Category Archives: Enterprise Alignment

Walking in a Straight Line

“You’ve got to think about big things while you’re doing small things, so that all the small things go in the right direction.” — Alvin Toffler

Robert Krulwich of NPR distilled decades of research in an attempt to answer the question, “why can’t humans walk in a straight line when blindfolded.”  For over 80 years, scientist have been baffled by the fact that we seem incapable to walk in a straight line if we don’t have sight of a visible guidepost like the sun, the moon or a mountaintop.

With the help of animator Benjamin Arthur, Krulwich used four experiments conducted in the 1920‘s to illustrate this phenomena:

1.  A scientist asks a friend to walk across a field in a straight line, blindfolded…

2.  Three men leave a barn on a very foggy day and set out to walk to a point a mile, straight ahead…

3.  A blindfolded man is asked to jump in to a lake and swim in a straight line to the other side…

4.  A man is asked to drive his car straight across an empty Kansas field…

The curious thing about Krulwich’s examples is that in each case, the subjects walk in a relatively straight line at first but then slowly start to drift.  As soon as they start to drift, the curve becomes more pronounced and they quickly begin to walk in circles until many of them end up where they began.  In each case, without the ability to see a fixed point in the horizon, people are unable to maintain their original trajectory.

Now I can’t remember the last time I blindfolded myself and tried to walk a straight line across a field, but I have witnessed a similar phenomena when organizations attempt to engage and align teams in continuous improvement.  While teams often start out moving in a common direction, without the ability to consistently see a focused and fixed vision of what they are expected to achieve, they quickly start to fall of the path.  Like the subjects in Krulwich’s examples, teams begin to go in circles at an increasing rate until many of them are back where they started.  What’s worse, is that teams are not just back where they started, they are also now frustrated with leadership because they worked hard to make a positive contribution only to end up confused and demoralized.

A leaders job is to define where the organization needs to go and then empower each team member to accomplish the goals through active problem solving and experimentation.  The problem is that merely defining the goal is not enough.  To keep the organization from walking in circles, the leader needs to ensure that each team member can consistently 1) see a focused and fixed vision of what they are trying to achieve and 2) design a system that allows everyone to immediately see when they start to deviate from the path.  Without clear and consistent goals and the ability to see when they start to drift, leaders, in effect, send their team members across the field blind folded.

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Redesigning an Industry Icon

Ford Motor Co. CEO Alan Mulally was a runaway winner of the 2010 MarketWatch CEO of the year, easily beating out Steve Jobs, Vikram Pandit, Jeff Bezos and Reed Hastings.  Since the hiring of Mulally in 2006, Ford has been on a roll.  While Ford continued to post financial losses through 2008, the company turned the corner in 2009 and started to reap the benefits of Mulally’s turnaround strategy.  Sales and profits are up, the stock quadrupled in 2009 and doubled again in 2010 and the company has gained market share in back-to-back years for the first time since 1993.  The company even posted its best third quarter profit ($1.7 billion) in over 20 years.

So how did an old aerospace guy with no automotive experience turnaround a struggling industrial icon?  Let’s look at six elements of Mulally’s strategy that have enabled Ford to transform their financial and cultural picture in four short years:

Create a Simple and Compelling Message – By defining a simple, but powerful mission to build higher quality, more fuel efficient, safer cars, Mulally gave Ford’s employees something they craved: a message they could rally around and a vision of a company in which they could believe.  “The more each of us knows what we’re really contributing to, the more motivated and excited and inspired we are.”

Make it About the Long Term – Second, Mulally invested in a long-range plan to create a global design language he called “One Ford.”  The One Ford strategy meant selling off higher profile brands (Land Rover, Jaguar, Aston Marton and Volvo), bringing back a completely redesigned Taurus, and designing cars on a global platform.

Exude Contagious Optimism – Mullally understands that his positive energy is contagious.  He exudes an optimism that is both inspiring and credible.  He has an unwavering belief in his team’s plan, balanced by relentless realism about current market conditions, and a willingness to make adjustments along the way.

