THE HELIX FACTOR II

8/18/2019 THE HELIX FACTOR II

1/321


2/321


3/321

iii

Copyright 1999 by Michael R. Wood.

All rights reserved. Except as permitted under the United States CopyrightAct of 1976, no part of this publication may be reproduced or distributed inany form or by any means, or stored in a database or retrieval system,without the prior written permission of the publisher.

ISBN: 0-9659809-2-8

Library of Congress Card Catalog Number: applied for

Printed in the United States of America.

First published in the United States in 1999 by:

The Natural Intelligence Press

Electronic version published in 2009.For more information about Michael R. Wood, this book, or other

publications email [email protected].


4/321

iv

Preface

The HELIX Factor II provides people and the organizations they serve adetailed method for identifying, analyzing and improving their ability toachieve strategic outcomes.

This book is intended for implementers of process improvement andreengineering projects. Its step-by-step building block approach shows youhow to build operationally measurable business objectives, resolve barriersfor achieving those objectives and develop new business processes thatensure their achievement.

To my knowledge, HELIX is the most comprehensive, complete andfundamentally sound strategic alignment/process improvement method inexistence. When embraced and faithfully followed, HELIX will assist youto achieve profound results.


5/321

v

EVERY PROCESS

IMPROVEMENT INITIATIVE

BEGINS AND ENDS WITH THE

STAKEHOLDER


6/321


7/321

vii

Table of Figures

FIGURE 3-1 - FLIP CHART QUESTION FORMAT ........................................................................................ 18

FIGURE 3-2 - SAMPLE OF PREFORMATTED QUESTION. ........................................................................... 19

FIGURE 3-3 — LEVEL OF EFFORT ESTIMATE ............................................................................................ 30

FIGURE 3-4 - PROJECT OBJECTIVES ALIGNMENT MATRIX ....................................................................... 31

FIGURE 4-1- TYPICAL WORK SCHEDULE .................................................................................................. 38

FIGURE 6-1- MAKING A COMPLETE COMMUNICATION .......................................................................... 53

FIGURE 6-2 - CHANGE ANALYSIS............................................................................................................. 60

FIGURE 6-3 - MODEL SYNTAX ................................................................................................................. 62

FIGURE 6-4 – CUSTOMER CALLS IN ORDER ............................................................................................. 63

FIGURE 6-5 - SALES ORDER SENT TO CREDIT DEPARTMENT ................................................................... 65

FIGURE 6-6: PRE-NUMBERED LEVEL 1 WORKFLOW MODEL .................................................................... 67

FIGURE 6-7 – NUMBERED LEVEL 1 WORKFLOW MODEL ......................................................................... 69

FIGURE 6-8: WFL2 SKELETON FORMAT ................................................................................................... 73

FIGURE 6-9: PHASE ‘A’ OF WFL2 MODEL ................................................................................................ 75

FIGURE 6-10 - CREDIT LIMIT EXAMPLE ................................................................................................... 78

FIGURE 6-11: MODELS AFTER APPLICATION OF RULES. .......................................................................... 80

FIGURE 6-11 — MODELS AFTER APPLICATION OF RULES (CONT.) ........................................................... 81

FIGURE 6-12 - CORRELATION PROCESS ................................................................................................... 88

FIGURE 6-14 - CORRELATION OF GOALS TO PROPOSED WFL2 ................................................................ 96

FIGURE 6-16 - CONTRIBUTION OF VADS TO PROJECT OBJECTIVES........................................................ 104

FIGURE 7-1- WORK SESSION KNOWLEDGE SUMMARY EXAMPLE ......................................................... 109

FIGURE 7-2 - KNOWLEDGE SUMMARY EXAMPLE ................................................................................. 110

FIGURE 7-3 - CHANGE ANALYSIS FORM LAYOUT .................................................................................. 111

FIGURE 7-4 - CHANGE ANALYSIS AFTER FIRST WORK SESSION ............................................................. 113

FIGURE 7-5 - CHANGE ANALYSIS ON FORM .......................................................................................... 115

FIGURE 7-6- CHANGE ANALYSIS ........................................................................................................... 127

FIGURE 7-7 - LEVEL 1 WORKFLOW ........................................................................................................ 130

FIGURE 7-8 - COMPLETED WFL1 ........................................................................................................... 132

FIGURE 7-9 - LEVEL 1 WORKFLOW MODEL SYNTAX .............................................................................. 134

FIGURE 7-10 - OUTBOUND “T” ............................................................................................................. 139

FIGURE 7-11 - COMPARISON OF COMPLEX VERSUS SIMPLIFIED WFL1 MODEL ..................................... 141


8/321

viii

FIGURE 7-12 - LABELING OF COMMUNICATION LINES .......................................................................... 143

FIGURE 7-13 - WFL1 AFTER APPLICATION OF DIAGNOSTIC RULES ........................................................ 146

FIGURE 7-16 - CA COORDINATES POSTED TO EWFL2 ............................................................................ 163

FIGURE 7-17 - CA COORDINATES POSTED TO PWFL2 ............................................................................ 164

FIGURE 7-18 - EXISTING AND PROPOSED WFL2 MODELS TO CA AND PROJECT OBJECTIVES ................. 165

FIGURE 7-19 - UPDATED CHANGE ANALYSIS AND PROJECT OBJECTIVES .............................................. 166

FIGURE – 8-1 - PART 2 OF THE CHANGE ANALYSIS ................................................................................. 175

FIGURE 8-2 - UPDATED PART 2 OF CHANGE ANALYSIS ......................................................................... 179

FIGURE 8-3 - COMPLETED PART 2 OF THE CHANGE ANALYSIS .............................................................. 181

FIGURE 8-4- ALIGNMENT MATRIX ........................................................................................................ 182

FIGURE 8-5 - VADS SUMMARY ............................................................................................................. 183

FIGURE 8-6 – EXAMPLE OF COMPLETED VADS SUMMARY ................................................................... 187

FIGURE 8-9 –

UPDATED PROPOSED WFL2, PHASES A AND B ................................................................. 196

FIGURE 8-10 - COMPLETED STIMULUS TRIGGER DIAGNOSTIC FORM (PHASES A & B) ........................... 197

FIGURE 8-11 - OVERVIEW OF WAREHOUSE PAGING CONCEPT ............................................................. 198

FIGURE 8-12- FAILURE ANALYSIS FORM ............................................................................................... 202

FIGURE 8-13 - PHASE C AND D OF THE PROPOSED LEVEL 2 WORKFLOW MODEL .................................. 203

FIGURE 8-14 – SUMMARY OF TRANSFORMATION RULES - CUSTOMER AND INVENTORY OBJECTS FOR

VADS PHASES C AND D ........................................................................................................... 205

FIGURE 8-15 – SUMMARY OF SECONDARY OBJECT TRANSFORMATION FAILURES - CUSTOMER AND

INVENTORY OBJECTS FOR VADS PHASES C AND D .................................................................. 207

FIGURE 8-16 – COMPLETED SUMMARY OF SECONDARY OBJECT TRANSFORMATION FAILURES -

CUSTOMER AND INVENTORY OBJECTS FOR VADS PHASES C AND D ....................................... 209

FIGURE 8-17 – COMPLETED FAILURE ANALYSIS FORM ......................................................................... 211

FIGURE 8-18 – DOCUMENTATION AT END OF FIRST DIAGNOSTIC WORK SESSION ............................... 216

FIGURE 9-1 - OVERVIEW OF DOWNLOADING SALES ORDERS TO PICKING CARTS ................................. 236

FIGURE 9-3 - STIMULUS TRIGGER DIAGNOSTIC FORM (ADD STIMULUS TRIGGER FOR CART

CONCEPT) ............................................................................................................................... 240

FIGURE 9-5 – SAMPLE IMPLEMENTATION PLAN ................................................................................... 246

