Implementing innovation frameworks within facilities management contracts

Improving InnovationWithin Your Facilities Management Contracts

March 30, 2014

Prepared by:Chris Payne

CSSConsultancy.com

Improving FM, Maintenance and SupportServices through clever thinking

T: + 44(0) 1698 901025F: + 44(0) 1698 901035E: [email protected]: www.cssconsultancy.com

Our missionWe work within the Facilities Management, Maintenance and Support Service sectors to radically improve service performance, enhance relationships and install tools that encourage clarity, innovation and positive change.

Chris Payne Innovation & Improvement DirectorCSS Consultancy

4|

What we will cover during this presentation

► What is innovation?

► Why is it important?

► What drives it?

► How do FM organizations currently innovate?

► Where do you innovate?

► How do you measure innovation?

► Improving innovation

— Implementing an Innovation Strategy

— Barriers to Innovation

— Building in innovation

► Next steps

► Some suggested reading

5|

What is innovation?

6|

What is innovation?

An idea?

7|

What is innovation?

An invention?

8|

What is innovation?

A better way of

working?

9|

What is innovation?

There are lots of

definitions

10|

Innovation is about people creating value for stakeholders

by implementing new ideas

What is innovation? Fresh thinking that creates value

Innovation is the creation of something that improves the

way we live our lives

Innovation is really about responding

to change in a creative way; it’s about generating

new ideas, conducting

R&D, improving processes or revamping

products and services.

Innovation is the creation of the new or the re-arranging of the old in a new way

Innovation lowers the costs and/or increases the benefits of a

task

Any creative idea, getting implemented or realized successfully, is Innovation

Innovation is converting ideas to numbers.

Something new or different introduced

The term innovation may refer to both radical and incremental changes to products,

processes or services.

Innovation is the specific instrument of entrepreneurship… the act that endows resources

with a new capacity to create wealth

The introduction of something new.

New products, business processes and organic changes that create wealth or social welfare.

Innovation: Something new and uniquely useful

There are lots of

definitions

11|











task











Innovation is about people creating value for stakeholders


There are lots of

definitions

12|











task











Innovation is about peoplecreating value for stakeholders


There are lots of

definitions

13|

What is innovation?



Value• Cost• Advantage• Safety• Ease• Time• Satisfaction

People• Suppliers• Employees• Customers• End users• Consultants• Partners

Stakeholders• Suppliers• Employees• Customers• Users• Consultants• Shareholders

• Community• Partners• Industry• Investors• Government

Ideas• Efficiency• Complimentary• Evolutionary• Revolutionary

The evolution of innovation:• Technology push (‘50s – late ‘60s)• Market pull (Late ‘60s – mid ‘70s)• Coupling/interactive (Mid ‘70s – end ‘80s)• Integrated/process (End ‘80s – early ‘90s)• Networking (Early ‘90s – ’00s)• Open innovation (‘00s – ’10s)• Open innovator (‘10s onwards)

- Kotsemir & Meissner ‘13

14|

What is innovation?








Typically, innovation results are measured in financial terms based on Return On Investment (ROI) calculations. From a service perspective, this ROI can extend to encompass health, safety, quality and environmental metrics in addition to customer satisfaction levels and loyalty.

15|

What is innovation?








Author Wayne Burkan in his publication entitled ‘Wide Angle Vision’, suggests that innovation is driven by disgruntled customers, off the scope competitors, rogue employees and fringe suppliers.

16|

What is innovation?








Research shows that without new ideas, organizations often become complacent based upon past experience, partly driven by institutionalised behaviours and a focus on the internal development of their own structure.

17|

Why is it important?

Recent research on the Standard & Poor's 500 has shown that successful

companies today remain in business for only an average of 15 years. In the 1920s, this average lifespan was 67

years.

(BBC News, 2012)

6715

18|


Recent research on the Standard & Poor's 500 has shown that successful

companies today remain in business for only an average of 15 years. In the 1920s, this average lifespan was 67

years.

(BBC News, 2012)

6715

Seven out of 10 corporate chiefs in the UK are over-reliant on fading revenues, and more than a quarter fear their business

model will no longer work by 2017

FT (28/4/2104)

7/10

19|


58% of business leaders in large UK companies admit their management team is

failing to effectively lead for innovation

Eyes Wide Shut: Leading for innovation in post

recession Britain

58% 93.5% of 1500 CRE executives cited face-to-face collaboration as a critical success factor

in achieving innovation.

