When it's About Lasting Change . . . Process Improvement is Almost Always the Last Option!

Case Study

The following case study describes the experiences of a real-life organization that implemented the Shared Values Process®.

Context

A deregulated Midwestern utility knew it was in trouble. The organization was profitable, but its stock had flat lined in the low $20s per share for the past 32 months. The board of directors was advised that the stock was undervalued and vulnerable to a hostile takeover bid at any moment.

Diagnosis

What the company needed was to dramatically change the way it was perceived in the marketplace by financial analysts as well as customers. The company was considering a new business model a process improvement initiative and prudent downsizing - to meet these challenges. In the back of their minds, however, the company's leaders knew that process improvement wouldn't be enough. They recognized that a new paradigm or approach to their business was the answer. The question was, "What paradigm?"

Key Indicators for Success

A new value/perception relationship and improved performance indicators would enhance the company's worth in the minds of both its financial community and customers, but there were other measures of success that the leaders believed were even more important-sustained growth and profit improvement, two attributes that had eluded the company for years.

Getting Started

Once senior managers understood the diagnosis and the key indicators for success, they formulated a strategy to address four equally crucial factors that they believed would deliver perceived value to their stockholders and customers -customer service, business development/market penetration, internal logistics, and facilities maintenance that would deliver.

Next, they identified and listed the activities needed to achieve targeted results, and they prepared Gantt charts with delivery dates and final end-dates for completion of each major initiative. Their plans were intentionally both bold and visionary.

The managers soon discovered that just designing a strategy was not a sufficient means for getting the results they needed-far from it. In the words of one of the active leaders in the internal logistics project, "Knowing what needs to be done doesn't naturally lead to knowing how to get things done, especially when the doing involves changing people's attitudes; encouraging people to become responsible as well as accountable team members; and moving the team from expecting extrinsic motivators, such as incentives and pep talks, toward the realm of intrinsic motivators, such as pride in one's work and thinking like the customer."

They realized that a new "people strategy" was needed to change the culture of the organization. Their notion of how the organization should view its people was simple: "We will achieve our success with our people. We will ask for their help, we will include them in the tough choices, and we will stop treating our people like children."

Coincidentally, several months before the diagnosis of the organization's challenges was announced, members of the company's process improvement team learned of a significantly different approach to creating lasting value. Called the Shared Values Process, this philosophy was based on the work of Rob Lebow, author of the business classics, A Journey Into the Heroic Environment and Joy at Work, and involved TransAction Zone Thinking(TM), which contends that every member of an operation must be willing, able, and capable of making their transAction without supervision (the capital "A" is not a misprint; it stands for action).

One team member who attended a conference introducing this approach commented, "I was blown away. I was expecting more program-of-the-month mumbo jumbo, but Lebow outlined an intrinsic motivational approach to organizational change that is quantifiable at every stage of the transformation. The process was developed from the findings of 17 million surveys from 40 countries. It was a 'pinch me1 and 'I can't believe it' experience."

Shared Values Process/Operating System

The Shared Values Process/Operating System provided the instructional tools and facilitation needed to create great customer transactions by making every member of the operation both accountable and responsible. This 48-month process involved five stages that emphasized shared values and standards of conduct based on those universal values as shown in Figure 1 and described briefly below. Extensive education and training of the company's employees occurred during the transition, and internal experts were certified to carry on the work at the end of the cultural transformation.

* Stage 1 - Create TransAction Zone Thinking: All employees at every level of the organization completed the "Values and Attitude Study," with 60 questions to measure 27 key workplace wellness factors that are divided into three key categories. The level of values tension measures the gap between how people expect to be treated when they come to work and the way they are actually treated by co-workers and management and is the single most accurate predictor of organizational competitiveness. The level of individual engagement and job satisfaction correlates closely with job morale and productivity. The level of intrinsic motivation tracks employees' interest in and enthusiasm for their work, which correlates with quality and creativity.

* Stage 2-Establish a Shared Values Culture: All members of the organization attended 10 facilitated sessions to discuss how to relate to each other and customers. Business values and shared values guidelines were developed based on these discussions. Then task forces of eight to 12 employees were formed to study the work processes, identifying transaction blocks and resolving work flow issues. During this stage, the concept of "outside-in decision making" was introduced, where managers and supervisors learned to serve as "wise counselors," whose roles involve coaching to impart new skills and information, counseling to help workers solve their own problems, resource connectors to help workers find the resources needed to get their jobs done, transaction stewards to assist workers in completing transactions, and visionary leaders to communicate the big picture. Front-line workers learned to take responsibility and accountability for improving customer transactions without supervision. All employees were involved in a task force that studied and improved at least one process/system during a five-month period and documented its learnings in a white paper.

* Stage 3 - Teach Personal Responsibility: The next stage involved redesigning the human resource systems, moving away from a control-based focus to a freedom-based approach. Task forces were established to address eight people systems: selection, hiring, retention, and termination; new member orientation; compensation; coaching and mentoring; career development; communications and information transfer; leadership and citizenship, and quality and measurement. Every employee developed an individual job design and accountability agreement by negotiating with co-workers to identify responsibilities they wanted to perform in exchange for a promise of accountability.