FIGURE 10-1 – HOW HELIX DISCOVERY PROJECT DOCUMENTATION SUPPORT THE REQUIREMENTS

DEFINITION PHASE…………………………………………………………………………………………………………….. 254

SECTION 1 - PROJECT SCOPE & OBJECTIVES AND BENEFITS (FIGURE 3-4) ............................................. 280

SECTION 2 - SCOPE OF WORK PERFORMED TO DATE ........................................................................... 280

SECTION 3 - PROJECT COST AND TIME LINE FOR COMPLETION (FIGURE 3-3) ........................................ 280

SECTION 4 - PROJECT WORK SCHEDULE (FIGURE 4-1) ........................................................................... 280

SECTION 5 - PROJECT KICK OFF AND AUTHORIZATION TO PROCEED .................................................... 280


9/321

ix

FIGURE 7-25 - VADS SUMMARY ........................................................................................................... 280


FIGURE 7-19 - CHANGE ANALYSIS AND PROJECT OBJECTIVES ............................................................... 280

FIGURE 7-22 - PART 2 OF THE CHANGE ANALYSIS................................................................................. 280

FIGURE 7-13 - EXISTING LEVEL 1 WORKFLOW ...................................................................................... 280

FIGURE 8-18 - EXISTING AND PROPOSED LEVEL 2 WORKFLOW MODELS .............................................. 280

FIGURE 8-10 - STIMULUS TRIGGER DIAGNOSTIC FORM (PHASES A & B) ............................................... 280


FIGURE 8-17 - FAILURE ANALYSIS FORM .............................................................................................. 280

FIGURE 8-16 - SUMMARY OF SECONDARY OBJECT TRANSFORMATION FAILURES —

CUSTOMER AND INVENTORY OBJECTS FOR VADS PHASES C AND D ...................... 280

FIGURE 7-1 - WORK SESSION KNOWLEDGE SUMMARY ........................................................................ 280

FIGURE 7-2 - KNOWLEDGE SUMMARY ................................................................................................. 280

SECTION 1 - PROJECT SCOPE & OBJECTIVES AND PROJECT SUMMARY ................................................. 281

SECTION 4 - PROJECT COST AND TIME LINE FOR COMPLETION (FIGURE 3-3) ........................................ 282

SECTION 5 - PROJECT WORK SCHEDULE (FIGURE 4-1) ........................................................................... 283

FIGURE 8-6 - VADS SUMMARY ............................................................................................................. 284


FIGURE 7-19 - CHANGE ANALYSIS AND PROJECT OBJECTIVES ............................................................... 286

FIGURE 7-13 - WFL1 AFTER APPLICATION OF DIAGNOSTIC RULES ........................................................ 289

FIGURE 8-13 CONTINUED - PROPOSED LEVEL 2 WORKFLOW AFTER CORRELATION PROCESS ............... 291

FIGURE 8-10 - COMPLETED STIMULUS TRIGGER DIAGNOSTIC FORM (PHASES A & B) ........................... 292


FIGURE 8-16 - COMPLETED SUMMARY OF SECONDARY OBJECT TRANSFORMATION FAILURES ---

CUSTOMER AND INVENTORY OBJECTS FOR VADS PHASES C AND D 295

FIGURE 7-1 - WORK SESSION KNOWLEDGE SUMMARY ........................................................................ 296

FIGURE 7-2 - KNOWLEDGE SUMMARY ................................................................................................. 297


10/321


11/321

xi

About the Author

Pioneers are a breed apart. Their sense of vision and purpose drives them toexplore, innovate and achieve beyond the norm. By their nature theyobserve, question, reflect and create.

Michael R. Wood is a pioneer in the true sense of the word. His life has been a continuous quest toward finding new paths to forge, new systems todevelop. HELIX repr esents just one facet of Michael’s quest. It is theculmination of over 16 years of questioning conventional wisdom andaccepted practices and reflecting on ways to improve the business world.

The result is an alignment and organizational improvement technique calledHELIX.

Michael was born in San Diego, California in 1950. In 1966, he wasintroduced to mastery concepts through the study of the Martial Arts. Hegraduated in 1972 from the University of Southern California with aBachelor of Science degree in Business. In 1974 he became a CPA.Immediately upon entering the professional ranks, Michael becameimmersed in accounting, consulting and data processing. Four years later,he began seeking ways to align the expectations and needs of anorganization to the emerging information technology age. By 1981 he haddeveloped a formal Systems Development Life Cycle methodology calledThe HELIX Methodology. What differentiated this from other techniques ofthe day was its focus on discovering organizational needs before definingsolutions. At the time, these ideas were so radical that Michael receivedlittle recognition from the systems methodology community.

During the 1980s, Michael strived to improve the methodology. His focusmoved away from technology and toward aligning an organization’s

strategic direction with its work processes.As an educator, he served as an adjunct professor in Pepperdine University’sMBA program and as an associate professor at California LutheranUniversity. He has conducted workshops and seminars on a national andinternational level for organizations like Penton Learning Systems and theCalifornia Society of CPAs.


12/321

xii

As an involved professional, Michael has served on the Board of Directorsof the Texas Instruments International User Group and the FinancialManagement Systems International User Group. He has served on theCalifornia Society of CPA’s educational advisory board as well as on theeditorial advisory board of Beyond Computing Magazine. He has been

published in ComputerWorld , CIO Magazine, Los Angeles Business Journal and other trade magazines and newspapers. He is often quoted in periodicalsas an expert source on process improvement and reengineering.

As a CPA, Michael has worked for a national firm and as a partner in localand regional CPA firms.

As an entrepreneur and executive, he headed up the successful HelixCorporation for over six years. During that period, Michael’s clientsincluded Golden Nugget, Hughes Aircraft, Warner Bros., and WesternCommunications, Kelley Blue Book and more. During most of the 1990s,

Michael served as a “Key Executive” in a billion dollar hospitality andcasino / gaming company. Currently, Michael provides consulting servicesas the national Subject Matter Expert in the areas of IT Strategic Planning,Business Process Improvement and Organizational Alignment forwww.gantthead.com.

Michael still actively consults and is always seeking stakeholder valuedriven engagements.


13/321

1

1 Introduction

From Theory to Execution

Welcome to The HELIX Factor II - The Implementer’s Guide and CaseStudy Workbook . This is the second book in the HELIX Factor series and

presents detailed instructions and examples on how to plan for, organize,conduct and present the findings of a HELIX (process improvement /reengineering) project. To enhance the ease of learning, the reader is

presented with a how-to approach in a case study format.

In the first book of The HELIX Factor series , the 17 key factors thatunderscore the principles and philosophies of HELIX were presented. Theimportance of aligning an organization’s strategic direction to its objectivesand to its Value-added Delivery Systems (VADS) were discussed.

I f it has been a whi le since you read The HEL IX Factor - the key to

streamlini ng your business processes, you might f ind i t helpful to review

the essenti al pri nciples and ali gnment concepts provided in the appendix

before you begin thi s book. Thus, there wil l be no confusion over the

terminology and general concepts presented in this Implementer’s guide.

As you venture into your first HELIX project, keep this guidebook with you.For the best results, follow every step and procedure. Resist the urge to takewhat appear to be shortcuts. Remember, it is not how fast but how well youfinish that counts.

This guidebook provides all the tools and techniques needed to organize andconduct a HELIX project. The methods presented have been tested and finetuned for over a decade. You can expect your efforts to produce results thatare nothing short of impressive. Remember, achieving returns of 500 to 1,000

percent on HELIX projects is very common.

The guidebook is organized in the sequence of a project. It walks you througheach step needed to produce successful results.

First, you will learn how to identify winning projects. Next, you will learnhow to kick off projects to achieve energy, momentum and executive support.


14/321

2

From there, a realistic case study will be explored in detail to show you howto perform the work needed to complete a project successfully. Finally, howto package, present and implement project recommendations will be reviewed.

In short, this book contains everything you need to identify, conduct andimplement high-payback, process improvement / reengineering projects.


