Book Notes - Corporate Transformation and Sense of Urgency

Reading Notes-Company Transformation-Sanzhi Kuang

Reading Notes-Company Transformation- Sanzhi Kuang

read this book on WeChat Reading in the summer of 2022. It was recommended by Jiang Tao, the founder of our CSDN , and took some notes at that time as follows.

Summarize:

Author: Sanzhi Kuang , consultant, entrepreneur. It took him 13 years to expand MISUMI, a veteran precision machinery manufacturing company, from a listed company with sales of 50 billion yen to an international company with annual sales of over 200 billion yen.

Every company with a certain history, relatively successful, or not very successful encounters similar problems:

• People are dependent on established processes and skills are aging. Employees are not clear: whether the results of this business are brought about by the company's platform, or by my unique ability and efforts. Much of the 'reform' is lip service. It is very difficult to change a person.
• The company's decision-makers failed to seriously follow up and analyze the success or failure of the core business, and analyze the causal relationship.
• To achieve "very successful", it is necessary to establish a "sense of urgency", analyze and implement new strategies in depth, but this will make people uncomfortable. How can the team overcome all kinds of "discomfort" and make processes and products First class? This requires a sustained and consistent effort from core team members.
• It takes more than one year for many improvements to have fundamental effects, and it takes patience and perseverance to focus on core issues and iterative improvements.

Detailed notes:

(1) Let the people of the company go to the scene of the problem to think and learn

A common method for companies is to invite consultants to provide short-term guidance. After the guidance, has the employee's ability to think independently improved significantly? No.
It is necessary to face the specific business and thoroughly investigate the reasons for the defeat. Achieving "profound reflection" is the starting point of reform.
Find relationships between entities and ask basic questions:

• User - Company - Cost - Our Product - Competitor - Partner What are these relationships
• Why should customers buy services from my company and why should they buy from competitors?
• What is the value that our various functions bring to users? (Saving time? Solving problems?)
• A business has: relative market share, market growth potential and risks
• The "relative customer value" that customers get from the company's products + services
• Activity Based Costing: Activity Based Costing (ABC)

(2) Cost system

How much does it cost other departments and processes across the company to generate a revenue? (Including handling after-sales, complaints, and other costs)
Mismi collected and calculated the costs of each item, and found that the business that was originally thought to be a "big profit" was a loss.
Resistance to introducing a new process (especially a digitally driven process):

• The work of importing is complicated
• The more precise the pursuit, the higher the invisible labor cost
• If the ABC is not updated in a timely manner according to the process changes, the cost information will be out of date
• If the information from the new process is not connected with the work of the company and becomes a natural part of the work, employees will abandon the new work process.

stagnation in corporate decision-making

• Corporate decision-making is interrupted at the junction of departments and departmental organizations.
• The company's products are backlogged between processes (similar Toyota's 'kanban' shows this backlog problem)
• By reducing "interruption" and "backlog", and better pursuing the value of time, enterprises can build new competitive advantages.

(3) How to promote a new strategy (Chapter 4)

In a new environment, it is not acceptable to copy the experience of the previous headquarters.
Focus and invest where it matters most (US, China).
The team working hard in the new environment has many specialties. When encountering difficulties, they cannot inform the top leaders of the headquarters, resulting in difficulties and lack of help. (The company's old system did not encourage reporting difficult situations to the president.)
At the beginning of the new strategy, don't "burn the grass" - set fire to dry grass, spectacular once, but leave the scorched land, unable to continue to develop. Therefore, it is necessary to launch a campaign with continuous effects in the best state.

