LESSONS FROM LEADERS - Forbesimages.forbes.com/forbesinsights/StudyPDFs/NorthHighland-Lesson… · 3. FactSet, April 8, 2016 4. “U.K. Inflation Unexpectedly Slows to 0.3%; Core

MARRYING THE ART AND SCIENCE OF PERFORMANCE IMPROVEMENT

LESSONS FROM LEADERS

IN ASSOCIATION WITH:

CONTENTS

Introduction ................................................................................................................................................................. 2

The Need for Performance Improvement ..................................................................................................... 3

Marketplace Dynamics ...........................................................................................................................................4

The Art of Performance Improvement ............................................................................................................ 6

The Science of Performance Improvement ................................................................................................ 10

A Harmonious Marriage: Four Lessons in Integrative Leadership ......................................................14

Masterful Matchmaking: The Soul of Performance Improvement .....................................................19

Acknowledgments ...............................................................................................................................................................20

2 | LESSONS FROM LEADERS

INTRODUCTIONThe genius of famous innovators and CEOs is often oversold: most success is built on

good fortune as much as sheer brilliance, and invention is a collaborative process.

1. Gallup, May 2013

ut there is no contesting the genius of Steve Jobs. The Apple founder was dynamic. He couldn’t exclusively be defined as either a master businessman or a master designer,

though he was clearly both. Jobs was gifted with the ability to see that both these worlds could, and should, productively collide.

It’s hard to remember it now, but in the mid-1980s – before e-commerce, and the Internet of Things, and #Instafame – computers had no cultural cachet. They had all the appeal of a visit to the DMV, and creatives and artists saw no use for them. But on January 12, 1984, we collectively took one look at the Macintosh and knew something was different. Its white screen was stunning after years of reading green text on a black background, and the graphic and user interface was revolutionary. We looked and globally understood that something fertile and engaging lay there, at the intersection of art and science.

Twenty-seven years later, in 2011, Jobs launched the iPad2, saying, “It’s in Apple’s DNA that technol-ogy alone is not enough. It’s technology married with liberal arts, married with the humanities, that yields us the results that make our hearts sing.”

Jobs was a genius, an irreplaceable, inimitable force. But his philosophy – that art and science must be com-bined to create Apple-level magic – is replicable. It can be distilled and scaled to develop a value-driven

approach to performance improvement (PI), in every industry and every market. It can be tailored to marry data and finance with people, innovation, and engage-ment to realize immediate results and create long-term, sustainable value.

Performance improvement initiatives fail at a rate of 70 percent,1 and that failure can often be attributed to a reliance on either too much art or too much sci-ence. This inability to marry the two results in wasted money, time, and other resources for businesses.

In this piece we sought out business leaders in a cross-section of industries to provide real-world examples of how they married the art and science of performance improvement to create lasting value within their own organizations. We reflect on the Art of Performance Improvement, which focuses on people, innovation, and user-centered process change. We offer best practices in the Science of Performance Improvement, where technology and data are leveraged to support business decision-making and management by evidence. And we showcase great business leaders who are successfully harvesting that fertile land at the intersection of the two.

We can’t all be Steve Jobs. But we can learn from his great example, emulate his ability to marry art and science, and reap the benefits in our own pursuit of excellence.

JOBS WAS A GENIUS, AN IRREPLACEABLE, INIMITABLE FORCE. BUT HIS PHILOSOPHY —

THAT ART AND SCIENCE MUST BE COMBINED TO CREATE APPLE-LEVEL MAGIC —

IS REPLICABLE.

THE NEED FOR PIPerformance improvement isn’t new. Over the last decade, PI-focused

methodologies like agile, Lean and Six Sigma have gone mainstream,

and the savviest organizations have reaped the benefits of greater pro-

ductivity and reduced waste. But the stakes are higher now, and the

pressures are mounting.

“We’re operating in an extremely cost-constrained environment,”

says Tina Ehrig, North Highland’s global head of strategy and per-

formance improvement. “Meanwhile, organizations are expected to

innovate and grow faster than ever, all while functioning in increasingly

siloed operating models with a shifting workforce. Today, more than

ever, there are so many ways to fail.”

