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Paradigm
Shifts
By Michael Alan Hamlin
November 19, 2001
In Hong Kong last week, recently named Thomas Group
CEO John Hamann told a group of top executives in local and multinational
firms that four significant paradigm shifts have occurred that are
changing the way companies are managed (In the interest of full
disclosure, Thomas Group is a client of my firm.). Hamann's argument
is based on 20 years' experience working with companies and government
organizations in North America, Europe, and Asia.
The first of these shifts is the shift from a functional
view of the business to a process view of the business. To illustrate,
consider that a prospective client recently told us that we were
being called in to help figure out why customer complaints were
on the rise, despite the fact that individual departments within
the company seemed to be operating just fine. But the problem is
probably not that the departments are working just fine, but how
they work together. Unless functional departments make the effort
to work together well, they frequently become consumed with internal
efficiency and productivity, and as a result pay far less attention,
if any, to company-wide efficiency and productivity and their contribution
to them.
Like a lot of management advice, how well a business
process takes place that spans functional departments seems an obvious
concern. But often, managers looking for ways to solve problems
ignore the obvious, assuming that some hidden factor is the source
of the company's problems. And that something as monumental as the
problem at hand couldn't possibly have a clear-cut cause.
Which brings us to the second paradigm shift, the shift
from reliance on individual experts to dependence on cross-functional
teams. While experts have their role, experts by necessity have
a very narrow focus or they wouldn't be experts. Their perspectives,
therefore, have come to mean very little unless they are placed
in the context of the perspectives of other experts whose fields
also impact how smoothly a process takes place in an organization.
And functional experts are most often found within the company,
on the frontline, rather than among the legions of consultants available
to companies. How well these homegrown experts address problems
depends on how empowered the team is to address them.
That's where paradigm shift number three comes in.
This is the shift from a combative culture to a collaborative culture.
How a problem is addressed no longer depends on which internal or
external expert argues the loudest or has the ear of the boss, but
how a group of internal experts view a problem in the context of
diverse functional perspectives, and then decides how best to alleviate,
change, or incrementally enhance a problem, or a process.
All three of these paradigms involve internal issues.
And for much of the past 20 years that's where Thomas group focused:
on helping companies effectively address roadblocks to great efficiency,
productivity and profitability through improving internal processes.
Competition and technology-driven changes in the way companies interface
with buyers and suppliers, however, have expanded the Thomas Group
focus beyond internal business processes.
There lies the fourth paradigm shift, the shift from
a narrow view of the enterprise to a boundaryless view of the supply
chain. Improved business processes internally can be, and have to
be, extended throughout the supply chain to keep costs down, keep
promises, and improve relationships with customers, delighting them
and tying them to the company.
Hamann provided a number of examples of how understanding
these paradigm shifts has affected the work of Thomas Group with
its clients. The German car parts manufacturer Robert Bosch, for
instance, found that as its clients product cycles accelerated,
it was unable to match their pace. There was another problem too.
Each change to say, a braking system design, was costing the company
US$5,000 to US$35,000, significantly eroding profitability.
According to Hamann, "at the heart of the problem
lay a functional organization approach. When a particular design
was passed through the sales department, someone in sales managed
that project through the sales department. When it was passed on
to engineering, there was an engineering project manager, and then
yet another project manager in manufacturing, and so on. In fact,
there were project managers all over the company, in all departments,
all for the same project."
This was a classic approach to functional excellence,
rather than process excellence. So Thomas Group looked across all
of these departments and "created a process structure around
the design itself. Project managers then worked in cross-functional
teams with clear deliverables - on time delivery, internally and
externally, at the lowest cost," Hamann explained.
"The sales team member concentrated on the product
definition in the quote or start of the process, and then engineering
and manufacturing members worked side-by-side with sales to respond
directly to the clear and complete definitions that were now available.
The result was that 40% of those very costly change requests disappeared.
The time to complete designs was reduced by 56%, improving both
customer satisfaction and revenue growth. Needless to say, this
had enormous financial impact at Bosch."
Thomas Group's intervention wasn't as simple as insisting
that people work side-by-side. Systems and cultural issues both
represented roadblocks to increased responsiveness and other process
improvements in the development of new product design. But instilling
collaborative business processes isn't an esoteric idea either.
What the Bosch and other examples show is that while competitive
pressures are enormous as a result of liberalization, globalization,
and technology, there are straightforward and relatively painless
ways companies can respond to these challenges.
(Michael Alan Hamlin is the managing director of consultancy
TeamAsia and the author of three books on Asian economies and companies.
His latest book is Marketing Asian Places, of which he is
a co-author (Wiley, 2001).)
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