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Down on the ground helping to drive results upDriving Change34 Leaving My Mark On The WorldCelerant’s Pamela Griffin leaves her mark inIpalamwa, Tanzania with Global Volunteers.48 A New Beginning At The End Of The WorldClients don’t usually ask Consultants to helpthem totally change people’s lives, but that’sexactly what Technoserve did in Mozambique.Closework ® Global Review is a magazinepublished by Celerant Publishingon behalf of Celerant Consulting Ltd.Edition Four: June 2012.Publication DirectorThibaut BatailleChief EditorLisa SmithEditorsUS & EMEA Marketing TeamsEditorial conception and realisationPatrick Keating5668Mining For KnowledgeCelerant sponsors the Prospectors &Developers Association of Canada (PDAC)2012 International Convention in Toronto.After Working At Our Desks All DayWe Decided To Stretch Our LegsClient and Consultant create a winningpartnership at the Rome Marathon.Design conception and realisationAndrew Barnes-JonesContributorsCelerant Consulting thanks all its Clients,Friends of the business and Celerant teamsfor sharing their exceptional experiencesand knowledge with us.The words, photos and images in thispublication cannot be used without theexpress consent of Celerant Consulting Ltd.For more information on business solutions, 70 C-Cube Opens More Doorssector expertise, service lines and insightsCelerant’s unique club for Masters of Changementioned in this magazine, please visit:is now open in Paris, Doha and Dusseldorf.celerantconsulting.com68162036404254Driving ResultsRiding The Wind Of ChangeHelping Siemens Wind Power expand from anambitious entrepreneur to a genuine global player.The Harbour Consultants:Bright Lights. Booming Future.Mad traffic, mosquitoes and a midnightbreak-in are all part of working life forCelerant Consultants Maxime B, Cyril F,Mickaël S and Antonio F on a majorOil Service Centre project in West Africa.Global Project SnapshotsConstruction, Financial services,Manufacturing, Energy.Turning Uncertainty into Global ResultsCelerant Consulting Supply ChainGlobal ExperienceGlobal Project SnapshotsManufacturing, Chemicals,Life Sciences, Government Services.Leading The FieldGetting down on the ground in Europe to helpdrive results up for Irish Dairy Board.Creating Global Value AccelerationCelerant Consulting OperationalTransformation Global ExperienceGlobal Project SnapshotsFMCG, Energy, Manufacturing,Construction.

agenda1422245052Driving InsightsAn Optimised Supply Chain Doesn’t JustAlign Plans, It Also Aligns PracticeTranslating a global SC strategy into consistentglobal action means engaging people at everylevel of your organisation.Unlocking CreativityAlternatives to traditional brainstorming.Changing The Way GovernmentSpends Taxpayer DollarsLooming budget challenges mean therelationship between the US Governmentand the Contracting community must befundamentally redefined. Performance BasedCost Management is the way forward.LEAN In Financial Services: Money MightMake The World Go Around, But PeopleAnd Processes Make The Money Go AroundResearch by the Lean Enterprise ResearchCentre shows that improvement potentialis greater in a services environment thana manufacturing one. Our global financialclients would agree.Meet In The MiddleWhat’s the best strategy for demand drivenSupply Chains that don’t look like Dell’s?586266122630Compelling asset management to driveshareholder value in the midst of a NorthAmerican Chemical Renaissance.The North American chemical sector is in the midst ofan exciting renaissance, but Operational Excellenceis essential to build long term shareholder value.THE GRANITE CITY: It’s been a home fromhome for almost 20 years.Celerant Consulting has established itself as amajor partner for Oil & Gas companies in theNorth Sea, helping them improve performanceand implement change. Our sector experts givetheir views on what now lies ahead.The Bottom Line Is That ChangeImproves The Bottom LineWhen we partner with Private Equity firms andtheir portfolio companies we help managementteams boldly change the way their business runs.Driving IdeasSurviving The Storm CloudsThe French CEO Challenges 2012 Barometer.Switching To A ‘Can Do’ Mindset.Niko dominates its home market in Belgium.Now it wants to dominate internationally. CEOPeter Watteeuw explains how the companywas galvanised into real Behavioural Change.Nordic ProductivityCelerant Consulting’s 2011 Survey details thefacts, the fiction and the future.38444660The Formula For A Successful Change ProgramDrawing on his 30+ years career, Paul DeVivo,CEO of Houghton shares ‘10 Learnings’ that serveas a project implementation tutorial.Managing Growth In A High Growth Region– From Supply Chain Nightmare To SupplyChain WonderlandMany Latin American companies are nowregional or global players, but they need tobalance their rapid growth with sustainableinternal change.Entrepreneur Is A French Word, But JustHow Entrepreneurial Are French Companies?Collaborative, cross-disciplinary organisationsare still few and far between, says FrançoiseBerthier, Head of Change Support/HumanResources at Sanofi. Yet compared to traditionalpyramid structures, they allow more roomfor innovation.Consulting – Quo Vadis?Greg Baranszky and JJ Sendelbach of DoublejayConsulting LLC look at the unprecedentedchanges sweeping the industry.32Rediscovering Our Hunger: Working HarderAnd Smarter To Improve Nordic ProductivityHard work and ingenuity created our present.Now they must protect our future.Printed by Corelio PrintingCLOSEWORK® GLOBAL REVIEW 2012 5

Driving ResultsAll thoughts must be distilled into action and action that brings results.RIDING THEWIND OF CHANGE.When Siemens Wind Power wanted toexpand from an ambitious entrepreneur toa genuine global player it appointed CelerantConsulting to help it resolve 3 spiky issues.‘ This project fostered cross-continent collaboration whichwas essential to prepare our organisation for futuregrowth.’ Ingrid Jaegering, CFO Siemens Wind Power, EMEA.6CLOSEWORK® GLOBAL REVIEW 2012

iemens Wind Power is one of theSworld’s largest providers of completewind power solutions for offshore,onshore and service projects.Rapid global growth had created inefficienciesin its Corporate and Operational processes, soit decided to launch the LEAPFROG Project andchose Celerant Consulting to help it analyseand resolve 3 key issues: Inadequate alignmentbetween Operational and Financial forecasting;insufficient transparency in Operational businessperformance; the lack of SOPS and tools in itsProject Acquisition and Execution phases.Virtual collaboration. Real progress.3 work streams were established at boththe company’s Corporate and AmericasHeadquarters and collaborated virtually todesign and pilot new ways of working to deliver:Integrated Planning: New set-up of the Load(S&OP) Plan. Planning & forecasting processeswere aligned between Corporate Headquartersand the regions to ensure faster response timesto Sales and less change requests to existingplans. New order forecast, sales planning andcapacity demand processes & tools were installedto support more regionalised operations.A new Management System:A new MCRS ® Management System with aKPI navigator was designed and implementedfor Corporate Management (Level 1-2) andRegional Management (Level 2-4) and factbased performance meetings with clearroles and responsibilities for operationalimprovements were established.Regional Interfaces: New tools and processeswere designed and implemented for all SalesAcquisition and Project Execution phases.Continuous Improvement was guaranteedthrough root cause analysis and consistentprocesses and interfaces were installedright across the global organisation.RAPID RESULTSRAPID BUY- IN• The company quickly moved to a factbased performance culture.• Operational performance and deviations toplan are now fully visible in the KPI navigatorand used to deliver Continuous Improvement.• Changes to the Load Plan have beensubstantially reduced which enablesbetter planning and forecasting.• The projects standardised, aligned toolsand processes enabled the AmericasSales organisation to gain a perfectscore in an internal audit.CLOSEWORK® GLOBAL REVIEW 2012 7

The Harbour ConsultantsBright Lights.Booming Future.Mad traffic, mosquitoes and a midnight break-inare all part of working life for Celerant ConsultantsMaxime B, Cyril F, Mickaël S and Antonio F ona major Oil Service Centre project in West Africa.8CLOSEWORK® GLOBAL REVIEW 2012

The Harbour ConsultantsAround 15 vessels use this one every day,including giant ocean going ships, complexoffshore pipe laying vessels, supply vesselsand crew ships that travel back and forth tothe platforms. The company is responsible formoving everything within the OSC and our roleis to help them increase client satisfaction tothe levels of other OSCs across the globe byinstalling Operational Excellence and coachingtheir workforce. We’re also working withProcurement, Finance and HR.The long and winding roadBy law every company that wants to do businesshere has to have a local partner, so this OSCis a joint venture with a local oil company. Itwas carved out of nothing, expanded incrediblyfast and is now so vast that the only way to getaround it is by car. We arrive on site at 7.00am and work through till around 7.30 pm. It’sincredibly hot, 30 o C every day, and very dusty.In fact, there’s so much dust that there’s actually ateam of people who regularly sweep the roads.The site entrance is a long and bumpy, dirt roadwith a sign on the gate that says: ‘No Guns.No Alcohol.’ Container trucks rumble up it dayand night and it’s so bumpy that once a truckflipped over. Our biggest problem in getting toand from work is the traffic. In the last 10 years,hundreds of thousands of people have pouredinto the cities from the countryside, but at themoment there simply isn’t the infrastructureto handle all these people. There’s very littlepublic transport, so everyone gets around bycar and they all drive really fast, which meansthat the only option is to take your life in yourhands and force your way through. It’s crazy.Some days it takes us 2 hours to get from thebase to our guesthouse – and that’s only 6km.Zinho, Pépé and ZézéThere are 4 Celerant consultants on site, 3from the French office and a Portuguese-SouthAfrican colleague. There’s also a VP who comesout once a month to oversee the project. Wecompleted our analysis in October 2011 andbegan the project in November with the aim ofintroducing a totally new culture of performance.We began by putting in place a visual managementsystem which allows Managers to see exactlywhat’s happening across the OSC at any givenpoint. We also implemented a planning systemthat listed each worker’s full name and detailedall the tasks that needed to be done. At firstthough, the Manager in charge of planning eachday’s activities was reluctant to put names againsteach task. We couldn’t understand why he didn’tknow who was supposed to be doing what,until finally he told us. It was because nearlyevery member of the team has a nickname,just like Brazilian footballers. People only knowyou by your nickname, Zinho, Pépé, Zézé andso on, so it was almost impossible for him toput a face to their correct name.Missing parts and ever present mosquitoesAround 800 people work at the OSC, plusall the clients from the Oil & Gas companies.‘ Everywhere youlook there areskylines of cranesand new publicworks racing tocreate a moderninfrastructure inrecord time.’10CLOSEWORK® GLOBAL REVIEW 2012

5. Among the following external factors,which ones are you most concerned about for 2012?The biggest concerns are the continuingeconomic slowdown and political instability.7. What are the main challenges facingyour company in 2012?The Top 3 Challenges are cost reduction,productivity and innovation.The pursuit of the economic slowing downThe political instability within the EurozoneGeopolitical crisesBank failure in EuropeCompetition from AsiaFailures from customersIncrease in interest ratesEuro/dollar exchange rateFrench presidential electionsSocial and fiscal constraints in France42%42%37%37%37%32%26%26%26%68%Cost reductionProductivityInnovationConquer new marketsManaging talentOrganic growth8. What are your priority actions for 2012?42%37%32%53%74%63%6. which are the main internal threats in your company?The No.1 internal threat is resistance to change.The Top 3 Planned Actions are to improveproductivity, develop innovative solutions andrationalise processes, systems and structures.Resistance to change53%Reliability of forecasting system42%Growing number of simultaneous projects 42%Production costs too high42%Lack of Human resources on growing markets 37%Loss of skills/competencies35%Improve productivityDevelop new products or servicesRationalise processes, structuresReduce overheardsReduce purchasing costsInvestments on the production tool39%33%28%56%50%78%The initiative was led by Celerant Consulting’s Paul Pinto,Senior Vice President, supported Sabrina Laborde,Capital investments will be saved at all costs.Unlike 2008, there is no question of sacrificing investment projectsthat involve future competitiveness. CEOs know that, once again,they will have to drive transformation initiatives to create deeperflexibility and adaptability within their organisations.Marketing Manager. The full article appeared inL’Expansion, January 2012. L’Expansion is one ofFrance’s Top 3 Monthly Economic & Businessmagazines with a circulation of 800,000and a web visibility of 1.8m uniquevisitors per month.CLOSEWORK® GLOBAL REVIEW 2012 13

Driving InsightsSuccess always demands a greater effort.Translating a global SupplyChain strategy into consistentreality means engagingpeople at every level of yourorganisation, says AdelOuederni, European SupplyChain Service Line Leaderat Celerant Consulting.You have to power your SCwith efficient humanwareand a clear, shared roadmap.An optimisedSupply Chaindoesn’t justalign plans,it also alignspractice.n many organisations today there’sIa serious disconnect between theflow charts that show how theirSupply Chain is supposed to workand what’s actually happening out in the field.Celerant Consulting’s global Supply Chainexperience has uncovered two main reasonsfor this. The first is a significant disconnectbetween what many companies believe they haveas processes and organisational models andwhat they really have in practice. The second isthat supply chains tend to have hidden bricks,sort of ‘black boxes’, too complex for theorganization to recognize, analyze and align.Working with companies across the globein various sectors, we see how these ‘blackboxes’ impact performance and derail overallsupply chain alignment.Supply Chains’ disjointed organizational structures,combined with increasing complexity and cumbersomeIT systems make these black boxesharder to identify and fix. For instance, some ITsystems, with obsolete or unsuited rules, canbecome a problematic rigidifying factor.Our view is that to develop an efficient, agileSupply Chain you need to recognize these blackboxes in order to realign the Supply Chain andhave it fully under control. This can be achievedonly by putting enabled ‘humanware’ back inthe driving seat, which supposes revisiting theorganisation, as well as the policies and leversit’s running with. This is why we put a strongfocus on the organisational dimension (people,roles & responsibilities, skills and capabilities,change management, etc.) when analyzing,then transforming supply chain performance.Also, the objective of any Supply Chain transformationshould not to be to fix a new staticmodel, but to redefine an adaptive, agile one.For this purpose, Supply Chain organisationshave to question the way they operate ona regular basis to discover how their realityis changing and how they can optimize theway the business produces, procures anddistributes. We see for example, that somecompanies use exactly the same logic in theirproduction with 20 customers as they did 10or 15 years ago with just few ones, leading tosignificant inefficiencies and a damagingdisconnect. Their business, product mix, supplybase, etc. has changed, so their Supply Chainmust be revisited to adapt to the new reality.14 CLOSEWORK® GLOBAL REVIEW 2012

