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Transforming local best practices to a global competence Marcus Tennant

Kyoko Fukuda

Yokogawa

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Abstract

• We have heard about “the global economy” and the impact on a global scale of decisions made centrally and “globalization” using global methods locally. Both of these terms use the word “global” in the sense of taking something from a central location or headquarters facility and rolling it out globally. But what about taking local best practices and leveraging them to customers and clients globally? In this workshop, we will look at how best practices can emerge locally but are often ignored in a global perspective due to their local origin. Many of these best practices are developed “below the radar” and work very well for a local market; however small changes or adaptations could make them of global significance. We will examine cases of local best practices and they were promoted to improve business performance globally. We will also look at things that can go wrong if this is not done correctly and finally, we will highlight ways that a company can discover and apply these practices.

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• Principal Systems Architect in Yokogawa’s Global Strategic Technology Marketing Center

• M.S. Operations and Technology Management & B.S. Chemical Engineering

• 25 years experience in process operations and automation

• Worked for Rockwell Automation, Morton International, Jones Blair

• Member of ACS (American Chemical Society), AIChE, ASUG & CISUG and active with Vision 2020

• Marketing Committee Chair for WBF• Member of ISA 88 & ISA 18 WG6 (Batch Alarms) • Strong expertise in product management, financial

planning and analysis, chemical industry and other industry segments, project management, production planning, team building and leadership, competitive intelligence gathering and social media

Marcus A Tennant

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Kyoko Fukuda

• Member of Process Automation Product Marketing Dept. in Yokogawa HQ, Tokyo for writing, proof-reading, and translating technical documents and sales promotional materials.

• Member of global strategic business marketing committee.

• Member of information-initiative working group for web and inbound marketing.

• Team leader in primary assessment of contractual issues with vendors and business partners.

• 15 years of experience in global sales activities for industrial automation mainly in Asia & Pacific and EU.

• 10 years of experience in power supply business with HP, CISCO, Agilent, etc.

• General knowledge in wide range of industrial automation and its applications by industries.

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• Company globalization trends• Why is it important for your company and career• How best practices emerge and their global value• Identifying local best practices• Global implementation strategies

– Technical driven – Behavior driven

• Importance of cultural differences• Additional Tips and Ideas• References and more information

What you are going to learn in this workshop

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Company globalization trends

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Globalization

• Who is the largest US owned Brewer?

• Rise of joint ventures– Automotive– Oil and Gas

• Automotive Brands bought and sold– Who owns who this now?

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Automotive company ownership

• Volvo is now owned by Zhejing Geely auto group (China)

• Saab was sold to Spyker auto group (Netherlands)

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Chemicals Global consolidation

• Ineos(UK) built from divested assets from BP, BASF, Dow, Solvay, UCB

• SABIC -> DSM Petrochemicals, Huntsman UK, GE Plastics

• Hexion- formed from Borden chemical(US), Resolution Specialties(UK) Bakelite(Germany) –Now merged with Momentum chemicals as Momentive Performance Materials Holdings

• Dow, BASF, Bayer all have made large global acquisitions

Joint ventures

• Dow's principal joint ventures– Compañía Mega, S.A.– Dow Corning Corporation– EQUATE Petrochemical Co.

K.S.C.– Equipolymers– The Kuwait Olefins Company

K.S.C.– MEGlobal– The SCG-DOW Group

Univation Technologies, LLC

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Food & Bev Acquisitions

• Kraft -> Danone cereal and biscuits(France), Iberian united biscuits(Spain), Cadbury(UK)

• Bimbo(Mexico) Beijing Panrico food processing (China) & Westin foods bakeries (US &CA) & Sara Lee Baking

• Consolidation of Global Brewing – InBev 200 Brands, Brewed in 30 countries– SAB 190 Brands, Brewed in 32 countries

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Pharmaceutical Globalization

Pharmaceutical Mergers and Acquisitions, 2000 to 2009Year $Billions Number of Deals2000 $97 412001 $27 872002 $66 1472003 $23 1732004 $95 1712005 $46 1282006 $74 1382007 $71 1802008 $40 1402009 $147 140

10-Year Total $690 Billion 1,345 total mergers

• Abbott purchased Primal Health care solutions #1 Pharma company in India

• Hoffmann-LaRoche(Swiss) Genentech(US)

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Oil and Gas company Global consolidation

& Amoco

• Joint partnerships

• Refinery sales

• Gas business purchases

Global sourcing of a well known product

14WSJ 12/10/10 The Economist 8/12/11

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With these changes….

