Evolving Excellence

Thank You for Being a Failure

By Kevin Meyer

Yesterday Sue Shellenbarger penned one of the best articles I've ever seen in The Wall Street Journal, and that's saying a lot.  Those of us in the lean world - hey even the more people-oriented business world in general - know that failure can be a positive when it is a learning experience.  The hidden value of people, again.  Sue takes this to a whole new level.

Amid worries that we are becoming less innovative, some companies are rewarding employees for their mistakes or questionable risks. The tactic is rooted in research showing that innovations are often accompanied by a high rate of failure.

"Failure, and how companies deal with failure, is a very big part of innovation," says Judy Estrin of Menlo Park, Calif., a founder of seven high-tech companies and author of a book on innovation. Failures caused by sloppiness or laziness are bad. But "if employees try something that was worth trying and fail, and if they are open about it, and if they learn from that failure, that is a good thing."

Don't just accept failure, or even encourage the appropriate risk-taking that can create failure, but actually reward it?  Yes, if it was worth trying and if it created a learning experience.

Grey's Mr. Myhren recently started handing out the "Heroic Failure" award because he was worried that fast growth at the agency, a unit of WPP's Grey Group in New York, was making employees "a little more conservative, maybe a little slower," he says. Creator of E*Trade's talking-baby ads, Grey New York has more than doubled to 900 employees since 2008.

I'm sure we've all been there at some point in our careers - the dynamic organization matures and slows down.  What better way to get that youthful energy back than to screw it up?  Ok, you know what I mean.

Many people succeed at producing innovations because they churn out a very large number of ideas, both good and bad, says Dean Keith Simonton, a psychology professor at the University of California, Davis. "The most successful people tend to be those with the most failures," says Dr. Simonton, author of more than 500 studies and articles and 12 books on creativity and innovation.

Extracting lessons from foul-ups is the focal point of Michael Alter's "Best New Mistake" awards at SurePayroll, a payroll-services company in Glenview, Ill. Only people who are trying to do a good job, make a mistake and learn from it are eligible for the $400 annual cash award.

It's not as easy as just creating a reward.  The culture has to embrace the positive aspects of failure.

However, all innovative companies tend to be alike in certain ways, Ms. Estrin says. They encourage coworkers to trust each other, comment on each other's work and take criticism in stride. Also, managers encourage intelligent risk-taking, tolerate failure and insist that employees share information openly.

The article provides some examples of real-life failures, potentially career-ending failures, that resulted in learning and were rewarded.  Think used kitty litter and getting nasty calls from the tax guys.  Yep, bad.  And innovation will come.

So is your organization getting a bit sluggish?  Perhaps it's time to fail a bit more, learn from it, and celebrate.

10 Years Ago Today - on September 11th

By Kevin Meyer

Yesterday I told you how ten years ago on September 10th was one of the most difficult - and transformative - days of my life.  Yes, the day before September 11th - what a week that was.  And I vividly remember driving into work the next day, trying to figure out how I was going to respond to the press, and to the friends and coworkers I had just laid off the day before, when I heard the news from New York.

9/11 transformed all of us.  The world changed.  Perhaps in different ways, perhaps in ways we don't like.  Perhaps in ways it had to change.

In the days and years afterwards I remember the range of emotions, but I especially remember the range and latitude of discussions.  The anger that many felt, the remorse of others, how some people created wild conspiracy theories, how some became more focused on assigning blame to the President or religions oror past actions no matter how obtuse or irrelevant in thinking.

But a concept that has stuck with me because it applies to organizational leadership in addition to geopolitical politics is how to deal with negative influences.

In politics we had Al Qaeda as the disruptive or negative influence on our modernizing world.  The response to that influence ranged from those who believed in full all-out military action to eliminate the scourge to those who believed talking could resolve all differences.  Nuke 'em or sing kumbaya.

Both extremes don't work.

In organizations we also have negative influences.  People who stand in the way of progress, overtly or behind the scenes.  Those that disagree, oppose out of ignorance, or openly subvert new ideas.  And we have managers whose reponse ranges from immediately firing them and anyone remotely associated with them to those who simply put up with them - and hope that someday, somehow, they'll change their ways.

Again, both extremes don't work.

