Many companies have not tapped the full potential their product development process, because their management thinking has not evolved as quickly as the technology for execution:
they still approach the Highly variable information-generating work of product development as if it were like manufacturing, failing to recognize it is profoundly different.
Details why lean product development works and applying manufacturing principles to product development does not:
Another excellent article worth reading in its entirety:
https://hbr.org/2019/08/hire-leaders-for-what-they-can-do-not-what-they-have-done
"48% of managers hadn’t received any management training in the previous 12 months and 33% of companies did not offer any training at all." How much does your business offer?
“Bad management can originate in a structure that does not allow better behaviour. A “toxic” manager is rarely alone in a company. They are tolerated by the organization, if not supported outright. These kinds of practices can be found at other levels within the organization, the bad manager being only one active piece of a harmful system.” - some executives protect employees and ostracize those who - in the best interests of the company - point out the damaging behaviour.
“to identify gangrenous companies, it is worth looking at staff turnover” - one of the reasons to work with executives understanding this & absenteeism early in acquisition assessment or turnarounds
https://www.welcometothejungle.com/en/articles/job-interviews-how-to-spot-toxic-management
Example how a commodity seller can become a solution provider growing market share.
CEMEX is one of the rare firms executing lean business strategy beyond the merger & acquisition stage.
Article here: https://www.strategy-business.com/article/00325
These are my unedited notes, however I HIGHLY recommended reading the article. Twice.
Also leveraged mergers & acquisitions including entering new businesses in ready-mix concrete and aggregates
Strategy
long track record in lean operations (“ruthless operating efficiency”) evolved to become one of the most successful companies from an emerging market, and developed a high level of customer responsiveness. It delivers cement within 20 minutes of receiving an order in many locales. Its international business strategy enabled CEMEX to grow rapidly during the 1990s and early 2000s, when it became one of the biggest cement companies in the world.
while maintaining consistently high profitability levels. (In 2014, the company reported US$2.7 billion EBITDA on revenues of $15.7 billion.)
developed a capability for environmental sustainability:
decreasing the company’s own fuel use
removing or mitigating pollutants in materials
and looking for ways its products and services could lead to sustainable practices for all the industries CEMEX serves.
get good at postmerger integration, and extract more value out of those assets than the former owners.
“Enforcing is really the right word. A good example is the emphasis we put on closing the books on the 1st or 2nd day of every month. A lot of managers initially wondered why it was so important to do this. They thought nothing would be lost if they did their closings on the seventh or eighth day. But we believed that having that information readily available would increase the likelihood that managers would make the right decisions. And the practice had a very high-level overseer: Mr. Zambrano himself, into whose email inbox all of these reports flowed. This was not subject to negotiation.”
accounting management
[any] product has a disadvantage in that a customer can find a substitute for it. A solution, by contrast, cannot be that easily replaced. So we started to develop offerings that more closely resembled solutions.
“For CEMEX to play that kind of role, the company needed new capabilities. We needed a new kind of executive, connected with the environment, who understood the real needs of any given locality. We changed old habits; for instance, in the past our people were not prepared to interact with our communities or with the media. We had become an efficient company with an inward-looking culture. But our operational guys realized that they needed to be able to talk to the media, and to local communities and their leaders. The operational guys had to recognize that it wasn’t enough to lower costs; they also had to connect with local people and address their concerns — for example, about the dust generated by trucks picking up materials.”
“The sales guys had to learn not to wait for people to come in with orders; if markets were soft, they had to go out and propose solutions to problems that had not yet been brought to public attention. “We don’t just mend holes in your street — we can prevent those holes from recurring for the next 30 years.” selling concrete
Partly it’s a matter of how we talk about these things with customers. We’re not just selling cement or ready-mix; we’re helping you build a street. We’re helping you build a home. We aren’t selling a product to you; we’re working with you on a solution.”
each business must recapture transport dollars. We won’t dictate how you do it, but we require that you recapture all your freight somehow.
Left to their own devices, big companies will continue to act big. They’ll put in more rules, procedures, and standardization. When you’re running a hyperlocal business like ready-mix concrete and aggregates, you can’t allow that to happen. You have to fight all the time to be small
about 40% of the direct cost of cement is wrapped up in [energy use], you need to watch the expense of fuel and electricity carefully.
