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Resolution for 2016 – Performance Excellence

New Year 2016“Effective leaders help others to understand the necessity of change and to accept a common vision of the desired outcome.” – John Kotter

 

Happy New Year! Let me start by wishing you a healthy, joyful and successful year in 2016.

 

It is common to make resolutions for improvement upon the start of each new year, so let’s consider some resolutions we can make for our businesses this year. As mentioned in the quote from management guru John Kotter above, there are two elements of the necessity of change: (1) understanding the necessity of change and (2) accepting a common vision of the desired outcome.

 

For the first point, the market is the best teacher. As W. Edwards Deming once said, “It is not necessary to change, survival is not mandatory.” So let’s take the need for change as a given and focus today on resolutions to create an outcome of performance excellence.

 

Let us use the Eagle Consultancy International model for Sustainable Wealth Creation to formulate our top ten resolutions for transformation of our organizations toward excellence this year – Principles + Practices = Performance.

 

In 2016, we resolve to:

  1. Ensure our values are congruent with our organizational mission, well known by all associates in the organization, and consistently followed in practice (Principle)
  2. Commit to servant leadership, remembering that leaders are to serve and enable the success of their associates (Principle)
  3. Look at failures as learning opportunities, choosing to look at situations with a continuous improvement mindset instead of looking for somewhere to affix blame (Principle)
  4. Utilize the strengths of all the associates in the organization, adapting their role to maximize their contribution and engagement (Practice)
  5. Establish key performance indicators to monitor progress on each of the critical few organizational goals and ensure that progress is widely communicated daily throughout the organization (Practice)
  6. Find and eliminate the root cause(s) of one risk of accident or injury each month (Practice)
  7. Find and eliminate the root cause(s) of one product nonconformity each month (Practice)
  8. Find and eliminate the root cause(s) of one equipment failure each month (Practice)
  9. Standardize one business process each month, with: responsibilities and document flow defined, clear standards of timeliness, inputs and outputs required, and quality standards (Practice)
  10. Make a point to thank at least one associate every day for specific actions that reinforce your organization’s vision and values (Practice)

 

I know if we can keep these resolutions in our mind, our organizations will have a successful and prosperous 2016! I am at your service to discuss how ECI can help you implement these resolutions.

 

What other resolutions do you have for your professional life in 2016? Leave a comment to this post!

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Being There – A Leadership Practice

Factory Worker

“If you want to go fast, go alone. But, if you want to go far, go together” – African proverb

In our journey toward Sustainable Wealth Creation, we need to adopt some practices that distinguish true leaders from managers. Leadership is an exercise of the heart, management is an exercise of the head. Both are imperative.

Like many who attend prestigious business schools, I started out with the head. “Management stuff” studied in my MBA curriculum was easy for me. I could do the decision trees, analyze the cases, evaluate the financial statements and design the optimal compensation plan with the best of them. It took a rude awakening, however, to learn the leadership part.

I was the shift leader for about 30 production personnel in an operating department and I was great. I knew exactly what needed to be done to organize the work efficiently and effectively for optimal performance. I assessed the skills of my team, improved the processes, installed improved metrics and performance management systems. The KPIs were trending up and I thought things were going great.

Then one day, my boss pulled me aside for a private chat. He was quite the talker, and none of our periodic discussions was finished quickly. Usually I was anxiously watching the clock on his office wall, imagining all the crises happening on the shop floor while I waited for a convenient chance to go attend to the chaos.

On this day, however, the subject was direct and brief. “Bryan”, he said matter-of-factly, “I don’t think you are cut out for this job.” I was floored. Me!? The one with the fancy degrees from the fancy schools? The one who was improving the performance of the department and had the data to back it up? How could this be?

To be honest, I did not believe him that day. I walked away from that conversation convinced he was wrong and determined to prove it. Over time, however, I learned that he was right.

You see, there is something more to leading a group of people than efficiency – what you can get out of them. As a rational B-school student I had learned how to maximize the efficiency of people and processes and I was good at it. But what I did not consider was the impact on the people themselves. They knew I appreciated what they did to contribute to our shared department goals. What they did not know was that I appreciated them – who they were as people.

