The Operational Excellence Journey

"The secret of success is to do the common things uncommonly well." In one sense, that’s what Operational Excellence (OE) is all about. And over the past three years, teams of highly motivated Technicolor people have demonstrated their ability to do things ‘uncommonly well.’

During the OE program’s first year, we found 36 ‘common things’ that looked promising for improvement. The following year, we implemented those improvements and contributed €134 million to the company’s results. Last year, we contributed about the same amount again, proving that Operational Excellence is not a one-time effort but a continuous journey.

But the transformation involves much more. It leads to profound changes in the way we approach the business, serve customers and bring innovative products and services to market. As you read this issue of the newsletter, you’ll discover some of the many ways that the OE program and OE projects are helping spearhead the transformation of Technicolor – from cloud computing and post-production services to software excellence.

We turned in a remarkable performance in H1. We are more committed than ever to extend the Operational Excellence journey and prepare a new, comprehensive portfolio of projects for 2015.

Operational Excellence Projects Contribute to Solid H1 Results

Operational Excellence projects provided 75 million euros in gross Technicolor Free Cash Flow during the first half of 2014, helping the company achieve another half year of strong performance. The largest of the OE gains came from OE cost containment projects, which contributed savings totaling 40+ million euros. The five OE projects involving Technicolor transversal functions also contributed handsomely, achieving H1 savings of nearly 13 million euros.

OE H1 contributions to revenues amount to roughly 72 percent of the budgeted 103 million euro OE contribution for the entire year.

OE Project Leaders Put their Heads Together

Meeting in Princeton, New Jersey, USA in early June, OE project leaders focused on the challenges and opportunities raised by cloud computing as well as ways to keep the OE program and spirit running strong. Along with better skills acquisition & development, cloud computing is seen as one of the two key enablers for transforming Technicolor into a sustainably profitable and growing enterprise. For more about the cloud, please see the article in this newsletter.

Host Michel Rahier underlined the achievements of the OE program over its first three years to open the daylong session. Noting how various OE initiatives have changed our daily lives at the office, he highlighted the outstanding results achieved by Home Entertainment Services, Connected Home and multiple transversal functions.

Looking forward, Michel described critical challenges for the company:

  • gaining market share in the Connected Home segment,
  • reinforcing our IP portfolio to sustain our patent licensing revenues stream and developing a technology licensing offering, 
  • raising Technicolor’s innovative profile in the movie and broadcast industries and
  • building on our leadership in advanced video and audio technologies to participate in defining new models for content creation, management and distribution.

Taking into account these new challenges, he outlined three Operational Excellence Program goals:

  • to support the evolution of our company towards more innovation and new generations of products and services
  • to expand the OE footprint to all Business Divisions and dig deeper into performance issues
  • to continue to deliver material benefits to the company

A pair of afternoon workshop sessions was dedicated to brainstorming over how to keep the OE program itself lively and dynamic. OE project leaders formed two groups to conduct a so-called SWOT analysis, i.e. to define OE program Strengths, Weaknesses, Opportunities and Threats. Highlights of their findings include:

Strengths

  • A proven track record for success: cost cutting, real simplifications, transformations
  • Broad scope
  • Strong senior management support
  • Diversity of contributors
  • Breadth of subject matters
  • Network of people

Weaknesses

  • Unbalanced representation between the different businesses and functions of the Group
  • A focus or perceived focus on cost-cutting at the expense of transformation
  • Lack of time among project participants

Opportunities

  • Leverage OE successes and track record
  • Expand into additional business divisions
  • Expand to include additional business functions such as sales, marketing and data processing, as well as new activities such as cloud, skills management and business warehousing
  • Expand to include new geographies such as Canada, India, UK and others.

Threats

  • Reduced sense of urgency: risk that operational efficiency is no longer perceived as a priority
  • Time for managing change and make it visible and convincing
  • Silo mentality: why do I need OE to address Operational Efficiency?
  • Real and/or perceived diminishing returns

Participants in the full day OE workshop also learned how Production Services are undergoing a business transformation (see article in this newsletter), how software excellence is being developed Group-wide, and how Finance teams are striving for efficiency, effectiveness and innovation as part of the transformation of the company’s transversal functions.