The myriad of opportunities to fail may explain why only 10 percent

of executives strongly believe that their organization is performing at

its full potential.2

Real PI, the kind that creates and sustains market leadership, must

conquer pressures that are far more dynamic than manufacturing waste

and one-time cost savings.

2. North Highland market research, May 2016

ONLY 10 PERCENT OF EXECUTIVES

STRONGLY BELIEVE THAT THEIR

ORGANIZATION IS PERFORMING

AT ITS FULL POTENTIAL.

COPYRIGHT © 2016 FORBES INSIGHTS | 3

10%

For additional information:

http://www.northhighland.com/services/performance-improvement


MARKETPLACE DYNAMICSThe need for performance improvement is acute, and in all industries there are life-

and-death consequences for not meeting or beating a growing demand for efficiency

(both financial and operational); shifting customer and employee demands; increasing

competition in innovative offerings and price.

3. FactSet, April 8, 2016

4. “U.K. Inflation Unexpectedly Slows to 0.3%; Core Rate Drops,” Bloomberg, May 17, 2016

LOW INFLATION = NO PRICE INCREASES: In the U.K. rates hovered between 0.3 and 0.5 percent in spring 2016, well below the Bank of England’s 2 percent target.4 U.S. inflation rates have firmed in the same time period, but they remain volatile.

COMPETITIVE VELOCITY IS ON THE RISE:The advent of the fourth industrial revolution, with its reliance on the Internet of Things (IoT) and cognitive computing, will exponentially increase the veloc-ity of change. This means that any shortcomings will show up sooner and cascade faster, putting pressure on the effectiveness and sustainability of perfor-mance improvement initiatives.

COMPANIES ARE STRAPPED FOR CASH:Today’s organizations must scrutinize how every dollar is spent, as slowing pro-ductivity (overall productivity in the United States decreased in the first quarter of 2016) and increasing labor costs weigh on profits: almost a third of the com-panies in the Standard & Poor’s 500 Index reported a decrease in first-quarter earnings.3


“A PI STRATEGY THAT EFFECTIVELY MARRIES ART AND SCIENCE TAKES THOSE

OPPORTUNITIES TO THE NEXT LEVEL, PAVING THE PATH TOWARD MARKET LEADERSHIP

AND TRUE DIFFERENTIATION.” — Tina Ehrig

Global Head of Strategy and Performance Improvement, North Highland

5. Bersin, 2012

Business performance in every industry is under the extreme pressure of these marketplace dynam-ics. Performance improvement offers opportunities to relieve those pressures and make room for growth.

“A PI strategy that effectively marries art and sci-ence takes those opportunities to the next level, paving the path toward market leadership and true differentia-tion,” explains Ehrig.

CUSTOMERS DEMAND INDIVIDUALIZED, 24/7 OPTIONS: Omni-channel, real-time, customized offerings are now the barrier to entry in the fight for wallet share. Additionally, a tsunami of consumer data offers unlim-ited possibilities for highly targeted consumer engagement, but streamlined operational and organizational strategies are required to do it right.

EMPLOYEES ARE OUR GREATEST OPPORTUNITY… AND CHALLENGE: The nature of work has changed. Businesses now demand always-on responsive-ness from their team members. In exchange, employees are demanding more too – more autonomy, more impact, more flexibility, and more emotional investment from their employer. Employers understand the new employee-driven dynamic and are spending $720 million annually to satisfy it.5 But as a source of differen-tiation, these efforts are falling flat. In fact, in 2015 the majority of U.S. workers – 50.8 percent – were not engaged, while another 17.2 percent were “actively dis-engaged,” according to a Gallup poll.


THE ART OF PERFORMANCE IMPROVEMENTWhen we think of the art of PI, it’s easy to get caught

up in big cerebral concepts, like shared values and

purpose. Leaders that successfully apply the art of PI

do so in highly regimented and disciplined ways that

have an impact in a daily, tactical way.

In consulting with business leaders for this piece,

it became clear that those who successfully apply

the art of PI do so through three regimented stages.

It is creative, it is soft, but it is also disciplined and

carefully controlled.