The temptation by many is to immediately cut off the gangrenous limb.  That often seems very leaderly and action-oriented.  But sometimes there really is an underlying process problem or misunderstanding.  Perhaps the person doesn't understand the "why" behind a new program or understand how he's affecting the group.  Clarifying the situation and expectations can change the behavior.  But not always.

The lazy way out is to do nothing, to talk forever, to put up with and tolerate the behavior and hope it eventually goes away.  Diplomacy and never-ending ineffective sanctions to go back to the geopolitical analogy.  If it's a true cancer it grows and spreads, and prevents and even discourages growth by others.

The reality is that the truth and answer, as with most situations, is in the middle.  Don't take immediate action to remove the person - or nefarious organization or even country.  First try to understand their perspective and issues and see if a common understanding can be developed.  But this can't go on forever as it will damage the common good and forward progress. At some point a difficult decision needs to be made that change will not occur and the person - or organization - must be removed.  It's not fun, sometimes it doesn't even seem humane.  But it must be done.

Understanding and operating in that middle ground, standing firm against the two extremes, but knowing when action must finally be taken and taking it, is leadership.

10 Years Ago Today - on September 10th

By Kevin Meyer

Today, 9/10, is a very memorable day to me.  Ten years ago today I had to lay off over 150 brilliant people, including myself.

You see, not quite a year earlier I decided to leave a long career in medical device manufacturing to try the telecom world.  I found an opportunity to run a hypergrowth operation that developed and manufactured laser photonics test equipment - basically the equipment tested the laser drivers that sat at both ends of long-haul fiber optic communications equipment.  The operation was struggling under an 18 month backlog with a manufacturing capability grown organically over the prior two years.  Loads of opportunity.

Over the next ten months the operation was transformed.  Not just from my knowledge and experience, not just the experience of consultants I had the latitude to bring in to help us out, but the brilliance and passion and creativity of the initial fifty or sixty people we had and the hundred plus we added over the course of the year.  A couple of very talented HR folks helped us find and relocate the best from around the country.  The fact that we were (and I still am) in one of the best places in the U.S. to live didn't hurt.

Production capacity went from $1M a month to $5M in a month in the same floorspace.  Quality, especially first pass yield, became near perfect.  The backlog was dried up and on-time delivery made customers confident in orders they placed with us.  Our technology remained leading edge.  Lean methods had created an incredible transformation.

Then, like the rest of telecom in 2001, demand dried up - almost overnight.  Suddenly the industry realized that fiber optic capacity was overbuilt.  In March we had our first order cancellation - we considered it a blip.  In July we had a very minor work slowdown - while still recruiting for open positions.  In late August we finally came to the realization that this was a serious, long-term situation.

That's when the battles with the corporate headquarters taught us a lesson about lean - and traditional business.  It didn't matter that our technology remained superior.  It didn't matter that labor was a tiny fraction of our cost.  And it didn't matter that our manufacturing operation was orders of magnitude more efficient than the ones at other locations, especially at corporate headquarters a few hundred miles south.

Traditional business thinking said that manufacturing had to contract, that regardless of where cash was actually spent labor was the easiest cost to cut, that manufacturing had to be "controlled" and remote locations were difficult to control.  I was told to shut down the operation.

We tried to do it right.  We kept everyone, everyone, informed as decisions were being made.  There were no surprises.  My leadership team fought hard, but unfortunately it wasn't enough - but it was recognized by our folks.  We were respectful and compassionate.  The corporate office offered many folks a transfer down to corporate office - and only two people took the offer.  Both with less than a year of experience.  Our product line, still in demand, was destined to die.

9/10/01 came, and it was tough.  It was painful but it was not a surprise. 

Then the next day, while driving into work and worried about dealing with the repercussions of the prior day, I heard the first news of 9/11.  And the events of the past day were put into perspective.

I learned a lot of lessons on that 9/10.  I learned a real lesson in how traditional accounting counts the pennies of labor costs but creativity, experience, and knowledge are no where to be found as an offsetting value on the P&L or balance sheet.  I learned how corporate decisions can be made on politics and perception as opposed to a real analysis of product lines, customers, manufacturing capability, and technology.  I learned how to not overlook the smallest blip in order pattterns - and any data for that matter. 

