Michael T. Lockard
WAL-MART FINANCIAL SHARED SERVICES DIVISION
Director, Revenue Operations
BI SERVICES CENTER
Richard J. Rowan, Jr.
Director, Global Shared Services
Head of Finance Shared Services/ SCM
MARKS & SPENCER FINANCE SHARED SERVICES
Director, Program Support Center
US DEPT OF HEALTH AND HUMAN SERVICES
SSON: Innovation is much discussed within shared services today. What does it actually mean?Michael Lockard: Innovation, to us, is doing something new, doing it differently; in fact, we got the dictionary out. It’s not about technology, or state of the art, or best in class. And what’s new for Wal-Mart—we’re only a 47-year old company—isn’t necessarily new to others. In fact, we had to do a lot of retraining because many folks still believe innovation is basically about technology. Our innovation sub-committee focuses on process and technology: the right people and the right process technology. A lot of it is about the design of the process. How do you design innovation into the process? And to be honest, that’s what we’re lacking. In the customer contact center, how do you build customer engagement into the actual design? —Self-service, tier 1, tier 2, tier 3 … that’s where we’re innovating, in terms of how we design the process. It’s in the incremental parts that you’re going to get most of your valuable feedback. For example: how does the hourly associate, who impacts the customer, do things differently? We reward staff by giving them $1000 for every innovative idea they deliver, as a result of which a process is changed for the better. But to specifically answer your question—how do you handle innovation in the design of the process?— really, project managers handle the strategy but the customer facing associates come up with the ideas, and we reward them by submitting and implementing those ideas.
Phyllis Alesio:For us, at Boehringer-Ingelheim, innovation is seen as the competitive edge that everyone has to participate in, especially when you have customers like Wal-Mart that are just an innovative. They’re expecting their business partners to do the same. So for us, innovation is about doing business correctly for the future and bringing value to the customer. It’s tied to everyone’s goals and objectives for the year. We’re just now really attempting to determine what tools you can use to assist people to be innovative and reward them, because, really, in the past you were rewarded for doing what you were told to do and not to think outside of the box.
Richard Rowan:I think Phyllis kind of touched on our definition of innovation, which is to think outside the box. For me, one of the challenges would be in the personnel area, especially in North America, with the travel restrictions we have in place now, and everything. I’m spending a lot more time in the States these days, and I’ve been trying to bring in people who can ask, "Why not? Why can’t we do this or that?" I see a lot of that sort of thinking in my global process centers. As for stepping outside the box, we’re trying to move into areas we haven’t historically been involved in. One of the reasons I like to come to this conference—and last year I brought my entire staff—is because it’s an opportunity to meet with the leading edge as far as suppliers are concerned. The exhibit room is one of the best places as far as finding out what’s emerging from OB10 and others in this space, for example. Those organizations can help me find the resources to drive the innovations I need.
Gary Critchley:Innovation is one of our core values at Marks & Spencer. It’s about changing the culture, rewiring the DNA, and getting people to think, whenever they sit down and look at a process, "Is this the best way of doing it?" If everyone’s doing that, then we have the energy to make things happen. Once we have the innovation spirit going, then we add some structure around it. We train people in "creative thinking," for example. Or we’ll run "outrageous opposites" sessions to get the ideas flowing. We give people the tools so they can start thinking about how to get there. Other things we’ve introduced include "outcome thinking," where we focus on the outcome we want first—then work out how to get there. In other words: forget about the process.
For bigger projects, we’ll reengineer a process—hang it on a wall and take it apart, looking at what is value-add and what not. So there are two approaches here: one is creating a mindset, and then creating a structure and framework around the mindset. The framework is the easy bit: lots of people can tell you how to evaluate and redesign. The culture is the difficult bit because it requires energy, commitment and it’s harder.
Paul Bartley:I think we’d define innovation as "a changed way of thinking." It’s usually in response to something outside the organization that makes you have to change, in order to have a closer understanding of what your customers need. Otherwise it’s just change for change’s sake, and there’s no value there.
There are a number of ways we’re driving innovation at the Program Support Center: firstly, by empowering the managers to make changes and propose changes. Right now we are very hierarchical, pretty much run from the top down. So there’s no reward for innovation. If you have a great idea and try to implement it, but it’s not the favorite idea of someone at the top, you may be slapped down. We’re trying to change that. I’m trying to change my part of it, trying to get people to events like this one to encounter new ideas and then empower them to make the changes. It may be as simple as putting something online. What’s important is to offer rewards, as the others have already mentioned. We offer spot cash awards for ideas and we try to reward people right away.