Develop a Truth Telling Culture – Mulally has created a culture in which telling the truth is paramount and gets rewarded.  As an example, Mulally presides over a weekly “Business Plan Review” where the heads of Ford’s four profit centers and its 12 functional heads report on progress relative to their targets, share problems and collaborate on ideas for improvement.

Be Profitable on Lower Volumes – Under Mulally’s leadership Ford has reduced structural costs by more than $10 billion and will have reduced its production capacity by 40% by the end of next year.  In a drive to be right-sized, Ford now has fewer factories, each producing more vehicles, which has allowed the company to be profitable at near-record-low sales levels.

Create Intimate Customer Relationships – Led by Scott Monty and his talented social media team, Ford has created an extensive online presence committed to creating transparency during the turnaround.  In addition, Monty launched “The Ford Story,” a social media hub which builds intimate customer relationships through Facebook, Twitter, YouTube and other online communities.

Regardless of your size, industry or business goals, Mulally’s vision and values are equally relevant to every leader responsible for aligning people and driving change.  If you want to dramatically increase your effectiveness and post unprecedented results, “stand for something beyond profit…rally your employees around a shared mission…practice realistic optimism…and tell the truth without fear.”

Managing Rapid Change on a Large Scale

For Starbucks, the world’s leading retailer, roaster, and brand of speciality coffee, 2008 was a tough year.  Amid a struggling economy and increased competition from cheaper rivals, the company’s net income during the first three months of the year fell 28 percent compared to the same period in 2007. Starbucks’ founder Howard Schultz announced that the company had “lost its way,” becoming too standard and corporate, and less entrepreneurial—less like a local coffee shop.  Shultz resumed the role of CEO and president, and for the first time the company closed stores on a broad scale.

Fast forward a year.  Starbucks posts a 4-percent growth in total sales, comparable store sales are up 4 percent (driven by increases in store traffic and average ticket price), and the company’s margins are up 8.5 percent.  As a result, the company’s earnings jump to $241.5 million in the final quarter of 2009, more than three times the $64.3 million seen a year earlier.  Even more impressive is that Starbucks’ consumer research shows higher satisfaction in every major indicator, such as value perception and experience, compared with 2008.

So why should you care about Starbucks’ turnaround?

Aside from the obvious financial success, the methodology behind the transformation reveals important lessons about driving rapid change on a large-scale.  Although many analysts would argue that the turnaround was due to store closures, aggressive cost cutting, and price increases, Shultz would take offense at this “financially focused” view of the transformation.  Starbucks did shore up key financial metrics, but Shultz’s vision for the company’s turnaround was to reconnect with its past: build upon the legacy of innovation and provide customers with a distinctive “Starbucks experience.”

In the July/August 2010 issue of Harvard Business Review, Shultz discussed his views of the four key elements to the dramatic turnaround at Starbucks:

Own the issues.  The first step of the turnaround was to challenge the leadership team to accept responsibility for the self-induced mistakes.  This started with Shultz.  As chairman of the board, Shultz acknowledged to the entire company that he was just as much to blame for the current situation as operational leaders.  An often overlooked step in the process, leaders “owning reality” is critical to expediting change.  Without the willingness to take responsibility, leaders spend their time justifying past decisions and protecting sacred cows, rather than learning from mistakes and making immediate course corrections.

Engage leadership in the process.  It was critical to Shultz that all managers and leaders own the relationship between each barista and customer.  “One cup of coffee, one customer, one barista at a time.”  To help ensure this, Shultz created a very public expression of this commitment to be accountable and responsible for each and every customer experience.  In the midst of financial woes, the company spent $30 million and took all 10,000 store managers to New Orleans for a company conference.  Prior to the start of the conference, every manager participated in five hours of community service (50,000 hours in total).  Using their hands, heads, legs, and backs, the team kicked off their renewed commitment to customer service by doing service.

Raise revenue and cut cost. After getting buy-in from company leaders, the team initiated a number of improvements aimed at quickly changing the financial condition of the company.  During the course of the first year, the company cut $581 million in costs, of which 99 percent were permanent and not customer-facing.  The company also made a number of changes in the stores to better align product and service offerings, including reintroducing Pike’s Place blend, selling healthier snacks, and launching a new loyalty card.  Finally, Starbucks ignored conventional advice and launched its highly popular VIA instant coffee.  With $100 million in annual sales during its first year, VIA provided a much needed shot in the arm as well as opened more than 30,000 new points of distribution for the company.

