| It has been a blessing that our business has been picking up but along with it comes the need to constantly make small adjustments in our staff to keep our production flowing smoothly. One of our more recent adjustments was to hire an additional brake press operator for our second shift. As you many have heard,skilled people are really hard to find and we were lucky to run across one who had a fair amount of experience. He admitted in the interview that it had been several years since he had actually operated one of these machines and that he might be a bit ‘rusty’ but he was confident that he could be brought up to speed fairly quickly. What we didn’t tell our new associate was that there have been some really significant advances in forming technology while he was away from the field and the training he would need might be a lot more than he was expecting but we were confident he was up to the task. The decision was made to have him spend his first two weeks with us on first shift so he could work with Rick,our best operator. I need to pause here and say a little bit about Rick because what happened next is really what this story is about. Rick in one of those associates your wish you could clone somehow. Not only an excellent craftsman,he is also one of those people who are constantly thinking three or more steps ahead. To watch him work is sort of like watching a ballet of efficiency. To top it all off he has a good attitude and is wise beyond his years. Monday morning we took our new guy out and introduced him to Rick. You could tell our new man was taken aback by the computerized controls on our precision brake press but Rick assured him it was “a piece of cake” and started giving him an overview of the differences in technology between then and now. Whenever we hire a new person I always try to keep a close eye on how they are fitting into our organization. A new employee is a huge investment and the last thing you want to do is set them up for failure by not giving them the help or guidance they need to become productive. The first thing I noticed was that Rick seemed to have our new guy’s total and undivided attention. In fact he was so focused I mentioned it to Rick and Rick’s explanation is what this post it about. “I just explained to him,” Rick said “that because of cross-training we needed two brake press operators on second shift and I expected him to train the other guy.” The result was dramatic. Our new associate went from new hire status to trainer in two weeks. I have worked in manufacturing for over 30 years and I have never seen a newly hired person more focused and attentive to learning. As I said before,Rick is wise beyond his years and this is a great example. I am really intrigued by this concept and I plan to look for other opportunities to use it in the future. I have been blessed to have many mentors over my career. One of them was the owner of a small welding shop where I worked shortly after graduating from high school. He taught me a lot but what I remember best was what he taught me about quality and how it applies to our real boss,the customer. This little machine and welding shop was typical of what you would find in most small farming communities. Using just a few basic machines a small staff of incredibly skilled workers would perform repairs and restorations on everything from manure spreaders to rusty Pepsi trucks. One day a local farmer brought a badly damaged fuel tank from his tractor to be repaired and Lloyd decided this would be a good opportunity for me to use all I had been learning to do a complete job from the estimate to writing the invoice. About halfway through the repair it became obvious to me that I had grossly underestimated the amount of time and material required to do a proper job so I took my concern to Lloyd. I knew he would not be happy losing money on this job so I suggested cutting some corners so I could stay close to my estimate. I thought I might be able to avoid the embarrassment of having to tell my customer his tank repair was going to cost him nearly double what I had quoted him. Lloyd saw it as a ‘teachable moment’ and what he said made such in impression on me that it has been the basis for my view on quality for nearly 50 years. For those of you who have never sat in the seat of a Farmall model H tractor like my customer had I need to explain that there is no more visible part on the vehicle than the fuel tank. It is positioned right in front of the driver just forward of the steering wheel. Reliable fuel gages were rare back then so the operator would remove the cap often to get an accurate measure of the fuel level. Even if the fuel tank wasn’t placed in your line of sight you would still have to interact with it on a regular basis to avoid running out of fuel in some remote corner of the farm field. Now that you have a mental picture,here is what Lloyd said to me when I wanted to cut corners to stay within my estimate. “You have to look at it this way,” he said. “If you do a proper job the customer is only going to be mad at you one time. If you cut corners,it might be functional but we both know it won’t look nice. In that case,he will be mad at you every time he crawls onto the seat of that tractor.” The quote that comes to mind is:“The bitter taste of poor quality remains much longer than the sweet taste of a low price.” I don’t know of any business that has an unlimited supply of customers so it’s vitally important that they feel they received the value or quality they paid for. There is hardly a better way to encourage your customer to take their business somewhere else. Research shows the average satisfied customer might tell three people but if they are unhappy they tell anyone who will listen. Talk about having your problems multiply,poor quality can cost you customers you haven’t even met. What differentiates your business from your competition? It’s quite possibly one of the most important questions you could ever ask yourself. So important,in fact,that finding the answer could mean the difference between the success or failure of your business. As one of my mentors once told me,“If you don’t offer something your competition doesn’t,the only way you can compete is price and that’s a slippery slope.” Now that you know the question and how important is,pause here for a while and consider the answer as it applies to your business. Don’t be discouraged if the answer eludes you. You should only be concerned if the answer came easily. Chances are you won’t just pull this one out of your mind. The process should be more like assembling a puzzle where you first have to find the pieces and then examine each piece and determine where it fits to create the solution. Answering this