15/321

3

2 Identifying Winning ProjectsAssessing Support, Payback and Success

There seems to be an unlimited number of projects an organization can pursue. A person’s success or failure in an organization is often based on theoutcome of projects on which he or she has worked. Ideally, people want toget involved only with projects that are guaranteed to be successful.Unfortunately, there are no guarantees. So how are winning projectsrecognized? Do projects have inherent attributes that make some more likelyto succeed than others? What about payback? What is it? Does payback

mean a high return on investment, or is it driven by perception?

How Money is Spent

First, I want to explain how organizations spend money. The monies anorganization spends can be grouped into three categories. I call the firstcategory “positioning dollars”. Positioning dollars are those monies spentwith a specific objective or return on investment (ROI) in mind. Typically,

positioning dollars are future-oriented and highly visible. Capital

expenditures, research and development and various projects are budgeted interms of positioning dollars. Because of their high visibility, getting positioning dollars usually requires a proof of concept, cost justificationstudies, persuasion and political skill.

I call the second category “inertia dollars.” Inertia dollars are found onincome statements. They represent cost of sales, salaries and operatingexpenses. Justification for these dollars is typically based on what was spentthe previous year. They are spread over multiple divisions and departmentsamong hundreds of accounts. The costs related to projects financed through

inertia dollars are difficult to track. Many unofficial (underground) initiativesare paid for with inertia dollars.

The third category involves bias, preference and emotion. This type ofspending always takes the form of positioning or inertia dollars; however, the

justification process is an afterthought used to rationalize and justify thespending. Although there are no studies to reference, I believe that about 50

percent of positioning dollar spending is really biased, preference andemotional spending in disguise.


16/321

4

Process improvement, reengineering and organizational alignment projectstypically require positioning dollars. These types of projects can be justifiedin two ways. The first way is to promise to reduce future costs. The conceptis that by spending positioning dollars now, the organization can save inertiadollars in the future.

To determine the amount of savings or ROI requires an understanding of howmany inertia dollars are currently being spent compared to how many will bespent after the project is completed. The difference is the “return” and shouldexceed the cost of the project. This means that a project costing $250,000 in

positioning dollars would need to save $250,000 in inertia dollars to breakeven. If it were to provide an annual return on investment of 15 percent overthe next three years, it would have to generate $362,500 in inertia dollarsavings ($250,000 [original investment] + $37,500 x 3 [15 percent return for 3years]).

However, it gets more complicated than that. The monies being saved arefuture dollars. Any good CFO will want to justify the project based on aminimum ROI that takes into account the net present value of future cashflows. Typically, in the absence of an ROI justification, the project will beviewed as a cost without an underlying benefit and therefore will go nowhere.Even harder to justify are projects that promise to increase revenues. Thesetypes of projects require great salesmanship because the paybacks are focusedon forecasting the performance of customers, markets or investments, eachharder to control than costs.

The Resistance Factor

Because most projects threaten someone’s territory, they are met with varyinglevels of resistance. This resistance is manifested in a number of ways. Thefirst way is resistance to the project being approved. This opposition may bemotivated by political or budgetary considerations. Whatever the reason, therisk faced at this point is not getting the project approved.

Once the project is approved, resistance may then manifest itself as a lack of

cooperation and participation. This can be subtle or overt. Getting projectsapproved without the right level of support is tantamount to committing project suicide, since it is unlikely that the project will ever be completed ontime or within budget, if at all. In general, it is better to propose a project andhave it never be approved than it is to get a project approved and then fail inits implementation.

Few organizations forgive someone who squanders millions of positioningdollars. However, most organizations seem to unknowingly reward those who


17/321

5

squander millions of inertia dollars due to inefficient operations and work processes. Remember, inertia dollars are buried and spread out among manyentities and accounts while positioning dollars are highly visible, bothfinancially and politically.

In assessing potentially winning projects, two levels of risk need to be

considered. First, is the risk of promoting the project and not getting itapproved? Second, is the risk of getting approval and failing to achieve the

promised objective or payback?

Success Criteria

When assessing a project’s pr obability for approval, consider the following:

Is there a good business case?

Be sure that the project has the potential for a higher-than-average ROIand can be achieved within a reasonable period. Ideally, the ROIshould be a percentage greater than inflation or other competing

projects, and should be achievable within a reasonable period. Forexample, most highly successful technology projects are completed in18 to 30 months. A longer time frame increases the possibility oftechnology changing or perhaps having to confront a different set ofneeds.

Has low-hanging fruit been identified?

A project that starts providing paybacks right away is said to have low-hanging fruit. These immediate paybacks often help fund the projectand build the team’s credibility to deliver. Always look for low-hanging fruit. Do not forget about low-hanging fruit that might be

preference or bias motivated. Remember people tend to buy onemotion not logic.

Is there grassroots support?

Assess whether the people in the rank-and-file buy into the project.

Getting their support will often influence their superior to support the

project. Bottom-up supported projects typically have a greater chanceof succeeding than top-down driven projects. On the other hand, top-down driven projects have a better chance of being approved. Having

both types of project support is ideal.

Is there an executive sponsor?


18/321

6

Start with the CEO and work down. Having the right sponsor may beall that is needed. After all, in the final analysis, it is often not what the

project can achieve but who wants it that counts.

Is there a sense of urgency?

Many organizations urgently react to fixing something in order to avoid

experiencing painful situations. The greater the pain, the greater theurgency to relieve the pain. This will increase the chance for projectapprovals. Remember, it is management’s perception of pain that isimportant. Sometimes management responds to perceived pain wherenone really exists. Pain must be perceived and truly exist if a project isgoing to be successful.

It is very difficult to convince someone to change if there is no pain.That is one reason why people pursue habits like smoking, drinking ortaking drugs. The pain is future-based while pleasure is based on the

present. Companies are no different. They tend to do what feels goodat the moment, even though it will damage their future success.Likewise, it is difficult to deliver true improvements where there is noneed. Pain that is merely perceived, but in fact is not present, usuallycures itself once the perception is corrected. Thus, unnecessary projectsrarely see completion.

Once the project has been approved, it needs to be assessed as to its probability for successful completion. Here, the five preceding questions can be used again. However, the greatest factor for potential success lies in the

answer to this question: Is the organization and the key people involvedcommitted to the project?

Commitment to a project often increases directly in proportion to a person’s personal stake in its success. The worst form of commitment is verbal.Assess what each person has to lose or gain by the project’s success. Nomatter what the sponsorship and funding, lack of commitment will doom eventhe best-intentioned or highest ROI projects.

There are no magic formulas for achieving the support, time and funding

needed to create a successful project. There are some criteria for assessingwhich projects are most deserving, so beware of projects that have too manynegative answers to the previous questions.

To maximize the potential for success, consider breaking a project into small pieces to deliver value on the completion of each piece. HELIX projects canhave either a scope that addresses an entire organization or one that is tailoredto address a single Value-added Delivery System (VADS).


19/321

7

Start with a single VADS as the scope. Often, these projects can becompleted quickly with big paybacks. A single VADS project can take from afew weeks to about three months. Market the project as a “proof of concept”study focused on introducing HELIX to the organization. Select a VADS thattop management and the workgroups involved view as currently inefficientand expensive. The project’s goal should be to build consensus and toidentify opportunities for practical and cost-effective improvements.

Approaching the project in this way will minimize the political risk. It will befunded with inertia dollars and maintain a low-profile posture. My experienceis that the implementation of the project’s recommendations will besignificant and impressive (over 100 percent ROI) making future projectseasier to initiate and complete. The level of grass roots acceptance of the

process will increase, as will your creditability.


20/321

8

3 Welcome to Jonathan, Mills Inc.

Introduction to the Case Study

This case study is based on a cross-section of actual projects, so it is very

realistic. However, in order to keep this case study manageable, it has been

simplified. The company, people and information contained within the case

study are fictitious and are not intended to represent any specific individual or

group of people. The company, called Jonathan, Mills, Inc. (JMI), is a

wholesale distribution company that sells fabric to interior designers. In

working through the case study, keep in mind that the tools and techniques aretotally independent from the case study data, example content and the industry

selected. They can be applied to any organization regardless of industry, size

or process function (planning, staff or line). At times, you might get so

engrossed in the case study’s content that you will forget about the lessons

being presented. For the best outcome, stay focused on the tools and

techniques.

