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Saturday, June 18, 2011

Up or Down, Nothing Stands Still

Every business has a life cycle.  I have seen the cycle broken down into four to seven stages.  For my purposes today we are going to simplify this to four stages.  The stages are;

     Introduction or Start-up
     Growth or Development

All businesses follow this cycle.  When you hear a business owner say they are happy with their current sales and just want to maintain, they are already in decline. Maintaining the statuesque is not possible.  When a business remains static their environment continues to move forward, leaving them behind, in decline. 

Competition is always seeking to take your customers.  Competitors in the Growth stage are striving to improve.  They seek new ways to produce a better quality, less expensive product delivered to the customer at a faster rate.  If your business is simply trying to maintain they will take your customers and you will decline.

Technology, machinery and materials are constantly improving.  Companies that are in the Growth stage will take advantage of this.  If your company is not, they will beat you in the market place and your company will decline.

In the Maturity stage companies begin to accept their processes and techniques as successful.  They are at their peek and want to begin capitalizing on their investments over the years.  They become emotionally tied to their processes they invented and don't want to change.  They begin to see record profits and are blinded to the fact that competitors have made them  the target.  At their peak, it is the beginning of the end.

In the past, this cycle took many years. Changes were slow and the cycles long.  In today's world, with rapidly changing technology, world wide economies and lightning fast communications shortened the cycle. Companies rise quickly to the top of their industry and then fade away in only a few short years.

If the cycle is short and inevitable for all companies, how do some companies prevail for years?

Awareness of the cycle and courage to change when things are good, is the key to long term success 

To survive the business cycle and not enter into decline, companies must reinvent themselves at the peak of their success.  Most companies move into the decline stage, find external excuses for their slide and wait to react until it is too late.  Others accept the true reasons for the decline but have waited too long to initiate changes and struggle to the end.  The key to longevity is to understand the business cycle and begin the transformation when they are at the top. 

 It is against human nature to make drastic changes when things are good.  "Why Change a Good Thing?".  Change is difficult and there is always the fear that you will make the wrong change.  When things are in decline it's easy, Can't get any worse.  When things are good people do not want to mess them up.

To make successful changes, the company must retain it's core principals.  The core principals that established the company allowed it to achieve initial success and will guide them in there transformation.  They form the culture and reason the company exists.  Loosing track of these essentials during the process will insure failure of the change process.  The employees, your most valuable asset work for the company because of the culture and core values of the business.  Abandoning the core values will not find support with the team.  Without the team, change is impossible.  It is okay to develop and refine the culture, but never abandon it.

Ebsco is currently in the maturity cycle. We have found success and respect in the industry.  Now is the time for change.

We are looking at every process and finding ways to improve.  We are investing in equipment and materials to increase quality, reduce costs and lead times.  We are enhancing and expanding our training program to equip our team with the best tools available. We are investing in software to help us manage the process and provide better communications. Ebsco is transitioning from the maturity stage back into the start up cycle.  We are rigorously maintaining our core values and culture to insure our success.

So, as the competition establishes Ebsco as the target, we not only are moving the target, we're changing the target completely.  We are taking what the competition does well and setting it in our sites while maintaining our strengths. 

We are not starting over on the cycle.  We drug the entire cycle up to where we are, and are starting UP from there.  The process takes time but it's one hell of a ride.  I hope you'll join us on our ride.

Saturday, June 11, 2011

Technology Servant or Keeper?

This last week I spent time with our Internet SEO company, Quantus Creative looking at Google analytics.  I also attend meetings planning a major software purchase that will automate and tie together several front end processes at our company.  I marveled at the capabilities and vast quantity of information these two systems offered. To truly utilize the power and information in these systems is a full time job, hence our relationship with Quantus.  This led me to consider the question, In business today are we utilizing technology to serve us or have we transformed our jobs to manage the technology?

I began my management career in 1979.  This was at the leading edge of the technology boom.  Technology at that point was isolated to large corporate main offices and had not trickled down to the operations level.  Management was considered both an art and a science.  There were proven systems, processes and theories that were widely utilized, the science.  The art of management was still a huge factor.  Managers utilized intuition and gut feelings to make decisions.  Successful managers had a real connection to what was happening and intuitively reacted to capitalize on the circumstances.

Today much of that intuitive art of management has been replaced by technology.  We have real time data available that will communicate the current situation.  Intuitive programs with historical data can accurately guide decisions makers in their response to the data.  Formerly, managers made observations as anecdotal evidence, formulated conclusions and made decisions.  Now managers have real evidence at a touch of a button.  Often we are able to "drill down" several levels for specific data and rearrange the data to identify trends and patterns before they make impacts on the operation.

So it would seem that art of management has been replaced by technology.  I propose that technology has not replaced the art of management but changed it.  The art of management now lies in the ability to discern what information and how much information is utilized by management.