In today’s dynamic, globalised markets complexityis increasing, visibility is decreasing and theparadigms that were adopted in the 90s and 20sare no longer enough to ensure performance.You have to satisfy the market, reduce costs,become more efficient and avoid permanentfire-fighting in dealing with new environmentsand constraints. The only way to achieve all thisis to become adaptable, agile and permanentlyin control of your Supply Chain. This can onlybe achieved by aligning all Supply Chaindimensions (Organization & People, Processes,Systems and tools, Footprint and infrastructure),end-to-end, from strategy to daily practice.In Celerant, we have a unique capability to movefrom Operations Strategy down to day-to-dayexecution where individuals make a hugedifference in putting together the full picture.We work alongside people at every level of thebusiness, because whatever your plans are intheory, if people running them don’t have themeans and capabilities to ensure that ideassuccessfully cascade from the CEO to the sharpend, your Supply Chain can fail. This also meansbeing able to take into account local facetsand cultures at every stage of Supply Chaintransformation projects. Then, needless to saythat in today’s complex environment, efficienthumanware is the foremost differentiator inbusiness adaptability.An efficient Supply Chain is the backbone ofevery successful business, but it has to be aflexible backbone, which means having robust,rather than rigid foundations. It must be able toregularly adapt to new trends and changes inthe market, as well as internal and externalnetwork mutations. This supposes to constantlycapture the influencing factors on the business.Supply Chain adaptability has to become anembedded gene within the business so that itcan follow a continuous evolution, instead ofhaving to undergo a perilous deep transformationevery couple of years or just be reshaped anderoded by the environment.The Six Pillars Of Supply ChainAdaptability ExcellenceCelerant Consulting believe that Supply Chainadaptability excellence is built on:An Aligned and Integrated Organisation at AllLevels: Not just internally, but also with keysuppliers and customers to ensure that all differentparts in the value chain have the same targets,work together smoothly and can collaborate toadapt collectively to the changing environment.Supply Chain is primarily about Organisationand People. In broad numbers, it’s 60% aboutpeople and organisation, 30% about processesand how value chain components are operated,and 10% about information systems and otherenabling tools. Organisation remains the key,but you cannot simply focus on one component:you have to focus on all three at the same time.An Adaptable Supply Chain Footprint: Regularlyreviewing and adapting your Supply Chainfootprint is essential to control costs and risks.It may currently make sense to buy componentsfrom China for example, but if this means reducingunit cost while significantly increasing leadtimes or quality issues, it will decrease youradaptability. So all key factors need to be inbalance. Footprint review is also about howmuch capacity you want to have in-house(‘base’ capacity) and how much you need to beable to trigger to adapt to variations (‘surge’capacity) for an optimal response to demand.Key Customer & Supplier Intelligence &Collaboration: In today’s fast moving environment,active customer and Supply Chain intelligenceis vital to help a business detect trends and pickup any signals which might mean additional risksor opportunities. This means going far beyondtransactional exchange, through EDI or otherforms of data communication; it means workingclosely with your suppliers and customers toanalyse the risks and opportunities and jointlycome up with timely, effective plans.Integrated Visibility & Planning: The mosteffective Supply Chains have the best visibility,from strategic planning, to tactical planning, toexecution. A business must then be able to revisitthese plans at any time and adapt to any changesin the environment based on a structured andoptimal Supply Chain response mode. IntegratedVisibility & Planning enables internal and externalalignment and collaboration, so that a businesscan anticipate issues and seize opportunities,not in a fire fighting manner, but with informeddecisions and robust rules.A Direct Link between Operational Excellence &Supply Chain Management: Businesses mighttalk about LEAN and Operational Excellencein general, but what is sometimes missing isthe link between Operational Excellence andoverall Supply Chain optimisation and agility.In our experience the two aren’t always hand inhand which is counter-productive. A businessmight have optimised sites or production lines,but that doesn’t necessarily mean its overallSupply Chain is synchronized and aligned.That’s why it’s vital to have a consistent linkbetween the way the overall Supply Chain isbeing operated and the way the execution ishappening at each individual node.A Back to Basics Overview: Many businesseshave been reshaped by acquisitions or mergers,or extended into new geographies or new marketsegments, and these additional layers can oftencorrode the existing Supply Chain rules or makethem irrelevant. Unfortunately, many rules areembedded and hidden in IT systems or otherforms of what we call black boxes, areas thatnobody controls or questions but which canmislead a business. So it’s key that in strategic,tactical and short term Supply Chain planning,existing policies are revisited to make sure thatthe business is being run according to optimisedrules and current reality, not the rules thatwere set 10 or 15 years ago, or uncontrolledderivatives of those outdated rules.‘ Supply Chain is primarilyabout Organisation and ChangeManagement. In broad numbers,60% of it is about people.’CLOSEWORK® GLOBAL REVIEW 2012 15

The Sky’s The LimitMore Power More ParticipationBUSINESS CHALLENGE The client is one of Europe’s leading solar moduleproducers in Germany. It’s a vertically integrated company, producingfinal product modules, cells and basic wafers, but it’s a growth story withparticular challenges. The company faced increasing and fluctuating demandand greatly increased competition. So to protect its position and prepareits production platform for the future, it decided to launch a comprehensiveOperational Transformation programme. Celerant Consulting was broughtin to help because of its extensive experience and its unique Closework ®approach to implementation and behavioural change.CELERANT SOLUTION The programme’s aim was to significantly increasecapacity in the short and long term by just over 30%, reduce cost perpeak watt and right size the headcount. Working closely with ClientManagement, Celerant confirmed the original productivity target and amultimillion Euro business case was in sight. The entire workforce wasmobilised and aligned to drive beyond the performance limit. Actionplans were immediately implemented to address the extensive use ofcontract employees and detailed plans were designed and implementedto optimise a complex production line. Using LEAN and 6 Sigma methodsand tools, Celerant helped the workforce build Process Excellence andcreate a culture of Continuous Improvement.RESULTS Long term targets became short term targets. The long termbusiness case was doubled and increased capacity of over 30% was insight. •Significant yield and throughput improvements were achievedwithin the first 3 months. •Full project tracking with standardisedtemplates was implemented to professionalise the approach.•Key people trained by Celerant in soft and hard tools to enablethem to continuously improve the company and train others.‘Celerant gave us valuable drive and supportfrom analysis all the way through to implementation.’Head of Wafer ProductionBUSINESS CHALLENGE The client is a global leader in the Nuclear Powerindustry. Due to recent events the industry is facing tougher regulations,but performance objectives remain the same. Internal resources at its plantsare finite because of hiring restrictions, an aging workforce and the timeneeded to train new people. The challenge for each plant was thereforeto achieve its targets with roughly the same resources. Celerant Consultingwas brought in to help make this happen because of the successfulOrganisational improvements it had achieved at other client plants.CELERANT SOLUTION The project’s objective was to identify areas tofacilitate, simplify and improve employees’ way of working. Celerant didan extensive scoping with more than 10% of the workforce and narrowedtheir comments down to 60 focused areas. Top management were thenengaged to weigh and eliminate irrelevant areas and data analysis,process critics, design workshops and focus interviews were used tofurther define the selected areas of improvement. The goal was to gaineveryone’s participation and belief in the process and identified solutions,so they could carry out the required changes in the near future.RESULTS More than 800 improvement areas were identified. •From 60selected areas, 18 were validated by top management as key to overallsite performance - maintenance planning of secondary equipment, workauthorisation permits process in controlled zones, spare parts managementand delivery process to work stations etc. •Each selected area wasstructured as a typical Celerant project with a MCRS ® ManagementSystem, Client project manager, team structure and agreed milestones.•Final deliverables were to: work with the 18 client project managers ondetailed Steps to Milestones and ensure buy in as they would have topresent it and deliver it to the plant director; provide the plant director withthe tools and MCRS ® to drive and manage those 18 individual projects.ManufacturingEnergyCLOSEWORK® CELERANT GLOBAL REVIEW 2011 2012 XX 17

Driving ChangeChange is the constant, the signal for rebirth, the egg of the phoenix.2012 marks CelerantConsulting’s 25thyear of helping clientsturn complexity intoopportunity.18CLOSEWORK® GLOBAL REVIEW 2012

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Driving ResultsAll thoughts must be distilled into action and action that brings results.Turning Uncertainty into Global ResultsCelerant Consulting Supply Chain Global ExperienceIn today’s uncertain times, companiesare looking for Supply Chain flexibility,efficiency and visibility. CelerantConsulting turns complexity intoopportunities, helping clients to designtheir supply chain as a key driver forgrowth and value. We focus on yourpeople for successfully transformingyour supply chain operating model,globally and end-to-end, in allindustries & services.Golden RulesGet results as a way-of-working,not as a one-off programme:• Make your Supply Chain asustainable competitive advantage.• Engage leaders own and inspiresupply chain excellence.• Implement a lean, safe and cleansupply chain operating model.• Work 360°: top-down,bottom-up and end-to-end.5Net inventory and DSOsignificantly reduced(two-digit %) across5 regional business units.EXPERIENCE 1Challenge: Generating truly effectiveWorking Capital improvementLocation: Asia PacificSector: Manufacturing‘Celerant helped us reduce our WorkingCapital position significantly in a veryshort time span, and by engaging localprocess owners heavily in the project theylearn a lot of methods and concepts.’Managing Directoraverageincreased15OEEEXPERIENCE 2Challenge: A Pan-European Improvementplan to deliver the targeted savingsLocation: Europe (7 countries)Sector: FMCG‘Celerant has a special capability that otherconsultants companies do not have – you’rereally good at going into the details fromshop floor to senior management leveland you are able to truly solve the issues.’Supply Chain DirectorNo.1expert benchmark levelat managing externalmanufacturing partnersin the least time possible.EXPERIENCE 3Challenge: Making External Manufacturingwork for youLocation: US, China, IndiaSector: Pharma‘Success means an assured, flexible andpartner based supply chain. We will buildtrust and grow benefits forward.’Global Vice President20CLOSEWORK® GLOBAL REVIEW 2012

Driving InsightsSuccess always demands a greater effort.UnlockingCreativityAlternativesto traditionalbrainstorming.Innovative problem solving can only occurwhen traditional, ineffective techniquesare challenged, argues Greg Kinsey,SeniorVice President at CelerantConsulting. Sometimes youhave to turn the establishedthinking upside down.22 CLOSEWORK® GLOBAL REVIEW 2012

Driving InsightsSuccess always demands a greater effort.Only a few times in our nation’s historyhas the need for profound change in theway Government spends taxpayer dollarsbeen as apparent as it is today.Looming budget challenges mean that the relationship between Government andthe Contracting community must be fundamentally redefined, argue James BiereMarceau, President and Matthew Jankowski, Vice President, Celerant GovernmentServices. It’s the only way to drive greater performance from both sides.he US Government faces a futureTwhere more or better work willhave to be done for the same orless dollars. That means the risk- reward relationship between Governmentofficials and the Contracting community willhave to change. It sounds simple, but given thecultural and behavioural changes that will berequired to break the current legacy processesthat influence how taxpayer dollars are spent,it could prove difficult without the catalyst of afresh perspective. With a 95% success rate invalue-based consulting for commercial clientsand a track record of successfully changingbehaviours, Celerant Consulting can providethat perspective.We believe that not only can the current levelsof performance be met within shrinking budgetcycles, they can be dramatically improved.Think differently Act differentlyThe process by which Government officialsmanage congressionally approved budgetsis complex and often fraught with politics.They must remain vigilant on how taxpayer’sdollars are spent, but the Federal AcquisitionRegulation procedures they have to follow tomanage budgets, continuing-resolution budgetdelays and fiscal-year constraints create anatural conflict between what they should doin order to be more efficient - and what theyactually do to meet their expenditure andprogram objectives. With pronounced longtermbudget challenges now facing our nation,Celerant Consulting believes that a much greateremphasis must be placed on significantlyincreasing the probability of success forGovernment contracting so that it can achievegreater efficiencies that are both understoodand measurable.Current thoughts within the U.S. Federal spaceon acquisition and programmatic efficienciesalready indicate some willingness to considernew ways of approaching contracting. For example,contracts that provide smaller incrementalpayouts to ensure that success is consistentlydemonstrable and measurable , or longercontract terms to minimize the workload on thecontracting community, have begun to appearthroughout the U.S. Federal and military space.Unfortunately, such changes fundamentally donothing to ensure that the officials managingthese billion dollar contracts will receive valuefor what they have acquired.Revamp the risk – reward modelWhat’s needed is a way of changing collectivethinking towards increasing the probability of24CLOSEWORK® GLOBAL REVIEW 2012

success of projects throughout the Contractingcommunity. Celerant Consulting believes this newparadigm can only succeed if it is accompaniedby a change in risk versus reward expectationsacross the Federal Government and its contractedsupport teams. This must start with a Federalcommunity that is motivated to reduce costsand maximize efficiency. While the Governmentdoes not operate like a profit-driven entity, it isworthwhile asking why, unlike in the corporateworld, there has been no historical quest forproactive measures to reduce costs in up, aswell as down years. The simple truth is that thecurrent budgetary process does not motivateU.S. Government organizations to create one.The current model is: Spend it, or lose it in nextyear’s budget request.This is not to imply that U.S. Government workersare complacent within the current environment.The opposite is true. Well intentioned, patrioticand hard working Government employees whoare bogged down performing activities that addlittle value simply don’t have the luxury of tryingsomething different, unless it’s driven top-downthrough the organization. What’s more, manyGovernment agencies are extremely risk-averse,so it’s virtually impossible to implement a cultureof taking risks with new processes or conceptsin an effort to maximize efficiencies. In contrast,commercial sector industry partners would notaccept, nor even prevail, if such conservativepractices were the mainstay in their environments.Incentivize to change behavioursSo how do you motivate people to spend lesswhen they’re under no external pressure to doso? The challenge lies in first incentivizing theContracting Officer community with rewardsfor giving money back or optimising budgetaryspends. From there, this change in behaviourwill permeate the Contractor base at large,whose members can quickly be expected toadopt a fresh perspective.In Contracting, as in any business, incentivesmotivate certain behaviours. Business executivesas a group, motivated by promotions andbonuses, will strive for greater profits, usuallyachieved by driving down costs and increasingmargins. Incentives do exist in the currentGovernment contracting environment, but they’renot aligned to drive the right behaviours intoday’s budget and programmatic climate.Another, perhaps greater flaw in the currentprocess is that it also fails to provide theGovernment with sufficient time to clearlyarticulate what is realistically needed, andto award contracts to companies that canrealistically deliver.The use of incentives in the U.S. Federal market isnot new. A form of Performance Based Contractingthat has already been embraced by the U.S.Department of Defense (DoD) is Performance-Based Logistics (PBL), which gave AcquisitionProgram Managers an opportunity to reducecosts without compromising operational systemreadiness. By getting the contractor to committo a performance level, rather than contractingfor goods and services, the Government effectivelyshifted its cost risk to the contractor, which inturn saw the opportunity for a greater profit.Based on the same core principle as PBC, PBLis now gaining wider popularity and attentionwithin the DoD at large.As a further example, energy-conservationcontracts propose fees based on a PBC modelwhere compensation is tied to energy savings.When the annual savings in energy bills exceedsthe amortized costs of the services, the customerhas little need or desire to be concerned withcontractor profits. With the promise of dramaticallyreduced utility bills, particularly for sizeable,aging Government buildings, these contractsrepresent a strong proof-of-concept for expandingthe use of PBCs into other types of services and arecurrently in use within some U.S. Federal agencies.Celerant Consulting believes it is now time toexamine how Performance Based Contracting canbe applied within all Government organizationsto create an ideal environment for:• Greater collaboration across the Governmentand the Contractor community.• Motivating the Government workforce to sharein the agency’s overall efficiency objectives.• Motivating the Contractor to exceedexpectations - as profit margins increase.• A greater sharing of the risks and rewardsof achieving cost savings.• A tighter management and measurementof expectations within shorter intervals.Reciprocal trust is paramountIn our experience, the recurring theme that hasdriven successful PBCs is trust. With both theGovernment and the Contractor having skinin the game, trust is paramount to successfulimplementation. This in and of itself may be thegreatest barrier to implementing what has beenproposed because trust can’t be achieved overnight;it develops as a result of an expectedand consistent set of outcomes that are tied tothe human behaviours of both sides engagingthe contract.American taxpayers are demanding that theirgovernment maintain and even increase levelsof performance with decreasing budgets. It’sclear that this goal has quickly risen to top ofmind for several leading acquisition officials.The time is right for Government organisationsto increase accountability, enhance operations,drive cultural change and demand better results.At a grass roots level, the fundamental questionwhich is driving fiscal change in both the publicand private sectors is: ‘If the dollars the contractingcommunity spent were coming directly fromtheir personal wallets, would they spend thebudgets the same way?’‘ Historically, the onlytime governmentbecomes innovativein cost cutting iswhen the budget iscut. There’s littlemotivation whenbudgets areexpanding.’Greg Rothwell,former Senior Acquisition Executive, DHS.CLOSEWORK® GLOBAL REVIEW 2012 25

