Building a Culture of Operational Excellence

Pete Evans

Director of Service & Performance Management (Business Services Operations) at LEGO

Learning Objectives

LEGO (Business Services) is building a Culture of Operational Excellence in a very LEGO way including storytelling to build understanding and connection - Swamp to Summit, change management does exist and why it is difficult and the BSO Journey so-far and what comes next...

Key Takeaways:

  • Operational Excellence Journey must speak directly to our people - NOT to a toolkit

  • Storytelling when done well can engage teams at all levels

  • Operational Excellence is a journey not a project/program

"If you talk in positive ways about arrival at your destination then you create a compelling argument for why people would want to get there."

Pete Evans

Director of Service & Performance Management (Business Services Operations) at LEGO


Hi, everyone. My name is Peter Evans. I’m very, very happy to be joining you today. I live in Mid Wales, in a small cottage. As you can see, I hope that the technology is working well for everybody. It’s a real honor to get the chance to speak to this conference into such a great selection of manufacturers and people who normally I don’t get the chance to chat with a tiny little bit about my background, I’ve been involved in change management and improvement, operational excellence for about the last 30 years, haven’t had a career that started in finance, spend some fabulous years in GE Capital, in both fleet and aviation through the 90s, into telecoms in the early 2000s. And then, through some lucky quirks of fate, living in Denmark for a while with maskelyne. First off, shipping business. And now with the Lego group where I’ve been for the last five years. What I’m going to do now is share my presentation. And hopefully you will enjoy this presentation and hopefully, find some fun and some interesting information in there, which I hope that you get a lot of some insight, but also the chance to perhaps share some questions later on. As I said, my name is Pete Evans. I’m director of service and performance management for Business Services operations so BSO within the Lego group and this I think others would know this as shared services. I’m going to talk a little bit today about Lego itself won’t spend too much time in there a little bit about bit BSL business service operations, and how we started and where we are today. And then quite a lot about change management and our operational excellence journey, and how that works. I said, I hope you find it interesting, perhaps a little bit different in terms of the ways described, and also gives you the opportunity to join in and share some conversations later on.

So let’s start. So Lego, and I know probably for all of you, that’s probably the interesting bit. We are based in Denmark, as I’m sure you all know, we’re a family business. And we’re growing like crazy, right now. Our mission is to inspire and develop the builders of tomorrow. And one of the big differences for me, in being part of the Lego group has been working for a company that really, really does get this stuff, and really is connected from top to bottom, across our vision and mission. And kind of the why we exist and what we do. And it’s one of the reasons I think why we’ve been so successful in the last 1516 years and continue to be successful now, even in these very difficult times. Just a couple of fun facts to kind of get us started. So Lego group is in fact, the largest tire manufacturer in the world. And you can see here about 700 million, that number changes up and down a bit. It’s a very, very big number. Of course, not quite so complex as people in the real man, motoring tire world. But there you are. And then the thing I really love is that if you take for if you take six to buy four Lego bricks of the same color, there are 915 plus million ways of putting that together. And if you kind of connect that to a child’s imagination, or to anybody’s imagination, and their ability to make those many decisions, and to make those those many different designs. That’s one of the major reasons why this is such a successful product such as successful toy, learning device, growth device, if you like sharing the advice for all of our all of our customers and particularly for for children. As I said, we’re a very connected business. I joined lego five years ago on the basis of a discussion around values. And what was really clear to me that the people I was talking to at the time. Geico, Klaus Pfluger, a guy called Allah Magnus was that they just lived and breathed the values of the company. You don’t tend to see our values on posters, you tend to see people living them real values. And I think that makes a big difference. And I know often for many of you, if you really want to connect to your business, you don’t connect to a poster. You actually connect to the people and the way that people act and the way that people behave. And this is a massive part for us. You can, you can see those values written here. And the promises which we really take very, very seriously around play around our partners, which in my world corresponds to looking after our customers into paying our vendors on time, to Planet promise, of course, and the huge amount of work we’re doing in that space right now. And we’ll continue to do. And of course, people promise about how we work together to make it work. And a spirit that under underpins all this have only the best is good enough. And we we seriously mean that. And that’s why your 1960s brick grandfather’s breaks, will join together very well with our 2021 breaks. And continue to do that that era, almost irrespective of what you do too short and same fight. And so really important part of what we do, which underpins everything and the way we think, and the way we behave in the Lego group.