question had a dramatic effect on our business. My only regret is that we didn’t focus on it sooner. In the beginning,like most startups,we had a built-in advantage over our competitors in that our overhead was very low. We could underbid the competition and still make a higher than average profit because our expenses were very low. This was the point at which I should have been wrestling with answering the above question but I made the same mistake many entrepreneurs make,continuing to work in my business instead of working on my business. It didn’t take long until the overhead began to grow along with our sales. We hired our first full-time employees and along with it came health insurance,paid holidays and paid vacations. Our existing building was too small to accommodate our increased sales so we leased a much larger building and our rent and utilities tripled. Soon our overhead matched others in our industry and profits plummeted. Our playing field had become level and we had lost our edge. As my mentor had warned me,we found ourselves competing on price. It was now obvious that we needed identify that thing that would set us apart from the others or find ourselves in a bankruptcy auction. We thought our mission of providing a quality part at a fair price on time was enough to set us apart from the others but too late we realized there was nothing there that could not be easily copied by competitors. The first pieces of our puzzle we started fitting together all had to do with how the world kept moving at an ever-increasing pace. As we got better at recognizing puzzle pieces we found pieces that fit our solution from some unlikely sources. Vendors,purchasing agents,salespeople and many of our employees had them. Our job was to simply recognize them when they were presented. The picture that began to emerge was one of a manufacturing industry going through a drastic change. Due to the popularity of just-in-time delivery and other programs put into place to reduce inventory and improve cash flow our customers were requiring smaller quantities and shorter lead times and meeting significant resistance from their sub-contract manufacturers like us. The standard in our industry was 6 to 8 weeks and most of our competitors saw that as a non-negotiable time period required to furnish parts from purchase order to delivery. What we saw was the opportunity we had been looking for. Once we knew clearly what our goal was we got everyone in our company involved. We abandoned conventional wisdom and tried to focus on doing what made sense instead of doing things the way they had always been done. We mothballed or sold some perfectly good pieces of equipment designed for batch manufacturing of higher quantities and replaced it with machines designed to efficiently and economically produce the smaller quantities customers needed. We also were the first small manufacturer in our area to begin working three shifts to get maximum use out of our existing space and equipment. The result was nothing short of dramatic. The month-long lead times that had been normal in our industry for so long could now be measured in days instead of weeks. In addition we discovered a bonus to our more agile way of doing business we had not anticipated. Because our new methods gave us the capability to literally turn a repeat order around overnight,those customers who were looking for someone to enter into a Kanban agreement could actually be accommodated in our normal production. So now when someone asks us how we are different from our competition we can proudly say,because we can deliver faster than anyone else. That’s what Schoonover Industries’ competitive advantage is and now that you understand how the process works you need to apply it to your business. If we were to make a list,in order of importance,things that successful companies have in common,the first item on my list would have be embracing change. I’m not talking about change for change’s sake,I’m talking about making appropriate adjustments that are in step with what is going on in the rest of the world. To look at it another way,we don’t see too many rigid companies at the awards ceremonies. This would be easier to put into practice if it weren’t for the fact that embracing change goes against our nature. We humans are creatures of habit and we are so much more comfortable with the usual and customary. As managers we need to find a way to get our associates to let go of the familiar and embrace change. Depending on the group of people you are dealing with this could be a difficult job but one critical to the survival of your company. I think Charles Darwin said it best;“It is not the strongest of the species that survives,nor the most intelligent that survives. It is the one that is the most adaptable to change.” So,how do we sell this concept to our associates when they tend to stick with what is more comfortable? We might start by talking about how the world continues to move at an ever increasing pace and that includes change as well. We can also rename it to help dispel some of the negative emotions connected with the word change. Saying that your company is agile or is good at ‘thinking out of the box’has a different feeling than saying we like change. Another suggestion is to start with those changes that are both small and have the highest likelihood of being successful. It’s what we call picking the low hanging fruit,easy to reach and it leaves a good taste. Then brag about it’s success like crazy. If it had a measurable impact on productivity or profitability,chart it. Single out those who were involved and congratulate them in front of their peers. The goal for your company should be to become as strong and healthy as possible and this is one of the ways to do that. If you can make embracing change part of your corporate culture you will automatically become one of the leaders. Instead of trying to stay even with the competition your competition will be following your lead. Because Schoonover Industries has always been strictly a commercial operation we have tried to keep sort of a low profile in our community. That has begun to change in recent years as we have grown and started to win various awards. As our name began to show up more and more often in the local newspaper we began to receive requests for tours of our business. People naturally figured if we were receiving this sort of recognition we must be doing something right and they were curious to see for themselves. We have always been proud of what our associates and we do so we always welcome the chance to show others. As we have conducted these informal tours over the years people like to comment on things they see or experience that surprises them. The