• Increasingly, we work in or with global companies

• Each company’s global culture is different– Some companies, global outreach and sharing of best practices are

institutionalized– Others are kept as very separate business units with little or no interaction– Many joint ventures fall in half way– Can be a challenge if your company has a different approach to globalization

than your customer.

• Many companies are reducing corporate staff and centralized functions– Engineering– Marketing

• With access to global media & marketing there are more opportunities to find out what is going on within your company around the world.

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• HQ office develops a platform – for instance a batch platform or an APC platform but no implementation guidelines

• Regional offices develop solutions for the platforms to address local plant issues – i.e. local best practices

• Clients may decide to use the regional solutions at other global sites – they in turn become regional best practices

• Other regional offices become aware of the solution

• Other clients become aware of the solution

How Best Practices Emerge

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Why search out best practices?

• You may be working in…

• Marketing or Business development in a global corporation– HQ – Looking for solutions developed locally and have market

potential in other regions.– In a region where you want to expand your best practice

– Expand your world view or your frequent flyer account

• In a manufacturing facility that has to compete regionally or globally

• Small company looking to do business globally

• Looking for ideas to improve your local or regional business.

Strategy of evangelizing best practices

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-Transfer costs-Branding police-Fights over allocation and marketing costs

-Could be:• Internal best practice• Solution offering• Marketing program

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Global change strategies

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Determine the type of change that needed

• Differentiate between primarily technology and behavior change

• For technology change - focus on standards and adapted programs

• For behavior change – Influence strategies

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Technology and data driven change

• Leverage established global quality improvement programs– Six sigma, Kaizen, TQM, Taguchi

• Global production of a product with local beliefs– Ensure consistent measurement and collection of

data– Build data driven discussion and decision making.

• Build levels of trust bottom up and top down management support

• Use standards and methods – Global industry standards are needed for global change.

Example –Intel Copy Exactly

• Intel introduced its “Copy Exactly!” factory strategy in the mid-1980s and completed its adoption in 1996.

• Credits “Copy Exactly!” with enabling the company to bring factories online quickly decreasing time to market and increasing production yields.

• “Copy Exactly!” solves the problem of getting production facilities up to speed quickly by duplicating everything from the technology development facility to the volume manufacturing factory.

• Ensures that the process devised at the development facility is fine tuned not just for performance and reliability, but for high-volume production as well.

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Copy Exactly Basic Structure

• 1st: The physical inputs must be matched.

• 2nd: data is collected at the process step output level on parameters and compared to results at original site.

• 3rd: a comparison is made at the module level, using test structures

• 4th: the actual product characteristics are measured and matched.

• Use formal statistical tests at

each level. 23

Copy exactly Philosophy

• Identical inputs to identical equipment will produce identical results

• Physics Works the same anywhere in the world!• Non-identical input and equipment are unlikely to produce identical

results…even if we achieve matching on gross measurements.• Small differences can cause BIG problems later on.• We don’t know what we don’t know”–when we change something. • By copying inputs & equipment exactly from existing facilities to

new factories, we are guaranteed identical output.• We knowingly surrender upside (“innovation”) to avoid downside.• History shows downside, not upside, results from deviation.• We are not technically smart enough to make changes during a

transfer without unplanned negative consequences

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• Joint System Development and Project– Project was a “copy” of a European plant – Skills needed to be transferred from Europe to US– Development work was taking place at the same time as project work– Several problems occurred

– Project people did not have sufficient skills for the requirements phase, but used a European consultant

– European consultant was not available full time– Project team was continually changing– Scope and development was also changing– User expected “experts” and wanted “the latest”

– Project started, but got into difficulty and a one year delay– European consultant and full time team assigned to project– Project was a success, but over a year late and 4x over budget

What happens if there are No Best Practice’s?