I want to go on and talk about business service operations for a little bit, because this has been a very interesting journey. And I joined specifically to help in the continuous improvement operational excellence space of a startup in business service operations. In fact, it was our third attempt to get shared services working in, in the Lego group, and in 2016, having been through a whole series of machinations and some not fun, Lego, very easy decisions around people and around changing fundamentally the way we look after key services. We created a new organization, we close local finance and HR back offices. And we built a global business service if you like. And that services basically spread out to Singapore, in Asia Pacific with a satellite in China, in cloud nollie, and Prague, which looks after all of Europe, in Monterrey, Mexico, which looks after the Americas that both Prague and Mexico are built around our offices in our factories. And then in Billund, Denmark, which of course, is our international headquarters, and where we have a group of people, they’re very focused in the process world. And we’ve been working together for this four years or so on building five years on building a kind of an operationally excellent and global team that can really work together to make a difference. If I share a little bit about that roadmap, we’ve moved basically from a great idea in 20 1415, to the reality of today, which is a trusted partner for the Lego group. And you can see some timelines here. And typically, there may be a lot of words on some of these slides. But I won’t talk to all of those words. Of course, I think the key things to pick up on here are some work around stabilization and improvement. So we see up regularly see profit productivity in the five to 10% range, remembering that our real job is to help scalability and growth in the Lego group. We are not at rather unusually charged with a cost saving target every year, we are charged with supporting everything that goes on and when you consider how much we’ve been growing, I won’t share 2020 numbers, but but it will be significant, then you can see that the challenges come from that actually, in our productivity often comes from that, from that growth. In 20 1920, we expanded the organization, we in fact, we’ve expanded it a couple of times to broaden our end to end process focus. And then in 20 1920, to bring in governance risk and control teams into into the BSL including fraud prevention. And as you could imagine, as things go more and more online, and that becomes a busier and busier place to work. And my own team SPM, as it says is service and performance management. And we are charged with understanding, building the models for service the customer experience for stakeholder journeys, rather, we tend to recall our internal customers, stakeholders, by the way, and, and to run performance management, a whole range of other things from there. And in 2020, of course, we continue that journey. And we’ve hit a bit of a tipping point, actually, because as you can see from here, a net promoter score. So looking at our internal the people we look after across the Lego group, and what they think of us in terms of what they advocate for us, has gone from a low of minus 19 when we started to currently plus 41 astronomical change 60 point change. And in fact, we’re about five points ahead of the of the Hackett gauge in terms of what world class looks like, and employee motivation and satisfaction within our group of plus 82 which is an incredible numbers. Certainly I’ve never worked in a business that comes close to that. So we have a strategy. I said we’re at a tipping point and that strategy is becoming more and more important to us in terms of how We move it forward. And we’ve just gone through a process of revising that for the next three years, you can see a picture here, I won’t go into the top details of that. But you can see it’s a very Lego picture, of course, we start with why we exist. So it’s a global force for establishing innovating, learning through play, that’s the Lego purpose. And then we kind of drive that down through our own vision, and some key priorities that we’re working on, or some experience which I happen to own for BSL and the leadership team. And then three very, very significant chunks of work around expert insight, compelling engagement and enhanced speed. And that is underpinned by a strong ethics and compliance mindset, relentless focus on quality through our operational excellence programs, and creates some space for creativity and imagination. And those we regard as our table stakes. If we don’t get that right, you don’t get to play in the other areas. Let’s talk a little bit about how we get people how we convince people to play. And so one of the things we talk about and think about all the time is about our ability to improve. And I love this little picture on here. But that’s kind of something that’s very clear in our minds all the time about Adobe can’t be too busy to, to improve. And looking at that, and thinking about how we convince people to play is kind of where I’m getting to now. So the the change management, the why the how on the walk. And so I’ve said that a really interesting that