Through this case study, each aspect of HELIX will be covered: from projectidentification to developing project support to delivering the finished product.Key areas presented include:

Project Planning and Estimating

Facilitating Management’s Objectives and Buy-in

Working with HELIX Facilitation Tools

Workflow Modeling and Mapping

Conducting Post-Work Session Diagnostics

Estimating Time and Cost of Implementation

Organizing, Packaging and Presenting Results

Each section will present theories, tools and techniques, followed by theirapplication within the context of the case study. This way, there will be dualreference points. The first is an academic presentation, while the second arereal life examples that build one to the next. This approach will prove helpful


21/321

9

as an ongoing reference point during the planning, conducting andimplementing of actual HELIX projects.

In order to set the stage for conducting a HELIX project, some background onthe case study company is needed.

JMI sells primarily to large interior designers, retail outlets and large principal buyers like hotels and developers. During the past 18 years, the company hasexperienced average growth and has maintained its fair share of the market.In recent years JMI has found itself losing market share and experiencingvirtually no growth. The company is concerned that its business processes areout dated thus hampering its ability to compete.

Two of JMI’s competitors have recently gone through major reengineeringefforts that seem to have improved their bottom line by reducing costs(downsizing). JMI rejects the notion of downsizing, and has always

considered itself strongly loyal to its 7,500 employees, many who have beenwith the company since its inception 20 years ago.

You work for the HELIX Foundation (HF), a nonprofit organization. AfterJMI’s CEO, Robert C. Jonathan, listened to a HELIX presentation, he becameconvinced that a process improvement project using HELIX might providesome needed insights into how to turn the company around. He was interestedspecifically in the potential of aligning JMI’s strategic direction to itsoperational processes. Mr. Jonathan arranged for a meeting between yourteam and his top executives:

Cynthia Mills, Executive Vice President (EVP)

Michael Jacobs, Chief Financial Officer (CFO)

Brad Crenshaw, General Manager and Chief Information Officer (CIO)

Steven Ethridge, Vice President, Human Resources

Marie Richards, Vice President, Sales and Marketing

The purpose of the meeting was to provide you with some background onJMI, as well as its current situation and future aspirations. Here is what you

learned:

The discussion centered on JMI’s belief that it needs to make majorimprovements to the inventory and order management functions. For the lasttwo years, the company’s sales have stabilized at about $600 million (no growth) even though the industry overall has enjoyed an eight percent growthrate.


22/321

10

The average customer buys about three fabrics per order at about 100 to 150yards per fabric. JMI’s markup is about 40 percent. Direct cost for fabricranges from $7.50 to $38.50 per yard, the average being about $28.50 peryard. However, JMI does carry some very expensive lines that run as high as$150 per yard. JMI receives about 150 orders per day.

At any given time, JMI’s active customers number about 5,000. The typicalcustomer orders about eight times a year. Inventory levels average about $60million at any given time. Accounts receivables are currently averaging about47 days in age. About 12 percent of orders are lost due to out-of-stockinventory situations. A typical order takes about five days to ship and twomore days to bill.

When you asked to see JMI’s business plan, the executives smiled politely.Ms. Mills stated that they (top management) were a tightly knit group whoshared a common understanding of the goals and plans of the company. As a

group, they felt no need to write it all down. Given this answer, you asked fora briefing on JMI’s strategic direction and current year’s plan of action. Atthe briefing you learned:

Vision

JMI wants to be the industry leader.

JMI would like the company to become public within the next threeyears.

Plan

Increase sales about 20 percent a year.

Stabilize workforce at current levels.

Increase cash flow by $15 million a year.

As Ms. Mills stated, there appears to be 100 percent consensus among theexecutive team. Another meeting would be scheduled after you had anopportunity to digest the information JMI had given you.

What’s Going on at JMI?

At first blush, JMI seems to understand its situation and has a clear idea ofwhere it wants to go. But what does the data actually mean? To understandall this, the data needs to be reviewed in concert with some of the alignment


23/321

11

concepts presented in The HELIX Factor (see appendix for summary ofalignment factors). This way, the team can identify any additionalinformation needed. Remember, it is just as important to know what is known as it is to know what is not known.

As you conduct the initial management work session, look for information and

clues that help build an understanding of where potential misalignments between stakeholder needs, strategic direction, business objectives and VADSexist. This effort typically requires one or two work sessions with uppermanagement. The first session should focus on becoming comfortable andfamiliar with your contacts and to learn how top management views thesituation. Understand their perspective as to what improvements need tooccur. Also, take advantage of the work session to increase the team’sindustry perspective. Be careful not to dominate the session by trying toeducate people about HELIX or lecture them about why alignment is soimportant. Remember that this is a time to listen and learn, not to teach.

After the first session, the team needs to perform some diagnostics on thecollected data. The core project team (Facilitator and Analysts) does thisaway from project participants. The focus of the diagnostics will be to:

Correlate and align the information collected.

Identify missing information and gaps in knowledge.

Identify potential alignment gaps.

Develop a l ist of questions to help explore andvalidate the understanding of top management’s

needs.

Develop a basic plan of action for the project. Using the datacollected at the first meeting, the team can perform this diagnostic

process.

Correlating and aligning the information collected

When correlating information, look at both the explicit and the implicitinformation collected. First, take each piece of collected information andwork from the company vision down to specifics. At JMI, the team exploredthe following:

Vision

JMI wants to be the industry leader in fabric distribution.


24/321

12

What does this mean? Does being the industry leader mean havingthe highest sales, best bottom line, largest market share or bestreputation? If JMI defines an industry leader as one having thehighest sales and market share, then it might want a strategy of lowmargins and aggressive credit terms. On the other hand, if the

bottom line is the goal, then the strategy might lean more toward pursuing fewer but more profitable customers who will supporthigher margins. The team will need to define clearly this “industryleader” concept with JMI management.

JMI wants to take the company public within three years.

How does this align with becoming an industry leader? As anindustry leader, would JMI be attractive to future stockholders? Ifso, then bottom line performance will be critical to its success.However, if JMI is striving for the largest market share, then it may

become unattractive to investors. Here, the needs of futurestakeholders must be discussed.

Implicit to any vision or goal is the assumption that the originators believe them to be good. We can assume that JMI’s management believes that being the industry leader and going public is good. Thequestion is, good for whom? At the next meeting with JMI, the teamwill want to hear JMI’s thoughts on how the two vision points would

benefit the following stakeholders:

Customers

Owners (current and future) Employees Community


25/321

13

Business Plan

JMI wants to increase sales about 20 percent a year.

Why 20 percent? Is 20 percent what JMI believes will make it theindustry leader? Why not 5 percent or 30 percent? It would be

erroneous to assume that this objective ties directly to the vision. Itmay be that JMI is merely trying to recover some lost ground.

Is 20 percent achievable? What changes does JMI think it mustmake in order to achieve this growth? What percent of the growthwill come from industry growth vs increased market share? Again,the answers to these questions will help establish the degree ofalignment that exists between their vision and plan.

JMI wants to stabilize the workforce at about 7,500.

Why 7,500? From the work session, you know that reducing theworkforce is not philosophically desirable. How does JMI intend togrow sales without increasing the number of employees? Does it

believe that the current workforce can take on the additional volumethat comes with 20 percent growth a year? If that is true, then JMImust believe it has substantial unused capacity. How manyemployees do comparable competitors employ?

Remember that the team is seeking to understand how the vision andthe plan support each other. Misalignment at this level will result inoperational confusion and chaos. Before attempting to solve low-level issues, the team must understand any high-level anomalies thatmight be driving the organization in the wrong direction.

JMI wants to increase cash flow by $15 million a year.

