Any cursory review of the chat boards on the Internet concerning ISO55000 will tell you that the question on everyone’s mind is how to reason the benefits case for implementing an asset management system to executive management.
There is a perception that simply having a list of benefits will be the persuasive conclusion that creates resolution to the issue of whether an organization should adopt the standard or not.
In the quicker, cheaper, faster world we live in, the challenge from management to show the benefits is a very real issue and one to take seriously. Changing a set of organizational perceptions into a go forward position for adopting ISO55000, or the principle of putting in place an asset management system, will have to be treated in a more mature and comprehensive manner for success to be achieved.
The purpose of this article is to frame the issue and present a structured framework around which discussion about the topic can take place.
RESPONDING TO THE INITIAL PERCEPTION ISSUE
As one raises the argument for implementing a strategic asset management system, the immediate response is going to be a challenge of showing the financial benefit.
Management is conditioned to respond with this challenge. In the myriad of issues that face executive teams on a regular basis, it is the first filter for any next step discussion or meaningful consideration. The reactionary position and immediate concern is wrapped around a mental model of potentially devoting significant resources into a new idea that has no tangible and credible business benefit. This mental model is represented in Figure 1. In this model, significant input energy is expended without a measurable tangible benefit. We refer to this as the vicious cycle of going nowhere, which needs to be addressed comprehensively in order to progress to a more structured and productive position.
Figure 1: The vicious cycle of going nowhere
The great fear, for which there are many precedents, is that committing to an ISO55000 future will lead to a disruptive churn that will demand resources, absorb organizational energy and, ultimately, land up at a point not dissimilar to the point of departure, i.e., there is a perception of investment with no value gain.
To break through this organizational perception or mental model, one has to embark on a much more considered and strategic approach that will lead to a structured discussion and review. The goal is to create a new organizational perception that has a value enhancer paradigm represented in Figure 2.
Figure 2: The value paradigm
CREATING ACCEPTANCE - Planning and Designing the Persuasive Argument
Minds are hard to change and scientific research tells us that the flexibility of thinking reduces with age. That means the older the person (read senior management), the more challenging it is to create a paradigm shift from an existing mental model. There has been significant research conducted into formulating a persuasive argument, and from this, we present a structured approach for preparing such an argument. The model consists of seven levels to be used as a template to become an effective persuader. Let’s consider them.
REASON – Reason involves using logic, analogies and other rationale processes to persuade. Most management teams, especially engineers, consider themselves rational and wish for this to be the foundation for persuasion. Within the reason argument, one has to provide examples, show alignment to real business needs, and show with examples what has happened and how a management system could have prevented it. It is also useful to provide industry comparisons. Finally, one has to craft a value argument linked directly to the individual business.
We also have to recognize that even though individuals like to think they are rational, all of us live in a multidimensional mental world where we are all subjected to emotional and political aspects to our cognitive decision making. This means we have to broaden our approach – with the following considerations.
RESEARCH – Reason has a multiplier effect. Argument is much more persuasive when backed up with research. This means you need to be prepared to answer the “why” question with researched, organizational-related facts. Research needs to look at data and analyze it in a systematic manner (often statistical). Using data, one can analyze basic facts to understand trends, conditions and opportunities.
Bear in mind that the data synthesized into information has to be persuasive to warrant a change of mind. There is the cycle of transformation of data to information and then finally into action. Remember, you make your arguments as clearly and unambiguously as possible based on the facts. Arguments can be made more persuasive by adding a “because” statement to it. …. Because it will give us consistency of execution between operations and engineering leading to higher use of installed capacity, based on ….
RESONANCE – While reason and research appeal to our cognitive aspects of the mind, resonance applies to our emotions. Again, behavioral research shows if one can appeal to another’s feelings and emotions to create an emotional resonance, one has the most powerful lever for changing minds and gaining support. Reason and research, though logical, may not be enough if your audience doesn’t care about the issue.
The issue has to be communicated in a way that sounds or feels right, on an emotional level. This may follow reason and research, but occurs when a connection occurs at a subconscious level. We are also told that while reason and research are processed in the cortex within our brain, resonance occurs within the limbic system and, as such, has to be addressed differently.
REPRESENTATIONAL REDESCRIPTIONS – This is an elaborate way of saying you need to make your argument in a number of ways and through different media. Individuals have different learning preferences and methods of processing information. Some can quickly assimilate information from a chart or graph, others prefer to read a narrative, still others want to hear it personally and yet others require pictures or stories. So present the argument in different forms, all of which should explain and reinforce the same key concepts.
RESOURCES AND REWARDS – So far, the arguments lie in the domain of an individual who has an open mind. At this point, one has to revert to the specific, what’s in it for the individual argument. For example - better throughput, leading to improved profitability, leading to recognition, leading to improved status within the organization.
The resource argument is also a key consideration, as it often represents a no-go restraint. In the cost constrained, resource limited situations that most organizations find themselves in, clear valuable initiatives often are not considered due to the limitation of resources. This needs to be considered and addressed in the argument for implementation. The point being there needs to be a clear indication of the resources required to create the solution and some consideration as to where the resources (money, skills, capacity, know how) may come from.
REAL-WORLD EVENTS - The risk argument. Sometimes, one has to change mindsets on a large scale through events. Recent asset-related events abound, such as the Deepwater Horizon oil spill disaster, the Toyota safety recall and the Fukushima nuclear disaster. It is easier to convince an audience to motivate for change when facing real, identified major risks even if the facts are lacking. One real-world event is more and more regulators looking at using ISO55000 as a framework for regulation and how that will affect your industry/organization. There is also the evidence-based conclusion that managing risk is well rewarded. This is summarized from the work of the Aberdeen Group shown in Figure 3 and Table 1.
