"America's Most Admired Companies"

Anne Fisher

Fortune

March 19, 2007, pp. 88-94

Each year, Fortune magazine gives its rankings of America's most admired companies, based on ratings made by US and worldwide executives, directors, and securities analysts. This year's Top Twenty in America were:

1. General Electric
2. Starbucks
3. Toyota Motor
4. Berkshire Hathaway
5. Southwest Airlines
6. FedEx
7. Apple Computer
8. Google
9. Johnson & Johnson
10. Procter & Gamble
11. Goldman Sachs
12. Microsoft
13. Target
14. 3M
15. Nordstrom
16. United Parcel Service
17. American Express
18. Costco Wholesale
19. IBM (tie)

19. Wal-Mart Stores (tie)

Ratings were also made for companies in the respondents' own industries on Social Responsibility, Innovation, Long-term investment value, Use of corporate assets, People Management, Financial soundness, Quality of products/services, and Quality of management. The high scorers on these criteria were:

• Social responsibility—CHS, United Parcel Service, Whole Foods Market
• Innovation—Apple Computer, Google, FedEx
• Long-term investment value—CHS, Berkshire Hathaway, Exxon Mobil
• Use of corporate assets—Kinder Morgan, CHS, Exxon Mobil
• People management—FedEx, Procter & Gamble, Google
• Financial soundness—Exxon Mobil, CHS, Berkshire Hathaway
• Quality of products/services—FedEx, Walt Disney, Procter & Gamble
• Quality of management—Procter & Gamble, General Electric, Kinder Morgan

The top ten admired companies around the world were:

1. General Electric
2. Toyota Motor
3. Procter & Gamble
4. Johnson & Johnson
5. Apple Computer
6. Berkshire Hathaway
7. FedEx
8. Microsoft
9. BMW
10. PepsiCo

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"The Process Audit"

Michael Hammer

Harvard Business Review

April 2007, pp. 111-123

Though process redesign has become a well-known approach to organizational change, many of these attempts to redesign major processes have foundered. Five years ago, the author of this article began working with a consortium of organizations "to create a framework that would help executives comprehend, plan, and assess process-based transformation efforts." The result of this work is the identification of a set of "process enablers" that determine how well a process can function over time, and a set of "enterprise capabilities" that allow processes to take root in organizations. Five process enablers and four enterprise capabilities together form the author's Process and Enterprise Maturity Model (PEMM), which can be used to assess an organization's current strengths and weaknesses for process-based transformations.

The five process enablers are:

• Process design—"The comprehensiveness of the specification of how the process is to be executed"
• Performers—"The people who execute the process, particularly in terms of their skills and knowledge"
• Owner—"A senior executive who has responsibility for the process and its results";
• Infrastructure—"Information and management systems that support the process"
• Metrics—"The measures the company uses to track the process's performance"

The four enterprise capabilities are:

• Leadership—"Senior executives who support the creation of processes"
• Culture—"The values of customer focus, teamwork, personal accountability, and a willingness to change"
• Expertise—"Skills in, and methodology for, process redesign"
• Governance—"Mechanisms for managing complex projects and change initiatives".

The article includes two useful tables (one for assessing the maturity of a business process, and one for assessing the maturity of the enterprise to begin a process-based transformation). After conducting the assessment, the organization can identify areas they need to strengthen in order for their planned process-based transformation to be successful. Blanks versions of the tables can be downloaded at www.hbr.org.

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"Internal Customer Service: Has It Improved?"

Jerry Seibert and John Lingle

Quality Progress

March 2007, pp. 35-40

In 1993, a national survey examined the quality of internal customer service in U. S. organizations. The results at that time showed that internal customer service ratings were low, with less than 50% of respondents reporting favorable ratings of their company's internal customer service. However, 88% said they believed superior internal customer service was key to business success, and 76% reported having undertaken a major internal customer service improvement initiative.

In 2006, the survey was repeated. The average overall ratings of companies' internal customer service rose from a previous 32% favorable in 1993 to 48% in 2006. Ratings of internal departmental service changed as follows:

• Manufacturing/production/operations—from 42% favorable in 1993 to 57% favorable in 2006
• Communications/public affairs—from 31% favorable to 56%
• IT—from 27% favorable to 48%
• Finance/accounting services—from 32% favorable to 48%
• R&D—from 35% favorable to 46%
• Legal—from 25% favorable to 43%
• Procurement/purchasing—from 32% favorable to 42%
• HR—from 24% favorable to 41%
• Marketing—from 31% favorable to 37%
• Sales—from 31% favorable to 36%
• Quality—from 48% favorable to 67%

The study also found that companies with top ratings on internal customer service are differentiated by cultural attributes associated with quality:

• Top leaders' commitment to quality in words and deeds
• Application of quality principles
• Hiring employees who recognize the important of internal customer service
• Maintaining internal customer service standards
• Staying in touch with their customers

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"Promise-Based Management"

