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Business Transformation: Lessons from Lean Change Management

October 28, 2020  |   Webinars

In this webinar, Hector Villavicencio walks us through a pragmatic Strategic Leadership Process that has helped him successfully bridge the gap between strategic planning and operationalization. His framework builds on existing methods and on his personal experience implementing lean initiatives. The framework combines Lean and Business Change Management principles to drive and sustain business transformations.

Hector Villavicencio brings 20+ years of professional experience as a Project Development Engineer, Production and Facilities Engineering Manager, and Production Process Excellence Manager across multiple countries in companies such as Shell and Cargill. Examples of transformation projects he has led include initiation and implementation of a lean culture, production automation, integrated production systems models, production and system optimization, across multiple international sites. He has also led multidisciplinary project teams, from conceptual design to implementation, ranging from low-millions to $4+ billion in size. He started his career as a Steam Engineer in charge of plant safety and process operations. More recently, he has founded LEAN TPS LTD (Lean Technical and Project Management Solutions), a consulting practice that delivers technical and project management solutions through engineering, training, project management and lean consulting services.

Victor holds a Graduate Diploma in Management, a MSc. in Power Generation, a Chemical Engineering Degree from the University of Calgary, and a Lean Six Sigma Black Belt.

If interested in our past and future webinars, please subscribe to our YouTube channel. We also welcome you as a member of our LinkedIn Group where you will receive webinar updates and have a chance to network with hundreds of your peers: click here to join.


Disclaimer: This transcript was generated automatically by a software with 86% accuracy. Please forgive errors in the remaining 14%. Please listen to the video recording for exact accuracy. This automated transcript is provided "as-is".

All right, welcome back, everyone. I am hosting this webinar on behalf of Sesasystems. Today's topic is business transformation. And so specifically, we're going to hear lessons from a change management expert. Our guest speaker is Hector Villavicencio. Hector comes with 20 plus years in project development engineering. He's been a production and facilities engineering manager, production process, excellent manager at Shell, Cargill and other companies. His experience includes Lean Transformation projects, Lean culture, production, automation and system optimization from the low millions to more than four billion dollars. And he's currently the founder and principal of Lean TPS, which stands for Lean Technical and Project Management Solutions. He holds an engineering degree in power generation chemical engineering and he's a Lean Six Sigma black belt. So thank you very much for being with us, Hector.Before I pass it on to you, just a few words about our host sesasystems. Many of you already know sesasystems of her two thousand five hundred products used by fifteen thousand companies, some of which you're seeing down here. And we are a really turnkey provider for operational excellence tools, including training games, Ergonomics and Lean office furniture workshop furniture such as workbenches. And some of these that you see here. Logistics includes the floor racks trolleys, Kanban systems, floor marketing, safety, signage, and both digital and standard visual management in the digital that includes the screens as well as digital KPI management and wireless and Andon lights. The visual management includes a variety of whiteboards, some of which you see here and the magnetic accessories. So without further ado, I will pass it on to you, Hector. Thank you very much for being with us.

Yes, so let me share my screen here. Hello, everyone, welcome to this webinar, we're going to be talking about a very relevant topic today, business transformation, lessons from Lean change management.

So why are we talking about this topic today? We know that in this environment that we are living in with technology and change are the constant we actually have. Companies need to actually go through business transformation, not because they want, but because they want to actually stay competitive in this business environment. So now I would like to actually just share with you that that anyone that is involved in the business transformation will benefit from this, a topic, you know, people they are change leaders, operational leaders and any employees that are actually working in companies where there is a business transformation would benefit from this. A webinar. So now, in terms of the key objectives that we are actually planning to achieve today is that we want to we want to actually reflect on some of the lessons on business business transformation that I have experienced myself by working as a Lean coach, as a Lean expert in different companies. And I would like to share with you a model or a framework or a mindset that actually summarises all these learnings in a way that you actually can think about this approach and apply it in your business as your field as you deem necessary. So in terms of the agenda here, we're going to have three major points here to discuss and no one is said, you know what makes a Lean Lean initiative succeed? Number two, I'm going to be sharing the lessons that I mentioned before.

