Leadership & Purpose

Jim Womack, author of Lean Thinking made some insightful comments about structure and purpose in his April 2009 newsletter. He said,

“One of my favorite questions when meeting with senior leaders of enterprises is, ‘What is your organization's purpose?’ The typical and immediate response is, ‘To make money and grow.’ ‘But,’ I respond, ‘this answer has nothing to do with your customers, who provide the money your organization needs to profit and grow.’ I then repeat my question, but elaborate, 'What does your organization do to solve customer problems better than competitors so that customers old and new will pay good money for your services and goods and buy more over time?'

“In recent years a fashionable alternative to ‘make money and grow sales’ was that organizational purpose was to steadily grow shareholder value. But now the king of shareholder value, General Electric's retired chairman Jack Welch, has acknowledged – thank goodness – that this is a result, not a strategy for achieving this result. Now that investors as well as customers are on strike during the great financial crisis, the whole management world is being forced to rethink purpose from the standpoint of the customer.

“Confusion about purpose is particularly painful to watch in the collapse of General Motors because this organization was so brilliant for so long in clearly defining its purpose. On June 9, 1921, GM's great leader Alfred Sloan produced a simple memorandum on the topic of ‘Product Policy’ that defined General Motors’ purpose for generations to come.

“Sloan stated that General Motors would provide a carefully configured range of products for ‘every purse and purpose’, from used Chevrolets at the lower end of the market (with dealer financing on these traded-in vehicles) to a ‘fully loaded’ Cadillac at the top end. This simple memo rationalized GM's chaotic product line-up so its vehicles would not overlap in the market. Instead, they would each have a clearly defined place in a status hierarchy and would always be more refined, a bit ‘classier’ with a higher price, than competitor products in each market segment.

“This memo about market policy was much more than the now familiar market segmentation and value proposition for each segment. Sloan did something much more important by defining GM's central purpose as creating an aspirational escalator for every customer through the life cycle, from the used Chevrolet as their first purchase to the fancy Cadillac as their last (often concluding with a Cadillac hearse on the way to the cemetery!) And it worked brilliantly. General Motors was probably never as efficient in production as Ford and it was rarely a technology leader. But it provided a clear product pathway on the customer's life journey. Customers embraced this purpose and opened their wallets to pay higher prices for more refined products within each market segment. Within a few years of Sloan’s memo GM had became the largest and most successful corporation in the world and in the history of the world.

“Moving forward to the present moment, it is saddening to read the viability plan GM recently proposed to the US Automotive Task Force. With the exception of the plug hybrid Volt (an unproven technology for an unproven market to be produced at tiny volume in the early years), the plan is entirely about "restructuring" and shrinking, about what General Motors isn't. It isn't Saab or Hummer or Saturn. It won’t have nearly as large a dealer network. It isn't a manufacturer with a significant North American footprint outside of Michigan and Ohio. Etc.

“The natural instinct of senior managers in any crisis is to restructure and downsize. But the question is always, ‘Restructure and downsize toward what?’ No customer cares about a company's structure. No customer cares about downsizing. Customers only care about a company solving their problems along life's path.

“So here's my advice to new GM CEO Fritz Henderson or whoever may follow after him. Before you restructure, restate GM's purpose. Today no one knows. Do it in a simple memo.

“P.S. Toyota has gotten off lighter than GM in the current crisis, but it faces the same confusion about purpose. Until the mid-1990s the clear purpose of Toyota was to be the best organization in the world at providing refined, durable "value" products in all market segments with few delivered defects to customers. The assumption was that growth would naturally follow, and it did. But then the purpose seems to have shifted to becoming the biggest auto company as rapidly as possible by adding capacity everywhere, a purpose that no customer cares about. At the same time competitors, led by Hyundai, have closed the gap on Toyota's original purpose and everyone is doing hybrids where Toyota initially took the lead. My fear is that he will only focus on cost reduction and restructuring.”

HAVE YOU CLEARLY DEFINED YOUR COMPANY’S PURPOSE? WOULD IT IMPRESS YOUR CUSTOMERS?

Process Management

What is your productivity? A study on productivity done in 2008 by Proudfoot Consulting found that about 34% of the average employee’s time is spent on unproductive activities. This included production, support and office employees. It found that most managers spend about 34% of their time on administrative tasks and only 10% on training and supervising employees. One could add the two numbers together and it would suggest that managers have 68% of their time doing admin or other non-productive tasks. I suspect that the numbers somewhat overlap where admin work is also non-productive. The point is, we spend too much time doing the wrong things. To change how you spend your time, consider the following:

Manage time or it manages you. You need a plan each day on what you really need to do.

First things first. Identify your priorities and do those first. If you could only do one thing during the day – what is most important to do first? Then, do it first!

Private victories precede public victories. The way you manage your personal time and commitments will lead to how you manage your work and public commitments. If you plan to get up every morning and exercise but then sleep in, you failed in your own commitment. Win your private victories first.

Delegate, delegate, delegate. The requirements for effective delegation (per Stephen Covey) are:

1. Give clear expectations of the desired results.
   
   Do not tell them how to do it, but help them visualize the results (This requires that you are clear on what results are expected.)
   
   Give deadlines and explain why it is needed.
   
   Tip: To make sure they understand the expected results, ask them describe it back to you.
   
2. Provide guidelines on how to do the job
   
   Give them a few parameters – only those guidelines or limits that are required such as limits on budget or manpower assistance.
   
   Be open & honest – tell them about the quicksand and wild animals (any past failures)
   
   Tell them what not to do, NOT what to do. They may not do it your way, and that’s OK.
   
3. Provide resources to help them do the assignment. Let them know what resources they have and can use, who has useful information and/or who can help in other ways.
   
4. Expect Accountability
   
   Be clear on how and when to report back. (By email, in person, or?)
   
   Define the status reporting requirements. What details you need to know.
   
   Tell them ‘No Surprises’! They are to tell you as soon as it is known if they can’t meet the deadline or can’t do the task.
   
   Define the consequences- Let them know what will happen if they accomplish the task and if they don’t.

Do regular Muda (means waste in Japanese) walks to see what is happening and make improvements as needed. Look for ways to help the employees do their jobs easier.

Expect your employees to come to you with answers, not just problems.

Consider if you are solving the same problems over and over? If so, you haven’t got to the root cause or are not committed to the countermeasure of that root cause. Analyze your reoccurring problems and take action to remove or prevent the root cause. Ask why five times,

Learning Opportunities

You may be interested in attending one of these training seminars by Dennis Sowards:

Sept. 17, 2009 - Customer Loyalty by Design, – Phoenix, AZ – Sponsor: PIPE & 469 JAC, contact Cathy at pipetrust@qwest.net

Oct. 6, 2009 - Lean Works in Construction – Milwaukee, WI – Sponsor: Plumbing Mechanical Sheet Metal Contractors Alliance, Contact: Dajen Bohacek at 414/543-7622 or dajen@pmsmca.com Must be a SMACNA member company, associate or sponsored by one to participate.

Oct. 15. 2009 - Introduction to Lean in Service, – Phoenix, AZ – Sponsor: PIPE & 469 JAC, contact Cathy at pipetrust@qwest.net

Contact Dennis Sowards if you want a customized workshop exclusively for your company.

Thought for the day

Most people don’t aim too high and miss - they aim too low and hit!

- Bob Moward

For more information about the High-Performing Contractor assessment process contact Dennis Sowards at 480-835-1185



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