Managing change…why it succeeds and why it fails
This topic is something that challenges each and every one of us, every day that we go to work. It is the biggest source of frustration to employees at every level within organizations. It is also a major contributor in preventing organizations attaining their potential, and sometimes leads to them failing completely and going out of business. It has challenged leaders for generations. It would be difficult to know how many books are written each year on the subject, but they probably run into thousands. It is taught in business classes all over the world, and individuals and organizations spend huge sums of money in the process. Despite that, it is debatable if we are getting better at it.
This paper is about Change and why it works and why it fails. It is focused on manufacturing factories because that is where the author has spent most of his working life. It describes a successful process that combines10 Management Operating Principles© with the Lean Toolbox. These were written in 2000 in acknowledgment that although his previous Lean Program implementations were initially successful, they were not being sustained. This combination has delivered sustained outstanding success in both high and low cost locations in Europe, USA and Asia.
In 2004 the Lean Enterprise Institute acknowledged his work in a paper written about the remarkable turnaround of the Gillette Oral B Iowa City Toothbrush factory, a plant that he was assigned to, and asked to prepare for closure. Instead, it became a benchmark site for Gillette within 2 years.
“Leadership is not about making speeches.
Leadership is defined by results”
In a career spanning over three decades working with major multinationals, change for me was never ending. Multinationals are marvelously constructed organisations where regardless of the economic environment, pressure for results is never ending, and relentless. If you are expanding, the bar simply goes up, if you are reducing, you align your resources to match that, which means shedding resources and trimming costs.
In either situation, change has to be managed and although there are challenges with both situations, they are more difficult with the latter where difficult decisions must be made, communicated and executed.
For the last 15 of those years I have been implementing a formula that has been highly successful and provided great results. I have turned ailing and poor performing factories around, creating what is known within the manufacturing world as Benchmark sites. That is, they become a model for the rest of the organisation to imitate.
This article is therefore written from the perspective of a Factory Manager. It is not an article with academic references. Rather, it is based on my own experiences witnessing and being part of both failure and success, and gradually evolving to a formula that has provided outstanding results even in situations when others said it would not be possible. I have learned much during that time, but one thing is clear: “nice” managers are not successful. Neither are they respected. By “nice” I mean those that sidestep sensitive and difficult issues. They give similar Performance Appraisal ratings to high and poor performers alike. Sensitive issues involving people are ignored. They conform and will not challenge or “rock the boat”. Managers that confront difficult issues, that challenge the status quo, which will not ignore people related issues, will be successful.
I have successfully managed factories in Ireland, USA, India and China. What I will describe here is what I do when I go to a site, how I engage with the workforce, how I deal with people who are going to slow down what needs to be done and the tools and techniques applied that has consistently provided spectacular results. Space does not allow me to go too deeply into detail, but I hope readers will get a good idea of what guarantees success, and what will ensure failure.
THE THREAT IS REAL – COMMUNICATE THAT!
In every case where I managed factories competition was fierce. Within multinationals each manufacturing source is constantly being compared. You fight to hold what you have, and try everything at your disposal to attract new investment. It is essential that this message is imparted to the workforce and repeated at every opportunity. Sometimes the threat is very direct, like when I was sent to a factory in the USA to prepare it for closure within two years, or in Ireland immediately after my then organisation, Gillette, was acquired by Proctor and Gamble, and they had tentative plans to close our plant and move the business to their own legacy site in Germany and to a new one in Eastern Europe. In such circumstances it is easier to communicate as the threat is clearer. In other circumstances the threat is more indirect. I have seen many factories enjoy good years, get complacent, and lose their business to other sites that have become more competitive. Those stories are shared. Examples of factories that either no longer exist, or are losing business and therefore also losing jobs are shown. They are made aware of the ongoing pricing comparisons that are always taking place, so that a constant awareness of the competitive environment is being created.
