How Good Is The Management?

An Evolving Excellence reader from Denmark by the name of Peter Risager, a manufacturing systems student at Aalborg University in Denmark, sent me a translation of an article on the most recent nonsense from the McKinsey wizard running Lego into the ground.  You may recall that he moved just about everything from Billund, the the Danish town that has been home to Lego forever to foreign factories, then shut down those factories and sent all the work to a third party manufacturer in eastern Europe and Mexico.  Now he is trying to figure out how to get the third party folks to perform, explaining that " It is like teaching a five-year old to ride a bicycle with training wheels. It has been necessary, to a higher degree than expected, to run behind him with with a stick tied to the bike to ensure that the child does not crash." 

I have taught just about all of my kids to ride bicycles and never saw the need to run behind them with a stick, so I am not sure just how Mr. Knudstorp is helping.  For that matter, having demonstrated that he cannot effectively manage manufacturing in Denmark or anywhere else, it is hard to see how Mr. Knudstorp is qualified to teach his contract suppliers anything at all.  The salvation for Lego will come when the city fathers and company owners are seen running behind Knudstorp with sticks, chasing him beyond the Billund city limits, never to return.

I have trashed Lego and Knudstorp enough in Evolving Excellence.  The point that another great old manufacturer is being destroyed has been made.  The bigger point I want to make is that it is all about management.  Of course manufacturing can succeed in Billund - and if it is failing, it because of how it is being managed.  The Knudstorps of the world don't understand that basic point.  By moving the plant from Billund to the Czech Republic and the U.S, he did nothing to address how the plants are being run - just where they are being run, which was not the problem.  Then turning them over to contract operators and moving from the U.S, to Mexico, he changed who was running them, but again missed the fundamental problem of how.

Investing hundreds of millions of scarce Lego dollars in an ERP system did not fix the how problem either.  It simply automated the current, unsuccessful approach.  In effect, it is driven by the belief that everything that is practiced by management is inherently right - it just needs to be done faster and more accurately.  Of course, if current management practices are actually the source of the problem, a big ol' computer system to automate those practices just accelerates the rate of the unfolding disaster.

I haven't blogged for a while - I apologize and I sorely miss the regular interaction with all of you - due to a combination of laziness and a hectic travel load.  I am just coming off a a month long binge during which I went 8,500 miles and talked to a little over 500 people in 8 states about lean manufacturing management.  There were far too many manufacturing operations people in my audience - to whom most of what I have to say was like preaching to the choir - and far too few CEO's, CFO's and HR directors, but there were enough of them to be encouraged.

A guy named Gerry Edwards who has taken on the challenge of saving Scottish manufacturing from extinction puts it well: "The big question at the end of the day is: how good is the management? That is what makes the difference."

He is right, lean manufacturing or manufacturing excellence by any name, boils down to that question - how good is your management?

Comments

[Kent Blumberg]

According to James O'Shea and Charles Madigan, in "Dangerous Company" (1997),

The day before he died, James O. McKinsey (father of McKinsey consulting, and of the business consulting industry) told his friend, “Making real decisions in a business is a lot harder than getting paid to advise people what to do.”

While I have learned a lot from some of the folks at McKinsey, James had it right. Leading a real business is quite different from advising a business leader. Perhaps Lego is finding that out.

[Bill Waddell]

My education continues - apparently there is some method of teaching kids to ride bikes in Denmark that involves tying a stick to the bike to keep the kid from crashing. Mr. Knudstorp was suggesting that this method be used to control his wayward suppliers, rather than beating them with sticks as I assumed.

In the second paragraph, however, in which I suggested that sticks be used to control wayward CEOs, I advocate the more traditional use of sticks in training - beating them with the sticks to get them to leave.

[Brendan O'Malley]

Some years ago, I was part of the management team in a plant that was one of two that was going to be closed. We were the smaller of the two, but the performance of the plant was widely recognised as superior. Better and faster customer service, higher inventory turns, faster new product introduction, fewer organisational layers, innovative partnerships with the sales and marketing folks. We were sure that this would make the difference. It didn't: we were closed because it was thought to be easier to move a small plant to a big one and because "performance is a given". if there is one thing I've learnt over and over again, performance is NOT a given. It's the one thing that matters. This article only goes to reinforce the point - how good is the management?

See my blog: The Competitive Edge at http://brendanomalley.blogspot.com