Staying Afloat During a Downturn
By Lynn A. Moline

News from the economic front is gloomy; so is the prevailing mood among many manufacturing executives. The reaction of many companies is a quick fix, across-the-board cost cutting spree. While aggressive cost containment is critically important, blind cost cutting can actually do long-term harm. For example, huge layoffs can have a damaging impact on employee morale, and squeezing suppliers can impact quality. So careful thought about where and how to cut is the order of the day.

But what else can companies do to survive the downturn and be on the leading edge when things stabilize? While there is probably no single best formula for what to do when the chips are down, here is a collection of helpful practices from a variety of sources. Which ones make sense for you?

• Give employees incentive rewards for suggesting creative ideas for new products and product enhancements. This keeps key people future-focused and strengthens your marketability.

• Think twice about an across-the-board reduction in business travel. Your customers may not be buying much, but if you are the only supplier who visits them now, you’ll be fresh in their minds when the buying resumes.

• Take advantage of the slow time to invest in your company’s long-term health (from various Manufacturers Alliance members):
     - Do that long-overdue strategic planning
     - Send your people to training
     - Charter some rapid continuous improvement teams in your operations and 
       administrative functions
    - Get your people busy giving your facility a cosmetic makeover—paint the walls
      and  floor, scrub the equipment, landscape the front.

• If you have some cash, buy out struggling but promising competitors to claim a bigger piece of the market when the economy bounces back.

• Be the only one in your industry to boost R&D efforts now; you’ll be a “leg up” on competitors when things stabilize.

Finally, start thinking about contingency plans for the next downturn (we know there will be one.) The best time to plan for trouble is before it strikes; heads are clearer when there’s no panic.

© Lynn A. Moline 12/08

Hippos, Gurus, and Strategy Deployment
By Lynn Moline

There’s a story about a hippopotamus that fell in love with a butterfly. The hippo, recognizing certain inherent problems with consummating his love, sought advice from a guru on a mountain. “It is simple, my son,” the guru intoned. “You must think like a butterfly.” For a moment, the hippo was elated, but then his eyes clouded over. “But how does one think like a butterfly?” The guru responded, “Hey man, I just formulate strategy, I don’t implement.”

Every manager has felt like the hapless hippo at one time or another. Implementing strategy is what the job is all about, but it’s a challenging task not unlike keeping a ship stable and steaming ahead in rough seas while executing orders for mid-course corrections. The job is so challenging that, according to a Booz-Hamilton survey, only six percent of Fortune 500 executives believe their managers comply completely with business objectives.

Yet, effective strategy deployment happens anyway at companies large and small. And it happens because managers make it their business to understand strategy, translate it into language that their people understand, and doggedly champion ongoing work.

Understanding Strategy
Managers at all levels must understand the business they’re in, not just the unit they run. What’s going on in your industry and with your customers and in their industries? What are the major indicators of your company’s performance and how well are you doing? What are your company’s core competencies and how does the company try to leverage those in the competitive market? What are your company’s business and financial models? In addition, when a specific strategy is ordered, managers should be sure they understand the intent of the directive. Knowing these things will put managers in a good position to carry out the next requisite for successfully deploying strategy: translating it into language their people understand.

Translating Strategy into Everyday Language
This is arguably the most important factor in strategy deployment because it’s where the rubber meets the road. Good managers know that people will do almost anything, no matter how difficult, if they understand what they are supposed to do, why it’s important, how their contribution matters, and the consequences of doing or not doing the job well.

To simply announce that “the boss says we need to do a better job of packaging these parts” and then expect that people will make it happen is naïve. While most managers would probably not announce strategy quite so simply, the example isn’t much of an exaggeration because many managers are unwilling to invest the time, effort, and persistence required to persuade people to perform.

First of all, the implementers need some context. Why do we need to do a better job of packaging? Is something wrong with the way we’ve been doing it? What do you mean by “a better job?” Why does it matter and to whom? What if we don’t do it?

Next, implementers need to know their roles in making it happen. “What’s the big plan for doing this, or if we don’t have one, how will we get one? What do we need to do? How will our performance be measured? What tools and information will we be given to do this job? What if we don’t do it—how will it affect us and others? What’s the timeline for doing it?

It’s important to note that to simply communicate these messages in an e-mail or during a staff meeting will be grossly insufficient. Managers need to talk one-on-one with key players to address their individual concerns and apprehensions and to answer their questions.

Championing Ongoing Work
Finally, and critically, managers must be persistent. To abdicate responsibility for keeping on top of progress, providing feedback, and holding people accountable for meeting targets is to ensure failure. Strategy initiatives live or die on management’s level of attention and commitment to them.

© Lynn A. Moline, 6/04

When a Goal Isn’t Really a Goal
By Lynn Moline

As a new year rolls around, many managers are working at fever pitch to figure out how to implement the long list of “goals” bestowed upon them by their bosses like so many non-returnable holiday gifts.

Technically speaking, a goal is a specific, measurable target reached when someone does something; it’s the desired outcome of work, not the work itself. This distinction is an important one that often gets missed in the mad dash to set goals.