When we become servants to technology, we loose control of the operation.  Managers often feel it is their job to be on top of everything and that is not entirely incorrect.  The art of management is the ability to determine how they will accomplish this.  Many fall into the trap of attempting to analyze every report and date source, to drill down and understand every detail.  This becomes a "can't see the forest for the trees" scenario.  Chances are in their attempt to see everything, time constraints will only allow them to see a few things in detail and never address other topics at all.  They will spend all of their time collecting data and never addressing corrections and opportunities the data presents. Most importantly they loose touch with their most important resource, their team. Failure is imminent.

The art of management now is in the utilization of technology.  Successful managers know how and where to obtain the information they need and to do it quickly.  Sampling data for trends is an effective use of technology.  Entire fields of study have developed in time management centered around the use of technology.  Auto generated reports at pre-determined intervals harnesses the power of technology effectively.  Managers must constantly evaluate the benefit of technological outputs and only utilize those that have utility to them.

One of the most effective management utilization's of technology is exception based management.  It is established on the time proven 80%-20% rule.  Concentrating on the most important 20% of your business will produce 80% of your results.  To impact the remaining 20% will require 80% of your effort.  It makes sense to stay focused on the areas that you can have the greatest impact.  Technology is the best tool to assist you in identifying those areas. Obviously you would not want to see customer service at 81%, quality at 82% and safety at 79% and determine to focus all of your energies on safety. Hopefully no company would be satisfied with 81% customer service and 82% quality.  Each aspect would be looked at individually.  KPIs or Key Performance Indicators would be identified for each area.  Monitoring these KPIs, within each area will allow you to focus your resources effectively.  In customer service you may have identified on time delivery, communication, accurate billing and fast customer response as your key elements. You would establish data reports evaluating all of these aspects.  After identifying the weakest category you can drill down into the data to identify root causes of your performance.  You will then focus your efforts on improvement of that category.  Exception based management should produce a stair stepped progress.  You improve the weakest aspect, after improvements, it is no longer the weakest and you shift your efforts to the next weakest aspect.   You will only spend time with detailed data on the areas of focus.

When evaluating the use of your time utilizing technology it is essential that you NEVER loose focus on your most important resource.  Your team.  Nothing happens, nothing is produced and profits don't exist without them.  Technology is merely a tool.  It is up to you whether you utilize it to serve you or subjugate yourself to maintain it.

Saturday, June 4, 2011

Quality Assurance

Most companies say they are committed to quality and continuous improvements but the truth lies in their actions.  Are they changing? Are things different now compared to a year ago?  If the answer is no, then they are not committed. 
I have attempted to document Ebsco's journey in continuous improvement in this Blog.  At the beginning of our journey we created a new mission statement defining who Ebsco is.  It is all about quality and our commitment to continuous improvement.
We recently completed a project that improved the entire process in our Quality Control Department.  To say I'm proud of everyone's  accomplishments would be an understatement.  We have drastically reduced Que time in the department and completely modernized the physical surroundings.  What better way to drive quality than to improve the quality control department.  We accomplished our objectives in QC.  I was ready to check that project off and move to something new when I was asked a simple question. "Is it Quality Control or Quality Assurance?"  Who is really responsible for quality?
When Toyota created TQM the responsibility for quality was instilled in everyone.  Everyone was empowered to shut down the assembly line if they discovered a quality issue.  Quality was at the root of everyone's job. 
Everyone at Ebsco have always been committed to quality.  Individuals in all departments have provided input into the quality system and taken responsibility for the quality of their work.  If they had not we would not have the reputation for quality we have today.  The question was where was my responsibility in the process. 
Ebsco had NCRs, Work Order Exceptions, CARs, PARs and the entire collection of quality improvement alphabet forms.  Previously these forms went to the Quality Systems Manager who investigated, reported and logged the document. One person handling the entire system.  It was difficult to manage the information much less report changes to the team. 
Now the forms go to the responsible Vice President.  Liz and I are responsible for sharing this information with everyone involved and coordinating their corrective actions. We have the responsibility to drive the team to the root cause.  Now that everyone sees a commitment from management people are encouraged and are submitting problems.  The team creates solutions and everyone sees the benefit of their efforts.
With these changes, we are changing the name from Quality Control to Quality Assurance.  Quality control is everyone's job.  The Quality Assurance department is responsible to oversee and verify their efforts.  We are also reviewing all job descriptions and adding quality control to the basic job requirements for every employee.  We are developing training for our Team Leads in root cause analysis.  Quality control lies with each individual and management is behind them 100%. 
As I have mentioned in previous Blogs, the key to Ebsco's success is leadership.  Not management leadership but the teams leadership in driving change. The simple action of showing management's support for their ideas drives them to take Ebsco to our ultimate goal of becoming a World Class Manufacturer".

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