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• It is always unlikely that a “copy” of a plant will be an exact match• The European organization had not developed any local best practices

for:– Project implementation– Roles and responsibilities– Training and skills– Identification of process commonalities and differences– Technology transfer

– When and how to work with new operating systems and other changes to technology

What was needed?

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Identifying local best practices

• It is not enough to do your best; you must know what to do, and then do your best. -W. Edwards Deming

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For behavior change

“Influencer:The Power to change anything”

Kerry Patterson et. al. 2008

“Switch:How to change things when change is hard” by Chip Heath & Dan Heath, 2010.

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What to look for when you are searching or know of a best practice.

• Search out & Study Positive Deviants– Develop a deep understanding of the organization you want to

change– Discover and study settings where the targeted problem exists but

does not

• Search for Behaviors– Don’t confuse behaviors with outcomes– Focus on vital behaviors– Identify recovery behaviors

• Test your results

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Pharmaceutical sales

• In 2003 Genentech Introduced Xolair- breakthrough drug for Asthma– Sales remained well below expectations 6 months after launch

• Of a sales force of 242, two sales people were selling 20 times more Xolair than their peers– Initial reaction was see if reps had an unfair advantage in the quota

system– Had to hire a consultant to tell management that the two sales people

were in fact doing something different• Xolair target market was different than previous drugs –

Oncologists and Pediatricians– Required intravenous drip that their practices were unfamiliar with– Two sales reps had become change agents-educating medical staffs on

processes & paperwork.• Company initiated a ‘Best Practice’ change approach

– Slow adaptation due to lack of influence

Your company's secret change agents HBR May 2005

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For Behavior change - Six Strategies to leverage

Source 1 – Personal Motivation – Do you want to do it?Source 2 – Personal Ability – Can do it?

Source 3 – Social Motivation – Are other people encouraging the right behaviors?

Source 4 – Social Ability – Are other people providing help, information or resources?

Source 5 – Structural Motivation – Does the environment encourages the right behaviors?

Source 6 – Structural Ability – Does the environment support the right behaviors?

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1: Make the undesirable desirable

• How is it possible to change the meaning of a behavior itself from– Loathsome Gratifying– Pleasurable Distasteful– Insulting Inspiring

• Make Pain Pleasurable• Create New Experiences

– Get people to try it– Make it a game

• Create New Motives– Connect to a person’s sense of self– Connect Behavior to Moral Values– Spotlight Human Consequences– Win hearts by honoring choice

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2. Surpass your limits

• Hope for everyone- Avoid a fixed mindset– Much of will is skill– Much of prowess is practice

• Perfect Complex skills– Demand full attention for brief intervals– Provide Immediate feedback against a clear standard– Break Mastery into Mini Goals– Prepare for setbacks ; build in resilience

• Build Emotional Skills• Kick-start our brain

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3. Harness Peer pressure

• The Power of one– The right one

• Enlist Social Support– To influence you– Become an opinion leader yourself

• The power of everyone– Make Undiscussibles discussable

• Create a village

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4. Find strength in numbers

• Enlist the power of social capital– When others are part of the problem– When you can’t succeed on your

own

• Interdependence• Novelty• Risk• Watch out for blind spots• Group Solidarity

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5. Design rewards and demand accountability

• Use incentives wisely

• If your doing it right, less is more

• Reward Vital behaviors, not just results

• Reward vital behaviors alone

• Watch for Divisive Incentives

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6. Change the environment

• Fish discover water last

• Learn to notice

• Make the Invisible visible

• Mind the data stream

• Make it easy

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Space: The final frontier

• Frequency and quality of human interaction is largely a function of physical distance.