“BY HAVING THOSE CONVERSATIONS IN

ADVANCE, I HAVE A CLEAR VIEW OF THE

LANDSCAPE HEADING INTO A PROJECT,

AND CAN ANTICIPATE ROADBLOCKS.” — Karen Shanley

Organizational Development Lead, Eagle River Water & Sanitation

STAGE 1.

PREPARE YOUR CANVAS: Data alone can’t diagnose a problem. Leaders, who find ways to extract root causes in ways that surveys and spreadsheets can’t, are able to provide solutions that are more holistic and sustainable.

Karen Shanley, who leads organizational development for Eagle River Water & Sanitation in Colorado’s Vail community, has a knack for extract-ing that type of soft data.

“I work really hard to hold fidelity to mapping the current state before we start problem-solving,” says Shanley. “We as human beings are prob-lem-solvers, but if we don’t spend time clearly defining the problem we’re trying to solve, we can’t come up with a holistic solution.”

With approximately 100 employees, Shanley often spends weeks in advance of a project kickoff having one-on-one conversations to “sift through baggage” – identifying pain points and frustrations, and easing the staff into the idea of implementing a PI initiative.

“By having those conversations in advance, I have a clear view of the landscape heading into a project, and can antici-pate roadblocks,” says Shanley. “Then it all becomes about the [problem-solving] process, because we’ve already worked out the people part. You can’t do that with an audience.”

Mark Eastham, senior vice president at healthcare firm McKesson Corporation and general manager of McKesson Pharmacy Optimization, understands that without a precise lay of the land, PI initiatives are doomed, but getting there requires one very hard-to-define element: trust.

“You could have the best idea in the world, but if you have people that don’t trust each other, you’re destined to fail,” says Eastham.

To build trust, Eastham advocates for getting to know a team “inside and out” with a hands-on management style focused on relationship building.

“You can’t be managing from a distance,” says Eastham. “Trust isn’t something you can objectively measure, so you have to use your expertise and intuition as a leader to know if the trust is there or not.”

3S T A G E S

“YOU COULD HAVE THE BEST IDEA IN THE

WORLD, BUT IF YOU HAVE PEOPLE THAT

DON’T TRUST EACH OTHER, YOU’RE

DESTINED TO FAIL.” — Mark Eastham

SVP, McKesson Corporation, and GM, McKesson Pharmacy Optimization


“WHEN I PUT TOGETHER A

CLINICAL QUALITY TEAM, I NEED

A DIVERSE AND PRECISE GROUP

OF PEOPLE.” — Dr. Thomas Balcezak

Chief Medical Officer, Yale New Haven Hospital

STAGE 2.

GATHER THE RIGHT MIX OF TOOLS: Leaders report that one of their greatest PI tools is multi-disciplinary teams with the authority to create change, and the proximity and perspective to do it right.

At Yale New Haven Hospital, Chief Medical Officer Dr. Thomas Balcezak and his team are in constant pursuit of better-quality care, at a lower cost per unit, with improved outcomes. In that pursuit they have cre-ated clinical charter teams. At the time of this article’s writing, Yale New Haven had 12 clinical charter teams in play, tasked with improving the 12 most critical patient-related clinical quality variables at the time. Dr. Balcezak knows that the success of those 12 initiatives hinges on the qual-ity of the team.

“Healthcare is one of the largest team sports in the world,” he muses.Dr. Balcezak utilizes the National Surgery Quality Improvement Project

database to identify PI opportunities by benchmarking Yale New Haven’s performance in 135 clinical variables – everything from preoperative risk factors to postoperative mortality – against other hospitals in the nation.

Once an opportunity is identified – let’s say preventing surgical site infections is selected – Dr. Balcezak starts by tearing down all the elements of its associated PI project to ensure the right players are part of the clinical quality team.

“When I put together a clinical quality team, I need a diverse and pre-cise group of people,” explains Dr. Balcezak. “In this example I’d need the surgeons who are doing that particular operation; the anesthesiologists who work those cases; post-op caregivers; surgical intensive care unit staff; and a pharmacist with an expertise in postoperative antibiotics. Then I have to think further down the chain to include an infection-control special-ist; a hospital epidemiologist; perhaps an infectious disease doctor; and even someone from environmental services who is responsible for cleaning the room and/or the equipment that’s used in the care of that patient.”

