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Intro & Due Diligence Change Out Consulting 2

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M
mroeske

The document discusses several cases of operational issues facing businesses and the role of operational due diligence. It describes 7 cases ranging from financial losses and legal issues to issues with leadership, processes, costs and new market expansion challenges. It then outlines the key areas operational due diligence examines such as organization, leadership, strategy, processes, finances and more. It emphasizes the importance of due diligence when taking corrective actions such as turnarounds or business improvements.

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Operational Excellence Strategy & Operational Excellence: Business turnarounds Business improvement Change Management Organizational learning Outsourcing - managed services Business planning Executive/leadership development
Which one? Case 1 - Financial & Operational 0.5M$US losses/mo Legal issues - employment, customer Quality Asset management Corruption False billings Management left country .4M$ accruals each mo. 2yrs.
Which one? Case 2 - Financial and Loss of direction Margin slide each year - 40 offices Loss in productivity in operations Labor models different from city to city Sales force losing confidence in elements of the business model Absenteeism on increase Billing leakage Loss in market focus/target
Which one? Case 3 - Growing pains - leadership Processes missing Teamwork issues Management divided Capacity issues Critical reporting Skill development Lack of vision
Which one? Case 4 - Leadership & Accountability Zero margin - on largest office Lack of process Leadership Morale Accountability issues Teamwork Quality
Which one? Case 5 - New Business New market/country Successful business model in other countries Unsure of labor market Unsure of financing structures Unsure of infrastructure - how to support Financials unknown
Which one? Case 6 external cost pressures Inflation costs rising at >12% per year Competitive pressures increasing General employee benefit costs increasing General expenses on the rise Revenue expectations targeted YOY at 25%
Which One? Case 7 - Unmanaged costs, process & service Total system costs of specific area of business not understood Technology independently acquired - out of control Personnel not trained or managed Service levels low and not measured - independently managed
Unmanaged Costs Diverse goals Leadership and organizational issues Lack of Vision Lack Fact-Based Information Operational Process Selling Process Lacking WHAT’S WRONG WITH THE OFFICE ? Discoveries / Opportunities: Underutilized Technology Strategy/Global Strategy Unclear
Crisis or just another day? Product issues Revenue decline Financial issues Operational issues Morale Teamwork Process Sales Competition Market changes Customer Contract Legal Organizational Technology
Crisis will exist in every company’s history Technology change in marketplace Capacity didn’t keep up with demand Near bankruptcy Layoff e.g. IBM, Xerox, Nissan, Swiss watches, Telecom, Chrysler, Shinsei, dot.coms
What is Operational Due Diligence? Organization Management Leadership Roles and Responsibilities Culture Skill levels Market penetration/presence/ understanding Reporting Strategy Process Selling tools Barriers to selling Sales potential vs. actual Financials Workflow Workgroup alliances Administration HR practices Etc. etc. etc. Study of:
When…..due diligence? Post merger integration Performance issues Financial, operational, sales, marketing, administrative You are newly ‘in charge’ and need an audit Turnaround requirements Business planning Thoughts of outsourcing in the future Setting organizational up for change Audit an area of concern Setting up a new business model Evaluation or setting up for outsourcing (managed services)
Where does Due Diligence fit in? Project Definition Due Diligence Solution Develop- ment Implement- ation Analyze/ Measure results Strategy and Business Improvement Scheme
How is due diligence done? Leadership check first Open environment Pre-announcement made Individual interviews Drill down in ‘suspect areas’ Validation discussions Mini summary/ conclusions Analysis of process, forms, reporting Participation in meetings Brief understanding of market & product services Understand market pressures Understand outside influences Deliver report on findings
Areas to uncover in a full due diligence Human Resources Finance Operations Sales Marketing Other departments Management team Leadership Process Meetings Quality Administration Communication Information flow Culture Staffing levels
Major areas to check -1 Human Resources Training - skill development Role and Responsibilities Performance management Role vs. expectations Incentives to work - e.g. recognition, comp Finance Use of P&L as a diagnostic Planning tools Forecasting tools Pricing Costing Allocation of accounts Budget center vs. LOB
Major areas to check - 2 Sales process Account development Client lifecycle mgmt. Account retention New business Presentation skills Proposal skills Automation tools Database Management Channel development Customer engagement process Operational process Scheduling Information flow Quality process Skill development Measurements Automation Cost analysis and reporting Manpower planning Job order process
Major areas to check - 3 Management, Leadership, Culture Meeting styles Accountability Leadership styles Coaching skills Listening skills Communication process Performance management Styles of managing Vision, Mission, Tasks Use of measurements Use of P&L as a diagnostic tool Proactive vs. reactive Culture of fear or culture of trust?