COMMUNICATE THE VISION
I begin by laying out the challenges, threats and also the opportunities if we implement necessary change. A vision is created of where we can go to. Usually this says something like: “We will be among the best in the world in which we compete” (In reality I mean “The Best”, but to declare so will create too much resentment from sister factories and the senior people associated with them). I tell them that I have a toolkit, which I can apply with their support, but before completing the formula I need their input. So I ask them 4 key questions:
what is working,
what is not working,
what we should retain, and
what we need to do to become a great plant.
External facilitators are used to conduct this exercise with the entire workforce in groups no larger than 20, so that involvement and confidentiality is assured. The outcome of the consultation process is printed in booklet form and every employee gets a copy. This is a wonderful tool to show everyone that their opinions matter, and provides the moral high ground when rolling out the change programs.
“The best leaders are those most interested in surrounding themselves with assistants and associates smarter than they are. They are frank in admitting that and are willing to pay for such talents!”
CALL TO ACTION: IDENTIFY THE PEOPLE BARRIERS TO CHANGE
Meantime, managers at all levels are being appraised, identifying who is going to embrace what needs to be done, and who will get in the way of the necessary changes. It is my experience that at least one third of senior, middle and front line managers need to be separated. Usually, I take on board a small team of consultants I know and trust to help me quickly identify those, and to educate and train people in the various programs. It is absolutely essential that the people, particularly those at senior level who are not going to make it, are quickly removed. Otherwise, momentum will be slowed down and undermined by their presence. It must be emphasised that this is critical. The factory manager must be absolutely ruthless in driving this, because the greater good, perhaps the very survival of your plant, will be jeopardised.
LEAN TOOLKIT – MAKING IT HAPPEN
In parallel with this, we set about putting our Lean tool kit in place. There is no more effective way to obtain better results than through the “Lean journey.” I like to have multiple programs working in parallel. So purchasing begins to work with key suppliers to get new working agreements in place. We establish Kanbans to our warehouse and then to our factory floor, and for the internal movement of work in process. We train people in the art of Process Mapping and get people working throughout the plant on generating improvements. We start to get people thinking about Value Streams, (factories within factories) and usually within 3 months have an exemplar value stream emerging, with others identified to work on later. Meantime, all of our plant reports are being redesigned so that every work center has data that they can make sense of, enabling them to track their own performance. All data collected is analysed, if it is not adding value and being used to inform and improve it is eliminated. We also get our entire staff, including office and factory personnel, involved in redesigning their work areas through the 5S Process.
This is an outstanding tool for maximum involvement of people and when implemented will transform how the factory looks.
With all of these programs in play, credibility for the new programs becomes well established. What has been promised is being delivered upon. The challenges facing the plant have been laid out backing it up with clear evidence. The workforce has been asked to answer the 4 key questions I referred to earlier, therefore taking their views on board. Those not delivering are being separated (workforces always know who those are and this further increases credibility). The factory is looking much better through the 5S programs, and painting and refurbishment. Data that was not being used has been discontinued, new reports from every department have been redesigned and now both inform and add real value. Communications processes are in place, and as much as possible this is done through Visual Management, with results and key messages posted throughout the plant. Space has been freed up in the warehouse and shop floor through the introduction of Kanban and implementation of 5S. Value Streams are being created to drive out waste with allocated people being decentralised so that they sit and work together.
Usually after 3 months great excitement has been generated, with many programs already in place. Improved results are already visible. After 6 months a very substantial change is visible in both the atmosphere of the plant and its appearance, and of course its results. After 1 year it is truly spectacular, and then just keeps getting better as people become more familiar with the new way of working and with the various tools and techniques. This is what works for me. I have achieved spectacular results by using this formula. The plant I was sent to close in the USA was declared a Benchmark site by Gillette within 2 years. The Ireland plant survived and still thrives as a Benchmark site. They continue to see off threats from Eastern Europe and Asia. In fact, they have just recently leased an adjoining factory. In my last assignment in Shanghai, I also left a Benchmark site behind. With this formula, applied without compromise, there is no failure, only spectacular success!
