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The brain has become popular in the Netherlands in the past two years. Brain scientists have been publishing books sharing their interpretations on various topics of human behavior and the brain. Common theme of all: The brain is influencing your perceptions, thoughts and decisions without you even being aware of it.
Some even go that far by claiming certain patterns in the brain can be a proof if you have a certain disorder. It can be for better or for worse.
“It was not me that committed this crime; it was my brain and more…”
Anyway this post will be full of quotes as I am not the brain expert, still giving the brain an important role (even in PLM)
“My brain? That´s my second favorite organ” – Woody Allen
It is good to be aware of the influence of the brain. I wrote about this several times in the past, when discussing PLM vendor / implementer selection or when even deciding for PLM. Many of my posts are related to the human side of justifying and implementing PLM.
As implementing PLM for me primary is a business change instead of a combination of IT-tools to implement, it might be clear that understanding the inhibitors for PLM change are important to me.
In the PLM communities, we still have a hard job to agree between each other what is the meaning of PLM and where it differs from ERP. See for example this post and in particular the comments on LinkedIn (if you are a member of this group): PLM is a business process, not a (software) tool
And why it is difficult for companies to implement PLM beside ERP (and not as an extension of ERP) – search for PLM and ERP and you find zillions of thoughts and answers (mine too).
The brain plays a major role in the Why PLM we have ERP battle (blame the brain). A week ago I read an older publication from Charles Roxburgh (published in May 2003 for McKinsey) called: Hidden flaws in strategy subtitle: Can insights from behavioral economics explain why good executives back bad strategies. You can read, hear and download the full article here if you are a registered user.
The article has been written long before the financial and global crises were on the agenda and Mr. Roxburgh describes 8 hidden flaws that influence our strategic decision making (and PLM is a strategy). I recommend all of you to read the full article, so the quotes I will be making below will be framed in the bigger picture as described by Mr. Roxburgh. Note all quotes below are from his publication.
Flaw 1: Overconfidence
We often make decisions with too much confidence and optimism as the brain makes us feel overconfident and over optimistic about our own capabilities.
Flaw 2: Mental accounting
Avoiding mental accounting traps should be easier if you adhere to a basic rule: that every pound (or dollar or euro) is worth exactly that, whatever the category. In this way, you will make sure that all investments are judged on consistent criteria and be wary of spending that has been reclassified. Be particularly skeptical of any investment labeled “strategic.”
Here I would relate to the difference in IT-spending and budget when you compare ERP and PLM. ERP spending is normal (or strategic) where PLM spending is not understood.
Flaw 3: The status quo bias
People would rather leave things as they are. One explanation for the status quo bias is aversion to loss—people are more concerned about the risk of loss than they are excited by the prospect of gain.
Another reason why adapting and implementing PLM in an organization is more difficult than for example just automating what we already do.
Flaw 4: Anchoring
Anchoring can be dangerous—particularly when it is a question of becoming anchored to the past
PLM has been anchored with being complex and expensive. Autodesk is trying to change the anchoring. Other PLM-like companies stop talking about PLM due to the anchoring and name what they do different: 3DExperience, Business Process Automation, …..
Flaw 5: The sunk-cost effect
A familiar problem with investments is called the sunk-cost effect, otherwise known as “throwing good money after bad.” When large projects overrun their schedules and budgets, the original economic case no longer holds, but companies still keep investing to complete them.
I have described several cases in the past anonymously; where companies kept on investing and customizing their ERP environment in order to achieve PLM goals. Although it never reached the level of acceptance and quality a PLM system could offer, stopping these projects was impossible.
Flaw 6: The herding instinct
This desire to conform to the behavior and opinions of others is a fundamental human trait and an accepted principle of psychology.
Warren Buffett put his finger on this flaw when he wrote, “Failing conventionally is the route to go; as a group, lemmings may have a rotten image, but no individual lemming has ever received bad press.”
A quote in a quote but so true. Innovative thinking, introducing PLM in a company requires a change. Who needs to be convinced? If you do not have consensus (which usually happens as PLM is vague) you battle against the other lemmings.
