Transform BEHAVIORS, Transform RESULTS! When trying to embed changes or new mindsets and behaviors, organizations tend to focus on following a particular methodology rather than clearly defining the underlying behaviors that will deliver the sustainable behavioral change and align the thought processes that drive the behaviors—whether the intent is to continuously improve safety or overall risk manage- ment or achieve a sustainable growth and improvement trajectory. The key role of leadership teams is not to deliver results. It is to inspire and own the organi- zational culture that delivers the expected results. If culture is owned by HR, it is doomed to be another thing leaders have to do on top of their day job. Business leadership teams must oversee defining and managing organizational culture and have HR coach the capability of leaders to cast the right leadership shadow by role modeling the right behaviors, rewarding the right behaviors in their teams, and providing clarity on expectations around behaviors of all leaders and employees. The most challenging part of any performance-improvement implementation is the identi- fication of key behavioral indicators (KBIs). The purpose of this book is to assist with that challenge and make “behaviors” easier to understand and identify. The book defines and describes the importance of focusing on the behaviors necessary for sustainable change rather than focusing on the tools and methodology behind change management. It discusses multiple lenses of change including Lean, Six Sigma, Agile, Risk, and Customer Experience and also addresses the weaknesses of complying solely with the methodology and tools. It proposes a behavioral framework to suit each particular lens. This book begins with reasons most continuous improvement programs fail to deliver the expected results. More importantly, it discusses embedding the newly described mindsets and capabilities into the business. The book concludes by providing leaders a roadmap and a coaching framework on how to align and embed their new behavioral framework at all levels, starting from the front-line worker up to the CEO. Essentially, this book leads the reader through the process of understanding the concept of defining behaviors and the difference between them and tools/methodology. It introduces KBI for leaders to define and drive the desired behaviors at all levels. This will increase the probability of sustainability of the improvement initiative by focusing on and maturing the behaviors these initiatives are trying to drive. Transform BEHAVIORS, Transform RESULTS! Identifying and Using Behavioral Indicators to Drive Sustainable Change and Improvement By Morgan L. Jones Drew Butler Gerhard Plenert First published 2023 by Routledge 605 Third Avenue, New York, NY 10158 and by Routledge 4 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business © 2023 Dr Morgan L. Jones, Drew Butler & Dr. Gerhard Plenert The right of Dr Morgan L Jones, Drew Butler & Dr. Gerhard Plenert to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. ISBN: 978-1-032-12476-6 (hbk) ISBN: 978-1-032-12475-9 (pbk) ISBN: 978-1-003-22474-7 (ebk) DOI: 10.4324/9781003224747 Typeset in Garamond by KnowledgeWorks Global Ltd. Contents Preface .......................................................................................................xv Acknowledgments ..................................................................................xix Foreword ..................................................................................................xxi About the Authors ................................................................................xxiii 1 Review of CI Program Challenges ...............................................1 Reasons for CI Failure .................................................................................2 Implementing a Tool-Oriented Approach ..............................................3 Focus on Performance ............................................................................4 Lack of Motivation ...................................................................................4 Poor Communication ..............................................................................5 Inexperienced Manager ..........................................................................6 Inexperienced Team Members ...............................................................6 Inadequate Infrastructure .......................................................................7 Contextual Reasons .................................................................................8 Focus on Short-Term Results ...................................................................8 Previous Attempts at Continuous Improvement ........................................9 Change Management ................................................................................10 Summary ...................................................................................................13 2 Introduction to Desired Behaviors ............................................15 Organization’s Core Behaviors .................................................................17 Why Define Core Behaviors? ................................................................17 The Ideal Core Behaviors .....................................................................18 Ideal Results Require Ideal Behaviors ......................................................20 KPIs and KBIs .......................................................................................21 Habit Formation ....................................................................................22 Purpose and System Drive Behavior ........................................................24 v vi ◾ Contents Designing a System ...............................................................................26 Internal and External Relationships for a Well-Designed System ........26 Structures and Hierarchies ................................................................26 Defining a Purpose for the System ......................................................27 Integrating Behaviors into Systems .......................................................27 Step 1: Identify Critical Business Systems ........................................28 Step 2: Prioritize Which System(s) Need to Be Addressed First ...........28 Step 3: Agree on a Purpose Statement for Priority Systems ............28 Step 4: Agree on a High-Level System Map .....................................28 Step 5: Agree on KPIs and Targets for Each System ........................28 Step 6: Use Value Stream Mapping (VSM) If Applicable .................29 Step 7: Use the Behavioral Deployment Process .............................29 Step 8: Get Feedback ........................................................................29 Step 9: Refine the System ..................................................................29 Principles Inform Ideal Behavior ..............................................................30 Cultural Enablers ...................................................................................30 Respect Every Individual...................................................................30 Lead with Humility............................................................................31 Continuous Improvement .....................................................................31 Focus on Process ...............................................................................32 Embrace Scientific Thinking .............................................................32 Pull and Flow Value ..........................................................................33 Assure Quality at the Source ............................................................34 Seek Perfection ..................................................................................34 Enterprise Alignment ............................................................................35 Create Value for the Customer ..........................................................35 Create Constancy of Purpose ...........................................................36 Think Systemically ............................................................................37 Risk-Taking Mindset and Behavior ...........................................................38 Anatomy of Key Indicators (KPIs, KBIs, and KAIs).............................39 Summary ...................................................................................................39 3 Change Management ..................................................................41 The Disconnected Bridge .........................................................................42 Systematic Approach Rather Than Tool-Based Approach ...................43 Emphasis on People and Culture .........................................................43 Change Management Methodologies .......................................................44 ADKAR Model .......................................................................................45 Stage 1: Prepare Approach ................................................................45 Contents ◾ vii Stage 2: Transition .............................................................................45 Stage 3: Future ...................................................................................46 Mckinsey 7-S Model ..............................................................................46 Style ...................................................................................................46 Skills ...................................................................................................47 Systems ..............................................................................................47 Structure ............................................................................................47 Staff ....................................................................................................47 Strategy ..............................................................................................47 