Cerveceria Nacional Dominicana: Everyone Building the Future Together
Cervecería Nacional Dominicana (CND) is in the midst of actions that will dramatically impact its future course. CND is the first and dominant brewery in the Dominican Republic (DR) and the largest in the Antilles and Central America. Three years ago the company was facing the confluence of declining consumer affordability, increasing competition, increasing raw material prices, and worldwide beer industry consolidation. “We’ve been a very successful company for decades, but the pressures in the marketplace helped us realize our longstanding ways of doing things were no longer giving us the growth and shareholder value we needed, and were becoming increasingly challenging for our clients, our people, and our partners”, said Isabel León, Director of Process Design. “Hammer and Company enabled us to see very clearly what to do about it. They helped us realize that it was necessary to take the strategic decision of dramatically changing how we did business, through transformation of our processes, and provided us with a roadmap to plan and manage the journey ahead.”
About Cerveceria Nacional Dominicana (CND)
CND, which is part of Grupo León Jimenes, has 4500 employees and produces and commercializes several brands of beer, malt and rum, all of them known for top quality and amazing taste.
Its beverage product portfolio includes the beers Presidente, Presidente Light, Bohemia Especial, Bohemia Light and The One. CND also commercializes in the DR the imported beers Miller Genuine Draft and Miller 64. The malt unit includes the brands: Malta Morena, Extracto de Malta Lowenbrau, and Vitamalt Plus. In 2008, through an agreement with Barceló Export & Import (BEICA), CND began commercializing the rum brands Barceló and Siboney, both considered among the best rums in the Dominican Republic. CND has an 88 percent market share and serves a variety of point-of-sale clients—from the corner market, to bars and entertainment establishments, to restaurants, hotels, supermarkets and convenience stores, all of whom serve the final consumers.
The “What” of the Process Journey
Isabel León, Director of Process Design: “The underlying philosophy of our transformation strategy has been: anchor to our customers, because they are why we exist; center on our processes, since it is only through end-to-end chains of work that we can deliver results that really matter; and to do all this, focus intently on our people, because all of us together must plan, design, change, and execute to make everything work.”
CND started its process journey by redesigning both its “buy side” (Procure Goods and Services, PGS), and its “sell side” (Deliver Products and Services, DPS), at the same time. León continues: “We knew that choosing these two processes for dramatic change and improvement would get our Process Journey off to the strongest start, because the right changes would make a big difference for our clients, deliver substantial financial benefits, strengthen relationships with our suppliers, AND actively engage the heads, hearts, and hands of over 2,000 of our people. We discussed this decision with Dr. Hammer and he agreed.”
In only a few months time, the first round of changes for PGS and DPS began to be implemented, and truly significant benefits for all stakeholders were evident:
From Procure Goods and Services (PGS) process:
Better process, skills, and tools for negotiations resulted in over $7Mil in savings in 2010 alone.
The cycle time for minor purchases was slashed from 41 days to 4, while costs were also reduced and user dissatisfaction turned into satisfaction.
Supplier partners have also been extremely pleased with the new process…even suppliers who were NOT selected in competitive supplier evaluations have been highly complimentary of the experience they had.
All jobs were completely redefined—for both process performers and managers, a new structure put into place, and everyone focused on a new set of measures that gives them line-of-sight to end-to-end process results. Individual development plans are in place to further invest in and grow people’s capabilities.
Luis Alvarez, PGS Process Director: “I am so proud of what our people have accomplished. To think of where we were just a couple of years ago, and where we are now is hard to imagine. As we focus together on many additional opportunities for further improvement, including extending the new process to the operations we recently acquired on other islands, I have no doubt that our people will continue to make all the difference.”
From the Deliver Products and Services (DPS) process, some of the most significant benefits include:
The set-up time for new clients has been reduced from 30 days to 2.5 days, which also increases CND’s revenue as it shortens the time that clients have provisional status and are restricted in what they can buy.