Again, why $15 million? What is driving this perceived need? Willa strong cash position make the company more attractive toinvestors? Is JMI planning to retire its debt, buy out competitors or

pursue large capital investments? Certainly, increased sales withstable costs should improve cash flow, but will 20 percent growth

produce the $15 million needed?By now, more questions have been raised by the data than have beenanswered. That is good. The seeds for a productive dialogue withmanagement have been planted.


26/321

14

The Issues

JMI wants to make major improvements to its inventory and ordermanagement functions.

While a number of statistics have been collected, it is unclear what

JMI wants to do about them other than make improvements. Itwould be easy to assume that, since these statistics were provided inthe context of making improvements, JMI is not happy with one ormore of the following:

Markup (40%) Average order size ($14,963) Number of active customers (5,000) Order frequency (8 per year) Inventory levels (average = $60 million)

Outstanding account balances (average = 47 days) Out-of-stock situations (12%) Order processing times (end-to-end = 7 days)

The team needs to formulate questions that will help JMI contrast thesestatistics with what it thinks they should be. Most likely, some of the statisticswill be targets for change while other statistics will not. The team will alsowant to develop questions that help JMI determine how the plannedimprovements will help the company achieve its vision and objectives.Finally, the team needs JMI management to identify potential VADS for

review. At this point, signs are pointing to the VADS that are related toselling products to customers.

The Questions

Using HELIX Factors 9 through 11 (see appendix for summary of the HELIX Factors) forreference you can now create the questions to be explored at the next meetingwith JMI.

Factors #9 & #10 - Alignment of Stakeholder Needs to Strategic Direction and Business Objectives. Conspicuously missing from JMI’s data was anyreference to its stakeholders and how JMI does, or wants to, add value tothem. This is not unusual since most organizations overlook this. Therefore,the first questions should be aimed at clarifying how JMI sees its vision andobjectives benefiting the stakeholders.

The team should take care to watch its communication skills and not comeacross as preachy or arrogant. The questions need to be structured to


27/321

15

encourage dialogue and to educate the team so it can propose the bestapproach for helping JMI achieve its goals.

Reading the diagnostics on the vision and business plan, the team found itselfasking traditional “who, what, when, where, why, and how” questions. Hereare some examples of questions that could be formulated from the data so far.

What does being the industry leader mean to you (JMI)?

Who will benefit from JMI achieving the industry leader position?

Why is taking the company public important, and who will be the beneficiaries by doing this?

What is the connection between becoming the industry leader and going public?

What do the employees think of going public?

What do the customers think of going public?How does increasing sales by 20 percent a year help JMI achieve aleader position and eventually go public?

What has kept JMI from achieving this kind of growth in the past?

How much of the growth does JMI expect from general industry growthvs. increased market share?

How does stabilizing the workforce at 7,500 support becoming anindustry leader, going public and growing at 20 percent a year?

Why does JMI want to increase cash flow by $15 million a year?

How does this cash flow increase support becoming an industry leaderand going public?

Certainly more questions might be developed. However, these should providean ample framework from which to work. In reviewing these questions,notice they are open-ended in nature. They cannot be answered yes or no.Also, notice that there are no right or wrong answers. Each question isdesigned to foster dialogue and increase shared understandings.

Factor #11 - Alignment of Business Objectives to Value-added-DeliverySystems and Process Groups. The next set of questions focus on the moredetailed operational data received from JMI. Here, the same open-ended,dialogue-fostering approach is used for each question. The goal is to developan understanding and let JMI management reflect on the data gathered and

begin to develop some specific objectives. The questions target some of theoperational functions and related VADS for review.


28/321

16

Statistic Questions

How long should it take to ship and bill an order?

What is an acceptable level of orders lost due to out-of-stock situations?

How long should it take to collect an invoice for an order from an

average customer?What should be the average value of inventory at any given time?

How many orders will JMI need to process each day in order to meet itsgrowth objectives?

What should be the average value of those orders?

How many of those orders will come from new customers vs increasedorder frequency or size?

What changes to the 40 percent markup does JMI need to make to

support its objectives?

VADS Questions

What organizations within JMI participate in processing orders andmanaging inventory?

How many different ways does JMI sell fabric?

What are the various stages through which a sale goes, starting from the point at which a customer makes an inquiry through shipment and payment for the product?

In what ways can JMI increase or decrease inventory?

Up to this point, the project team has performed some basic diagnostics basedon the information collected after one work session with JMI’s management.So far the diagnostics performed centered around developing a series ofclarifying questions to be used in the second work session with JMI’smanagement team. To assist the team in formulating the questions, HELIXfactors #9, #10 and #11 were utilized.

The questions developed in the first management work session will bereviewed in the second session. As stated previously, when working throughthe questions, it is important to remain cordial and friendly. The team shouldexpect to encounter some resistance during these and other types offacilitation work sessions. Do not press too hard for answers. Instead, gatherwhatever insights you can and come back to unanswered questions later.Most likely, the team will leave the meeting with most of what they need.


29/321

17

You want to end with the knowledge that management felt the team listened,heard and demonstrated an understanding of their needs and concerns.

Preparing for Management Work Session Two

Before going to the second management work session, the team needs to

organize its questions thus helping management focus and provide meaningfulanswers. A flip chart, tape and a few fresh marking pens (three colors shoulddo) are needed for this work session. Using the flip chart, the team organizesthe questions in the form of an interactive presentation. As the team worksthrough each question, management’s responses are summarized on the flipchart. This process will guarantee that management stays involved in thesession and reinforces their confidence that the team understands theirexpectations.

The first page of the flip chart should state the goal of the session. In the JMI

example, it should read something like this:

The goal of this session is to demonstrate that the team understandsJMI’s objectives and to align the outcomes of the improvement projectwith JMI’s strategic direction.

This type of statement helps to set the stage for the upcoming dialogue. Itreinforces the idea that the project is going to happen. It also sets anobjective, “To ensure that the outcomes of the improvement project supportJMI’s strategic direction”.

Each of the subsequent pages should focus on one question. At the top ofeach page, list the facts or statistics from the first meeting that led to thequestion. Next list the question. Under the question, leave enough room towrite a summary of the answers received.

Figure 3-1 presents the suggested format to be used for framing each question.

Figure 3-2 presents a sample question with enough blank space to writeanswers

As each page is finished, remove it from the flip chart and tape it to the wall.This will allow each data sheet to be kept in view throughout the work sessionmaking it easy to refer to items when clarifying questions and it will alsodemonstrate how much is being accomplished.

Certainly, many other tools that can be used to conduct a work session: white boards, PC projection units or electronic white boards to name a few.However, I have not found any medium as flexible and as effective as a flipchart for facilitating this kind of work session. Posting completed flip charts


30/321

18

pages on the walls in full view of the work session participants allows for easyreference and demonstrates what is getting accomplished.

Figure 3-1 - Flip Chart Question Format

Flip Chart Question Format

Statistics or Data that led to the Question

The Question

Summary of the Answer


31/321

19

Figure 3-2 - Sample of preformatted question.

JMI wants to become an industry leader.

JMI wants to grow 20% a year.

JMI wants to stabilize the workforce at 7,500

10. How does stabilizing the workforce at 7,500 support becoming

an industry leader, going public and growing at 20% a year?

Work Session #2 – Facilitating, Clarifying and Aligning

Dialogue

The second work session focuses on facilitating dialogue. Provide

management with the opportunity to reflect on its vision, objectives and plans.The goal is to help management revisit the vision and objectives in context ofthe questions developed. Do not be surprised if a lively discussion ensuesamong the management team. It is through such animated discussions thatreal issues surface and can be addressed in an open and candid manner. Theteam’s role is to facilitate these discussions, using the summary answers fromthe flip chart as a stimulus trigger for moving on.


32/321

20

Limit the work session to two hours. This pace will help maintain the worksession’s momentum and direction. In addition, keep in mind that time is

precious to everyone and even more so for executives.

Here is what was learned from the second work session with JMI’smanagement:

What does being the industry leader mean to you (JMI)?