From there, Dr. Balcezak goes one step further to consider how expe-rience and dynamics set the team up for success. Beyond job titles and functional expertise, Dr. Balcezak selects team members based on their experience in previous performance improvement projects, and in their ability and inclination to serve as either team leader or contributor. These are soft metrics, nearly impossible to self-identify, and heavily reliant on strong leadership and intuition to nose out.


“WE GENERATED THE IDEAS OF

THOUSANDS OF EMPLOYEES IN

A WAY THAT WAS GALVANIZING

AND FUN.” — Jewell Parkinson

Head of Human Resources for North America, SAP

STAGE 3.

PROCEED WITH PURPOSE, PREPARE TO BE AGILE: Having a vision is essential, but being flexible enough to change course mid-project is where sustainable PI is born. Applying design-thinking methodology helps keep organizations nimble in their pursuit of excel-lence. Rooted by a clearly defined problem, design thinking allows for an open-source innovation period, leading to refinement and testing to develop winning concepts.

Software giant SAP applies design-thinking theories in PI initiatives internally and externally. The SAP staff are agile natives, and their tools facilitate the type of agile value creation, productivity, and efficiency all performance improvement initiatives aspire to. So when Jewell Parkinson, SAP’s head of human resources for North America, participated in a proj-ect to design a new set of company values, agile principles were at the core.

With 85,000 global employees and a string of successful – but culturally disjointed – acquisitions, SAP knew it couldn’t create its company values in a vacuum. So SAP designed an inclusive and transparent platform, holding over 1,000 workshops across the world, open to any and all employees who wished to contribute. Ideas were curated on an intranet collaboration site and voted on through a series of quick polls and contests.

“We generated the ideas of thousands of employees in a way that was galvanizing and fun,” says Parkinson. “And in the end, the values were very well received because many people knew that they had a hand in the process.”

THE SCIENCE OF PERFORMANCE IMPROVEMENT


6. Gartner, Feb. 12, 2015

For most organizations, data makes the world go round. It drives strategy, fuels innova-

tion, and quickly identifies opportunities to cut costs and improve performance.

And now, with the emergence of big data, our worlds are about to spin a little faster. We have peered into the peephole of big data’s potential, while industry oracles pre-

dict its massive implications. Gartner claims that by 2020, big data will be used to reinvent, digitalize, or eliminate 80 percent of business processes and products from a decade earlier.6

The trick, of course, is in collecting and collating that data in such a way as to extract patterns and rich insights.

“Social data, especially, is rich data, but few compa-nies are tapping into its true power in ways that drive

innovation and growth or operational and organiza-tional excellence,” explains Ehrig. “A robust data and analytics program – ours employs a cutting-edge team of computer scientists, physicists, and business and indus-try strategists – helps companies propel performance improvement through an evidence-based approach.”

Rich, decoded data like this allows us to maximize profits to ensure that all outputs and outcomes center on creating value. The science of PI is in systemati-cally incorporating that data and applying an analytical approach to deliver effective projects, sustained pro-grams, and critical capabilities.


APPROACH 1.

THE SCIENCE OF EFFECTIVE PROJECTS: Done well, projects offer the opportunity to experiment and innovate. They provide opportunities to test, learn, and evolve. And when rooted in a scien-tific, data-driven approach, they provide opportunities to create immediate value through cost savings and operational excellence.

Samir Saini, chief information officer of the city of Atlanta, applied the latest in cognitive computing – IBM’s supercomputer, Watson – in a project to understand how best to improve the performance of the service desk run by the IT department. The service desk covers 10,000 users, all employees of the city of Atlanta, and wasn’t hitting its target 85 percent resolution rate. To chart the method for improvement, Saini used Watson to analyze a two-year sample of data to deter-mine the number of tickets, their priorities, and how long it took to resolve an issue.

The analysis revealed that requests for password resets accounted for a significant percentage of tasks, and that the majority of tickets went to a small subset of people. Based on this data, the city made adjustments in the operations of the service desk. The results improved as measured by cus-tomer-service metrics, such as resolution time or first-call resolution.