Donald Sull and Charles Spinosa

Harvard Business Review

April 2007, pp. 78-86

The authors of this article argue that "At its heart, every company is a dynamic network of promises. Employees up and down the corporate hierarchy make pledges to one another—the typical management by objectives. Employees also make commitments to colleagues in other divisions and to customers, outsourcing partners, and other stakeholders. Promises are the strands that weave together coordinated activity in organizations." Systematically coordinating these commitments is what the authors call Promise-Based Management, and they list a number of ways that Promise-Based Management can be successfully applied to alleviate the following major obstacles to getting things done:

• Organizational silos hinder coordination
• Employees are disengaged
• The organization lacks clear accountability
• The organization lacks agility
• Stakeholders don't trust executives to honor their commitments
• The organization is trapped in the status quo

The article discusses in some detail what the authors consider to be the five characteristics of a good promise:

• Good promises are public—In order for promises to be seen as more binding, promises should be made in public, remain public throughout the life of the commitment, be publicly monitored, and completed in public.
• Good promises are active—There should be active conversations involving offers, counteroffers, commitments, and refusals.
• Good promises are voluntary—Compelling people to comply with each and every request leads to less feeling of personal responsibility for the commitment. There should be space for counteroffers or even declines if the request appears unreasonable.
• Good promises are explicit—"Requests must be clear from the start, progress reports should accurately reflect how the promise is being executed, and success (or failure) should be outlined in detail at the time of delivery."
• Good promises are mission based—The rationale is explained, and enough time is taken to be sure that the importance of the promise is understood.

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"2007 Training Top 125"

Training

March 2007, pp. 58-83

Since 2001, Training magazine has been issuing its yearly list of the top 100 internal training organizations in the United States. Brief descriptions are given of the training efforts in each company. This year's top 25 are:

1. The Ritz-Carlton Hotel Co. (hospitality)
2. Pricewaterhouse-Coopers (accounting services)
3. EMC Corporation (technology)
4. Verizon Wireless (telecommunications)
5. General Mills (food manufacturing)
6. Ernst & Young (consulting services)
7. KPMG LLP (audit, tax, and advising)
8. Wyeth Pharmaceuticals (pharmaceuticals)
9. Booz Allen Hamilton (consulting services)
10. Export Development Canada (finance/banking)
11. Lockheed Martin Corp. (defense products)
12. Scotiabank Group (finance/banking)
13. Carrier Corporation (healthcare/IT)
14. SCC Soft Computer (healthcare information systems software)
15. Satyam Computer Services (IT solutions)
16. Miami Children's Hospital (health/medical services)
17. University of New Mexico Hospitals (health/medical services)
18. 1-800-FLOWERS.COM (retail)
19. Microsoft Corp. (software)
20. InVentiv Commercial Services (commercial/clinical services)
21. KLA-Tencor Corp. (semiconductors)
22. BMO financial Group (finance/banking)
23. Aetna Inc. (real estate/insurance)
24. South African Breweries (manufacturing)
25. Deloitte & Touche USA (accounting services)

Note: The March issue of Training magazine also has brief descriptions of all 125 companies on this list, as well as a story on Best Practice companies for Outstanding Training Initiatives.

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Personal Commitments to Process Improvement

John McNeil, GP
 

In our work, we continuously encounter the challenges that Hammer highlights in his article: arduous and harrowing attempts at transformation resulting in slow or little progress. And the root causes we observe align consistently with Sull and Spinosa's observation that uncoordinated commitments at and across all levels of an organization are often to blame. We work in organizations where only 50% of commitments are reliable. We also work in organizations where barely 20% of commitments do not need to be checked, do not need further pressure and do not result in duplicated, wasteful effort. These latter organizations are in dire straits, destined to suffer from endless meeting cycles exploring assertions, scenarios, and opinions.

Interestingly, but not surprisingly, this lack of reliable commitment and the attendant difficulty in implementing change seems to pervade organizations from top to bottom. Take Hammer's macro-process enablers: design, performers, owner, infrastructure and metrics. These are the very things that we recommend for a simple standardized method to thrive at the base of an organization. Local processes at the operator level also need a comprehensive specification of execution. Local processes need training, skill, and knowledge and the resulting expertise. They need an owner, responsible for nurturing and driving the evolution of the key methods. They need information systems and they need metrics, preferably related to a stable, measurable, customer-defined need. If these are lacking at the top levels, in an organization that cannot engage in active conversations of offers, counteroffers, commitments—and yes, refusals—then we have generally found them lacking at the bottom, too.

What to work on first? Hammer provides a sensible set of process enablers and enterprise capabilities as listed in the article summary above. He proposes working first on the areas of largest shortfall, but we are often called upon to work in areas that are easiest to manage standalone, easiest to implement, and even ones that are less controversial, while momentum builds for change across the organization. At the process level, this may well mean working on performer skills and knowledge first, followed by metrics, ownership, infrastructure, and radical process redesign. At the enterprise level, it can mean working first at expertise, then process governance, leadership, and culture change. This is driven in part by the availability of ready tools and materials in some of the first-listed areas, but in any case your situation is unique. One cycle of this work is never sufficient. And fast, significant progress is not in any way linked to a lack of arduous and harrowing work; the latter is just much more bearable. See you on the journey.

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