DC Velocity - April 2019

QYou have a new book coming out in May on transforming the supply chain. Can you give us a brief explanation of what the book is about and how supply chains need to transform today?

AWell, it’s interesting. [At Gattorna Alignment,] we have been doing research around the world for the last year, running thought-leader-ship retreats and talking to companies, and what I can say is, just about every organization that speaks to us is in some stage of transformation.

Whether they are at the start
of the journey or they are like
[the energy management com-
pany] Schneider Electric, which
is five or six years into it, everyone
is thinking about
transformation.

The reason they are thinking about it is that the world has changed so much in the last few years. The whole digitization question has just come on so quickly. And now it’s no longer talk. Everyone is trying to figure out: How do we digitize our supply chains end to end? And what does that mean? And how are we going to transform our organizations to cope with the sort of volatility that’s been coming at us rather rapidly?

And, of course, there’s also all the disruptive things around customers’ expectations. These are all part of the reason why companies are saying “We’ve really got to accelerate the way we transform our business.” And I think that’s the important thing. You can’t [transform your business] slowly; you’ve got to do it quickly. If you do it too slowly, it encourages the forces of darkness inside your business—the cultural drag—to slow down and resist change, whereas if you do it quickly, you take them by surprise.

QCan you tell us a little bit more about these “forces of darkness inside the business”?

A Look, there’s been lots written about competitive analy- sis and what we should do to protect ourselves from our competitors. In my view, competitors are not the real threat to our business. The real threats to our business come from inside because competitors generally don’t know a lot about our business. The problem is the people inside our business who sit in meetings, nod their heads, and say “Yeah, yeah, yeah,” but deep down they are really saying “No, no, no.” This sort of insidious resistance to change is the real threat.

We’ve found in our research that between 40 and 60 percent of what companies write down in their business plans as intended strategies never gets delivered. And it’s not because of competitors’ action; it’s because people inside the business are forming pockets of resistance. So, what we have to do more and more now as part of a successful transformation is address the sorts of people we need in the business. How are we going to reorganize? How are we going to create pockets of subcultures—for example, a subculture of cost cutting, a subculture of speed, a subculture of innovation? You need to develop these subcultures inside your business to drive these different strategies into the marketplace.

Q What can companies do to foster these subcultures? AFirst of all, you’ve got to figure out what sort of [subculture] situation you’ve got. Ten years ago, you couldn’t do it, but now you can. You can actually X-ray an organization. There are techniques to “map” the cultures inside the business—because there’s not one culture, there’s normally pockets of culture. So, you can do an “as is” [map] and then the “to be” [map] of where you want to go.

The “to be” should be based on the sub-
culture that you see in the marketplace for
a particular customer segment because you are dealing with
human beings on both sides of the fence.

Our contributions are that we’ve found a common metric and methodologies to describe customer behavior or customer subcultures. And once you understand point A [what the company’s subculture is right now] and point B [what you want the subculture to be], you can work out a path to change.