SSON: Let’s look at the cultural challenge to start. Gary mentioned encouraging creative thinking at Marks & Spencer. Can you expend on how you are doing that?
Gary Critchley:We’re primarily trying to empower people and get rid of gradism, instead, encouraging a democracy of ideas. That starts with the leadership team, because if they’re closing down ideas, it won’t work. Another thing is to offer people opportunities to be empowered. We have a meeting space that is quite large, and we asked our staff: what do you want to do with it? So they turned it into an ideas lab—basically, an empty room with bean bags, which provides a space which is first, theirs, and second, a place in which to be creative. So we’ve given them some ownership. We’ve also provided a number of tools to help them think creatively. So say they’ve done some outcome thinking and know what the outcomes needs to be, but are stuck on how to get there. We offer a toolkit that includes things like "outrageous opposites. It works like this: Question—What do you want to do? Answer—Pay people on time. Question—Ok, so what’s the opposite of that? Answer—Not to pay them at all. … This generates a lot of creativity and a ton of ideas in a relatively short space.
The ideas lab is used for our "Lean Finance" programs. One week every month we’ll lead two processes there. We’ll bring the process owners from the floor and give them the opportunity to step away from their work and the phone, and think about whether they are doing things in the best way possible.
We have an investment portfolio and I know exactly which "Lean" programs we are investing in. Right now I know we have 10 programs, nine of which are loss leaders, and one of which is a star. When that one pays back, it’ll fund all the others. Also, we operate these projects as blitz-Kaizen weeks, which means we have just five days to map, value, measure, redesign and implement. It’s all about action. We haven’t actually gone the Black Belt route though. It’s more about getting things done than focusing on credentials.
Phyllis Alesio: Gary, what was one of your "AHA" moments? Could you share that?
Gary Critchley: Well, one jumps to mind which relates to SAP licenses and which will save us around $120,000. A junior grade guy came up with this. We know that there are some people out in the business that raise only one or two purchase orders a month, whereas we have a central team. So we rationalized the people with low volume transactions, got rid of their licenses and brought the work into the center
SSON: Phyllis, what are you doing within your organization to encourage new ideas?
Phyllis Alesio: We have a couple of new initiatives. One is to reach outside the pharmaceutical industry. Just because we’ve done this for 120 years doesn’t mean it’s the right way. What is the auto industry doing? Is there some kind of application that we can bring in and apply, or maybe modify? We also have a corporate initiative going on, whereby the whole company is looking to redesign the way we work. It’s called "the workplace of the future." Tele-working is a big part of this. It’s all about getting rid of cubicles and being a mobile worker, working from home or from Starbucks. But when you’re here at work, it’s about collaborating and exchanging ideas. It’s about creating a workspace that supports this, with lots of light and windows—proven to make people more creative.
Michael Lockard: As we are a lean Six Sigma organization, we’re not naturally that innovative. We are more likely to teach a DMAIC philosophy. We probably place too much emphasis on the actual certification as opposed to the results, so I’m definitely going to take the "two processes a month" idea away with me. I think we need to refocus on actually getting something done as opposed to having 20 people certified. We might be rewarding the person too much as opposed to the process and the results. I think I’ll be stealing a lot of ideas from Marks &Spencer!
Richard Rowan: We’re really focused on building the culture side of our operations. Right now I’m focused on North America. We do have requirements for process improvements, and we’ve taken that internationally. What I’ve found is that our shared services group in Poland is naturally doing this kind of thinking, on their own. That is not what I am seeing over here. At the lower level, what I’m trying to do is build on the culture and right now that’s getting the right people in place. But I also have meetings on a global basis with the entire group where I try to drive these types of things. Too often, you’re busy delivering and just hitting the next target. It’s interesting because supervisors have been so focused on delivering that it’s not a natural step to start thinking of creatively leveraging their resources, particularly if that involves sending work offshore. The scope of what we do in North America right now is very small compared to what we’re doing in Poland and Mexico. We are constantly under pressure as far as headcount reductions and cost are concerned—as you’d expect from the auto industry. I’m trying to creatively leverage my global organization, shift work, and set some goals. It’s really about working with people and showing them possibilities. I’m trying to push the whole innovation process by driving it through the HR evaluations every year. My role is to be a catalyst. Years ago I was more focused on the operations side. Now I’m trying to drive the future.
