Why the Ivory Tower May Have Authority but is Clueless to What's Really Going On

Even though few would dispute the value of being an engaged leader, many still do not practice what they preach. The harsh reality is great numbers of leaders continue to operate in a vacuum by sequestering themselves away in the corner office and attempting to lead from afar.  Trust me when I tell you that being out of touch is never a good position to find yourself in as the CEO. I rarely come across leaders who couldn't benefit from being more meaningfully engaged on both a broader and deeper basis, and hope that today’s post will encourage you to do just that and engage.

Patrick Lenioni's new book "The Advantage" is a supreme summary to my point.  "Lack of intelligence, domain expertise, or industry knowledge is almost never the problem I see in organizations. In twenty years of consulting to clients in virtually every industry, I have yet to meet a group of leaders who made me think, Wow, these people just don’t know enough about their business to succeed. Really. The vast majority of organizations today have more than enough intelligence, expertise, and knowledge to be successful. What they lack is organizational health.

This point is worth restating. After two decades of working with CEOs and their teams of senior executives, I've become absolutely convinced that the seminal difference between successful companies and mediocre or unsuccessful ones has little, if anything, to do with what they know or how smart they are; it has everything to do with how healthy they are". - Lencioni, Patrick M. (2012-03-14). The Advantage: Why Organizational Health Trumps Everything Else In Business . John Wiley and Sons.



There are hundreds if not thousands of management books which touch the subject and still we fail to improve.  This blog will share some of my favorite thinkers on the subject and yet so many people seem lost when trying to solve their dilemmas. We educate hundreds of thousands of professionals in MBA's, management programs and speakers and we still fail often more than we succeed.  The solution is presented by exceptionally smart people in many different ways and we still don't see the light.  I propose two main reasons for this failure in modern day knowledge transfer.
1. Management believes they know more than the knowledge worker.
2. Because of #1 there's little serious effort to foster and capture intellectual capital and create an environment of learning and sharing.

W. Edwards Deming once observed that, in most companies, a small percentage of employees are clearly superior, a small percentage are incompetent, and the majority of the remaining people will perform as well as the organizational systems and processes allow them to do so. Deming goes on to observe that one of the two primary roles of leadership, then, is to continually cultivate and improve these systems and processes to motivate and incent people to perform at their peak, thereby driving shareholder value. The phrases “if it ain’t broken, don’t fix it” and “if you keep doin’ what you’re doin’, then you’ll keep gettin’ what you’re gettin’ ” are the antithesis of Deming’s continuous improvement model. To drive this point home, some define insanity as doing the same thing over and over again and expecting it to produce different results



Most managers make decisions, solve problems, and take other action believing that they already understand the company's current reality. But they rarely take specific actions to increase their knowledge and understanding of the current reality. In addition, a common understanding of the current reality should be developed, not just an individual one. If this is done right, the rest becomes much easier.  Gemba is a concept which can often quickly address this lack of knowledge.

Gemba a Japanese term is defined as a "real place".  Think about your firm, where is the value really created?  Jim Womack in Gemba Walks states "My purpose in taking a walk is simple: to see and to understand how more value can be created with less waste. But what is the purpose of the value stream along which I’m walking? That is, just what “value” should it provide for its customer? This is a critical question for the lean thinker because diving in to “fix” a process (a value stream) so it can provide more of the wrong “value” can only be an exercise in frustration. Yet I find that many lean practitioners seem hardly aware of the issue." - Womack, James P. (2011-02-21). Gemba Walks  Lean Enterprise Institute, Inc..

Another interesting component of business today is the power which accounting has over direction.  Consider how often decisions are made based on perceived costs or ratios which have no intellectual value whatsoever.  Most management believe cost or accounting based decisions are what drives successful firms.If American business is ever to restore its lost competitive edge, companies must eschew the use of top-down accounting information to control operations. They must empower workers, and managers, to listen to and respond to the voice of the customers they serve and the voice of the processes in which they work.


It will not be enough simply to reform the management accounting information that companies now use to control operations. Restoring competitiveness will require managers altogether to stop controlling business operations with accounting information—even new activity-based varieties of cost management information. Companies first developed the habit of using accounting information to control operating processes—people’s work—only during the 1950s. Before that time, companies did not rely on their accounting systems to provide operational control information. The use of accounting information to control day-to-day operations, almost second nature to managers living today, might have seemed strange to generations of managers before the 1950s.


In Relevance Regained, Thomas Johnson perfectly states. "Companies that give empowered workers and managers ownership of information about customers and processes are not forsaking concern for profit. Far from it! They simply recognize that long-term profitability is impossible if the bottom line continues to dictate people’s actions. Personnel whose actions are driven by the bottom line can  not respond flexibly to customers. To motivate behavior that is responsive and flexible, companies require new management information and new management thinking." Johnson, H. Thomas (2008-06-18). Relevance Regained (pp. 16-17). Simon & Schuster, Inc..