there are some This is my absolutely my perspective, but there are some truths about change and change management. And it starts I think this is straight out of kircher. God. So all perspective is individual. And you say, Well, no, no, of course it is. Well, that’s easy, because it’s easy to say. But it’s often forgotten in this change management. While we often think of these big communication programs, where we sheep dip everybody in the same message, and these big kind of poster stuff, and all of those sort of things, but reality, we’re dealing with individuals. And of course, the change for them, whatever it is you’re trying to do is situational. If they’re having a bad time at home, if their kids are not well, if their family is not well, particularly in this in this era, where you know, through COVID, where schooling is not going as well, as you might expect, and all of those other things aren’t working, then thinking about change is quite difficult, right? In fact, it’s very, very hard. And so our journey has to get to be concise conceptual, that means that we all agree that we’re going on the same journey, it may not be that we can go at the same pace. And it may not be that we that we can’t kind of all get there at the same time. But we do all need to get there. And therefore you have to think about the individual at every step of the way. So whether you’re talking in front of a team of eight or 10 people or an organization of 400 people, or whatever it is, you have to remember there are individuals there and they will each interpret in their own way. Go back to that strategy page, right, where it talks about automation, speed and all those things. If you’re working in accounts payable, and you see things like that your immediate thought is, does that mean my job is going to go does that mean that I’m going to get replaced by a machine. And of course, part of our level promises that we work together on this stuff. And we find ways to make it work for everybody. And so that’s part of the trust that we have to get not just within our stakeholders, but as important if not more important, within our own people, and how we engage everybody everyday in there. So where do we go from here? Well, first is why. And then trust. I’m of course, as you can see from this picture I listened to and I absolutely agree with where Simon Sinek goes on all these things. And the Golden Circle, which starts with why right as he says every organization and paint knows what they do. Some know how they do it. Very few talk about the why they do I think Lego talks about the why brilliantly by the way as a company. And that helps with strategy deployment and all those other technical stuff that lien buffs and or everybody else who worries about TPS and all those other things. Think about the why becomes easy if you’re connected, and people understand where you’re going. So let me take that a little bit deeper. We started to draw pictures my boss at the time, by the way, said Peter, this is so simple, right? Why do you need to say this? And the reason is because people kind of forget right? You get really carried away as a leader on strategy and targets. By the way, I saw a great quote from from I think it’s Adam Stanford great economist the other day, which basically says, a measure stops being useful as soon as you set a target and I do understand exactly what he means by that. And so strategy and targets of course, start in top down but performance manager When the actual working day happens bottom up, that’s where you deliver all this service. And our job as leaders, I like to do capital, we used to talk about the kind of NFL type phrase of, of blocking and tackling, right? That’s our job as leaders, right is to make sure that the guys carrying the ball can get across the line, right, you can score that touchdown or try or whatever sport other sporting analogy you would like. So I performance about Services has to become visible. throughout the organization, actions are taken at the right group, and problems are solved at the right level. Not all problems need to come up the way and that’s something we’re kind of learning over time.

That picture goes to a different level. Because alongside that, we also want to be able to tell stories. And the way we talk about operational excellence in BSL is a journey we call SWAT to summit. Now, Swan summit actually, is a fairly simple story in a number of ways, backed up by a very complex and deep understanding of what operational excellence really is. And if you think about the story that says if you’re in the swamp, right, and you can’t see anything, all you want to do is count as one, that’s all you’re focused on. But as you start to move up, and let’s take the journey into, let’s say, a medical journey from Kathmandu to Basecamp Everest, right? If you’ve got the right equipment, and the right guide, you can basically do that. And you could do that on your own. Or you could do it with a group of people. But you can get there. based companies a very different place in Basecamp Everett’s for instance, you spent about four weeks there a climatized, learning new skills, and most of all, tying yourself to a bunch of mates so that you can climb up to the summit together. And if you think about that, in those terms, then only a world class climber or a world class idiot tries to get to the summit of Everest on their own, actually is nearly impossible these days, because you end up in a massive cube. And that’s a different issue, and a different set of theories to think about. If you then change that to an operational excellence journey, the swamp is the place where you don’t know your customer, you don’t really know what they want, you can’t really measure in the view of what they want. And you’re not sure how you’re going to deliver from one day to the next. And as you move up the mountain, you get better and better. And Basecamp is that place of control. Not only do you know all of those things, but your your hurdles are working, you’re having your morning meetings, you’re moving, moving progress forward every day, you’re improving every day, but you’re using still quite rudimentary tools to do that. And as you climb to the summit, of course, then things get more complex. And you need more science and more data and more analytics, and a whole bunch of things there to make it more complex. We’re very close to Basecamp in many of our services right now, and we are aiming for for everyone in BSL to be at base camp by the end of 2021. And that, in a nutshell, is their operational excellence journey. Let me kind of share a little bit more on that. The war is a mechanism for describing operational excellence. It’s as simple as that a roadmap if you like, on how to get there. And to understand where we are today. There’s a lovely old joke. Actually, I heard it in Ireland, of a guy stops a farmer and says, Can you tell me the way to Dublin? And the farmer says, Well, I wouldn’t start from here. And that’s if you think about it in operational excellence. Often that’s where you are. Right? I can tell you that in my days in telecoms. For instance, when I first started to use a journey like this, we were deep in the swamp. Right. And you don’t and that’s a difficult place to start an operational excellence journey, you would think, actually, in reality, it’s a very good place to start an operational excellence journey from because improvement, it comes pretty easy. The why, as you can see on the right hand side, is to help VSO deliver on our vision and mission. It’s as simple as that, and to improve stakeholder centricity and service mindset. Because that’s where we’re really focused. And that’s why we’ve made such a difference around things like NPS and a whole range of other things. And I can tell you, we’re not living just to create a lovely service and cuddle everybody. We’re delivering a very, very well honed service. But we do that with with a service overlay, which is tremendous. The scope, as you can see here is the five areas that we focus on for operational excellence. The model that we have is, was built about 10 years ago, in my Virgin Media days, actually. And there we use the things like CMMI, whole Toyota production system, a whole range of things to help influence the system on journey, and I’m getting that and the target is as you can see.