“The data allowed us to create a targeted solution,” says Saini. “Solving that one issue improved our overall cus-tomer service metrics, putting us at rates better than we’ve ever seen.”

For Saini, this is not a linear process. The new aggregated data is currently being reanalyzed

every six months to inform future performance improve-ment projects.

“SOCIAL DATA, ESPECIALLY, IS RICH DATA,

BUT FEW COMPANIES ARE TAPPING INTO

ITS TRUE POWER IN WAYS THAT DRIVE

INNOVATION AND GROWTH OR

OPERATIONAL AND ORGANIZATIONAL

EXCELLENCE.” — Tina Ehrig

Global Head of Strategy and Performance Improvement, North Highland

3A P P R O A C H E S


“SOLVING THAT ONE ISSUE

IMPROVED OUR OVERALL

CUSTOMER SERVICE METRICS,

PUTTING US AT RATES BETTER

THAN WE’VE EVER SEEN.” — Samir Saini

Chief Information Officer, City of Atlanta

APPROACH 2.

THE SCIENCE OF SUSTAINED PROGRAMS: A sustained PI program is the backbone of the kind of continuous improve-ment that drives value and innovation. Within PI programs, science – and more specifically, data – offers the opportunity to clearly define success and identify opportunities to improve.

The leaders interviewed for this piece shared several best practices in the science of sustained program management. First, they all employ feedback loops that clearly tie the success of overall programs and individual projects to the corporate growth strategy. Second, they foster an agile environment made up of PI-focused team members with clearly defined roles, including scrum masters, team members, and technical experts. Third, they use data to learn and improve, analyzing the performance of individual projects and the program as a whole at regular intervals.

McKesson’s internal IT group has grown quickly to accommodate a ris-ing number of technology projects. The group had suffered from missed deadlines in the past, and future deliverable deadlines were slated to slip if something didn’t change.

Eastham’s first tasks were to move IT into an agile environment and implement a set of performance measures, which were monitored daily and analyzed on a weekly and monthly basis. Armed with this data, Eastham and his team were able to identify opportunities to improve.

“If we didn’t hit a timeline, for example, we would go back and dig into why didn’t we meet it: Did we miss something? Is this still a good improvement to undertake? Have there been some barriers presented, and what’s the ROI to overcome the barriers?” Eastham explains. “Sometimes I wouldn’t call [these situations] unsuccessful, I’d call it more of a learn-ing moment.”


“IT’S HARD-WIRED, BELIEVING

THAT WHATEVER WE’RE DOING

TODAY WE CAN DO BETTER

TOMORROW.” — Tom Mahoney

President and CEO, ITA Group

APPROACH 3.

THE SCIENCE OF CRITICAL CAPABILITIES: Engagement solutions partner ITA Group was facing a massive flux in its workforce. Over a three-year period, 80 percent of its 600 employee owners were suddenly either Generation X or Millennials. The workforce was new, untenured, but ITA prides itself on serving as the solid constant for clients going through transformation.

“New-on-new is really hard in a partnership between a supplier and a customer,” explains President and CEO Tom Mahoney.

The company knew it had to find a way to identify employee engage-ment issues before they had a chance to erode client satisfaction. So ITA Group leadership designed seven KPIs, starting first and foremost with an employee-retention-rate goal of 90 percent.

“It starts with our people, because we knew we had to have the right team in order to deliver on the rest of our goals,” says Mahoney.

From there the remaining KPIs were derivative of employee retention, customer retention, customer satisfaction, productivity (measured by the labor costs associated with generating $1 in profit), revenues, earnings, and knowledge transfer/tools utilization.

ITA Group’s customer-retention goals were set at 100 percent (bar-ring circumstances they couldn’t control such as acquisitions). Similarly, the company set steep goals of achieving 90 percent customer satisfaction rates; productivity ratios of below 50 percent; and double-digit growth in revenue and earnings.

Measured monthly, sub-standard KPIs trigger continuous improvement projects. Audits are conducted in red-line categories to identify opportuni-ties for incremental improvement.