• Propinquity- the physical proximity of individuals

• Distance keeps people from routinely interacting

• Need to find ways to keep interaction globally– Global teams– Internal bulletin boards– Instant messages– Social media

– Standard and business focused sights– Google+ hangouts

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Case study Hand washing in hospitals

• Established fact since 1847 hand washing reduces infection rate– Studies show 50% compliance in hospitals– Needed 90% compliance to pass a joint commission

• Dr Leon Bender went on a cruise– Hands sprayed before going on the boat– In the buffet line

• Causes– Busy – Sinks out of workflow area or blocked by equipment– Arrogance/ego

• How to measure – enlisted nurses to keep track and report

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Hand washing -2-

• First effort – eMails & posters no effect

• Second effort– Handed out small disinfectant bottles in the physicians parking lot– Set up a safety posse that rewarded Dr.’s with a $10 Starbucks card

when they were “caught” washing hand– Compliance to 80%

• Third effort – Asked Dr’s in a board meeting to participate in a hand culture test. – Result was disgusting and striking images of bacteria– IT dept. set up image as standard screen saver for hospital computers– Compliance to nearly 100%

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Addressing problems in implementation

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Fighting Not Invented Here (NIH)

• Big issue with Major corporations

• Convert Internal researcher to external technology scouts

• Change from addition knowledge to Silos to moving knowledge in and out of silos

• ‘Steal with pride” award -stolen or borrowed ideas that show value to the business. Stuff parrot & small monitory award– energized business unit to look outside for ideas

Steal with pride program to counteract NIH

• A business unit leader in newly-merged BP Amoco wanted to create a culture of curiosity, encouraging his staff to look beyond the boundaries of their own business unit. He decided to create a simple monthly recognition scheme, under the banner of “steal with pride”.

• The award given to a member of staff who could demonstrate that they had found a good practice from a different business unit, applied it, and created value.

• Each story would be celebrated on the intranet, and the winner received an award in the form of a cuddly parrot, which would sit on the desk of the winner for a month (prompting questions from passers-by), before moving onto the next winner, and leaving in its place, a solid gold pirate coin worth several hundred dollars – which was theirs to keep.

• The parrot worked well as a recognition scheme because it was visible, lighthearted, symbolic (“steal with pride” – giving permission to look outside), frequently awarded, and both clearly supported – and initiated –  by that business unit leader.

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Stolen from Chris Collision’s blog

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Open Innovation Model

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Financial tools - Innovation Killers

• Misapplying Discounted Cash Flow & Net Present Value

Innovation KillersHow Financial Tools Destroy Your Capacity to Do New Thingsby Clayton M. Christensen, Stephen P. Kaufman, and Willy C. Shih

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Other

• Breaking Global Silos

• Enlist the help of your global customer

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More Case Studies

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NUMMI- Test in region

• Toyota needed to learn how to make cars in the US– Need to adapt production system to US culture,

regulations, and suppliers.– Formed joint venture with GM in 1984– Reopened Fremont, CA assembly plant with

same workforce

• Workers traveled to Toyota city to learn system before plant startup

• Plant built cars that equaled or exceeded quality ratings from other facilities

• Gave Toyota the knowledge and confidence to build other assembly plants in the US.

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Guinea worm eradication

• Painful life cycle humans are the only hosts– Humans drink water contaminated with larvae- – one year worm exits the body

• 3.5 million cases in 1986 in 20 countries• Carter center took on the goal of eradicating the

disease through human behavior change– Searched for positive deviants and determined critical

behaviors– Filtering water with a fine mesh cloth– Preventing people with emerging guinea worms from

entering ponds– Enlisted the help of trusted, respected elders to give the

message of change• 1797 cases in 2009 in four countries

Progress to date

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Check list implementation

• WHO (World Health Organization) improve safety of surgery globally

• Failure in surgery is primarily errors of ineptitude (mistakes made due to not making proper use of what we know)