Taking that a little bit further, I won’t read all the words on this slide. What are the very important things is to be able to tell a story About what it feels like when you get there. If you can’t do that, then all you’re asking people to do is take a leap of faith. And that’s a very difficult thing. It’s a very difficult thing by way of C suite, of course, but it’s a but it’s actually more difficult when you’re talking to people on the shop floor. So the way I like to do this, and this is a, this is something I learned in GE Capital back in about 1990 1991 was the kind of thing they called backward imaging part of the change acceleration process, by the way, and backward imaging builds the motivation to engage with a compelling story, tell it like you’ve already arrived. You know, it’s that newspaper headline, when you finally succeed. And if you use language like this, and if you talk in positive ways, about arrival at your destination, then you create a compelling argument for why people would want to get here. And that’s the piece that we’re really very focused on, within my team to help people understand the what’s in it for them. And why Actually, this is worth doing. Okay, you use terms like we love it here, we’d love to see you here. And we’re not done. We talk about the hard work that we’ve that we’ve done, that we were that we that we took some brave decisions, and that we are all leaders. And we firmly believe that in the government, by the way, we believe that we are all leaders, and that we work together, whatever rank you are in the organization, you lead in your in your space, and you lead with your colleagues to get us on these journeys. So very important part of what we want to do. What are our next steps? Well, new tools to either diagnosis and planning. One of the things of course, we find is that you can lose, I have very few I have three Lego continuous improvement guys in LCI in, in my team, for about 400 people. And you could lose them completely in doing diagnostics, and assessing and doing all that sort of stuff. So we’ve rebuilt and are rebuilding the tool to make that more useful for everybody else. Training everybody. In basic skills, we’ve actually trained all 400 people in basic lean, what’s called level one in the lean competency system, we’ve trained, most of our leaders now nearly all of them in next level up. And we are using that to help them understand how this journey works together. And then of course, we built it into the objectives and targets for people over the next few years to help them on that journey. Team Lead planning. So not leader, lead leader, of course, massively important that everybody works together on this plan. It’s not just my plan, and it’s certainly not lcis plan for each area is their plan. So they plot the route, and then mana constant monitoring and cost corrections, of course, because you don’t always get it right first time. And then behind that we support the delivery plan, act as guides on that journey. Focus on performance management and behaviors, particularly because we want to do more work in that space and help that journey. So we have a much better and clearer line of sight to leadership measures and a whole range of other stuff that connects across the Lego group. And then as we go, and as we learn more, pick out the themes where we think we need to help more and run specific sessions in that, whether that’s problem solving, or whatever it is, and add that to a learning plan and give people the space to move. So that’s kind of where we’re at where we’re headed. And that’s our next steps. So, in summary, for me, it’s quite simple, really, we build a picture of where you want to go. We start with that picture. We don’t just concentrate on leaders. As I said, I think we believe everybody is a leader. But we we heavily concentrate on people to make sure they understand the journey, we find our compelling story and stories, we actually have a story for each of the elements you saw when within the scope of operational excellence for us. And then we relentlessly deliver that story. I talk about it all the time. I’m sure I drive my peers mad with it. But it’s my job to keep telling that story. We know the stories of advertising and how it’s and how many times you need to hear to make it stay. And of course we celebrate.

As we arrive. I like to kind of have a picture in my head of base camp as a serious series of tents. And within those tenses, leadership and problem solving and all those things. And each of those tents, there’s food and there’s drinks and there’s ability to share and celebrate the fact that we’ve arrived. And of course you don’t get to Basecamp unless you become pretty strong and can master all of the skills needed. on that journey, that’s about it for me, I hope you find that interesting. I’m very open to contact to discuss it wider, further and deeper to get into technicalities, which of course, I don’t think this is the right way to do it. So we can talk about technicalities as well. And if you want to contact me, my email address is on the bottom here. Or you can find me on LinkedIn or any other method, jungle drums, smoke, whatever it is you want to do. But thank you very, very much for doing me the honor of listening to this, always open to feedback, always open to questions. And with that, I’d bring this to close. Thank you very much indeed. And please enjoy the rest of the conference. And of course, please stay safe and please stay well. Bye Bye now.

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