Stating the obvious, a post with many quotes and cliches!

This is an exciting week, I am preparing for the different panels for an event this week at Operations Calling. I found myself searching for ways to drive home the main point about adoption of digital platforms.  I have tried in so many ways to explain this in this blog, at events, with industry influencers and of course with all my customers. I have used technical explanations, analogies, theories, examples and more.  At the end I find myself repeating cliches and quotes that I believe provide a concise and memorable phrasing and drive a point home - and I love them. They are also very effective in the face of all the debate and skepticism around digital transformation, a topic a write a lot about.

So this post is going to be a bit full of what seems like cliches and obviosity but at the same time points out how ridiculous it is that we are still dealing with skepticism and denial about what digital technologies can do for our industry. 

Digital Transformation requires a commitment to a fundamental change that results in an order of magnitude productivity increase. 

And it does and can happen! I have seen it with my own eyes - two recent examples of manufacturing sites that have successfully transformed show how true this is (you can watch one here, the other is still not public). Once you see and experience it, the reality of it seems so easy, so obvious. At the end of the day what make this a reality is the collective human organization's quest to achieve a goal and the focused effort that it takes. If you will it, it will come true! And let's be clear it is a collective team's and organization's effort to achieve a common goal. "Unless someone like you cares a whole awful lot, nothing is going to get better. It's not.", from The Lorax, 1971, Dr Seuss.

Its not a secret that change requires a focused strategy, just listen to Walker Reynolds. Strategy is nothing without a clear goal. So many companies and people talk about strategy but they have no well defined objective or goal.  Drucker wrote that “Objectives are the fundamental strategy of a business. Objectives must be derived from what our business is, what it will be, and what it should be.” 

So defining goals and objectives are key. Arnold Schwarzenegger says that you should "visualize the person you want to become". In other words visualize your goals, draw a picture of what your manufacturing operations will look like when you are fully transformed and has achieved three digit precent improvements, for example increasing throughput by 100%. I can just hear the critics, its not easy, its complicated, you don't understand. Well here is quote from Clint Eastwood: "If you want a guarantee, buy a toaster". Nelson Mandela said: "It always seems impossible until its done. Nelson Mandela".

But remember that "culture eats strategy for breakfast", another of Drucker's famous quotes (borders on being a cliche). In the examples mentioned above it was clear that culture was a critical factor in the transformation. It works hand in hand, driving change with a clear goal ignites people and that helps create a culture of change. Also aligning a culture of continuous improvement with digital tools is an explosive catalyst for change. That is exactly what happened in this case - its just incredible to watch. 

Change is infectious because the results and accomplishments are real and rewarding. Organization and their people that change are eager and proud to share their feedback and observations. This is something that you can use to gauge the impact of a digital technology as well as the other way around if it affects change. 

Reflections on performance management

I have sometime to reflect lately about performance and a favorite of mine performance management. As always I fall back on Dr. Deming's 7 (or 14) deadly diseases of management, especially "eliminate management by numbers, numerical goals. Substitute workmanship"! And, the often misquoted "you have to manage what you can’t measure"

What is even worse is that traditional performance management not only focuses on the numbers but is also doing this by looking to the past. Surprisingly, most organization in this day and age still rely on periodic consolidation of business data to give them an idea of what is happening now by looking at the past, last month, last quarter and even what happened last year. This they believe is a measure of how they are performing and even more dangerously an indication of where the business is heading.

The world as we know is in transition to a real-time world where data is ubiquitous - the so called Digital Transformation. We hear everyday how AI, Big Data, IoT, AR/VR, etc is changing peoples life and how we work. These new technologies are also changing the way we do business and the way we run our manufacturing plants. Yet this change is held back by a mindset that is still deeply rooted in traditional main-frame and paper based process thinking. Even executives that feel they are progressive are still operating under these rules. I am just amazed at people who believe that they are cutting edge when they generate an excel report based on manually transformed data that is a month old - and these guys run huge business operations.

We take an employee survey once a year, spend 1 month consolidating the data and up with a PDF report. Then we analyze it and take decisions about our business based on this static report over the period of a year. What about using the wealth of online survey tools to get a real time view into the employee life, using social media tools to gauge employee satisfaction, etc. The surprising thing here is that using these modern tools is cheaper and less effort than managing “the employee survey” process, but will the shareholders accept this data? Hmm… probably not, so let’s go back to paper so we can show them that we are performing - Deming is turning in his grave!