The cycle time for making sponsorship payments to clients (for business promotions CND helps support) has been reduced from 25 days to immediate reimbursement, with the processing cost to CND also reduced.
Since CND recognized that clients care most about improving the profitability of their own businesses in how they serve the final consumer, an end-to-end approach has been defined for delivery of “services” to clients (including things like providing point-of-sale promotional materials, assistance, and refrigeration), to better support the products CND provides. This means more sales and better margins for CND’s clients, and improved CND profitability on a client-by-client basis. Previously point-of-sale materials were given to a client based on material availability. Now those materials are directly tied to client volume tiers and business growth actions and milestones.
A new technology platform is rolling out, which will give every person in the process 360-degree visibility of each client’s relationship, allowing tailoring for each client—which will not only further enhance CND’s relationship with its clients, but also further improve CND’s profitability.
As with PGS, new jobs, structure, measures, and development plans are in place, cementing process management as a way of life, and ensuring that ongoing process work will drive even greater results in the future.
Rafael Ureña, DPS Process Director: “When we started this journey, we all passionately believed in what Dr. Hammer had taught us…but the reality is that the benefits are even greater than we imagined, for our clients, our owners, and our people. As Dr. Hammer and Lisa Hershman say in their new book…Faster, Cheaper, Better…it really is possible to have them all!”
Removing the Brakes and Pressing the Accelerator
As soon as work on the first two processes began to drive significant change and benefits, CND launched work to strengthen its governance and people-related processes.
“The more we used Hammer and Company’s Process and Enterprise Maturity Model (PEMM™), the clearer it became that we had to strengthen our leadership, governance, expertise, and culture. But the real insight for us was seeing that it would not be sustainable to address each of these things under the roof of the process program itself—but rather, we needed to put in place permanent changes in our chief governing process, Set Direction, and our chief enabling process—Provide Capable and Motivated People (PCMP). We saw this work as the key to sustaining not only the growing maturity of the two business processes already being implemented and the results those processes were delivering, but also being able to undertake transformational change on an ongoing basis through more process redesign. We realized that the Set Direction and PCMP processes would either be the accelerators or brakes…and we knew we must make sure they became accelerators…and they did!” León emphasized.
The Set Direction Process
The first part of the Set Direction Process tackled was to design and put in place a new Initiative Management Process—to govern all initiatives in the company. “We had to get a handle on that since, like most companies, we had too many initiatives, which is really just a lot of process changes that are not being well managed or coordinated”, León continued. Every single initiative proposed must now be related to CND’s Enterprise Process Model, and must clearly explain how it will improve one or more of CND’s processes—including processes that are not undergoing redesign (CND has four core business processes, and fourteen processes in all). Decisions are made by the executive team based on facts, sound analysis, and collective wisdom. A shared pool of both financial and people resources is allocated by the team as it works to ensure that the highest priority initiatives are executed successfully. CND is now launching fewer, bigger, and more powerful initiatives. At the same time, this process was designed to provide more authority, visibility, and accountability to leaders at the next level down and to simultaneously accelerate their personal development and capabilities.
“At first, the changes required in how we as leaders think and act were VERY challenging. We went from an environment where everyone could operate pretty independently, to one where a team makes the decisions based on data, and the success of the initiative is tracked and transparent all the way through! No wonder some people weren’t fond of the new process initially. But very quickly, even more quickly than we thought, our whole executive team began to see the power of the new process and embraced it. It was obvious that the principles of the new process were very sound, and the collaborative work sessions we designed pushed us to act our way into the new way of thinking quickly”, noted Luisa Arias, Process Director for Set Direction.
Soon after the Initiative Management Process was in place, giving greater control and results on initiatives already in the pipeline, CND redesigned and ran the first cycle of a new annual Planning Process enabling them to get out in front of initiatives that would need to be defined and launched for the coming year.
The Planning Process was designed to require full engagement of everyone on the executive team, focus intently on what the company could learn from its past efforts and present position, push everyone’s thinking further about the future and its implications, and provide greater focus and specificity for how value and growth would be achieved. “We are now hitting the targets we set with far greater reliability,” Arias added.