And number three, I'm going to be sharing with you the methodology and the the approach that I'm actually proposing to use for your business transformation initiatives. So first, you know, the big question that I ask myself is, you know, how can we actually make Lean initiative succeed? So that's one that's the biggest question that we all in all the people involved in business transformation ask how can we make those transformations more effective and more successful? So now if you actually research the topic of Know Lean transformation, specifically what you will find is that quite often that the reasons for the these initiatives to fail are diverse. And so we all know that the way we talk about project management, leadership in the company, we talk about the things like the organizational culture, employee engagement and so on. So so I basically I'm referring to a paper from McCleen and in the Journal of a Total Quality Management and Business Excellence, and that this paper highlights at the top. I call it themes. And that's on the on the Lean Change management now when it comes to overall change management or business transformation initiatives, a study by McKinsey and IBM indicates that the success rate of a business transformation is in the 30 to 40 percent. So that's something that I would like to use as a reference to highlight the importance of this topic, because there is a lot of resources and a lot of moral employees morale involved in these transformations. And we want to make sure that we have a way to become more effective at this at this type of work in. So now going back to the themes that I mentioned before, cultural leadership and employee motivations, communication, the project management by the employee involved involvement and the and the training. So those are the themes that they are highlighted in this paper by paper. But by making now I group those into into two major categories. And what I found is that you can actually categorize them into the I call it the strategy formulation misstep and the strategy, the deployment statement. So now if you look at those are two major steps in the process. What you actually find is that the you know. The big question that I would like to ask is, what are we missing in change management initiatives? So my conclusion is that what we're missing is a what? A something I call.

Strategic alignment and strategic alignment is actually important because it is a mindset and that's what we're going to discuss in the next few slides. So now if we actually take the the the whole approach of the analysis of the of this of these themes, you can actually use the Swiss cheese as a model to actually realize that. Each one of these themes is crucial to to come up with a successful what you call a sustainable change. So the slices represent the various barriers or enablers, enablers. The holes in the Swiss cheese model represent the individual strength in that part of the of the system. And then what I would like to highlight are the enablers, as I mentioned before, we have a strategy formulation having a clear vision and strategies, objectives and priorities. The culture, one of the most important aspects of business transformation we know is culture, leadership. And that and when I refer about leadership is not just the executive leadership, but also leadership on the on the ground and of course, the strategic strategy deployment. That is actually a crucial because that's where we're actually executing the work. So this model allows us to actually recognize that.

If one of these is in the Swiss cheese, there is actually a block in the process, we are actually not going to be able to succeed in the sustainability of this changing. So. This is actually the key here to remember that the. And of course, what I would like to actually highlight here is that we actually have disciplines that we can learn from and the one of them is the strategic management, and the second one is business change management. And the third is the of course, is applying the Lean principles. And that will explain that why Lean actually plays a huge role in the success of a business transformation. So now I would like to share with you a couple of learning said a couple of lessons from from my experience. So they said two stories. One of them is a story where people were actually in this case, a this is a story where people have the management team have a vision, a very clear vision of where they wanted to go. Now I'm using the what I call a shape of the cobbler across a model to actually show how this team A was actually a. Coming up, with a successful ideas on how to implement their Lean transformation, so, for example, this happening in oil and gas production, the film, this was about five to six years ago. My role in that in that particular case was to coach a team members in the implementation of Lean that the team had started a Lean a journey team A, as you can see here, was that in an asset in that asset that the leaders were actually very clear about the Lean the value they Lean there was going to bring to the table.

So they had a strong conviction for the change. In these assets, the teams that were able to adopt and mature a Lean process that where they integrated their daily production meetings as part of their leaders standard work. These folks and not only did they track it on a daily basis, their safety and production targets, but they were also able to track opportunities to to reduce unit cost, production unit costs. That's the one that we measure in dollars per barrel. And by doing that, they were able to actually make some quick wins. As a matter of fact, that this team was able to reduce the costs of the involving the with the sand separators that they used to rent them to to treat their production at the beginning of the production cycle. In this case, it was gas production. And that that the the comment I would like to make about this is that the. They what made them successful in this particular journey was that, you know, number one, they had a clear vision from the leadership.