Business management values to live by:
- Customer satisfaction over company internal interests
- Problems are learning opportunities, not occasions for blame
- Shorter lead-times are better than longer ones
- Teamwork over individual heroes
- Fixing problems as they occur over working first and fixing later
Full article: Michael Ballé identifies a set of lean management values to live by
https://planet-lean.com/michael-balle-identifies-a-set-of-lean-management-values-to-live-by
Improving Your (Production) System - applies whether you’re producing a service or any other type of output
They hired her to make the firm better, but the firm’s leadership wanted to believe they were already great.
Some management demonize people, accusing them of being the problem instead of solving the problem that is being raised.
It’s not comfortable to see your shortcomings; this discomfort causes leaders to deflect and defend, and when leaders do this, they limit whether their organization advances.
article here: https://hbr.org/2020/01/dont-demonize-employees-who-raise-problems
“Several companies have Lean programs in place, but the uptake has too often proved superficial and focused solely on the use of tools (like 5S or visual management).
So far, most of industry has failed to understand the importance of changing managerial practices and leadership behaviors.”
https://planet-lean.com/lean-management-mining-industry
while driving to the airport in AZ I heard a podcast on how mining is adopting current business practices, drop me a line if interested
quotes from article, my comments in italics
"Instead, business leaders may need to change how their organizations operate.
One great way to start?
Ask employees what small changes will help them most."
When was the last time you engaged your employees?
Successful turnarounds often start with the (new) CEO meeting everyone in the business, getting to know them on a 1 to 1 basis, and what problems they experience. Involving themselves in the business helps them understand what impedes it, so they know what needs to be worked on and how they can facilitate it.
One reason people get burnt out is from banging their heads against the wall with issues senior management fails in addressing.
“When Stanford researchers looked into how workplace stress affects health costs and mortality in the United States (pdf), they found that it led to spending of nearly $190 billion — roughly 8% of national healthcare outlays — and nearly 120,000 deaths each year. Worldwide, 615 million suffer from depression and anxiety and, according to a recent WHO study, which costs the global workforce an estimated $1 trillion in lost productivity each year. Passion-driven and caregiving roles such as doctors and nurses are some of the most susceptible to burnout, and the consequences can mean life or death; suicide rates among caregivers are dramatically higher than that of the general public — 40% higher for men and 130% higher for women.”
“FACT: companies without systems to support the well-being of their employees have higher turnover, lower productivity, and higher healthcare costs, according to the American Psychological Association (APA). In high-pressure firms, healthcare costs are 50% greater than at other organizations. Workplace stress is estimated to cost the U.S. economy more than $500 billion dollars, and, each year, 550 million work days are lost due to stress on the job. Another study by the APA claims that burned-out employees are 2.6 times as likely to be actively seeking a different job, 63% more likely to take a sick day, and 23% more likely to visit the emergency room.”
“gold standard of measuring burnout — the eponymous Maslach Burnout Inventory (MBI) — and the coauthor of the Areas of Worklife Survey. Maslach worries about the new WHO classification in the IDC11.” “Categorizing burnout as a disease was an attempt by the WHO to provide definitions for what is wrong with people, instead of what is wrong with companies,” she explains. “When we just look at the person, what that means is, ‘Hey we’ve got to treat that person.’ ‘You can’t work here because you’re the problem.’ ‘We have to get rid of that person.’ Then, it becomes that person’s problem, not the responsibility of the organization that employs them.”
“a survey of 7,500 full-time employees by Gallup found the top five reasons for burnout are:
Unfair treatment at work
Unmanageable workload
Lack of role clarity
Lack of communication and support from their manager
Unreasonable time pressure
The list above clearly demonstrates that the root causes of burnout do not really lie with the individual and that they can be averted — if only leadership started their prevention strategies much further upstream.”
“It’s hard for leadership to then ignore needs after witnessing them first-hand.”
An easy comparison with something tangible help you quantify your management gap:
in the same way datacenters are on the cusp of adopting liquid cooling - businesses are on the cusp of adopting Lean.
Tangible Example: Datacenters & Liquid Cooling Technology
The following comparison from CoolIT Systems shows Liquid Cooling Technology typically produces the following results compared to conventional datacenter air cooling:
Capital expenditure 25% decrease
Operating expense 22% decrease
Rack density 80% increase
Intangible Example: Businesses & Management Technology
The following comparison from A. Ward’s work shows Lean Product and Process Development potential compared to conventional business:
Development time 75% decrease
Quality problems / Schedule & Cost overruns / Failed products: 90% decrease
Innovation 90% increase
I charted his data to make this visual:
Example “5 years ago, it took us 14 weeks to introduce a new chip to our factory; now it takes 10 days” - the first Intel factory to achieve these times using Lean principles.
