CEO: “We will aim for zero accidents, perfect quality, a 10% reduction in cost and 25% of growth coming from innovation. We CAN do this.”
(Some months later) CFO: “We are off 4% from our cost goal. Can’t you come up with some extra ideas/projects to close the gap within 6 months?”
COO: “If we take a very small hurt on quality, I think we can save some extra money.”
Sounds familiar?
Many production companies seem to have difficulties determining an inspiring long term goal and an appropriate path towards that goal.
In a standard operations environment, the goal is pretty much standard: deliver value to the customers, maximising volume over cost while keeping your licence to operate. Often this is translated in benchmark safety, benchmark quality and benchmark cost.
Many forget that:
- You need AND good safety, AND good quality, AND good efficiency to deliver low cost, and
- To reach these goals, you need an ownership culture which implies people are treated as humans
You can’t choose either or. (Well. You can, but that won’t work on the long run.)
There is ample evidence that all dimensions are linked (e.g. TPM, DuPont Bradley Curve).
- If you reach high quality, you will also perform well on safety.
- If total cost is low, cultural diagnostics will reveal teams that truly collaborate across boarders
- If efficiency is high, probably people feel good about their contribution to the business, supported by managers who care about their people.
The reverse is equally true. If you perform poor on safety, your quality is not going to be world class, neither your efficiency, nor the team spirit. That is why you don’t have to audit all dimensions: if a company has a poor culture to manage safety, you can be fairly certain they will also deliver poor quality.
That leaves us with a chicken and egg problem. Should one drive all dimensions together? If not, which one should be the lead. Some observations:
- Trying to manage everything together is what many companies do and often results in disappointing results. It is hard to make it into one nice & compelling story.
- Some call it operational excellence. If managers are aiming for short term wins by deploying toolboxes, forgetting to grow the culture, the results are likely to be disappointing.
- Focusing on cost is what few claim, but many do. This results in behaviour favouring short cuts that on the short term might provide some value, but on the long term … hurts.
- Some companies have been very successful focusing on Safety e.g. Alcoa & DuPont
- Others have been successful focusing mainly on Quality e.g. TQM
- Yet others owe there success by creating a culture of ownership e.g. TPM or Don’t just fix it, Improve it!
- Such ownership is cultivated in some organisation through stimulating daily small improvements (‘Kaizen‘) within the full organisation e.g. 2s lean by Paul Akers in FastCap or Visual Workplace by Gwendolyn Galsworth.
- And some even take ownership to yet another level by adopting self-managing teams e.g. Morning Star or Favi.
It seems that executed right, it does not really matter whether you focus on safety, quality, lean or even self-management. The more important factor seems to be what resonates most within the company and to be consistent (you need every cog in the clock to make it work). With pressure coming from different directions, that last part seems to be the hardest.
Do you have a specific focus and how do you manage to sustain that approach despite destractions?
(Adapted from the original article posted on LinkedIn published Sept 17th 2016)