Alcoa can help you create sustainable organizational transformation by looking inward to see the best practices it has already used.
Alcoa’s transformation into the company it is today began when it planned to implement the Toyota Production System throughout its global estate of 250 locations. Despite making significant progress over the next few decades, the Primary Metals Division remained behind. Vince Adomo, the Vice President of the division at the time, established a team in 2002 to investigate and develop a new approach. This team consisted of executives and consultants in external change management.
Adomo was told by one of these consultants that Alcoa’s efforts were too narrowly focused. This was what was keeping Alcoa from reaping the full benefits of the Toyota Production System. Alcoa was focusing too much on its maintenance division. This meant that Alcoa was not recognizing the importance of improving operational equipment reliability.
Looking wider, engaging deeper
Adomo further investigated and found that the consultant’s concerns were correct. The teams responsible for the plant’s change initiatives were dominated by maintenance and engineering managers with very little representation from operations. The company was also experiencing high turnover in its managers. This was preventing the company from focusing on long-term reliability. Costs were rising due to the need for leaders who are constantly improving.
Adomo used these findings to restructure the change management teams. These teams now included plant managers, engineers, as well as operational leaders. He assigned the teams the task of re-energizing the change program to improve reliability. The new approach led to a cascading of responsibilities throughout the organization. Everyone was responsible for the new emphasis on reliability and giving safety more prominence.
Reinforcement of the business case for change
Adomo conducted a company survey to confirm the new strategy. This revealed wide differences between the most and least performing plants in Alcoa’s network. He wanted to see both financial rewards and higher standards of safety. He insisted that there should be no return on investment from delaying maintenance. Instead, sustainable productivity improvements should be made through improvements in reliability. While there would be savings through lower maintenance and repair costs, these savings would only come from improvements made upstream.
The group analyzed data and identified best practices within the company and predicted that it would save between 10% and 20% on its maintenance and repair budget over the next three years. They also estimated that every dollar saved would result in an approximate $1.50 increase in equipment effectiveness.
A new strategy for change management
After setting these new financial targets, the new change management team realized that it needed to focus its efforts on employee engagement. The efforts were again reflected in the organization’s hierarchy, with the process following a natural progression.
Principles of new practice, with support from management and sponsorship
Cultural change, setting goals and objectives, and focusing on organizational behavior.
Process re-development with an emphasis on equipment design, procurement and materials management.
Optimization, creating a more efficient organization structure that eliminates losses and reinforces training.
Sustainability, controlling costs and auditing efforts, management reporting, reliability engineering.
Managing change effectively
The key to business transformation was the ability to manage and execute the change well.
Alcoa had a strategy for changing and metrics to help them stay on track. Alcoa then engaged the support of senior executives and plant managers through Town Hall meetings. They developed a mission statementm