One of my favorite books is Good to Great: Why Some Companies Make the Leap…and Others Don’t. Published in 2001 by business management professor Jim Collins, it outlines the fundamental ideas that set successful businesses apart from ordinary ones. I have seen first-hand how these principles can be applied to drive success in Sales and Operations Planning (S&OP).
Collins discovered that success was the result of three key elements:
- Disciplined people
- Disciplined thought
- Disciplined actions
In S&OP, we always talk about People, Process and Technology as the crucial pillars of success. We don’t think in terms of disciplined people, disciplined thought, or disciplined actions. But S&OP, when it has the right People, Process, and Technology, what we get is disciplined people, disciplined thought and, best of all, disciplined actions.
Let’s dive into these 3 pillars of S&OP and see how Vanguard organizations who take S&OP from good to great apply Collin’s key principles to each.
Disciplined People in S&OP
Jim Collins discovered that outstanding (level five) leadership was a shared trait of all great businesses. I have witnessed how strong S&OP always has involved, humble, open, and strategic leaders. These people maintain a spirit of humility and perseverance. These level 5 leaders develop core principles that go beyond just making money. Such people support the S&OP process, participate in it as advocates, and offer corporate strategy, which gives the process direction.
A cross-functional team with the correct skills and culture is necessary for an S&OP process to go from good to great. Collins emphasizes the phrase “First Who, then What?” Applying this to S&OP teams, it is essential to include more than functional representation—you must also bring the right individuals to the table. Emerging S&OP processes that make the transition from good to great begin with “who,” not “where.” Figuratively speaking, you direct the bus first, and then you convince others to follow.
Disciplined Thought in S&OP
To start, as Collins says, people must face the harsh realities of their present situation. We must be honest with ourselves and address any inefficiencies or bottlenecks in our supply chain and logistics procedures.
Companies making the shift from good to great must be prepared to recognize and evaluate their defining facts through the S&OP process. Collins lays out a four-step procedure to raise awareness of new trends and potential issues.
1) Lead with questions, not answers. Take a Socratic approach to questioning; ask questions to understand rather than to manipulate. Instead of asking “Why don’t you agree with that,” one can ask “Can you explain that to me?” or “What should we be concerned about?”
2) Engage in dialogue and debate, not coercion. Discuss and argue issues instead of using force. Use dialogue to not only secure “buy-in” but also to identify the optimal course of action.
3) Conduct autopsies without blame. Use KPIs as tools rather than as rewards or prizes. Try to draw lessons from your prior failures and achievements.
4) Build red flag mechanisms that turn information into information that cannot be ignored. Having the power to draw attention to an unpleasant fact is using the red flag. Beyond mere transparency, it involves fostering a climate in which everyone feels free to express the truth, no matter how harsh it may be.
Disciplined Actions in S&OP
Next, Collins emphasizes the significance of having a succinct and clear approach and taking focused action. Like this, a successful S&OP process necessitates that businesses have a solid grasp of their goals and create a cohesive strategy. Do not imagine that this calls for a despotic, rigid devotion to a constantly evolving process. Every team member is instead given the level of personal authority and freedom needed to realize the goals the company has set for itself. This is accomplished via a methodical procedure and a focused vision to achieve a common goal.
Collins describes the idea of the flywheel, in which persistent work generates momentum and produces ground-breaking outcomes. Like this, an effective S&OP process necessitates that businesses continually assess and enhance their performance, creating momentum toward their goals. Positive momentum is created by making choices and performing activities that support and affirm the company’s vision.
The S&OP process is energized as a result of the accumulation of observable positive outcomes. Reactive decision-making, overextending into too many various areas of focus, adhering to transient trends, and making frequent modifications to plans results in a lack of interest in the procedure and underwhelming outcomes.
Bonus Tip: Technology Accelerates Change, it Doesn’t Create it
The final tenet in going from good to great is understanding that technology accelerates success rather than creates it. Technology is crucial, without a doubt, but it is never the primary factor in determining whether an S&OP process is successful or not. Companies that have gone from good to great steer clear of trends and instead concentrate on the areas where technology can speed up the S&OP process.
None of the good to great businesses Jim Collins researched started out with cutting-edge technology. In my experience, many Vanguard organizations have led the way in applying technology after establishing their S&OP process.
In conclusion, a successful Sales and Operations Planning (S&OP) process can be achieved by applying the ideas presented in Jim Collins’ Good to Great. This entails assembling the ideal team, facing reality head-on, formulating a specific plan, fostering a spirit of cooperation, and consistently raising performance. Companies can produce ground-breaking breakthroughs and sustain long-term success by using these concepts.
Take your S&OP from Good to Great, or get started with a brand new process, at IBF’s S&OP & IBP Global Conference from June 14-16, 2023. Held in the heart of Chicago, you’ll learn from and network with S&OP/IBP experts from the world’s biggest companies. Click here for more information.