It’s tough to create an environment where people aren’t afraid to bring things up, or make mistakes. There are amazing possibilities out there, from a technology standpoint. Our job is to make things happen with the resources we have. It’s kind of like chess, except you’re playing with multiple boards around the world. So you shouldn’t be shy about asking for resources—you never know when someone is going to say yes.
Phyllis Alesio: You’d mentioned that Poland does a good job with processes. Can you talk about that some more?
Richard Rowan: Part of it is that we’re a relatively young organization in Poland, and the culture is one that is very interested in succeeding and will do whatever it takes to succeed. We recently shifted Global Process Ownership for Accounts Payable from one of our US-based people to a person in Poland and the exponential step up has been amazing; he’s proactively going out there and
doing things. The group I have right now in the US is one that has been around for a while. I’m almost looking at ways to improve my turnover here in the US—it’s too low. So as we’ve hired people in the US, I’ve been interviewing them to make sure we’re hiring folks who make others a bit uncomfortable, who disrupt. In general ledger, we’ve hired someone recently who’s gone far and above the norm. This is a person just a few years out of college. That’s where you begin to see what’s possible. Long-established folks would have said much of what has recently been achieved is not possible. So this opens up their minds to the possibilities. The new centers in Poland and Mexico now have everyone on edge. I’m trying to leverage this, so everybody rises.
Paul Bartley: This is something we’re going through too. One of the initiatives I’ve got under way right now is to empower the people on the front lines. We provide 60 different services, including finance, acquisitions, IT, occupational health services, etc. The 60 managers running those services vary in terms of what they think their job entails. To date we’ve concentrated on improving a few areas, one of which is travel. We run travel for all of HHS, so any employee at the agency who goes anywhere uses our system to create an authorization, book their travel, and then get reimbursed for expenses on the back end. The manager we brought in a year ago has completely turned the place around. The interface with the customer is now much easier, communications on policy and how to use this system have improved, and what you can and can’t do is all much clearer now. We had an issue with the online system being down for a week a while ago, but the manager had set up segmented lists based on likely audiences (system users, approvers, travelers, etc.) and he was able to communicate with each group to tell them what they needed to know at the appropriate time to get the work done. In fact, it turned out not to be such a big crisis after all. We now use him as an example. For instance, I’ve asked my payroll group: what if payroll shuts down? Have you thought about what you’re going to do? Who would you talk to? How?
Now I’m trying to create a new role, to be called a Service Manager role, that will help other managers to be empowered to improve their services, much like the travel manager. Right now my managers tend to be very technical. If you’re the Security head, you probably know a lot about security, but very likely not much about budgets or hiring people. We’re challenging each one of the 60 managers to obtain these "business skills" and I think what will happen is that some of the ones who’ve been around awhile, who don’t have these extra skills, will think it’s too much work and let someone else do it. They’ll become experts in the functional area and someone with more business acumen can step into the service manager role. It’s really about creating business owners. I want to be able to ask each of those 60 people: "Why’s the budget like this?" and not have them tell me, "Well, go ask the budget guy." We need people to step into a fresh role not necessarily being technical experts, but knowing how to get in and ask the questions. That’s innovation: coming in and looking at stuff in a different way.
Michael Lockard:What’s changed is that the old model is no longer sustainable. It used to be that if you were the expert, you could get in there yourself and fix problems. If you saved a couple of percentage points every year, that got you a raise. Now we want 10-20% improvement every year. You can’t do that by yourself, so you have to get the right people on board. I think you see more people programs now because we all realize that we have to be the strategy people. Our jobs have changed, we’re more of the general manager type now, and we’re trying to find people like us to help raise the bar.
Paul Bartley:I agree. I think there are historical reasons. When this all started, it was the payroll person’s job to drive payroll processing costs to the leanest they could be. Now it’s time to put someone in there that isn’t so much of a technical expert that asks, "Why are we paying people in this way at all?" That’s the person who can take us to the next step. Once you get to that high level and they want another 15% cut out, it requires a quantum leap to something else.
Michael Lockard: I remember the 80s, when it was all about paying for your incremental raise. So you worked on eking out that additional 3-4%. That was when companies were still growing, and as a percentage of sales, expenses were held in check. Now, with sales abysmal, it’s all about cost control and discipline. We’ve never been so valuable to our companies. This is a time for us to shine.