Tuesday, September 30, 2008

Fast change at Weyerhaeuser.

The organization design process started in January 2005, with an implementation target of January 2006. Weyerhaeuser's goal was to consolidate the five product-line businesses that had been part of three acquired companies into one customer-facing division so the customer would experience a single point of contact for all products and services. This was an organization with 15,000 associates, and, in one way or another, each of them was going to be touched by the redesign outcomes. So, the design process involved teams from across the entire division, representing manufacturing, sales, marketing, engineering, new product development, etc. The teams' job was to define the roles, responsibilities, and relationships needed to execute the new business strategy. They came up with several organizational design options and conducted a rigorous review process to determine which option would provide the most value to customers and to Weyerhaeuser.

After months of active discussion and debate, the new organization was presented to the CEO who then approved it. A leader for the division was selected in June 2005, and an executive leadership team was selected using Weyerhaeuser's "next-generation" succession plan. Since the next-generation leaders were very much involved in the development of the new strategy, they were committed to see it implemented properly. Key leadership positions were filled across the organization, and a launch event was held in October to introduce iLevel to the division's 300 leaders. This two-day business simulation session let people experience the new strategy first-hand and be personally involved in the launch of the new iLevel brand. They were then the internal champions of the transition and completed the staffing of their organizations based on the new strategy. In January 2006, the iLevel organization became a reality. 

Design and implementation at Weyerhaeuser was developed to avoid the execution gaps which come about because of the following seven shortcomings:

- Failure to ensure that there's a deep understanding of the “why” behind the new strategy … and failure to get real buy-in or alignment from the leadership team about critical priorities. The plan was to avoid going forward with unexpressed ambivalence.

- Not engaging a critical mass across all levels, locations, functions and businesses.

- Not dealing with the organizational inertia that comes from legacy mindsets and leadership skill gaps.

- Not having the right tools and processes to maintain transparency and accountability.

- Failure to maintain momentum and sustain initiatives over time, as the energy and the urgency tend to slip away..

- Failure to focus resources where they will have maximum impact by using critical leverage points.

- Failure to manage the “Now" and the "New” simultaneously, operating in a world that's not "either / or."

More details tomorrow.

Monday, September 29, 2008

High-velocity execution.

"Fasten your seatbelts. The turbulence has scarcely begun. With accelerating speed we've transcended boundary after boundary of diversity and complexity. The past is ever less predictive; the future is ever less predictable and the present scarcely exits at all" - Dee Hock

In the current fast-moving business environment, companies have to move faster than the rate of change and faster than the competition if they want to stay ahead. The longer it takes to implement strategy, the more likely it will be out of date by the time it’s in use. Murphy’s law warns that the more time it takes, the more likely something will go wrong. We also know that the quicker the implementation moves, the less opposition it’s likely to encounter. Today, it’s better to be 80% right fast than 100% right slow. However, there’s a conflict here between going faster on the one hand and going into more detail and involving more people on the other.

769 CEOs from different countries reported in a recent Conference Board survey that their number one strategic concern was excellence in execution. Over 80% said they’ve failed to effectively implement important strategic initiatives even after spending considerable time thinking about and planning how to introduce them. However, it doesn't have to be like this, as the following case study illustrates.

Weyerhaeuser is a proud sponsor of ABC television's hit show, Extreme Makeover/Home Edition. Every week Weyerhaeuser's products go into creating a new home for a richly deserving family. Ironically, the deserving families on the show aren’t the only ones in need of a major renewal. Weyerhaeuser needed one too - an extreme makeover of one of its key businesses.

For many years the residential wood products industry seemed immune to the significant changes driven by technology and consolidation experienced by other industries, and was able to get along with business as usual. In 1997, that began to change, and the changes started with its customers. 

In 1997, the top 100 builders accounted for 18% of all housing constructed in North America. By 2005 that percentage increased to 37%, a doubling of market share. The growth of larger builders helped fuel the US real estate boom because of newer, faster ways to build homes.

These new approaches also brought dramatic changes in expectations for construction suppliers. Larger builders wanted to exploit their size and scale to create far more efficient ways to build houses, while also dealing with a shortage of skilled labor. Builders achieved significant improvements: The time required to frame a house dropped from three weeks to just five days for the most efficient builders. They increased their use of prefabricated wall sections, roofs, and floors delivered directly to the foundation site, ready to install. All of this required suppliers like Weyerhaeuser to do things very differently.

Their strategy was to target large builders with a set of experiences that would make their jobs easier, delivered through a network of big dealers and distributors. This was done by creating the "iLevel" brand. This new brand consolidated five product-line businesses into one new business. The goal was to increase the percentage of iLevel product that went into the construction of every new home built in America. The result: In its first year, 2006, product penetration grew by 5% (this was the single biggest jump in a decade). 