As you can see here, they had a very a a. Create a discrete number of priorities that we're working on. They have a strategy as to how they were going to move those priorities through through the through and through the process. One thing, if you want to call it, and that the beauty of this is that they actually achieve the the lowest unit operating costs in when benchmarking with other competitors in their area. So this is a good example of how leadership plays a very critical role in the whole a business transformation. Having people on the ground that are leaders also played a big role. And then I'm going to summarize those a big I call it that the big rocks for success in business transformation. So so, you know, I would like to encourage questions at the end of this presentation to to explain more for people. They would like more details on this particular case. So now going back to to my Swiss cheese model, what the you know, I would like to highlight here is that the you know, each one of the slices was covered by this team. So the team was bang on the money. The leadership team was bang on. The leaders on the ground were bang on. They actually had a strategy. The culture was actually driven to actually support the initiative.

And then they also knew how to deploy the strategy by having a very clear a standard work that the Bellini's done. The work was actually practiced properly. They actually spent a lot of their time designing their visual balls and they and they had the end in mind there. So that's a good example of a team that is successful and how they were able to achieve it that is actually witnessing the benefits of this implementation. So now. On the other side, I'm going to share with you in contrast to two theme A, very theme B, and this is what I call case B, and in case B, what the you know, I learned there is that the folks in the team were frustrated that the Team B members were frustrated. They were actually thinking that their Lean efforts were distracting them from the real work. That's one of the comments I got from them. Lean is actually distracting us from the real from our real work. And why did they actually say that? Is that number one is that they have too many initiatives. As you can see here, they have too many competing initiatives in their in their workload besides that, that they also have multiple targets. So it was hard for them to actually focus because they have quite the number of targets.

Another observation we made that I made actually from this a case is that the management was actually clear on what they wanted to achieve, but the reason was not really communicated, communicated the clearly to the folks. So not having that vision clearly communicated to the people was actually something that was not helping because people were actually trying to achieve a lot of work and they didn't know what they were going. So that's very critical for for this and for any initiative to to to be successful. You know, one that experience I would like to share with you about the case is that the you know, as part of my field trips as a Lean coach, this was also in the oil and gas field. I had the opportunity to to have a one on one session with Charles Charles Wesser, the team leader, one of the team leaders in that in that film. So, you know, the conversation went like this. How can we filter our priorities in a way that we can actually get more value or we can get that demotivated? That's one of the questions. And is there any way that we can achieve so that we can actually get the team excited about what they are doing? Can we actually simplify the work for them by just focusing them on a very few, three to five priorities?

The other question that we ask ourselves is, how do we ensure that the priorities that the team is working on are aligned with the top business objectives? So, you know, we actually talk about these questions. And I would like I wanted to make him think on his own about the answers for these questions.

So the production neither here. Charness was actually very quick to actually realize. And he said to me, Hector, I got it. I think that they will step back on this process and we'll start working on our quick wins first, because our team is going to get excited about removing from from the their workload they a number of projects and also working on the projects. They are going to move the needle in terms of their satisfaction, their employee satisfaction, as well as those projects that will actually add more value in with the perspective of the business objectives. So the team was actually a chance, actually a start to the change in the behaviour's himself. Number one is he started changing the behaviors himself, important for for the team to see those behaviors. And the team started in their in their weekly huddles. They started to review their priorities and they started to track the projects in a way that they would actually focus only on the ones they added the most value to the team. So there was a big improvement after that. The lesson that we got from here is that the without a very clear vision from the beginning, you're actually going to have quite the number of challenges in getting the teams motivated to to work on the implementation of the initiatives because of what we just said. So now from a from a suite, if we look again at the Swiss cheese model, what you find here, that there was not a very clear strategy formulation process in place because that wasn't helping the culture to really for the people to get motivated about the work after we actually identify the opportunity that the local leadership, I call it the local leadership, the level two or three leadership, they started getting aligned and they started moving the deployment.

Now, the big question that I ask myself, how sustainable can you be with? I mean, remember that the final, the ultimate, the outcome that we expect from our change, our business transformation initiatives is that we want to make it sustainable. So, you know, if we don't have all these slices of the Swiss cheese in place, we actually have a high risk of not making our initiatives successful. So I question the longevity or the sustainability of of any initiative where one or a few of those elements are not really aligned to the strategy and to the the needs of the business. So now I put together this slide to actually provide additional reflections from CASIS Amb. But but the big thing I want you guys to take from this is that the you know you know, we have reflections such as that they need to have quick wins to motivate the teams that are very important, to have to apply a systematic approach to identify the change risk and the stakeholder management, of course.

