The DuPont Analysis

I realise that a lot of my focus in recent times has been on personal skills. Here is a post on a related topic , what to change

Dupont analysis is used to illustrate how different factors impact important indicators of financial performance. As such, this can be used to compare companies in a specific industry.This can also be used to conduct 'what-if' analysis.

A change agent starting of analysis on what to change can enter basic information in the model (e.g. sales,liabilities,costs,equity etc) and then get a basic view of current profitability.

This can then be used to identify where possible improvements can be made and their effects.

Deciding what to change: Role of a diagnostic

It has always been a struggle to me to clearly establish an approach to identifying what to change. Six Sigma has its X's and Y's; process consultants have their maturity framework...but how does a CEO decide what needs to be changed in an organization..

Though newly arrived CEO's probably don't ; most consultants seem to recommend some form of diagnostic as the first step to starting a transformation journey.

Mark Gottfredson and Steve Schaubert (of Bain), in their book 'Breakthrough Imperatives (2008,Harper Collins) recommend a three step approach. The authors divide the transformation into steps of

• diagnose the points of departure
• envision the point of result and 
• (build) the road to results

The authors build their diagnostic around the following defined rules ; 

• Costs and prices always decline
• Competitive position determines your options
• Customers and profit pools don't stand still
• Simplicity gets results

We will discuss building diagnostics around these rules in subsequent posts. Any diagnostic will need identifying appropriate measures or performance indictors, finding ways to know the existing performance and establishing some form of benchmarks

What has been your experiences with building a diagnostic

P.S. Apologies for the break of previous weeks. I had another 'writing assignment' for my organization !!

Process Vs Functional Organization

Organization structure is one of the key levers available to a leader wanting to make improvements in the organization.A key trend that we see today is the move to 'process based ' or even more a matrix organizations. In the case of matrix organizations also , process tend to be one of the axes.

I do a lot of work in IT function improvement.Many clients are today implementing ITIL as an approach to bring visibility and improvement on the support side of IT. When implementing ITIL, a key struggle has been deciding the balance between the existing functional roles ( say a help desk manager) and the 'newly' introduced process roles (say a incident manager).

In the book,'Designing organizations' ;Jay R Galbraith (2002 Jossey Bass) talks about the type of lateral processes based on management time and difficulty. He talks about various levels : Voluntary and informal group, e- coordination,formal group (ranging from simple to multidimensional and hierarchical),integrator (full time by roles or departments) and finally a matrix organization.

Organizations wanting to implement ITIL are also faced with similar choices. As shown in figure above, they need to make a choice on the level of authority for the newly introduced roles. From a simple  reporting (Weather station) sort of roles (which would then be allotted on a part time basis to an existing functional role) organizations mature and evolve to provide more authority and control to process functions. There exists no perfect answer to where the balance of power resides !


What does all your experience suggest?

Business Model :Key to deciding what to change

As a response to my earlier post of how does one decide what to change in an organization, a colleague referred me to the book 'Confronting Reality'.

My colleague was  pointed out that a review of the 'business model' will enable one to identify what needs to be changed.

The authors ( Larry Bossidy and Ram Charan, 'Confronting Reality" 2005) define a business model as a statement of an organization's current reality and its likely-as opposed to hoped-for- future direction.
The business model ( see figure) has three essential components

• the environment in which the business operates
• the organization's financial targets
• Activities of the business:strategy formulation,operating activities,selection deployment,development of people, and organizational processes and structures

The authors believe the business model provides a blue print of taking action.Repeated review of the components of the business model till a harmonization can be achieved will throw up the factors that need to change..

Any thoughts?