• Discovered a surgeon/pilot who developed a ‘Cleared for takeoff checklist” for presurgery– Misapplied antibiotic reduced from 33% of surgeries to 0%

• Developed checklist and tested at 8 hospitals globally– Major complications fell 36%, Deaths fell 47% (Oct 2008)

• Currently in process of global implementation– Book written Dec 2009(NYT Bestseller)– Awareness building in the on-line global health care community

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Gloves Display

• Corporation wanted to centralize purchasing on common commodity items globally

• Receive resistance from many in the field

• Gloves used in manufacturing many types/ many vendors were a large purchase item

• Purchased gloves at every location, built into a display showing the pricing and shipped to every location

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Cyber security implementation a tale of two (Very large global oil) companies

• First company- loose corporate structure autonomous business units– Small team out of corporate tasked with writing policy

– Wrote 3-4 draft guideline at high level– Brought in people from business units global– Small group reviewed guidelines, provided input and built detailed policy – Group grew larger in participation which resulted in more bottom up buy-in

– Implementation– Committed, consistent communication through webinars plant meetings,

highlighting incidents– Established seed funding for initiatives and required equipment assisted

business unit buy in

• Second company – Top down command and control– Established strong system of global corporate compliance – Policy input period with global input– Once issued- strong company culture of reward and punishment

enabled compliance to policy

Cultural differences

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• Easy to Perceive• Language• Architecture• Food• Population• Music• Clothing• Art and literature• Pace of life• Emotional display• Gestures• Leisure activities• Eye contact • Sports

• Bottom of the Iceberg• Notions of time• How individuals fit into society• Beliefs about human nature• Rules about relationships• Importance of work• Motivations for achievement• Tolerance for change• Importance of face/harmony• Preference for leadership systems• Communication styles• Attitudes of men’s/women’s roles• Preference for thinking style-linear

or systemic

Cultural Intelligence p21

Cultural Intelligence

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Equality/Hierarchy Scale

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• People Prefer• Be self directed• Have flexibility in roles

they play in a company• Have the freedom to

challenge the opinion of those in power

• Make exceptions, be flexible and maybe bend the rules

• Treat men and women in basically the same way

• People Prefer• Take direction from those

above• Respect and not

challenge the opinions of those who are in power because of their status and their position

• Enforce regulations and guide lines

• Expect men and women to treated differently

Direct/Indirect scale

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• People Prefer• Be more direct in

speaking and be less concerned about how something is said

• Openly confront issues or difficulties

• Communicate concerns straight forwardly

• Engage in conflict when necessary

• Say things clearly not leaving much open to interpretation.

• People Prefer• Focus not just on what is

said but on how it is said• Discreetly avoid difficult

or contentious issues• Expresses concerns

tactfully• Avoid conflict if at all

possible• Express views or

opinions diplomatically• Count on the listener to

interpret meaning

Individual/Group Scale

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• People Prefer• Take individual initiative• Use personal guidelines

in personal situations• Judge people bases on

individual traits• Put individuals before the

teams• Be nonconformists when

necessary• Move in and out of

groups as needed or desired

• People Prefer• Act cooperatively and

establish group goals• Make loyalty to friends a

high priority• Determine their identity

through group affiliation• Make decisions as a

group • Put the team or group

before the individual

• Keep group membership for life

Task/Relationship scale

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• People Prefer• Define people based on

what they do• Move straight to business

relationships come later• Keep most relationship with

coworkers impersonal• Sacrifice leisure time and

time with family in favor of work

• Use largely impersonal selection criteria for hiring

• People Prefer• Define people based on

who they are• Establish comfortable

relationships and a sense of mutual trust before getting down to business

• Have personal relationships with coworkers

• Sacrifice work in favor of leisure time and time with family

Risk/Caution scale

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• People Prefer• Make decisions quickly

with little information• Focus on present and

future• Be less cautions in a

ready fire aim way• Try new and innovative

ways of doing things• Have fewer rules

regulations guidelines and directions

• Be comfortable changing plans a the last minute

• People Prefer• Collect considerable

information before making a decisions

• Focus on the past• Be more cautious in a

ready aim fire way• Want more rules

regulations guidelines and directions

• Stick to proven methods for solving problems

• Not change plans at the last minute

Geert Hofstede Cultural Dimensions

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Cultural Dimensions -1

• Power Distance Index (PDI) that is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally.