Now, when you actually look at the reflections and you look at the original teams that we mentioned at the very beginning of this of this presentation, you will actually find that those reflections actually fall within the categories of leadership motifs and expectations and employee involvement. So now if we actually a step back a little bit, what we're going to learn is that Lean principles provide a lot of direction and guidance, that when it comes to leadership, what you will find is that we have an opportunity to leverage Lean building culture, not only because the Lean culture brings a lot of improvement in the in the manufacturing processes and the tools, but also because the philosophy and the principles behind that are actually powerful to actually make our business transformation sustainable, like growing the leaders process, the standardization, the leadership and the work they cut, that a scientific problem solving approach to getting people to actually develop their Problem-Solving capabilities. Those are big elements that help us get the sustainability in place. That the second element that, you know, is fundamental is the strategic management applying a strategic formulation before you actually engage in the whole change management, a process in the whole business management process. You need to actually. Prepare yourself for all the decisions that you need to make.

To ensure that there is alignment, not only alignment of the goals to the strategies and they and they and the whole initiative alignments a. But also. To make sure that you you. You actually take some tough decisions when it comes to what are the cultural elements that you want to you want to sustain or you want to Lean, what have the communication, the communication said that you want to have to be able to articulate the need for the change. That is going to be a lot of a, I guess, a few critical decision decisions that will allow you to start the business change management process. So please remember, don't start the business change management process. And it started sorry, it started only after you have made some strategic decisions on how you want to approach culture, how you want to approach the whole A. A scope of the communications and they and how you're going to tackle the stakeholder management as well so that those are the disciplines that we actually can learn from. We can actually we can actually improve our likelihood of success by being very holistic about the whole strategy. So now I want to I wanted to share with you something I really like from Peter Peterson. He wrote a book called Strategic Learning. And one of the big things that makes me think about a strategy is strategic management, is that, you know, outperforming competitors on insights and then acting on them is what gives an organization its highest probability of success.

So, you know, I want you guys to reflect on this. It's important to use this as a reference because at the next slide, there is going to be related to what I call the strategic model. And the strategic model basically includes the following. So no one is a. The strategic model that I'm proposing is actually more a way of working or a mindset, and I will explain to you why. So number one is that if you are actually embarking in a change in a business transformation initiative, the first step that we need to take is actually to understand the internal and external environment. So we need to understand our own culture. Is our culture aligned with where our vision. Have we done recently any business transformation that work to actually improve our credibility as a in front of the employees? Or do we actually have a bad legacy of changes that make our employees quite skeptical about future changes? Before we embark in any change management, we need to understand what is this status of people's perceptions when it comes to management's decisions, when it comes to their values and beliefs of the company?

Very important for us to actually understand the external environment, because at the end of the day, one of the big drivers for you to make the change is actually what's happening outside of the company. And I would like you to encourage you to think about what's happening outside of your industry, because quite often what happens outside of the industry will give you a little bit of an idea about what could happen down the road in your own the environment, your own industry or in your own company. And that may actually give you opportunity, opportunities to envision and strategize a bit more on on the long term. So the trains of technologies and the markets are actually information that you need to have very clearly in mind that when it comes to the whole strategy for your for your business. So I recommend you send the SWOT analysis, but not in the way that many people use it. Many people use the SWOT analysis to just describe the strengths, the opportunities and the and the weaknesses and the and the threats. I actually like the approach by David, Fred, David. He wrote a book on the strategic management is very popular. But the lesson that you learn from there is that. Not only do you. Identify those elements of the strengths and weaknesses and so on, but you actually use them to think about how you combine them, for example, to use the strength to take advantage of opportunities to actually overcome weaknesses by taking advantage of opportunities, by using your strength to mitigate or avoid threats, or by minimizing the weaknesses and the and they avoid avoiding the threats altogether. So this is very important, because if you have your leadership team and you have representatives from from from the company helping you to think about those, do you have a better chance to actually come up with a creative strategies that will address the internal and external environment is very critical that you actually do that before you embark in any change management initiatives.

