I was following a blog, which as I recall, was titled, “How Can America Win Back the Manufacturing Capacity It Has Lost?" As I read all 88 postings, I was amazed to read the contents of the topics discussed. There were 62 postings on some aspect of government regulations or intervention as being the problem to overcome. There were another three related to how the governments of other countries assisted their industries. There were four saying unions were the problem and, specifically, the high wages were the issue.
Lots of issues and, quite frankly, some pretty complicated and deep subjects were discussed.
But what immediately caught my eyes was that only two of 88 specifically mentioned a problem with American management or American leadership. (When I refer to management and leadership, I mean all folks from the floor leadership to the very top, including floor supervisors, middle managers, the CEO, the entire C-suite and the board of directors as well.)
I was flabbergasted and still am.
Why is it that if American manufacturing prospers, then the executives line up to collect their accolades, bonuses and promotions. Yet when American manufacturing is failing, the problem is the government -- or some other outside entity? You may buy into that logic, particularly if you are one of those American managers whose business is failing, but that type of logic does not pass muster with this consultant. Does it pass muster with you?
Quite simply, the reason we are losing the vast majority of our manufacturing is that others have developed -- and are using -- superior models of management and leadership. Most notable of these are the Japanese, who have taken the basic -- and now outdated -- models developed mainly in the United States and continuously improved them to a level that we, in America, are no longer able to compete as we once were. We are losing manufacturing business to those who can manage their businesses better.
It is really not very complicated.
So, how did we get to this position? The genesis of our problem starts with the basic concept of an MBA and the teachings of the business schools, coupled with the penchant of American management to take the MBA concept to an extreme.
The MBA Concept
What’s wrong with the concept of the MBA? Nothing really, until these tenets get taken to an extreme. The basic concept underlying the theory of management, and the MBA in particular, is that there are more commonalities in this field than there are differences. Probably true. However, extend that a little and you soon come to believe that an MBA can run a business -- any business, anywhere. And you reach the point that a successful manager can run a bank, a petroleum refinery as well as a hardware store -- which is a commonly held belief underlying the current failings of American management today.
This type of thinking leads to four very unsound concepts that have crept into the skill set of many American managers. They are so common that they are accepted as “the way things should be around here.” Unfortunately these four items are so damaging as to place American manufacturing in a followership role rather than a being the leader of the pack. Tthe scorecard has clearly shown this.
- The first unsound concept it that the only important aspects of a business can be expressed in financial terms. Everything can be reduced to numbers such as cash flow and ROI. Conversely, if they cannot be expressed in these terms then they simply are not important and hence not worthy of management’s attention. What about morale? What about the cost of an unhappy customer? The extension is that since these are not easily, if at all, expressed in quantifiable terms, then they are not important enough to demand management attention. Who really believes that? But what do most managers do? They try to manage the money, the results, and hope all else will fall in line. Dr. W. Edwards Deming felt this concept was so important he listed it as “Deadly Disease No. 5: Running the company on visible figures alone.
- The second unsound concept it that since everything can be reduced to numbers --mostly financials -- almost anything can be understood, evaluated and corrected by evaluating documents called spreadsheets, monthly balance sheets and quarterly reports, to name a few.
- The third unsound concept it that since only the financials matter and they can be expressed in spreadsheets, there is no need to leave your PC and certainly not your office to make the decisions needed to be a good leader or a good manager.
- The fourth unsound concept is that since you can now do “managing and leading” from your office, there is no need to interact with the action on the floor. Consequently, the machines become a fungible piece of capital that need none of management’s attention. But worse by far is the concept that the people on the floor are another piece of fungible expense -- not even capital -- but an expense that we are actively trying to minimize to improve all those financial metrics we are using to drive this business. This is the worst of the unsound concepts -- with far-reaching and deleterious effects.
The Solution: First, Awareness of the Problem
Management, which is also the leadership in most firms, must realize they need to change.
Unfortunately, this is not happening at any reasonable rate. What is happening is that plants are closing, businesses are shutting down and entire industries are being taken over by those who are better managers. We are losing the battle to keep manufacturing in America.
If you hadn’t noticed, the little island nation that was devastated about 65 years ago has become a world manufacturing power, and about the only natural resource it had in abundance was fish.
No natural resources -- unless you count the people and their ability to work and think, and their ability to manage and lead -- then they have some resources. That ought to make all of American management not only think but wake up and take notice. Unfortunately, we are still asleep.
Once we overcome the first hurdle -- a monstrous problem in and of itself -- the next question is: What model should we change to?
What Not to Do
First, leadership is not some manager sitting in his office presuming that he knows it all, and “all of it” can be expressed in a spreadsheet that he can receive on his PC and then, from the comfort, quietude and solitude of his office analyze this information and make a cold, calculated decision that will drive his business to prosperity.
This is such a perverse model of management and leadership that I struggle to find words to describe it. The best I can come up with is arrogant management.
I call the new model of leadership -- well, it is not really new; the Japanese have been using it for 65 years -- lean leadership. It has six basic qualities, which are:
- Leaders as superior observers: They go to the action -- they call it the gemba -- to observe not only the machines and the products but also to spend significant time with the employees. They also are in contact with their customers. A much overlooked leadership skill they have in abundance is the ability to be an empathetic listener.
- Leaders as learners: They do not assume they know it all. Rather, they go to the floor to learn. They are in “lifelong” learning mode.
- Leaders as initiators: They plan, they articulate and sell their plans, and they act on their plans. They are not risk averse. They are not cavalier.
- Leaders as teachers: They are “lifelong” teachers. When something goes wrong, their first thought is not “Who fouled up?” but “Why did if fail?” and “How can I use this as a teaching opportunity?”
- Leaders as role models: They walk the talk. There is no substitute for this. NONE.
- Leaders as supporters: They recognize they mainly get work done through others, so they have mastered the skills of “servant leadership.”
So, “How Can American Win Back the Manufacturing Capacity It Has Lost? The formula is rather simple:
- Recognize and accept there is a better way to manage.
- Start by employing the six skills of lean leadership.
I wish this would come about. I have been doing that wishing since the 1980s, and not much has really changed. Even today, I am not holding my breath. Unfortunately, the simple and seemingly obvious does not always get done. As partial explanation to that phenomenon I will leave you with three quotes:
In the choice between changing one’s mind and proving there’s no reason to do so, most people get busy on the proof … John Kenneth Galbraith
Men stumble over the truth from time to time, but most pick themselves up and hurry off as if nothing happened … Sir Winston Churchill
Opportunity is missed by most people because it is dressed in overalls and looks like work … Thomas Edison
Lonnie Wilson has been teaching and implementing lean and other culture-changing techniques for more than 40 years. His book, “How To Implement Lean Manufacturing” was released in August 2009. His new book on “How to Lead and Manage a Lean Facility” is under construction. Wilson is a frequent speaker at conferences and seminars. In addition to IndustryWeek, he has published articles in Quality Digest and is a frequent contributor to iSixSigma magazine. His manufacturing experience spans 20 years with Chevron, where he held a number of management positions. In 1990 he founded Quality Consultants, www.qc-ep.com, which teaches and applies lean and other culture-changing techniques to small entrepreneurs and Fortune 500 firms, principally in the United States, Mexico and Canada. In particular, he specializes in “lean revitalizations,” assisting firms that have failed or failing lean implementations and want to”do it right.” You can e-mail Lonnie Wilson at [email protected].