Shared Values ....................................................................................47 Kotter’s Theory (Including Accelerate) .................................................48 Create a Sense of Urgency ................................................................48 Build a Guiding Coalition .................................................................48 Form a Strategic Vision and Initiatives .............................................49 Enlist a Volunteer Army ....................................................................49 Enable Action by Removing Barriers ................................................49 Generate Short-Term Wins ................................................................49 Sustain Acceleration ..........................................................................49 Institute Change ................................................................................49 TFSD Model ...........................................................................................50 Think .................................................................................................50 Feel.....................................................................................................51 Say ......................................................................................................51 Do ......................................................................................................51 HRM Role in Continuous Improvement ...................................................52 KPIs and KBIs ...........................................................................................52 Production .............................................................................................53 Relationship ...........................................................................................53 Organizational Performance .................................................................53 Lag KPIs ....................................................................................................54 Lead KPIs ..................................................................................................54 Focusing on Results Only .....................................................................54 Decision-Making ...................................................................................54 Variability of Measurement ...................................................................55 Developing a Whole System .....................................................................55 Step 1—Set the Principles .....................................................................56 Step 2—Why Those Principles? ............................................................56 Step 3—Understand the Principles .......................................................56 Step 4—Set the Behaviors ....................................................................57 viii ◾ Contents Step 5—Deploy the Behaviors .............................................................57 Step 6—Assess the Behaviors ...............................................................57 Step 7—Diagnose ..................................................................................58 Step 8—Implement ...............................................................................58 Effective Communication for Change Management ................................58 Programmatic Communication .............................................................59 Participatory Communication ...............................................................59 Barriers to Effective Change Management ...............................................65 Lack of a Plan ........................................................................................65 Lack of a Leader ....................................................................................65 Change Fatigue ......................................................................................65 Technology Issues .................................................................................66 Existence of Multiple Cultures ..............................................................66 Summary ...................................................................................................71 Measuring Success ....................................................................................72 4 Agile and Patterns .....................................................................73 What Is Agile and Scrum ..........................................................................74 Leadership and Agile/Scrum .....................................................................77 Agile/Scrum Patterns of Behaviors and Systems .....................................80 Small Teams and Cross-Functional Team .............................................80 Autonomous Teams ...............................................................................82 Small Items ............................................................................................82 Sprint Goal ............................................................................................82 Yesterday’s Weather and Teams That Finish Early Accelerate .............83 Swarming—One-Piece Continuous Flow .............................................84 Regular Product Increment ...................................................................84 Happiness Metric ...................................................................................85 Chapter Conclusion ...............................................................................86 Summary ...................................................................................................86 Measuring Success ....................................................................................91 5 Case Study of CI in Financial Services ......................................93 Suncorp Case Study ..................................................................................93 Suncorp’s Previous Transformation Attempts .......................................94 BIP Achievements .................................................................................94 Initiatives and Frameworks ...................................................................95 Benefit Realization Framework .........................................................95 Governance Program ........................................................................95 Claims Benefit Framework ................................................................96 Contents ◾ ix Financial Outcomes ...............................................................................96 Process and Performance Optimization ...............................................97 Improved Business Performance and Services ....................................98 Enhanced Customer Experience and Removal of Pain Points ............98 BIP Shortfalls .........................................................................................99 Using Tools and Systems Only .......................................................100 Focusing on the Benefits and Profits Only ....................................100 Leaders Did Not Show a CI Behavior .............................................100 Absences of Guiding Principles and Behavioral Framework ........101 Lessons Learned from the BIP ............................................................101 BIP Competencies Behavioral Framework .............................................102 Fosters a Culture of Continuous Improvement ..................................105 Develops and Implements Solutions ..................................................105 Leads Change ......................................................................................105 Lives BIP and Continuous Improvement ............................................106 Understands Suncorp ..........................................................................106 Understands the Industry ...................................................................106 Reaches Measured Decisions ..............................................................106 Enhances Brand Reputation ................................................................107 Applies Good Judgment......................................................................107 Comprehensive CI Competency Framework .........................................107 Fosters a Culture of Continuous Improvement ..................................112 Develops and Implements Solutions ..................................................112 Leads Change ......................................................................................116 Lives Productivity and Continuous Improvement ..............................117 Summary .................................................................................................117 Measuring Success ..................................................................................118 6 Risk Behaviors .........................................................................119 What Is Behavioral Risk? ........................................................................119 Background on Risk in Financial Service ..............................................120 Compliance Governing and Management ..........................................121 Cybersecurity .......................................................................................121 Third Party ..........................................................................................121 Process Risk Controls ..............................................................................121 A-B-C Model ............................................................................................122 Risk Behaviors .........................................................................................122 Ethical Role Modeling .........................................................................122 Challenge Management .......................................................................123