A machine breaks, and the operator calls me on the portable radio. I come and see the problem and call a mechanic. The mechanic comes and I leave – what is the point in me being around? I can’t fix the machine, he can! It is inefficient for me to waste my time watching the mechanic fix the machine, he will call me when he is done and I can most effectively use my time doing something else.

But from a leadership perspective, this is a failure! Such an approach is efficient but damaging to trust and relationships. The operator wants me there to be there, to enter into her experience that she like me wants the machine to be running and productively producing product, but she cannot because it is not. She wants me to share her frustration and be with her to overcome the issue. When I leave her alone with the mechanic, trust erodes and her desire to achieve my objectives is reduced. “Why should I care about whether or not the machine is running right now when my boss doesn’t seem to care?”

Usually I select only one quote, but this time I picked a second because I could not choose which better to illustrate my point:

“A community is the knowledge that people have of each other, their concern for each other, their trust in each other…”

- Wendell Berry

You see, there is such a thing as short-term efficiency which erodes the long term sense of trust and community in an organization. It is difficult to measure and even more difficult to build, but it is easy to destroy by acting like you just don’t care about the problems others have in exceeding a shared performance objective. It is easy to destroy by acting like the manager rather than acting like the leader who enters into the pain of his associates to support them in their difficult times.

As the first quote above makes clear, the path of management is the path of short-term gain and long-term failure. This is the path I was on those decades ago as a production supervisor when my manager tried to coach me. I wish I would have learned the lesson then. I would like to think I have learned it by now, and often I do get it right. But still at times the when pressure is on I find it all too easy to take the quick and easy path to management efficiency that goes fast and sacrifice the long-term bonds of trust so critical to an organization that will go far.

How about you, where do you need to “Be There” for your team? What steps will you take to do so this week? Share your ideas by comment to this post.

 

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Lean Thinking – Another Practice

Seven Wastes“There is nothing so useless as doing efficiently that which should not be done at all” – Peter Drucker

As we continue to contemplate the elements of Sustainable Wealth Creation, we need to address the practice of Lean Thinking. Often when people talk about lean manufacturing or TPS (the Toyota Production System), they think about removing inventory and delivering products just in time. This is indeed an element of TPS, but lean thinking is in fact a much broader and more universal concept that can and must be applied to all activities of the enterprise in order to achieve world-class excellence and profitability

Lean Thinking was a concept developed and popularized by Taiichi Ohno of Toyota Motor Corporation in the 1970s and 1980s. This concept was arguably the single most important advance in the concept of management in the second half of the 20th century. Before that, the US industrial complex had been fascinated with the idea of optimization of processes to make them efficient, often by the exploitation of the capabilities of the computer to automate and expedite process controls. Ohno’s radical idea, as in the Drucker quote used to lead off this post, is the least expensive process is the one that does not happen at all!

Therefore, in a Lean Thinking mindset, we need to evaluate each process and first determine whether or not this process is necessary at all before we optimize the process to make it more efficient and cost effective.

It is easy to fall into the trap of thinking this step is unnecessary. After all, if we do something and have done it for a long time, there must be a reason for it, right? The simple answer is, sometimes yes and sometimes no. It is amazing how many processes in organizations exist for a reason that no longer applies, yet the process remains.

Let’s examine an example. Suppose our plant has a supervisory sign-off process to review the quality of our finished product before final pack. At one time this was a great idea – the organization was new, the processes were unfamiliar, the workers were not yet well trained, and poor quality product was getting shipped to the customer. A decision was made to have the supervisor double check the quality and sign off prior to final pack and ship. This process was created and implemented, along with paperwork and clerical record keeping and auditing and tracking of the results, and provided a valuable customer service at that time.

Now, ten years later, the process persists. Why? – because of what I call organizational inertia. Everyone is used to this process, and in fact everyone believes it must be done that way or we will damage the high quality reputation we have established with our customers. After all, the supervisors still are finding defects at their final check and if they did not do it, who would prevent the defective product being shipped? The data says we need it!

Yet the underlying motivation that caused the need for the process is no longer there. Our equipment is stable, our operators are well trained, our in-line quality control plans are robust, and our people are justifiably proud that we have a great record of low customer claims and rejects. In fact, just last year we received a “top supplier” award from a major customer.

