By the time the clock starts on any serious organizational transformation, many people in their functional silos and the confines of their own job space, especially those in the lower half of the structure, are already completely alienated. They don’t know how to participate successfully and won’t ever know.
This isn’t because they decide to resist change after some rational evaluation of their self-interest. It’s because they don’t understand the language of the transformation goals. They don’t understand how to affect transformation from within their own function and job space.
This is a problem of translation.
There are many performance vernaculars and dialects in use within large companies. Everyday communication is a potpourri of corporate, functional and job-based jargon. Without translation, each of these is opaque to the outsider. Without translation, this opacity results in ignorance, confusion and ultimately, alienation. Basic communication and governance fail.
Too often, we diagnose the failure to translate and communicate effectively as ‘resistance to change’ at some level within the workforce. Typically, the workforce isn’t even aware that the ship has sailed.
First, goal alignment requires translation to the functional vernacular
An executive committee (EXCO) may do a fabulous job of articulating the corporate vernacular, including strategic and financial aspects of transformation goals for a reduction of Working Capital. But how does that translate into the performance vernacular of Supply Chain or the Warehouse?
For example, let’s say a company wants to reduce its Working Capital from $1.0B to $700M over 3 years. Some consultants have completed an external benchmarking study across competitor organizations which demonstrates this opportunity. The goals break down into Inventory, Payables and Receivables reduction targets.
The language of these goals is typically almost exclusively financial at the corporate or Board level.
We see the CFO’s presentation to the Executive Committee (EXCO) looks like this:
“External benchmarking studies have revealed that we have a significant opportunity to reduce Working Capital from $1.0B to $700M by undertaking a Working Capital Optimization Program. As Working Capital is reduced, short-term and long-term debt on the Balance Sheet can be reduced. This impacts the Earnings Statement positively by reducing Interest Expense and results in increased Operating Income.
Invested Capital is also reduced and therefore Return on Invested Capital (ROIC) is improved at the level of both the numerator and denominator. This will result in the company being able to access a lower Weighted Average Cost of Capital (WACC) which in turn improves the economic spread between ROIC and WACC and raises Earning Per Share (EPS).”
That’s EXCO and Board vernacular. Good luck understanding that without an accounting or finance education!
Supply Chain vernacular on the same subject may look something like this:
“In support of the Working Capital Optimization program, Logistics, Procurement and Warehouse functions will target the reduction of both internal and external lead times. As lead time is a principal factor in the formula for determining minimum and maximum stock levels, as well as safety stock levels, reduced lead time will result in lower inventory levels.
We will identify and physically segregate slow moving and dead stocks. This will allow a program to revise warehouse layouts with a view to situate stock in zones based on issuance rates. This layout review In conjunction with the batching of zone pick lists will raise pick densities and thereby increase picker productivity, further reducing internal lead time and reducing operating expense. Procurement will establish a revised process for instituting and expediting requests for disposal of discontinued stocks. This will allow further improvement to layout and productivity.”
While this language is couched in Supply Chain vernacular, what does it mean to people working at the level of their own job spaces as they put away, pick and handle stock items on an hour by hour basis? Is further translation required?
Translating the goal into ‘job space’ dialects
So, a broad translation of the corporate goal to reduce Working Capital, lift Operating Profit and increase Return on Invested Capital (ROIC) translates into Supply Chain vernacular and presents the following Warehouse operational goals:
- Reducing Internal Lead Time (put away, picking, consolidation and delivery);
- Reducing Minimum and Maximum Stock Levels;
- Segregating Slow Moving and Dead Stock;
- Increasing Pick Density;
- Batching work (orders/reservations) to increase Pick Density;
- Increasing Receiving, Handling and Issuing Labor Productivity.
This is the translation from corporate financial vernacular to the functional vernacular of Supply Chain and into the operational vernacular of the Warehouse.
Next, translation should extend to the job space dialects. Looking at individual jobs in the Warehouse the project sponsor must answer these questions::
- Which Warehouse department or area is responsible for Supply Chain performance outcomes?
- What is the specific goal for each department?
- How should performance be measured?
- Which individuals jobs are responsible?
- How should jjob performance be measured?
- When will job results be delivered?
Answering these questions leads the transformation leader to translate goals from the functional vernacular into the job space dialects. The job space is thick with technical jargon and may be even more opaque to the outsider than the corporate or functional vernacular.
For example, a job space translation of the transition goal in the Warehouse may look like this:
“The Warehouse function will measure the average lead time taken to pick and deliver items from the point of reservation to delivery of stock to the end user (derived from SAP bar code scans). This measurement will be adopted by staff engaged in issuing and shipping. This lead time is an element of internal lead time. Longer lead time results in higher maximum stock and safety stock levels, which in turn increases stock levels. Working back from goals for inventory reduction to calculate the required reduction in internal and external lead time allowed specific performance expectations to be calculated.
An average 20% reduction in total internal lead time is required to deliver the targeted reduction in fast moving SKUs with a 26% reduction required for issuing (picking) lead time. A pick productivity goal of 100 picks per hour will be established for each picker, supported by a pick density goal of 5 picks per linear meter, and a realized average delivery lead time of 12 hours following consolidation for shipping. Analysis has determined that these improvements can be realized if warehouse layouts are redesigned and dead and slow-moving stocks are physically segregated.”
So, following translation from the corporate vernacular to the functional vernacular and on to the warehouse job space dialects, we arrive at goal alignment. Everyone can speak the language of the transition goals.
The process of translating a goal into functional vernaculars and job space dialects will usually lay bare any major flaws in assumptions about cause and effect. Translation is difficult if cause and effect is ill defined or the initial analysis lacks veracity. Establishing a clear line of sight between cause and effect takes time…more time than transition managers usually want to commit for the purpose…and certainly more time than most consultants want to contribute before
Translation to the job space dialect is the most granular test of the viability of the transformation goal.
It’s one thing to have a goal for lifting revenue, reducing costs, improving margins or lifting throughput. It’s another for the goal to be viable in functional terms. It’s entirely another to have each of the people in relevant functional groupings understanding how they will affect the goal from within their personal job space.
Deming said “It’s not enough to do your best. You need to know what to do and then do your best.”