(4) Mentality and sense of crisis (Chapter 5)

The worse the company's performance, the stronger the sense of crisis among its employees? Not necessarily , these employees acted according to the same old logic, and were numb to the wins and losses in the market and the voice of customers. Employees are "accustomed to losing" and don't feel pain.
In a company with good performance, employees are sensitive and will work hard to do a good job (what is the causal relationship between the two?)
As long as the top management does not adopt a hands-on (on-the-spot) style, it is impossible to reform the company and improve the organizational performance. sense of crisis. On the other hand, high-level executives with a sense of crisis and in-depth analysis of problems will not be liked by employees-this is a necessary price.
" sense of urgency " – how to build a sense of urgency? I've previously been trained by management guru John Kotter , who pointed out that an organization naturally becomes complacent and lies flat - a disconnect between how a company's employees feel inside the company and how its users feel externally . This requires a "sense of urgency" to drive change.
https://www.mindtools.com/pages/article/newPPM_82.htm 8 steps. The core is to "create short-term wins" - to create improvements that can see results in the short term.

(5) Triggering a breakthrough (Chapter 6)

The company's "third-day delivery" model has continued for more than two decades. All employees are used to it and have the self-conceit that "we are better than other companies even if we are not the best". When they ask for a change, the first reaction of these people is "it is unnecessary" and they feel uncomfortable.
To improve the model to "delivery the next day": to make all cooperative factories enter this rhythm, the new executives have worked for a year and eight months without any results. It took another nine months to see the effect of shortening the production cycle and reducing costs.
Elements of a successful reform:

• When necessary, high-level officials should directly intervene, insist on doing things by themselves, and convey the intention of reform to the scene
• Have an organizational design that clearly places care responsibilities
• In order to remove obstacles, some "constraints" must be removed in time
• Make results visible (short-term wins)

(6) Improvement of operations (Chapter 7)

The president visited several customer service centers, where he saw ailments that the head office could not detect. When dealing with customers, many contradictions have emerged. CSDN will also allow company employees to do customer service in 2022 to experience direct feedback from users.
If too much work is handed over to outsourcing, then the company will feel numb to the "innovative sensibility" and cannot have the "ability to change strategies independently".

Kuang Sanzhi, a consultant and management expert, also encountered several major failures after taking over the company :

• The new reform announced by the president at the meeting was misunderstood by the middle management, and then only superficially agreed and learned, but in fact it still followed the old process. The president doesn't see the results of a specific experiment, but simply believes that good reform is afoot. There have been signs of problems in the experimental stage, but no one has seriously analyzed them.
• At the last moment, it was found that the reform did not proceed as planned, so the plan to transform into a new system had to be temporarily suspended. Old and new systems run inefficiently together, creating huge waste.
• The original middle-level leaders resigned and new leaders came in. It took more than two years to see the effect of improvement.

(7) How to design a dynamic organization (Chapter 8)

It turns out: Select team leaders from motivated employees where all can compete. Reform: The company can appoint personnel.
It turns out that employees can apply to join different business teams every year, and 1/3 of the employees change teams every year. Reform: It is carried out every two years, and employees are expected to devote at least 4 years to the same business.
It turns out: The company believes employees can learn on their own. Reform: Increase the training of personnel.
It turns out that once an employee makes a mistake, he will be fired. Reform: Allow employees to learn from their mistakes, and keep them if they can grow.
It turned out that there are many divisions of labor by function in the organization, and it is often impossible to make a decision without discussing with all relevant parties, and the tendency of management and control is strong. Improvement: Simpler organization due to less "handoffs" of work in a "generalist" approach where individuals can do various things on their own. Tendency to empower and act autonomously.
Sanzhimao analyzed the reasons for Misumi’s predicament:

• The professional quality of employees is too poor (see what was mentioned at the beginning of this article, after consulting consultants to guide, the ability of employees has not improved)
• The company is poor at "seriously demanding results" (see 1.b of this article, it is necessary to thoroughly investigate the reasons for losing the battle, in fact it did not)
• The above two reasons lead to: Mismi's employees stay at the stage of 'ordinary people', have not improved their management level for a long time, and take the "pursuit of success" lightly. Then it leads to the muddled operation of "Eight years can be done at a loss".

We have made a lot of improvements in 2022. Compared with the content of this book, many of them are still not in place. As this book points out, many changes need to be promoted for many years before they can stand up and see the full effect.