Flaw 7: Misestimating future hedonic states
Social scientists have shown that when people undergo major changes in circumstances, their lives typically are neither as bad nor as good as they had expected—another case of how bad we are at estimating. People adjust surprisingly quickly, and their level of pleasure (hedonic state) ends up, broadly, where it was before
A typical situation every PLM implementation faces: users complaining they cannot work as efficient anymore due to the new system and their work will be a mess if we continue like this. Implementers start to customize quickly and we are trapped. Let these people ‘suffer’ with the right guidance and motivation for some months (but this is sometimes not the business model the PLM implementer pushes as they need services as income)
Flaw 8: False consensus
People tend to overestimate the extent to which others share their views, beliefs, and experiences—the false-consensus effect. Research shows many causes, including these:
- confirmation bias, the tendency to seek out opinions and facts that support our own beliefs and hypotheses
- selective recall, the habit of remembering only facts and experiences that reinforce our assumptions
- biased evaluation, the quick acceptance of evidence that supports our hypotheses, while contradictory evidence is subjected to rigorous evaluation and almost certain rejection; we often, for example, impute hostile motives to critics or question their competence
- groupthink, the pressure to agree with others in team-based cultures
Although positioned as number 8 by Mr. Roxburgh, I would almost put it as the top when referring to PLM and PLM selection processes. So often a PLM decision has not been made in an objective manner and PLM selection paths are driven to come to the conclusion we already knew. (Or is this my confirmation bias too )
As scientists describe, and as Mr. Roxburgh describes (read the full article !!!) our strategic thinking is influenced by the brain and you should be aware of that. PLM is a business strategy and when rethinking your PLM strategy tomorrow, be prepared to avoid these flaws mentioned in this post today.
As today it was again ‘Black Saturday”, the day that the French and German roads are filled with cars and traffic jams above100 km length, it was a moment for me to reflect in the middle of my summer holiday. I do not want to make other continents jealous, but the summer holiday is important (and long), still time for some thoughts.
PLM is dead, long live Social / User focused PLM ?
In one of my old 2008 posts, PLM in 2050, I predicted that PLM would no longer exist at that time, as companies would no longer focus on individual systems, but on full coverage of business processes, through integrated and federated data sources. I see this trend coming from two major PLM vendors (Dassault Systems / Siemens) with their 3DLive / HD PLM concepts. These concepts are trying to provide a unique user experience, where in an intuitive manner, a user in a specific role can obtain relevant data, analyze and simulate it in a virtual environment. Here the PLM vendors are really taking the lead to become the main platform for product development processes. Will the name PLM disappear at a certain stage ?
Additional you see startups and also some of the major PLM vendors experimenting with community concepts, social media. Moving towards a “Facebook’- like environment for product development and collaboration processes. The idea behind this direction is partly driven by the fact that the old generation of workforce slowly moves towards retirement where the new generation is not motivated to follow up the same working processes and procedures. The old generation moved from paper-based, manual processes to terminal-like screens, email and excel sheets.
If the new generation of employees will benefit from Facebook like environments is the question. Product development and collaboration requires a lot of boring data entry, even if we have a unique user experience. In addition, I was reading a preview of some research done with American and Dutch students, stating that study results from those students active on Facebook are significant lower as the result of student not active on Facebook, although they spend the same time on internet. I haven’t found the original source – here is a Dutch link. Curious to learn who will develop and bring better products to the market in the future with modern social PLM ?
ALM based on PLM is underestimated by owner /operators
As I have been active the past two years in some Asset Lifecycle Management projects based on PLM, I also feel that many owner/operators do not have the understanding or guts to change the way they are working. Understandable from their point of view – as long as the errors and risks are acceptable, why change the way the whole industry is working ?
In the nuclear industry you see the awareness growing. People know the risks of a nuclear disaster (after Chernobyl) and as we need more energy resources, nuclear energy with enhanced containment of risks is a natural way to go.
Perhaps after the BP disaster in the Mexican gulf, where apparently to the various reports, people were taking the wrong decisions due to inaccurate data or due to lack of information (could not be found in time) ALM based on PLM could be considered. However, investing even a few millions and changing the company’s way of working will never be approved by the BP management, as it will never happen a second time. It is all about being proactive (which is not a natural behavior) or being reactive and trying to control the damage. Here I have no predictions for 2050, I only believe that the proactive companies have a higher chance of survival – no matter which industry
But now my holiday activities call me back – for those not blessed by a holiday, here an overview of some of the relevant posts from the past year/
PLM and Organization
and if these links are not enough – look at my favorite blogs:
This time it is hard to write my blog post. First of all, because tomorrow there will be the soccer final between Holland and Spain and as a Virtual Dutchman I still dream of a real cup for the Dutch team.