Continuous ImprovementWhat was the burningplatform that made youstart this programme?Niko has been hugely successful in Belgium forover 90 years, mainly with sockets and switches.We’re the dominant player in terms of turnover,margins and market share. But we came to realisethat while this dominant position was a goodthing, it was not so good that we couldn’t growother products groups in this market. That wasalso our situation internationally. We were notas successful internationally as we were at home,mainly because the type of products we wereoffering were not as easy to differentiate from thecompetition. There was nobody outside of Belgiumjust waiting for Niko switches and sockets.The characteristics you need to become inter-nationally successful are also very different fromthose you need to be nationally successful.Being a market challenger is totally differentto being a market leader and the whole DNA atNiko was that of a market leader, so we didn’thave the right attitude to grow our internationalbusiness in the most successful way. This led usto the situation in 2010 where we decided that wewanted to double our international sales within3 years and at the same time maintain our marketleadership in Belgium. We wanted to take thatcash flow and invest it in international growth.Now we quickly realised that to be successful itwould not only be a matter of good sales andmarketing efforts, in terms of understanding theneeds of the different markets and providingsolutions, knowing the right players in thosemarkets and so on, it would also be a matter ofimproving our operations - and by that I meanour operations and Supply Chain. We neededto make a major shift because for a long timethe company has been an extremely productionoriented company. So we needed to shift to amore customer centric company.Also more specifically in Operations, it meantthat where the focus was oriented in a ‘pushorder’ model, we now had to make sure that wecould handle what I call ‘any kind of order.’ Ifwe wanted to grow the business outside Belgium,certainly at the beginning, orders would comein at unexpected times and in the volumes thatwere not as high as we would have liked to make,or as we were used to making in our Belgianmarket. So we needed to create an Operationsorganisation that could react quickly and flexiblyto all the different types of orders from thedifferent markets. On the other hand it wasabsolutely imperative that our quality, costsand service levels remained the same.Why did you decide ona LEAN programme?To be honest, we didn’t deliberately chooseLEAN. We chose Celerant Consulting. TheOperations Manager had a vision of LEAN andwas articulating what it would mean in terms ofthe programme, so it was a good fit and clearlywhat we implemented is covered under LEAN -the need for change was there, we had tocreate an Operations organisation that coulddo everything I described earlier and to makethat shift we quickly came up with the mainpriorities: We had to increase productionefficiency, we had to maximise production flowto decrease waste and so on, and we had tolook at our Supply Chain model. What we soonrealised however, was that to be really successfulthis Change Programme would have to go muchfurther than the technical aspects. We wouldhave to shift the whole mentality of the factory.As I said, Niko has been very successful for avery long time, so most people here live prettymuch in their comfort zone, including lower andmiddle management. We had to create a realsense of urgency for change and we wanted touse an outside party to help us do this. A partnerthat could not just help in terms of content,but also with the whole Behavioural Changeprocess. And that’s basically why we choseCelerant. When we had our first contacts withthem and after they conducted the analysis wefelt that the way Celerant operates is by goingdeep into the change process, working on thementality in the company and creating a senseof urgency for change.Has your appreciationof LEAN changed?I had no experience of LEAN implementation untilthen and I basically saw it as a method to make anoperational department more efficient. So thefirst and most important thing that I’ve learnedabout LEAN is that it’s a general businessphilosophy that helps you better define yourwhole vision and company strategy. It’s notjust focused on Operations, it’s much widerand deeper than that. The whole concept ofLEAN is to focus on the customer. You have tothink how you can create extra value for yourcustomer and what the impact will be. So LEANhelped me fine tune our vision and overallstrategy. That’s the most important thing thatchanged throughout the programme.CLOSEWORK® GLOBAL REVIEW 2012 27

Driving IdeasIdeas move fast when their time has come.‘ When we had our firstcontacts with Celerantwe felt that the waythey operate is by goingdeep into the changeprocess, working on thementality in the companyand creating a sense ofurgency for change.’I also learned that LEAN is not a one-off project. The third success factor was changing the cultureOnce you start you’ll never stop. It’s Continuous and the mentality, and here I’m specificallyImprovement and this is what I now see happening talking about changing the management mentality.on the shop floor. People are driven and they’re We had to become more action driven, moregetting this extra motivation because they have disciplined and we also had to learn a lot morean impact on the process. My main concern about fact based decision making. We werehad been how would we keep this going after working a lot, doing a lot, but it didn’t alwaysCelerant left us? Now I see that my own people correspond to the three things I’ve just described.are very motivated and it is going very well.My main concern and my impact on this projectThe third thing that impressed me is what has been creating the sense of urgency. CreatingI would call the power of visualisation. We the awareness that there is a need for changehad no experience with a lot of the tools that and changing the operational clock speed, notCelerant brought us, so visualising all these only in the beginning to motivate people tothings was so powerful and effective for this get started, but also in how we continue thatprogramme. It also taught us how to better by doing things in a more effective way withvisualise our other plans and bring them to the a higher sense of urgency.floor. We worked very closely with Celerant andwhenever they asked for help or wanted usHow easy was it to bring themake a decision we immediately responded.Voice of the Customer deeperYou said that many people into the organisation?were set in their ways. Was To be honest, there are areas where we arestill struggling with that. The things we’veit difficult to change them? changed on the Supply Chain, they’ve workedIt was the major effort. Three things needed to well, but the Voice of the Customer has tohappen for the programme to be successful: come through our commercial people andthe first was convincing people there was an that’s one of the areas where I feel we mosturgent need for change - and that wasn’t easy have room for improvement. The wholewhen the company has been doing so well and programme worked well in the Operationspeople believed there was a direct relationship Department, but with Niko being the companybetween that success and how they did things. that it is, we were pretty much organised insilos. It was top down communication inThe second was transmitting our ambition most departments, with some bottom upand objectives to everyone. In the Operations communication in other departments, butDepartment it was clear that we wanted to there was very little communication betweenchange something, but the Operations Manager departments and that was something we hadneeded some help in defining and translating to break through. I think we only partlywhat exactly we wanted to achieve and how succeeded in doing that last year with thewe were going to achieve it.project. There’s more work to be done.28 CLOSEWORK® GLOBAL REVIEW 2012

Continuous ImprovementHow are you continuingyour change journey?The programme has succeeded in Operationsand Supply Chain. Now we need to keep upthe sense of urgency and take it to the otherdepartments which weren’t so much of apriority in the beginning.Was it difficult to makepeople understand thiswasn’t a one-off, it’s nowthe way we work?Not in Operations, Supply Chain or the technicaldepartments like engineering. That’s one of thegreat things I discovered walking around theorganisation. People are now self motivated,they’re proud that they can contribute andthey want to continuously improve.I would like to add one more thing. WhenCelerant left us just before Christmas 2011 itwas clear to me that our biggest challengewould be keeping this process of change goingwithout them. I had a fear that we would fallback into the old habits, but what happenedwas the complete opposite. From January ourBelgian market has been extremely strong andthis demand continued throughout February.We had sales that exceeded by 25 – 30% ourbudget and all forecasts by 25 – 30% whichmeant we quickly reached our capacity levels,had backlogs and our service levels weredropping. People in the Belgian market knowthat they can order and we will always supplywithin 24 hours, but this unexpectedly strongdemand built up a very serious backlog, soreaction in the market was pretty strong andit was impacting our reputation.I asked for a crisis meeting to figure out howwe were going to handle this. I wanted us tobe back at historical levels of backlogs withinthree weeks. The people in Operations tookthat challenge on and within three weeks weended up at a level that was lower than thelowest day in 2011!This was a tremendous success and severalpeople here have said that they’re convincedthat it would have never been possible beforethis Change Programme. And it’s not justbecause of the tools and tricks they leanedfrom Celerant, it’s because of the total shift inmentality that Celerant had helped us create.Everybody took it very seriously, they created asystem whereby every morning at 10 am representativesof all the departments got together togo over the plans, see what problems there were,then follow up on that and monitor everything- that was also something we’d learned fromCelerant. There was also a very clear commandstructure which was one of the things we lackedpreviously in this kind of situation. These meetingswere run very efficiently because they were factbased and action driven, there was no discussionsaround things, people just got straight to thefacts. I attended some of those meetings andthey were very impressive.Anything you’d havedone differently?I wish we had done this earlier.‘ People are driven andthey’re getting this extramotivation becausethey have an impacton the process.CLOSEWORK® GLOBAL REVIEW 2012 29

Driving IdeasIdeas move fast when their time has come.NORDIC PRODUCTIVITY:The facts, the fictionand the future.‘In Nordic society,the incentive to work isdiminishing and the urgeto put in extra effort isdisappearing. This is in sharpcontrast to foreign competition.’CEO Global Transportation.Last year Celerant Consulting carried out amajor online survey of 175 Nordic Business Leadersto establish the bottom line on Nordic productivity.Profile: 30% Top Executives, 70% Senior Executives.12 sectors with 50% from Manufacturing & FMCG.15 functions with 36% from Operations &Production, 28% from General Management.‘People arecreative and fullof ideas. If you havethe right staff, you get goodinput and good productivity.’CEO Consumer Goods & Services.1 The Nordic Perspective I 2 The Global Reality IDo you believe productivity levelsin the country where you work arecomparable with other countries?Productivity levels in Nordic countriesare all below the OECD average.Slovakia120South Korea118USA10626%35%39%Ireland106OECD Avg103Finland101NOProbablyYESSweden99Denmark97Norway95AVERAGE LABOUR PRODUCTIVITY 2009 INDEX: 2005 = 10. SOURCE OECD3 The Global Reality IIProductivity increases are significantly lowerin Denmark and Norway – a worrying trend.4 The Nordic Perspective IIHow much has productivity increased in yourbusiness unit/department in the last year?Slovakia5.1%South Korea4.3%Ireland2.5%5-10%USA2%Finland1.9%Sweden1.8%0-5%5%Don’t KnowOECD Avg1.7%Norway1.2%Denmark0.3%20%+AVERAGE ANNUAL PRODUCTIVITY INCREASE 2000-2008 (%). SOURCE OECD23% 25% 34% 6% 11%30CLOSEWORK® GLOBAL REVIEW 2012

Nordic Productivity Survey5 Productivity Levers 6 Improving Value Chain ProductivityWhat do you think are the mostimportant levers for productivity?Where do you see the biggest productivityincreases coming from in your value chain?90%84%69% 69% 67%54%75%58%48%34%OTHER(SUPPLY CHAIN)SALES & MKGR & DmanufacturingTECHNOLOGY/INVESTMENTWORKFORCETRAININGCOMMUNICATIONBETTER PROCESSES/SYSTEMSMANAGEMENT7 The Power Of ProductivityHow do you classify productivity gains?CONTINUOUSIMPROVEMENTPREREQUISITETO SURVIVALCompetitiveadvantageOTHER48 % 33 % 16 % 3 %8 2011-12 Nordic Productivity TargetsWhat is your target for improving productivity in your business unit/department this year?8% 22% 51% 10% 3% 6%0-5% 5% 5-10% 20%+ DON’T KNOW NON REQUIRED9 Measuring Personal ProductivityHow do youmeasure yourown productivity?48% 25% 13% 11% 3%FINANCIAL VALUEI CREATEI DON’TMEASURE ITTASKS I COMPLETEPER DAYOTHERSPEED OF TASKSI COMPLETE PER DAYCLOSEWORK® GLOBAL REVIEW 2012 31

Driving InsightsSuccess always demands a greater effort.REDISCOVERINGOUR HUNGER.Working harderand smarter to raiseNordic Productivity.Productivity figures for all Nordic countries are consistentlybelow OECD average. Business leaders know this must change,says Hans Lindeman, Head of Celerant Consulting Nordic andwith the right leadership and the right vision it can.hat did we learn from our NordicWProductivity Survey detailed onthe two previous pages? Whenasked the question: Do you thinkproductivity levels in the country where youwork are comparable to other countries? only39% of respondents agreed and even theywere wrong. Nordic productivity generally lagsbehind many 1st world countries.* In addition,the Nordic workforce generally works less thanmany other developed countries, productivityis rising more slowly and the gap to countriesthat we typically compete with is growing.Business leaders know this must change and51% have a target of improving productivity by5-10% in their business unit or department thisyear. They also believe that change will taketime and this is underlined by the fact that forsome, ‘The Nordic Model’ is seen as a block ora challenge to improving productivity.The bottom line is that all Nordic countries aregoing to have to work harder, smarter and addmore value to everything they do in order to staycompetitive on the global stage. The positiveresults of the survey however, suggest that our32CLOSEWORK® GLOBAL REVIEW 2012

Nordic Productivity Surveyrespondents believe that we have many of thetraits that are necessary to improve such ashigh education, political stability, creativityand global experience.Increasing Value Added workSo how do you create a performance basedbusiness culture? One that is continuallychallenging people to learn, to grow, toimprove productivity, freeing up information,democratising problem solving and givingpeople the autonomy to be successful? A criticallever is to work smarter. And the quickest wayto work smarter to improve productivity is toget everyone in the organisation to increasetheir Value Added work - and stop doing thingsthat don’t Add Value.The Celerant Consulting Workforce ImpactabilityStudy 2011 demonstrated the dramatic impactthis can have. It tracked the daily activities of200 middle managers from 6 different industriesin the US and after assessing more than 11,000work hours, demonstrated that operators generatea stunning 50% more value than supervisors.It also showed that 43.5% of a supervisor’sdaily work load can be effectively impacted,so to really drive productivity companies mustreview supervisor activities in detail anddetermine which portions of their day can bealtered to improve the value add they generate.This also means examining specific roles toensure that the right employees are performingthe right tasks. Loosely defined roles andineffective practices create a frustrating dailywork experience, with a great deal of lost time.Implementing a simple architecture with clearroles and responsibilities is the first step inbreaking this cycle and improving productivity.Celerant Consulting’s Operational TransformationService Line has a track record of improvingproductivity by changing behaviours - and whatchanges behaviours is simultaneously addressingmanagement systems, processes, people andskills. Our robust MCRS ® Management Systemcreates alignment from the boardroom all the waydown to the lowest person on the floor and backagain. This enables an organisation to createaccountability at the lowest possible level.Creating this holistic perspective and processallows Managers to make the right decisions,improve communication and reduce the negativeeffects of errors from one department or functionto the next. In addition, a team that understandsits contributions and feels connected to theentire programme is more motivated toimprove performance.Doing more with lessAll Nordic countries are well placed to improve.They have high levels of education, stablepolitical models and their citizens are not yetexposed to the type of extreme short-termmeasures that the Greeks are. Over the lastdecade Sweden has demonstrated its abilityto change and improve its competitivenessand financial strength, and along with Finlandis reasonably placed in terms of productivityand hours worked compared to the rest of theworld’s high-productivity countries. Howeverboth countries must continue their focus onimproving productivity growth and building onpast strengths, especially Finland which is facingincreased national fiscal challenges in 2012.Norway is in a special category due to its relianceand income from fossil fuels. However, consideringthat its workforce work fewer hours than anyother country in Europe, it should invest and focuson productivity to provide a back-up plan to itsreliance on oil and gas and take a leadershipposition in sustainable development. Clearly atthe back of the pack is Denmark, which is facinga very bleak future if it does not do somethingdrastic soon. It has very low levels of productivitygrowth coupled with a workforce that workscomparatively few hours. In addition, it carriesthe burdens of a very cost intensive welfaresystem and a growing budget deficit. Faced withincreasing corporate taxes a growing numberof corporations are considering moving theworkforce out of Denmark. If this imbalance isnot changed very quickly, the long term effectscould be devastating. It is a negative spiral thatcould take many years to get out of.Back to the futureDeveloping a culture of working harder andsmarter is the biggest challenge facing Nordicbusiness leaders today and our survey shows thatthey believe that the Top 6 drivers to achievingthis are management, better processes andsystems, better communication and training,an engaged and motivated workforce andinvestment and the overall economy.At Celerant Consulting, we believe that moremanagement won’t help, but better managementwill – and when it’s combined with bettersystems and processes it will actually have aprofound effect. There is also no doubt thatin the medium to long term, communicationand education will have a very positive andlasting effect.Many people in the Nordic region appear tohave become complacent about competition,believing that somehow because our companiesand corporations have been world leaders ininnovative practices, technological advances andvalue creation we’re immune to the challenges ofglobal competition. Such complacency has been seenbefore. Take for example, the Japanese economy.From the 60s to the 80s the Japanese led theworld in innovation, technology and improvingproductivity. Today, that advantage has all butdisappeared as the country has stagnated.The Nordic region is definitely not immune toglobal competition and we’re going to have torediscover our ambition and drive. We’re going tohave to work much harder and much smarter tokeep all the benefits that we enjoy in our societies.Involving, motivating, leading and above allrekindling the hunger in our employees hasnever been more important.‘ Hard work and ingenuitycreated our present. Nowthey must protect our future.’* AVERAGE LABOUR PRODUCTIVITY 2009 INDEX: 2005 = 10. SOURCE OECDCLOSEWORK® GLOBAL REVIEW 2012 33