Cushman & Wakefield: Joint survey of CRE Executives conducted in partnership

with CoreNet Global 2012

93%

68.9% rated the physical work environment as an

important factor in innovation.

69%

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When evaluating contract bids and tenders, 86% of people procuring bundled services

believe innovation is important, second only to cost

Time for change in FM - Interserve & Sheffield Hallam Research (October

2013)

86%

21|


When evaluating contract bids and tenders, 86% of people procuring bundled services

believe innovation is important, second only to cost

Time for change in FM - Interserve & Sheffield Hallam Research (October

2013)

86%

Almost 80% of Facilities Managers are measured first on performance against Budget. As a cost centre it is an area where budgets can be cut to make

savings.

80%

RICS: Raising the Bar 2012

22|


68% of CRE teams are seeing increased demand from senior

leadership to improve the productivity of the real estate

portfolio

68%

61%

72% of CRE teams experience demand to deliver clear

enhancements to workplace productivity

72%

48% of CRE teams view financial constraints as the greatest limitation on CRE

from enhancing its strategic position

48%

28% of CRE teams are “well equipped” to meet the demands of senior

leadership

28%

61% of CRE teams experience demand to deliver improved

worker productivity

JLL: Global Corporate Real Estate Trends 2013

23|

68% of CRE teams are seeing increased demand from senior

leadership to improve the productivity of the real estate

portfolio

68%

61%

72% of CRE teams experience demand to deliver clear

enhancements to workplace productivity

72%

48% of CRE teams view financial constraints as the greatest limitation on CRE

from enhancing its strategic position

48%

28% of CRE teams are “well equipped” to meet the demands of senior

leadership

28%

61% of CRE teams experience demand to deliver improved

worker productivity


JLL: Global Corporate Real Estate Trends 2013

24|

What’s driving it?

Techno-logical

advances

Changing customers and needs

Intensified competition

Changing business

environment

Influence of global trade, economic cycles and government policies

Population profiles (age, em

ployment and affluence)

in addition to increased expectation of choice

Global trade, outsourcing and market diversification

Auto

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25|

”“Organizations are beginning to acknowledge their share of responsibility for the problem of the overwhelmed employee and take steps to solve it. 3.

””

””

”““

“““


Changing business environment1. Ernst & Young: Tracking global

trends 20142. Grant Thornton: Insights into FM –

Issue 9, 20143. Deloitte: Global Human Capital

Trends 2014: Engaging the 21st-century workforce

Estimates show that 70% of world growth over the next few years will come from emerging markets, with China and India accounting for 40% of that growth. 1.

Between now and 2050, the world’s population is expected to grow by 2.3 billion people, eventually reaching 9.1 billion. Over 80% of future demand will come from Asia. 1.

Instead of a “China strategy” or an “India strategy,” companies will begin formulating strategies for particular cities, or for city clusters. 1.

Over the last five years, FM deals involving international buyers have risen from around 5% of the market by volume to almost 20% in 2013. 2.

Companies die because their managers focus on the economic activity of producing goods and services, and they forget that their organizations' true nature is that of a community of humans. 3.

Techno-logical

advances



Changing business

environment

26|”””””“

““““

What’s driving it?Changing customers and needs1. Ernst & Young: Tracking global

trends 20142. IFMA: Facility Management Trend

Report: Emerging Opportunities for Industry Leaders 2014

3. JLL: Global Corporate Real Estate Trends 2013

4. Cushman & Wakefield: Workplace Transformation Survey 2013/2014

According to market research firm Frost & Sullivan, while sustainability itself was the main focus of FM in 2010, workplace management will lead the charge by 2020. 2.

Sixty-five percent of companies around the globe are having problems sourcing critical-skill talent. In the fast-growth markets, the problem is particularly acute. 1.

Economic realities and capital expenditure constraints have maintained pressure on CRE teams to implement short-term tactics, often to the detriment of longer-term strategic moves. This focus has been aimed at bolstering corporate financial performance through cost savings and/or capital release. 3.