“It’s hard-wired, believing that whatever we’re doing today we can do better tomorrow,” says Mahoney. “Our current customer satisfaction rating is 97.83 percent, which is very, very high. And yet we still believe we can do better.”

97.83%C U R R E N T C U S T O M E R S A T I S F A C T I O N R A T I N G


A HARMONIOUS MARRIAGE: FOUR LESSONS IN INTEGRATIVE LEADERSHIP

“Human beings, as is well known, are distinguished from nearly every other creature by

a physical feature known as the opposable thumb. Thanks to the tension we can create

by opposing the thumb and fingers, we can do marvelous things that no creature can

do – write, thread a needle, carve a diamond, paint a picture, guide a catheter through

an artery to unblock it,” wrote Roger Martin in The Opposable Mind: Winning Through

Integrative Thinking.


‘‘Similarly, we were born with an opposable mind we can use to hold two conflicting ideas in constructive tension. We can use that tension to think our way through to a new superior idea.”

It is such integrative thinking that Martin credits for the success sto-ries of many of the 50 corporate leaders he interviewed for his book. As an example, he cites A.G. Lafley, who faced two conflicting ideas when he became CEO of a floundering Procter & Gamble in 2000. The company was spending more and more on innovation, but introducing fewer and fewer new ideas.

There were two schools of thought about how to turn the company around. One was to cut costs that were out of control and lower prices. The other idea was to do just the opposite: use innovation as a competitive advantage and charge premium prices.

Lafley did not want to choose one of the two solutions. Instead, he embarked on a strategy to cut costs and innovate. He did it by eliminating layers of management and pioneering a new approach to innovation. “I am not an either-or kind of guy,” he told Martin.

Executives interviewed for this report also approached their PI initiatives with integrative thinking. They viewed PI holistically, ever seeking the har-monious marriage between art and science.

“At the end of the day, being effective at business means [understanding] people,” says Ehrig. “A lot of times the reason initiatives fail isn’t because they didn’t have a good idea rooted in the right process and evidence, but rather because they didn’t think about the complexity of moving an orga-nization through a change, and motivating a group to want to stand behind the goals of the organization.”

It’s not always an easy or natural approach. Most leaders – perhaps with the exception of Steve Jobs – are inclined toward one leadership and deci-sion-making style.

“Sometimes I find myself almost inconvenienced by the hard metrics because I’m so focused on the other end,” says Shanley of Eagle River Water & Sanitation. That is why she works with a project manager/analyst to make sure that “the two ends” connect for the final value.

Like PI, integrative leadership doesn’t subscribe to a cookie-cutter meth-odology. But there are lessons from integrative leaders that can be applied regardless of industry, market, or current leadership approach to happily marry art and science to drive value.

THERE WERE TWO SCHOOLS

OF THOUGHT ABOUT HOW TO

TURN THE COMPANY AROUND.

ONE WAS TO CUT COSTS THAT

WERE OUT OF CONTROL AND

LOWER PRICES. THE OTHER

IDEA WAS TO DO JUST THE

OPPOSITE: USE INNOVATION

AS A COMPETITIVE

ADVANTAGE AND CHARGE

PREMIUM PRICES.


4L E S S O N S

“FINDING THAT BALANCE IN HEALTHCARE

REQUIRES ACKNOWLEDGING AND

UNDERSTANDING ALL THOSE FACTORS

FROM A PATIENT’S PERSPECTIVE.” — Dr. Thomas Balcezak

Chief Medical Officer, Yale New Haven Hospital

LESSON 1.

EMBRACE THE MESS. The conventional approach to PI would be to sim-plify the challenge, narrowing the contributing factors down to as few as possible. Our brains are pro-grammed to simplify in this way, to avoid exposure to uncomfortable complexity. For example, finance departments haven’t traditionally regarded emotional factors as salient. Similarly, departments tasked with organizational behavior may traditionally ignore the quantitative. And conventionally, it is only after PI initiatives with restricted saliency fall apart that we rec-ognize our failure to consider factors that were outside the project’s immediate reach.

Integrative leaders instead actively seek the less obvious. They embrace the mess of a myriad of factors – giving balance to art and science – to illuminate the problem as a whole. They welcome complexity because they know that’s where the best answers come from.

