Four years ago I posted a funny story passed along to me by a Lean friend, that dealt with the consequences of crazy measures, and how lack of management oversight will allow these measures to persist indefinitely. It’s one of my shortest posts and worth a quick read if you haven’t already seen it. Go ahead – rub the lamp : )
Now, back to the present. A conversation last week with another Lean friend reminded me of the 2010 post, but this time in the context of ‘the corner office’ rather than the front line (or checkout line in the case of my earlier post.)
My friend, Al, a retired divisional controller of a large multi-national manufacturer related a story about his former firm’s CEO: “It used to drive me crazy how decisions were made,” Al said. “We ran a profitable operation here in Massachusetts, but I was constantly pressured to identify work that could be shipped to low wage regions.“
The CEO’s behavior was driven by the corporation’s MBO’s. In particular, the CEO’s bonus was tied in part to increasing the percentage of ‘foreign content’ for all divisions.
“Our labor was less than 5% of our cost,” Al said. “I tried to show our CEO that relocating production for my division’s products would increase total costs far beyond any perceived part cost savings, but he had blinders on. All he saw was the mindless objective to increase foreign content. Ultimately, we were forced to move production. And when problems with quality and delivery arose as a result, our CEO wasn’t accountable. That was someone else’s MBO!”
Several years ago, I heard a similar story from the factory manager of a well-known highly automated, hosiery producer: “Our entire production line was automated save for one manual step at the end of the process to sew several stitches in the toe of the stockings. Corporate decided that the three stitches should be done in China. So we were forced to load nearly completed products into containers for shipment through the Panama Canal and across the Pacific Ocean for the last stitching operation. Once stitched, the stockings were shipped back to the US for packaging and sale.” The factory manager shook his head in frustration as he told the story. “Where are these folks getting these ideas?” he said.
So, how do these two stories relate to my 2010 post? No oversight. No direct observation, in this case, by the persons who are charged with the corporation’s fiduciary responsibility – its board of directors. The CEOs in the examples above are no different than the cashier in my 2010 post. They were following damaging directives from absentee leadership. The difference in these cases however is that when CEOs receive nonsensical objectives the potential for damage to customers and employees is very much greater.
Are your corporate measures working for you or do they reward you for crazy behavior? Please share a story.
BTW: My next FREE webinar, “Tea Time with the Toast Dude”, entitled “The Technical Side of Going to See” will offer some observation frameworks for managers to facilitate their understanding of floor conditions when they “go to the Gemba.” Hope you can make it on Tuesday, June 17th from 3:00 -3:45 p.m. EST. (Read more and pre-register here.)
Also, a couple important reminders:
- The early bird discount deadline for our October 1-2 Northeast Lean Conference at the Mass Mutual Centerin Springfield, Massachusetts is fast approaching. Register by May 31 and receive a $100 discount.
- GBMP will be teaching the Shingo Institute Discover Excellence Course at Alpha Analytical in Westborough, Massachusetts on June 12-13. There are still a few slots open.