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Ask an Expert: transforming performance in a multinational corporation

By Alan Davies

How can a manufacturer bring lean to multiple locations around the globe?

McKinsey Expert Alan Davies shares some insights into what can make or break manufacturing performance transformations in multiple, cross-cultural locations based on his deep experience in consumer goods, supply chain, and lean and Six Sigma.

Q. My organization is planning a lean transformation across several dozen manufacturing sites spread around the world. What do we need to think about as we plan our program?

Alan Davies: In an ideal world there will be a single transformation program for the corporation, but we know that is an unlikely starting point. All large-scale transformations demand a balance between the varying needs of the local sites, lines and even manufacturing cells, and the obvious benefits of using standard processes, tools and nomenclature across the entire business. In a multinational environment, you face the same challenges, but some of those trade-offs need even more thoughtful management.

Q. So, where should we start?

Alan Davies: Start with a baseline assessment of the businesses and locations. You need to look at what exists already, what may have gone before and what didn’t work well. Talk to the business owners to identify their challenges and where they need help. You don’t want to establish something that competes with existing programs, and you do want to make sure your program is aimed at their needs and that they can link the benefits back to your program.

Beyond current levels of performance, you also need to understand the resources and capabilities available to drive the improvement effort. Ultimately, the majority of the resources need to be in the business unit and not part of a large corporate team: that is where the benefits are delivered and that is where the culture needs to transform.

You also need to decide from the outset how you will measure progress. Your program shouldn’t be measured on the number of people trained or the number of tools used. The focus needs to be on delivering results through giving the right people the right skills. To establish a clear path that starts with a good understanding of the problem, ask yourself, who are the resources? Do they have the right skills?

Q. We know there are big disparities in skills and culture between sites. What do we do about this?

Alan Davies: No organization has the right people with the right skills in the right place at the beginning of a transformation effort, so capability building is one of the most important parts of your program. For many companies, a small center-of-excellence based at corporate headquarters can be a very useful starting point, and the use of cascading “train-the-trainer” techniques is a very powerful way to spread capabilities quickly through the organization.

The solution you choose will be time sensitive, too. Building a complete lean or Six Sigma program takes a lot of time and effort. Often it makes sense to draw on external resources, particularly at the start of your program. External support can help you with basic materials that you can customize for your own program, and can be invaluable in training and coaching the staff in your organization who will go on to be the leaders of the transformation effort.

It’s vital that capability building is integrated with the progress of the transformation itself, though. People will need the opportunity to apply their new skills as they develop them. Trying to get high potential employees into your program will consume a lot of your time.

It’s just as important to think about tailoring your program for your more advanced sites as for your lesser performers. In the desire for global consistency and leverage, you should not force solutions or approaches on the more advanced locations.

I recall a situation where most sites were doing 5S pretty poorly and in different ways. We had good traction in developing a consistent approach globally, but we had one very advanced site. They felt like we were going to impose 5S on them, when it was already so ingrained in their culture that they no longer needed even a formal audit process. The lesson here is that as you think about your vision, don’t get trapped into forcing adoption; rather, think about providing a globally leveraged solution for when that technique is required. Develop the vision and direction, then let individuals and locations use the tools as needed to deliver the greatest impact.

Q. Are there any special considerations in a multinational transformation that you don’t see in a national or regional multi-site program?

Alan Davies: In these cases you do need to account for different cultures, languages, local practices and legislation. I recall developing a certification reward formula based on a percentage of salary rather than just taking a dollar amount and translating it to local currency.

As you think about branding, publicity, and other communications, local languages always present challenges. Shop-floor coaching in English won’t work in many countries, for example, so you need to ensure that your change agent teams have the required languages skills. Similarly, a real, local example will always resonate more strongly in communication than one from an unfamiliar facility far away. This is another strong argument for shifting responsibility for the change to local personnel as soon as possible.

I would also caution you to not localize too much. Though you may always get good support from the executives who cover multiple sites and regions as you try to drive consistency, it is very difficult for them when the same things are presented in different words and formats. You cannot really leverage the results from your program until you can take existing solutions and apply them globally.

So, encourage local examples but keep executive output and reporting formats rigid.

Q. What else?

Alan Davies: Enabling best-practice sharing is critical. And it is here that a solid IT infrastructure can really help. Knowledge-sharing network technologies have given us the opportunity use keywords, tags, links and content to quickly search through information to find existing solutions. You can also use such systems to see what your teams on the ground are looking for, to push out communications and to have chat room type boards to solve issues within the network.

Q. Are there some common pitfalls we should avoid?

Alan Davies: In reference to the last point above, technology is a great enabler. But don’t let it replace the face-to-face meetings. I do recommend one or two global meetings a year. As you observe the group in action in those meetings, you really get to appreciate individual capabilities and the relationships that have been built.

Do not set up your program to compete with other improvement activities. Bring something new and impactful. Make sure leadership sees the impact and so supports the program moving forward. There will be opportunities to bring some pre-existing elements into your program, but do this sensitively.

Do not force-fit individual tools into any project for the sake of adhering to the model. Focus on the overall approach and direction and deliver that impact.

You cannot push the program into every function and location at the start. Focus on where the business is struggling and where you can deliver change and impact. You have to have a clear vision of the end state and plan to get there over a period of time. A clear rationale sets clear expectations for the whole organization.

About the interviewee: Alan Davies is an expert in McKinsey & Company’s Houston office

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