Executives at New Zealand Steel faced what looked like an impossible situation. As HR head Ian Sampson said: "When you think about it, we were expecting the impossible from the employees. Headcount was going down, change was everywhere, and the business was built on shaky technical assumptions. It was widely known that we might close down entirely. And yet we needed people to become proactive, positive, energetic and to dramatically change their relationships with each other."

Sampson's words, although uttered in 1996, reflect the state of manufacturing today. The odds are stacked against us, and finding a way sometimes seems an impossible task.

The First Law of Performance: How People Perform Correlates To How Situations Occur To Them

Although there are facts about how and why things are the way they are, the facts are much less important to us than they way those facts occur. The First Law rejects the commonsense view of performance -- that people do what they do in a situation because of a common understanding of the facts -- and instead takes the view that people do what they do because their actions are correlated to how the situation occurs to them.

Finding a way to apply the First Law of Performance requires two steps. The first is to see the connection between people's actions and how situations occur to them. The second is to find a way to alter how situations occur to you and others. If you can do this, action shifts, automatically. At New Zealand Steel, the situation occurred as dire, destined to fail and seemed impossible to turn around.

The turnaround moment happened when the CEO of New Zealand Steel told the workers: "I think we've done a lot of good planning and efficiency work, but it won't get us to success. I've been sitting here, thinking about what will. It gives me a problem. I now know we need a future that excites us, and I'm not the kind of guy that can do that. I'm an operator. I love making things work, but I'm not a visionary. I can't come up with that future. I'm going to put together a process that'll allow everyone to collaborate on creating the future that we need. I do know this -I'll know it when I hear it."

While it's rare for a single speech to hit a chord, his did. It worked because he articulated how the situation occurred to people, and also challenged the prevailing view.

How the situation occurred to people shifted. They began to see opportunities to cut costs, innovate their process and do more with less. Keeping the business open and profitable became a company-wide, aligned on goal.

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