And more than anything I learned how harnessing the passion of people can create incredible transformation.  In addition to the lessons, this incident let me start and later sell a contract manufacturing business, build a consulting business, and become president of a medical device company.  I've been lucky enough to hire back some of the talented people I laid off.  Many others also used their new knowledge and experience to create success at other organizations.

9/10/01 was one of the toughest days of my life.  And a day that transformed my future - in a positive way.

Yep, Forgetting the Brains Again

By Kevin Meyer

Another day, another company forgetting that there's a value-adding brain attached to the pair of hands that supposedly costs so much.  The difference this time is that the company is in China.

Taiwanese technology giant Foxconn will replace some of its workers with 1 million robots in three years to cut rising labor expenses and improve efficiency, said Terry Gou, founder and chairman of the company, late Friday.

Foxconn, the world's largest maker of computer components which assembles products for Apple, Sony and Nokia, is in the spotlight after a string of suicides of workers at its massive Chinese plants, which some blamed on tough working conditions.

The company currently employs 1.2 million people, with about 1 million of them based on the Chinese mainland.

Now perhaps you can understand but not forgive this particular company for not understanding the power of creativity and experience generating improvement ideas.  That would require some minimal level of respect for people, the second pillar of lean, in the first place.  When company employees have a habit of jumping off of tall buildings that respect probably doesn't exist.

Over the past several years we've told you about many companies in supposedly "high cost" areas like the U.S. and Japan that can out-compete "low labor cost" rivals not with robotics but with ideas.

When was the last time you saw a robot submit an improvement idea?

Lean à la Chromalloy and Steelcase

By Kevin Meyer

Last week brought us two stories of two companies mentioning their respective lean manufacturing efforts.  I thought I'd show you a couple quotes and see if you notice something.

First we have Chromalloy in Georgia.

Newnan's Chromalloy facility has announced an expansion that is expected to bring 125 new jobs over the next year. Chromalloy, located in the Shenandoah Industrial Park, repairs components of aircraft engines and industrial gas turbines.

Chromalloy will add new capabilities to the existing facility, building new lean manufacturing lines to service additional turbine power systems.

The expansion is already under way, [Tim, General Manager] Ulles said. For the past several months, the company has done some recruiting and hiring, and will be ramping that up over the next few month. "The types of jobs that we will be hiring for will be welders, machinists, shipping and receiving people" as well as engineers and customer service employees, Ulles said.

"We have a very committed and educated workforce, and we just look forward to adding more of the same here in Newnan, to expand the lines of operation," Ulles said. "We find there is a rich talent base here for skilled workers," he said, and "we have robust training programs that allow us to develop people, as well."

Ok, and now we have Steelcase in Michigan... well sort of in Michigan.

The corporate restructurings of the past decade put Steelcase Inc. in a better position to drive future sales growth and profits, CEO Jim Hackett told shareholders today.

The latest restructuring move started in January, when Steelcase announced plans to shut down three factories, including its Kentwood East seating plant, and move the work to Mexico. The closing will eliminate 750 jobs, including 400 in Kentwood.

Getting fit required Steelcase to shed excess manufacturing capacity and implement lean manufacturing and new sales and distribution models, Hackett said. “In order to execute the growth strategies, we know we must be committed to fitness,” Hackett said. “Investment in one area often means curtailing or re-inventing our activities in another.”

For one company lean means growth. For another lean means reduction, elimination, and shedding (oh sorry... "re-inventing").

For one company lean means leveraging a rich talent base and even improving on it through further training and education.  For another lean means moving a couple thousand miles away and starting over with brand new people.

Bill described this beautifully a few days ago in his post on how lean is not a cost reduction strategy.  Lean is realizing that attached to the pair of hands meticulously and erroneously watched by traditional accountants is an experienced, creative brain filled with brilliant ideas for improvement.  The oft-forgotten second pillar of lean, respect for people.

I wonder which company will be thriving in a decade... and which will still be "re-inventing" itself for the tenth or twentieth time, in search of the mysterious missing piece.  When it is, or was, right in their factories.

McDonald's and the Value of Employees

By Kevin Meyer

Yesterday I came across a video created by McDonald's in the UK that attempts to demonstrate the value of being a McDonald's employee - and refute some of the criticism.  I've been pondering it for several hours and still conclude it's a good thing - even if we all wish there were more manufacturing jobs making real things instead of service jobs making us fat.