comment we hear most frequently (by far) is about our associates. They may express it in different words but the meaning is always the same,we have amazing people! Many of our guests are business owners or managers themselves so they are curious about how it came about that we could have so many great people working in our company. The secret,I tell them,is hire for fit and train for skill. This is one of those things they don’t teach in business school. Like most of our most valuable lessons,we had to learn it the hard way. Metal fabrication requires a high level of skill so we were focusing almost entirely on people’s skills when we hired them. After a long period of high turnover and lots of chaos we stepped back and took a long,hard look at what was going on. I would like to say a light bulb went on and we knew exactly what to do but it wasn’t that simple. After months of study and untold numbers of exit interviews we had a theory but it took a long time to prove it. Businesses all possess a ‘corporate culture’ or personality and what we came to realize was that nearly every person we had hired who didn’t work out did not match up to ours. When we shifted our focus from hiring the most skilled applicants to matching up their values,ethics and goals to what was already in place in our company is when things began to turn around for us. It’s also when we started to receive the positive comments from visitors about our workforce. We haven’t stopped trying to hire skilled people but we have tried to take a more balanced approach. If it looks like we are putting too much focus on how someone fits our family,think about it this way;If someone’s skills don’t exactly match what you need you can provide training,all they need is an interest and the aptitude. If their values don’t match ……. Well,I think you get the idea. When I first try to explain this concept to someone they assume we gave up some of our quality or productivity in exchange for harmony but that is not how it turned out. Because we all but eliminated the chaos and the retraining that goes with employee turnover we have been able to redirect all that wasted energy into being productive. Even the investment in the skill training has paid unexpected dividends. We were justifiably proud to provide training to employees that would increase their skills and raise their entire family’s station in life. What we weren’t expecting was what an impact it would have on their loyalty and morale. That’s what visitors see when they take the tour and it’s what makes it a joy for my wife and I to come to work everyday. Hire for fit,train for skill. It’s more than just a good business decision;it’s also the right thing to do. It’s a phenomenon more easily observed in larger companies but to some extent,it’s at work in any group where leadership is involved. It works like this….. You do a marketing survey and the results show the majority of your customers indicate that the quality of your product or service could stand improvement. You call a company-wide meeting and tell everyone about the new quality initiative. From now on,you tell everybody,nothing goes out to the customer unless it’s exactly right. You even go so far as to say that this is so important that you would consider holding up production until it’s done right. Then you go back to work feeling confident you did everything right. I mean,a company-wide meeting,how could they miss how important this quality thing is? Now that you have that handled you can concentrate on another concern. We are coming to the end of the quarter and our sales are lagging behind what was forecast. You throw yourself into addressing boosting your sales. Your new mantra is ‘ship it’and you check the figures almost daily. And it works! The final numbers come in to show you actually beat your target. Life is good…. and then the customers start calling. “We thought you were going to work on this quality thing we talked about.”They say. “What was that survey about if you didn’t care what we told you?” What happened? You take one of your middle-managers aside and ask him. Here is what he tells you:“One day out the the entire year you come out and tell everyone how important quality is and then,every day for the next two months your actions show us it’s really what we get out the door that’s important”. I guess the bottom line is,be careful what message you are sending. If you aren’t getting the results you expect,make sure you are not paying attention to the wrong thing. It’s really sad that much of our news media has slowly turned what once was a truly noble profession into an all-out contest to see who can report it first. I understand competition as well as the next person but when that becomes so much of a focus that your decisions begin to have negative consequences and you begin to harm the people you are supposed to serve it’s time to take a step back and look at the bigger picture. More and more it seems push to be the first to report any sort of breaking news has begun to blur the line between reporting the news as it happens and predicting the future. This sort of over-reporting was most obvious after the sub-prime lending fiasco caved in and we had so much uncertainty about our nation’s economy. I know bad news sells but it seemed as though the media actually found some delight in reporting how bad things were. I started listening to what they were saying about the stock market and a pattern started to emerge. If the DOW went up $100 for the day they would say “The stock market crept up today”but if it dropped even $50 it “plummeted”. Listening to this sort of thing nearly every day caused widespread fear from the corporate boardroom to the man in the street and they took action out of fear. There is no way to measure how much this media-fueled near panic deepened the recession we are just now recovering from but I would bet it would be significant. The reason I bring this up now is because I am afraid I can see it happening again. This time Chicken Little is telling us inflation is coming. This morning I read something that said the national average price of gas has increased for 26 straight days even though the supply is within a normal range. Going back to what we learned in high school about the law of supply and demand the obvious answer for this is simply greed. What the reporter said was the reason for this was ….. wait for it……INFLATION! So,is inflation our next self fulfilling prophecy? Maybe it’s time to start paying attention to the media that uses this sort of supermarket tabloid journalism and turn them off. They live and die by circulation,whether it’s newspapers sold or mouse clicks and those that are not balanced don’t deserve our attention. |
Recent Comments