Five critical success factors helped to make this transformation happen very, very quickly – in 90 day segments. These five factors were: 

1. The new organization was designed around the needs of the customers. 

2. The transformation was executed with high velocity. 

3. It engaged a critical mass of key leaders. 

4. There was significant investment in training and communication. 

5. The cultural aspects of the organization were given the highest priority. 

I’ll continue this case study tomorrow.

Friday, September 26, 2008

My Macintosh computer, a poem by Gary Snyder.

I've been a happy Mac user since 1985 and so has today's featured poet, Gary Snyder. Snyder was born in San Francisco in 1930 and has worked as a poet, essayist, travel writer, translator, and educator since then. He's been awarded the Pulitzer Prize for poetry in 1974; the Bollingen Prize for Poetry in 1997; the John Hay Award for Nature Writing in 1997; and most recently the Ruth Lilly Poetry Prize in 2008. A prominent environmental activist, Snyder served for many years as a faculty member at the University of California, Davis, where he is now Professor Emeritus of English, as well as a member of the California Arts Council. His philosophy of life is, "Find your place on the planet. Dig in, and take responsibility from there."

Why I take good care of my Macintosh computer by Gary Snyder

Because it broods under it's hood like a perched falcon
Because it jumps like a skittish horse
and sometimes throws me
Because it is pokey when cold
Because plastic is a sad, strong material
that is charming to rodents
Because it is flighty
Because my mind flies into it through my fingers
Because it leaps forward and backward
is an endless sniffer and searcher,
Because its keys click like hail on a rock
& it winks when it goes out,
& puts word-heaps in hoards for me, dozens of pockets of
gold under boulders in streambeds, identical seedpods
strong on a vine, or it stores bins of bolts;
And I lose them and find them,
Because whole worlds of writing can be boldly layed out
and then highlighted, & vanished in a flash at
"delete" so it teaches
of impermanence and pain;
& because my computer and me are both brief
in this world, both foolish, and we have earthly fates,
Because I have let it move in with me
right inside the tent
And it goes with me out every morning
We fill up our baskets, get back home,
Feel rich, relax, I throw it a scrap and it hums.

Thursday, September 25, 2008

Developing broader skills.

In the past, technical employees developed specialized skills by delving deeper and deeper into narrow fields of expertise. They also tended to stay in one position or area for a long time before moving up or out. Many got promotions or became managers because of their specialized expertise and their ability to combine analytical reasoning with intuition sharpened by years of experience. In the future, however, a narrow specialist risks becoming a liability rather than an asset.

More complex technology calls for combinations of new and different skills to operate and solve problems. Changes in engineering education already reflect this trend toward broader expertise. Carnegie-Mellon had merged electrical and computer engineering into a single degree program. Cornell offers a combined civil and geotechnical engineering degree. A high-performance culture demands new skills and capabilities that will enable specialists not only to solve problems by themselves, but also to help others learn what these specialists know. Doing so requires interpersonal as well as technical skills.

So, organizations that promote people solely on their records as individual contributors are likely to pick the wrong people. In the past, we've tended to promote highly structured, analytical, action-oriented people. In the future, we'll need people with agility and flexibility, multi-focused thinkers able to integrate many different kinds of information, who can get above the details of their own departments and detect patterns and opportunities where others only see chaos.

In high performing companies, success depends not just on what functional specialists do, but on their connections and interactions with others. This doesn't just come about automatically. It comes by widely distributing leadership responsibility throughout the firm. Business literacy is a big issue in developing leadership. You can't ask people to exercise broader judgement if their world is bounded by a very narrow vision.

This new evolving world has some perplexing paradoxes:

- Being in control means being a little out of control.

- Although people will work in small groups, they'll have to stay in touch with many more people.

- Even though new technologies allow people to communicate effortlessly with countless others, they risk becoming more isolated than ever before.

Wednesday, September 24, 2008

Just-in-time training.

In order to deliver more timely training, Apple transformed many of its training resources into ARPLE (the Apple Reference, Performance and Learning Expert). Apple's employees around the world can all use ARPLE, on-line and on-demand by means of its Ethernet technology. As a result, Apple replaced most of its former classroom training with just-in-time multimedia learning platforms. These are constantly updated to reflect current state-of-the-art information and learning.

Carnegie-Mellon University teaches its engineering students advanced math concepts as they need to apply them, not in separate math classes. I've found that employees acquire and apply concepts and skills more readily when they feel they need them, and when the knowledge they acquire proves immediately useful on the job. The software industry uses just-in-time instruction by including built-in help commands that allow users to ask for assistance, and then access different levels of detailed instructions at their own pace.