Figure 3: Designing the persuasive argument
Table 1: Breaking Free from the Viscous Cycle Paradigm
There is also more and more discussion regarding insurance companies looking at the presence of an ISO55000 management system as a consideration for insurance.
Potentially, in the near future, this may be a license to operate issue within certain industries.
RESISTANCES - Expect teams and individuals to be more comfortable with the status quo. The strongest force that resists changing minds is the comfort with the as is. Compounded this is the fact that changing minds becomes more difficult with age. Therefore, it is important to show the arguments around not changing in the most uncomfortable light.
A useful perspective is to build a detailed, credible picture of the scenario of what happens if we don’t put in an asset management system. This argument leads to the point that if the organization needs to get better, there has to be a structured process to get there and a management system in place to sustain the gains.
ESTABLISHING PURPOSE – Creating Organizational Intent
Once through the gaining acceptance phase, the next challenge, and the biggest challenge of all, is execution and implementation. Much as we reasoned the absorption of a strategic approach when presenting the argument for implementation to management, we recommend a strategic approach to creating organizational purpose around ISO55000. We make this argument based on four key reasons:
1. Creating an Empowering Governance Structure
So often, really good initiatives within an organization never overcome the first barrier that confronts execution. There is a thin dividing line between those initiatives that succeed and those that do not. To ensure an initiative has the maximum opportunity for success, one should establish a fully sponsored power coalition that acts as the steering committee for the initiative. This steering committee acts as an advisory committee made up of high-level stakeholders and experts who provide guidance on key issues. The more sponsored and powerful the organizational governance structure, the greater the chance the execution phases will have of overcoming the inevitable obstacles regarding implementation. A powerful coalition of support will clearly indicate the organizational importance of intent.
This steering committee should have executive representation, as well as representation from production and other areas of the organization. It should have a charter for success and meet regularly to review the steps along the way. Barriers need to be identified early in the journey and the governance structure needs to play an active role in removing or lowering the magnitude of the performance barriers.
2. Establishing Clear Purpose
The purpose of this article is to provide a framework around which meaningful conversations can take place within organizations regarding the relevance of implementing the ISO55000 standard. At its core, ISO55000 will provide an accountable and manageable system that drives value from the ownership of an asset. This purpose needs to be clearly analyzed, reviewed and articulated in an organization’s own frame of reference and defined in such a way that organizational purpose resonates in clear articulation of intent.
Having this clearly articulated purpose crisply defined provides the basis from which many organizational conversations can start and a point of meaningful reference along the journey.
Organizational purpose can be captured in vision and mission statements, but these are often cladding that gets lost in noise. The real point is for the implementers to make purpose reside in all considerations by whatever means possible.
3. Aggregating the Improvement Initiatives
In most asset-intensive organizations, there are a number of competing improvement initiatives driven from different centers and different angles into the organization. Examples include Six Sigma, defect elimination, focused improvement, practical problem solving, etc.
While individually, there is a good chance that they may be yielding benefits, there is a greater chance of a multiplier effect and organizational sustainability of results if they are strategically encapsulated within a management system.
Therefore, we argue that there is a strong case for aggregating the improvement initiatives together to create asset productivity within the strategic context of the organization. This implies the convergence of both production and engineering goals, encapsulated within a management system.
4. Embedding the Key Concepts
There are a number of key concepts to embed into the management system and culture to manage progress, including:
- Establishing a line of sight between overall organizational objectives, how the asset is being operated and maintained, and everything in between.
- Implementing a management system that involves establishing a number of accountable processes. The key for these to create value is the concept of in place, in use. In other words, not just a paper exercise.
- Basing decisions and operational practices around the concept of driving value contribution through the total life cost of ownership of the asset.
At the end of the day, one will inevitably have to list the tangible benefits from implementing ISO55000. There are seven that are formally listed and six more that I added. For reference, they are:
- Improved Financial Performance – Improved services, outputs, return on investment and reduced costs without sacrificing short- or long-term performance. This can lead to the preservation of asset value.
- Managed Risk - Reduced financial losses, improved safety, and minimized environmental and social impact, all resulting in reduced liabilities, such as insurance premiums, fines and penalties.
- Improved Services and Outputs - Consistently matching the needs and expectations of the customer and achieving required service levels.
- Corporate/Social Responsibility - Improved ability to demonstrate socially responsible and ethical business practices within the organization’s community.
- Demonstrated Compliance - Transparent conformity with requirements and adherence to asset management standards, policies and processes can be achieved.
- Enhanced Reputation - Through improved customer satisfaction, stakeholder awareness and confidence improves.
- Improved Organizational Sustainability - Appropriate handling of short- and long-term effects, expenditures and performance can improve sustainability of operations and the organization.
To which I add the following:
- Improved Knowledge Management plus improved decisionmaking creates a learning organization.
- Greater Overall Accountability leads to more assured governance.
- Allocation of Responsibilities occurs at the right level through the organization.
- Ability to Elevate Asset Management as a key strategic enabler to the executive level.
- Ability to Create a Cross- Functional Rhythm of operation that transcends traditional organizational boundaries.
- Ability to Move Improvement Initiatives from the temporary, metastable state to the more permanent, sustainable and accountable state.
Grahame Fogel is an Asset Management Consultant with experience covering 25 years around the world. Grahame has been associated with many of the recognized benchmark programs, such as US Steel, Pfeizer Pharmaceuticals, PJB Power, Boeing and others. He has a depth of experience in the power, pharmaceutical, mining and chemical process industries. More recently, he has been on the forefront of implementing PAS 55.