In healthcare, the salient features are particularly messy, and they are far from static.

“Finding that balance in healthcare requires acknowledging and understanding all those factors from a patient’s perspective,” explains Dr. Balcezak. “It’s called risk adjustment, and it’s where we as physi-cians spend the most time.”

Yale New Haven is constantly striving to apply the art and science of PI to better account for and mea-sure the success of risk-adjustment work, where physicians must fine-tune healthcare plans to account for everything from age to co-morbid conditions, socioeconomic status, health insurance status, and post-discharge care and support.

“I might have high blood pressure and diabetes, and you might have rheumatoid arthritis and lupus, but we’re both here to have our knee replaced. Well, the risks that I face with my co-morbid conditions are different from the risks you face with your co-morbid conditions,” says Dr. Balcezak.

It would be far simpler to ignore those factors, to create a simplified plan of attack for major proce-dures, and to ask patients to adjust accordingly. Instead, Dr. Balcezak is seeking ways to streamline the infor-mation-gathering, better arm physicians, and better prepare patients for risks and recovery, given their spe-cific – though messy – set of salient factors.


LESSON 2.

PRECISELY MAP CAUSALITY. Integrative thinkers are able to map the causal relationships of those salient fac-tors in a non-linear way, questioning the validity of apparently obvious links.

SAP has positioned itself as the leader in enterprise software, with 38 products developed across 25 industries over the last 40 years. Quality is an integral part of the product development lifecycle definition; SAP quality engineers are largely responsible for the quality (in terms of functional accu-racy, usability, and performance) of these products. Test execution is their core activity.

SAP quality engineers in India were faced with three key challenges: slow system performance; poor information handover, creating persistent knowledge gaps; and a time-consuming Waterfall model for the automa-tion process.

Kevin Sheal, a strategy consultant with SAP’s Productivity Consulting Group (PCG), outlines how the PCG Team conducted a 360-degree view of the challenges faced by the quality engineers using a lean approach to analyze and improve the quality engineer role. Transparency was gained by interviewing and shadowing six representative quality engineers and a baseline of 43 percent productivity (quality engineers actually doing test execution) was established.

PCG brought the key stakeholders together to tackle the issues and identify root causes. Workgroups were formed to address these root causes and follow through on the recommendations and commitments. This led in the space of four weeks to a 16 percent increase in test execution as a core activity.

As with every company, SAP’s customers owe it money for services ren-dered. And the time it takes customers to pay has a direct impact on cash flow. So Sheal was tasked with decreasing the company’s day sales outstanding.

After identifying salient factors, Sheal worked to map them against cau-sality. While measuring how long it took for the SAP collections team to resolve an outstanding invoice, both through data collection and in-per-son interviews with team members, he identified an opportunity to stop the train earlier on its track. By focusing on invoice transparency and accu-racy, Sheal stunted opportunities for disagreement and dispute, increasing on-time payments and freeing up cash flow.


“THERE IS AN ART TO THIS, AND IT’S

INTUITIVE AS WELL. YOU HAVE TO HAVE

GOOD, STRONG CRITICAL THINKERS THAT

CAN PROCESS THIS INFORMATION…” — Tom Mahoney

President and CEO, ITA Group

LESSON 3.

DESIGN A PROGRAM BLUEPRINT. With a firm grasp of the causal relationships between salient features, the next step is to architect a frame-work for decision making and project execution. Integrative leaders don’t break down a PI initiative into independent pieces and work on them in silos. They create a framework that reflects how one project and its outcome will affect another, and they hold all of those pieces suspended in their minds at once.

In Des Moines, Iowa, ITA Group was facing a tight labor market. It needed top talent to compete, so the most obvious solution was to improve recruiting functions. But Mahoney and key ITA executives under-stood that recruiting was not a stand-alone function. They dug deep – both internally and through exter-nal market research – to unearth salient factors. Then a cross-functional team, with representatives from cul-ture, marketing, communications, and operations, was organized and tasked with finding a way to attract top talent in ways that would achieve four other objec-tives: increase customer satisfaction, increase revenues, decrease cost, and decrease risk.