Just-in-time learning, delivered when and where its needed, takes control out of the hands of instructors and puts it instead into the hands of learners. Adding video-servers and training materials into groupware networks delivers on-demand training that users can access 24-7 at their own convenience. In addition to classrooms where employees learn about implementation by working through case studies, progressive companies use computer networks to structure meetings where employees can work together to solve problems and take advantage of opportunities.

Increasingly, smart companies rely of formal training courses only to convey highly volatile information that's changing too quickly to make it worth saving.

Tuesday, September 23, 2008

Thoughts on training.

Disney’s “pixie-dust” formula for generating committed employees has four key ingredients - selection, training, support and benefits.

Speaking of training, Lutron Electronics, a maker of lighting controllers, has factories in Pennsylvania, Puerto Rico and St. Kitts in the Caribbean. Employees at all three plants share a common core training curriculum, specifically designed for the unique demands of mass customization and flexible specialization. As part of their development, employees rotate through different work cells in the factory, staying in each until they're judged to be proficient. This qualifies them for greater pay.

Workers in the Caribbean, in keeping with their plant’s make-to-supply charter, are taught to improve their skills on automated equipment. In Pennsylvania, employees are taught the nuances of make-to-order customization, interfacing directly with customers and visiting their sites. When business conditions change quickly, training has to be fast as well, able to provide immediate results.

Lutron leverages the capability of its technical designers across the whole sales and manufacturing process by building intelligence into its products (e.g. light dimmers) so customers can create what they need by adapting the product to their own requirements. Training a small number of people and using technology to leverage their skills is an effective way to defend against the cost of training large numbers of people who may leave and take their skills elsewhere.

Here's some advice about career self-reliance in the new economy. Think of yourself as a business and be clear about your area of expertise. Define your product or service and know who you’re going to sell it to. Understand the value you add for your customers and invest in your own growth. Know where your field of expertise is headed, and be willing to change and start a new business when it looks like your current one is becoming obsolete.

The new employer-employee contract should go something like this: You’re responsible for your own career. Your employer, will help provide you with experience and training that can keep you marketable, but not necessarily give you a job forever. If you work smarter and produce high quality goods and services, in return, the company will give you personal recognition, continuous training, and a good living. For both lower level employees and professionals, staying competitive is the only real job guarantee in the global economy. The twin tasks of teaching and learning should be ingrained as a major responsibility of every employee.

The late Anita Rodick, founder of The Body Shop, explaining that company’s decision to provide courses on aging, urban survival and sociology as well as courses on products and customer service, said, “You can train dogs. We wanted to educate our people and help them realize their full potential.”

Monday, September 22, 2008

Using managers as trainers.

O K, now you've got the hiring process under control, what will you do with the employees to bring them up to speed once you've hired them? Here's a plan followed by the award-winning Ford engine plant in Romeo, Michigan.

The hourly workforce at Romeo were transitioning from a tractor plant which had previously operated on the same site and had never built engines before. Therefore, considerable technical training was required both prior and subsequent to start-up. Since the plant was organized in work teams and the workforce had no previous experience with these ideas either, extensive ongoing employee social-skill development was also needed. Additional training aimed to develop employee business skills, so people could understand the plant's performance goals and track their progress in meeting them.

Several delivery systems were used to provide training for employee development at Romeo. These included instructor-led classroom training, off-site seminars, video training, stand-up computer-based training, self-instructional computer-based training, interactive video training, and experiential on-the-job training. Most classroom training was developed and presented by Romeo employees, most often by the plant's management team. These instructors were given “train the trainer” courses prior to developing and delivering their programs, with special emphasis on including group and team-based activities.

Many benefits were gained when the plant leaders acted as instructors:

- First, they built learning relationships with the participants, and were seen to be real experts in the content being covered. Over time, this developed into an on-going working relationship where the employees felt more and more comfortable calling on the instructors when there was a problem in their functional specialty.

- Second, as the managers taught courses in their areas of expertise, the plant leadership was perceived to be competent and approachable, instead of distant and removed from day-to-day operations.

- Third, the interaction in the classroom kept the leadership up-to-date about issues developing on the plant floor.

- Fourth, employees got their questions answered directly by those who were the most knowledgeable in the plant about the topic of their concern.

- Fifth, there was visible consistency between the training and the plant’s operating philosophy, which stated that the role of management was “to assure people have the atmosphere, resources and abilities to do what is needed to produce the highest quality production engines in the world, and to develop teams of employees who are the best engine builders in the world.”