If you are a leader your goal needs to be finding good ideas and fostering them.  Turf wars and silos need to be a thing of the past of you will join the ranks of many failed companies.  John Kotter in Power and Influence noted " 1. Good ideas are rarely lacking inside even poorly performing firms. As a consultant, all I needed to do was go around and interview enough people, summarize the better ideas, and voilà! I would have a first-class report bursting with excellent recommendations. 2. Having a good idea is one thing, implementing it is something else again. The reason firms have excellent ideas in them, and yet still perform poorly, is that the people who have the ideas can’t get them implemented. Bureaucratic and political obstacles stifle their creativity and innovation." - Kotter, John P. (2010-09-28). Power and Influence. Simon & Schuster, Inc..

Change must occur if the traditional top down management is to be removed by bottom up knowledge sharing.  Environmental change demands organizational change. Major internal transformation rarely happens unless many people assist. Yet employees generally won’t help, or can’t help, if they feel relatively powerless. Hence the relevance of empowerment. THE RATE OF CHANGE IN THE business world is not going to slow down anytime soon. If anything, competition in most industries will probably speed up over the next few decades. Enterprises everywhere will be presented with even more terrible hazards and wonderful opportunities, driven by the globalization of the economy along with related technological and social trends. The typical twentieth-century organization has not operated well in a rapidly changing environment. Structure, systems, practices, and culture have often been more of a drag on change than a facilitator. If environmental volatility continues to increase, as most people now predict, the standard organization of the twentieth century will likely become a dinosaur.

If you haven't noticed the theme of this blog is to use some of the best practitioners in this field to show you how common the answer is out there.  To sum up this topic I close with James Womack's recommendation on how to start your change.

"What is the work of management? What value do managers actually create? My answer, informed by insights from John Shook, is that managers create value—that is, they do useful work—through four types of actions: Gaining agreement on the few important things the organization needs to do. This means focusing on how the organization can dramatically improve its ability to create more value, and the right type of value, with less time, effort, investment, errors, etc.

• Gaining agreement is predominantly the work of senior managers, using the lean management tool of strategy deployment. (But please note that the top managers don’t decide in isolation about the few important things. Rather, they gain true agreement through catch-ball dialogue with different levels of the organization about problems and opportunities.) 
• Deploying the few important initiatives selected by strategy deployment, solving problems as they arise, and evaluating proposals from lower levels of the organization. This is predominantly the work of middle managers, using the lean management tool of A3 analysis that puts plan-do-check-act cycles into an organizational and customer context. 
• Stabilizing the organization. This means making every step in every process capable, available, adequate, and flexible so the value stream can flow smoothly from end to end and improvements can be sustained. This is predominantly the work of front-line managers, using the lean management tools of standardized work with standardized management and kaizen. 
• Creating the next generation of lean managers. This is the work—perhaps the most important work—of every manager at every level, using the lean management tool of A3 analysis. New lean managers can only be created in intense dialogue between mentors and problem owners through many cycles of gemba learning.

If this is the work of management, how does my list compare with what managers actually do every day? In my experience, there is hardly any overlap. Most managers I observe spend most of their time with incidental work—box-checking, meetings that reach no actionable conclusions, report writing, personnel reviews that don’t develop personnel, etc. And in the time left over they do rework. By the latter I mean the firefighting to get things back on course as processes malfunction. Most managers seem to believe that this is their “real” work and their highest value to their organization. I see the gap between the true work of management and the things managers actually do as the muda of management, a vast reservoir of wasted effort and lost opportunities that we all need to address. Removing this muda is one of the greatest challenges facing our movement in the years immediately ahead."  Womack, James P. (2011-02-21). Gemba Walks . Lean Enterprise Institute, Inc..

Patrick Phillips
http://www.patrickkphillips.info/

Leadership and their Role in Value Delivery

The proliferation of process methodologies has not only made the traditional form of managing more uncertain, but has greatly increased the consequences of uncertainty for managers. Value based (Lean) methodologies emerged as a way to manage and even turn these uncertainties into organizational advantages.  There are countless ways these methodologies define value, but all methodologies have one commonality which they share to ensure long term success.  Leadership and leadership support for value based change initiatives are the number one variable for success or failure of any such initiative.   This post will explore how unconventional leadership supports change in your organization and how with thoughtful planning and support you can avoid the most common points of failure.

Traditional command and control structured organizations are often not effectively designed for allowing leaders to adequately promote value delivery.  Traditional organizational structures are also not fruitful at turning managers in to effective leaders.  Neither are they designed at empowering their workforce, rather they tend to focus on hierarchical decision making which promotes a command and control mentality.  

Value or value creation can be viewed in multiple ways.  The customer must value your product or service and be willing to pay for it, it must change the product or service, and must be done right the first time.   Many frameworks do a great job focusing on these three areas.  Although frameworks are great tools at enabling value delivery they can only be utilized if the culture and environment fosters and promote value delivery at every level in the firm, including the individual.  Using Pareto’s law we can deduct that tools/frameworks only represent 20% of the ability to deliver optimal customer value while leadership empowerment and support comprises the additional 80%.  In successful value focused firms 80% of the effort is expended on changing leaders' practices and behaviors  and ultimately their mind set.  Senior management has an essential role in establishing conditions that enable the effort to succeed. Their involvement includes establishing governance arrangements that cross divisional boundaries, supporting a thorough, long-term vision of the organization's value-producing processes, and holding everyone accountable for meeting value driven commitments. This is accomplished through regular, direct involvement and understanding their role in empowering their employees (who should be considered your intellectual capital).   Without this vision any value driven initiative (Lean, Six sigma, Theory of Constraints, agile) will only be seen as the flavor of the month.

