The impact of company culture on IBP part III: Sustain IBP
In my recent survey on Sales and Operations Planning (S&OP); the S&OP pulse check 2010, survey participants that had implemented S&OP for longer then 5 years showed higher satisfaction in the S&OP process. More important, they showed higher satisfaction in the value that S&OP creates for their functional area and the business. Higher satisfaction often means higher engagement, more effective decision making, which will drive better S&OP. As Integrated Business Planning (IBP) is an advanced form of S&OP this will be valid for IBP too. This creates the thought that a minimum of a 5 year journey is required to imbed IBP and create real satisfaction in the process. It further suggests that IBP goes beyond the average 3-5 year strategic company focus.
There are examples of large FMCG companies that lost their best practice IBP status, because of a change in strategic focus. Through mergers these companies changed focus and a year’s long IBP journey disintegrated in months. How can we embed IBP in corporate culture and keep focus beyond our strategic horizon, if every management position is replaced every two or three years and mergers and acquisitions happen all over the place?
If a business is merging and you want to sustain the IBP culture, make sure you keep the right people in the right positions. As Jim Collins’ in his book Good to Great mentions: ‘it’s not about people, it’s about having the right people.’1 According to Kotter, “Change sticks when it becomes ‘the way we do things around here’. Until new behaviours are rooted in social norms and shared values, they are subject to degradation as soon as the pressure for change is removed”. Two factors are particularly important in institutionalizing change in corporate culture: 2
1. A conscious attempt to show people how the new approaches, behaviours and attitudes have helped improve performance.
2. Make sure that the next generation of top management really does personify the new approach.”
The first factor is about communicating the wins of IBP to all stakeholders and to the total business. This needs to be done relentlessly and in a structured way. Senior leaders and managers can monthly update their wider functional teams of IBP outcomes and wins. Face to face and with the support of the company news letter. This communication can be part of measurable performance plans.
The second factor is about hiring, promoting and developing employees who support IBP behaviours. IBP can be added to cross functional curriculum, induction, training, 360 degrees feedback and performance programs. In this way we can make sure new leaders will personify IBP and sustain the IBP culture.
In his two factors, Kotter assumes that the existing senior leadership leads by example in changing and sustaining cultural and IBP behaviours. If you find yourself in an IBP environment where this assumption is not valid, it seems both Kotter and Collins suggest to get rid of the leaders and indeed let the next generation of top management in. If you don’t, IBP culture or any culture for that matter, won’t sustain. The two next examples show that this is not only true in books but also in real life business.
Richard Branson said in a recent blog3: ‘the lesson I have learned from difficult restructurings is: avoid taking on someone else’s legacy. If the people you’re responsible for no longer have the enthusiasm and determination needed to relaunch the company you’re better off finding a new team to launch your business.’ A clear statement on having the right people on board to launch a company! This must be valid for IBP as well.
In an other example, I vividly remember the introduction speech from a CEO who had the task off merging two multi billion dollar food companies. In his first speech in front of the total head office of the soon to be acquired company this CEO said: ‘If you don’t perform, but fit our new culture, we have to ask you to leave. If you do perform well, but you don’t fit our new culture, we have to ask you to leave too’. No need to guess if this CEO wanted to sustain his company culture!
We better learn from these examples if we want to sustain IBP in the fast changing company environment of these days.
1. James C. Collins, Good to Great, HarperCollins, 2001
2. John P. Kotter, Harvard Business Review on Change, 1998, p.1-20
3. Richard Branson on http://www.entrepreneur.com/article/217944, January 2011
You can find these books here: Supply Chain Trend booklist