The 5Rs of Managerial Renewal

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The 5Rs of Managerial Renewal

• L.R. Jones
• Naval Postgraduate School
• Fred Thompson
• Willamette University

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Management by New Names?
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RestructuringReengineeringReinventionRealign
mentRethinking
5Rs
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Restructuring

• Identify the organizations core competencies.
• Cut everything out of the organization that does
  not add value -- especially red tape, rules that
  inhibit performance.
• Contract everything out of the organization that
  is not a core competency.

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Tools TQM, value-chain analysis, activity-based
costing (ABC).

• Chart the entire flow of activities needed to
  design, create, and deliver a service
• For each activity and step within the activity
  determine its associated cost and the cause of
  that cost, or cost driver
• Determine whether or not the step adds value for
  the customer and, if it is non-value adding,
  identify ways to eliminate it and its associated
  cost
• Determine the cycle time of each activity and
  calculate its cycle efficiency (value-added
  time/total time) and
• Seek ways to improve cycle efficiency and reduce
  associated costs due to delays, excesses, and
  unevenness in activities.

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Does this Step add Value?
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SERVICE PERFORMANCE IN SUPPLY MANAGEMENT
Service efforts Service Accomplishments
EFFICIENCY Inputs Required to Achieve
Outputs EFFECTIVENESS Customer Satisfaction
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SERVICE PERFORMANCE IN SYSTEMS ACQUISITIONS (Infor
mation collected by Program, Center, phase,
and/or acquisition category)
Service Efforts
Service Accomplishments
EFFICIENCY Procurement Dollars Managed per
Dollar Spent, RDTE Dollars Managed, Technical
Order Dollars Managed, Sustainment Dollars
Managed Per Dollar Spent EFFECTIVENESS
Satisfaction of MAJCOMs, SAF Acquisition Office,
etc.
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Reengineering

• Start over rather than trying to fix existing
  processes with band aid solutions.
• Put the computer and other information
  technologies at the center of the operation.
• Build from the ground up rather than from the top
  down.
• Base organizational design on processes rather
  than functions and positions on the
  organizational chart.
• Focus on improving service quality, reduced cycle
  time, and costs.

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Tools modern data bases, expert systems, and
information technologies teaming, benchmarking,
cycle-time burdening.
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• Accounts Payable U.S. Navy vs. Ford
• Navy twenty-six manual accounting transactions
  and nine reconciliations -- thirty-five steps in
  all.
• Ford 3 steps order, receipt, and payment
• Computerization could cut steps in the Navys
  accounts payable to fourteen
• Navy fails to capture information once and at
  the source. Instead each step in the supply
  process -- requisition, receipt, certification of
  invoice, reconciliation, and revision -- is
  repeated on up the chain of command.
• The people who produce information do not
  process it. Processing is handled by
  financial-management specialists
• Navy does not build financial control into job
  designs. Commanders should be evaluated during
  peacetime in part on the basis of their success
  in managing costs.

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Reinvention

• Develop a planning process.
• Establish a service/market strategy.
• Move the organization toward new service delivery
  modes and markets.

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Tools strategic planning, market research,
target costing, networks and alliances.
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Realignment

• Align the Organizations Administrative and
  Responsibility Structures with its market and
  service delivery strategy.
• Align the organizations Control/Reward Structure
  with its administrative and responsibility
  structures
• Align the organizations Human Resource
  Management Practices its control/reward structure.

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Realignment 2

• Successful organizations
• Provide job security
• Carefully recruit based upon the right attitudes,
  values, and cultural fit
• Rely on self-managed multidisciplinary teams and
  decentralization of decision-making as basic
  principals of organizational practice
• Pay high wages contingent upon performance
• Provide extensive training
• Share performance and financial information
  widely
• Reduce status distinctions.
• Put mission centers first
• control functions such as personnel or finance
  are not core missions if they are not core
  missions, they should be treated as support
  centers.

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Tools High commitment HR practices, PBOs,
multi-divisional structures, lean production,
responsibility budgeting and accounting, transfer
prices, high-powered incentives.
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REALIGNED RESPONSIBILITY STRUCTURE FOR THE U.S.
DOD

Military Departments Supply trained and equipped
military units to COMBAT COMMANDS
Unified Special Commands
COMBAT COMMANDS Supply Budgetary Resources To
MILITARY DEPARTMENTS
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Rethinking

• Speed up the observation, orientation, decide,
  act cycle -- both to improve performance and to
  learn faster.
• Empower front line workers to evaluate service
  performance and provide feedback on service
  delivery and strategy.
• Build a learning, adapting organization.

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Tools decentralization, flexible controls,
working capital, quick and dirty analysis,
learning models.
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Hard Thinking or Hardly Thinking?