This is a case study of how cultural change is occurring within an engineering development function of major food and beverage company. This group has been actively attempting to change its culture since 1993. The desired objective is a culture that thrives on high impact technical innovations for this company’s system, one that is based on continuous improvement and learning.

Let’s begin with a brief background of where this function has been culturally, what their vision is, and their plan for moving toward their vision. As you read this study you may want to pay particular attention to the following points:

Can this group be successful in changing their culture given that the overall corporate culture is very traditional, the structure hierarchical, the dress code conservative, focus is short term on bottom line and share holder value, and finance has the most influence?

What attributes do the leaders within the function need in order to reach their vision?

How can they minimize frustration?

I am a firm believer that if you continue doing what you’re doing you’ll keep getting what you’re getting. You must change your behavior to get change to occur around you. You must become a living, breathing pain in the rear, activist. So, how can these mangers get their people to become not only advocates of change, but also activists?

The modern history of this group begins in the early 1970s. At this time considerable innovation occurred in the areas of new manufacturing equipment and processes and in solving technical problems in the field. During the 1980’s the amount of innovation declined as the engineers became project managers and policemen. The culture became very risk averse in the late 1970’s and early 1980’s. This was due to the top technical management. There was a need to leave a paper trail so that if a mistake was made, you could easily prove it was somebody else’s fault.

Fortunately this top technical management began to retire in 1992. One VP replaced two levels. The style was totally different. The new management believed in constant improvement by learning from mistakes as well as successes.

Up until 1992 the function’s focus was very short term. While it was every engineer’s responsibility to keep abreast of new emerging developments, the time demands of police work and fire fighting limited their ability to perform this duty adequately. In 1992 things began to change. A technical crisis in Latin America highlighted the need for a longer-term view. In late 1993 a small long-term development group was formed. This group began to fill the gap. However, the rest of the engineering function continued business as usual. This began to pull the long-term developers back, closer to the short-term view. While some organizational changes occurred in an attempt to address this issue, the basic philosophy remained the same. Nothing changed. Frustration grew. Results were few.

1996 represented the beginning of the real push toward cultural change. This came with a change in function management and a new human resources team for the function. The new management was committed to increasing the value of the function to the company. In order to do this a significant change was necessary. The new director of engineering was well known for his boldness and his willingness to "buck the system".

One of his first moves was to contract an outside consulting firm, Key Organizational Strategies (KOS). Individual departments had already done considerable work around skills and competencies required for the future, visioning sessions, etc. KOS compiled all of this information and summarized it in one place. They also compiled previous benchmarking studies that the function had conducted along with assisting with a number of new studies. These were used to formulate a strategy that the management team then put into action.

This represents a list of those companies included in the benchmarking:

1. Rohm & Haas
2. Gate Way (chemicals)
3. ICI
4. ECC International
5. S.C. Johnson & Son, Inc
6. TREMCO
7. EXXON
8. HP
9. 3M
10. IBM
11. E.I. DuPont

The studies indicated that most of these companies’ R&D groups were clearly organized in terms of their focus with respect to basic research, applied development, and finally commercialization. Degrees of overlap and how and when projects were handed off occurred varied. In some companies the person responsible for the basic research actually moved from one group to the next as the project progressed to coward commercialization. These companies had clearly defined innovation management processes that they could articulate. They had clear measures of success and systems in place to capture ideas throughout the organization. Most of these companies had some kind of mentoring program for younger associates. They were very focussed on obtaining people with the correct skills and competencies. Their people were proactive. They had a dual succession ladder in place so that technical people could reach VP status without becoming managers. They also had rewards and recognition systems that rewarded innovation and creativity. Most of these were team based rather than individual based. They were also based on the value or potential value of the innovation rather than the number of innovations. Their physical and emotional environment fostered collaboration, cross-functional cooperation and teamwork. They also had forums and clubs outside of their "day jobs" where they could learn and share their expertise with those interested in learning something new.

Based on these results the engineering function decided to reorganize (see above). As its business was not basic research it began with a long-term development group focussed on applied engineering developments ranging from 5 to 10 years from commercialization. Strategic development groups were formed according to engineering disciplines relating to specific aspects of the company’s business. These groups were fed partly by long term development. There focus was 3 to 5 years. Ideally when a long-term development was within 3 to 5 years from commercialization it would be taken over by a strategic development group. Finally there were account groups assigned and funded by the company’s operating groups. These groups focus on developments that will impact their operating group’s business plan. These are 1 to 2 years from commercialization. The operating divisions are responsible for actual commercialization. People were assigned to the various groups from existing compliment according to their skills, competencies, and their preference. This was not completed without some redundancies and retirements occurring as well as hiring new people with skill sets that would have been difficult for existing personnel to acquire.

The function developed two major process, Strategic Innovation Management or SIMS and Development Innovation Management or DIMS. The SIMS process is designed to ensure that ideas and developments are focussed on the addition of value and that there will be a high probability that these developments will be commercialized. DIMS is focussed on individual projects and project tracking. In addition, a system for capturing ideas throughout the function, "Business Opportunity Teams", is being developed.