OPERATING PRINCIPLES© – WITHOUT COMPROMISE
Twelve years ago, in frustration with the lack of urgency and engagement of the management team and workforce at the plant I was then assigned to, I wrote what I called;10 Operating Principles – without Compromise©, that I have used then and since to summarise and help communicate my thinking, and to focus the workforce on what it needs to concentrate on. The language used is deliberately clear, direct and unambiguous. They are posted all over the plant, everyone is educated on what they really mean, and regular surveys are arranged so that we remain on track. They have worked wonderfully well for me
Create an open honest environment where good communication is treated as an essential part of the process and in which everyone has a genuine voice.
Maintain high awareness of the competitive environment and a constant focus on cost reduction and continuous improvement.
Build urgency and speed of response into all processes through the empowerment of people and elimination of bureaucracy.
Acknowledge people as our greatest asset and invest in their education and development on a continuing basis.
Clearly communicate goals and objectives to employees at every level and hold each person accountable.
Nurture an organisation that is in constant touch with developments in technology, the markets, the wider organisation and that anticipates and prepares for change, rather than reacting to it.
Design transparent plant reports so that managers and people at all levels have the necessary information available to effectively manage their areas and be held accountable for them
Develop an effective Performance Appraisal system so that every employee is given an assessment of their performance, strengths and opportunities, with follow up plans to address those that need improvement.
Take swift action to deal with employees, regardless of level, who obstruct or do not sufficiently contribute to change that is necessary for the ongoing development of the business.
Empower people, by creating a team based matrix organisation that allows for fast decision making and where occasional mistakes are treated as opportunities for learning.
“The only definition of a leader is someone who has followers!”
WHY SO MANY ATTEMPTS AT CHANGE MANAGEMENT FAIL?
If what has been written so far is about how change works, what about failure? For me it is clear. If success is down to Leadership, then we are also responsible for failure. Any Leader that does not set out the context for change sufficiently and involve the workforce extensively at every level will simply not succeed. They must establish a communications process that is 2 way with comments and questions listened and responded to. They have to provide the necessary education and resources to ensure successful implementation of the various programs. Managers and employees that slow down or block the changes must be removed. It is within these critical areas that too many leaders compromise, and subsequently fail.
The Massachusetts Institute of Technology (MIT) has confirmed that over 60% of attempts at change fail. Personally, I think the figure is on the low side. From what I have seen over 3 decades it is much higher than that. I would have put it at around 80%. However, organisations are understandably reluctant to admit to failure, with very good reason. So I suspect that always getting the real data is not so easy. Acknowledging failure means shattered careers, lost bonuses, and perhaps even a share slump. Divisions and departments close ranks and partial success or even downright failure is often celebrated as success, or the program quietly dumped soon to be superseded by the next new flavor of the month. (Those readers working in large organisations will understand exactly what I mean!)
Over my career, I have been able to tap in to people’s natural instinct for survival, and natural desire for meaningful work. Workforces have the same needs all over the world, regardless of where they reside. They want to be respected, and to be acknowledged by having a voice that is listened and responded to. They want opportunity for education and development, and to be fairly remunerated so that they can provide security for themselves and family. The wonder is why so many organisations struggle to see that, or to implement programs putting them in place!
Finally, I conclude with one of my favorite descriptions of the organisation that I believe provides an essential basis for success!
The old rules of traditional hierarchical, high external control, top down management are being dismantled; they are simply not working any more. This has changed the role of manager from one who drives results and motivation from the outside into one who is servant leader, one who seeks to draw out, inspire and develop the best and highest within people from the inside out – Stephen Covey
Paper presented at NITL Conference, Dublin, Nov 2009. Published by Linkline 2009.
Managing Change – How to be Successful!