What is done with the findings? Potential process outputs of due diligence Summary of findings Report written - roadmap for discussion and implementation Presentation made, buy-in processing Internal commitment made to move forward Implementation plans made Buy-in to move forward Implementation plans might include: Tool building/process Skills training Teambuilding Visioning Leadership training Organizational change Business planning Outsourcing Third party specialists Review of staffing levels
People aspects of operational due diligence Positive Allows issues to come out Allows people to express their ideas Progress may be seen immediately - but implementation is important Action can finally occur resulting in better morale Negative Motive doubt Efficiency inspector effect Reviewer may not get full view Employees may feel hesitant to talk - loyalty confusion vs. getting it out in the open
Kotter’s Eight Steps to Transforming Your Organization (‘Leading Change’) Institutionalizing New Approaches Consolidating improvements & producing still more change Planning for & creating short term Value Empowering others to act on the Vision Communicate the vision Create a vision Form a Powerful guiding Coalition Establish a sense of Urgency
Implementation issues (of due diligence proposed solutions) Real buy-in Operational readiness Change issues Safety (job) of the employee Safety of the domain/ego Money Technology Timing Willingness and fortitude Prioritization Taking on too much Solution selection Leadership Management Accountability] Ability of the organization to execute actions Follow-up
Essentials in Change Management Communicate, Communicate and more Addressing the ‘me’ issues quickly Conduct communication meetings with workgroups as well as one on ones as necessary Evergreen process - change as needed Hold to the calendar Create focused initiatives Look for early results on a few things - so, that there is a feeling of reward and accomplishment Ensure focus on customers Manage the resistance at all levels Make the tough decisions Leadership, leadership, leadership No trial options
Meeting resistance w/ action Not Willing Not able General Communicate Training Performance Manage
Potential ways to counter the barriers Validation during the due diligence period Insure buy-in Open book on project Key player involvement in the due diligence Key players involved in the solution creation Project manage the implementation One on one sessions with the non-believers Group sessions Kickoff, midterm, delivery of initial findings and solution set, progress meetings Use of tools to gain consensus Summary - no surprises - no secrets from the key players Set clear targets, clear calendars for those involved
What directions would you like to take? My role: COO/CEO/CRO role? Part time or subordinate/consultant role? Advisory role? How do we handle? Internal implementation Change process Key leaders & enablers, key process How do we decide? CEO/owner decision? Key Senior Staff decision Weighted voting on top 3, top 10 issues to conquer
Phase I Due Diligence – estimated 1.5+ months Duration depends on client: timing, availability, full disclosure and honesty of the discussions Price depends on above – but primarily based on time taken, also scope, desired end result Resources needed, internal competency Deliverable is due diligence document Discussable elements/issues/problems Potential solutions/benefits of the solutions Suggested actions (Internal validation, if environment allows)
Phase II Depends on outcome of ‘vote’ after due diligence is complete and reviewed Executive/Key player training Determined during/after the due diligence process Other options available: Take over or work alongside CEO where authority is shared – Part time role - # of days to be determined, however, must be regular and predictable – otherwise still billable whether client is available or not – TBA Retainer – special event participation – e.g. one time training, meeting participation, planning sessions, etc.
Phase III Retainer basis Dependent on need, but typically monthly rate Intended to ‘keep things in place’ E.g. Monitoring process, ‘advisor’ role, or special needs assignment
Training and credentials Xerox Conducted sales training courses – in Asia, mainly Japan (In the 80’/90’s Xerox was considered one of the top 3 firms for sales training) Conducted and created own operations courses in USA Academia Adjunct professor at UC Irvine’s Paul Merage School of Business http://www.Merage.UCI.edu/Faculty/FacultyDirectory/FacultyProfiles.aspx?FacultyID=7705 Two main courses taught are Global Business Strategy and New Ventures Adjunct Professor at Chapman University – 2009 Temple University (Tokyo location) conducted customized Management/Supervisory/Leadership training Professional leadership training organization Mahler group Boutique global training firm in NJ, comprised of retired VP/Senior executives http://www.Mahlerco.com/Faculty-Mark-Roeske.aspx
Training could include one or a combination of the following: Leadership Training Managing Coaching/Communications Sales Training Business/organizational Planning Business Strategy Change Management Organizational Learning Time Management Manager as a Quality Leader
Pricing Depending on customer requirements/conditions

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Intro & Due Diligence Change Out Consulting 2

  • 1. Operational Excellence Strategy & Operational Excellence: Business turnarounds Business improvement Change Management Organizational learning Outsourcing - managed services Business planning Executive/leadership development
  • 2. Which one? Case 1 - Financial & Operational 0.5M$US losses/mo Legal issues - employment, customer Quality Asset management Corruption False billings Management left country .4M$ accruals each mo. 2yrs.
