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The 5Rs of Managerial Renewal

The 5Rs of Managerial Renewal. L.R. Jones Naval Postgraduate School Fred Thompson Willamette University. Management by New Names?. Restructuring Reengineering Reinvention Realignment Rethinking . 5Rs. Restructuring. Identify the organization’s core competencies.

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The 5Rs of Managerial Renewal

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  1. The 5Rs of Managerial Renewal L.R. Jones Naval Postgraduate School Fred Thompson Willamette University

  2. Management by New Names?

  3. RestructuringReengineeringReinventionRealignmentRethinking 5Rs

  4. Restructuring • Identify the organization’s core competencies. • Cut everything out of the organization that does not add value -- especially red tape, rules that inhibit performance. • Contract everything out of the organization that is not a core competency.

  5. Tools: TQM, value-chain analysis, activity-based costing (ABC). • Chart the entire flow of activities needed to design, create, and deliver a service; • For each activity and step within the activity determine its associated cost and the cause of that cost, or cost driver; • Determine whether or not the step adds value for the customer and, if it is non-value adding, identify ways to eliminate it and its associated cost; • Determine the cycle time of each activity and calculate its cycle efficiency (value-added time/total time); and • Seek ways to improve cycle efficiency and reduce associated costs due to delays, excesses, and unevenness in activities.

  6. Does this Step add Value?

  7. SERVICE PERFORMANCE IN SUPPLY MANAGEMENT Service efforts Service Accomplishments EFFICIENCY = Inputs Required to Achieve Outputs EFFECTIVENESS = Customer Satisfaction

  8. SERVICE PERFORMANCE IN SYSTEMS ACQUISITIONS (Information collected by Program, Center, phase, and/or acquisition category) Service Efforts Service Accomplishments EFFICIENCY = Procurement Dollars Managed per Dollar Spent, RDT&E Dollars Managed, Technical Order Dollars Managed, Sustainment Dollars Managed Per Dollar Spent EFFECTIVENESS = Satisfaction of MAJCOMs, SAF Acquisition Office, etc.

  9. Reengineering: • Start over rather than trying to “fix” existing processes with “band aid” solutions. • Put the computer and other information technologies at the center of the operation. • Build from the ground up rather than from the top down. • Base organizational design on processes rather than functions and positions on the organizational chart. • Focus on improving service quality, reduced cycle time, and costs.

  10. Tools: modern data bases, expert systems, and information technologies; teaming, benchmarking, cycle-time burdening.

  11. Accounts Payable: U.S. Navy vs. Ford • Navy = twenty-six manual accounting transactions and nine reconciliations -- thirty-five steps in all. • Ford = 3 steps: order, receipt, and payment • Computerization could cut steps in the Navy’s accounts payable to fourteen • Navy fails to capture information once and at the source. Instead each step in the supply process -- requisition, receipt, certification of invoice, reconciliation, and revision -- is repeated on up the chain of command. • The people who produce information do not process it. Processing is handled by financial-management specialists • Navy does not build financial control into job designs. Commanders should be evaluated during peacetime in part on the basis of their success in managing costs.

  12. Reinvention • Develop a planning process. • Establish a service/market strategy. • Move the organization toward new service delivery modes and markets.

  13. Tools: strategic planning, market research, target costing, networks and alliances.

  14. Realignment • Align the Organization’s Administrative and Responsibility Structures with its market and service delivery strategy. • Align the organization’s Control/Reward Structure with its administrative and responsibility structures • Align the organization’s Human Resource Management Practices its control/reward structure.

  15. Realignment 2 • Successful organizations: Provide job security; Carefully recruit based upon the right attitudes, values, and cultural fit; Rely on self-managed multidisciplinary teams and decentralization of decision-making as basic principals of organizational practice; Pay high wages contingent upon performance; Provide extensive training; Share performance and financial information widely; Reduce status distinctions. • Put mission centers first control functions such as personnel or finance are not core missions; if they are not core missions, they should be treated as support centers.

  16. Tools: High commitment HR practices, PBOs, multi-divisional structures, lean production, responsibility budgeting and accounting, transfer prices, high-powered incentives.

  17. REALIGNED RESPONSIBILITY STRUCTURE FOR THE U.S. DOD $ Military Departments Supply trained and equipped military units to COMBAT COMMANDS Unified & Special Commands COMBAT COMMANDS Supply Budgetary Resources To MILITARY DEPARTMENTS

  18. Rethinking • Speed up the observation, orientation, decide, act cycle -- both to improve performance and to learn faster. • Empower front line workers to evaluate service performance and provide feedback on service delivery and strategy. • Build a learning, adapting organization.

  19. Tools: decentralization, flexible controls, working capital, quick and dirty analysis, learning models.

  20. Hard Thinking or Hardly Thinking?

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