Now we have to look a little deeper. Why are defects still being found by the supervisors in this situation? It makes no sense, until we consider human motivation. Our process has a cost, and the cost is more than the time and attention of the supervisors, the clerks and administrators and auditors who gather and compile and report and check this data. The hidden cost is the impact on the operators. What message does our process send to them?

To the operator, the following messages are subtly but clearly communicated by our process:

  1. We cannot trust you to make an important decision that could impact our customer relations; and
  2. Our supervisors can make better judgments about quality than you can.

Upon reflection with Lean Thinking, we realize our process is not only costly in the expense to administer the process, it has a people cost as well. It communicates some negative messages to our operators, which are internalized in their approach to their work.

After all, what is the point of an operator checking their work carefully if they know a supervisor will check it again anyhow? Why would they feel responsible, accountable (and yes, empowered!) to represent the company’s quality aspirations when our process tells them we neither expect them nor trust them to do so. How much damage does this attitude do to our cost of quality beyond the tangible costs of our process?

So the thoughtful Lean Thinker will not seek to optimize this supervisor inspection process by building a computer system to read bar coded defect data into a database so we can automate the reporting of the supervisor quality checks. Instead, he or she will eliminate this process and clearly communicate to the operators that their decisions on the quality of the finished goods will be final. We trust them and empower them to be fully accountable for their craftsmanship.

There is retraining and communication and roll out of this process change over time so that everyone is fully prepared and equipped to take on this new responsibility. There are some operators who do not want to accept this responsibility and are reassigned to other work. There are supervisors who resist passing this control to the operators and have to be reassigned as well. And yes, there are some defects that go to the customer, with their requisite root cause analysis and elimination back at the plant to ensure they do not reoccur.

In short order, however, not only does our inspection cost decrease by the elimination of this completely unnecessary process, but we enjoy a much more important benefit. Now our operators know and feel full accountability for the quality of their work. More importantly, they feel more empowered, bringing not only their hands and eyes but also their brain and full self to the plant as a critical component of our customer relationship. They are not just cogs in the machine any more, they are trusted teammates who take pride in their craftsmanship and the quality of their work.

I would suggest this is a huge win for the enterprise, which will reverberate not only to the bottom line but to operator engagement as well.

Two critical clarifications of Lean Thinking are in order.

First, Lean Thinking is not just applicable to the shop floor. In contrast to the common perception that TPS is for manufacturing only, it applies equally well to office functions. The reports and meetings we have in our offices that at one time served a purpose but today consume time and resources yet no one cares about them are a fruitful opportunity for cost reduction and elimination of frustration. After all, there are few things more demoralizing to any human than the occupation of their time and efforts on work that creates no benefit to the organization or its customers.

Second, Lean Thinking seeks to eliminate “Non-Value Added” processes. We cannot eliminate processes that add value to the product or service we are selling unless our customers are willing to accept the lower valued product or service, or we are willing to accept customer defections. Thus the first step to Lean Thinking is to distinguish what processes are valued by the customer (things they are willing to pay money for because they need it to be that way) versus those we do for our own internal purposes and the customer would not be willing to pay for, which are candidates for elimination.

We have value adding processes in the office as well as the factory floor. A human voice to answer the telephone may create value for the customer just as much as a grinding operation to remove burrs on the part. Elimination of either in the name of cost reduction or efficiency is a reduction in value that may be opposed by the customer and may not end up creating wealth in a sustainable way.

What process can you eliminate this week in your operation? Comment to this post with your ideas and let’s share thoughts about it.

As always, I look forward to discussing how I can help increase the Performance of your enterprise by incorporating world-class Principles and Processes, like Lean Thinking!

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Management By Fear

Management by Fear – A Practice To Abolish!Fear

“The world is not dangerous because of those who do harm, but because of those who look at it without doing anything.” – Albert Einstein

People have been telling others what to do since the beginning of mankind. The historical way of determining who gets their way was the stronger rules the weaker. Originally this was physical strength, later it extended to mental dexterity and more formidable weapons. This approach still has a place in society – the military strength of competing forces determines who sets the rules.