Similar to CoolIT Systems products like Revelstoke whose parts are available to anyone, but the success was due to how it was put together;
Lean Product & Process Development is also available to anyone, your success is due to how you work together.
With many companies playing catch up to where their industry is in the transition, where do you stand:
are you holding on to obsolete management practices and falling behind?
or learning current methods and staying competitive?
_______________________________________________
#Lean #ContinuousImprovement #CoolIT #LiquidCooling #Datacenters #LeanProduceandProcessDevelopment #intel #Computing #Technology
some great points by Steve Denning, Senior Contributor: (my comments in italics)
“Think about how most large companies operate, (and where YOURS exhibits these traits - is your management mature enough to have an open discussion about each and honestly admit where they fall short?) :
- Big-company politics tend to rule the day. Discussions are not forthright.
- Meetings are layered in so much posturing and subtle deception, they are downright Shakespearean.
- Seniority and titles matter more than having the right data or insight.
- People speak out of both sides of their mouths. They smile and nod their heads yes without agreeing. In this world, civility is more important than being right. Results suffer for the sake of harmony.
“pervasive customer-obsessed mindset. Customer obsession is not just for top management, sales and marketing. Everyone is expected to be obsessed with knowing about and enhancing the impact of what they do for the customer.”
“CEO Jeff Bezos announced this in his 1997 letter to shareholders and Amazon has relentlessly stuck to that obsession ever since.”
“As Rossman explains:
In most big organizations, customer data—where it exists at all—is spotty and soft, while financial data is hard and ubiquitous. Guess what drives decision-making? The hard financial numbers consistently trump any soft customer numbers”
“customer value” wins battles that it wouldn’t win in firms run with a financially oriented mindset.
Amazon doesn’t start an activity or develop a capability unless and until the team has figured out how it will measure customers’ response.
the single biggest opportunity for companies operating today is to completely rethink their concept of metrics.
Today, you need real-time data, real-time monitoring, and real-time alarms when trouble is brewing—not lag-time metrics that hide the real issues for 24 hours or longer. Your business should operate like a nuclear reactor. If a problem arises, you need to be aware of it immediately.”
6 page narrative imagined future press release describing benefits customers are getting, answers to 'frequently asked questions' and how activity was developed.
A set of metrics by which customer benefits of the activity will be measured in real time.
Senior managers are doers, not merely overseers of others
Communication between teams is unnecessary & even wasteful.”
Forcing function - ... teams dedicated to creating innovation need to be separated from the teams representing the status quo...
More about independence from the legacy bus & having unfiltered comm & collaboration with a company's CEO or senior leader.
70-90k/650 empl build capabilities 11-14%
(some different view points to mull. If you can’t print this out, circle where you see an opportunity for the company to improve behaviour, and have an open discussion with executives about it, you fall into the category of ‘most’ disorganizations.
It’s easy for most disorganizations to see where they fall short. It’s actually more work to do nothing about it) - yet this is their typical behaviour - stay disfunctional & burdensome).
Full article: How Amazon Became Agile
https://www.forbes.com/sites/stevedenning/2019/06/02/how-amazon-became-agile
Required reading for senior executives:
”Senior managers with good intentions have a handicap:
They possess inherited knowledge from the past which they apply to the present, even though it is no longer relevant.”
”Whether it is intended or not, this sabotages the practice of Lean management, whose intent it is to produce better results for business & society than can be achieved with Classical management.”
Love Bob Emiliani’s response also:
“Money (gain or loss) often puts top management to the test of whether they are serious about something. I suggest you negotiate a compensation package that requires the company to pay you 3 years of salary and benefits if current or future senior management obstructs your efforts - whether termination is voluntary or involuntary. You will need to carefully define obstruction in your compensation agreement. To do that, you can pick items from this comprehensive list https://tinyurl.com/yyevlkag . That way you will feel safe with them.”
Full article worth reading twice:
“How you behave in your leadership role will impact the final outcome”
“A command and control approach is likely to receive push back from multiple directions and will have limited ability to do either command the direction of the team, or control individuals who make it up. Leaders who attempt this approach find themselves forever tightening control mechanisms with diminishing effectiveness. The more you “police” the work of your team, the less responsibility and accountability they have for their own work. You end up creating a group of individuals and companies who have limited ability to contribute, and are forced to follow orders, defend their actions, and watch out for the interests of their own companies over those of the project.”
Some great introductory points in this write up, and alternatives to being a problematic command & control manager (even though article ends with a link to buy their book).
full article: https://www.linkedin.com/pulse/exponential-leadership-new-paradigm-project-driven-klaus-lemke