  • 3. Which one? Case 2 - Financial and Loss of direction Margin slide each year - 40 offices Loss in productivity in operations Labor models different from city to city Sales force losing confidence in elements of the business model Absenteeism on increase Billing leakage Loss in market focus/target
  • 4. Which one? Case 3 - Growing pains - leadership Processes missing Teamwork issues Management divided Capacity issues Critical reporting Skill development Lack of vision
  • 5. Which one? Case 4 - Leadership & Accountability Zero margin - on largest office Lack of process Leadership Morale Accountability issues Teamwork Quality
  • 6. Which one? Case 5 - New Business New market/country Successful business model in other countries Unsure of labor market Unsure of financing structures Unsure of infrastructure - how to support Financials unknown
  • 7. Which one? Case 6 external cost pressures Inflation costs rising at >12% per year Competitive pressures increasing General employee benefit costs increasing General expenses on the rise Revenue expectations targeted YOY at 25%
  • 8. Which One? Case 7 - Unmanaged costs, process & service Total system costs of specific area of business not understood Technology independently acquired - out of control Personnel not trained or managed Service levels low and not measured - independently managed
  • 9. Unmanaged Costs Diverse goals Leadership and organizational issues Lack of Vision Lack Fact-Based Information Operational Process Selling Process Lacking WHAT’S WRONG WITH THE OFFICE ? Discoveries / Opportunities: Underutilized Technology Strategy/Global Strategy Unclear
  • 10. Crisis or just another day? Product issues Revenue decline Financial issues Operational issues Morale Teamwork Process Sales Competition Market changes Customer Contract Legal Organizational Technology
  • 11. Crisis will exist in every company’s history Technology change in marketplace Capacity didn’t keep up with demand Near bankruptcy Layoff e.g. IBM, Xerox, Nissan, Swiss watches, Telecom, Chrysler, Shinsei, dot.coms
  • 12. What is Operational Due Diligence? Organization Management Leadership Roles and Responsibilities Culture Skill levels Market penetration/presence/ understanding Reporting Strategy Process Selling tools Barriers to selling Sales potential vs. actual Financials Workflow Workgroup alliances Administration HR practices Etc. etc. etc. Study of:
  • 13. When…..due diligence? Post merger integration Performance issues Financial, operational, sales, marketing, administrative You are newly ‘in charge’ and need an audit Turnaround requirements Business planning Thoughts of outsourcing in the future Setting organizational up for change Audit an area of concern Setting up a new business model Evaluation or setting up for outsourcing (managed services)
  • 14. Where does Due Diligence fit in? Project Definition Due Diligence Solution Develop- ment Implement- ation Analyze/ Measure results Strategy and Business Improvement Scheme
  • 15. How is due diligence done? Leadership check first Open environment Pre-announcement made Individual interviews Drill down in ‘suspect areas’ Validation discussions Mini summary/ conclusions Analysis of process, forms, reporting Participation in meetings Brief understanding of market & product services Understand market pressures Understand outside influences Deliver report on findings
  • 16. Areas to uncover in a full due diligence Human Resources Finance Operations Sales Marketing Other departments Management team Leadership Process Meetings Quality Administration Communication Information flow Culture Staffing levels
  • 17. Major areas to check -1 Human Resources Training - skill development Role and Responsibilities Performance management Role vs. expectations Incentives to work - e.g. recognition, comp Finance Use of P&L as a diagnostic Planning tools Forecasting tools Pricing Costing Allocation of accounts Budget center vs. LOB
  • 18. Major areas to check - 2 Sales process Account development Client lifecycle mgmt. Account retention New business Presentation skills Proposal skills Automation tools Database Management Channel development Customer engagement process Operational process Scheduling Information flow Quality process Skill development Measurements Automation Cost analysis and reporting Manpower planning Job order process
  • 19. Major areas to check - 3 Management, Leadership, Culture Meeting styles Accountability Leadership styles Coaching skills Listening skills Communication process Performance management Styles of managing Vision, Mission, Tasks Use of measurements Use of P&L as a diagnostic tool Proactive vs. reactive Culture of fear or culture of trust?