Focus on the customer experience.  As Shultz stated, Starbucks brand is based on quality coffee, but more important, on the relationship each customer has with a barista.  In a society where good service is rare and basic decency is often absent, Shultz decided the company would take a stand and demonstrate civility, respect, and trust in each customer interaction.  In addition, much to the dismay of Wall Street, Shultz got rid of reporting monthly metrics at the store level to move the pressure from producing good numbers to producing a good experience.  Finally, Starbucks launched www.mystarbucksidea.com as part of a new social networking strategy to connect the company with its customers in real time.  My Starbucks Idea is a portal that allows customers to suggest improvements to the store, products, and pricing, and for other customers to vote and identify the most popular ideas.  Actual Starbucks employees engage with the customers each week, respond to the ideas, and when an idea is selected, provide timetables and commentary on the implementation.  The portal generated more than 75,000 ideas in its first year alone.

At its core, “Starbucks represents something beyond a cup of coffee,” says Shultz.  While targeted revenue and cost improvements are one of the four primary elements of Starbucks’ transformation, Shultz emphatically states that it was the focus on the leadership engagement and creating a unique customer experience that were the secret to the success.

Like Starbucks, if we want to create an environment where passion drives our people and people drive our profits, we need to view change as something beyond the tools and techniques of continuous improvement.  Developing a lean culture is not the byproduct of achieving financial results through targeted kaizen events and Six Sigma projects.  In our desire to drive business results, we often let data, metrics, and financial impacts take precedence over crafting an inspiring vision and creating an emotional connection between our people and a larger purpose.

To accelerate your results, spend less time defining the what and how of continuous improvement, and more time defining who and why.  Engage people with an inspiring vision and connect their activities through aligned management systems.  By pointing the organization toward a customer-centric future state and giving people the autonomy to change products, services, and processes to achieve their goals, the organization can exponentially increase its success.

Creative Collaboration at Pixar

A couple of years ago, the Harvard Business Review published an article on creativity and collaboration at Pixar.  According to Ed Catmull (President of Pixar), the trick to fostering collective creativity is three fold: place creative authority for product development firmly in the hands of the project leaders, dismantle the natural barriers that divide disciplines, and build a culture that encourage people to share their work-in-process and support one another as peers.  A key to creating this culture is implementing processes that drive collaborative behaviors every day.  The article defined two simple, but effective processes which form the foundation of Pixar’s innovation process: the use of daily reviews and the creation of a postmortem process.  Let’s take a brief look at each of these processes to see how they work to drive right behaviors.

The daily review process is relatively simple, but powerful in its effectiveness.  At the end of each day, everyone involved in the creative process shows the progress of their work to the entire team.  Everyone is encouraged to comment on the material presented, but the director makes the final call with respect to the work and the next steps.  By forcing a collaborative approach to presenting incomplete work at the end of each day, people get past the embarrassment of an unfinished product and are more creative as a results.  In addition, the group interaction allows everyone to learn from and inspire each other.  Finally, by establishing a time for the team to meet each day, the director saves time and reduces the opportunities for error by communicating to the entire team at once.

The power of postmortems is forcing the team to take moments for deep reflection and share lessons learned which can be applied to future projects.  At the core of the postmortem process is time spent asking the team to list the top five things they would do again as well as the top five things to avoid.  To keep this process fresh and engaging, the team varies the manner in which they conduct the postmortem each time.  In addition to the top five review, the team employs performance data with which to analyze opportunities for improvement.  Among other data the team collects is the lead time to completion for each activity as well as the number of times something is reworked.  These data points provide both a delivery and quality measure which can be compared against predetermined goals.

At the core of Pixar’s philosophy is a belief that driving innovation depends on finding the right people and putting them in an environment which encourages daily collaboration and taking risk to accomplish great things.  Betting big on people, giving them enormous leeway to create, and providing them with timely, honest feedback sets teams up for success and enables Pixar to consistently turn out award winning products.