The same approach naturally extended to the workplace in the birth of the industrial age. Bosses told others what to do (i.e. bossed them around) based on their ability to inflict hardship and economic loss on those under their subordination.

As time has passed, bosses have gotten very good at using their positional power to dictate not only their subordinates’ actions, but also their words. Those who survive and progress in the organization are those who learn well to say the “right” things and do the “right” things – the things the boss wants done and said. Eventually they even learn to think the same way the boss does. Those who cannot accomplish this either exit or fail to progress in the organization.

Management by fear stunts the potential of the organization from the top. Rather than unleashing the collective intelligence of the whole, the enterprise cannot grow beyond the boss’ capability. But, there is another element of management by fear that shows up in shop floors around the world daily, and this is our focus for today.

On the shop floor, the essence of improvement is finding and fixing root causes of failures. Of course failures will occur in any system, and nobody wants them. But failures are also precious keys that open the door to improvement. Only by careful analysis of failures can we find the roots of our problems. And only once these roots are identified can steps be taken to ensure that particular failure never occurs again. This is the essence of continuous improvement – it is OK to fail, but never OK to fail to learn from the failure!

Let’s look at three examples with respect to safety, quality and equipment failures to contrast Management by Fear with World Class Management.

Topic Management by Fear – punishment based World Class Management – process based
Safety If someone got hurt, we must find out who did something wrong to punish them. If someone got hurt, we must find the root cause of the failure to ensure we fix it so no one can be hurt the same way again.
Quality If defective product was produced, we must find out who caused it to punish them. If defective product was produced, we must find the root cause so we can put countermeasures in place to avoid producing that defect in the future.
Equipment Failure If a machine fails, we must find out who operated it or maintained it incorrectly to punish them. If a machine fails, we must identify the failure mode and take steps in our maintenance and/or operating processes to prevent it from failing that way again.

Management by fear is based on the underlying assumption that people are the cause of failures, and we must punish them so others will be afraid to repeat that failure in the future because they do not want to suffer the same fate. The problem with this is that if people are afraid of punishment, how likely do you think it will be that the organization will be able to identify the correct root causes of failures when they occur?

Of course the answer is that accurate root cause identification will become difficult to impossible, because when a failure occurs the natural inclination of those involved in the process will be to hide the truth of what occurred to protect themselves and their coworkers from blame. The result of fear based management is that root causes of failures are not identified, not fixed, and the organization is destined to continue to repeat the same failures. Management by fear causes unnecessary loss of productivity, equipment failures, quality problems and worker injury and even death in manufacturing operations around the world.

In contrast, world class management is based on the underlying assumption that processes are the cause of failures, and we must relentlessly work to improve them to avoid loss of productivity, equipment utilization, quality and safety. With a root cause elimination focus, employees willingly share the truth of what happened because they know the goal is to figure out why they did it so the process can be fool-proofed (poka-yoked) to avoid anyone doing the same thing next time.

For example, if operator Tom pushed button A on the control panel when he should have pushed B, why did he do it and how can we prevent it next time? If we punish Tom, nothing gets fixed in the process and we can be sure some day operator Jerry will accidentally do the same thing. If instead we focus on the question why Tom pushed button A, we may discover an ergonomic change to the panel to reposition or color code the buttons, or even modify the PLC to render button A inoperative when it should not be pushed. We have effectively decreased the chance of Jerry pushing button A in that situation, possibly to almost zero.

This is not to say that our people never take deliberate actions or inactions that undermine our processes and create safety incidents, quality problems and equipment failures. People are still human, and there will be occasion for consequences when an employee decides to deliberately sidestep a procedure so they can play another hand of cards in the break room.

Nevertheless, a culture of world class management is vastly more effective to limit those decisions because it is inherently more respectful of our human capital. Which creates a more engaging workplace that fosters employee loyalty and brings their whole self to the job – the one where our workers are treated like the problem or the one where they are given the chance to be part of solving the program? The answer is obvious.

I welcome your comments, opinions and examples to this post.

Please feel free to contact me if you want to discuss how to implement World Class management in your workforce. I get excited by the opportunity to guide companies to these transformational principles.