Driving ChangeChange is the constant, the signal for rebirth, the egg of the phoenix.Celerant Consulting changes business for good.Celerant employees can also change lives for good.Just like Pamela Griffin in Tanzania.Leaving my mark onve been asked many times by manyI’people why I keep going back toIpalamwa, Tanzania with GlobalVolunteers? My answer is thatthese pictures speak a thousand words.My answer is also in the words of Antoine DeSaint-Exupery: ‘A rock pile ceases to be a rockpile the moment a single man contemplates it,bearing within him the image of a cathedral.’I see more than a broken down school and avillage with none of the basic infrastructure thatwe take for granted. I see potential in every child,student, teacher and villager. They know educationwill help provide them with a better future andI want to be there side by side helping them tobuild their cathedral, just as I work side by sidewith my clients.My personal motto is ‘Everyone Reach the Moonand Stars.’ It’s about dreams and making them areality, similar to Global Volunteers motto ‘Leaveyour mark on the world.’ I love that everyoneI meet in Tanzania cherishes the moment wevolunteers arrive and are there teaching themEnglish, Math and Geography in the classroom,as well as providing our personal expertise. I usemy business planning skills to help the local GlobalVolunteer staff with their many projects: buildinga clean water system, reconstructing the schooldormitories, building a new out-house, cultivatingthe land to plant next year’s crops of maize andbeans, organizing donated books into a usablelibrary and so on.Besides the structured time, I cherish just walkingthrough the village talking to the students, sharingour beliefs, dreams, and fears. It’s amazing whatyou can learn sitting outside a little shop, drinkinga warm coca and talking with your rafiki (friends).So far, I have chosen Tanzania as my home awayfrom home, but Global Volunteers has programsall over the world. If you are interested, pleasevisit them at globalvolunteers.org or contact medirect: pamela.griffin@CelerantConsulting.com34CLOSEWORK® GLOBAL REVIEW 2012

globalvolunteers.orgthe world.Global Volunteers’ unique philosophy ofservice requires volunteers to work at theinvitation and under the direction of localcommunity partners and one-on-one withlocal people. Somewhere in the world a childneeds your help. As a Global Volunteer you’llput your personal skills to work nurturing,teaching, feeding, planting, building,shaping - and often, saving children.CLOSEWORK® GLOBAL REVIEW 2012 35

Driving ResultsAll thoughts must be distilled into action and action that brings results.Feeding A Demand For MexicanSafety First. Safety Last.BUSINESS CHALLENGE The client is a major North American food company.Demand for its Mexican frozen food was booming, so it needed to maximizeplant production to guarantee customer satisfaction. The facility presenteda number of challenges, including an inexperienced group of operators andmechanics, a lack of structured processes and a divided managementteam with poor management practices. Equipment was showing signsof deterioration because of poor reliability and maintenance and therewas limited visibility into where and why bottlenecks were forming andthe best way to correct them. To further complicate things, the existingtortilla bakery section was to be decoupled from the rest of the productionline and a new one built in an adjacent building. Product quality and foodsafety were an absolute priority, so Celerant Consulting was appointed tohelp the company transform the site.CELERANT SOLUTION To ‘regain control’ of the production process theCelerant Team installed a cross-functional problem solving system tofix the root causes of recurring issues and used Closework ® to teachimproved methods on the line, facilitate clear communication and createa cohesive working environment. They also trained people for the separatebaking facility and integrated them into the new processes. Then whena sister production site was fire damaged and its production transferredover, Celerant supported the conversion of one line to include eggrolls,an entirely different process from anything existed. At senior managementlevel, Celerant also coached selected managers to promote fact baseddecision making and a real results focus.RESULTS The plant made a profit made for the first time in 3 years.•Overall OEE improved significantly and labor costs and materialwaste were reduced. •Emergency maintenance was halved andschedule compliance dramatically increased. •Preventive maintenanceprocedures, reliability SOPs and a new MCRS ® Management System todrive Continuous Improvement were installed.ManufacturingBUSINESS CHALLENGE The client, a leading North American chemicalscompany, first appointed Celerant Consulting for a major project at oneof its biggest plants that focused on waste water excursions, overallequipment effectiveness and operating budget improvement. Withsuccess in all areas, including a reduction in waste water excursionsto zero, Senior Management now wanted to use the momentum fromthat project to improve personal safety at the facility.CELERANT SOLUTION Celerant conducted a safety assessment and asa result partnered with the site leadership team to execute a safetyimprovement project to raise safety awareness and develop a culture andapproach that would drive sustainable safety performance improvement.To execute the project, the joint Taskforce focused its efforts on: SafetyStrategy including integration of site goals to corporate initiatives; SafetyInitiative Management with a focus on effectively managing executionof selected improvement initiatives; The Management Control andReporting System incorporating leading safety performance indicatorsin site safety performance review; Plant Safety Communications to raiseawareness on the job as well as awareness of new safety initiatives;Environmental Health & Safety Employee Councils to increase workforceengagement in safety improvement; Incident Investigation ProcessImprovement that included the consistent utilization of structuredproblem solving to identify and address root cause. The execution teamwas supported by an overall steering team that helped expedite decisionmaking and issue resolution.RESULTS The entire organization was successfully engaged throughoutthe project. •All project deliverables were completed. •The new systems,processes and behaviors that were implemented for a sustainablesafety culture meant that the organization could drive continuous safetyimprovement once the project was complete.‘I actually feel that we’re making a big contribution to the long termsuccess of the plant. I’ve never before worked on a project where I feltI was having that kind of impact.’ Client Co-Project LeadChemicals36 CLOSEWORK® GLOBAL REVIEW 2012

The Prescription For SuccessEnabling Core GrowthBUSINESS CHALLENGE The client, a major pharma company, was presentedwith an opportunity to gain a significant edge with one of its specializeddrugs. Setbacks among its competitors had created an open field for adominant prescription which was the clear favorite. A contractmanufacturer ran the primary production facility and was expected tomeet the incoming spike in demand, however, the company’s 2 facilitiesin the Caribbean were not up to the challenge. One had been earmarkedfor closure, calling for consolidation of all production to the remainingplant. Inadequate equipment and the short time frame made this impossible,so the plant previously earmarked for closure had to be brought back tolife to lead the way for production. Celerant Consulting was brought in tohelp make it happen.CELERANT SOLUTION The Celerant Team implemented a 24 week crossfacilityplan, focusing on rapid design and installation at the first plant,followed by replication at the second. The assessment pointed to subparequipment effectiveness and non-conforming behaviors that slowedthe process. The Team looked at 2 areas of concern: manufacturing andquality. In manufacturing, they focused on improving throughput byidentifying major bottlenecks and establishing short interval control tomonitor and correct the flow. The quality workstream focused on thecritical path of record review and disposition to level load the monthand shorten the lead time to shipment. They also focused on dynamicscheduling and short interval control to reduce lab errors and cycletime. In addition, the team recorded the process, implementing visualmanagement and active feedback loops for operators to help reducedocumentation errors.RESULTS Over 120 batches consistently produced. •Overall assetutilization was significantly improved. •Active supervision was doubled.•QC lab cycle time, overall record review and disposition cycle time andQA record review cycle time were all improved. •Client record reviewcycle time was also improved by one third.Life SciencesBUSINESS CHALLENGE Following Celerant Government Service’s successwith a sister organization, a U.S. Army Program Office asked us to conductan in-depth analysis of its operations following a Base Realignment andClosure (BRAC) move. A resource drain due to the move, service level drops,funding concerns and other related issues showed that improvements wereurgently needed. Objectives for the analysis included: review management’sstrategy and imperatives, understand the current organization and capabilities,assess the BRAC status and implications and lay out an objective courseof action for improvement.CELERANT SOLUTION The Celerant team launched an analysis to understandthe current state and capability of the client’s organization. It examined theroot cause and drivers of the current level of organizational performance thatare process, system and structure driven; the organization’s performancepotential; quick win improvement opportunities and an integrated implementationplan to identify any support required to achieve a sustainablestate. As a result of this analysis, Celerant was awarded a follow-on contractto: develop key focus areas and contact points to provide real-time dataand information to facilitate required work product output; conduct a postBRAC organizational workshop; complete a Fiscal Year 12 staff tax forecastand develop a logistics cost breakdown and program management reportingstructure; develop detailed schedules and cost breakdown estimates forPBL; develop future state organizational design and master documentationto include concept plans for military, core, matrix and contractor personnel;establish battle rhythms (MCRS ® ) that will include a management system,meeting structure in calendar format and a key report structure; develop andnegotiate Functional Support Agreements with all supporting organizations.RESULTS A new, proactively oriented organizational structure, well suitedto the demands of the current operating environment is now in place.•Functional support groups with clearly identified requirements andexpectations have also been installed. •The client is now prepared toenter the Performance Based Logistics (PBL) arena fully confident intheir ability to be successful.Government ServicesCLOSEWORK® CELERANT GLOBAL REVIEW 2011 2012 XX 37

oughton Chemical CEO, Paul DeVivo, recently spoke to CelerantHConsulting Americas about his experience implementing Change Programs.Drawing on real-world examples from his 30+ year career with organizationslike Unitor, Valspar, Ashland and Houghton, he shared his ‘10 Learnings’ that serveas a project implementation tutorial for Clients and Consultants alike.These Learnings have helped Paul and his Management Teamsexecute a great number of successful programs over the years.Houghton is one of the world’s largestand longest established suppliers ofspecialist industrial metalworking fluidsand fluid management services.In all significant projects metrics should bedeveloped for measuring the success of theproject. ‘Before measurements’ compared with‘After measurements’ should clearly indicatethe project’s success or failure. Choose and5Rewards and recognition of resultsmay take time to be realized andappreciated. Be patient.4agree on the right metrics. Take frequent‘During Measurements’ to ensure that you aretracking toward targets and to determine ifadjustments need to be made while you stillhave time. Waiting until the end of a projecttime line is too late to make adjustments.Enjoy the challenges, celebrateeven the smallest victories, sharepraise, stay positive, smile often andengage the entire team to enjoy theeffort. If this seems too much likehard work -look for another career.1Be patient forthe pay-off onyour efforts.Take measurementsbefore, during andafter all projects.This is worth repeating. Manyprojects are carve-outs from a muchbigger project vision. It is too easyto expand the current definedHave fun alongthe way.project scope with elements thatbelong in future projects.Limit scope creep.Every project should add toyour skills if you are opento process improvementsalong the way. Sometimesthe improvement ideas cancome from the least expectedsource. Stay open for learning.Recognize thatContinuous ProcessImprovement buildsskills for futureengagements.3Limit projectscope creep.Stay focusedon the projectat hand.2CLOSEWORK® GLOBAL REVIEW 2012 39

Driving ResultsAll thoughts must be distilled into action and action that brings results.‘ In only 30 weeks we haveexceeded our targets. We havethe right structure in place,a skilled team and the fullengagement of our staff onsite to sustain and driveContinuous Improvement.’Sean McHugh, Group CI Manager.40CLOSEWORK® GLOBAL REVIEW 2012

LEADING THE FIELD.When Irish Dairy Board wanted to create a culture of ContinuousImprovement at 3 plants in Europe, it asked Celerant Consultingto get down on the ground and help drive results up.rish Dairy Board was looking toIimprove operational efficiency inanticipation of the increase in dairyoutput forecast from the removalof milk quotas in 2015. The Executive ManagementTeam therefore decided to launch a LEAN Initiativeto align operations and introduce a culture ofContinuous Improvement into the business,starting with three key locations in Europe.After a competitive bid process, they identifiedCelerant Consulting as the ideal partner to makethis happen by introducing the new behavioursthat would be needed to create this culture ofContinuous Improvement.Rising to the topThe project started with the deployment of anOperations Excellence initiative across the threeEuropean sites to develop new ways of workingbased on LEAN Principles and internal best practice.Celerant focused on standardising OperatingProcedures and installed Short Interval Controlsto improve process stability. Kaizen events wereperformed with Operators and Team Leaders whichfocused on standardising operating proceduresand improving product flow.Celerant also introduced a comprehensive MCRS ®Management System that enabled the three sitesto standardise their performance measures andimplemented a Root Cause Analysis and escalationprocess to eliminate production issues.LEAN training and behaviour coaching at alllevels of the organisation, from Plant Managersto Operators, helped to embed these newchanges and create the culture of ContinuousImprovement that was evident by the improvedOEE and Yield KPI’s.SUSTAINABLERESULTS• The project was completed in 30 weeksand rolled out across all three sites.• 5S audit scores measuring workplaceefficiency and effectiveness improvementsrose from 60%- 85%.• System Implementation Status auditsachieved a level of 80% at all sites, whichmeans that real behavioural change hastaken place and a culture of ContinuousImprovement has been created.• By project end more than 40 ProductionTeam Leaders were trained and certifiedin LEAN, led by Continuous Improvementchampions at each site, with ownershipfor sustaining these results.CLOSEWORK® GLOBAL REVIEW 2012 41

