Friday, May 18, 2007/
I recently found that an empty goal is unachievable. Any outcome requires stripping your company’s potential of its frustrations.
It occurred to me the other day when I was working in a troubled business that perhaps many of our business models might be a little behind the times.
We want to measure performance and growth with numbers. Now that is great, but if that is all we do, we might just be accepting mediocrity.
You may say: “What do you mean? Isn’t 10% increase in production in 12 months fantastic? And what about my ROI and ROE. For heaven’s sake, look at my EBITA and the margins on gross sales. Don’t tell me that these measurements are an indication of mediocrity!”
Well, this is what I ran up against the other day.
The machines in the factory were producing 35,000 units per day. Management calculated that if they could get that up by 10% it would be terrific and really do something to the measurements. They had a production manager, a supply chain manager, a technical development manager, a foreman on the floor and computers that measured everything that moved.
They could tell to the last millimetre how much was produced in the last five minutes. They poured over production sheets and had production meetings and set targets and did all the right things according to the standard business model.
I turned to management and said: “Do you know, I don’t measure what you are doing or what you have done; I try and measure what you are capable of. There is potential in every business and measuring that potential and giving the people in the business the opportunity to achieve that potential is what interests me.”
“How do you do that?” the manager asked.
It is pretty simple, I say. Let us say you want an outcome like increasing the rate of output from your machines, which is what you want to do.
Instead of saying to your people that you want an increase of 10% in productivity, you ask another question. You ask: ‘What stands in your way, what frustrates you in your work, what is it that inhibits you in achieving your potential?’ The reason that you ask that question is because of a simple formula:
O = P – F
The guy asks me: “What the hell does that mean?”
I explained that any outcome in a business or any organisation for that matter is a product of the potential in the business. If everyone achieves their potential, you can’t get a better outcome. If people don’t achieve their potential, your outcome is going to be less than optimal.
So, if you ask someone to achieve an increase of 10% they might do it but you will never know whether they have achieved their potential or whether it is possible to achieve more than 10%. That is where you risk accepting mediocrity.
To cut a long story short, I was able to talk to the guys on the floor and found that they knew more about the industry and production than the production manager who was constantly interfering to the point where they would say “well, if that is the way you want it, you can have it that way”. They had turned off. They told me about all of the frustrations they were experiencing in their workplace.
So, we proceeded to lower the value of F because Output = Potential – Frustration.
I said to the guys in the factory: “Do you think you could run production without help from management?” Their eyes lit up and said: “Just give us a chance and we can show you what we can do, if we can do it our way and we are left to ourselves without interference.” There were some tricky things to be done to sideline the interference, but we addressed the hard issues and gave the guys their head.
Six months later, 45,000 units a day; and six months after that, 55,000 units a day. Not only that, the guys in the factory are jumping out of their skin. They tell me that for the first time in years, they get up in the morning and think “Wow, I am going to work today”. Now that is not mediocrity; it is excellence, and the story is true.
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