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Re-Learning

LearnAn Acquisition Integration Example

“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn” – Alvin Toffler “Wisdom & Ignorance”.

In our last post, we discussed the implications of transformative change in the manufacturing enterprise. Improvement always requires transformation, and transformation always involves fear, effort and loss. As such, it is easy to get stuck in the status quo and shun the transformation in order to avoid the pain. However, this is only a very short term solution, as your competition that is willing to endure the pain will make the improvements you fail to endeavor and enjoy a superior competitive position in the marketplace. At that point, the organization will either find the courage to transform or cease to exist.

One way such competitively disadvantaged companies can cease to exist in their current form is by corporate merger or acquisition, where they either merge into another company via joint venture or are acquired by another company. In such cases, the transformation can be swift and far reaching.

The transaction rationale often dictates the scope of integration, which in turn determines the amount of change that will be imposed upon the acquired company. Sometimes, conglomerate acquirers will not change much, simply adding the company to diversify its portfolio. Likewise, in some cases private equity acquirers will leave much of the company intact: its brand, processes, systems and potentially even management. In these cases, there will almost surely be some degree of change imposed by the need to extract synergies to justify the acquisition premium, often in the form of process changes or staff reductions to cut cost, or growth into new products or geographies to increase revenues.

The more significant change often occurs when a larger company integrates a smaller company by absorbing it into the larger company’s brand, management, processes and systems. In such cases, pain will be experienced by the acquired company’s employees in terms of fear, effort and loss. Often there is fear of being unable to survive the transition, effort to unlearn many habits of the culture existing in the old enterprise and relearn habits useful in the culture of the new, and loss of the comfort of old relationships, familiar processes and systems and a well-known corporate culture. In such cases, true resiliency is required by the employees to succeed in the transformation.

One example from my experience may be helpful. An acquiring company had very strict and detailed audit standards that applied to many facets of their operations. This imposed new burdens on the employees in the acquired company to learn and adapt to those standards. Those managers who failed to take these new standards seriously soon found that the parent company’s expectations were non-negotiable and were asked to leave the company. Those who were willing to learn the new standards and implement them were given the opportunity to stay and grow with the acquiring company.

At the same time, the acquired company had much closer relationships with the governmental authorities and regulators than was typical for businesses within the new parent company. The parent company resisted this for a while, but over time learned that it was in their best interests to learn and adapt when they started facing government opposition in their new location. In time, the acquirer was able to change their processes to keep the local government officials happy and forge a constructive working relationship at the acquired business.

Acquisition integration can be an extreme example of transformation and change. Those companies and people who can unlearn old cultures and behaviors and learn new ones have the chance to survive and prosper. Those who cannot will be relegated to the trash bin of industrial failures.

What about your experience with acquisition integration? I look forward to your contributions of good and bad practices you have observed to this discussion.

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Transformation

Transformation – the Art of Becoming MoreButterfly

“There will come a time when you believe everything is finished. That will be the beginning.” – Louis L’Amour

We have been considering the various Pillars and Practices of Sustainable Wealth Creation in manufacturing. In this post I would like to bring our attention to an obvious but often discounted fact – to get from where you have been to where you can be in any sphere of endeavor involves change. There is no improvement without the pain of transformation.

At this time of year, many of us resolve to make changes in our lives, to become more or better in the future than we are now by adopting some new personal practices or dropping some bad habits. The disciplined will persevere because they envision the result – how their lives will be improved after they have endured the difficulty of the transition. Perhaps one imagines how wonderful it will be to finally be in one’s dream job after they have done the hard work to make it reality.

In the same way, improvements in the manufacturing enterprise always involve fear, effort and loss:

  • Fear – because the pain to be endured is always more certain that the gain to be achieved. You can measure the money it will cost, the time it will take and the effort that will be required to transform the organization much more accurately than you can estimate the improvements that will actually be attained. There is fear that the result will not be worth the cost.
  • Effort –the work of transformation is hard and demands extraordinary effort from the best people in the organization. But how can you spare those people at this time, when there are so many critical priorities they must attend to? In transformation projects the dilemma always exists that the people who can best assure the desired results are exactly those whose efforts you can least afford to dedicate to the program.
  • Loss – change by definition means you not only will be something new, you will also no longer be what you were. There is a necessary loss to transform the enterprise. Even if the new stage in unequivocally superior, there is an inevitable regret that will occur in the minds of those who invested a portion of their lives creating and working with the old order of things which is no longer. I wonder if the butterfly ever pines for the day when he was curled up eating a leaf as a caterpillar?