Driving ResultsAll thoughts must be distilled into action and action that brings results.Creating Global Value AccelerationCelerant Consulting Operational Transformation Global ExperienceIn today’s fast changing environment,companies faced with unprecedentedand unpredictable change, may chooseto seek shelter and ride out the storm.However, times of market turmoil alsocreate significant opportunities to createsustainable competitive advantage. AtCelerant Consulting our aim is to partnerwith clients on their LEAN journey,helping them to create more effective,nimble and flexible organizations andtake advantage of these opportunities.Celerant Consulting focuses on all criticalelements for successfully transformingclients business operating model, globallyand end-to-end, in all industries & services.Golden RulesGet results as a way-of-working,not as a one-off programme:• Emphasize LEAN thinking,not lean tools.• Make leaders own and inspirelean thinking.• Work top-down, bottom-upand end-to-end.• Think big, start small.• Focus on reducing wasteand invest in growth.7countries wherethe programmewas implemented.EXPERIENCE 1Challenge: A Pan-European Improvementplan to deliver the targeted savingsLocation: Nordic and EasternEuropean countriesSector: FMCG‘I have seen many projects but this isdefinitively one of the best ones. Therigour in multi-site project managementis clearly one of the key success factors.’CEO50 % higher financialbenefits thantargetedEXPERIENCE 2Challenge: A comprehensive changeprogramme to ramp up operational efficiencyLocation: Canada & EuropeSector: Chemicals‘The good thing about Celerant wasthat they delivered on their commitment.’Managing Director35 % call wait timereductionEXPERIENCE 3Challenge: Developing a lean efficiencyorganisation and a strong platform for growthLocation: EuropeSector: Financial Services‘All the evidence shows that we’re nowachieving best practice in healthcareinsurance. I can honestly say I don’tremember another project which achievedso much so quickly and within soundfinancial parameters. I wholeheartedlyrecommend Celerant.’Director42CLOSEWORK® GLOBAL REVIEW 2012

$400mtotal annualized valueEXPERIENCE 4Challenge: Improving the level of performanceto meet the new business opportunitiesLocation: North SeaSector: Energy‘Getting to top quartile productionefficiency had always been one of thegoals. But actually getting number onein the last month of the project gave areal sense of satisfaction.’Senior Project Manager1solid programmemanagementoffice builtEXPERIENCE 5Challenge: Putting Customersat the heart of the businessLocation: New ZealandSector: Telecoms‘Celerant supported us to build theframework, driving the delivery andincrease our capability to continueimproving the customer experience’CEOe270msustainable cost savingsEXPERIENCE 6Challenge: A global programme todeliver Operational ExcellenceLocation: WorldwideSector: Life Sciences & Healthcare‘Celerant absolutely matched our ambitionand really adapted their approach to helpus steer our manufacturing base. Showingimprovements and successes really helpedanchor the changes in the organisation.Enthusiasm is back in the heart of ourpeople and that was a great experience.’President3continents wherethe programmewas implemented.EXPERIENCE 7Challenge: A multi-cultural Change Programmeto keep global brands rolling off the lineLocation: Africa, Americas, Asia & EuropeSector: Manufacturing‘Our top client scored us as the bestperformer on installation among itsdifferent worldwide suppliers.’Vice PresidentCLOSEWORK® GLOBAL REVIEW 2012 43

Driving IdeasIdeas move fast when their time has come.MANAGING GROWTHIN A HIGH GROWTH REGION:From Supply Chain Nightmareto Supply Chain Wonderland.atin America has a jaguar by theLtail. Led by Brazil, Colombia, Chileand Peru, the region is experiencingtremendous growth fuelled byhuge natural resources, lower than historicinflation, a strong manufacturing base, risingexports, increased foreign investment andmiddle class populations that are growingwealthier each year. But success doesn’t justbreed success, it can also breed opportunitiesand many Latin American companies are nowat a crossroads in their development.There are exciting national, regional and internationalopportunities for growth. As a result,productivity, efficiency and capital allocationare critical. There are also big challenges inmaximizing these opportunities with new assets,new equipment, new people or newly trainedpeople, because it all takes time. They needto get the most out of what they already have.People, structures, machinery, logistics, everyaspect of the business must be put under themicroscope to create an optimized, adaptable,growth grabbing organization.We like to describe it as having a certain sizedshirt when you were 5 years old and now you’re15 and you’re breaking out of it at the seams.Many Latin American companies have simplyoutgrown their old business model and needto design and implement a new one that betterfits their new size.Everything depends on your Supply ChainIn the older global economies, with little or nogrowth, supply is much higher than demand,so the challenge is to do the same with less,or less with much less. In Latin America,particularly Brazil, the exact opposite is true.Demand far outreaches supply, but satisfyingthat demand depends on an optimized SupplyChain and managing that Supply Chain hasbecome a complex challenge for many LatinAmerican companies.These companies need to adjust their operationalstrategy to develop a Supply Chain model thatis flexible enough to cope with even the smallestchanges in supply or demand and at the sametime optimizes their working capital, costs, cashflow and service levels. This requires OperationalExcellence in Supply Chain.To do this they first need to make sure they’reabsolutely customer centric, so they can alwayshave the right products, in the right quantities,in the right places, at the right time. That meansasking questions about every step of the process,from sourcing raw materials to designing theproduct all the way through the manufacturingenvironment and putting it before the endconsumer. How well are we really managingand collaborating with our customers and oursuppliers? How do we decide when to switchfrom ‘We do it ourselves’ to ‘Let’s source somereadymade product and customize it in country.’How do we build our talent factor? What newmanagement systems and new processesdo we need? And what’s our most effectiveorganizational structure to create long term,sustainable growth? It all goes back to whatthe operational strategy is because for manycompanies rapid growth has totally changedthe business model.Making working capital work harderAnother Supply Chain challenge that needs tobe overcome is the issue of working capital.In such rapidly expanding markets a lot oforganizations haven’t been disciplined enoughas they’ve grown. They have simply said ‘Right,let’s do it, we need to grow at all costs,’ andthen have realized that they have a significantdemand on working capital and that the cost ofgrowth is too much. They need to really focus ontheir working capital, optimize their inventories,cash flows and solve this problem.There are also the challenges brought on bynew or different sales channels. A number ofcompanies in Brazil, for example, have startedselling through the internet, which is quite anew thing. Others have decided that they’regoing to go direct to their end customers,rather than just sell through distributors.Some are even thinking of opening their ownretail stores. Their Supply Chains need to betotally flexible because it’s very different toship bulk product to Walmart than it is to shipproduct to perhaps 2,000 of your own retailstores. An added complexity is that not everysegment of your customer base has the sameneeds or wants from your product. So whatassortment flexibility are you going to carryin your product portfolio?Latin American businesses used to believe that theycould bring about all these changes themselves.There’s a much greater sense of urgency becausethey know they don’t have time to developinternally. Rapid growth has fuelled a hugedemand on talent within the business, so theysimply don’t have the capacity to assign teamsto work on internal Change Programs.Moving from a Supply Chain nightmare to aSupply Chain Wonderland requires vision, tenacityand a group of committed partners. CelerantConsulting together with Tantum Group/Symneticsunderstand the challenges and has a globaltrack record of helping companies overcomethem and reach that promised land.44CLOSEWORK® GLOBAL REVIEW 2012

Many Latin American companies are now regional orglobal players, say Gustavo Rojas, Managing Directorat Celerant Consulting, Latin America and MathiasMangels, Managing Director at partner companyTantum Group / Symnetics. But they need to balancetheir rapid growth with sustainable internal change.‘ Success doesn’t just breedsuccess, it also breeds opportunitiesand many companies are now at acrossroads in their development.’CLOSEWORK® GLOBAL REVIEW 2012 45

Driving IdeasIdeas move fast when their time has come.Entrepreneur is a French word,but just how entrepreneurialare French companies?n France, collaborative, cross-disciplinaryI organisations are still few and far between,says Françoise Berthier, Head of Change Support/Human Resources at Sanofi. Yet compared totraditional pyramid structures, they allow farmore room for interconnection and innovation.46 CLOSEWORK® GLOBAL REVIEW 2012

Organisational StructureWhat do you believepowers innovation?Creativity, efficiency and rapid decision making.Creativity enables a person, a team or anorganisation to produce new ideas, conceptsand solutions. Rapid decision making is thereto guide creativity and point it in the rightdirection – the direction of real innovation.By connecting people who have complementaryideas, information or skills, cross-disciplinaryorganisations stimulate creativity as muchas they supervise it. Compared to traditionalpyramid structures, they allow more room forinterconnection and freedom of expression, soideas multiply, concerted decisions are made swiftlyand this fosters the emergence of innovation.Why are ‘virtual collaborativeplatforms’ so conducive toinnovation?I think it’s because they provide a unique space,a virtual space, where people who might notmeet in their everyday jobs can share ideas,identify possibilities and generally gain fromone another. Within this space, communitiescan form across the entire organisation on thebasis of ideas, experience or common interests.Is a cross-disciplinaryapproach the onlyway forward?Many organizations are recognising that it is.We have reached the limits of overly verticalsystems where decision making processes areslow and individuals don’t cooperate or sharetheir ideas enough. All collaborative horizontalsystems, whether virtual or otherwise, offer a newway of working. They make our employees moreaccountable, optimise the development of ideasand effectively leverage the innovation process.Is this a turning point inFrench corporate culture?I believe that it is. For many companies however,this change will be a real challenge in itself. Ina vertical system, some managers have becomeused to closely supervising their teams, whichcan prove counter-productive when pushed toextremes. Horizontal structures change a manager’srole: he or she becomes an advisor, even acoach for the other team members. They inturn become more responsible as the managersteers their work and their thinking around toopenness and cooperation. Identifying how tocooperate or how to get others to cooperate tostrengthen projects and results is absolutelykey to innovation.How easy will it beto implement?It all depends on the existing corporate culture.No change can be made ex-nihilo or be totallyradical. A company which doesn’t already placethe emphasis on cross-disciplinary cooperationwill have difficulty introducing such informationsystems. On the other hand, if there is a realambition, they can contribute to the change andencourage staff to share their ideas and innovate.The primary condition is that Management conveysa strong message around the collaboration project.A message that collaboration equals innovation.‘ By connecting people who have complementaryideas, information or skills, cross-disciplinaryorganisations stimulate creativity.’CLOSEWORK® GLOBAL REVIEW 2012 47

Driving ChangeChange is the constant, the signal for rebirth, the egg of the phoenix.lmost three billion people live onAless than $2 a day across the world’sdeveloping countries. Poverty isa vicious cycle that deprives onegeneration to the next, leading to inadequateschooling for children, low levels of employment,major health issues, and increased crime, stressand hunger – all of which further exacerbatethe situation.Between October and December of 2011, I wasfortunate to have been selected by TechnoServeto join its Volunteer Consultant program inMozambique. TechnoServe is a DC basedeconomic development NGO with a mission toeradicate poverty by empowering rural poorpeople to build businesses.My project was to develop a business plan andfinancial model for the first commercial soyaproduction and processing venture in Niassa,a province of Mozambique. Described by thelocals in Portuguese as ‘Fim do Mundo’ or ‘TheEnd of The World’, Niassa is one of the world’spoorest communities.The premise for the soya-based venture is tocreate an Agro-Forestry Village, which is anintegrated approach to rural development thatcombines forestry development with commercialand out grower agriculture. The goal is to upliftpoverty by creating additional cash incomesfor small-holder subsistence farmers. Theseincomes can then be used to pay for food,education, healthcare and so on.You get back as much as you giveOver the course of the three months that I wasthere, I worked closely with the managementteam of my client, local technical experts andindustry advisors. The difficulty of working in acountry like Mozambique cannot be overstated.The complexity of addressing the needs ofmultiple stakeholders and empowering thepoor to endure short-term risks are furtherhindered by the tough business and culturalenvironment: a lack of high quality managers,poor infrastructure, high financing rates, alimited working culture and the prevalence ofcorruption and employee theft are just someof the issues that local businesses face daily.The experience in Mozambique has allowed meto gain a completely new perspective on the worldfrom both a social and a business point of view.I have also thoroughly enjoyed exploring thelocal culture – food, music, arts and language,as well as making a number of new friends.But perhaps what’s most rewarding is havingthe opportunity to take part in an innovativeventure that will ultimately create hundreds ofjobs and benefit thousands of local people.‘ What’s most rewarding is the opportunity to take partin an innovative venture that will ultimately createhundreds of jobs and benefit thousands of locals.’48CLOSEWORK® GLOBAL REVIEW 2012

Clients don’t usually ask Consultants to helpthem totally change people’s lives, but that’sexactly what Technoserve asked CelerantConsulting’s Howard Sun to do in Mozambique.A NEW BEGINNING ATTHE END OF THE WORLD.If you’re interested to learn more aboutTechnoServe or about my experience, pleasevisit: technoserve.org or contact me directlyhoward.sun@celerantconsulting.comCLOSEWORK® GLOBAL REVIEW 2012 49

Driving InsightsSuccess always demands a greater effort.Research by the Lean Enterprise Research Centre 1shows that improvement potential is greater in a servicesenvironment than a manufacturing one, says Ruth Morton,Manager at Celerant Consulting UK.ccording to recent researches, 50%Aof customers across Europe havelost trust in their banks. They’realso more likely to change banksnow than they were 10 years ago. Some of thereasons for this are obvious. The global footprintof multinational banks has changed beyondrecognition and the customer is often now farremoved from their operation. So the challengefor all Financial Service companies is how to maketheir organisation seamlessly and sustainablycustomer centric?Financial Services were the first to adopt inhousedeveloped ERP systems back in the 80s,but because of its risk policy, the banking sectorcould not rely on third parties to develop itsin-house systems. The result was that ‘batchthinking’ was almost invented in the financialservices industry. As processes became moreand more technology dependent, banksbecame too big and too slow to adapt to theever changing environment. Any change, nomatter how small, became a major challengein terms of risk and implementation cost.More importantly, the mindset of manypeople within Financial Services becamechange-averse. Today, the biggest needwithin the banking sector, but also the biggestchallenge, is to implement LEAN thinking –total customer focus, empowerment forchange, results ownership, out-of-the-boxthinking and a culture of ContinuousImprovement. These are the new ingredientsfor successful banking.Transform your businessCelerant Consulting are change experts. Weunderstand what makes LEAN work and havedelivered hugely successful transformationprogrammes across the Financial Servicesindustry. The global programmes we designdo much more than reduce costs, they createsustainable value.A key sector learning has been that mostfinancial institutions have grown complexbecause of their size and/or multinationalfootprint. As a consequence, little end-to-endprocess knowledge, let alone result responsibilityfor it, exists. In addition, we have found thatfinancial institutions have defined less incentiveson operational excellence (leading) but moreon financial results which are measures that arelagging current reality. Finally, in most cases theresponsibility for these financial results is a groupresponsibility, leaving it unclear who is responsiblefor the day-to-day operational results, andtherefore continuous improvement. Instead ofchallenging the current reality, most organisationsare set to a ‘Command and Control’ model whereactivity and people are closely managed, sothey’re quite opposite to a transparent LEANbased company - in other words: the productis too detached from the operation; processownership often sits outside day-to-day operations,resulting in high variations of process application.LEAN INFINANCIALSERVICES:Money might make theworld go around, but peopleand processes make themoney go around.50 CLOSEWORK® GLOBAL REVIEW 2012