During commissioning and start-up, many one- and two-day off-site team planning and training sessions were conducted, some involving as many as 600 employees, sub-contractors and suppliers in the same place at the same time. (A large meeting hall was built for this purpose and was subsequently donated to one of the local churches). These sessions were designed to deal with actual situations being experienced by the employee teams during start-up. Some of the tasks undertaken during these meetings included:
- clarifying the wording of the plant’s mission and operating philosophy;
- reviewing it’s application in real life situations to be sure everyone understood what was intended and implied;
- analyzing how well individual teams were functioning;
- clarifying the responsibilities and accountabilities of individuals and teams; and
- resolving problems within and between teams in operating the plant.

This overall training process was subsequently given the "Best Team Training in America" award by the American Society for Training and Development (ASTD).

Friday, September 19, 2008

It happens like this, a poem by James Tate.

It's Friday, poetry day once more. I like poems that describe ordinary life or those that paint fantastic pictures of events that could never happen, like ordinary life with unusual characters and events. The last time I featured the work of James Tate, on August 15, he was writing about a dog who was so helpful and well behaved during his life, he was reincarnated as a person, with depressing results. Here’s another of Tate’s animal poems; this time it’s about a goat and it's a bit more optimistic.

It Happens Like This by James Tate

I was outside St. Cecelia's Rectory
smoking a cigarette when a goat appeared beside me.
It was mostly black and white, with a little reddish
brown here and there. When I started to walk away,
it followed. I was amused and delighted, but wondered
what the laws were on this kind of thing. There's
a leash law for dogs, but what about goats? People
smiled at me and admired the goat. "It's not my goat,"
I explained. "It's the town's goat. I'm just taking
my turn caring for it." "I didn't know we had a goat,"
one of them said. "I wonder when my turn is." "Soon,"
I said. "Be patient. Your time is coming." The goat
stayed by my side. It stopped when I stopped. It looked
up at me and I stared into its eyes. I felt he knew
everything essential about me. We walked on. A police-
man on his beat looked us over. "That's a mighty
fine goat you got there," he said, stopping to admire.
"It's the town's goat," I said. "His family goes back
three-hundred years with us," I said, "from the beginning."
The officer leaned forward to touch him, then stopped
and looked up at me. "Mind if I pat him?" he asked.
"Touching this goat will change your life," I said.
"It's your decision." He thought real hard for a minute,
and then stood up and said, "What's his name?" "He's
called the Prince of Peace," I said. "God! This town
is like a fairy tale. Everywhere you turn there's mystery
and wonder. And I'm just a child playing cops and robbers
forever. Please forgive me if I cry." "We forgive you,
Officer," I said. "And we understand why you, more than
anybody, should never touch the Prince." The goat and
I walked on. It was getting dark and we were beginning
to wonder where we would spend the night.

From Lost River by James Tate, published by Sarabande Books, Inc

Thursday, September 18, 2008

Real world hiring strategies.

• The core values that Hewlett-Packard identified for high performance include: continuous process improvement, flexibility, teamwork and continuous learning. When H-P set up a new plant in Puerto Rico, the company brought people in for interviews in groups of twenty at a time. First, they filled out applications. Then, the recruiters asked them to look carefully at the application form, and to think about how it might be improved (continuous improvement). Then, they formed teams to summarize their suggestions (teamwork). Reforming into different teams (flexibility), they conferred and reported what they’d learned so far in the hiring process (continuous learning). Every applicant went through this sequence four or five times. Finally, the recruiters asked, “Do you notice something different going on here? What message do you think we’re trying to get across to you?” One H-P manager noted, “They then told us about the core values. We didn’t have to tell them. It’s important to be explicit about what you’re doing, the way you design your culture. You don’t get there by default.“

• At the Gates Rubber plant in Siloam Springs, Arkansas, all job applicants went through a five-step screening and interviewing process. First, they had a general interview with people from the personnel department. Three days later, someone else from personnel interviewed them a second time, to verify information and impressions from the first meeting. The third step consisted of a group interview with the plant manager and two other people from different parts of the plant who evaluated communication skills, work attitudes and general confidence level. Since teams perform all the work in the plant, these interviews also explored the applicant’s ability to respond well in a group setting.

If this panel approved the candidate, the personnel department conducted an intensive reference check. Candidates whose references checked out then come back for a final meeting which lasted a couple of hours and usually took place on a weekend so the candidate’s spouse or significant other could attend. During this meeting, the plant manager and two other people from the plant reviewed its policies, practices and benefits, showed a video on Gates Rubber’s history, and discussed what it meant to join a high-performance company.

Each step in the interview process tried to surface the kinds of problems that might otherwise show up only after the company had hired someone. Given the costs of quality mistakes, injuries, work slowdowns from incompetence, and overtime, Gates believed that its investment in hiring paid off. The Siloam Springs plant had an eight percent annual turnover rate versus 100% in a comparable plant in town owned by another company.

Wednesday, September 17, 2008

How to use phone interviews in recruiting.