To explain, consider the client team I worked with that had been given a list of eight “goals.” The managers on this cross-functional team were flummoxed—they realized they couldn’t tackle all the goals at once, yet they couldn’t determine which were the highest priorities.

Upon looking at their list of “goals,” it was clear that the trouble stemmed from the fact that they were trying to prioritize apples vs. oranges. Their list contained only three real goals; the other five items were work tasks. As the managers mulled over my observation, they recognized that by focusing on doing the five tasks, they would meet the three actual goals. They also realized they could create other goals to delegate to their staffs—real goals that, when accomplished, would contribute to meeting the three higher level goals.

When a task is called a goal, workers can actually get the task done without meeting the real goal. It’s like the sales people who were told that their “goal” was to generate fifty new leads in the first quarter. The sales people met that goal but missed the boat on increased sales, which was the boss’s real intent, because it was easy simply to turn in a list of new leads.

Remember that work tasks should lead to desired, measurable outcomes, and those outcomes are the goals. For example, a production manager’s legitimate goal could be to reduce costs on a certain product line by x percent within a certain time frame. The manager, at his or her discretion, could accomplish this goal in several ways, including delegating to supervisors goals for reducing cycle time, minimizing scrap, or increasing yield. Each of these goals would require that the supervisors decide how to accomplish them. If the supervisors decide to streamline a certain process and thus reduce cycle time, for example, they would indeed help the manager achieve the goal to reduce production costs.

The point of this story is that if you’re setting goals, set goals. If you’re making work assignments, make work assignments. And have a successful new year in the process.

© Lynn A. Moline, 12/03

Customer Focus in a Price-Conscious World
By Lynn A. Moline

The headline was hardly news to manufacturers: "Price drives customer decisions." Granted, the recent local newspaper headline was reporting the latest retail customer findings from the University of Michigan's American Customer Satisfaction Index (ACSI).

Manufacturers are acutely aware of the trend among their customers: while some level of quality is expected, customers want bottom-line value.

If value, or price, is a primary driver of buying decisions, it may seem superfluous to track any other measures of customer satisfaction or to spend time getting to know the customer better. Yet, a deep understanding of customers and their needs is perhaps more critical now than ever. In today's price-driven world, the manufacturers who know exactly what constitutes value in the eyes of customers gain competitive advantage because they offer those features that the customer values; they win loyalty, even in commodity markets; and they use customer awareness to motivate employees to produce quality goods.

Those are some pretty strong claims.. The evidence supports them. Companies that truly understand what customers value neither over- nor under-serve their customers and can carve out previously unrecognized profitable markets. An obvious example is the "MinuteClinic" phenomenon in health care. The very notion of offering medical care in a retail store flies in the face of conventional wisdom: it cannot possibly handle all the health problems families face; there is no doctor or specialist on staff; and the "clinics" are not clinics at all, but rather, demarcated spaces in stores. Yet, the MinuteClinic concept is wildly successful by every measure. Why? Because the creators of this novel type of health care identified the greatest needs of the greatest number of customers--common, minor, easily diagnosed health concerns--and the biggest customer complaints-- appointments with long waiting times--to design a service that caters to a huge underserved market.

Deeply understanding needs and value from the customer's perspective also helps increase customer loyalty. In recent weeks, three different manufacturing executives told me that even though much of what their companies produce can be sourced overseas, they win contracts because they have developed personal relationships. They have acquired an insider's view of how their customers think so they can offer special services tailored to each individual customer's needs.

In one company, the account executive (with help from his engineering and production teams) has repeatedly demonstrated to customer executives that his company can be trusted to do what it promises, so he keeps winning business. Another company realized that its immediate customers are its manufacturers' reps so the company learned the criteria reps use when deciding which of many products to promote and then figured out how to meet those criteria. The third company realized that low price is its customers' primary concern, but that on-time delivery also matters. So the company quotes two prices, one for product from low-cost but less reliable Asian sources and one from higher-cost, more reliable local sources. If Asia fails to deliver on time, the customer willingly pays the higher price for locally sourced products.

Finally, some manufacturers use customer contact to motivate employees to do quality work. The principle here is that employees will work with greater care when they realize that other humans, not some faceless corporate entity, will use what they produce. To accomplish this, three companies I recently visited encourage employees to watch customers use the product. All three make products or components that find their way into retail stores. Employees visit the stores to see who buys or uses their products, how customers react to the products, and how well the products look and work.

Clearly, customer focus is a competitive business strategy. To further illustrate the point, it's well known that Toyota wrote the book on manufacturing efficiency. It's a lesser known fact that Toyota also is relentless about seeking to understand car buyer preferences by expecting its design engineers to practice genchi genbutsu, going out to see for themselves what customers want. In designing the Toyota Sienna minivan, the project engineer went on an extended road trip as way to see what customers want. He drove minivans in every state and every Canadian province to learn what does and doesn't work.

Of course, manufacturers don't have to go to such extremes to understand their customers; fortunately, your salespeople can tell you a lot and you can learn from having regular conversations with your customers. But the main point is to realize that even when price is paramount, getting closer to the customer can still provide a competitive edge.

© Lynn A. Moline 8/07