THE TURNAROUND OF ORAL-B, IOWA CITY BY LIAM CASSIDY
“If you don’t like change, you’ll like being irrelevant even less” – Anon
Understanding the Nature of Change
We are all familiar with the phrase: survival of the fittest. It is used so commonly that we no longer really understand its true significance to our lives and dealing with the challenges we face. It does not mean survival of the strongest, it means survival of those most adaptable to change.
Change is all around us. The world is seeing the emergence of new global powers and emerging markets: China, Russia, Brazil, Indonesia, and Vietnam among others. These countries are seeking to diversify their economies and provide their considerable populations with the improvement in living standards they are demanding from their governments. We are increasingly seeing governments, and government-backed companies, compete for an ever-increasing scarcity of resources and commodities. These fundamental shifts in the economic world order are being felt in boardrooms across the world.
In short, the old rules of supply and demand, and assumptions about markets behaving rationally, have changed.
Resistance to Change
How does the above relate to Lean Manufacturing, or manufacturing in general for that matter? Simply put, the security of manufacturing jobs has become increasingly precarious, especially for those companies entrenched in the old ways of doing things. This was the case at the Oral-B plant in Iowa City, where the very resistance to change in the face of exposure to these new commercial realities, had brought Gillette, it’s parent company, to the point of asking me to implement a programme of closure. What had brought about this previously unthinkable decision, and how did we turn it around?
A proud history made irrelevant
The Oral-B plant in Iowa was built in 1958 and earned an excellent reputation for customer service. At 310,000 square feet, it was the largest manual toothbrush plant in the world, churning out almost one million units daily, with product development conducted on site. By the time I arrived in 2000, the plant had suddenly become vulnerable. Product development had been integrated with the parent company Braun, part of the Gillette Company. This meant that the plant’s workforce now competed for products and against facilities in China and Mexico with much lower cost structures.
Iowa City’s high service levels relied on high inventory levels, adding to its cost disadvantage. Its traditional MRP-driven push production system caused overproduction, creating even more inventory, which lead to costly stocks of obsolete products. Add in a traditional culture with multiple job classifications that hampered productivity improvements and the future prospects for making toothbrushes in Iowa City began to fade rapidly. This came as a great shock to the workforce as the 1990’s had seen a period of solid growth.
However, the plant, which mostly served North American markets, had some intrinsic strengths. The workforce was well-educated and had strong technical skills. Besides brush production, Iowa City did packaging and distribution, work that most plants of its type did not handle. Best of all, it was located in the middle of the company’s largest market, North America. Unlike China and Mexico, it was just days, not weeks, away from the major distribution centres for big retail customers such as Walmart, Costco and Target. These factors gave it a definite advantage over its competitors, if it could quickly reduce costs. I knew from my time in auto manufacturing that a lean system based on “just-in-time” (JIT) production and “pull” would reduce lead times and inventory, augmenting the plant’s advantage in service while reducing costs.
Hard Bargaining; Rapid Improvement
From the beginning I was completely honest and transparent about the competitive threat facing the company and the likely reduction in the number of jobs necessary: from 750 to roughly 450. Severance packages were offered. After some difficult and at times emotional communications and negotiations the union agreed to a two-year wage freeze and a reduction in job classifications, first from 33 to 20, then ultimately to nine. Plant management ranks were thinned out. Senior positions were cut from seven to five by merging the quality assurance and IT departments under the Human Resources Director.
The materials and distribution departments were integrated under a new supply chain director. These directors, together with the directors of engineering, finance and manufacturing formed a five-member operation team reporting to the plant manager. The workforce was consulted in groups of approximately 20 people, the problems and strengths of the plant were explained and they were asked for their feedback on the following four questions:
– What is working
– What is not working
– What do we need to retain?
– What do we need to become a great plant?