CND is now turning its attention to implementing the month-to-month process for conducting business performance reviews and diagnosing performance gaps—which it calls “Manage Execution” —for both the process-centered and function-centered parts of the company.
The new approach integrates end-to-end process thinking, dissection of design versus execution issues, and clear coaching of performers in their day-to-day work and ongoing personal development. This work is as much about improving the caliber of company-wide leadership as it is about performing the Set Direction Process. “We want the work of leadership itself to be a bit more of a ‘Process’, so that it will be easier for our leaders to increase their capabilities faster,” noted Lidia León, Process Director for Provide Capable and Motivated People. “Also, everyone on the executive team now has explicit process responsibilities in their job descriptions, as well as clear expectations for demonstrating certain beliefs and behaviors that will drive them to an even greater degree to anchor to customers, center on processes, and focus on our people,” she added.
The Provide Capable and Motivated People Process
All of the people-related changes in the redesigned processes have been supported with concurrent redesign of the Provide Capable and Motivated People Process. It includes a new selection process that has already been used to fill hundreds of new positions related to the redesigned processes. Even the people who haven’t been assigned the exact position they wanted like the selection process because it has brought objectivity. A new recruiting process has slashed the cycle time for filling vacant positions, while also reducing the dependence on, and cost, of third-party assistance. Also, a new process for individual development planning and a new process for organization-wide talent and succession planning are now in place. “When we first redesigned and started to operate these new sub-processes of PCMP, we knew they would be powerful because of all the input we solicited from their ‘customers’--our people all over the company. However, they turned out to be even more powerful than we imagined! We are regularly hearing people say that our new selection and development-related processes are not only better matching people with opportunities and partnering in their future growth, but in many cases people have said that they have gotten such deep learning that it is positively impacting their lives. On the days I grow weary from the journey, and we all have those days, I think of the dramatic and far-reaching positive changes our people are helping drive and also are receiving, and I am completely re-energized!” added Lidia León.
CND recently launched redesign of its fifth process, Move & Store Goods & Products, which is all the logistics associated with the parts of the supply chain not covered by PGS and DPS. “This process is still being designed, but targeted quick wins are already delivering both significant financial and non-financial benefits,” explained Asunción Rodriguez, Move & Store Process Director.
The “How” of the Journey – focusing on people!
Isabel León explains something they discovered and now consider a magical fusion in how to achieve transformational change quickly: “The huge breakthrough for us was finding a way to NOT ONLY get all of the really hard work of redesign and transformation done, on multiple fronts at one time—but while doing it, to accelerate people’s learning of new concepts and principles, change their thinking and behavior, and build their emotional connection and commitment. We engaged our people all along the way, not only in implementing and living the required changes, but in actually planning and designing them too—which ‘greased the skids’ when it came time to actually changing how they did their work. I know that may not initially sound all that profound, but we think being able to do it all at once is.”
“We found a way to do this deep and broad engagement—and STILL GO FAST! We call it ‘Kill 4 Birds with One Stone’. We make very detailed designs for planning, design, and working sessions of all kinds, so that the hard work gets done largely by the people who have to own and operate the resulting plans and solutions (Bird 1), and while they are doing it they learn new concepts and principles (Bird 2), begin to change their thinking and behavior (Bird 3), and build emotional connection and commitment to the changes needed (Bird 4). Real personal change starts LONG BEFORE the implementation of the new processes.”
The Journey Continues
CND had been one of the Dominican Republic’s “Most Admired” companies for several years in a row, even before starting its process journey, and of course, continues to be. Isabel León: “We have had a strong start and the process focus and momentum continue to build throughout the organization. But there is still a lot of work to do to build and secure the future we envision, not only for the sake of all the stakeholders of the company, but also for how the future welfare of our company positively impacts our country and its people. So, we will keep doing it… building the future together.”