The individual projects within this program, every-thing from employee onboarding and training to measuring how individual initiatives were impacting client satisfaction, were designed as parts of one holistic program, thoughtfully executed to amplify and com-plement one another’s outcomes.

Creating that blueprint requires a healthy marriage between art and science.

“There is an art to this, and it’s intuitive as well. You have to have good, strong critical thinkers that can process this information, and you have to use data to steer and drive the process,” Mahoney explains.

LESSON 4.

DON’T SETTLE. Integrative leaders always search for creative resolutions to tensions rather than accepting unpleasant tradeoffs. The decision-making process inevitably creates tradeoffs – delays, new options at the eleventh hour, cost increases – and too often we accept these with little complaint because it seems to be the best (or easiest) option. Instead of settling, integrative leaders shun the conventional and refuse to accept “less-than.” They get creative to avoid falling into having to accept “either-or.”

In the city of Atlanta, Saini knew that transform-ing to a smart city by embedding new technologies, including sensors, into the city infrastructure would spur preventative maintenance, improve citizen safety, and increase transparency in the city’s operations and spending. But installing such technologies was an expensive proposition.

So he faced an either-or: install modern technolo-gies or save taxpayer money. Saini refused to settle. His creative solution? The city of Atlanta will aggregate all collected data into a portal that the private sector is then charged to access. In this way it is possible to have the infrastructure and limit spending.

“The idea is to generate revenue to cover costs incurred in investing in the smart city infrastructure and save taxpayer money,” he says.


MASTERFUL MATCHMAKING: THE SOUL OF PISteve Jobs reveled in pointing out that the original team

working on the Mac had backgrounds in anthropology,

art, history, and poetry. He felt this was the secret sauce

that made Apple products shine, that gave them soul. But

“soul” is the type of characteristic that a computer engi-

neer may find difficult to develop. Meanwhile, typical

anthropologists may have trouble writing code.

o the impetus lies in the leader. To achieve PI magic, leaders must be the bridging force, marrying the individual art and science of projects, programs, and capabilities. They must balance informa-tion processing and data analysis with emotional connection,

empathy, listening, and understanding. It requires an opposable self, a trans-lation of integrative thinking into integrative acting – being the cognitive boss and manager, and an empathetic leader at the same time.

This duality is not easy. So smart leaders surround themselves with smarter counsel. They seek to integrate cultures, data, and people to act as masterful matchmakers. They bring thousands of employees together to write a corporate value statement, as they did at SAP. They seek to help physicians understand a patient’s definition of comfort as well as they do their vital signs, as Yale New Haven strives to do.

This is the soul of performance improvement. Good leaders understand the value of PI’s soul. Great leaders, integrative leaders, harness that soul, marrying art with science to achieve excellence far greater than could be achieved with either alone.


ACKNOWLEDGMENTS

Forbes Insights and North Highland would like to thank the following individuals

for their time and expertise:

Dr. Thomas Balcezak, Chief Medical Officer, Yale New Haven Hospital

Mark Eastham, Senior Vice President, McKesson Corporation, and General Manager, McKesson Pharmacy Optimization

Tina Ehrig, Global Head of Strategy and Performance Improvement, North Highland

Tom Mahoney, President and CEO, ITA Group

Jewell Parkinson, Head of Human Resources for North America, SAP

Samir Saini, Chief Information Officer, City of Atlanta

Karen Shanley, Organizational Development Lead, Eagle River Water & Sanitation

Kevin Sheal, Strategy Consultant, Productivity Consulting Group, SAP

ABOUT FORBES INSIGHTSForbes Insights is the strategic research and thought leadership practice of Forbes Media, publisher of Forbes magazine and Forbes.com, whose combined media properties reach nearly 75 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights conducts research on a host of topics of interest to C-level executives, senior marketing professionals, small business owners and those who aspire to positions of leadership, as well as providing deep insights into issues and trends surrounding wealth creation and wealth management.

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EDITORIAL

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RESEARCH

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Documents

LESSONS FROM LEADERS - Forbesimages.forbes.com/forbesinsights/StudyPDFs/NorthHighland-Lesson… · 3. FactSet, April 8, 2016 4. “U.K. Inflation Unexpectedly Slows to 0.3%; Core