The diagram above depicts the SIMS process. It shows the progression of an idea or project from its conception to commercialization. Each blue box is a distinct phase of the process. Between each phase is a gate where gatekeepers’ review must occur prior to proceeding to the next phase. The gatekeepers are responsible for ensuring that the idea is still valid from a business perspective. This becomes more rigid as the development moves closer to commercialization. The gatekeepers are a cross-functional team of made up of the Director of Engineering, Director of Global Procurement & Trading, and two Marketing Directors. This team approves sub-teams to actually carry out the reviews as appropriate. In each case the responsible development team recommends the members of the sub-team to the gatekeepers.

Above is the startup page for DIMS. This is where anyone wanting to enter DIMS begins. The DIMS process is a project tracking system. All projects are entered into DIMS. This includes a project charter, budget, team members, engineer time and expenses and project updates. It also includes the "Engineering Value Analyzer" which calculates the potential "Economic Value Added" (EVA) and potential "Economic Profit" (EP) for the project.

DIMS facilitates knowledge sharing as the information contained in DIMS can be shared with everyone in the company’s system. Although it does have security levels which can limit whom can view what information. It simplifies project tracking and progress reporting, allocates development costs (Personnel, capital, and expenses), helps manage risk, and finally is used to track actual EVA and EP of a project once it has been commercialized.

A system for capturing ideas throughout the engineering function is currently being developed. It centers on "Business Opportunity Teams" (BOT’s). These teams receive ideas submitted by associates and assist them in obtaining any additional technical, marketing, and financial expertise necessary to adequately prepare the submission for review by the gatekeepers. There may be a set period of one week per quarter when submissions will be accepted. The BOT’s will probably consist of the most senior engineers in the function.

The final initiative is called "Developer of the Future" (DOF). It is designed to create the culture and environment most conducive to technology innovation. It defines what needs to be done and what kind of environment is necessary to grow and nurture "Developers of the Future".

This initiative will put new processes, practices, and capabilities in place to build the environment, culture, and skills necessary. This initiative will also continue to build on the function’s previous efforts such as the development of a performance appraisal process and work done on aligning compensation.

DOF is divided into 4 key components:

1. Destination
2. Vision
3. Guiding Principles
4. Goals

It was developed by all of the engineering associates and key stakeholders. The destination is that the engineering function will be known and respected for being number one in its industry in innovation. It will be as well known for its engineering excellence as the company’s trademark is for product excellence.

The vision is lengthy and has been captured on a 25 by 4-foot mural. Below are exerts from the mural.

Seven "Guiding Principles" were established. These are:

1. Innovation ­ We generate new, exciting, and innovative solutions that apply engineering technologies to consumer needs and business opportunities.
2. Consumer and Customer Focus ­ The future needs of the consumer and customer are the key drivers of our engineering based initiatives.
3. Results Focus ­ We are accountable for ensuring that our business outcomes add value to the company’s system.
4. Intelligent Decision Making ­ We take personal accountability for making intelligent business decisions that balance benefit and risk.
5. Collaboration ­ Our diverse individuals share knowledge and work with others to deliver business results. Communication flows in all directions.
6. Learning ­ We value learning and take individual responsibility for proactively acquiring leading edge knowledge, skills, and abilities that link to business results. We learn from successes and failures.
7. Trust ­ We communicate openly and honestly and operate with personal and professional integrity to create an environment of trust and respect.

These principles are integrated into the vision depicted in the mural.

Five goals were established from ten work elements into which the mural is divided. These elements are:

1. Leadership Practices
2. Management Practices
3. Team and Individual Practices
4. Roles and Responsibilities
5. Performance Development
6. Communication
7. Recruiting and Selection
8. Rewards and Incentives
9. Work Processes
10. Physical Space and Resources

The five goals are outlined below.

Five goal leaders were appointed. These are the five department managers who also sit on the DOF steering committee. Associates volunteered to be on each team to help move each goal toward completion. Theoretically, completion should never come. New deliverables will be established for each goal as current objectives are delivered. Examples of objectives under each goal are:

Goal 1-

Goal 2 ­

Goal 3 ­

Goal 4 ­

Goal 5 ­

The goal teams are accountable to the function (all associates and managers). They report progress quarterly at engineering function meetings. Typically about 60% to 75% of associates attend these meetings (travel is the primary reason for missing).

The measurement of the functions progress toward their innovation culture will be conducted using a new tool developed by Dr. James Higgins of James M. Higgins & Associates, Inc. called the "Innovation Quotient Inventory" (IQI). It assesses product/service and process innovation within an organization. It uses a questionnaire. Two examples of the output of the data obtained from the tool can be seen below.

The analysis of the graphs and data requires training. Certification is available from Dr. Higgins. He can be reached at 1-800-2NO-Vate or http://www.jamesmhiggins.com. The IQI data was validated by the many focus groups conducted by KOS. This means that it can be used to measure the function’s progress toward their vision.