People, Deming was warning about this in the 1960s! The perilous belief that we can run a business to satisfy the numbers and share holders is dead - the digital age will allow them to see performance in real time, and even predict it. The current availability of information and the speed that we can get it will expose the flawed traditional practice of performance management and hopefully make it obsolete. We will have the technology and data to prove that we are "managing what we can't measure".

A Picture of MBO Misuse

I was reading “Organizational Sabotage - The Malpractice of Management By Objective” on the Deming Files and I am once again I am dumbfounded by how it is continuously being practiced or misused. It is a topic that I have written about before on the L2L blog and here. Although I liked the article it seemed lacking some real world examples. Needless to say I have experienced these continuously over my career and sometimes when reading these types of articles I just feel like shouting the proverbial “Hello”!

Anyways since I prefer visual interpretation I thought about trying to come up with a simple graphic to convey Deming’s and Drucker’s real message about MBO. I also thought I would add some description in the form of pairs of antonyms to emphasize the visual. Here is what I came up with:

Short-term / Long-Term

Disarrayed / Aligned 

Untidy / Tidy 

Conflicting / Collaborative

Kind of simplistic and vague – I know, yet open to interpretation? The notion is that if you set a short term goal it drives a specific behavior that is not always what you want, and probably not if it is a business strategy. Drucker wrote that “Objectives are the fundamental strategy of a business. Objectives must be derived from what our business is, what it will be, and what it should be.” Clearly he meant long-term objectives? 

I was with my kids at the beach the other way and they were learning to use a stand up paddle board. The 18 year old instructor gave them a simple tip. Always look at the horizon when paddling it helps keep your balance, look down at your feet and you will fall.

No computers and a Boston accent - The Company Men

Sitting on a plane the other day I was watching "The Company Men", seems that is the only time I get to see movies. The movie tells a story about some guys who are forced to leave their jobs because of downsizing of a manufacturing company. The company, which is in the ship building industry, is dealing with falling stock prices as a result of the recent recession. It features Tommy Lee Jones, Ben Affleck, and Kevin Costner in best Hollywood style as some very successful executives that get laid-off. Well Kevin really plays an independent construction guy with a strong Boston accent – go figure, and Aflleck is the sales guy. I didn’t find that it played into their strong suites – but I am a lousy film critic.

I am sure that the choice of manufacturing industry is Hollywood’s attempt at zapping the national sympathy nerve, as if the recession isn’t close enough? Although the movie I think was a bit shallow I could not help relating to it. Obviously this topic is close to everybody’s hart after the last few years. It seems that we all know somebody who has lost a job. I was living in Indiana at the time and boy do I have stories…

Now it seems that the economy is coming back and the jobs are as well. I obviously am looking at it from my little corner of the world working with the life science industries and this may skew my perception. I still would argue that there are small noticeable things that are happening for the good. For example I just read an article about the resurgence of the tech-job market. So is it finally over – I hope so?

I am observing many companies embarking on yet another round of “let’s get our manufacturing systems in shape”. This is great news especially if it also involves a real investment of both time and money. This trend is not new and has had numerous incarnations over the last 3 decades dating all the whay back to the CIM days of the 80s. However what I am noticing this time around is that we are bit more pragmatic. The compliance driver is omnipresent – no need to dwell there, but I also see some business drivers that relate to understanding the manufacturing process and supporting the value stream. What I mean is that the focus is much broader and holistic. Rather than try and find one visible driver to pin the Manufacturing System initiative there is a general understanding of the need for a solution, with the benefits coming from better operations and increased quality. In addition the need to have fundamental information for better decision making and performance management is voiced as a high priority and treated as an afterthought. This is all excellent news; let’s just hope that my observations are right and that we keep the momentum.

Like in the movie the recession seemed that have shaken up our world, grounding us in such a way that we are better poised to find value and understand what it means. Anyways back to the move - one thing that I noticed is that it tried to convey current time in a setting that was old. There were no cell phones and nobody had a computer on his desk. I am still trying to figure out what was the purpose. Like the proverb, and this is a crude translation: “There is nothing that is bad enough, that it is not good for something” (seems to be German).  I still don’t understand why there were no computers in that movie tough, and why Boston?

