our customers and their contractors are our suppliers.
If the contractors supply poor Work Plans and Reports or perform poor characterizations, it has a huge impact on the final product (safe and usable land). If we are to improve our process, we must look at and I would say control the quality of the supplies. This can at least in part be accomplished by developing and sustaining relationships with our suppliers and ensuring that the suppliers provide high-quality supplies. Time lines on both side and joint working meetings can greatly improve communication and cut down on expensive waiting. Our biggest expenses come from waiting on projects to return, reworks and getting back-up to speed on projects
Innovation Processes
Successful innovation drives customer acquisition, growth and loyalty. DTSC has not really changed its approach for Site clean-up in many years. With the changes in the industry, and the resent changes in Brownfields initiative etc, the time is right to create more innovative targeted processes designed with the end use in mind. More discussion of ways we can innovate and develop new approach is discussed later in this discussion. For the purposes of providing background information I will stick to theory provided by Norton and Kaplan. Innovation includes four important processes. They are:
1) Identify opportunities for new products or services,
2) Manage the research and development portfolio,
3) Design and develop the new products and services,
4) Bring new products and services to market.
It’s fruitless to develop and implement new products unless an opportunity has been identified. And the innovation must be in alignment with the overall organizational goals. For us, innovation generally comes in the form of new and emerging technologies and new and emerging contaminants. We have not changed our general approach for decades. When Brownfields became the new buzz word, we added Brownfields to our name but changed little else.
Regulatory and Social Processes
A Note of Caution
According to the experts, it is very easy to fall off the change bandwagon. Although complacency will be our biggest foe, we should expect change resistors to throw up road blocks or stall the process and even change champions to say: it’s worked, look at the benefits we’ve reaped, I guess we are done, so let’s let up and enjoy the rewards of our efforts. We can’t stop or even slow down until our culture embraces the change and makes it the way we do things around here.
Because of the number of mid- and Executive level staff that will be displaced along with the staff that will need to grow into new positions, we will have a number of saboteurs at every level in the organization. Many of these staff members will be looking for ways to derail or delay the change process and they will present a significant hurdle for the guiding coalition and change champions. Some of these people will be strong individuals, and high performers, but we can not let them derail the process.
Strategy
We are developing this change management strategy to help us reorient DTSC so we will be better poised to move into the 21st century and Wave 4 of the National Environmental Movement. Strategy is about understanding who we are and what we do (our Mission), who we want to become (our Vision), and most importantly, how we plan to get there (our Strategy). But, strategy is also about what we don’t do, resource and energy drains we need to avoid; our strategy should draw boundaries around the scope of our intentions for who we want to become. Skillfully implemented, a sound strategy identifies the goals and direction that managers and employees at every level must have to define and align their work.
Waves
If you saw the ER/Enforcement blog earlier, it had a small section talking about Wave 4 of the environmental movement. A small group of National authors believe we are on the verge of a new paradigm (Wave 4), which redirects focus from looking for bad guys and places it on finding ways to resolve the issues we have and returning property to reuse. That does not mean stopping past efforts to identify and clean-up Sites, it just means our focus needs to shift. In case you did not see the Four Waves of National Environmental Activity, table, it’s printed below:
Table 1 Four Waves of National Environmental Activity
Wave 1: Started with a period of conservation and responsible resource use and generally lasted from the mid-1800s to 1960.
Wave 2: Began with the identification of environmental degradation from industrial activities and spanned 1960s to 1980s and saw the establishment of the USEPA and the passage of the National Environmental Policy Act and other assorted environmental bills.
Wave 3: Ushered in a period of co-optation, or mainstreaming environmentalism, which ran from the 1990’s to the present.
Wave 4: Environmentalism is now a part of the mainstream and the challenge before us is to manage the successes of the past decade and a half. New competencies for environmental leadership are needed in five areas; (1) Professional Administration, (2) Collaboration among groups with related values, (3) political action skills, (4) scientific and technical assessment and (5) public education towards positive solutions.
Wave 1, 2 and 3 adapted from: Environmentalism for a New Millennium: The Challenge of Coevolution, by Leslie Paul Thiele
Wave 4 adapted from a talk given by Stuart Langton called: The Future of the Environmental Movement
If you buy-into this new wave of environmentalism, Wave 4 requires mastering new competencies. For DTSC, these new competencies should include: (1) Professional Administration, (2) Collaboration among groups with related values, (3) political action skills, (4) scientific and technical assessment and (5) public education towards positive solutions.
For our purposes, I’ve repackaged the Wave 4 competencies in an effort to fit our needs and come up with a list of DTSC competencies we should focus on in the 21st century. The competencies should be viewed as areas where we focus resources and training so we can develop new areas of expertise and lead California into the new millennium. The basic competencies are as follows:
1) Clean-Up – Like shown in number two above (collaboration among groups with related values), it’s time to work together and collaborate with other stakeholders so we can help return impacted properties to beneficial tax and income generating reuse that benefits the people. The State will see another shortfall of tax revenue, this year due to the economy, we must look for ways to help improve the economy.
2) Identification – Like number four above (scientific and technical assessment), its time to work with concerned citizen groups and scientists to identify potential threats we have already let in the door and those that are waiting to get in. This includes hazardous materials in building products or used to make products. The goal of number four is to drastically reduce the hazardous materials and substances we use or let into California thereby reducing what we must manage and dispose of.
3) Legislation – Now that we’ve identified some new and emerging threats we expect will impact Californians, we need to develop legislation needed to deal with the threats. Threats will, to a degree, include the use of hazardous materials in product production in California, but it will also include the impacts of imported materials and products used and disposed of in California. For us, this will be similar to political action skills above (Number 3).