Those who can best envision the resultant future state of the enterprise after the changes are most willing to begin and persevere until finish of the transformation and yield the benefits: greater profits, more engaged employees, higher quality products, a safer and more respected workforce, and the satisfaction of creating greater opportunity and a more positive impact for all stakeholders of the enterprise.

Our job as leaders of the manufacturing enterprise is to help people envision the potential future. We need to bring a vitality and enthusiasm to the organization to continuously help our people see the opportunities ahead and how much better we can be, to keep our eyes on the prize at the other side of the transformation. Only in this way can we bring the hearts and passions of our employees to overcome the fear, invest in the effort and discount the loss in becoming all our organization can be.

What a celebration it will be when we are flying above the trees that used to bound the upper limits of our reach!

What has been your organization’s experience with transformation? Leave a comment.

I would love to have a dialogue with you to discuss how ECI can assist you on your transformation adventure!.

Human Resources Practices

Human Resource Practices – Another Pillar of Sustainable Wealth Creation

“I not only use all the brains I have, but all that I can borrow.” – Woodrow WilsonBrain

As we have discussed in this thread, the two Pillars of Sustainable Wealth Creation for the manufacturing enterprise are Business Practices and Human Resource Practices. The Human Resource Practices of the enterprise are those that leverage the contributions of all the enterprise’s associates toward its goals (including sustainable wealth creation). Simply put, a key differentiating factor in enterprise performance is the effectiveness by which it harnesses its human resources for competitive advantage in the marketplace.

I suspect many readers can relate to my experience with both good and bad Human Resource Practices. Although the tone of how employees are treated is set from the top of the organization, the practices of individual managers also come into play so it is common to find both excellent and horrific human resource practices within the same enterprise. Therefore, a key enabler to Sustainable Wealth Creation is the continual dedication to upgrading the skills of managers in this area.

A key element of human resource management is the position of the leader on the autocracy / meritocracy scale. In an autocracy, the “boss” feels he or she is always right and it is the job of their subordinates to bend to their will in all matters. Such a boss will enforce their ideas by fear and intimidation, with repercussions ranging from verbal attacks to career sabotage to outright firing of those subordinates who dare to possess an opinion that differs from theirs. In contrast, the manager in a meritocracy listens to and thoroughly considers all viewpoints on their merits, regardless of whether they agree with the leaders’ own preconceived notions.

The consequence of an autocratic boss is the organization becomes incapable of rising beyond the capacity of the leader. As they cannot accept any ideas except their own, the collective intelligence of the organization is stunted, and their staff spend their effort trying to figure out how the boss thinks every problem should be solved so they can align with that, rather than contribute to the collective intelligence and growth of the organization. In the World Class organization, the meritocracy has the capacity to grow up to the sum of all the brains that are “borrowed,” or in this case “hired,” by the enterprise.

Is the following actual situation familiar? At a staff meeting, the boss asked for ideas how our department could decrease our workshop’s RI (recordable incident rate) to the target level. Everyone in the room (except the boss) knew the key barrier to decreasing our RI was leadership from (you guessed it) the boss. When he was on the shop floor, he acted like he was above the rules and did not have to follow them. The workforce saw this behavior and (predictably) responded by disregarding the rules themselves and challenging their supervisors’ desire to enforce those rules. The example of the leader always trumps the rule, and in this case even overweighed the workers’ reasonable desire to not get hurt on the job.

The revealing element of the culture of the organization in such a situation is how the associates respond to such a situation in the staff meeting. Had that leader created a safe environment where everyone’s input was appreciated and considered, someone would have delicately exposed the elephant in the room and our workshop would have been well on the way to decreasing the number of people who were going home to their families at the end of the shift in the same condition they arrived at the beginning of their shift.