Most CRE teams are finding it challenging to continue achieving year-on-year cost-saving targets through tactical means, as most of the easier opportunities within portfolios have already been realized. 3.

Occupiers cited human resource factors, such as recruiting, workforce productivity and improved work/life balance over cost factors, such as reduced facility costs and lower churn as drivers of workplace change. 4.

Techno-logical

advances



Changing business

environment

27|

“ ”“ ”“

”


Intensified competition1. Grant Thornton: Insights into FM –

Issue 9, 20142. Deloitte: Global Human Capital

Trends 2014: Engaging the 21st-century workforce

The deals that are seeing the likes of CBRE acquiring Norland, and Germany’s Bilfinger securing Europa are highlighting the trend for property managers to acquire FM providers and vice versa. 1.

Specifically, one of the big challenges that companies face when putting in place more centralised processes is to avoid stifling the innovation that can be generated within many quasi-independent entities. 1.

Techno-logical

advances



Changing business

environment

Corporations now compete globally for increasingly scarce technical and professional skills. 2.

Companies that succeed in building a global “supply chain” for skills will be positioned for success in innovation and performance. 2.

Target Name Acquirer Name Subsector Value £m

Enterprise Group Holdings Limited

Amey plc Utilities 385.0

Norland Managed Services Limited

CBRE Group Inc. M&E 321.1

May Gurney Integrated Services plc

Kier Group plc Maintenance/ Fit-out

221.3

Balfour Beatty WorkPlaceLimited

GDF Suez Energie Services SA

M&E 190.0

Inenco Group Limited Intermediate Capital Group plc

Utilities 150.0

28|

“ ”“ ”“ ”“ ”“ ”“ ”


Technological advances1. Ernst & Young: Tracking global trends

20142. RICS: Raising the Bar; City

Roundtables Report 20143. MoD: Global Strategic Trends out to

2040 4. BIM Task Group Website

All companies are in the technology business. 1.

The amount of digital information created each year will increase to 35 trillion gigabytes by 2020, requiring 44 times more data storage than in 2009. 1.

FM continues to be “bombarded” by new technologies –‘green’ technologies, the ‘Cloud’, wireless power; BIM, building sensors, and more. 2.

As building systems become more complex, advanced technologies have become readily available that allow integration of multiple streams of data, giving FMs an unprecedented level of access and mobility that did not exist just a few years ago. 3.

Techno-logical

advances



Changing business

environment

Innovation will create new opportunities and generate value, by successfully exploiting new and improved technologies, techniques and services, overcoming cultural and process barriers. 3.

Collaborative 3D Building Information Modelling (BIM) with all project and asset information, document and data in electronic format, will be required on all UK government construction projects by 2016.

The Nature of InnovationWithin Facilities Management Contracts

March 30, 2014

30|

How do FM organizations currently innovate?

Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer

Delivery modelStaffingFulfilment

ReportingMonitoringMeasuring

Control / complianceBusiness systemsPerformance improvement

CultureScale and scopeRelationship


StructureGovernance

Communication

Growth / market / competitorBusiness modelFinance

Strategic Operational

31|


Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer

Strategic Operational


ReportingMonitoringMeasuring

Control / complianceBusiness systemsPerformance improvement

CultureScale and scopeRelationship


StructureGovernance

Communication

Growth / market / competitorBusiness modelFinance

Needs improving

Focus of innovation

Seek alternative

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42|

Where do you innovate?

Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer

43|


Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer

44|


Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer

HIGH IMPACT –LOW INVOLVE-MENTTypically done by specialists

HIGH IMPACT & INVOLVEMENTParticipation by many individuals and or groups, bringing diverse skill sets

LOW IMPACT & INVOLVEMENTFew people involved and the impact is generally low

LOW IMPACT -HIGH INVOLVE-MENTFocus is on continual innovation in low impact ways

45|


Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer

HIGH IMPACT –LOW INVOLVE-MENTTypically done by specialists

HIGH IMPACT & INVOLVEMENTParticipation by many individuals and or groups, bringing diverse skill sets

LOW IMPACT & INVOLVEMENTFew people involved and the impact is generally low

LOW IMPACT -HIGH INVOLVE-MENTFocus is on continual innovation in low impact ways

46|


Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer

Where do they feel pain?How can the relationship be improved?What are the ‘strategic imperatives’?