Common question - What MES should I use?

I just returned from the CBI MES conference and found that the main theme or at least that many the attendees were interested in finding the right MES. Yes I know - “it is maybe easier to achieve world peace”. It seems there is no clear answer – no surprise! “It depends”, was a common answer, some said “it is what you make of it”, and I completely agree.

In my many years of studying the “Shop Floor Management” (aka Manufacturing Systems) problem I found that apart from all the technical and functional aspects, the common element that makes an MES implementation and operation successful is user involvement. The users (across all functions) really have to want it! MESs are complex and sometimes cumbersome. They touch many different functions in a manufacturing business, most critically they manage the value stream – or where value is being made. That makes their adoption and acceptance brittle.

In most cases MES products are aligned with specific industries and hence it is pretty straightforward to make an initial short list. But this is not always true, a vendor may be trying to penetrate your specific vertical opening up potential to influence them – and possibly also get a good deal. There are obviously many other factors that can and do play in. “It depends” is always a true statement when talking about fit of a specific MES product to your environment, and therefore it is always important to know what you need.

So how do you determine what you need? Most people will tell you, and correctly so, that you have to use formal (true and tested) models such as the MESA model or the ISA 95 standard. This is the boring but necessary part of the preparatory and selection phases for the MES. I am not saying you should skip the detail; it is by all means necessary. We all know that the devil is in the details, but using these models with no clear focus will not help either. You should use these models to make sure that you have not forgotten or omitted something not to define your problem. That is something only you and your company know, and in most cases it is very specific to your company or business. I prefer to use the 5 whys method to get to the root-cause and then write up as a series of problems – in simple language.

Another important thing to remember is to build on success as Lean practitioners advocate. It works best with a focused Kaizen-like event where a specific need is addressed. When people in the company observe or have taken part in a successful change the value seems transparent and obvious - and you don’t have to even explain or sell it. It is infinitely easier to convince people this way. In fact the only really successful MES projects, at least in my experience, have been when the operators and engineers embraced the system because it addressed a specific problem they had. Yes I know this seems trivial and is also the basis of modern product management, but it is really much more challenging than it seems.

So what have we learned from all of this? As many of the speakers at the conference re-iterated; you need to have a clear focus of the problem. It makes it is easier to build a business case to justify the investment – trivial really. But at the end of the day you have to want it, otherwise it will never happen.

Why are lay-offs so harmful?

Many thanks to Mark Graban that pointed me to a very interesting News Week article titled “Lay Off the Layoffs - Our over reliance on downsizing is killing workers, the economy - and even the bottom line”, by Dr. Jeffrey Pfeffer. The article speaks to the fact that lay-offs in fact do not save a company money, not in the long run nor in the short term. In fact it may have even more detrimental affects on a company than you may realize. The article states with reference to empirical evidence that

“…contrary to popular belief, companies that announce layoffs do not enjoy higher stock prices than peers—either immediately or over time.”

It is an interesting read for everybody, obviously for them that have been laid-off but also for the people doing the lay offs.

I think that the story behind the story is once again the topic of management and leadership. I strongly believe that in any situation it is always about people. That means that it is the people (managers) and their way of running a company that is the root-cause here. I have said before that you manage processes but you have to lead people. When you just manage people then they become an assets and when hard times are upon us, cutting costs by reducing your capital makes sense – right? Well no – isn’t that obvious - Apparently not?

“In the face of management actions that signal that companies don't value employees, virtually every human-resource consulting firm reports high levels of employee disengagement and distrust of management.”

“Layoffs are more like bloodletting, weakening the entire organism. That's because of the vicious cycle that typically unfolds. A company cuts people. Customer service, innovation, and productivity fall in the face of a smaller and demoralized workforce. The company loses more ground, does more layoffs, and the cycle continues.”

This reminds me of one of Dr. Demmings most commonly used quotes:

"Running a company on visible figures alone is one of the seven deadly diseases of management."