Beside that I had several discussions around PLM (Product Lifecycle Management), CM (Configuration Management) and ALM (Asset Lifecycle Management), where all insiders agreed that it is hard to explain and sell the value and best practices, because it is boring, because it is not sexy, etc, etc.
So why am I still doing this job…..
Product Lifecycle Management (PLM)
Dassault Systemes introduced in 2006 3DLive as the 3D collaboration layer for all users with the capability to provide in a 3D manner (see what you mean) on-line role specific information, coming from different information sources. Recently Siemens introduced their HD PLM, which as far as I understood, brings decision making capabilities (and fun) to the user.
Both user interfaces are focusing on providing information in a user-friendly and natural way – this is sexy to demonstrate, but a question never asked: “Where does the information come from ? “
And this is the boring but required part of PLM. Without data stored or connected to the PLM system, there is no way these sexy dashboards can provide the right information. The challenge for PLM systems will be to extract this information from various applications and from users to have the discipline to enter the needed data.
Those software vendors, who find an invisible way to capture the required information hold the key to success. Will it be through a more social collaboration with a lot of fun, I am afraid not. The main issue is that the people who need to enter the data are not rewarded for doing it. It is downstream the organization, in the product lifecycle, that other people benefit from the complete information. And I even suspect in some organizations that there are people who do not want share data to assure being required in the organization – see also Some users do not like the single version of the truth.
So who can reward these users and make them feel important. I believe this is a management job and no sexy (3D) environment will help here
Configuration Management (CM)
Although it is considered a part of PLM, I added configuration management to my post as a separate bullet. Two weeks ago, I attended the second day of the CMII Europe conference in Amsterdam. What I learned from this event was that the members of the CMII community are a group of enthusiastic people with somehow the same vision as PLM missionaries.
Quoting the organization: “CMII is about changing faster and documenting better. It is about accommodating change and keeping requirements clear, concise and valid.”
And it was interesting to listen to speeches of the members. Like with PLM, everyone is convinced configuration management brings a lot of value to a company, they are also fighting for acknowledgement. Not sexy is what I learned here and also here those people who are responsible for data accuracy are not necessary the ones that benefit (the most).
Like PLM, but even more in Configuration Management, the cultural change should not be neglected. Companies are used to have a certain level of “configuration management”, often based on manual processes, not always as efficient, clear and understood and satisfactory for the management, till something happens due to incorrect information.
Of course the impact of an error differentiates per industry, a problem occurring due to wrong information for an airplane is something different compared to a problem with a sound system.
So the investment in configuration management pays of for complex products with critical behaviors and in countries where labor costs are high. It was interesting to learn that a CM maturity assessment showed that most companies score below average when it comes to management support and that they score above average when talking about the tools they have in place.
This demonstrates for me that also for configuration management, companies believe tools will implement the change without a continuous management push. I remember that in several PLM selection processes, prospects were asking for all kind of complex configuration management capabilities, like complex filtering of a product structure. Perhaps pushed by a competitor, as at the end it was never implemented :(
Asset Lifecycle Management (ALM)
In some previous posts, I wrote about the benefits a PLM system can bring, when used as the core system for all asset related information. For nuclear plants, the IAEA (International Atomic Energy Agency) recommends to use configuration management best practices and I have met an owner/operator of a nuclear plant who recognized that a PLM system brings the right infrastructure, instead of SAP for example, which has more focus on operational data.
Also I had a meeting with another owner/operator, who was used to manage their asset data in a classical manner – documents in an as-built environment and changes of documents in various projects environments.
When discussing the ALM best practices based on a PLM system, it was clear all the benefits it could bring, but also we realized that implementing these concepts would require a conceptual revolution. People would need to start thinking asset centric (with lifecycle behavior) instead of document centric with only revisions.
