Insights on Excellence | "Insights" Archive

How to take the next step in your continuous pursuit of excellence

by Stephen Hawley Martin
for Virginia Business
February 14, 2006

General Motors recently announced it will trim 30,000 jobs and close nine U.S. plants over the next few years to balance production capacity and demand. That's big news, and in GM's case, absolutely necessary to bring costs in line with competition. You see, 30 years ago the company had about 60 percent of the market for cars in North America. Nowadays, that's more than all major domestic automobile companies combined.

One reason that foreign companies such as Toyota have cut so deeply into market share is they offer high quality and good service that GM was unable to match with its cumbersome management structure and old-fashioned mass production techniques. Now companies across the globe and in every type of business are doing their utmost to emulate the Toyota Production System, also called lean production, as well as Toyota's style of management, which is based on empowered teams. Not only does lean production cut costs, it ends up turning out higher quality products with fewer defects than the old batch and queue way of doing things. Empowered teams, unencumbered by red tape, can move faster than the old-style hierarchy.

What about you? Have you transformed your business to mirror Toyota? Are your costs in line? If you took the plunge and trimmed some fat, could you become the low-cost provider or producer in your field?

Perhaps you've already converted your operation to continuous flow and manufacture only to customer pull, making you a lean producer. Maybe waste has been removed, quality is Six Sigma, and customers can get the product they want, configured the way they want it, when they want it. Congratulations. But there still may be more that you can do.

First examine how your business is organized and structured. Again, Toyota is a place to find some clues concerning how you might improve. You see, to become a world-class company these days means the old management hierarchy that characterized traditional organizations must be eliminated so decisions can be made on the spot and opportunities in the marketplace acted upon with lightning speed. Businesses that achieve this status operate through empowered teams whose members have a championship mentality. In such an organization everyone pulls his own weight and shares a sense of urgency and accountability.

The question many ask is how can this be achieved? It definitely should not be left to chance and does not have to be.

At least two methods exist for implementing major change. The common approach is called the "define and convince" model, in which an assigned expert (or expert team) defines the change specifics and convinces the rest of the organization to follow its blueprint. This model can work okay in small companies if there is a close link between the company's leadership and its workers. But in larger businesses, the process is almost always slow, seldom wins widespread buy-in, and often requires extensive infrastructure and procedural controls to maintain the change.

The other method, the "participative model," can work well in both large and small organizations. The leader defines change goals and challenges the work force to define and execute the changes. The actual process involves a series of large-group sessions for convergence and decision-making, positioned around smaller group activities where testing and learning takes place.

This approach works best because rapid assimilation of knowledge and buy-in usually takes place across the organization. Nevertheless, old-line managers often hesitate to use it because the approach requires the leaders to trust workers with the details instead of those they perceive as experts. Participative change roles are quite different from those in the define-and-convince approach. Leaders are not order-givers, but participants in learning and decision-making. Experts don't define specific changes, they provide substantive knowledge. Workers are not "change targets," but full participants in learning and decision-making.

To make change happen using this method, leaders need to set targets and make strategic decisions. But those who must live with the details are the ones who should decide on the details.

To make sure change happens in a timely fashion, milestones need to be set that will mark key points of system integration. These are large group sessions that are forums for defining, understanding and decision-making on major integration issues. Viable options are identified before these meetings by a cross-functional team made up of representatives from each area of the organization affected by the change. This team presents these options, and leaves the final decisions to the full group, thus assuring maximum buy-in by everyone.

It may help to call on experts to facilitate the large-group sessions so they run smoothly, but experience has shown the key to successful change is to have the people who make decisions on the specifics also be the ones who have to live with them.

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Stephen Hawley Martin is a former principal of The Martin Agency in Richmond and the author of more than half a dozen books including his newest, Lean Enterprise Leader: How to Get Things Done Without Doing It All Yourself. He is editor and publisher of The Oaklea Press, a book publishing business dedicated primarily to helping business executives increase productivity.