It is said that if you don’t know where you are headed, any path will get you there. Even if you do know where you are headed, there are multiple paths to take. Which one is right for you?
By Peter H. Christian
The world is truly an ever-changing place. Whether it is fashion, transportation, housing, or technology, improvements and new trends continue at a dizzying pace. Driving these developments are consumers’ desires to obtain price-valued, customized, innovative, and high-quality goods at faster and faster rates. Many online services can provide one-day delivery at prices far below those of brick-and-mortar stores. And the pace is not slowing, but rather increasing daily.
Instant gratification causes ongoing and increasing pressure on manufacturers to quickly deliver goods that are reasonably priced and of high quality, while innovating new offerings that will delight their consumers. In trying to do so, manufacturers must find a balanced strategic plan, or they will not be able to satisfy these needs and wants while existing and new competitors can. If they cannot, they will certainly be left behind.
History is full of examples of once-dominant companies that eventually fell behind the industrial “pack” and became industry dinosaurs. Bethlehem Steel, for example, provided steel products that helped the U.S. to victory in World War II and were used to build the skyscrapers of Manhattan. Today, it no longer exists. And so, we think, “If they couldn’t make it, what chance do I (and my business) have for lasting in this continually growing, insatiable environment?”
But all is not bleak. A wave of improvements has been created by extremely smart and thoughtful individuals to assist companies in staying up with, or even leading, the charge for better, faster, and less costly products. However, this has also caused somewhat of a dilemma in choosing which approach to use: As fast as one approach is devised, another with a new twist pops up on the horizon. Some of the choices available are Theory of Constraints, Just-in-Time, Total Quality Management, Lean, Six Sigma, or the new and improved Lean / Six Sigma. So many choices. Do you do one, two, or all?
We faced that dilemma at my old company of employment some years ago. We tried to do bits and pieces of each of the popular improvement and development programs at the time and make them all fit together. We then ran into a very smart person, Dr. Joseph Juran, one of the Quality gurus of his time.
At our meeting, Dr. Juran asked what we were doing at our company. One of my associates and I told him about all of the programs (with their requisite acronyms) that we were employing. He looked at us incredulously and said, “Sounds like alphabet soup to me. Pick one and do it well and you will be just fine.”
Now if that sounds too simplistic, it isn’t so. Dr. Juran didn’t mean that you shouldn’t stay up with the new thoughts and innovations that are continually occurring in the industrial world. He wasn’t advocating going back to pre-Industrial Revolution days. What he was saying is that there is, and will always be, a core of things that drive a company as it strives to beat its competition and make its mark in the business world. Most programs go to that core.
Companies need to provide a balance among demands and the programs to address them. If not, they will certainly fall out of balance, and that can spell trouble. So what is the balance that needs to be achieved and maintained? I suggest the following for your consideration:
Innovation. Companies need to innovate constantly, whether it is new products, processes, technologies, or the like. If there is no differentiation between you and those you compete with, you will either stagnate or eventually go away. Companies need to look at new products to manufacture and sell those that complement their core business and make sense to consumers. Nike wouldn’t make it in the electronics world any more than Apple can sell athletic apparel. But each innovates new items in their spaces and expands their markets quite well. If these can work into the current manufacturing spaces, that is terrific. But more times than not, new products mean new materials, tooling, equipment, and, potentially, new skills from the employees.
Foundation. As a company gains a foothold in the business world, it forms a foundation of goods and/or services that it becomes exceptionally good at. Say “Crayola” and what comes to mind? Crayons. Can you think of any other brand? And yet Crayola is more than just crayons, as the company manufactures and sells children’s markers, paints, craft kits, and Silly Putty, along with other items. Crayons are a foundation that is still a core of the business since they were introduced to the world in 1903. Much has happened since then to more than maintain this product, enhancing it through packaging and the addition of myriad colors that Messrs. Binney and Smith could never have imagined. Crayons are still a mainstay of this company, the strong foundation of which is maintained.