This kind of change requires a management vision, clear explanation of the benefits and a lot of attention for the user. Only then when these changes have been implemented, and data is available in a single repository, only then the fun and sexy environments become available for use.
PLM, CM and ALM are not sexy especially for the users who need to provide the data. But they provide the base for sexy applications where users have instant access to complete information to make the right decisions. To get there a cultural change is required. The management needs to realize that the company changes into becoming proactive (avoiding errors) instead of being reactive (trying to contain errors); investing upfront and never be able to know what the losses would be in case an error occurred.
Not sexy, however the benefits this approach can bring allow employees and companies to continue to do their work for a secure future
And now … time to close as the final is near
As a consultant working with mid-market companies, I enjoyed reading this post from Al Dean and its related comments and posts. Although I must say Al’s statement:
PLM+ are looking to solve this by creating a rich application that engages the user, provides ease of implementation and ongoing maintenance (by allowing the user/admin, rather than costly consultant) and can be delivered over the web, in an on-demand manner (which saves hardware and infrastructure cost)
was a trigger to react, as I am a consultant.
The base of every PDM/PLM
First I believe the base of PLM and PDM is to agree inside your company that you share and centralize product data. This means not only files, but also Bill of Materials, Issues, etc, etc, ..
To share and centralize product data seems like an easy mission and this is what all PLM software as a base provides, and I assume PLM+ does the same, only they store the data in the cloud, like Arena.
Sharing data is not a natural process in all companies as there is always the culture to share the minimum and to keep the rest to prove your own value – the bigger the company the more this will happen. This is human nature and this differs case by case. To make people share data is an area where either the management has to push, or in very small companies, a power user. In larger companies, often an external consultant is doing this job, in the role of an ‘outsider’ who can moderate and explain the benefits for all, instead of the threats.
This is what consultants really do; they do not install or administer systems.
PLM solutions can vary in the way they make sharing of data available. Some solutions are very rigid in what they offer as data model, but most of the necessary entities and attributes are there. They are based on best practices and target the 80 %. Often this is good enough, if the customer has no alternative and has the power by themselves to enforce the system as their platform for sharing data.
More flexible PLM solutions have an advantage and in the same time this is their disadvantage. They can be extended beyond the 80 % scenario and both the implementer and the customer will be challenged to reach the 100 % satisfaction. However we all know from the 80-20 rule, this is where it gets complicated.
80 % of the project is done in 20 % of the time, or in other words: you spent 80 % of your time (and budget) on reaching the last 20 %
Once having reached a common platform for sharing all product related information, for me the real PLM is starting. This is where a company would implement processes, that streamline the product development or delivery process – it requires a cross departmental change.
And at this stage, it is often where a consultant comes in. It is very rare, that in mid-market companies, management reserves time and resources to come with a strategic plan to implement PLM – I wrote about this in an older post. PLM requires a change in the way the company currently works.
So I am curious to learn how PLM+ and other On-Demand PLM software companies will try to address this step, as change is needed and someone has to push for it.
In my last three consecutive posts, I wrote about who decides on PLM in mid-market companies (a generalization from 15 years experience). There I claim that the selection for a PLM system is subjective, very much based on personal relations with the mid-market company. Again how PLM+ will address this in their business model, as there is a need for someone to push.
Open Source PLM software has somehow similar challenges. You need the drive from inside the customer to agree on sharing product data and next to extend. This is where the traditional PDM and PLM vendors push their business in direct contacts. Of course Open Source PLM providers have their focus on after the initial installation of the platform to extend it with a consultative and service model.
Conclusion: As every PLM provider at the end needs revenue for a living, I am looking forward to see where On-Demand PLM will go and finds it place. What will be business model that makes people buy and create the change
The last month I have been working with Aerosud Aviation in South Africa to finalize and conclude on ROI and the lessons learned around their PLM implementation, which started in May 2007. I was lucky to be involved in the initial scoping of the project in 2007 and assisted the local Value Added Reseller together with the team from Dassault Systèmes UK team in a step by step project towards PLM.
When I met the people in Aerosud the first time in 2007, I noticed it was a young company, with open-minded people, everyone trying to improve their daily activities per department. There was the need for PLM as some of their major customers required Aerosud to have a PLM system in place. Also Configuration Management was mentioned many times in the interviews and what I learned that time: Excel was the tool for configuration management.