Use a phone interview to save time and to decide if it’s worth meeting with the candidate in person. Make sure it addresses initiative, talent, span of control, team and management issues, and interest.

Start by spend two minutes describing the company, the job, and who you are. Then ask:

Please give me a quick overview of your present situation and a general overview of how your background fits our needs.

Please give me a quick overview of your current / most recent company and position, and describe the biggest impact or change you’ve made there.

Give me an example where you’ve demonstrated initiative.

Describe how your department was organized, and who you reported to.

Tell me how you developed and managed your work group,
Tell me about some team project you were engaged in and describe your role.

Please describe your most significant individual accomplishment (typically a one-time event, such as an analytical or technical study, or a special project).

Please describe your most significant management or team project and clearly define your role.

One of our critical success factors is……………..Can you describe where you've had a comparable success?

When interviewing, ask the candidate for two or three examples for each question, and make sure you understand the context of each example. Look for indications of high initiative in every answer. Probe the answers for the why, when, how and what. Get all the details - size, scope, complexity, effort, issues, dates, and references. Asking for references from the very beginning discourages people from exaggerating or making things up.

For more information, read You're Not the Person I Hired by Barry Deutsch and Brad Remillard.

Tuesday, September 16, 2008

Tips for effective hiring.

1. Create a compelling vision of the job that includes a list of performance expectations. Present the job as a significant and exciting long-term opportunity. That way, candidates will want to sell you about their skills, instead of you having to sell them.

2. Don't talk about money before the interview. Delay any discussion of a salary range until after the first meeting or when you invite the candidate back for a second one. Use their acceptance of a salary range as their ticket to come back for another interview.

3. Don't oversell the merits of the job. You may think you can sell or charm a candidate into taking a job - but this isn't recruiting. While you need to convince the candidate to take the job, you're not likely to do this with a superficial sales pitch.

4. Talk about the merits of the job in one-minute sound bites before each question. To do this successfully, you'll need a complete understanding of the job, as well as an awareness of the candidate's suitability for it.

5. Create an opportunity gap. Paint a picture of what the candidate will learn by taking the job and do this before you've asked too many questions.

6. Test a candidate's interest throughout the process by asking challenging questions.

7. The more interviews you have, the more the candidate has a vested interest in accepting your offer.

8. Test all offers before making them formal. Ask, "What would you think about an offer of $___?" The worst thing you can do is to extend an untested offer and then wait for a response. If you hear "I have to think about it," it means you've moved too fast and lost control of the process. You want candidates to think about it when you're in control, well before the offer is actually made.

9. Practice active listening. Let the candidate talk freely when responding to fact-finding questions as this demonstrates your interest in him or her as a candidate.

10. Stay in touch. Follow up with the candidate every few days after the offer is accepted.

Recruiting is more marketing than selling. If you over-sell, over-talk, and under-listen, you'll either lose the best candidates or pay them too much.

The above comments are edited from Stay in the Buyer’s Seat! by Lou Adler.

Monday, September 15, 2008

Selecting and hiring great employees.

A company policy that often needs redesign is the selection and hiring of new employees.

Hiring good people is like getting married - if you do it right, you don’t have to do it often. The first rule of staff degradation is that people who rank a seven on a scale of one to ten usually hire people who rank a five or a six. Aim to break that rule, and never hire anyone you wouldn’t want to work for. An organization’s hiring process should be consistent with the values it wants to live by, so start with that end in mind.

If you’re in a situation of excessive risk, hire someone who's already learned to shave on someone else’s beard. Hire the management team you think you’ll need five years from now if everything works out. Hire people who share your vision and agree with your business principles (make sure these are clear to the people being recruited). Have the best candidates spend time with the people they’re going to be working with. Hire backups for key people; the biggest weakness in smaller companies is often a lack of bench strength.

Options to improve employee selection typically include:

• Change hiring requirements to place greater emphasis on personal values and a willingness to learn, in addition to assessing current credentials and past experience.

• Use work simulations to assess a job applicant’s attitudes and skills.

• Involve those who will work with the new employees in their selection.

In considering these ideas, it’s important to bear in mind that staffing for high-performance requires hiring people who are assertive, ambitious, and have an expansive attitude toward work and life. Current employees should participate in choosing the candidates because it develops their ownership for the success of new employees. In the long run, time spent screening and scrutinizing potential staff should pay off handsomely in terms of commitment, loyalty and service to customers. A formal buddy system, pairing new hires with veteran employees, helps to get people up-to-speed quickly once they're hired.