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• Individualism (IDV) Is the degree to which individuals are integrated into groups. • On the individualist side we find societies in which the

ties between individuals are loose: everyone is expected to look after him/herself

• On the collectivist side, we find societies in which people are integrated into strong, cohesive in-groups, often extended families

Cultural Dimensions -2

• Masculinity (MAS) versus its opposite, femininity, refers to the distribution of roles between the genders which is another fundamental issue for any society to which a range of solutions are found.

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• Uncertainty Avoidance Index (UAI) It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations.

• Long-Term Orientation (LTO). Values associated with Long Term Orientation are thrift and perseverance; values associated with Short Term Orientation are respect for tradition, fulfilling social obligations, and protecting one's 'face'.

Tool for quickly comparing cultures http://www.geert-hofstede.com/

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http://www.geert-hofstede.com/

Example Korean Airlines

• Accident of the KAL 801 is the result of a succession of causal factors (the long flight length, tiredness, bad weather). These factors made the pilot make a mistake that the co‐pilot was not able to correct for cultural reasons.

• Korean Air had more plane crashes than almost any other airline in the world for a period at the end of the 1990s.

• Korean culture has a high Power distance index and Hierarchical

• Boeing and Airbus design modern, complex airplanes to be flown by two equals. That works beautifully in low‐power‐distance cultures like the U.S., where hierarchies aren't as relevant. But in cultures that that have high power distance, it is more challenging

• Hire American consultants – critical behavior– English only in cockpit –offered training classes for those

deficient– Encouraged air crews to adapt a flight persona with low

power distance 66

Robert Zaun and Adam MakiWBF 2006

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Cultural differences may also based on different groups for instance:

• If you were in the Norwegian Military and you received the command “Secure the Building” you would:

a) Surround it, provide cover fire by snipers and heavy machine guns, and then clear the building room by room.

b) Make sure the windows are closed, lights turned off and the doors properly locked at the end of the day.

c) Sign a ten-year-lease contract, with options to buy it after five years.

Yes

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Common Definitions are Important

• In the Norwegian Military the command “Secure the Building” has different meanings:

– Army - Surround it, provide cover fire by snipers and heavy machine guns, and then clear the building room by room.

– Air Force - Make sure the windows are closed, lights turned off and the doors properly locked at the end of the day.

– Navy - Sign a ten-year-lease contract, with options to buy it after five years.

Robert Zaun and Adam MakiWBF 2006

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Summary

• Global landscape for companies constantly changing– Mergers, acquisitions, divestitures, and joint partnerships are

occurring at a fast pace

• If you need to make changes determine if your change technical or behavioral .

• For technical changes focus on Best practices and global standards.

• For behavior changes focus on positive deviants and strategies for change.

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References

“The Checklist Manifesto:How to get things right”

Atul Gawande 2009

“Nummi”This American Life webcast 3/24/2010

http://www.thisamericanlife.org/radio-archives/episode/403/nummi

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References

“Open Innovation: The new imperative for creating and Profiting from Technology”

Henry Chesbrough 2006

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References

May/2005

Jan/2008

Edwin Tufte seminar

• Presenting Data and information- One day course by Edwin Tufte

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http://www.edwardtufte.com/tufte/

• Fundamental strategies of analytical design

• Evaluating evidence used in presentations

• Statistical data: tables, graphics, and semi-graphics

• Business, scientific, research, and financial presentations

• Complexity and clarity

• Use of PowerPoint, video, overheads, and handouts

• Multi-media, internet, and websites

• Credibility of presentations

• Animation and scientific visualizations

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