By Phil Green
The factory manager of a medium-sized plant manufacturing a varied line of pumping machinery was suddenly taken ill and confined to his bed for a lengthy period. During his absence a firm of industrial engineers convinced the president and the board of directors that the plant needed more "system". The system was accordingly installed and placed in operation. When the factory manager returned he found a difficult situation on his hands.
A heavy volume of expense was incurred in operating the system, and instead of speeding up managerial returns, it was actually slowing them down. Its control was complete, but its action was subject to disastrous delay.
The factory manager realized that the particular system installed in his plant was entirely too complicated for an industry of its size. He promptly convinced his superiors of its defects, and began modifying it to the extent that he eliminated $60,000 worth of "red tape "within the period of a year.
Sound familiar? I took the above quotation from the book "Factory Management" by John Bangs, published by the Alexander Hamilton Institute in 1936.
Building continuous improvement systems is like building bridges. The point is to get across the river. Some people confuse the point and design a fantastic and expensive bridge. They spend their time building, maintaining, and admiring the bridge, rather than crossing the river in the most economical way and continuing their journey.
Bangs described how companies implemented ever more complex management systems in the early part of the 20th century. He says that as the desire for control grew and services of industrial engineers (read consultants) came into demand, companies devised even more elaborate systems.
He says that some managers went so far as to install systems of such elaboration that it took almost the factory to run the system, rather than the system to run the factory.
Unfortunately many organizations find themselves in the same situation today.
I am astounded by the number of managers who say that they implemented an ISO 9000 system just to get the certificate. They now face complex systems that complicate their lives. One manager told me that she hates her ISO 9000 system, and spends $2 million per year operating it. Other managers complain that their company's Six-sigma
is a "cult" that interferes with the work of competent technical people or operations
manager.
The same situation faces many managers as they contemplate Lean Sigma, ISO 14000, ISO 18000, and other continuous improvement systems that carry various names. What should they do?
Don't confuse building the bridge with crossing the river, that is, don’t confuse the means with the end. The system is a means, not a goal in itself. In the Vietnam war, the Americans built strong bridges that had to be protected from attack. The Viet Cong built simple bridges whose decks were one foot underwater so that they could not be seen from the air. There was no need to defend them.
The management team should design the objectives and the main features of the system, at an off-site meeting focuses on only that.
They should design a system that moves the organization towards the attainment of its vision and strategy. They should avoid systems that give staff people credit
for successful projects in operations. Such staff will constantly interfere with
operations managers and lower productivity.
The management team should decide what administrative procedures they need in their system. They should not leave this decision to procedure-writers or consultants.
The management team should define the information that should go into their system and procedures, and why. They do not just accept the standard Six-sigma, ISO, or text book format without question.
Before staff people develop "tools" or write procedures, managers should ask what value they will generate.
Managers should measure and define success by improvements in effectiveness of the organization (less variation, lower costs, smoother relations with key stakeholders, higher efficiencies, attainment of strategic goals, etc.) not by the number of procedures that have been written, the number of people who have been trained, or the number of completed improvement projects.
We know we have succeeded when all members of the management team speak highly of their system and promote it within the organization.
The converse is a system implemented by experts who isolate themselves from management and measure their success by deadlines met, procedures written, and people trained;
and that most line managers quietly deride.
Any system that does not add value and produce results will not last long (hopefully).
Ideally, the system should not stand alone. It should be part of the overall business management system. Design it to cut costs in the long and short terms, improve quality and productivity, protect the environment, satisfy customers, assure shareholders that there are no hidden liabilities, improve relations with the local community, decrease transaction costs, prevent major industrial accidents, and enhance your company's reputation.