Unfortunately, in this case, the boss had created an environment of intimidation and none of the staff were stupid enough to incur the consequences of an honest observation. Everyone looked around for a savior, who finally came in the form of one production supervisor who had overheard the boss complain to her recently about how he did not believe the workers were properly motivated to be safe (as if going home to their families with all body parts intact was not motivation enough). She suggested a safety promotion to give each member of the crew with the best RI metrics a small gift card at the end of the year. Our boss of course loved this (it required change in neither his mind nor his behavior), so he enthusiastically endorsed it and everyone else around the room heartily agreed.

Perhaps some RI improvement was achieved as a result. Unfortunately, the workers’ trust in management was further decreased because they saw clearly that no one in supervision is willing to confront the boss – “apparently safety is not really as important as my supervisor says it is around here.” Even more unfortunately, I am sure some well meaning people needlessly suffered preventable injuries because of the culture created by the boss.

In summary, the 1st Human Resources Practice is to listen – it is simply a more effective and sustainable model to have a team of borrowed brains working on a problem than a single copy, however well developed it might be.

What about you, are you using all the brains you can borrow, or limiting yourself to those between your ears?

As you ponder this question, I invite you to contact me for a discussion of the performance pain points in your organization..

Pillar 1 – Business Practices

“In the long run men hit only what they aim at.” – Henry David Thoreau

As we discussed in our last post, the two Pillars of Sustainable Wealth Creation for the manufacturing enterprise are Business Practices and Human Resource Practices. The Business Practices of the enterprise are those that enable the enterprise to maximize the sustainable wealth creation of its Technology. Only through the thoughtful application of world class Business Practices can a manufacturing organization effectively source and deploy the technology needed to add value efficiently to the products it produces.

One of the critical Business Practices is the use of metrics by which the operation will be managed. The metrics should flow directly from the values, because only those things which are measured and tracked will demand consistent attention and commitment from the managers and associates of the enterprise. Unless the values are translated into metrics that are attended to by all the staff, they will remain only framed words on a conference room wall.

Successful enterprises therefore first select metrics that reinforce their vision and their values, then align their people with the metrics by:

  1. Clearly defining the metrics
  2. Setting goals for metric attainment at all organizational levels, from the overall corporation to each structure or department, and even down to the individual associates where possible
  3. Broadly publishing metric attainment against these goals within the organization
  4. Incorporating the metrics into the evaluation of managers and associates across the organization

It is usually quite easy to spot failure of an organization to attend to the importance of metrics by asking simple questions of the employees you meet:

  • What are your individual and department goals for this year, quarter or month?
  • How are you or your department tracking against them at this time?
  • How do those goals support the organization’s overall corporate goals?
  • How to those goals align with the organization’s mission?

If these most basic questions are unclear in the minds of the people, you can be sure of two things. First, the organization is failing to maximize its potential toward its goals. [Hopefully, these goals include sustainable wealth creation, our theme in The Eagle’s Eye]. Second, the organization’s vision is an imaginary thing, probably dreamt up by well meaning executives once upon a time, but disconnected from the reality of the activities and passions of the employees in their daily work.

Next time, we will begin to examine the Human Resources Pillar, which stands alongside the Business Practices Pillar as a fundamental support to translating the enterprise’s Principles into high Performance..

Practices – the Pillars

“Leadership is the capacity to translate vision into reality” – Warren Bennis.

Football

So, we are off to a great start! In our first post, we have concluded that Sustainable Wealth Creation is the goal of the manufacturing enterprise. In our second, we discussed how a clearly aligned mission (Principles) for the enterprise engages the full efforts of the organization toward achieving that goal. Great theory, but does not make a product you can ship to a customer. Where this all comes together is the Practices of the organization, the essential pillars of how things are actually done that build on the foundation of the Principles and create the wealth – the translation of vision into reality.

What are these Practices? As I mentioned in the last post, the key Resources of the enterprise are its Technology and its People. As a result, we can think of the Practices of the organization in two general categories:
1. The Business Practices that enable the enterprise to maximize the sustainable wealth creation of its Technology
2. The Human Resource Practices that enable the enterprise to maximize the sustainable wealth creation of its People
These two fundamental Practices are complementary and both are required for excellence.