In this case it is financial metrics. It seems that in a recession most management executives are thinking of short term financial metrics rather than the long term health of their company? I am sure that these managers do not intend to do this and that they probably believe that they are doing the right thing. However it is this focus on managing rather than leading that is the problem. Managing the company’s business (The process) is more important than leading the people (organization). The end of the quarter's bottom line is more important than long term viability. Although this seem to be common practice, there is ample proof of companies that thrive by doing differently. Yes, by simply motivating and empowering their people. That is what makes them great companies, and also immensely profitable I may add

We are driven by this need to satisfy investors, whom I may add are also typically about short term gain. It seems that everything revolves around the need to make money now - the typical sales man approach, which is to pick up the closest shiniest pennies rather than to look ahead and possibly see a pot of gold on the horizon. Even if there is not one there at least you looked, and people appreciate that – do not underestimate what that means?

Management by objectives. Why?

I just published a post on the Linked2Leadership about Management by Objectives.

https://linked2leadership.wordpress.com/2009/03/19/management-by-objectives-why/

Excerpt:

Management by objectives, why? What is the perceived goal? What is the origin of this approach and why did anybody in his right mind think that it would work?

Maybe it stems from the thinking that we can impose tasks on people and that, by itself, will motivate them to do what they need to do. Old school thinking, if you ask me. Unfortunately, this is how many companies are managed and this practice usually only works when a high degree of self discipline and self motivation exists in the followers. But what happens when motivation and discipline erodes? How does a leader regain the lost ground when self motivation dies? 

Death to the Performance Review!

I came across a blog post on the Lean Blog about “Professor Channels W. Edwards Deming and Writes "Get Rid of the Annual Review” that comments an article in the Wall Street Journal by Dr. Samual Culbert, a Professor at UCLA Anderson School of Management. The premise of the article is that 

“It [Performance Reviews] destroys morale, kills teamwork and hurts the bottom line. And that's just for starters.”

Amazing, finally somebody has successful articulated exactly how I feel and what I want to say after every performance review that I have ever experienced. I am sure many of us have experienced this inexplicable sense of anguish, desperation and “I am not good enough” that follow the days after a performance review. It doesn’t matter how many positive and how many “great”, “excels in”, and “could not do without you” comments you get. We always focus on that one “needs improvement” or “could do better” comment that is probably in there, as Prof. Culbert points out, to justify the pay increase (or not) that has nothing to do with your performance.

“It isn't, "How are we going to work together as a team?" It's, "How are you performing for me?" It's not our joint performance that's at issue. It's the employee's performance that's a problem.”

I believe that the practice of performance reviews is in fact a symptom of lacking leadership skills. In this modern age we love the new shiny tools, and the diet pill. There is no substitute to the social interaction and personal sacrifice that a leader needs to exert in order to create a winning team. Dr. Culbert points out, which is so much in line with my experiences - it brings a chill to my spine:

“Instead of energizing individuals, they are dispiriting and create cynicism. Instead of stimulating corporate effectiveness, they lead to just-in-case and cover-your-behind activities that reduce the amount of time that could be put to productive use. Instead of promoting directness, honesty and candor, they stimulate inauthentic conversations in which people cast self-interested pursuits as essential company activities.”

When lacking skill we naturally look for tools as a substitute. If you don’t know how to fix a car, then it certainly will not help to use the expensive wrench. The scary part here is that there are even software tools for this! You need to acquire these skills and expertise, which in the case of leadership requires both years of experience and some fundamental personal traits that not everybody has. 

As Dr. Culbert also points out we love to measure, yet measuring requires some kind of baseline.

 

“In almost every instance what's being "measured" has less to do with what an individual was focusing on in attempting to perform competently and more to do with a checklist expert's assumptions about what competent people do. This is why pleasing the boss so often becomes more important than doing a good job.”

We love quantifying for many reasons, but it does not work for everything, especially when it comes to leadership and team work. It is another example of “Quantifying the Unquantifiable”.The end results are much more destructive than they are helpful or performance enhancing. Mark Graban points out in his blog post that this is very much in line with the teachings of Dr. Demmings. Demming in fact pointed out: 

"Running a company on visible figures alone is one of the seven deadly diseases of management. "

I have had this blog post bottled up so long that just finally writing it feels good. Thank you for the inspiration Dr. Culbert, I am now officially a fan!