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John R. Dougherty 

Hugging your packaging line has nothing to do with this article.  The assets we’re talking about aren’t even shown on a balance sheet.  In this age of downsizing, these “assets” are sometimes just considered costs to be trimmed to make short-term financial measurements look better to Wall Street.

These “assets” are the people who work in a company.

The “appreciation” we’re talking about has nothing at all to do with recognition, reward or any human resources program (although these are important).  The “appreciation” we’re talking about is the opposite of “depreciation.”  This means finding ways to make these assets more valuable to a company.

People Are The Key

The late 80’s and early 90’s have seen much downsizing, restructuring, rightsizing, reengineering, streamlining, etc. across the industrial base of North America and Europe.  Justified as the way for companies to “reinvent” themselves for more effective, flexible and agile decision making, reengineering for too many companies became just downsizing.  Yes, in many cases there was “fat” and “deadwood” to be trimmed. But in most cases, the “fat” has now been dieted off!  Further trimming will cut into muscle and bone.

 

Now is the time for industry to focus on the next generation of objectives: to exercise and work at building the strength and power of our companies. 

This can only be done through a concerted effort to rebuild or increase confidence and security in our people — at every level of every organization.  Companies must begin painting clear visions of the future and defining paths that their people can follow to reach these visions. Cultures that encourage risk taking and thinking “outside the traditional box” must be nurtured.  Slogans and kick-off meetings are not enough.  How companies treat, measure and motivate their people must undergo significant change.

Lester Thurow, the MIT economist, addresses this in his latest book, The Future of Capitalism: How Today’s Economic Forces Shape Tomorrow’s World:  “Rather than focus on the next quarter’s bottom line and opting for the quick fix of downsizing, business must learn to operate in a world where human capital or ‘brain power’ is the only strategic competitive asset...  Businesses must make investments in the distant future, including long-term investments in infrastructure, education and knowledge.”  Clearly Thurow advocates investment in technology, management approaches and tools, and an involved and empowered workforce.

Technology alone won’t get us there.  Remember Ollie Wight’s old quote, “MRP II is not a computer system, but a people system made possible by the computer.”  That’s never been truer than it is today and it applies not just to MRP II but to most initiatives a company undertakes, whether that be Synchronous Flow or Agile Manufacturing, Efficient Consumer Response (ECR), Customer Linking, Total Quality Management (TQM), Just-in-Time (JIT), Design for Manufacturability, etc.

Truly people are the answer.  An organization’s challenge is to unleash the power of their people to find and implement the solutions to everyday problems.  The people know more about what needs to be done to their own work processes than anyone else in the company. They can solve process problems if given education, training, time and money.

Permanent, effective change only occurs when all the people share the same vision and commit to a common approach to achieving that vision.  Without such focused consensus, a group of empowered people can become a mob, working at cross purposes and producing more destruction than progress.  In Figure 1, “The Formula for Effective Change,” you can see the four elements that are necessary to make change.  Each of these components must have value.  If any one of them has zero value, lasting change simply will not happen.  The higher the value of each component, the higher the rate of change.

 

  

Figure 1

 

To truly “appreciate” our people assets, to empower them, we must first ensure that they share an understanding of what’s possible and how to achieve it.  Key to achieving that understanding are formal education and training programs focused to a company’s goals and objectives.

To some this could conjure up fears that you need to spend thousands of dollars flying key people across the country to attend seminars, workshops and classes.  And then hire back all those human resources and training personnel to develop and conduct a full curriculum of education and training classes in house for everyone else.  Certainly that won’t fly in today’s economic climate.  Even if it would, the uneven success rate with that approach in the 80’s has planted seeds of doubt in all of our minds.  We’re not recommending attacking everything at once and educating everyone on everything at the same time, but rather tailored, focused education at the time of change, at the company location, coupled to action and results.

Managing Change Successfully

Rene Dubos was a Pulitzer Prize winning biologist who died in 1982.  His last written work was an essay entitled, “A Celebration of Life.”   It was in this moving and visionary essay that the famous quote, “Think globally but act locally,” was coined.  Dubos was writing in a broader context and talking about progress across all forms of human endeavor.  But his advice applies as well to the specific efforts of manufacturing and distribution companies.  The full quote is particularly relevant:

“Change happens one step at a time, by thinking globally but acting locally.”