The goal of LEAN is to open up the work processand streamline hierarchies. LEAN programmesmust therefore be applied vertically as well ashorizontally to mobilise everyone – and leadershiphas a key role in making this happen. Horizontallyor end-to-end: Without having the full processview, you risk to sub-optimise pieces of the processthat in the end, will not have a significant impacton the customer. Vertically or top-down as well asbottom-up: Our research has shown that mostLEAN programmes either focus too much ontools and training and not enough on results,or the exact opposite. We believe that only acombined approach can drive behaviouralchange and produce sustainable results,so a well-balanced programme must:• Be an Integral part of the company’soperational strategy.• Ensure clear targets are set and understoodby the workforce.• Combine operational with tactical results.Value AccelerationValue acceleration represents the vertical andhorizontal integrated approach applied whendesigning and deploying Lean programs. It’sabout getting it ‘Right First Time’ whetherthat’s solving an issue or ensuring the rightconversation takes place. To be able to adaptquickly a company must identify opportunities,engage its workforce and build the right systemsto measure performance and ensure ContinuousImprovement. That way it can iterate its operationalvalue stream cycle and attain top value velocity.Value acceleration is based on 3 fundamentalswhich are explained further:• Defining lean in the company’s operationalstrategic context as opposed to a shopfloorrelatedproject• Focus on pro-active thinking by implementinga management system that allows the companyto pro-actively manage operational results sothat tactical and strategic results are reachedon time and in full• Introduce Lean leadership and therefore activelyinvolve those levels that are necessary to takefundamental decisions during the program.Corrective Thinking to Pro-active ThinkingIn our experience, Financial Services companiestend to be solution focused and uncomfortablewith taking time or using data to get to rootcauses. The upshot is that the only problemsthat get discussed are the ones with proposedsolutions. When that solution doesn’t work -because it didn’t solve the problem - a newsolution is automatically proposed, rather thananyone looking into the root causes of the problem.The situation is often made worse by the lackof first class operational KPIs – there might belots data, but very little information that linksthe operation to the operational strategy.This reinforces the silo mentality, but moreimportantly, prevents managers from spendingtime on the floor where value is added.We have known situations where managersdidn’t even know where their team were situatedand were fearful of going on to the floor.Our MCRS ® Management System is designed tocreate alignment and support translation of thebusiness strategy into measurable performanceat all levels of the organisation. It creates anintegrated information flow from executive levelto the cutting edge – and back again. It helpsmanagers prioritise and focus on key issues. Italso closes the loop on performance by usingagreed KPIs and fact based decision making andreinforcing accountability for identified actionto support Continuous Improvement. MCRS ®drives the move from Corrective thinking toPreventative thinking.Maximise LEAN LeadershipPeople are absolutely key to successful FinancialServices organisations and they cannot becontrolled in the same way as machinery.Staff often work in an island, with poor processvisibility and a lack of data to drive effectivedecision making. Industry culture also meansthat generally people are incentivised to followprocesses unquestioningly, rarely using theirinitiative to solve problems or improve their work.This is reinforced by a hierarchical structurethat prevents a clear line of sight across thevalue stream, and the fact that while there’s ahigh turnover at the top of organisations, furtherdown into middle management there’s littlefresh thinking, creating stagnant processesand little push for change.In this environment, behavioural change is vitalfor success. You are not asking someone tochange a machine setting, but to change theway they behave. In the set up to any LEANprogramme, Leadership’s most important taskis to create the climate for successful change‘ The global programmeswe design do much morethan reduce costs, theycreate sustainable value.’by ensuring their organisation is both willingand able to change. They must challenge thestatus quo, create a vision and making surethat a strong plan is in place. With our uniqueClosework ® approach, we work side by side withall layers of the organisation to fully implementa LEAN transformation. We combine all theprocess, system and people elements with realbehavioural change, resulting in sustainabileoperational and financial results. As one of ourrecent clients said ‘This is the first programmewe’ve had that actually implemented something.’We also advise that performance boards arebrought in from Day 1, because if you understandit, you can draw it and involve others to improvefurther. Only when there is a clear understandingof performance can leaders genuinely challengeand support their managers and workforce.Changing your culture is the key to everythingAccording to research commissioned by HarvardBusiness Review, the most effective aspect ofLEAN thinking in Financial Services is the abilityto speed up ‘mistake making’ - but achievingthis requires real behavioural and cultural change,So how do you create a performance based culture?One that is continually challenging people to learn,to grow, to improve performance, freeing upinformation, democratising problem solving andgiving people the autonomy to be successful?Transforming a business through LEAN thinkingis a never ending journey and one of Celerant’score competencies is changing behaviour to changeresults. The Celerant 5 Box Model ® shows thatto deliver sustainable change you have tochange behaviour and what drives behaviouris simultaneously addressing processes,management systems and people and skills.Culture is sustained behaviour across thewhole organisation. It’s about scaling updesired behaviours - and that’s where we havea proven track record in knowing what it reallytakes to make an organisation successful.1 Going lean: Published by: LEAN Enterprise Research Centre, Cardiff Business School, Peter Hines & David Taylor, 2000.CLOSEWORK® GLOBAL REVIEW 2012 51

Driving InsightsSuccess always demands a greater effort.MEET IN THE MIDDLEWhat is the best strategy for Demand-DrivenSupply Chains that don’t look like Dell’s?asks Gregg Macaluso, Director of theSupply Chain Service Line at CelerantConsulting, Americas.52 CLOSEWORK® GLOBAL REVIEW 2012

e’re all familiar with popularWexamples of optimized SupplyChains: 5 minute, configured-online,assembled-to-order computers;vessel loads of base-model Toyota Camry’sarriving in Long Beach to be later fit-to-suitregional or individual customer needs; evencontainer loads of New York Jets home jerseysfinished with Tim Tebow’s name and numberbetween Sunday’s late-game heroics andMonday’s store opening.The advantages of late stage differentiationand Push-Pull boundary-setting are welldocumented and acknowledged.That’s great for all those companies whose productportfolio is suited to the established and most-oftendiscussed consumer or discrete model. Demandplans get aggregated at family levels where they’llbe more accurate, scaled production is outsourcedto a low-cost location, then provide for a manageablenumber of late-defined customer alternativesto be assembled close to customers with littleor no waste. Sounds pretty good.But how can I guarantee success if my companymakes specialty or bulk chemicals, provisionsspare parts in a network, or makes products likehighly regulated consumables like those usedin segments of Life Science? What if the supplychain I manage doesn’t “have an app for that”?Is our only alternative to go back to a ‘Forecast& Sell at a Discount’ strategy?’Maximize your position on the board(from Simchi-Levi, et. al)1Demand UncertaintyH1LPullContinuousReplenishmentAShortBInventoryPositioningPushLongLead Time(to Plan, Source.Make, Move)The scenarios where pure Pull or Push strategiesapply, even where there is postponement orPush-Pull boundaries are now better understood.Boxes A and B however, pose far greater challenges.The Continuous Replenishment ModelIn situations where demand uncertainty islow but expected supply lead time short, themodel used by grocery and wholesale fooddistribution might provide a hint to an alternativedemand-driven supply chain model.A Specialty Chemicals supplier, aligned withwholesale and retail building repair/improvementproviders, manufactures and distributes a finite,but industry-complete mix of commonly consumedspecialty coatings and additives. In this ContinuousReplenishment model, the supplier is givenhistorical consumption data from the end-partnerin the supply chain. It then takes point-of-saleor other near-real-time consumptive information,typically through shared technologies, andprepares supply to previously-agreed intervalsto maintain specific levels of inventory downstreamcloser to the customer.Overall inventory is owned by either party inthese alliances, depending on their need andcapability to hold it, but it’s amicably pooled andcontinually managed and refined by all partnersto continually improve mutual investment inworking capital and improve customer servicelevels. So much so that one of Celerant Consulting’sChemical Industry clients recently adopted thisrapid-replenishment strategy to reduce leadtime between production, distribution andend consumption from 6 weeks to 3-5 daysreducing the need for a working-capitalintense network of supply.The Inventory Positioning ModelIn this model, the lead time is somewhatlonger, usually a few days to a week instead ofhours, but demand volatility (volume and SKU)is also less certain. So the role of inventorychanges from having a limited number ofproducts continuously available to havinga wide variety and volume of productsstrategically placed so that once again investmentand service levels can be optimized.Celerant Consulting has recently been workingwith a Telecommunication Industry client tomaximize its Inventory Positioning. The companyhas a mix of over 5000 network-service componentsthat range in value from $50 to $10,000 each. Itserves a range of clients that are guaranteed alevel of service up-time/repair within a range oftimes, depending on the service and configurationof network involved. Historically, the companyhad forward-placed a large percentage of themix close to the customer across a 13 state region.This translated to a wide range of materialbeing placed in various quantities in literallythousands of locations no more than 100-200miles apart over the regional service area.Upon analysis, we discovered that only 13%of the company’s customers required servicewithin a 4 hour timeframe. This allowed us toconsider a tiered inventory structure, where themost frequently used and generally less expensivespare parts are placed close to customers andthe more exotic and less frequently used partsare pooled and located regionally.Reallocating the company’s inventory like thisresulted in a 9 figure reduction in a 10 figurespare parts working-capital pool. Streamlininglogistics-delivery to point-of-use also madetechnician inventory control less cumbersomeand far more reliable.Supply Chains that are not typically notedor accustomed to nimble thinking aboutbeing demand-centric now have flexiblealternatives. Today’s challenging economydemands innovation over ‘Forecast and Hope.’Considering these alternatives may be a newway to profitably meet in the middle betweenPush and Pull.Gregg Macaluso is also Instructor of SupplyChain at the Leeds School of Business,University of Colorado-Boulder.1 Designing and Managing the Supply Chain:concepts, strategies and case studies.David Simchi-Levi, Philip Kaminsky,Edith Simchi-Levi. 3rd edition.CLOSEWORK® GLOBAL REVIEW 2012 53

Driving ResultsAll thoughts must be distilled into action and action that brings results.Defusing A Supply Chain CrisisA ‘Barrel Chasing’ MindsetBUSINESS CHALLENGE The client, a world leader in packaging solutions,decided to centralise its numerous spare part distribution platforms intoa single hub, with the support of one of the world’s leaders in distributionand logistics. Within a few weeks however, it was obvious that this newplatform simply wasn’t performing as efficiently as expected, leadingto huge delays in delivery time. The situation drew critical internal andexternal customer complaints, a state of ‘crisis’ was declared by TopManagement and Celerant Consulting was brought in to lead theresponse and resolve the crisis as rapidly as possible.CELERANT SOLUTION The priority was to recover delays and implementthe agreed contractual services by the distribution partner in a sustainableway. A crisis governance structure, including a ‘Crisis Taskforce,’ wasimplemented to tackle non performance. Crisis meetings were convenedtwice a day to ensure short interval control of key crisis indicators, definerecovery actions and ensure that they were followed up until full completion.Within a few short weeks, the collaborative relationship between theclient and its logistic partner was re-established, thanks to the resultsachieved by the taskforce. 3 months after this turbulent situation, thecrisis was declared officially over by the Top Management.RESULTS All key crises were addressed within 3 months: •Daily shipmentdelays were reduced by up to 95%. •The number of spare parts referenceswaiting for reception on a daily basis was reduced by 90%. •The numberof non conformities waiting for treatment on a daily basis was reducedby 85%. •The number of virtual gaps between IT systems was reducedby 95%. •The platform workforce are now managing themselves, platformperformance and driving Continuous Improvement.BUSINESS CHALLENGE The client is a global, diversified, upstream oil andgas company with a portfolio of producing assets. It had been running anOperational Excellence programme across some of these assets in NorthernEurope for more than a year and wanted an independent review on progress.Celerant Consulting was invited to conduct an analysis of the programmeand feed back its findings. Opportunities for strengthening the approachwere identified, which resulted in a proposal for coaching the organisationto leverage behavioural change and accelerate benefits from the existingprocesses and systems. 5 assets were identified as locations for offshoresupport, with an onshore team providing design and implementation supportacross 3 workstreams, with a big emphasis on coaching.CELERANT SOLUTION The project’s aim was to deliver improved operatingefficiency across the 5 supported assets by creating a ‘Barrel Chasing’mindset. Working closely with the client team, Celerant’s experts quicklyinstalled a number of Production Loss prevention processes, a Planningand Scheduling process and used its unique Closework ® approach to coachPerformance Management meetings in order to ensure compliance.RESULTS All assets are now operating above forecast target line.•PLE processes now fully installed and embedded. •4 key PerformanceManagement meetings installed to reinforce the new performancefocused culture. •An improved Planning and Scheduling process hasalso been installed.‘Celerant provided us the appropriate methodology to solve the crisis inthe most efficient way.’ Director of Life Cycle Management Worldwide.FMCGEnergy54 CLOSEWORK® GLOBAL REVIEW 2012

Innovating On All FrontsBuilding A Better Supply ChainBUSINESS CHALLENGE The client is a new entity in the lighting industrycreated from different businesses and acquisitions, each with a differentDNA and approach to Product Development. It was operating in rapidlychanging landscape because of the introduction of Solid State Lightingand intelligent Controls (Systems and Solutions), so it needed to rethinkthe way it innovated to introduce new products and solutions quicklyinto the market. A 4 week analysis revealed an average slip of theactive product portfolio of 45% and predicted a significant shortfall inits strategic growth ambitions by 2013.CELERANT SOLUTION The company decided to initiate a major ChangeProgramme, beginning with their activities in Europe and then rollingout globally and asked Celerant Consulting to support the first 12 weeksof the Design & Training phase. The aim was to improve 4 key aspectsof performance: reduce average Time To Market by 50%; reduce nonvalueadded time on development projects by 50%; install a new MCRS ®Management System with aligned KPIs; align the roles and responsibilitieswithin R&D and Marketing. To make this breakthrough, Celerant established3 work streams: Financial & Operational to align the project portfolio tolong-term financial targets, with real-time transparency of existing andfuture projects; Business Creation to create a more manageable processthat would reduce Time to Market and maximise bang for buck; ProjectExecution to reduce process inefficiency to acceptable levels and optimiseresource allocation conform strategy. The Celerant team also extensivelytrained key client people to ensure a seamless handover after the Design& Training phase.RESULTS Three product development types were identified which haverealised significant reductions in Time To Market (TTM). •Type A, newproducts - TTM reduced from 16-12 months. •Type B, products derivedfrom existing platforms - TTM reduced from 14-6 months. •Type C,improved or cost down existing products - TTM reduced from 9-3 months.ManufacturingBUSINESS CHALLENGE The client is one of the world’s largest producersof bricks, pavers and clay roof tiles and had grown rapidly through a seriesof acquisitions. The financial crisis of 2008 marked a turning point in thepattern of economic development for the global construction industry,so the company asked Celerant Consulting help it maximise cash flowsby analysing areas for improvement and designing an integrated SupplyChain planning model that could be rolled out across the organisation.The key goals were to improve EBITDA performance, reduce workingcapital and provide first class customer service.CELERANT SOLUTION Celerant conducted an in depth analysis and basedon these results, began to design all the relevant elements for the futuresupply chain. Working closely with the client team, Celerant’s expertsdefined a new ‘One Way of Working’ across the value chain and organisationwith a standardised MCRS ® Management System, KPIs and tools. They alsodeveloped a new organisational structure with clear roles, responsibilitiesand IT system requirements. The supply chain function was closely alignedwith Sales through a clearly defined S&OP process that was embedded inthe European region with a clear RACI. Celerant also developed commonprocesses for product lifecycle management, inventory & order managementand production planning and established an inventory planning model tocut inventory levels.RESULTS A standard organisational design at all sites with a proactiveMCRS ® Management System, an optimised S&OP process and newprocesses for Forecasting and Demand Planning. •An efficient OrderManagement process focused on reliability of Order Book data so thatthis information could be used in the planning cycle. •A new inventorymanagement process and modelling tool. •Redesigned productionwheels and tools for Capacity and Supply Planning. •Product lifecyclemanagement processes and tools to accurately determine change-overcosts, cost prices and ABC classifications‘This was by far the best project I have seen in a long time.’Managing DirectorConstructionCLOSEWORK® CELERANT GLOBAL REVIEW 2011 2012 XX 55

Driving ChangeChange is the constant, the signal for rebirth, the egg of the phoenix.From salt to iron ore, from opencast to underground,Celerant’s experience spans 25 years.56 CLOSEWORK® GLOBAL REVIEW 2012