Skills can always be taught on the job, but attitude is pretty well hard-wired in people and is difficult, if not impossible, to change. As a result Southwest Airlines interviews are full of questions designed to expose an applicant's personality, congeniality, style, and coping skills. Typical questions include 'Describe a situation in which you handled a crisis at work' and 'Give an example of when you were able to change a co-worker's attitude about something.' The right answer is an expansive one, a well-told tale, and it's crucial that the applicant demonstrate a sense of humor. Southwest used to also ask interviewees point-blank to tell a joke.

I'll provide some more innovative and successful examples of hiring processes tomorrow.

Friday, September 12, 2008

Smart, a poem by Shel Silverstein

It's Friday poetry day again, featuring the work of "Shel" Silverstein (September, 1930 – May, 1999). Silverstein was an American poet, songwriter, musician, composer, cartoonist, screenwriter and author of children's books. He never studied the poetry of others, and therefore developed his own style which was very laid-back and conversational.
This is a poem to read to your kids - or someone else's kids if you have none of your own. It will appeal to their sense of humor.

Smart by Shel Silverstein

My dad gave me one dollar bill
'Cause I'm his smartest son,
And I swapped it for two shiny quarters
'Cause two is more than one!

And then I took the quarters
And traded them to Lou
For three dimes - I guess he don't know
That three is more than two!

Just then, along came old blind Bates
And just 'cause he can't see,
He gave me four nickels for my three dimes
And four is more than three!

And I took the nickels to Hiram Coombs
Down at the seed-feed store,
And the fool gave me five pennies for them,
And five is more than four!

And then I went and showed my dad,
And he got red in the cheeks
And closed his eyes and shook his head -
Too proud of me to speak!

Thursday, September 11, 2008

Choosing reward and recognition systems.

No design discussion would be complete without including some design options that make pay and rewards more relevant and effective. Ideas about how to do this typically include:

- Rewarding both work group and individual performance.

- Linking pay levels to the number of skills an employee learns and uses. Skills can be associated with business, administrative, and interpersonal competencies, as well as with technical operations.

- Creating reward systems that recognize not just certified skills and knowledge, but also the willingness to use those skills, and the results of successfully applying those skills.

- Tying pay-for-knowledge with performance planning, so employees regularly contract with others who depend on them based on their joint expectations for future performance.

- Providing individual and group incentives in addition to regular pay, based on exceptional project performance, cost reduction, or other important operating parameters that are within the direct control of the employee or the employee's work group.

- Setting up all-salaried pay schemes to eliminate a "we - they" culture in the firm, recognizing that the company's success depends on equality of effort and contribution by employees at all levels.

When considering these ideas, make sure that pay-for-knowledge schemes reward only the skills employees use on a regular basis and that actually benefit the bottom line. Skill training without sufficient application time to consolidate learning, or without proven certification processes (that include opportunities to explain, perform, and problem solve) will result in paying people for contributions they haven't really made. This will in time encourage exploitation rather than responsible behavior.

Tuesday, September 9, 2008

Setting boundaries continued.

Design options to consider when setting organizational boundaries include:

- Setting boundaries around complete processing segments, so employees can clearly identify, evaluate, and control the inputs and outputs of each segment.

- Placing boundaries so they minimize the likelihood of passing problems from one work unit to another.

- Creating multifunctional teams of employees who are responsible for producing a complete end product or a clearly defined component of the final product.

- Reassigning administrative and/or support tasks so that these multifunctional teams have quick access to all the resources they need to succeed.

As an example, Colgate's liquid detergent plant in Cambridge, Ohio is the sole producer of dish and laundry liquids for the company and currently employs about 400 people. It was designed to have an organizational structure that was different than other Colgate plants in order to avoid their manufacturing and labor problems. All employees at Cambridge were salaried and there were only two job classifications, Operator Technician and Maintenance Technician. The ultimate goal of the plant design was for every technician in each classification to be qualified to perform every task in that classification. The leadership team’s responsibility was to see that technicians had the knowledge and resources they needed to do their job in the most effective way possible.

Every technician belonged to a shift team. There was only one layer of management between the teams and the plant manager. Chris Miller, one of the team leaders, said he saw his job as, “pushing responsibility for decision-making down to the lowest possible level, and having the team members make some decisions that were formerly made by managers and foremen.” A shift team operated the production line from bottle forming through filling, packaging and palletizing, until the finished product was placed in a truck for immediate shipment - there was no warehouse. This gave the shift team members complete ownership over the manufacturing and shipping process from start to finish.

Shift teams monitored the quality and quantity of the product produced. They also tracked key measures related to the operation of their group, such as attendance and training. Team members weren't replaced when they were absent; other team members had to cover when someone was out. During the first year of operation, over half the employees never missed a work day, although, as salaried employees, they would have been paid whether they were at work or not.