JMI wants to be the most profitable distributor within the industry. Thecompany’s management realizes that JMI cannot become the leader ingross sales within the next three years. However, by taking most ofJMI’s planned growth to the bottom line, they believe JMI can becomethe most profitable in terms of operating profit as a percent of grosssales.

Who will benefit from JMI achieving the industry leader position?

JMI believes that everyone except its competitors will benefit fromachieving an industry leader position. The owners, Mr. Jonathan andMs. Mills, benefit because the company becomes worth more. Theemployees benefit because JMI will be able to offer better salaries and

benefits. The customers benefit because JMI will have the means to provide higher levels of customer service.

Why is taking the company public important, and who are the beneficiaries of this?

Robert Jonathan is now 67 years old. Cynthia Mills is 63. They take agreat deal of pride in having taken JMI from a small organization 18years ago to the successful business it is today. However, they feel thatif the company is to continue to prosper, it will need to grow andexpand. They also want to allow employees to share in the ownershipof the company. Finally, they would like to retire soon. Taking thecompany public provides a vehicle for all these things to happen.

What is the connection between becoming the industry leader and going public?

By becoming the industry leader, JMI will become a very attractivecompany to investors. Management believes that achieving this position

What do the employees think of going public?

At first, the employees were not in favor of the concept, primarily dueto poor communications. As part of taking the company public, JMIwill set aside 20 percent of the offering for employees. Communicatingthis to the rank and file breathed life into the operation. As Cynthia


33/321

21

Mills stated, “There is something in this for everyone and that’s the waywe want it.”

What do the customers think of going public?

There has not been any formal discussion with the customers over the plan to go public. JMI’s management team feels that communicating

its plans to go public will require careful planning and should occur atthe right time and place.

How does increasing sales by 20 percent a year help JMI achieve aleader position and eventually go public?

Achieving a 20-percent-growth-per-year track record will demonstrate thatJMI is on a strong growth path and is an aggressive competitor. This willmake JMI more attractive to investors. The 20 percent growth will alsoexceed the current 8 percent trend in the industry. Based on JMI’scalculations, although it needs only an 18 percent growth rate to achieve anindustry leader position, the extra 2 percent offers a safety net.

What has kept JMI from achieving this kind of growth in the past?

JMI believes that it has become inefficient over the years. Itsoperations need to be streamlined, and its facilities, systems andapproaches should be upgraded. This is why the company is talking tous.

How much of the growth does JMI see coming from general industrygrowth vs. increased market share?

The industry has been growing at about 8 percent in recent years.Based on this continued growth, JMI has projected that it will need tomake up the rest in increased market share. To do this, a veryaggressive marketing effort will need to be implemented.

How does stabilizing the workforce at 7,500 support becoming anindustry leader, going public and growing at 20 percent a year?

JMI has too many employees for its current volume. The managementhopes that their expansion efforts will allow the work force to become

efficient and productive. The management believes that downsizing isa last resort and a sign of defeat. They also feel that by sharing this point to its employees, the company will build momentum for thegrowth effort. Since JMI has the capacity to support the growth, it cando so in a relatively stable cost structure. Building a record ofaccomplishment as an efficient and aggressive company can onlyimprove JMI’s image to prospective investors.

Why does JMI want to increase cash flow by $15 million a year?


34/321

22

JMI is relatively debt free. However, it is also relatively cash lean. Themanagement team understands that in order to streamline the operationsand facilities, it will probably need to invest capital. Preferably, thiscapital will come from cash flow and not debt. The $15 million peryear represents the management team’s best guess of what theexpansion effort will cost.

How does this increase support becoming an industry leader and going public?

To the extent that debt can be avoided and the capital investment issuccessful, the increased cash flow strategy supports the overall goal.

How long should an order take to ship and bill?

Orders take about five days to process. Competitors average about fourdays. JMI’s goal is to process an order, from point of order throughshipping, in 24 to 36 hours. All orders shipped should be billed thefollowing workday.

What is an acceptable level of orders lost caused by out-of-stocksituations?

JMI knows it will probably never tune the inventory to eliminate all out-of-stock situations. However, JMI does not want this to exceed one percent.The company wants to do this without creating massive overstockingsituations. Currently, the management agrees that JMI stocks too muchlow-demand fabric and not enough high-demand fabric. They definitely

see the alignment of inventory levels to customer demand as an importantarea for improvement.

How long should an average customer take to pay for an order?

JMI was not as interested in average collection periods as it was in changesin customer’s paying habits. Certainly being paid quickly (30 days) would

be great. What management really wants is an early-warning system thatindicates when customers are changing their payment habits in a way thatnegatively affects JMI.

What should the average value of inventory be at any given time?

JMI was quick to point out that this was very much related to the lostorders and overstocking issues. Its first goal is to tune inventory levels toreflect customer demand. Once that is achieved, JMI would like to workon improving the inventory turnover rate. JMI firmly believes that a

properly tuned inventory would increase turnover and reduce the averageinventory from $60 million to about $40 million.


35/321

23

How many orders will JMI need to process a day to meet its growthobjectives?

What should be the average value of those orders?

How many of those orders will come from new customers vsincreased order frequency or size?

The JMI team had not discussed these areas before. Their projections weredone at a macro level. However, Cynthia Mills saw the value in knowingthe answer to these questions. The team agreed that part of the projectshould be to develop a model that would help them understand the impactof the growth objective on order volume, frequency and value.

What changes to the 40 percent markup does JMI need to make tosupport its objectives?

To stay competitive, JMI believes it will not be able to increase its

margins. However, by becoming more efficient and stabilizing operatingcosts, JMI expects to keep more of the gross profit from sales.

What organizations within JMI participate in processing orders andmanaging inventory?

This question generated the most discussion. The management had neverreally thought in terms of organizations and processes before. It required afew rough diagrams to help them visualize the processes. Consequently,management identified the following groups:

Order Desk Field Sales Sampling

New Accounts Shipping Credit

Billing Collections Purchasing

Receiving Will Call Contracts

How many different ways does JMI sell fabric?

JMI sells fabric COD, on account and via contracts.

What are the various stages through which a sale goes, from the point acustomer makes an inquiry until the order is shipped and paid for?

Although it varies by the type of sale, the basic stages (from left to right)are as follows:


36/321

24

Open Quote Open Order Credit Approved Order

Shippable Order Shipped Order Billed Order

Paid Order

What are the ways JMI can increase or decrease inventory?

JMI identified the following ways to move fabric in and out of inventory:

Buying it Selling itTaking it back from

customersThrowing it away

Finalizing the Data Gathered and Proposing the

Project

At this point in the project, the team has spent about three hours with JMI’smanagement and a few hours performing some diagnostics on the datacollected. In the last meeting, the team facilitated answers to 22 questionsfrom JMI. The team now needs to review and perform a few diagnostics onthe answers to those 22 questions. As in all HELIX diagnostic work sessions,this one should be done immediately after the meeting. To help do this, it isbest to schedule the team for the entire day. Conduct facilitation sessionsin the morning and perform the diagnostics during the rest of the day. At theend of this diagnostic session, a project proposal will be produced. This

proposal will contain:

Objectives of the project

Scope of the project

Preliminary project plan (time line, tasks and level of effort)

Before meeting with JMI, the team had very little knowledge about thecompany, its goals, objectives and challenges. After a few hours of

interfacing with the management, the team has discovered a great deal andincreased its understanding of JMI’s desires and expectations.

After every work session, always take some time to document the informationgathered. By doing this, new knowledge is not taken for granted. Becomingconsciously aware of new knowledge ensures that the whole team interpretsthe information in the same way. The concept is to huddle and make sureeveryone is playing the same game and running the same plays. The


37/321

25

knowledge gains are documented throughout the 22 pages of flip chart paper.The flip chart is good, too, because it clearly distills the data as it is collectedso the whole group sees it, thus helping to ensure consensus.

The first step is to formalize the data from the flip charts by simply enteringthe data into a computer. It is best to do this in a group setting using a large

PC screen or PC projector unit.