Celerant Consulting has beena partner to global Metals &Mining companies for25 years, so it was with greatpleasure that we recentlysponsored the Prospectors& Developers Associationof Canada (PDAC) 2012International Conventionin Toronto.he annual four-day PDACTConvention has grown in size,stature and influence since itbegan in 1932 and is now theevent of choice for the world’s mineral industry.With over 1,000 exhibitors and 30,369 attendeesfrom 125 countries, it allows business leadersthe opportunity to get a global perspective onthe challenges facing the mining industry.As repeated Gold Plus sponsors of the event,Celerant Consulting hopes to both contribute tothe ongoing development of the industry andlearn from practitioners and industry leaders.“There’s no better place to network with worldclass industry practitioners in mining and moreimportantly to teach what we know and learnwhat we don’t.” said Boyce Jacob, a Metals andMining Executive at Celerant Consulting.“Celerant plans to continue to support PDACand similar industry events for years to come.Contributing to thought leadership in the industryand being active members of the community iscrucial to guiding and delivering operationalstrategy and implementation for our clients.”CLOSEWORK® GLOBAL REVIEW 2012 57

Driving InsightsSuccess always demands a greater effort.The North Americanchemical sector isin the midst of anexciting renaissance,says Joseph Coote,Chemical PracticeLeader at CelerantConsulting, Americas,but OperationalExcellence is essentialto build long termshareholder value.Compelling assetmanagement to driveshareholder value inthe midst of a NorthAmerican ChemicalRenaissance.Starting now.uelled by a wave of capitalFinvestment, North Americancommodity, diversified andspecialty chemical companiesare investing to take advantage of the region’senergy and feedstock positioning and favorableinvestment climate.Attractive low-cost natural gas is expected tocreate a broader industrial resurgence and enhanceddemand in the long term, with the result thatglobal chemical companies are also revising theirgeographic portfolio weightings and lookingto invest more in the Americas with more than$100bn (€76bn) of new capital expected to betargeted in the Americas over the next decade.Company strategy is critical to defining businessstrategy, geographic positioning and investmentportfolio, but how well companies execute andmanage their investments will significantlyinfluence their financial performance andshareholder value creation. The long haul winnerswill be companies that have generated abovenormalized levels of capital returns throughdisciplined process management.Building Shareholder ValueA variety of drivers contribute to buildingshareholder value for chemical companies.One of the most distinguishing metrics is Returnon Capital Employed (ROCE). Shareholder valueis tightly linked to asset efficiency and ROCE.58 CLOSEWORK® GLOBAL REVIEW 2012

Chemical Sector Peer Group Analysis:Relationship Between Return on CapitalEmployed and ValuationROCE %3025R2 = 0.72201510500.0 1.0 2.0 3.0 4.0 5.0TEV/CESpeciality ChemicalCommodity ChemicalDiversified ChemicalThis scatter chart shows a relatively strongrelationship between the average five-yeartrailing ROCE and total enterprise value overcapital employed for a portfolio of commodity,diversified and specialty chemical companies.There are some interesting observations tomake regarding the strength of the relationshipand how it varies by type of participant. In general,commodity companies must generate a higherROCE to achieve the same valuation (proxy forvaluation being TEV/CE). Whereas, within thespecialty and diversified sectors there is moreeven distribution reflecting many factors includingportfolio quality, scale, cyclicality and overallliquidity. Generally, companies below the curvebenefit from positive portfolio dynamics andliquidity effects, achieving higher valuations perunit of capital employed. Those above the curvegenerally suffer from a discount due to the cyclicalnature of their portfolios, scale or momentumissues and therefore require higher ROCE performanceto achieve similar shareholder value.While ROCE is influenced by the quality ofindustry structure and competitive positioning,creating a culture of Operational Excellenceallows a company to address these dimensionsof shareholder value proactively.Companies tend to be more focused on operationalimprovement and cost management in thedownward portion of the cycle. But the winnershave focused on creating a culture of OperationalExcellence with clear management frameworks andcontinuous goal-setting to achieve continuingperformance gains. The focus of programmaticefforts may change throughout the investmentcycle, but the level of effort is continuous. In thecapital investment wave, it will be important toemphasize good investment decisions, as wellas effective implementation. Optimizing theindustrial footprint, capital portfolio managementand capital project management are all importantat this phase of the industry investment cycle.There is significant opportunity for improvement.In a recent survey of 2,800 CEOs and business unitmanagers in the US, only 19% were satisfiedthat their LEAN programs (those focusing onefficient use of resources for profit generation)had delivered what was intended. We believethat the difference is adopting a culture ofOperational Excellence.Increasing throughput from existing assetsWe see significant transformation opportunitiesthat will drive shareholder value, particularlyamong the mid-sized companies in the sector.Leading companies that are focused on enhancingreturns on invested capital are focused oncontinuous and programmatic improvementaddressing the key levers impacting both thenumerator and the denominator.There are three thematic improvement areasfor holistic programmatic management: costmanagement; revenue enhancement; and capitaland asset management. While the balance offocus reflects the current state of the company,its specific opportunity areas and competitivepositioning, it also reflects positioning in thebusiness and investment cycle.As the economy improves, we expect cyclicalrecovery in housing and modest additional recoveryin the automotive sector to produce a significantrebound in chemical demand. With the chemicalsector operating near 80% overall utilization andmany companies behind the capital investmentcurve, the focus will remain on increasing throughputfrom existing assets and also bringing onnew capital investments in a timely manner.The use of Overall Equipment Effectivenessand Capital Project Management are in vogueas companies prepare for recovery. Companiesemploying leading capital project managementtechniques routinely achieve 1.5-2% higherROCE performance.Examining investment options consistentlyrequires a capital portfolio management processwith a sophisticated risk management approach.Companies employing integrated portfolio managementapproaches consistently make betterinvestment decisions. The area is a growingbest practice that is embedded in managementframeworks across most of the larger, moresophisticated chemical companies, and mid-capcompanies are employing this approach as well.Minimizing price inflation Maximizing innovationAs the economy recovers, there is a disproportionaterisk of commodity price inflation. To dealwith potential input price volatility similar to the2008 time period, many companies are shiftingto purchasing and supplier management programsfocusing on novel contracting mechanisms andsupplier management approaches.Sales analytics, pricing optimization and saleseffectiveness are critical to the creation ofmechanisms and communication to passinginput pricing through to customers in a timelymanner to reduce the profit cyclicality acrossthe value chain.Longer-term innovation is also critical to supportenhanced margins and growth. For businesses,innovation is not an end in itself. Their prime taskis to identify the right innovation, and it sometimesrequires tough decisions to be made betweendevelopment projects. Having the right processto manage innovation in a portfolio and ensuringthat the company is taking enough and the rightbalance of risks with its new product developmentinvestment is key. This requires the right levelof process structure and discipline with theright risk/benefit ratio and systematic controlof timelines and costs.Adopting a holistic approachIn summary, we believe that the winning companiesin our industry have increasingly created a cultureof Operational and Process Excellence thatembodies commercial excellence, capital andasset management, and cost management.This holistic approach leads to strong shareholdervalue performance with best practice companiesconsistently outperforming their peers. Shiftingthe focus and activity level of a holistic managementapproach is prudent throughout the business andinvestment cycle, and an important managementskill to optimize return on capital, growth andshareholder value.A version of this article first appeared on ICIS.com – the breaking online news service for theglobal chemical industry.CLOSEWORK® GLOBAL REVIEW 2012 59

Driving IdeasIdeas move fast when their time has come.Consulting, Quo Vadis?he global Consulting industry is inT the midst of unprecedented change, sayGreg Baranszky and JJ Sendelbach of DoublejayConsulting LLC, and it’s creating three categoriesof Consultancy. Leaders, Followers and Sleepers.What big trends are shapingthe Consulting market?Greg: The global Consulting market is still slowlyrecovering from the downturn, but it’s far frombusiness as usual – and it may never be thatway again. Several major trends are combiningto create a more challenging environment forConsulting firms of all types. Competition is much,much tougher, with firms trying to eat each other’slunch; pressure on fees continues, except at thevery top of the very top tier; clients are doing farmore in-house; Return on Consulting is moreminutely dissected; Procurement Departmentsare ascendant, and non-traditional competitorsare muscling into Consulting, often riding strongclient relationships and hot topics such asSustainability. In our view these trends arenot flavors of the month, or even flavors of theyear. They represent a fundamental evolutionin the Consulting marketplace and every firmwill have to adapt to this new normal.What types of projectsare companies engagingConsulting firms with?Greg: This tends to vary by region and byconsulting service line. In the OperationsManagement space, our current researchshows that:• Many clients are moving away from their focuson cost-cutting and towards more strategic,growth-oriented operations projects.• Strategic supply chain management is hot,particularly in faster-growing emerging marketslike Brazil where the gap between clients’strategic plans and their existing production/supply chains is widest.• Sustainability, in all its guises, from broadcorporate responsibility projects to highly targetedsustainable supply chain work, is driving moreand more consulting revenue.JJ: Clients in all markets are pushing for morecomplex and integrated solutions that renderthe hand-off between strategy and operationsalmost imperceptible. ‘S&O’ - Strategy &Operations Consulting - is becoming the newbuzzword. As this amalgamation happens itwill be easier for the strategy people to say“I can do implementation” than for the “getyour hands dirty” Operations people to arguethat all of a sudden they can do strategy.From a client’s POV, theConsulting market appearsmore crowded than ever.Greg: That’s true. As we’ve already noted,firms are trying more aggressively than everto eat each other’s lunch by broadening theircurrent services lines and extending into newservice lines. This results in greater overlap inthe service mix of existing firms and a greaternumber of providers in each service line. TheOperations Management space is the best60 CLOSEWORK® GLOBAL REVIEW 2012

Consulting 2020example of this phenomenon. Strategy firmsare pushing ‘downward’ into OM; IT firms arepushing ‘upward’ into OM, and non-traditionalsuppliers, such as large engineering basedfirms, are pushing ‘inward’ into OM.How do you stand out insuch a crowded space?Greg: Truly differentiating is becoming moredifficult every day and is a key concern for manyof the firms we engage with on a regular basis.Clients are using words like ‘clones’ or ‘theswarm’ to describe their consulting providers –not words that any Consulting firm would liketo hear applied to itself.In a market where so many firms are so good,or at least competent, at so many differentfunctions, we see the real point of differentiationas the way that Consulting firms deliver theirservices - not necessarily the quality level ofthe services themselves, because the qualityis so similar.Our analysis shows that ‘Customer Experience’is composed of very specific elements that firmsmust get right to stand out from their competitors.These include knowledge transfer, joint clientconsultingteams, success-based fee structures,thought leadership that is more than marketingcollateral for the firm, and true partner-levelinvolvement in all phases of project delivery. Allof these raise not only traditional measures ofclient satisfaction but also what Doublejay callsclient involvement with a Consulting brand. Firmswhich score highly on client experience-basedinvolvement measures are the ones which becomethe go-to option in a client’s mind and trulystand out from their competitors. Some firmsunderstand this intuitively, but we have seenvery few that have systematized this approach.The ones which have are reaping the benefits.JJ: I was discussing this subject with a verysophisticated user of Management Consultingservices at a Fortune 10 company and he said‘The best thing I can say is that when I send anemail to my Consulting partner on a Sundayafternoon asking a question, I get an email backanswering that question by Sunday evening.And he’s not charging me for that. So I willalways go back to that firm because that’swhat I’m looking for. Any firm can do the actualproject. I’m looking for something else.’What’s next in Consulting?What should companies andfirms alike be thinking about?JJ: Based on over 50 projects and marketresearch we have developed what we call‘Consulting Quo Vadis?’. In this scenario analysis,Consulting as we know it today, will disappearand will be replaced by two business models.The first one is best described in today’s terminologyas ‘high end staff augmentation’. It willentail everything that a company needs to setup, socialize, organize and run large scale andcomplex projects. Consultants in this categorycome through the door with three major ingredients:1. Tools, how to organize and run large projects,2. Experience, based on cases worked on before,3. And an unbiased outside-in viewpoint.The second category we have started toname ‘evidence based consulting. These areConsultancies who are absolute subject - andvertical - experts. No matter whether the projectis, a strategy, efficiency, finance, IT or HRproject, the Consultancy again brings threesignificant ingredients along:1. Hard fact evidence based on ‘big data’(historic and predictive business intelligence)2. True partnership with the client (long-standingrelationship with all levels and LOBs of the firm)3. A business model that lends itself to share in therisk and the rewards of the project with the client.Is there a game-changing business model comingour way that will make Consulting as we know ittoday a thing of the past? We believe absolutelyyes! And it is not going to be one or the otherConsulting model of the future, it’s going to beboth! There is need and a place for both. Thegood news for consumers of Consulting thoughwill be that there will be significantly more choicesthan today. Where today’s decisions who to‘ The real point ofdifferentiation is theway that Consultingfirms deliver theirservices.’work with and how are often made within theold boys club and with an eye towards boardroom assurance, tomorrow’s decisions will bebased on who has the most evidence in ourvertical and horizontal and who do we trust isour best partner in this regard today and forthe foreseeable future?Do you think Consultingfirms recognize the speedof change?JJ: There are three categories of Consultancyout there: Leaders, Followers and Sleepers.That’s my answer.Greg: There are fewer Leaders than Followersand fewer Followers than Sleepers. Our view isthat these are fundamental changes that willalter the way Consulting is done. If they don’tadapt, many firms won’t be in existence in5 or 10 years.JJ Sendelbach is Managing Director at DoublejayConsulting LLC and Greg Baranszky is a Director.Doublejay Consulting, founded in 2003, is a strategicadvisor to the professional services industry.CLOSEWORK® GLOBAL REVIEW 2012 61

Driving InsightsSuccess always demands a greater effort.THE GRANITE CITY:It’s been a home from home for almost 20 years.Celerant Consulting has established itself as a major partner for Oil & Gascompanies in the North Sea, helping them improve performance andimplement change. UK Vice Presidents, David Delvin (Sales), David Vaughan(Analysis), Mark Turek (Operations) and Dereck Clow, Head of Country,give their views on what now lies ahead.66 62CLOSEWORK® GLOBAL REVIEW 2012