So now the outcome of this, as you can see, is that the output or the deliverable of this is what the analysis is, that you would end up with alignment on the differing strategies, options for strategies that you have. Now, alignment is very important because what happens is you want to make sure that your leadership team is actually in on the same page with us CEO to come up with or pursue any changes that you actually decide to move on. Now, you know, a step that the next step in the whole sequence of events is that you actually decide from that from the number of strategies or alternatives that you came up from the SWOT analysis. Now, you actually in there were down on the strategies they going to pursue based on a on a discussion that you have with your team about their priorities and their impact on the business. So I'm going I'm going to go into the details of how you do that. The what we call the quantitative strategic planning matrix or even the SWOT analysis. What are we like you guys to think or to recognize is that. There is a very important strategic formulation, a step that we can skip before moving into the change management and execution, and then you can do this, say a particular approach.

But at the end of the day, the important thing is that you actually apply a systematic approach to the whole strategic strategy formulation process. So now the next step in the whole equation is actually the output of this strategy formulation process is that now you have alignment on the strategies, the objectives and the KPIs at the leadership level. And that's what I call the what now that needs to be aligned with your culture. You can actually come up with the strategies they are in, misaligned with your culture, because, you know, that that that the the possibility of people accepting your they change is going to be. Quite a blow, so you want to make sure that you leverage the culture and that the culture is actually aligned, aligned with the whole initiative. The next item that we would like to be aligned, they gain alignment, is actually what I call leaders behaviors. There is no way that the people are going to start getting excited about your change initiative. If we as leaders are actually are showing behaviors that contradict the initiative that we're actually trying to move forward. And that, of course, that leads behavior and then communication, right? So we want to make sure that the communication not only do we have communication that gets people excited about the change, but this communication is consistent and this communication is simple, simple. We want to make sure that people, all of the people are on the same page about the They Change initiative. We don't want to have a communication to make things complicated for the people.

And one important element of the communication is that we actually consolidate all of those initiatives that you think they are actually contributing to your change. We consolidate them on at a very high level so that people don't get the overwhelmed by the number of initiatives. We also have the duty to actually reduce the number of initiative so that people actually focus on the big priorities, and that's something that we all know. But it's also one of the most difficult things to achieve. So now now that we have this a alignment at the leadership level, now we can actually move into what we call a strategy deployment phase. And this is where the business changed. Management experts are actually very good at the is implementing those elements of the cultural elements, the the communication elements, the tracking of how we are proceeding with the whole a change management work. But most importantly, we also need to actually recognize that at the end of the day, what we actually deliver from this strategy formulation process is the what and that what is actually a trickle down to the different levels in the organization. And what we actually need to think about is how we're going to get the feedback from the people, from the lower levels so that, you know, they are actually very clearly aligned with the top down the strategies and they are very clearly understanding how they are going to contribute to how.

So these are what the how actually is feedback to us as leaders and the how actually is they converted into fine-tuning our strategies, fine-tuning our objectives in a way that they are more realistic and they are what we call what we call smart. And so in any case, that that's why we also call vertical alignment. So now that is the most difficult alignment, actually, is that what we call the horizontal alignment? Now, the horizontal naming is difficult because, you know, depending on the on the company or companies, the structure, the structure, you may have a company, they have silos. And those silos actually are the toughest ones to integrate because they might be a culture that is actually contradicting the change that you are trying to promote. And for that matter, you have to be completely aware that there is going to be a lot of resistance to actually work together if you don't put in place the right the reward systems that H.R. reward systems to promote the sharing of goals and to actually start those leaders working together to eliminate or mitigate the impact of the cytosine. So, of course, once we actually start getting into the whole execution of your change management initiatives, what do you want to achieve is what I call quick wins. And the quick wins are powerful because, you know, if you actually have goals that are super long term, people are going to be impatient or, you know, they are not going to be super excited if they actually don't see some immediate rewards. And for that matter, we need to actually have a most must have wins that they allow your organization to get people excited and motivated.