At this point, some team members will be tempted to make their firstdeparture from HELIX. Typically new teams will want a secretary or clerk totype up the data. Some questions may be: “Why do we all have to do the dataentry? Isn’t this a waste of our time?” The answer is this:

Doing the work as a team is critical to fostering continuing dialogue

and to avoiding misinterpretations of the data.

Using a football analogy, for instance, the team watches the game filmstogether. This way they maintain the same set of goals and strategies from theteam’s point of view.

The second step is to take the documented knowledge gained and formulatethe project’s objectives.

The third step is to correlate the data collected. To do this, develop a matrix.This will help demonstrate alignment between the project objectives, JMI’sstakeholders, vision and plans.

Finally, the results of the effort will be packaged into a proposal forconducting a HELIX project.

STEP 1 - FORMALIZING THE FLIP CHARTS

The summarization of the 22 questions will serve as the documentation of theflip chart data. Again, resist the ur ge to view this step as a clerical pr ocess .The team needs to function as a single unit during these diagnostic sessions.They must possess one mind and one understanding. Take turns at thekeyboard. Use this opportunity to have constructive dialogues.

STEP 2 - FORMULATING THE PROJECT’S OBJECTIVES & SCOPE

From the knowledge gained to date, the team can see that JMI has analyzed itsgoals to become an industry leader and take the company public. Its plans togrow 20 percent a year, stabilize the workforce and generate $15 million ayear in additional cash flow appear to support the vision. Finally, through theanswers received in the second work session, JMI’s management hasexpressed some definite expectations related to improving its operations. The


38/321

26

project’s objective is to discover how those expectations can be satisfied .Below is a summary of the expectations articulated to date:

The company can increase its volume without a significant increase inoperating costs. This allows it to add more profit to the bottom-line,making JMI more attractive to investors when it goes public.

When the company is successful enough to go public, it will be able toreward its employees by providing them with 20 percent ownership.

The company expects that by achieving its growth objectives it willavoid any downsizing programs.

JMI anticipates that this project will help it to achieve the following:

Reduce order-processing time from five days to two or three days.

Reduce lost sales due to stock shortages from 12 percent to less than1 percent of the orders taken.

Implement an early warning system for detecting changes incustomer payment habits.

Eventually reduce average inventory from $60 million to $40million, improving inventory turnover by 33 percent.

Develop a model that would forecast the impact of achieving variousgrowth objectives on order volumes, order frequency and ordervalue.

Improve operating profit margin by becoming more efficient whilekeeping gross profit margins at 40 percent.

With these expectations and the information gathered in questions 19 through22, the team has the necessary data to establish the objectives of the project.HELIX Factor # 5 - The Principle of Context states that objectives must be

presented so that the project participants can understand them in the context ofthe jobs they perform.

For example, “In order to achieve our vision of becoming an industry leader,taking our company public and providing our employees with an ownership

opportunity, we need to become more aggressive, focused and efficient. This project signifies our first step in this quest. The objective of this project is todiscover ways to:

Improve our customer service and beat the competition by reducing thetime it takes to process an order through shipping, from five days to twodays.


39/321

27

Increase our sales by over $40 million a year by keeping the number oflost sales due to stock shortages to less than two a day.

Improve our collections by identifying when a customer has a three daychange in their paying habits.

Become the industry sales leader by increasing our sales volume by 30

orders a day.”

Notice that the objective does not try to address every expectation of JMI’smanagement. Increasing inventory turns and developing predictive modelsare difficult to express in terms of operational actions that need to be taken.Often, they are side-bar objectives that can be achieved while achieving themain objectives.

These objectives could be stated in many ways. What is important to

understand i s the way in which the focus has been reduced to a few, very

tangible goals. The objectives reflect an opening context sentence or twothat a ligns with the company’s vision. The project objectives are expr essed

in operational ly measur able terms so success wil l be easy to track.

Given these objectives, the team can construct a scope statement that reflectsthe work to be done. Scope statements should identify what areas of the

business will be reviewed, the approach that will be deployed and the timeframe in which the work will be completed. The JMI scope might readsomething like this:

The scope of this project will consist of reviewing the processes related tosales (contract, on account, C.O.D. & returns), purchasing (replenishment,new products) and inventory management with the intent of discovering waysto:

Improve our customer service and beat the competition by reducing thetime it takes to process an order through shipping, from five days to twodays.

Increase our sales by over $40 million a year by keeping lost sales toless than two per day because of insufficient inventory.

Improve our collections by identifying when a customer has a 3-daychange in their paying habits.

Become the industry sales leader by increasing our sales volume by 30orders a day.

Participants in the project will consist of representatives from:


40/321

28

Order Desk Field Sales Sampling

New Accounts Shipping Credit

Billing Collections Purchasing

Receiving Will Call Contracts

Representatives from these groups will work together in cross-functional,collaborative teams to identify opportunities to streamline operations andachieve the stated objectives. The project will be conducted over the next sixmonths and will culminate with a report to management targetingimprovement opportunities.

This scope of work provides a clear basis for organizing the project. Itrestates the objective and clearly identifies the groups, the approach to be usedand the period for completion.

Keep in mind that the JMI case study is intended to provide a set of examplesfrom which to learn. Remember to focus on the organization of the materialand not on the specifics of the data being presented.

STEP 3 - FORMULATING THE PROJECT PLAN AND COST ESTIMATE

To complete the proposal requires a project plan and associated project costs.Since HELIX uses a very pragmatic series of steps, estimating the level ofeffort and related costs of a project is relatively straight forward. The

following givens apply to the estimating process:Every HELIX project consists of conducting a series of threefacilitation work sessions for each VADS identified. Each facilitationwork session is followed by a diagnostic work session to formalize andcorrelate the data gathered (three facilitation work sessions and threediagnostic work sessions).

Each facilitation work session is limited to 2½ hours.

Each subsequent diagnostic work session takes about eight hours per person to complete.

Each facilitation work session is comprised of representatives from thegroups that participate in the VADS and two project team members(facilitator and monitor).

Each non-team member project participant can expect to spend twohours of data-collection time for every work session attended.


41/321

29

The number of VADS and participants will change during the project but not significantly. Remember that this is a discovery process, soflexibility needs to be built into the plan and related estimates.

The management-report production process takes about 40 hours tocomplete.

There are only three variables that need to be known to forecast the cost of the project: 1) the number of VADS to be reviewed, 2) the number of participantsand 3) the hourly cost/rate of each participant. Given these three pieces ofdata, the team can calculate the level of effort and the related costs required tocomplete the project. Given the level of effort, the team can forecast theduration of the project based on scheduling the facilitation and post-diagnosticwork sessions. A good general rule is to allow for one facilitation and onediagnostic work session per week per facilitator/monitor team.

For the purposes of JMI, assume the following:

There is only one facilitator/monitor team.

There are six VADS to be reviewed; items in the (#) column are thenumber of groups/participants involved.

Contract Sales (field sales, sampling, contracts, order desk, credit,shipping, billing/collections) (7)

Sales on Account (order desk, credit, shipping, billing/collections)(5)

New Account sales (field sales, new accounts, sampling, order desk,credit, shipping, billing/collections) (8)

Backorder Sales (field sales, order desk, credit, purchasing,shipping, receiving, billing, collections, accounts payable) (9)

Replenishment Purchasing (purchasing, receiving, accounts payable)(3)

New Product Purchasing (marketing, purchasing, receiving,sampling, field sales, accounts payable) (6)

The average cost per participant is $35 an hour.

The cost of the two-person team is $200 an hour.

Figure 3-3 provides a summary of the calculations based on the aboveassumptions.


42/321

30

Figure 3-3 — Level of Effort Estimate

The logistics of scheduling dates and times for each specific work sessiongoes beyond the scope of this case study.