Technology. We are definitely in the IT age. Information is generated, shared, and utilized at mind-dizzying rates and is generated exponentially. But “access to” and “utilization of” are very different things. Companies that think that just being connected to others on the internet will solve all of their problems are sadly mistaken. There are still tremendous amounts of human intervention needed to deal with all of the data and information flow. Anyone who believes that any system will take care of all their business needs is in for a world of trouble.
Individuals utilizing systems and the internet need to know what they are dealing with and how to utilize them properly. Technology is a powerful tool but can create as much harm as good if not properly used, and it has its downfalls. What happens when a system goes down or is hacked and held for ransomware? How will companies act and react? What if the data being used is bad and, in turn, generates bad information? Does the user know when there is a problem, or accept what is thrown out from the system? Too much of anything, no matter how good, can also be very bad. Paralysis by analysis is still true, and yes, you can have data overload.
So embrace new technology, but beware. There are still pitfalls, and you need properly trained and aware personnel who can interpret and properly utilize the system and the data stream involved.
Agility. In the early 1990s, a study by Roger Nagle, Ken Preiss, and Steve Goldman was conducted to determine what high performing companies were doing that allowed them to be leaders in their industry and to stand head and shoulders above their competition. It was determined that they had employed an agility philosophy with four main components:
- Enriching customers by providing a great product and service value;
- Mastering change and uncertainty by being able to react quickly to changing business demands, needs, and issues;
- Cooperating to enhance competitiveness—that is, working closely with other businesses to provide a full complement of products and services while acting as one entity;
- Leveraging the impact of people and information by truly employing the often used—and abused—statement, “Our people are our greatest asset.” And, even then, staying on the leading edge of information technology.
Nagel, Preiss, and Goldman didn’t invent these aspects. They discovered that the truly successful companies, whether large, medium, or small, were adhering to these aspects of the business. What was true some 25-plus years ago is still true today: Agile companies continue to succeed while their non-agile competitors struggle and, in many cases, disappear.
Operating Principles. No matter what new wave of thoughts is developed on how businesses should run and make improvements, three things are always to be considered: quality, cost, and timeliness. If these are not a part of both innovation and foundation, there will be major problems. Let’s look at each for a perspective.
Quality. This is something we take for granted, although you can still get some poor quality from the best of companies. If we go back to the 1960s and even early ’70s, quality was not as big a deal as it is today. Then the Japanese hooked on to Dr. Deming, Dr. Juran, Philip Crosby, and other quality gurus, and the industrial world changed big time. Before that, “Made in Japan” was a punch line for poor quality. All of a sudden, cars and electronics from Japan started to kick the world’s butts, including here in the U.S.A. Our auto industry worked to play catch up and did so after much time and pain. Can you even think of a major manufacturer of electronics located in America today? Quality is still not perfect and probably never will be, but think back to the quality of products in the 1960s versus today, and there is no comparison and no going back.
Cost. Cost is a very relative thing. We all want to get an item at the lowest possible cost, but what we really want is a cost with a value that we place on the item we wish to purchase. While we would certainly want to buy a Mercedes Benz at the cost of a Volkswagen Jetta, we know that is not realistic. But when we compare the features of an S Class sedan to a comparable Lexus or Infiniti model, we then have a value comparison and try to get the best price relative to that of a car of similar nature. The same is true with your customers and consumers. They will look at your costs in terms of the value they are getting from you versus the competition, considering factors such as your quality of product and service, the speed at which you deliver, how reliable the item that they procure is, and how you will deal with any problem encountered with it. You don’t need to be the lowest cost, period—just your lowest cost. I once was told that my company’s corporate goal was to be the lowest cost producer in the world. I said that we could do that only by outsourcing all production to—at that time—Asian countries, but then we would give up speed and quality. The mantra then changed: We would be the lowest cost producer we could be while providing the best quality and service available.
Timeliness. We are an impatient society. We don’t want to wait too long to get what we want or need. With the growth of internet services, we can order something one day and receive it the next, and, if customized, maybe in two days or a week. For that service, maybe we will pay a little more, but then again, maybe not. And of course, the expected quality has to be there. So as a manufacturer, we have to be able to produce quickly and accurately. We can’t have a stored pile of goods because that costs big bucks and the age of the product creeps into the picture. New models are coming, and no one wants the old stuff, or if they do, they want it at a steep discount. So we have to be able to respond quickly to our customers’ and consumers’ demands to get things out as quickly and cost-effectively as possible.