So I think that at the end of the day, this model actually is based on the whole plan to check a just cycle, which is something that we learn from, from Lean, of course. And I don't know, as you can see here, Lean actually is powerful in the sense that it brings the structure to the whole change management initiative. It brings the the leaders, they extend the work, it brings the Problem-Solving capability. It brings them into the mentality that that all this initiative at the end of it, they need to support the development of an organizational capabilities and that at the end of it, they. Your strategies are going to be as successful as the capabilities that you are actually introducing or or developing or building in your company. And that's the key here to remember, guys.

All right, excellent. Thank you so much, Hector.

This is very thorough, very clearly very different than what we would see in a typical, I guess, MBA program where there is that kind of approach, maybe more theoretical, whereas you combine the number of tools into a your own bringing both the you know, the pragmatic approach, the experience, but also showing the connection with different tools that are there that are also more usually seen and I mean, perhaps the business school environment or an MBA or an executive program.

Exactly. Exactly. That's my perspective.

So I'm glad that that is what we're bringing here is a different perspective that triggers a dialogue on how we can continue improving organizational change management.

Yeah, yeah, yeah. So let me share my screen. I believe we are on the same page here.

So we have a Q and a follow up, but not during the webinar. We're taking the conversation. I was going to say offline, but online and on LinkedIn. And for those who would like to interact, ask questions, comment, please join us on LinkedIn and on you. By doing that, you also will qualify for a professional development, our certificate by interacting with us. So I provided the link here. Go to this link and know that it's a fairly long link. So if if you if you'd like to not, you don't have to type it. You can also follow us on Sesasystems. You can go to the Sesasystems, think LinkedIn and you'll see ductility or you can email me and I'll send you to make I'll provide you with my email once you are on that. Think you can answer a couple of questions briefly. We want to hear from you for two reasons. Number one, we'd love to know what your key takeaways are following this webinar and also if you see any of these approaches on working out for you or not. Have you seen how you use some of these approaches? What's your experience with them? And without, of course, disclosing anything that that you don't want to disclose, that will serve two things. First of all, for us to engage in conversation, I'm sure that many of our listeners and members of our page will would like to hear from you.

The second reason is that then we will document that you actually have heard listen to the webinar. You made it all the way to the end. And you know that you're really taking taking away some some learnings and thinking about it. We want these professional development, our certificates to have real value. So it's not just to an attendance certificate. It's really a way for us to make sure that you you've given some thought to this and make that certificate worthwhile for you. So if also you're interested in hearing about our future webinars, please join us on again on LinkedIn. But this time in our LinkedIn group, the title of the group is pretty long. We might have to change it at some point, but you will find us by typing Covid- 19 dot com smash groups smash eight six zero five eight four four. And so I'll let you write it down if you wish or type it right away. Hopefully we'll see some of you soon. Those numbers, we actually are now more than two thousand members, all of them videos of yours, no spam, primarily a way to inform you of our webinars, to share the recordings of the webinar. And sometimes we also share interesting, useful information, job opportunities, etc.. This webinar is part of this Sesasystems Academy, which is a lab space where we demo a number of our products and hundreds of executives join every year to learn how to use them.

So very sometimes very simple products. But as you all know, make can make a big difference in the spirit of Kaizen. And we are also offering this online series of webinars as an extension to this site, the Sesasystems Academy. If you'd like to also learn more, I mean, instead of a textbook, we are offering a catalogue, but really that's almost similar in the sense that it's organized by product categories. But you'll see also how they can be useful to all the Lean programs that you may think about, whether it takes five TPM, as you could see here, compliance when you need stainless steel visual management in a really thoughtful manner. So if you'd like to have the catalog on paper, please email and or you can also go on the website and request it. And if you'd like to have it as a PDF it is also available as a PDF. So for those who would like to connect with Hector, you have here it is linked in telephone, e-mail, and you also have mine down here. Again, thank you so much for sharing your experience with us. Great content and look forward to seeing you all on Future Webinar.

Thanks a lot. And thanks everyone that appreciate the time to review what they say. Explore this theme.

Thank you. Excellent. Great. Thank you. And it's true that very often sharing joining a webinar and sharing your experience is a chance to kind of reflect on your own experience. So I'm glad you also enjoyed it. And by the way, anyone who would like you to also join us and share their experience, please, please reach out by everyone or I think you have a great day.