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The Story of Porsche and Learnings for Digital agility

This deck retraces the story of Porsche and their journey of operational excellence and innovation. This is a model of successful change, that most Executives, now facing the challenge of digital, should learn from.

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The Story of Porsche and Learnings for Digital agility

  1. 1. How the story of Porsche can inform our approach to digital leadership Philippe Guenet | 2018
  2. 2. “In the beginning I looked around and could not find the car I dreamed of. So I decided to build it myself." Ferry Porsche @HenkoPhil 2
  3. 3. Introduction @HenkoPhil 3 Last year, I looked around and found that the IT consulting industry was increasingly failing its purpose. So, we decided to build a new “Coachultancy”. Henko
  4. 4. Warning notice: I am not advocating a carbon copy of manufacturing into IT. This deck also explains the differences. Decades of lessons learnt from Lean are worthwhile to understand however. In particular, the leadership and change elements share much similarity with managing digital change and making agile work in the enterprise. @HenkoPhil 4
  5. 5. @HenkoPhil 5 Image source: www.supplychaindigital.com @ the source, Toyota Production System
  6. 6. Toyota was born with TPS @HenkoPhil 6 § Just-in-Time § Production levelling § Jidoka § Kaizen § Gemba § Culture
  7. 7. @HenkoPhil 7 Image source: www.historics.co.uk Porsche, however, had to transform
  8. 8. @HenkoPhil 8 Porsche, back in the early 90s 70% drop in sales between 1986 and 1993 Ranked <#30 for quality High production costs Losses of €214m over 3 years
  9. 9. Short of answers, lots of excuses @HenkoPhil 9 “Global Economic Crisis” Then CEO 911 – 944 – 928 No common parts and high production costs Lack of strategic approach Comfort vs Sportiness leading to client confusion
  10. 10. @HenkoPhil 10 Image source: Porsche Consulting, Porsche AG New CEO – We must fix production first!
  11. 11. “A terrible Plant, but there is hope” Chihiro Nakao @HenkoPhil 11 Processes Reduce inventory, bottlenecks Products Rationalise variants, and unnecessary functions Organisation System of work, responsibilities, leverage capabilities
  12. 12. Kein Geld, Kein Raum, Kein Volk @HenkoPhil 12 The biggest change was cultural and needn’t cost money, but required strong leadership
  13. 13. Production recovery by continuous improvements @HenkoPhil 13 Image source: Porsche Consulting, Porsche AG 73% less time to assemble a 911
  14. 14. @HenkoPhil 14 Image source: Porsche AG 50 years of architecture evolution
  15. 15. @HenkoPhil 15 Image source: Porsche Consulting, Porsche AG JIT / True single piece flow production line
  16. 16. Production enabling product development @HenkoPhil 16 928 944/968 911 Boxster Cayenne Cayman Panamera Macan 1995 2000 2005 2010 2015 14% 10% 32% 8% 36% 88k cars 225k cars19k cars % Global mix
  17. 17. @HenkoPhil 17 Image source: Porsche AG All purposeful drivers’ cars Strong differentiation on the outside Standardisation beneath
  18. 18. @HenkoPhil 18 Matrixed organisation Product alignment + differentiators
  19. 19. @HenkoPhil 19 Image source: Porsche AG Results: Most profitable car maker in the world
  20. 20. @HenkoPhil 20 Image source: Porsche AG And getting ready to take on the future
  21. 21. @HenkoPhil 21 Image source: Porsche AG § Driver focus § Performance § Modernity § Responsibility § Production Flexibility And getting ready to take on the future
  22. 22. What shall we learn for Digital IT? @HenkoPhil 22
  23. 23. Porsche did not only survive by fixing production. This was only the first step of the journey. Production enabled innovation again. @HenkoPhil 23
  24. 24. Fix Production @HenkoPhil 24 Innovate Continuously Improve Operational Excellence Product Innovation
  25. 25. “Efficiencies enable innovation” Simon Wardley’s Climatic patterns @HenkoPhil 25
  26. 26. What would this look like in IT? @HenkoPhil 26 Optimise Automate Innovate Instability leads to unplanned work. Too much running stops change / build / innovation. Evolution is a virtue of competition. Continuous improvements should become structural. Change needs purpose and outcomes. Automation of operations is an obvious initial goal. Efficiencies unleash capacity on new order items & technologies using continuous experimentation. Stabilise continuously
  27. 27. § Past Lean successes were a result of scarcity § Leadership had to roll-up their sleeves § Gemba, walk-the-talk, think systemically, develop people Leverage Leadership @HenkoPhil 27
  28. 28. Leverage Leadership in agile too! @HenkoPhil 28 § Scaffolding is never meant to be a permanent part of the structure. § Why are we embedding Agile coaches? § Leadership is the coach!
  29. 29. Warning: Beware of the different IT beast! @HenkoPhil 29
  30. 30. In digital, innovation, product development and production are structurally interwoven @HenkoPhil 30
  31. 31. Digital IT is much HARDER! @HenkoPhil 31 § Handling variability § Innovation meshed with excellence § Disruptive business models § Global competition § Talents Queuetime Utilisation High variability environment à Team Autonomy Theory of Constraints Low variability environment à Six Sigma
  32. 32. Digital IT is much EASIER! @HenkoPhil 32 § Virtual is easier to deliver incrementally § Easier to experiment § Minor defects are OK § Knowledge work intrinsically motivating
  33. 33. The System of Work delivers the digital differentiation @HenkoPhil 33 § Systemic Management § Skills development (engineering) as a culture § Adaptive organisation towards flow § Change owned by the leadership Success emerges from making this cohesive mix work and continuously adapt & improve
  34. 34. Considerations for organisation and flow @HenkoPhil 34 Traditional organisation, functional alignment for economies of scale Product/Service alignment designed for faster response and economies of flow Spotify model Distributed organisation Wardley PST model. Aligned to the ways of working defined by the strategic maturity. Gartner Bi-modal IT Hybrid mix between systems of engagement and systems of records Acquisition Servicing B2C Partners Enterprise functions Procurement Procurement Procurement Web Apps Web Apps Web Apps Finances HR + L&D ERP / HR systems APIS APIS APIS Security Security Security Security Sales Content Marketing Partnerships Servicing Content Upsales Marketing / Loyalty PR & Comms ERP / HR systems Hiring Hiring Hiring Config / Inventory Core Systems Data / BI B2B systems & Apps Content Special services Config / Inventory Physical digital points Business IT Supporting functions Web Apps SSO Content Service Sales Marketing Core Systems Data / BI B2Bsystems Config Inventory ERP / HRPartners Customer bookings Customers Servicing Loyalty Marketing B2B Partnerships Finances PR & Comms HR + L&D + Hiring Security Procurement Productteamtransitioningchange DevOps change Programmes
  35. 35. Vision supporting the Change @HenkoPhil 35 PurposeStrategyOutcomesChange Cascade strategic intent Elevate continuous improvements
  36. 36. @HenkoPhil 36 Leadership should own the change Develop the autonomy of leaders and teams to operate faster Keep focus on business outcomes Systemic management to take the teams on the journey Leadership drives the digital alchemy
  37. 37. The hardest leadership challenge is to Own your change during good times. For those who wait until bad times, for every Porsche story, there are many more Blockbuster and Kodak stories… @HenkoPhil 37
  38. 38. Please join our industry knowledge development sessions at: Digital Leadership http://www.meetup.com/DigitalLeadership https://digital-lead.slack.com/ Philippe Guenet Digital change leadership pguenet@henko.co.uk +44 (0) 7798 623 007 @HenkoPhil