It was back in July 2010. I was planning a large meeting to brief sales leadership on what was coming next and I thought to myself, "how will we know we've arrived?" That's when I started to plan our year-end dinner. I closed my eyes and imagined a small team of us sitting with our leader Bill, smoking cigars and reminiscing. It was the Jesus and the 12 disciples kind of moment I imagined; if we had good stories, then we will have arrived.
I thought back even further in the days of the failed initiatives talking to one of the VP's. He asked me "how do you know transformation is taking place?" Without hesitation I replied, "it's when you start to replace your tribal lore with new stories of behaviors that reflect the transformation. Without stories passed at the water cooler, it's all just Power Point slides." And indeed, during the failures, different leaders had learned to "dress up" all cost-savings projects as transformations. From the top-down, there were pronouncements about the success of transformation. All of the frontline employees snickered, "we do purchase-price variance and engineering cost savings every year. This is not a change." We had slides but no stories.
The initial breakthrough actually came before my initiative began. We were unable to meet customer demand on a certain product and the customer was getting furious. Shiv had asked the business VP if he could shut-down the line for one week to redesign the line into a u-shaped lean cell. Reluctantly, the VP agreed. Shiv and a green-belt named Ray quickly enacted the new balanced cell and instantly doubled output. As director of strategy, I had arranged for Shiv to share his story at the all-hands managers' meeting. We finally had a story that began with the VP saying "this was awesome."
Now a year later, I was leading the Pull Replenishment Initiative and we had stories. For the first time in over 30-years, we successfully implemented an end-to-end enterprise process change. For the first time we demonstrated results with lightning speed, executing projects every 90-days. For the first time, we truly empowered employees to make on the spot changes to their own process without levels of approvals by committee. We were regularly seeing 50 - 80% productivity improvements after every kaizen event. The greatest compliment I received was from Tyler who told me "this is the first time I've ever been asked to use my creativity." By this time, there were so many people working on an opt-in basis on different projects that I actually couldn't keep track of all of them. It was a true "swarm" of initiative by our people and I was riding herd, barely.
So, I decided to push the envelope and announced that we would implement a 1000% increase of volume that we would enable through our pull systems 2-months ahead of schedule. Looking at the company calendar I saw massive disruptions on the horizon and so took the gamble that we could move our project in before several new product introduction projects. I hastily assembled a conference call and gave the warning order: our charter was to move 20 value streams on pull by Dec 31st. We would launch in October.
By now, the team was so confident in themselves that after the initial groans I only heard "o.k. here's what we would have to do to pull the project in." And off they went. We had crafted a scalable template so people instinctively knew their roles and responsibilities. Even though I tried to navigate around distractions, we had several competing priorities with the surge in year-end shipments, inventory reduction programs, and acquisition integration meetings. I spent several weeks briefing every customer service and sales team possible on the implications of our new build-to-order, no expedite model. Everyone was nervous, but agreed to cooperate.
D-Day arrived and almost like clockwork we enabled now 2,600 SKUs on our pull system. In September we had 200 SKU's representing 5% of our overall revenue on pull. In just one month, in October, we increased the volume on our pull system 10x to 50%. On those SKUs we drove down lead-times from 50-days to 14-days and improved on-time-delivery from 70% to 97%. We shipped approximately $XXM of products using the new enterprise process with nary a hickup. We completed a major initiative in 10-months with zero incremental FTE's, no CAPEX, and no consultant spend. In fact, I had spent less the entire year on Starbucks cards and recognitions than we as a company had spent for one day of strategy consultants.
After we finished our Wave 3, Bill invited a small group of us to dinner. It was the scene I had envisioned several months ago, but sadly without the cigars. We ate and talked all night, almost in disbelief at what our company had accomplished. Within 10 months, the number of people working on Pull Replenishment swelled from 10 to almost 1,000 people. Hundreds of participants were purely opting-in. People came up to Shiv and I every week asking "how can I be a part of this?" Our business revenue was down year-over-year but our operating income was up 80%.
Bill raised a glass and said to the team, "in my 35 years in operations, this is one of the best years I've ever experienced." Our resident sensei Shiv cut in "I think the sun, the moon, and the stars all lined up for this one. I don't know if we'll ever see something like this again." It was truly a high point for all of us. The company ended the year paying out the largest bonus since the dot-com bust.
To know that in a down economy people were enjoying the fruits of their labors with our initiative largely contributing to the results was about as satisfying as I could imagine. I have this pet peeve about meaningful work; I believe it's our job as leaders to set our people up for success. It's our job to give them meaningful work, work that excites them, ignites their talents and passions, and produces results.
So, here I am to tell the tale and advocate for good leadership, clear vision, constancy of purpose, and true empowerment. Thanks for reading my story. We're working on Wave 4 right now. I'll let you know the results in a few months.
*******new material! *************************
Based on a con-call we had with Gary Hamel, I have added this supplement to answer some of his questions:
Q: What are the fundamental differences between the top-down approaches that didn't work and your approach?
A: The fundamental difference lies in all the areas we consciously DID NOT try to solve or deal with. Shareholders are not giving extra points to your transformation for thoroughness or completeness. The P&L is a brutally honest scorecard. So, here is a list of items that the analysis showed we should consider dealing with but in fact, due to the need for rapid results left off the table.
Product Proliferation, Sales Compensation, Org. Structure, Performance Management, New Product Introduction Process, Design for Modularity, Global Supplier Dual-Sourcing
We focused on a critical few set of problems and honed in on our "critical X" variables. It turned out that we got 95% of the way home by solving just two: 1) have your component bins full when the order hits 2) get rid of phantom orders, forecasts, and expedites and build first-in-first-out without schedule manipulation. The mechanics of Pull are amazingly simple. The cultural shift was "ginormous."
Q: What innovative approaches did you use?
A: I used an approach called "BASIC - Borrow Aggressively, Shamelessly, Implement, and Combine." Here is a list of those thought leaders who influenced our approach:
Daniel Pink --> motivate through providing independence and meaningful work. Marcus Buckingham --> Focus on who people are, and not on what they are not (strengths based approach). David Petraeus --> Counter-insurgency. Implementing a surge. Winning hearts and minds. Success based approach. Gary Hamel ---> Future of Management, particularly the W.L. Gore story of how project leaders create an "opt-in" model for project teams, thus ensuring the team's success. John Boyd - OODA Loop, how fighter pilots assess data and make decisions faster to win a dogfight. Toyota -- following the Toyota Way will take leaders back to the Gemba, where the action is, and away from Power Point slides. Mike Rother - Learning to See. I could encapsulate my personal journey with that one phrase. King Solomon - to wage war seek many advisors. Bill Schroer's theory on adult education -- The lag between train--do must be max one week. The Heath Brothers - script the moves. Napoleon - l'audace, toujours l'audace.
Q: How did you grow as a leader?
A: Bill forced me to use all influenced-based levers of leadership: leading by example, inspiring others, positive feedback, and recognition. It was very hard to not have the "hard levers" to fall back on like performance appraisals, reporting structures, incentive plans etc., So I learned that the hard levers can be a crutch and if you're not CEO those are very hard to change. It ended up being a blessing in disguise that Bill basically threw me into the deep end and said "I trust you'll figure it out. Call me if you're having problems."