The OE workshop provided an opportunity to award three OE project leaders for exceptional results: Cédric Brignon for cash monitoring, Craig Casner for Assets & Telco management and Gilles Fleury as 2013 Project Leader Champion. 

Key Facts & Figures

  • Total 40+ projects created
  • Sponsorship by all ExCom and MCom members
  • Leadership from almost all Business Divisions (BD) and all Transversal Functions (TF)
  • Unchanged leadership team
  • 200+ working sessions with sponsors
  • 5 face to face workshops with OE project leaders
  • STEP objectives & assessment set each year by sponsors
  • Operational Excellence Awards
  • No dedicated budget - No dedicated resources
  • Unchanged goals as company advances
  • 375 M€ cost/cash improvements over 3 years (since OE program launch) including 75 M€ in H1 2014
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Our Hours are Our Greatest Resource

If you can’t measure it, you can’t improve it, says the old business adage. That’s why measurement is one of the cornerstones of the new Production Services Transformation initiative very recently launched. Headed by Production Services’ Chief Operating Officer Nathan Wappet, the new OE project focuses on post-production activities in particular. 

The project targets €3 million in savings this year. That would boost Post-Production Services’ gross earnings up to 10 percent. The savings are to be achieved in three ways: by ceasing non-performing activities, enhancing operational efficiencies and optimizing use of resources. These improvements should not only reduce spending but also lead to greater revenues, in part by ensuring that a greater proportion of services delivered are actually billed to clients.

Because post-production services are heavily time-based, much of the transformation effort focuses on improving the way actual time spent on client projects is measured and billed, especially overtime. Using several new tools, including automated time card and scheduling systems, the OE project pays very close attention to such variables as talent utilization and billing practices. The idea is to have a real-time view of all labor costs to accurately measure the profitability of each client project.

The program also involves developing and implementing virtual workflows. Here the idea is to standardize and streamline operations and reduce administrative work in addition to producing a real-time view of resource allocation and job status.

Craig Casner Explains the Benefits and Challenges of Cloud Computing

Cloud computing is Internet computing. By storing applications and data on-line, ‘in the cloud,’ rather than on desktop PCs or company-owned servers, cloud computing opens new possibilities for the way we use information technology (IT) both internally and for our clients. We spoke with Craig Casner, Project Leader for the OE Asset & Telco Management project, to understand why cloud computing was a top priority at the recent OE project leaders’ workshop in Princeton, New Jersey.

In a nutshell, what is Technicolor’s cloud strategy?

Craig Casner: Right now, we are focusing on ways to use cloud computing within Technicolor to enhance productivity and streamline various corporate functions. For example, we have begun moving business applications, such as Microsoft Office, Lync and Collaboration, from physical computers to the cloud. One benefit is that we will have access to all the storage space we need, without having to pay to extra, unused space. Because cloud resources are scalable, we can scale them up, or down, according to our real needs at any given time.

Will cloud computing offer any benefits for individual users?

CC: Yes, plenty of them. For one, there’s no limit to how many people can access, edit and share folders and files. That’s great for collaboration among team members. What’s more, with everything available in the cloud, people can work from anywhere there’s an Internet connection, at locations and times that best suit their business and personal lifestyles. Another benefit for users is that applications and files stored in the cloud are compatible with many, many devices – not only PCs but also tablets and smartphones.

What are the challenges to make this all happen?

CC: Thanks to a worldwide agreement with Microsoft, we began migrating the Office suite of applications, which includes Word, PowerPoint and Excel, to the cloud-based version, Office 365, in June. Once the migration is complete, hopefully in October, everyone in Technicolor will have on-line access, from anywhere and using nearly any device, to a huge mailbox as well as the Office 365 applications. The next challenge will come later this year, as we begin integrating Lync and Skype into our cloud program. And throughout the process, security is a critical concern. With everything in the cloud, we need to be absolutely protected against unauthorized access and usage of course.