The key to ongoing success is a balance. As we try to optimize any one of these without consideration of the others, we do so at the peril of sub-optimizing—a big no-no. So as we try to lower or contain costs, we have to make sure that quality is maintained or possibly improved as well, and timeliness is not sacrificed. There was an adage that quality, cost, and timeliness are all desired outcomes, but one can only expect to achieve any two of the three. That is no longer acceptable and doesn’t have to be true, as long as each is taken into consideration and balance is maintained while working on one or the other.
It is said that if you don’t know where you are headed, any path will get you there. Even if you do know where you are headed, there are multiple paths to take. Which one is right for you? And if a new path opens up, should you change the path you are on and follow a new one? My answer to this is the advice I received from Dr. Juran, some years ago. Pick a path, process, or program and stick to it, and do it well. With the proper resources, training, and commitment, you will succeed. Hopping around to follow the latest trend will only confuse and make you a member of the “Program of the Month Club.” Once the word is out in your company that this is happening, you will get little or no commitment from employees because as soon as they get started on a path, that approach changes and changes and changes. So the employees feel it is better to wait until a direction is settled on, or do nothing because to get involved will only be a waste of time.
My preference for a banner program is Continuous Improvement. Twenty-two years ago, before I started consulting, the company I was with employed Innovation, Foundation, Technology, Operating Principles, and Agility. We didn’t have a name for it—we just did it because it made sense and seemed the right thing to do. We intended to remain the leader in our industry. We talked about never becoming the next Bethlehem Steel and never getting in the position of having to do improvements out of desperation. We worked hard to make improvements to grow our market dominance and make us invaluable to our customers and consumers.
For three years in a row, we improved productivity enough to negate any increases in our other costs and were able to forego any price increases. We had an ongoing innovation of new products and fought off loss of business to not only traditional competitors, but new entries into the leisure time market who were new competitors from new industries. Quality was always paramount, as we were not the least cost manufacturer, but we delivered quality and value for our prices. And we continually strove to deliver products more quickly as we customized for our customers, dealing with orders from a single item to tens, or even hundreds, of items sent to distribution centers and drop-shipped to hundreds of individual stores.
That doesn’t mean that you shouldn’t be aware of and utilize new developments in the innovation and improvement processes that continue to appear. New tools are being developed that either supplement those from the past or are updates to improve those currently being used. Just as a craftsman knows which tools to use for which job, you should do the same. And as innovations in tools occur, they are added to the toolbox for use at the proper time and place. And don’t throw the old tools out. They have a place as well. Just as a craftsman finds a place for new power tools, he or she continues to employ and use hand saws, hammers, and screwdrivers when needed. A Value Stream Map is terrific, but the good old flow diagram has its place as well. Powerful software programs are certainly important, but Excel spreadsheets are and should be used.
Demands from customers and consumers continue to grow at a frenetic pace. Changes that previously might have taken a decade to recognize and deal with are now being anticipated and dealt with before they become issues or problems. Companies and organizations that balance the need for innovation while carefully maintaining and improving their base foundation through a directed path of technology, agility, and firm operating principles will continue to succeed.
These companies and organizations will consider the new trends and developments for improvement and will seamlessly integrate them into their business practices. Their people will embrace the notion that change is a constant phenomenon, and it is in the company’s and their own best interests to not become complacent or they will lose, as many already have.
About the Author
Peter Christian recently retired as president of Enterprise Systems Partners Inc. (ESPI), a business consulting company in Pennsylvania’s Lehigh Valley that works with companies throughout the United States in the areas of manufacturing improvements, information system selection and implementation, and project and product management. Mr. Christian had held the position since the company’s inception in 2002. He has more than 40 years of experience in operational growth and improvement, both as a consultant and as an executive with Crayola Corporation. He currently maintains a working relationship with ESPI as a contract consultant and can be reached at (610) 554-6486 or via email at firstname.lastname@example.org.