Based on the initial interviews a plan needed to be developed in which steps to implement PLM. The following three major points were the guidance for the implementation:
- The company was thinking documents and understanding documents especially Excel
- The company had no clear understanding of what PLM would mean for them as real awareness was not inside the company. Customers like Boeing and Airbus talked about the importance of PLM, but how this could impact Aerosud as a company was no commonly clear
- People in the company had a major focus on their department and there was no availability of a overarching group of people leading the implementation
You could say you will see the above points in many smaller and medium-sized companies. I wrote about it also in one of my previous posts: Where does PLM start beyond document management ?
The project phases
The good news for Aerosud was that their PLM Champion was an expert in CATIA and was familiar with writing macros in Visual Basic plus the fact that everyone in the company was open for using the system as standard as possible – no demands for special behavior of the system: “because we do this already for 100 years”
The last phrase you hear a lot in ancient Europe
The choice was to start with implementing ENOVIA SmarTeam Design Express and to focus in two phases around design data management (phase 1) and the usage of design data by other users (phase 2)
The plan was that each phase would take maximum 2-3 months and we would give the users the time to digest and change their habits towards the standards in the system. In reality it took almost a year, not due to technical or conceptual issues, but this was the maximum pace we could have with the amount of time and available resources. The good news after these two phases was that the first bullet was much clearer understood – the difference between having a system with a single version of the truth or Excel management.
In the summer of 2008 (our summer – as it was winter in South Africa) there was a management workshop in Aerosud and here after three days of discussion the position of PLM became clear. One year ago this would not have been possible, now people had seen ENOVIA SmarTeam and they could imagine what benefits the system could further bring. This addressed the second bullet I mentioned before. Although this workshop was not scheduled upfront, looking back now I see this was a crucial point to get understanding for the next PLM steps.
The next PLM steps were extending to a real Item-centric data model, because if you want to do PLM you need to work around Bill of Materials and all related information to the items in the Bill of Material. At the end this gives you configuration management without chasing Excels.
Again the next steps were divided in two phases with again a scope of 2 – 3 months. The implementation would be based on the ENOVIA SmarTeam Engineering Express methodology which came as a logic extension of the current implementation, without having to change the database or existing data model.
In the first phase we had awareness sessions for BOM (discussing EBOM / MBOM / Effectivity, etc) plus in parallel we introduced the item as place holder for the information. Not longer folders or projects as the base.
Introduction of the item was conceptual not a big issue and the major activities in this phase were focused on connection legacy data or current data from projects to the items. Data coming from various sources (directories, legacy databases) plus NC data became connected and visible in the single version of truth.
In the second phase of moving to PLM the focus was on EBOM and MBOM. Initially assuring that from the designer point of view the CATIA design and EBOM were connected as smoothly as possible, trying to avoid a lot of administrative overhead on the designer (sometimes unavoidable – see my previous post: Where is my ROI, Mr. Voskuil)
After having implemented a streamlined CATIA – EBOM connection, the focus moved to the MBOM. For me this is the differentiator for companies if they implement PLM or just Product Data Management). Implementing the MBOM requires a culture change and this is the place where the ERP people need to see the benefits instead of the threats . Luckily in Aerosud the manufacturing engineers were working in their Excels initially and not in the ERP system – which happens a lot in older companies.
For that reason the concept of MBOM in PLM was much better understood. Now Aerosud is experiencing these capabilities and once they become obvious for everyone the third bullet will be addressed: people start to work in processes cross-departmental instead of optimizing their department with a specific tool.
As this activity will continue, I also conducted with the Aerosud management and PLM implementation team an ROI assessment. Estimates about the experienced and projected benefits were kept low and on the realistic side. The result was that the outcome for the ROI period was approx 27 months, almost the same time as the whole project had as throughput time. This proved again the statement about a phased PLM approach. payback of project comes in parallel with the implementation and will ultimately fund the next steps.
End of July I will be holding a webinar with more details about this implementation for the Dassault VAR Community. I will be happy to expand this information for a wider audience afterwards, as I believe the project is representative for many mid-market companies that struggle to find the place where PLM fits ….. and brings ROI
Let me know if you are interested in this follow up and I will collect the inputs for a follow up.