  • 20. What is done with the findings? Potential process outputs of due diligence Summary of findings Report written - roadmap for discussion and implementation Presentation made, buy-in processing Internal commitment made to move forward Implementation plans made Buy-in to move forward Implementation plans might include: Tool building/process Skills training Teambuilding Visioning Leadership training Organizational change Business planning Outsourcing Third party specialists Review of staffing levels
  • 21. People aspects of operational due diligence Positive Allows issues to come out Allows people to express their ideas Progress may be seen immediately - but implementation is important Action can finally occur resulting in better morale Negative Motive doubt Efficiency inspector effect Reviewer may not get full view Employees may feel hesitant to talk - loyalty confusion vs. getting it out in the open
  • 22. Kotter’s Eight Steps to Transforming Your Organization (‘Leading Change’) Institutionalizing New Approaches Consolidating improvements & producing still more change Planning for & creating short term Value Empowering others to act on the Vision Communicate the vision Create a vision Form a Powerful guiding Coalition Establish a sense of Urgency
  • 23. Implementation issues (of due diligence proposed solutions) Real buy-in Operational readiness Change issues Safety (job) of the employee Safety of the domain/ego Money Technology Timing Willingness and fortitude Prioritization Taking on too much Solution selection Leadership Management Accountability] Ability of the organization to execute actions Follow-up
  • 24. Essentials in Change Management Communicate, Communicate and more Addressing the ‘me’ issues quickly Conduct communication meetings with workgroups as well as one on ones as necessary Evergreen process - change as needed Hold to the calendar Create focused initiatives Look for early results on a few things - so, that there is a feeling of reward and accomplishment Ensure focus on customers Manage the resistance at all levels Make the tough decisions Leadership, leadership, leadership No trial options
  • 25. Meeting resistance w/ action Not Willing Not able General Communicate Training Performance Manage
  • 26. Potential ways to counter the barriers Validation during the due diligence period Insure buy-in Open book on project Key player involvement in the due diligence Key players involved in the solution creation Project manage the implementation One on one sessions with the non-believers Group sessions Kickoff, midterm, delivery of initial findings and solution set, progress meetings Use of tools to gain consensus Summary - no surprises - no secrets from the key players Set clear targets, clear calendars for those involved
  • 27. What directions would you like to take? My role: COO/CEO/CRO role? Part time or subordinate/consultant role? Advisory role? How do we handle? Internal implementation Change process Key leaders & enablers, key process How do we decide? CEO/owner decision? Key Senior Staff decision Weighted voting on top 3, top 10 issues to conquer
  • 28. Phase I Due Diligence – estimated 1.5+ months Duration depends on client: timing, availability, full disclosure and honesty of the discussions Price depends on above – but primarily based on time taken, also scope, desired end result Resources needed, internal competency Deliverable is due diligence document Discussable elements/issues/problems Potential solutions/benefits of the solutions Suggested actions (Internal validation, if environment allows)
  • 29. Phase II Depends on outcome of ‘vote’ after due diligence is complete and reviewed Executive/Key player training Determined during/after the due diligence process Other options available: Take over or work alongside CEO where authority is shared – Part time role - # of days to be determined, however, must be regular and predictable – otherwise still billable whether client is available or not – TBA Retainer – special event participation – e.g. one time training, meeting participation, planning sessions, etc.
  • 30. Phase III Retainer basis Dependent on need, but typically monthly rate Intended to ‘keep things in place’ E.g. Monitoring process, ‘advisor’ role, or special needs assignment
  • 31. Training and credentials Xerox Conducted sales training courses – in Asia, mainly Japan (In the 80’/90’s Xerox was considered one of the top 3 firms for sales training) Conducted and created own operations courses in USA Academia Adjunct professor at UC Irvine’s Paul Merage School of Business http://www.Merage.UCI.edu/Faculty/FacultyDirectory/FacultyProfiles.aspx?FacultyID=7705 Two main courses taught are Global Business Strategy and New Ventures Adjunct Professor at Chapman University – 2009 Temple University (Tokyo location) conducted customized Management/Supervisory/Leadership training Professional leadership training organization Mahler group Boutique global training firm in NJ, comprised of retired VP/Senior executives http://www.Mahlerco.com/Faculty-Mark-Roeske.aspx
  • 32. Training could include one or a combination of the following: Leadership Training Managing Coaching/Communications Sales Training Business/organizational Planning Business Strategy Change Management Organizational Learning Time Management Manager as a Quality Leader
  • 33. Pricing Depending on customer requirements/conditions