Some of the good points:

• McDonald's is making a bit of a gutsy move to admit that although their jobs really are "just" flipping burgers, they are still solid jobs in a difficult economy. 
• I'm sure the underlying meaning was to improve the company's reputation, but in doing so they are also supporting and promoting the value of their employees.
• You'll notice the defined feedback and training (and train-the-trainer) programs create progression and promotion opportunities.
• You may also notice a couple situations where mistakes were made - but the intent was to learn from the mistake to improve the process, not pound on the person.
• Note how McDonald's differentiates their training and promotion opportunities from other low wage jobs.

It's eight minutes long and potentially a tear-jerker by the time you get to the end.  Think about your own employees as you watch it - especially those that do the jobs that most of us would not want to do.  Do you overtly support them the same way, and let them know they are critical and valuable to your process?

Humility, Respect, and... Ignorance

By Kevin Meyer

One of my favorite topics, and passions, is the second pillar of lean: respect for people.  I am completely convinced that the reason most lean initiatives fail is because they focus solely on increasing value for the customer through the elimination of waste - or worse yet just on a random set of tools without first finding a problem for the tools.  That's important, but just as if not more important is leveraging the creativity, experience, and knowledge of the oft-ignored brain attached to the pair of hands that most accountants believe is sole essence of the employee.

Many leadership cognoscenti are realizing this.  Just this today Terry Starbucker had a post on 10 Principles for the Selfless Leader that mentioned aspects of the respectful servant leader:

7. Remain humble. Don’t worry about who receives the credit. Never let power or authority go to your head.

As did Dan Rockwell in a post on The CEO of Deloitte Learns Respect from his Dad.

1. Treat others with respect and you can be an effective member of a team.
2. Treat others with respect and you can be a leader.

Humility, respect, virtue, values.  Great characteristics.  Unfortunately it's still not enough.

The most recent Sports Illustrated has a cover on Ohio State's football coach Jim Tressel that begins with his leadership traits:

The character traits that have made Jim Tressel a successful football coach and a beloved figure in Ohio are numerous and frequently cited. Former NFL coach Tony Dungy has praised Tressel's "integrity" and said he is the kind of man you'd want your son to play for.

Under Tressel, the Buckeyes often sat together before meetings or at the start of practice for 10 minutes of "quiet time" to read about virtues such as humility, faith and gratitude. Tressel liked to say that his teams "play as hard as we can play" but also "respect as hard as we can respect."

Sounds familiar.  Perhaps one reason why he has been compared with the greats like Vince Lombardi and Bill Walsh.  But respect only takes you so far.

Yet while Tressel's admirable qualities have been trumpeted, something else essential to his success has gone largely undiscussed: his ignorance. Professing a lack of awareness isn't usually the way to get ahead, but it has helped Tressel at key moments in his career.

That is, until others became all too aware.  Allegations of of improper compensation for his athletes have dogged him for years - and he claimed ignorance.  That changed last weekend.

A failure to disclose potential violations is considered one of the NCAA's cardinal sins and almost always leads to a coach's dismissal or resignation. Yet Ohio State supported Tressel and continued backing him despite weeks of negative press and calls by prominent alumni for him to be replaced.

That support crumbled suddenly over Memorial Day weekend. Tressel was forced out three days after Sports Illustrated alerted Ohio State officials that the wrongdoing by Tressel's players was far more widespread than had been reported.

Ignorance, whether by the supposed leader or the organization that supports him - both of which happened in this case, is not a virtue.  It is not humble, and it is not respectful.  True leadership begins with a solid ethical foundation.

Laying Off Hands, Losing Brains

By Kevin Meyer

Another day, another article that makes me want to bang my head against the wall.

Thirty people at the Stark Manufacturing plant in Paris have been laid off in what a company official described Friday as a seasonal adjustment. 

"Seasonal adjustment?"  Let's see what they make that is so seasonal...

Stark manufactures aluminum, steel and copper tube and tube assemblies serving automotive, aerospace, agricultural, heavy duty and military needs. It supplies the original equipment and aftermarket segments in U.S., Asian and European markets.

Ok.  So there are no other markets for metal tubes that can mitigate any seasonality?  Is their primary business tubes that support barbeque grills or something?

But here's the kicker:

Stenerson said the company only a month ago adopted lean manufacturing principles that have been in practice for "years and years" in the manufacturing industry.