This helped us to drill down and more fully understand our starting point and map out our program for change to optimise the plant’s performance. This required the shaping of three fundamental elements; the Operating System, Mindsets & Behaviours and Management Infrastructure:
As a direct result of workforce input, teams were put together to work on the following key areas:
– Supplier Development / Kanbans to factory
– Re-organise warehouse / Kanbans to factory floor
– Kanbans for internal improvement of Work-in-Progress
– Creation of a Central Store for Spare Parts also based on Kanban & Visual Management
– Re-organisation of resources to ensure maximum support for production
– 5s – A Place for Everything and Everything in its place
– Clearly defined Communications Process
This consultation process ultimately spawned 10 principles which guided the programme for change. These were later adopted more widely within Gillette and became known as:
The 10 Drivers of Rapid Improvement – without Compromise ©
Create an open, honest environment where good communication is treated as an essential part of the process in which everyone has a genuine voice.
Maintain a high awareness of the competitive environment and a constant focus on cost reduction and continuous improvement.
Build urgency and speed of response into all processes through the empowerment of people and elimination of bureaucracy.
Acknowledge people as your greatest asset and invest in their personal development on a continuing basis.
Clearly communicate goals and objectives to every level, and hold each person accountable.
Nurture an organisation that is in constant touch with developments in technology, the markets, the wider organisation and that anticipates and prepares for change rather than reacting to it.
Design transparent Financial Systems so that managers and supervisors have key cost measures as tools and can be held accountable for effectively managing their areas.
Develop an effective Performance Appraisal System where all employees get an assessment of their strengths and weaknesses, and follow-up plans to address their needs.
Take swift action to deal with personnel who obstruct or do not sufficiently contribute to change that is necessary for the continuing development of your business.
Empower people, by creating a supportive, dynamic team- based matrix organisation that allows for fast decision-making and where occasional mistakes are treated as opportunities for learning.
Mobilising the Workforce
To get people behind these drivers, a plant slogan was devised: “Fighting for our future”. This helped to keep the workforce focused on the reason for the changes.
Photo: A factory operative at Oral-B, Iowa City: “Fighting for our future”
All of the above was guided by a culture of rapid improvement. This allowed for a radical overhaul of the old system. This was needed due to the historic complexity of production scheduling arising from packaging, as well as the lack of separation between production and material-handling duties. A “Just-in-Time (JIT) team was created to help with issues arising from transition and to maintain momentum.
After 3 months, the team had converted an estimated 70% of the shop-floor to the new system, achieving its goal. Inventories were down dramatically and most products were made on a weekly basis. By 2002, the plant was competitive in terms of cost and other indicators within Gillette facilities globally. By 2004 it was one of the overall top performers in the company.
After 3 years, the programme for change had delivered a reduction in the workforce by 40% and improved productivity by 56%. Product costs were slashed by 30-60% and compared favourably with China and Mexico. Value streams were created giving cross functional teams responsibility for “their” factory, thereby making a large plant easier to manage and improving communications. The supplier base was rationalised and an aggressive Supplier Development program implemented.
Critical Learning Points
Having a workforce that is willing to (continuously) change is one of three keys for companies that want to compete in North America. The second is that management must understand the true costs and realistically appraise the merits of outsourcing. Thirdly, responsiveness and being close to the market is immensely important and translates into a real competitive edge when countering threats from more distant sites, in this case China and Mexico.
In summary; it is possible to survive and thrive in a high-cost environment, however, the right kind of leadership is critical, as is the expert application of lean practices. This brings us back to change and how to manage it. Change is a constant external factor, and likewise, from a manufacturing viewpoint, internal change must also be constant, with the emphasis on continuous improvement. Companies, workforces and suppliers, that resist change, instead of embracing it, will ultimately lose everything they seek to protect.
In 2002 the Iowa City plant was declared the best factory in Gillette. The rules of the game may have changed, but the workforce showed what is possible when challenges are tackled: adapting accordingly they stayed “relevant” to P&G’s business needs. (In 2005 the Proctor & Gamble and Gillette Corporations merged).
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