There was no job classification for a quality inspector at Cambridge. Instead, the members of each shift team assumed responsibility for controlling product quality. Everyone, up and down the line, constantly monitored both the product and the manufacturing process. When a problem was detected, corrective action could be taken on the spot by the shift team on their own initiative. Knowing there was no inspector to catch off-specification product made team members extremely diligent. All team members were trained in the use of tools and techniques such as Variance Analysis and Statistical Process Control so they'd be able to monitor operations and recognize and correct deviant operating conditions. Computer screens at each work station allowed employees to oversee the entire process, not just what was happening at their own station, and helped them to diagnose problems in the process down to the software level. This speeded up the response time considerably when something went wrong.

Since startup, Cambridge has evolved into one of the largest tonnage-producing Colgate plants in the world. Overhead and costs-per-case have been consistently reduced. Plant effectiveness has set records for the company and hundreds of millions of dollars in savings have been realized. The plant has reached its goal of becoming a prototype for detergent plants world-wide as competitors such as Procter & Gamble and Unilever have used Cambridge as a world-class benchmark. Reuben Mark, Colgate's chairman, has been so impressed by the plant's performance, he directed that all new Colgate plants be designed using the Cambridge model.

The moral of all this? If you don’t want to be the guy with the shovel following the parade, rethink how your business is organized. And do it now, while there's still time.

Monday, September 8, 2008

Redefining an organization's boundaries.

The next step in designing more effective organizations is for functional or business unit managers to get with their teams and decide where to set external and internal boundaries around their departments. The guidelines to follow in this exercise are:

- The organization should consist of self-contained work units that are responsible for discrete product processing segments that have clearly defined inputs and outputs.
Boundaries should minimize the transfer of variation from one work unit to another, and shouldn't separate people who need to work together and learn from each other.

In traditional firms, work sometimes gets transferred from one unit to another because of tradition or history. In an insurance company, for example, I found that claims were partially processed on floor A, then transferred to floor B for further processing, and finally returned to the initial area A for completion. Upon investigation, I found that a long time ago, an employee was transferred from department A to department B and at the time, she was the only one who knew how to do her particular task. So, the work followed her when she moved. Even though she had been retired for many years, the claims continued to follow that route and no one had ever asked why before. Rearranging the flow so the claims processing was all done in department A removed two queuing steps which greatly speeded up the processing time.

The dilemma of separate ownership of processing stages is that no one understands the whole process anymore. So, errors in the early stages go unrecognized until they re-appear as problems later in the process. Sometimes, these problems can't be fixed at that stage and the product has to be thrown away. This is true in service settings as well where once a customer has been badly treated, it's seldom possible to undo the damage caused.

I'll give more examples tomorrow illustrating non-traditional boundary choices and the reasoning behind them.

Friday, September 5, 2008

Summons, a poem by Robert Francis.

Robert Francis is one of the best-kept secrets in American poetry. He wrote in a clear, concise, musical style that combined the best qualities of Robert Frost and Emily Dickinson. Yet his style was uniquely his own. This is a poet not to be missed.
He was born in Upland, Pennsylvania in 1901 and educated at Harvard University. Prolific in many disciplines, Francis also wrote a novel, We Fly Away (1948). He died in July, 1987.

Summons by Robert Francis

Keep me from going to sleep too soon
Or if I go to sleep too soon
Come wake me up. Come any hour
Of the night. Come whistling up the road.
Stomp on the porch. Bang on the door.
Make me get out of bed and come
And let you in and light a light.
Tell me the northern lights are on
And make me look. Or tell me clouds
Are doing something to the moon
They never did before, and show me.
See that I see. Talk to me till
I’m half as wide awake as you
And start to dress wondering why
I ever went to bed at all.
Tell me the walking is superb.
Not only tell me but persuade me.
You know I’m not too hard persuaded.

Thursday, September 4, 2008

Innovative sites help to provide fresh input.

At this stage in the design process, I find it helpful to take key members of the design team on a tour of innovative work places, many outside of their own industry. Each tour typically takes a week with four or five full-day or half-day visits scheduled. I've found previous clients to be very accommodating in this regard. Customers and suppliers can also be visited if they've got something relevant to share.

Host companies often claim that preparing for these visits helps them evaluate how they're doing, renews their commitment to making their design ideas work, and allows them to tell the design story to new employees. The more they explain why they did what they did, the more they talk themselves into supporting the essential nature of their new work arrangements.

Design team members value the opportunity to ask questions of their opposite numbers, employee to employee, VP to VP, and appreciate that they're willing to take time out from their busy jobs to share their experience and learning with others. They hear about the good, the bad and the ugly, and from this they form their own opinions about what it takes to make organizational innovations work and how well they're working out.