Is this a key sector forthe UK economy?DC: Without a doubt. Just to put things in some kindof context, this year saw the largest investmentin the North Sea Oil & Gas industry for 10 years.It was over $10 billion. The industry employs380,000 people in the UK and accounts fornearly 20% of all Corporation Tax received by theExchequer. So we’re talking about a massiveindustry with massive resources.DD: It’s also a key sector for Celerant UK.We’ve already worked with nine of the Top 10Oil & Gas companies in the world and our bestsector experts and consultants are working inthis area. The first North Sea project we didwas 18 years ago and Mark and I were bothon it, but we’ve now eclipsed our 1996 peak.In terms of both revenue and people involved,we’re way beyond it.Why has Celerant got somuch traction in Aberdeenand what type of projectsare you currently delivering?DD: We have an exceptional track record in thissector, but it’s the way that we help companiesmake improvements in their business performancethat is the big difference. Our style of Consulting,in terms of supporting implementation challenges,is really what they’re looking for now because thenature and structure of the industry has changedquite dramatically over the past 5 years or so.The major players have divested their assets andthey’ve been acquired by smaller, independentcompanies that don’t have the massive infrastructurein place that say, Shell or BP do. Sothey’re looking for partners that can effectivelyoffset some of those gaps and help with theimprovements they’re trying to make. We fit thatbill very well. The other thing is that we’ve built adegree of momentum and success breeds success,so we’ve been able to secure a number of programmessimply because there’s a confidenceshown by others that we’re a good partner towork with. Success builds an interest in whatwe can do for others.MT: There are a number of projects runningin Aberdeen, all at different stages of maturity:TAQA started up recently and is still ramping-up,NEXEN is an established project in late-stage ofmaturity and then we have a couple of smallerfollow-on projects at Talisman which both sprangout of the main ‘Operational Excellence’ projectwhich we completed last year. From a service-lineperspective, we’re seeing a strong focus onOperations Management. This isn’t surprisinggiven the asset intensive environment, muchof which is being operated beyond its originaldesign life, so Engineering and Maintenancefeature strongly in our approach. The operatinglife-cycle also means that our clients are askingthemselves constantly whether they are configuredto respond to new challenges resultingfrom changes in their operating environment.This means that Organisational Effectivenesshas a big role to play in helping our clientsachieve their goals. The industry is constantlyon the move in terms of both ownership andoperating environment, which means that wewill continue to utilise and adapt our broadrange of offerings in service of meeting ourclient’s needs.What key challenges arethese companies facing?DV: There’s been almost an inbuilt inefficiencyin the North Sea because it’s a very difficultplace to work and in many ways the workingpractices have evolved over time, rather thanbeen designed. So the priority for all companiesis to increase efficiency to enable them to reinvesttheir operating expenditure into the areas theyneed to focus on going forward. You may havedifferent levels of efficiency on different ages ofplatforms, but everyone is looking to increase theiroverall efficiency and that’s our area of expertise.DD: A lot of emerging companies that acquiredolder assets from larger companies now have todeal with the legacy issues that have been in place.They’re trying to stamp their own methodology,their own way of doing things on their newlyacquired assets. The obvious difficulty they’vegot is that in some cases, these operationshave been running for 25 years or more.They’ve been operating with a single ownerfor that time and suddenly this new companyis trying to change the game. So there’s ahuge degree of change associated with tryingto get that right.‘ We’ve workedwith nine of theTop 10 Oil & Gascompanies inthe world.’MT: I agree with David’s comment aboutemerging companies wanting to stamp theirown mark, but I think that in some cases thecompanies themselves aren’t exactly sure whatthat mark is. So in some ways they’re workingfrom scratch to define their culture. In doing sothey are often looking to us, to our experienceand insights, to see what the best attributesand building blocks we can offer them in termsof establishing their way of working.DD: Another problem is that they usually wantto make these changes very quickly. It’s just thenature of what they want to do - and obviouslyif you start with a blank sheet of paper, it takesa hell of a lot longer than it does when youcan bring a number of options and ideas andexamples of how it’s done elsewhere.DV: I think one of the biggest challenges isprobably being driven by the high price of oilitself. It’s a resource rich sector and thereforewhat tends to happen is that there’s a massivelevel of activity, whether it’s projects, initiativesor improvements. And sometimes the sheervolume of projects that organisations undertakecan almost start to grind them down becauseyou can’t see the wood for the trees in terms ofcoordinating all these activities. Consequentlythere’s a lack of focus, a lack of clear governancearound selection and prioritisation and a lackof clarity around resource delivery. There’s alack of vision and leadership in really steering alot of these activities - and part of that is drivenby the sheer volume of activity in the industry.Another challenge is that a lot of assets arenow running beyond their original design life.So there’s the question of how can we extendthe life much further? The original intentionwas for maybe 20 - 30 years and now withsome of these assets the plan has been revisedCLOSEWORK® GLOBAL REVIEW 2012 63 67

Driving InsightsSuccess always demands a greater effort.bringing in additional sub surface assets, sothere’s a whole challenge there about how youselectively invest in your assets to set them upfor the next 10 -20 years of operation.What about the peoplewho work in this industry?DV: Companies are now actively competing forexperienced individuals, so you’ve got workforcestability issues and potential gaps that aredifficult to fill.DD: A massive demographic time bomb is aboutto hit the industry. If you look at the currentworkforce structure, the number of 50 year old,experienced engineers who will retire fairly soonis not being replaced by graduates coming in.So there’s a major worry about this knowledgeleaking out of the organisation. This lack ofreplacements came about because Oil & Gaswasn’t seen as a sexy industry for a while. It’sa tough industry, there’s a lot of travel. Somepeople like that and some don’t. The number ofpetrochemical engineers graduating these daysis nothing like it was in the 80s. So companiesare pinching people from each other. In thepast for example, a Shell employee would staywith the company for 30 years, but now peopleswitch company quite regularly.MT: Also a lot of the guys who were in chargeof Operations in the past have either retired ormoved up the ladder to other senior jobs in thecompany and are no longer around to advisetheir successors.What are the ‘ownership’challenges for an industrywith such a high dependencyon 3rd parties?MT: The context of the high dependency onthird parties is really how I read this question.I think it talks a lot to what was said earlier,in terms of the mobility and migration of keyresources from company to company. Whereashistorically someone would join an operatorfrom University and rise through the ranks andto extend it out to 40 - 50 years. They’re also48 64 CLOSEWORK® GLOBAL REVIEW 2012 be very much the company man, that aspecthas changed significantly. It’s rarer now to comeacross the company man, simply because peoplemove around as they see better opportunitiesfor career development. That’s become verymuch the culture in Aberdeen. In terms of peoplehaving the same level of ownership, I don’t thinkit’s quite how we would have envisaged it 10-15years ago. The whole ownership landscape haschanged quite significantly.DV: With a lot of third party contractors, it’sultimately a fairly transactional relationshipand that builds on this idea of not necessarilybeing a company or career man. You’re there todo a job for a defined period. Also with the shiftto shift rota, you’re living with the problem fortwo weeks, but you aren’t necessarily livingwith it week in and week out. It’s someoneelse’s problem when it comes to picking upthe activity for the next two weeks. So I thinkthere’s a whole range of ownership problems:the staff turnover that Mark talked about, theshift set up and the fact that 3rd parties arelargely driven by the transactional nature ofthe task and being remunerated, rather than along term interest and pride in the asset. Thisis always going to be a potential issue in anoutsourced environment.Based on your experience,what are the key requirementsfor delivering a successfulOil & Gas project - inparticular the challengesof delivering sustainablechange projects offshore?MT: I’m not convinced there are any uniquerequirements for Oil & Gas that are differentfrom any other project in a different industry.The ingredients of a successful project arepretty generic. What’s totally different about Oil& Gas, particularly where there’s an offshorecomponent, is that we’re dealing with a workforcethat is only there for two weeks out ofevery five. So in terms of success, it’s abouthow you structure the project to take thatinto consideration, because clearly not only

do you not have the same degree of face timeas you would on a conventional land basedproject, but obviously people disappear forseveral weeks. Going into every project withthat understanding and having Consultantswho understand that environment and aretuned into that challenge is clearly one of ourstrengths.DV: Part of it is structural. It’s related to theexisting shift patterns of two on and three off.People are rotating off the platform and spendingsignificant amounts of time away from theworking environment and this presents areal challenge in terms of driving new waysof working and getting them hardwired intothe organisation. Another observation for meis that quite a number of Operators seem tohave allowed the evolution of quite a lot ofvariation in performance from shift to shift. Itfeels as though there’s almost an acceptancethat shift to shift it’s the people out there thatset the tone in terms of how certain things aredone - as opposed to getting to a clear view ofstandardised best practice that is consistentlyapplied consistently.MT: The challenge that I see is that traditionally,there has always been an onshore organisationthat developed and set high standards and thenthere’s the offshore organisation where thesethings are implemented and from my experiencethere’s a bit of a disconnect between the two.By that I mean that the flow of leadership fromonshore to offshore is perhaps not as effectiveas it could be. So whilst expectations are sethigh onshore, I would question whether that’scommunicated and reinforced as much as itcould be and whether roles and responsibilitiesare clarified as much as they should be. I thinkthe industry recognises that this is a continuingchallenge. And that’s an area where we clearlyput a lot of our focus.How do you ensure youleave a sustainable legacy?MT: As we come to the latter stages of ourengagement, sustainability is a conversationthat we start and continually reinforce with ourclients. You can’t underestimate the importanceof leadership in this whole sustainability debate.‘ Closework ® is the fundamentaldifference in our approach.We work alongside people atthe point where the solutionhas to happen.’Once we leave it really is down to Leadership toensure that the processes, practices and systemsthat we’ve put in place are sustainable. So partof our job is to make Leaders understand whattheir role is in this. It’s a conversation that startsalmost immediately, but becomes more andmore relevant as we got towards the latter stages.They have to be clear where they fit into thosethings and what they have to continue doing toensure these things live on.DV: The other point to remember is that thesethings aren’t a quick fix. There‘s an investmentof resource in terms of activity and durationto ensure that the new ways of working areembedded into the organisation. There’s aChange vehicle that has to be put in place withboth client resource and external support andexpertise. You’ve got to have the right criticalmass to properly drive and install the newpractices. That all comes back to the quality ofpeople we put on these projects. It’s also aboutyour tenacity and rigour throughout the projectand not getting distracted. One of the lessonsthat we point to in programmes that fail withclients is that when things get tough, they thentake away the structures and lose their focus andthings dissipate. You’ve got to hold the structurethroughout the transformational change.How do you crossthe Rubicon?DC: Energy is a key sector for Celerant. It’schanging and moving and so are we. We havealready opened offices in Brazil, Africa and theMiddle East where we’re involved in manymajor projects, including Liquefied Gas. Thecompanies we deal with have a global footprint,so we’ve got to take our massive learnings andstart utilising them right across the globe.CLOSEWORK® GLOBAL REVIEW 2012 65

Driving InsightsSuccess always demands a greater effort.When we partner with Private Equityfirms and their portfolio companies ourrole is simple, says Celerant Consulting’sAndy Rodgers. We help management teamsboldly change the way their business runs.uilding value in a portfolio company,Bpreparing the platform for growthand developing attractive exitstrategies comes down to threebasic principles: planning, flawless execution andcommunication. These principals must be appliedrelentlessly from due diligence throughout theportfolio company ownership cycle. Acquiring firmsthat do not focus on Continuous Improvement aresimply fighting themselves. Status quo performanceis sub-optimal because pre-existing inefficiencieswill become roadblocks for growth.Optimizing total value from an acquisition ormerger can only be achieved however, if thecompany’s new strategy is understood by allparties. Acquisitions undertaken without cleardirection create a rudderless work environmentthat can derail the best plans and set the stagefor a merger stunted by cultural clashes. AsRobert F. Bruner, Dean of the Darden GraduateSchool of Business, University of Virginia notes inChief Executive Magazine: ‘CEOs tend to thinkthat integration merely consists of connectingthe IT pipelines, getting the cash to flow in theright direction and consolidating the accountingsystems, but that is just the start. Integrationis about building a joint vision and strategy ofthe combined company, and creating a set ofnorms about how decisions will be reached.’We believe that optimized integration is builton four basic tenets for change.1 Change begins before the closeValue creation starts with a detailed understandingof the organization’s structure, personnel, andareas of strength and improvement. The visionmust be clear, and the action plan fully developedbefore control is sealed by the Private Equity team.If aggressive preparations are not made, valuecan be lost from Day 1. Buyers must approachthis planning process by going beyond thetypical CIM review and financial due diligenceto get an inside look at future operations. Theyshould visit company sites and base conclusionson carefully gathered external data. This willprepare them for the tough decisions ahead, whilelaying the foundations for detailed operationalassessments and action plans in the first 100days of ownership. With this process complete,teams can confidently send out a Day Onecommunication that enrolls staff in the vision andignites positive momentum. Everyone must feelsupported by the full weight of the organizationas they undertake change, whether that’s a minoralteration to a department’s IT system or a majoroverhaul of a production facility. This thoroughsetting of the stage needs to be in play prior tothe close, and acquirers, management teams,and external advisors must collaborate continuouslyto ensure they’re moving in lockstep.2 Accelerate Value CreationThe first 100 Days are the window for newowners to exert authority and make changesthat demonstrate confidence, enthusiasm,and alignment with the vision. The planningand pronouncement process offers importantguidance, but without immediate, decisiveaction it will be almost impossible to enroll theorganization. These 100 Days are the criticaltimeframe in which assumed synergies mustbe proven, while redundancies and operationalinefficiencies are identified, evaluated andeliminated. Too often, new portfolio ownershiptakes hold of an organization gradually, and asa result employees hold fast to their heritage,routines and behaviors. Hitting the acceleratoron Day1avoids this pitfall.When it comes to mergers, establishing animmediate united front is crucial, otherwiseresistance to change can spell disaster. Theindustry is rife with examples. Take, for example,the purchasing of AOL by Time Warner. This$360bn merger was positioned to change thelandscape of communications, yet after 10 briefyears it collapsed as direct result of the companiesfailing to truly integrate their cultures and services.3 Change must be designed to lastFlawless execution is a daunting term, but it isa necessity as a new organization undertakesa transformation initiative. Execution must bepreciseand progress confirmed repeatedly withopen communication, management controlsand monitoring that keeps tabs on the manyballs in play. This pursuit of flawless executionis not geared toward ‘not getting it wrong.’ It’san approach that allows teams to make quickcorrections when things go awry. Organizationsare built around the most unreliable of resources –people – and plans will inevitably be scrambledas they unfold. Missteps need to be anticipatedand teams should be empowered to assess thesituation and take action.Even when the organization is moving in theright direction with the right processes in place,the work is not done. Implementation teamshave an obligation to make their work endure;they must not leave employees with new rolesand responsibilities and no idea how to sustainmomentum. Managers should be taught how touse the reporting and monitoring tools, how toanalyze progress and be accountable for theirand their teams’ actions. With a personal stakeand the enthusiasm that comes with truly owningtheir new roles, these key ambassadors willadopt the tools as part of the new culture andoperations of an improved enterprise. Robustmanagement systems and motivated peopleare the foundations of a performance culture,with Continuous Improvement built into theDNA of the new learning organization.66CLOSEWORK® GLOBAL REVIEW 2012

Driving ChangeChange is the constant, the signal for rebirth, the egg of the phoenix.‘ After working atour desks all daywe decided tostretch our legs.’At Celerant Consultingwe believe that strongrelationships make allthe difference, that’s whywe consider every projecta long term partnership.68CLOSEWORK® GLOBAL REVIEW 2012

17,000 runners took part in The 2012 Rome Marathon‘A Marathon requires great physicaland mental preparation if you want tobe successful. The Celerant project gaveme the chance to meet Nicholas andfind a passion in common.We thendecided to take this challenge.’Jean-François, GRTgaz20th Marathon. Time 4:15‘After 3 months of tough training,encouraging one another wheneverwe had to run at night or at -10°C,Jean-François and I finally sharedthe pleasure of crossing the finishingline with a big smile!’Nicolas, Celerant Consulting France1st Marathon. Time: 3:25CLOSEWORK® GLOBAL REVIEW 2012 69

Driving ChangeChange is the constant, the signal for rebirth, the egg of the phoenix.C-CubeThe CelerantChange Club bringstogether professionals inChange Management toshare their experiences,ideas and ambition.70 CLOSEWORK® GLOBAL REVIEW 2012PARIS:Nov 2008: C-Cube launches in France andcompletes its 13th workshop in March 2012C-Cube is the perfect forum for ChangeManagers from multinational corporationsand medium sized companies to share theirproblems and opportunities with each otherand Senior Consultants from Celerant’sOperations teams.

Masters Of ChangeOpens New DoorsDOHA:Dec 2011: C-Cube MEAholds its first network meeting.Club Members meet at quarterly roundtableswhere topics include Change & M&A, Change& Management and Change & Multi Site-MultiCulture. They also work together at interactiveworkshops to pool experiences and best practice.DUSSELDORF:Jan 2012: C-Cube Germanyholds its first interactive workshop.C-Cube promotes a culture of ‘step back’ inan arena where constant adaptation is vital.It offers a unique opportunity for ChangeManagers to develop personal awarenessand cement their credibility as internalleaders of change.CLOSEWORK® GLOBAL REVIEW 2012 71

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