Compliance / KPIs / SLAsEnd user fulfilmentR3 (Right Thing, Right Fix, Right Time)

Adoption planUtilization auditOpportunity review

Wasteful effortResource utilization

Improvement planning

47|


Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer

Where do they feel pain?How can the relationship be improved?What are the ‘strategic imperatives’?

Compliance / KPIs / SLAsEnd user fulfilmentR3 (Right Thing, Right Fix, Right Time)

Adoption planUtilization auditOpportunity review

Wasteful effortResource utilization

Improvement planning

Author Wayne Burkan in his publication entitled ‘Wide Angle

Vision’, suggests that innovation is driven by disgruntled

customers, off the scope competitors, rogue employees

and fringe suppliers.

“It is my belief that, by and large, there is one and only one source

of innovation, whether it’s internal IS/IT systems, recruiting

systems, or whether it’s the development of a technical

product. And that source is: Pissed-off people.”

Tom Peters

48|

How do you measure innovation?

Nine out of 10 FM providers polled have no mechanism to measure innovation within their

contracts or their business.

“We don’t”

49|

How do you measure innovation?

Nine out of 10 FM providers polled have no mechanism to measure innovation within their

contracts or their business.

“We don’t”

Adhoc innovation(on a case by case basis)

Through word-of-mouth

By copying others

Anecdotal evidence

Results

50|Source: http://timkastelle.org/blog/2012/04/the-innovation-matrix-explained-innovation-competence/

NOT INNOVATING VERY MUCH

THINKING ABOUT

INNOVATIONBEWILDERED

ACCIDENTAL INNOVATORS

FIT FOR PURPOSE

POTENTIAL STARS

UNICORNS STARS(AT RISK)

WORLD CLASS INNOVATORS

INNOVATION COMMITMENT

INN

OVA

TIO

N C

OM

PETE

NCE

Improving innovationImplementing an innovation strategy



THINKING ABOUT



FIT FOR PURPOSE

POTENTIAL STARS




INN

OVA

TIO

N C

OM

PETE

NCE




THINKING ABOUT



FIT FOR PURPOSE

POTENTIAL STARS




INN

OVA

TIO

N C

OM

PETE

NCE


53|


Starting your innovation journey

Decide where to innovate

Set incremental objectives

Define how you will innovate

Include everyone

Monitor, adapt, improve

54|

Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer


Step 1Decide where to innovate

55|


THINKING ABOUT



FIT FOR PURPOSE

POTENTIAL STARS


WORLD CLASS

INNOVATORS


INN

OVA

TIO

N C

OM

PETE

NCE


Step 2Set incremental objectives

56|


Step 3Define how you will innovate

57|


Step 4Involve everyone

Business Unit

Supplier

Customer

End-user

IT Department

Consultants

Community Group

58|


Step 5Monitor, adapt, improve

Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer

Service

Organiz-ational

Strategy Technology

Process

Marketing

Customer

59|

Improving innovationBarriers to innovation

60|

Improving innovationBuilding in innovation

61|

Some Suggested Reading

IFMA/CBRE FM Trend Report 2014

Grant Thornton FM Insights

Deloitte Global Human Capital Trends 2014

KPMG Real Estate Outlook 2014

PWC Emerging Trends in Real

Estate 2014

RICS Raising the Bar Report 2012

Interserve Time for Change in FM 2103

Cushman & Wakefield 2014

Workplace Survey

Improving Innovation

Any questions?

March 30, 2014Prepared by:

Chris Payne

63|

Funding Innovation

Provider’s Idea

Customer’s Idea

Joint Provider / Customer

Idea

Total

Provider funded

35 4 16 55 (36%)

Customer funded

13 12 5 30 (20%)

Jointly funded

14 14 39 67 (44%)

TOTAL 62 (41%) 30 (20%) 60 (39%) 152 (100%)

Source: International Association of Outsourcing Professionals innovation survey; Lacity & Rottman (2012)

Q: Who funds innovation?Typically, the stakeholder who proposes an innovation idea usually funds the innovation project in full or in part.

Improving FM, Maintenance and SupportServices through clever thinking

T: + 44(0) 1698 901025F: + 44(0) 1698 901035E: [email protected]: www.cssconsultancy.com

Improving InnovationHow can we help you?