Unlike old-style manufacturing practices, in which a plant manager or other leader dictated what the plant would do, lean manufacturing involves cross-functional teams making decisions together, Stenerson said.

Good luck with that.  Besides the fact that lean isn't really about "teams" (although perhaps I should allow for the fact that the reporter is clueless, not the plant manager), launching a lean transformation by whacking a bunch of brains isn't a good start.

Perhaps they should ponder the example of a much larger company a few hundred miles away.

Toyota Motor Corp. has extended production cuts at its North American factories into early June as it struggles to deal with parts shortages caused by the earthquake that hit Japan.

Despite the disruptions, Toyota promised no layoffs and said it would be ready when parts start flowing again.  The company's 25,000 workers in North America will report to work and use the time for training to make improvements at Toyota's 13 factories in North America, the company said.

Remember, there's a brain attached to that pair of hands.  Value can be created even if the hands aren't being used at the moment.

Productivity from the People

By Kevin Meyer

Interesting article by Kimberly Weisul in BNet describing a study on where CEOs really spend their time.  As you'd probably suspect, the vast majority is spent in meetings. 

As you might suspect, CEO’s go to meetings. A lot.

• Some 60% of CEO time was taken up in meetings
• CEOs spent 25% of their time on phone calls and at public events
• Only 15% of CEO time was spent working alone.

Time is also split between insiders and outsiders.

On average:

• CEOs spent 42% of their time with insiders-other employees
• CEOs spent 25% of their time in groups that included both insiders, such as employees, and outsiders, such as suppliers.
• CEOs spent 16% of their time as the only company representative with one or more outsiders.
• Among insiders, the finance department got the most time, or an average of 8.6 hours per week. Human resources got the least CEO time, or 5.5 hours per week.
• Among outsiders, consultants dominate CEO time, getting an average of 4.7 hours per week. Suppliers get the least attention, or only 1.3 hours per week.

But here's the interesting data:

As CEOs worked more hours, those extra hours went to meetings with people inside the company, so the hardest-working CEOs spent more time with their own people.  Time spent with insiders seemed to improve firm performance, while time spent with outsiders didn’t seem to make much difference.

A 1% increase in the amount of hours a CEO spent with his or her own people correlated to increase in [firm] productivity of 2.12%.

The power of realizing there's a brain attached to the hands of your team, and tapping into that creativity, knowledge, and experiences.

Works every time.

More Problems is a Good Thing

By Kevin Meyer

We all know how easy it is to jump to the quick and easy conclusion that people are the cause of problems.  We see it every day in every organization - verbal warnings, written warnings, terminations.  Off with their heads!  As if that is doing anything about the problems itself.

The reality is that virtually no one wants to create or cause a problem.  It happens, but it's exceedingly rare.  Ineffective, confusing, or contradictory processes are generally at the root of the problem.

The FAA appears to understand - thankfully as it's a critical function that I rely on a few times a month.  The headline sounds ominous... until you read deeper.

New numbers released by the Federal Aviation Administration show reports of air-traffic errors have nearly doubled in three years. The number of reported incidents in 2007 was 1040, and that number rose to 1887 in 2010, an 81 percent increase.

Egads!  But here's the good news.

Diane Spitaliere, manager of media relations for the FAA, told Fox News that passengers should not be alarmed by the increase in errors, because part of the increase was due to better reporting methods implemented in 2008. The new method protects controllers from punishment for errors they voluntarily report.

Since the non-punitive culture of error-reporting went into effect, the FAA says it has been receiving about 250 reports a week. “The FAA’s mission is to keep air travelers safe," Spitaliere said. "Over the past several years, the FAA has transitioned to a non-punitive error-reporting system at its air traffic facilities.

What's the real benefit?

This cultural change in safety reporting has produced a wealth of information to help the FAA identify potential risks in the system and take swift action to address them.

"The FAA takes all errors seriously but we believe increased reporting will result in an even safer aviation system.” The chairman of the National Air Traffic Controllers Association, Steven Hansen, apparently agrees. He has said that if authorities don't know about the problems, they don’t know what to fix.

To fix the process you must first understand the failures occuring in the process.  If you focus on the person caught up in the failed process you won't learn about many of the failures and therefore won't have the ability to even start to fix and improve the process.