* Stage 4-Expect Personal Accountability: The company then restructured into customer-centrix transaction zones, which place the customer squarely in the middle of the organizational structure. This "outside-in" work flow design ensures that customers' needs are the focus of every work activity, rather than "inside-out" work flow that forces customers to live with processes that offer no benefit to them. One part of this restructuring involved determining which functions to centralize and which to decentralize based on their connection to activities that are important to customers. An organizational charter documenting the structure and defining the organization's governance policies was developed. A business council, composed of elected representatives, the people systems director, and the senior executive was established to discuss organization-wide issues. Additionally, a leadership council, composed of one wise counselor from each transaction zone, was formed to provide leadership and support.

* Stage 5 - Use Entrepreneurial Thinking and Behaviors: Employees participated in workshops to enhance their skills in areas needed to balance logical, practical, and creative thinking and behaviors in a way that would ensure successful operation of the transaction zones.

Results

The net result of this company's experience with introducing the Shared Values Process/Operating System was a successful and sustained transformation. Here is how the CEO of this company summed up what was learned on the journey of introducing the people strategy for lasting change and extraordinary profit improvements.

1. We learned that our organization's shared values must guide all our decisions, regardless of whether they were technically-related, customer-related, process-related, or financially-related decisions. (Note that when we use the term, shared values, we mean our organization's Business & People Values(TM) that were carefully crafted and agreed to by all members of our organization after discussions during the course of many months. Unlike in the old days when only management would define our values and objectives, we now invite everyone to participate.)

2. We knew that we needed to establish a goal to create the most fun workplace in the history of the world. We wanted to drill as deep as we could in search of our "intrinsic motivation!" This is not an easy goal, and you need to be prepared to work at this activity every single day of your business life -especially if you're the CEO. (We learned that this always starts at the top of the organization - it starts with leadership and it's a journey.)

3. The purpose of your business is not to make profits but to serve the world in an economically sustainable way. (If you take this tack, you can't help but be enormously profitable. Now, on the surface this seemed totally altruistic, but it turned out to be a commercially viable strategy for building shareholder and customer value.)

4. We learned that we had to eliminate management as a metaphor for all the answers to all our problems. Next, we had to eradicate our organizational charts, which told people that fundamentally they were off the hook for being responsible and accountable and that they could kick decisions upstairs. Then we got rid of all job descriptions, which we came to understand implied what we "didn't do" instead of what each of us owned as our personal responsibilities. We eliminated entitlement as a God-given right and moved away from a world of hourly wages as we knew them. Instead we created a culture based on accountability and responsibility that rewarded our staff at all levels on a market value system that we created. (These changes meant that everyone at every level of the operation was both responsible and accountable for the ownership of his or her job, career development, raises, and promotions and that continuing to separate responsibility and accountability was undermining and destroying every process, procedure, system, and policy we had.)

5. We learned that our existing business practices were very good and that our people practices were our problem. By the way, don't let all this radical talk frighten you. Change of this kind doesn't happen overnight...but it will happen by natural selection. Additionally, over time and with great care, the replacement of the traditional management role with a new role is inevitable. We came to know this new role as the role of the "Wise Counsel." Additionally, organization charts with TransAction Zones(TM) and job descriptions with "job designs" that .tell everyone what everyone else does without supervision became part of our new approach to mending our business and placing it at the highest level of national competitiveness. (In other words, if you want to make more money around here, you need to increase your skills and worth. In short, if someone wants more money, he/she needs to reflect more worth, more learning... more value to our customers!)

6. We learned that fairness meant treating everybody differently. (And that class societies and petty bureaucracies pay an awful price for exclusionary practices, whether they are special parking spaces, closed-door meetings, or private information.)

7. We found ways- heck, we found excuses -to give others the opportunity to use their abilities to reason out problems (in other words, we didn't give our staff the answers). We found ways to encourage staff members to make decisions without asking permission and to take responsibility for actions that opened up channels for sharing knowledge. We encouraged "nested experiments" and extraordinary risk taking for the organization's sake and for our customers' benefits. We never forgot whom our customers or shareholders were, nor did we ignore safety or federal laws. We learned that when we started practicing uncommon transparency, an unexpected joy came from this one act. (Did all this come easy to us? Absolutely not! It took practice and hard work on leadership's part.)

8. We came to grips with the true meaning of the words, become a servant leader. (For us that meant treating staff members, stakeholders, customers, and suppliers as equal to our interests.)

9. We learned to ask four questions seriously before making a decision on something that might affect someone else: Is what I'm about to do good for our internal and external customers? Is my decision guided by our organization's shared values? Is my decision good for my team and company? Am I doing my job; in other words, am I doing what I said I would do? (We insisted that everyone in our organization live by these four questions. If they didn't want to, then we helped them understand what was at stake for them, our organization, and our shareholders.)

10. We learned that you couldn't please everyone. If everyone was pleased, it probably wasn't the right decision. (A "good" decision should make all or some of an operation's stakeholders unhappy because no individual or group gets all they want all the time.)

And we recognized a final truth:

11. Love is the answer and the question. (We learned that leadership must lead with passion, humility, and love!)

Postscript: Did the financial community embrace our philosophy? Nope...they did not! But they loved our numbers!

Joelyn Brandon is a consultant and trainer who works with organizations to implement Shared Value® cultures, as well as to pursue compliance with and prepare documentation for the Sarbanes-Oxley and Health Insurance Portability and Accountability (HIIPA) acts. She can be reached at mitandoj@yahoo.com.

Copyright Association for Quality and Participation Fall 2005
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