J M I S t a f f P

a r t i c i p a n t s C o s t

P r o j e c t T e a m

V A D S

( 6 )

#

F a c i l i t a t i o n

S e s s i o n

C o s t

( $ 3 5 x 2 . 5

h o u r s x

# o f

s t a f f x

3

s e s s i o n s )

P o s t S e s s i o n

C o s t s ( $ 3 5 x 2

h o u r s x # o f

s t a f f x 3

s e s s i o n s )

F a c i l i t a t i o n

S e s s i o n C o s t

( $

2 0 0 x 2 . 5

h

o u r s x 3

s

e s s i o n s )

P o s t D i a g n o s t i c

S e s s i o n C o s t

( $ 2 0 0 x 8 h o u r s

x 3 s e s s i o n s )

T o t a l C o s t

C o n t r a c t S a l e s

7

1 , 8 3 8

1 , 4 7 0

1 , 5 0 0

4 , 8 0 0

9 , 6 0 8

S a l e s o n A c c o u n t

5

1 , 3 1 3

1 , 0 5 0

1 , 5 0 0

4 , 8 0 0

8 , 6 6 3

N e w A c c o u n

t S a l e s

8

2 , 1 0 0

1 , 6 8 0

1 , 5 0 0

4 , 8 0 0

1 0 , 0 8 0

B a c k o r d e r S

a l e s

9

2 , 3 6 3

1 , 8 9 0

1 , 5 0 0

4 , 8 0 0

1 0 , 5 5 3

R e p l e n i s h m e n t

3

7 8 8

6 3 0

1 , 5 0 0

4 , 8 0 0

7 , 7 1 8

N e w P r o d u c t s

6

1 , 5 7 5

1 , 2 6 0

1 , 5 0 0

4 , 8 0 0

9 , 1 3 5

T o t a l B a s e C

o s t

5 5 , 7 5 5

R e p o r t P a c k

a g i n g ( 4 0 h o u r s @ $

2 0 0 a t e a m h o u r )

8 , 0 0 0

A l l o w a n c e f o

r N e w V A D S s a n d c h a n g e s i n J M I p a r t i c i p a n t l e v e l s ( 2

0 % )

1 1 , 1 5 1

T o t a l E s t i m a

t e d P r o j e c t C o s t

7 4 , 9 0 6

E s t i m a t e d W

e e k s t o C o m p l e t e P r o j e c t a

t O n e F a c i l i t a t i o n / D i a g n o s t i c W o r k S e s s i o n p e r W e e k

2 3


43/321

31

At this point, the team has developed the project’s objectives, scope and costestimates.

STEP 4 - BUILDING THE ALIGNMENT MATRIX

Before a formal proposal can be drafted, the team needs to develop the

alignment matrix mentioned earlier. This matrix will help demonstrate thatthe project’s objectives are aligned with JMI’s stakeholder needs, vision and plan.

Figure 3-4 presents the matrix based on the data gathered.

Figure 3-4 - Project Objectives Alignment Matrix

Improve our customer

service and beat thecompetition by reducing

the time it takes to process

an order (from the order

desk through shipping)

from 5 days to 2 days.

Better sales and

service levelsimproves industry

leadership

position.

Supports 20%

growthobjective.

Improved

service levels.

Better service

levels improvessales.

Reduced

frustration andcustomer

complaints.

Increase our sales by over

$40 million a year by

keeping lost sales due to

stock shortages to less

than 2 a day.

Increased sales

makes JMI more

attractive to

investors.

Supports 20%

growth

objective.

Improves cash

position.

Improved

service levels.

Better service

levels improves

sales.

Reduced

frustration and

customer

complaints.

Improve our collections byidentifying when a

customer has a 3-day

change in their paying

habits.

Better sales andservice levels

improves industry

leadership

position.

Supports cashflow objective

and reduces

bad debts

Avoidsembarrassing

bad debt

situations.

Improves valueof company.

Moves themcloser to

ownership.

Avoids

downsizing.

Become the industry sales

leader by increasing our

sales volume by 30 orders

a day.

Better sales and

service levels

improves industry

leadership

position.

Supports 20%

growth

objective.

Improves cash

position.

Demonstrates

customer

satisfaction

with JMI's

products and

services.

Improves value

of company.

Moves them

closer to

ownership.

Avoids

downsizing.

Customers Owners Employees

Value-added to

Project Objective Vision Plan

Supports

STEP 5 - FORMALIZING THE PROPOSAL

The proposal can be prepared once all the diagnostic and preparation work iscompleted. Proposals for HELIX projects should be brief and to the point.


44/321

32

This will increase the probability that it will be read. Along with the proposal,there should be a second document: the project workbook which contains allthe documentation assembled to date. Use the project workbook as animportant source of reference to answer management’s questions at the

proposal presentation.

There are many ways a successful proposal can be organized and presented.Below is a structure for the proposal that has worked well:

Section 1 - Project Scope and Objectives

Section 2 - Scope of Work Performed to Date

Section 3 - Project Benefits and Alignment Matrix

Section 4 - Project Cost and Time Line for Completion

Section 5 - Project Work ScheduleSection 6 - Project Kick Off and Authorization to Proceed

The proposal should be limited to about 15 pages. The first section shouldsummarize everything that management needs to know to approve the project(short description, costs, savings, ROI, timeframe and staff commitments).The rest is backup and support material.

Assume at this point that the project has been approved, and the team ismoving forward at full steam. For the sake of brevity, the case study will be

limited at this point to two VADS: Sales on Account and ReplenishmentPurchasing. The case study will be limited further as it moves deeper anddeeper into the details. Each reduction in scope will serve to enhance thelearning process.

Before launching into the project, the team needs to summarize what it knows.

So far, the team has met with management three times.

Although this number of meetings could vary based on the size andgeographic locations of the project, it should never take more than five

work sessions. If more than five are needed, it is usually due to lack of asponsor or that no one understands the project’s benefits. At the first work session, the team received an orientation ofmanagement’s vision, goals and expectations. It then developed aseries of questions for management and prepared them in a format thatwould facilitate dialogue and understanding.


45/321

33

Based on what was learned at the second meeting, the team formulatedthe objectives, scope, costs and timeline for the project. It developedan Alignment Matrix to satisfy itself that the project’s objectivessupported the company’s vision, business plan and stakeholder value.

Finally, the team formalized the work into a proposal that was brief and

to the point and presented it to the management team. Managementapproved it.

Up to this point, the team has invested about 20 to 30 hours on the projectover a two-to-four-week period.

Take a moment to reflect on this. In under a week of effort, and in less thanone month’s time, the team has gone from ground zero to developing afundamental understanding of the business’ needs and objectives. They havedistilled that data into objectives that are compelling and translatable intospecific workflows. The team has a plan to share those objectives with JMI’sknowledge workers. The team has the opportunity to facilitate these workers’expertise and creativity through a series of cross-functional collaborations,and thus jointly discover ways to achieve the project’s objectives.


46/321

34

A good leader provides a compellingvision of the outcomes the organization

aspires to achieve.A great leader knows how to engage anorganization’s workforce to determinehow to achieve the vision set forth.


47/321

35

4 Kicking Off the ProjectSetting the Right Tone — Sending the Right Message

JMI management has now authorized the project. The first step toward asuccessful

project is a proper kickoff. To do this, a formal kickoff meeting needs to be

held. At this meeting, at least one of the executive management team

members should be present to endorse the project. Ideally, the CEO would do

this. If the CEO is not available, then the next choice is to have the

endorsement made by an executive who represents the groups performing the

VADS.

If the project is of a strategic nature, as is JMI’s, it should be kicked off with aformal event. Before the project kickoff event, those being assigned to workon the project should be briefed in advance about the project’s scope,objectives and their individual roles. Formal invitations should be sent for thekickoff. Refreshments should be served. The goal is to begin building a teamand to impress on that team how important each person is to the project and to

the company.

The kickoff should be formal, yet social in nature. Each team member’srap port with the other members is crucial to the project’s success. As the

project progresses, the messages team members bring back to the work placewill have a major impact on both overall morale and implementation efforts.Messages that support the project will build success. Messages that arenegative about the project will breed failure.

Often, the most difficult part of the projec

THE HELIX FACTOR II

Documents

Transcript of THE HELIX FACTOR II