Don’t Delay…Start Today

The Shingo Prize (www.shingoprize.com) is a non-profit organization committed to the education, assessment, and recognition of organizations achieving operational excellence.  The process of applying for and receiving recognition from the prize is extensive and recently, we helped an organization undertake the challenge.  The organization has been on the continuous improvement journey for a few years now, and while they have achieved some great results, they have also struggled to engage the entire workforce in the change process and create a culture of daily continuous improvement.  One of the issues has been the leadership team’s lack of commitment to consistently provide the vision, resources, and urgency necessary to drive rapid process improvement.

When challenging for the prize however, the leadership team stepped up their game and spared no expense in preparing the facility and staff for the examination.  They created a well thought out and orchestrated tour, aligned the shop floor and support groups with a narrative to share with the examiners, ensured everyone in the facility knew their role in achieving a successful outcome, and conducted a series of dry runs to get the team comfortable with what to expect during the site visit.  As part of the preparation, the organization also implemented a significant number of improvements to key processes, daily huddles, and visual controls.

After witnessing the preparation that went into challenging for the prize, I could not help but wonder where the organization would be if they focused a similar amount of resource and energy around driving daily improvements the last three years.  Rather than merely ramp up for the examination, if the leadership team had created a similar level of urgency, alignment and preparation in daily activities, the organization would not only have achieved a higher level of cultural transformation, but business results would be significantly better as well.

In the end, the lesson to be learned is; don’t wait for a special event to create an aligned vision for your organization and pursue improvements with intensity and commitment.  Don’t put off until tomorrow what can be done today to create a culture of change and drive results.  World class organizations understand that continuous improvement is a daily activity embedded into the standard work of associates and managers.  They also understand that employees are hungry to buy into an “impossible” vision for the future, so there is no time like the present to start making the future a reality.

The Problem with Most Visuals

After spending countless hours analyzing visual management boards in office and manufacturing environments, many fail to live up to the expectations we set for them and die a slow and painful death. Here are three simple mistakes I routinely see made when designing and implementing visual boards:

1.  The boards are overcomplicated and fail to simply and effectively show normal versus abnormal
2. There is very little challenge build into the boards…they are way too “green”
3. The boards are boring…they look the same and lack any emotional connection or creativity

The following is an example of an executive assistant’s board which illustrates these key points:

This type of visual board can be seen in many office environments where the staff has been challenged to “implement visuals in their area” and become lean. In this particular case, the board focuses on scheduling, emails, travel packets and document management. With each category displayed, the goal is 100% (or very close to it) completion of the activity, with a weekly audit established to check on the progress. On the surface, the board is well organized, displayed openly and updated regularly. Upon closer look, however, the visual has a few problems which keep it from being effective as a tool for driving daily continuous improvement.

First, if all the goals are 100% and the assistant can easily achieve them, there is no challenge for her and thus “no problem” identified on the visual for her to solve. Second, this board only displays status on predetermined activities and fails to integrate steps taken to achieve an improved state. It lacks both a challenging vision of the future and clear aggressive targets which stretch the assistant and create “problems” she can then solve through daily improvement activities. It is only by creating this gap between what is possible and what currently is that she can be put into a position of growth and challenged to innovate.

As easy as this may sound, there are a number of issues that arise as soon as you want to make these changes to her board. First, the assistant needs to be open to the idea of wanting to take a risk and progressing toward a challenging goal. She needs to be ok with posting a board that says she is not perfect, but is working on it. Second, she needs to set aside time for addressing the problems that arise and coming up with new ideas to improve. Third, she will most likely need help in both the identification of issues as well as the creativity needed to solve them. If she is like many of us, she may be too close to her own process to be able to innovate. Her role may be better suited to identifying and finding the root cause of the problems, not creatively finding an solution. This puts the burden on the manager to not only follow up and ensure her progress and use of the visual, but assume the role of a mentor and help her develop into a daily problem solver, who is motivated by taking risks and challenging herself to redefine what it means to be an executive assistant and creating value for the organization.