Each pillar is greatly impacted by both the initial selection or sourcing of the resources and the effective utilization of the resources once acquired. As a management consultant who loves to “fix enterprises,” my bias is on maximization of the wealth creating potential of the resources that exist. This is not only a personal bias, however, it is a very practical one.

If an enterprise spends unlimited funds to hire the best people and/or deploy the hottest new technologies, the results may be good for a short period but will never succeed in the long term unless the processes by which these resources are managed are effective. The underutilized talent will come at a high labor cost and the underutilized technology will add a high depreciation burden to the enterprise, which the ineffective utilization of these Resources will not be able to compensate on the revenue line. As a result, wealth creation will be suboptimized and the goal of maximizing sustainable wealth creation will not be realized.

Let me provide an example from sports. Suppose an owner hired the most talented football players in the world and bought the best training and performing facilities in the world, yet asked a child to manage the team. I think anyone can guess the type of record such a club would have – certainly not up to the potential of the Resources acquired! But in fact some companies do the same thing, they think by throwing money at people and technology they can succeed, even though their Practices are “childish,” based on uninformed or outdated thinking about how to run a business effectively and how to manage people well.

It is critical, therefore, to get the Practices right, and this is much more about how an enterprise elects to manage its resources than how it sources them. Robust Wealth Creation can be sustained with suboptimal Resources managed in an excellent way, but can never be sustained with poor management practices that simply waste the potential of the Resources deployed. Ultimately, market forces will redeploy those Resources to more productive enterprises with better Practices.

In our coming posts, we will look more deeply at the Human Resource and Business Practices that lead to Sustainable Wealth Creation for the manufacturing enterprise..

Principles – the Foundation of Sustainable Wealth Creation

“A boat doesn’t go forward if each one is rowing their own way.” (Swahili proverb)Boats

In the last post I presented my thesis that wealth creation is the essential foundation to the long-term success of any manufacturing enterprise in a market economy. In this post, I want to discuss the foundation for sustainable wealth creation – the Principles of the enterprise. In everyday practice we speak of the Mission, Vision and Values of the organization as the Principles – the reason for its existence and the fundamental “rules” that govern its operations.

No enterprise, in any endeavor, can achieve greatness without a fundamental mission that unifies the efforts of its people to align toward the same objective – to row in the same direction. Just as the oars of a boat must be commonly directed to achieve progress toward a destination, so the efforts of the staff in an enterprise must be aligned to succeed in the marketplace. The enterprise’s capacity toward wealth creation is defined by the alignment of the staff toward this common goal.

Let me elaborate the boat analogy further in the development of the Principles, Practices and Performance model of EagleCI. The velocity by which the boat traverses its route is determined by four factors:
1. The strength and skill of the oarsmen – people selection and training
2. The quality of construction of the boat, oars and associated equipment –technology deployed
3. The consistency of effort of the oarsmen in the same direction –alignment
4. The conditions of the water –external environment

In our model, the 1st and 2nd factors are controlled by the Practices of the enterprise – how it selects and improves the Resources it uses to transform inputs into higher valued outputs. The key Resources of the enterprise are its People and its Technology. These Resources create the most wealth when they are well sourced and adapted for the work required to generate that value.

The 3rd factor is the Principles of the enterprise – the mission and guidelines that determine what the organization will do and how it will do it to create marketplace value. It should be clear that no matter how hard and effectively the oarsmen row, and how good their equipment is, if they are not rowing in the same direction the boat’s progress will be slower than its potential. Likewise, an enterprise that is not aligned around a consistent vision of where it is going and how it is going to get there will not maximize its wealth creating potential.

The 4th factor is the external Environment of the enterprise. Just like the velocity of a boat can be impeded by headwinds, waves, currents and obstacles, so too political, socioeconomic, bureaucratic and competitive obstacles can impede the wealth creating capacity of an organization. An enterprise that is not equipped with the right resources will fail in a difficult external environment, just as a boat will sink if it is placed in conditions for which it was not designed to go. When the environment changes, the Practices need to be adapted to accommodate that change, but the Principles do not change. The direction of travel remains constant.

I look forward to further developing these concepts together with you, and look forward to your comments.
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