Here's an example: Some years ago, senior management from TRW's Electronics Systems Group set out to learn about better ways to organize and run their business. They attended seminars and organization design courses. They visited successful plants in comparable industries around the U.S., including Motorola, IBM and Hewlett-Packard. They visited successful plants in other industries, such as the auto and aluminum industries. They toured Japan where they visited ten of the most successful Japanese companies. Afterwards, when they reflected on their learnings, they identified the following common denominators in each of the successful organizations they visited:

- All employees were actively committed and involved in helping run the business.

- The whole organization was clear and agreed on its purpose and on the goals it was trying to achieve.

- There was an emphasis on providing customers with uncompromising quality.

- All employees received prompt and accurate feedback on personal and organizational performance.

TRW's senior management was particularly impressed by the energy these successful companies spent developing and encouraging employee involvement. They resolved to aggressively increase their emphasis in this area. Given what they'd learned, they began by describing how things could be different in a workplace that incorporated some of the ideas they'd seen. To share their vision of the scope of change involved, they contrasted how work was currently done in specific areas with how it might carried out be three years from now. This helped put the magnitude of the task before them in proper focus.

Tomorrow is poetry day. Next week I'll return to the topic of how to consciously design more effective organizations.

Wednesday, September 3, 2008

Identifying distinctive competence.

Do you know your firm’s Distinctive Competence? What's the unique thing that it does really well? What quality or attribute sets it apart from its competitors? Knowing this critical characteristic is particularly helpful as a firm seeks to find ways to grow further. It helps in identifying the best partners in completing or expanding its distinctiveness.

Many factors create distinctive competence. It may be a function of serving a unique market niche, like Hot Dog On A Stick. It may be delivering a highly specialized product, like Deco Breeze Fans. Or it may be its quality of customer intimacy and superior service, like †he Ritz-Carlton Hotel chain. Or, its low cost, like Wal-Mart. For example, Kodak’s distinctive competence is in imaging. Kodak’s understanding of this has allowed it to expand into seemingly unrelated businesses like pharmaceuticals which use similar processing methods.

Ultimately, whatever it is leads to competitive advantage. When you think you understand and can communicate your distinctive competence, test it with your customers. Is this capability what they think is special about you? Does it create value in the mind of the customers? Is it something they care deeply about?

A business will be much more successful when its employees and customers have a simple, clear impression of why its distinctive competence is important. Defining distinctive competence helps the firm and its customers stay focused.

Tuesday, September 2, 2008

Recapping the design process.

O K, so in the past few weeks I've written about how to get started designing more effective organizations using the steps outlined below;

- revisiting and refreshing the organization's purpose.

- developing strategies to influence customers, competitors, investors, employees and the broader community in ways that will make it possible to achieve that purpose.

- identifying key employee behaviors and capabilities essential to success.

- creating an operating philosophy that will encourage and support those behaviors.

- agreeing on guidelines to be used in designing jobs, boundaries, decision authority, information flow, reward systems, and developing operating policies and practices that will encourage the desired behaviors.

I suggested that each of these steps involve members of senior management, because as venture capitalists are prone to say, "If the light ain't on at the top, it's dim all the way down." Mostly, this involvement entails pulling learning from previous experiences out of people instead of pushing new ideas into them. I've found the challenge in setting this up is in finding ways to get people to tell me what I would have told them. In this context, asking the right question is more powerful and persuasive than providing a prepackaged answer.

The final step in this first part is to understand the business's distinctive competence, that is, how it plans to be different and better than its competitors.

I'll deal with this tomorrow.

Monday, September 1, 2008

Developing design guidelines.

At Ford Hermosillo, design team members were asked to talk about organizations they'd worked for in the past where they felt motivated, informed, involved and effective. They then described the organizational conditions that made this possible- how decisions were made, how they were rewarded, and how they interacted with others. This allowed them to create the following design guidelines based on their previous collective experience:

Jobs should have broad, clearly defined responsibilities and should provide opportunities for autonomy, variety, growth and feedback.

Informed decision making at the lowest possible level should be developed and encouraged.

Rewards should recognize demonstrated knowledge, skills, initiative, quality, performance and teamwork, and should be based on individual contributions as well as overall plant performance.

Career guidance and development opportunities should be created to encourage all employees to broaden their skills, to increase their knowledge of the business, and to develop to their fullest potential.

Working conditions in all areas of the plant should support safe, pleasant and efficient practices.

Artificial status distinctions should be minimized. Special treatment should reflect functional necessity only.

Open, direct two-way communication should be encouraged and facilitated between all levels and all areas in the organization.

Information should go first to people who need to act on it.

Every employee should understand how his job impacts on the total effort. Functional or departmental boundaries shouldn't separate people who depend on one another or need to work together to produce a quality product.

The primary responsibility of supervision is to help people define and plan to achieve personal and organizational goals, to make sure they have access to the resources they need, and to interface with other groups as required.