What this means is that a comprehensive big picture must be developed.  Every company needs a vision of the improvements, initiatives, technologies and changes required over time.  But as experience has taught us, you can’t work on everything all at once.  Once a full vision is developed, a time-phased, sequenced action plan must be developed so that individual people can work on things “one step at a time.”

Sadly, over the last 20 years, as we’ve learned more of new technologies and approaches, as the stakes have gotten higher and the challenges stiffer, too many companies attempted to do everything at once.  They tried to take on all the challenges concurrently and have their people work on multiple improvement projects and processes at the same time.  This led organizations to dilute their focus, efforts, priorities and resources (that were often limited to begin with).  People (and fewer of them, due to downsizing) stretched themselves so thin that they could give no one effort the full attention it deserved.  Projects and efforts that started with much enthusiasm, optimism and hoopla, lost their momentum, stumbled along the path of progress and stopped well short of the expected benefits.  The confidence and belief in the potential of these efforts was shaken and the self-confidence of the people that undertook them eroded.  Companies were left with people who were cynical about the ability of their company, and themselves, to ever achieve the exciting promised results.

In almost all cases, the problem never was what companies undertook, but rather how, how much and how fast.

“Thinking globally and acting locally” in a manufacturing or distribution company really means, ‘Think big but act small.”  In other words, once your overall vision is defined, find one part of the business you can begin to work on and focus all of your efforts on improving that.  This could mean one location, one product group or one process, such as forecasting and demand management, sales and operations planning, product change control, data management and accuracy, developing manufacturing flow lines or cells, etc.

However, what it definitely doesn’t mean is to work in functional silos, one department at a time.  

Don’t let Sales and Marketing work on solutions to their problems totally independent from how the Operational and Development groups are gearing their efforts.  To be effective, acting small still requires cross-functional participation by all the major departments and segments of a business organization.  It’s only then that you can truly optimize a process in a way that best satisfies the customer while streamlining the business activities.

How To Get Started

What do we recommend?  Define a vision, set some goals and pick an area to start.  Pick a cross-functional team and free up enough of their time to make significant progress in that area. Educate the team to broaden their perspectives and enlarge their horizons.  Make sure they know what other leading edge, world class companies have accomplished and what tools are needed to achieve the results.  Then they can set more specific objectives, refine the implementation plan and focus on a pilot area. Lay out a 90-day plan that will start producing results at the end of the third month.

They then become the change leaders in helping all the involved members of the organization design and implement improved processes to produce the results.  All along the way constant monitoring, feedback and interaction (the last element of the change formula in Figure 1) should trigger adjustment and refinement of the design of the process.  In the end, when results are achieved, confidence will be built but lessons will also have been learned.  These will fuel the next effort in the next area and will help to begin spawning a chain reaction of process improvements, led by your people, across your business and organization.

Looking Forward

The drastic changes in industry over the last few years have shaken the confidence of many of our people.  There is a growing tendency to extrapolate past failures, abortive efforts and partial improvements to a bleaker vision of the future.  Rene Dubos called that “the logical future:” what tomorrow or next year will be like if you do things the same way you did them last year.  But you don’t have to settle for that.  You can do things different and better than last year.  That’s what Dubos calls “the willed future.”  The willed future is created by those people and those companies with the courage and vision to find new and better ways to do things.  In every area and in every industry these people and companies will emerge.  You have a choice.  It can either be you and your people --- or your competitors

 “In human affairs, the willed future always prevails over the logical future” — Rene Dubos.

The key to whether you’ll be the definer of that “willed future” lies in how you “appreciate your human assets.”  Don’t wait for your competitors, or someone higher or lower than you in your company, to address this critical issue.  It’s up to each of us to form a vision and share it with everyone around us in our organizations.  It can start with you.  It can start today.

If your focus and efforts fall in the areas of supply chain management, demand management,   manufacturing resource planning or distribution resource planning, Partners for Excellence can help.  

We’ve done it, we’ve lived through it, we found what works and what doesn’t.