Asking yourself “is your customer willing to pay for the activity you are engaged in” can provide tremendous insight when leading.  Defining value in any other terms can undermine the potential of value delivery for the firm.  Leadership often takes too much credit in the value of the organization when they often have created little direct value.  The majority of the value delivered is through the product, services or placement of your firm’s competitive advantage.  This means your greatest potential for value creation often resides in the employees who produce your competitive advantage.  Historically to gain the ranks of manager one had to experience, learn and work in multiple domains of the organization.  Rising the ladder through the learning curve of the organizational layers.  This allowed managers to gain knowledge and experience which could be used to effectively lead and make intelligent decisions.   Today management still rises through the ranks but often they lack the domain knowledge they would have previously gained.  Rapid Technology changes make it difficult for management to have the same depth of knowledge as those they manage.  The pace of change today has created a model where leadership is in stark departure from leadership over the last century.  Traditionally organizational structure evolved as a product starting with the industrial revolution with influence from military modelling.  A command and control model focuses on management making strategic and tactical decisions for their employees to follow without question.  This method worked fairly well in highly controlled production environments which had little variability in their process.   

Peter Drucker (http://en.wikipedia.org/wiki/Peter_Drucker) the father of Management predicted then observed a shift in the early 60's which indicated successful firms were putting more decision in the domain of their employees who work with the product.  Product complexity and efficiency were creating an environment where production lines where much more complicated and variable and couldn’t be supported by command and control.  With the emergence of service based industries it quickly became apparent that traditional management methods were out dated (although this had become equally apparent in manufacturing earlier).  Successful organizations today understand the majority of tacit knowledge with tremendous potential resides in the knowledge worker.  This is the same worker who under earlier models lacked decision making authority and operated as order takers.

 What is the primary role of a leader today then? This question is asked far too infrequently, and when it is asked, the answers are predictable and often wrong. But it is a vital question, as without leadership, empowered employees will never get off the ground. Common replies include setting the vision, establishing priorities, and providing motivation. These are important responsibilities which are out dated.  The essential purpose of a leader is to do one thing: create and empower change. Without a good leader, nothing changes. If a lean program, or any other program for that matter, is failing, it is probably not the fault of the tools. It is failing because of lousy leadership. As you embark on your journey, learn all you can about the concepts, practices, principles, and tools of your choosing. But remember, above all, the goal of these tools is value – and value hinges on leadership who promote and empower that change. 

The knowledge workers need to be in control of achieving and promoting change. Therefore, the leader must convey to the worker that they are the ones who own the processes. Leaders need to empower people to have everything in place in order to perform.  Only when they know and are empowered what to do will they feel accountable and take ownership of the processes. In organizations with traditional leadership behavior, there are frequently policy deployment directions from senior management. The mindset of these leaders is not to involve the people at all. Therefore, people can’t relate to the KPIs (Key Performance Indicator) that cascade down because they can’t understand their contribution or the relevance of the KPIs. People in these companies can’t engage themselves in supporting their senior management in delivering results. Consequently any initiative which does not empower or utilize the input of the employee is more likely to fail. 

Leaders must focus on commitment to endlessly invest in people and promote a culture of continuous improvement.  There is no destination for value delivery models, there's only the journey.  As a leader you should never consider your “Lean” or “Agile” program as complete.  Once you make this mistake you start down the path of contentment and will lose focus on empowering continuous change.  If leaders provide a full and continuous investment in their employees then they will in turn see dedication.  All too often when talking to senior management about learning and multi-skilling of employees, they tell us they worry about efficiency.  Learning take times which reduces what can be delivered to the customer.  Therefore, the view is that it is more efficient to have the specialist work on the specialist things (there are times and places for specialists but that’s for another paper). This might make sense from a traditionalist, but from a product-development-as-knowledge-creation perspective, this kind of thinking is plain wrong and even dangerous. Learning is the major value added activity in product development and knowledge transfer. In the long run, reducing learning will only result in loss in market share and a less valuable staff.  Often management use the excuse that they have to assign resources to satisfy the customer first, which leaves them little or no time to make real change. Their bosses find it hard to argue the point (or use it as a convenient excuse themselves). Value based culture requires you to make the time to make the change—long-term planning and results versus short-term results with little planning.

All leaders have the ability to adapt to the new value driven leadership mind-set.  However, not everyone will be capable of doing it without intensive coaching and support from their own leader or experienced external coaches. Even though initially some of these leaders will not feel comfortable in being a leader in this new system, not many of them leave or are forced to leave because, over time, most will understand the value and adapt to the new leadership system.

Not every leader nor every company culture is ready for this change in leadership mindset. Despite this, many companies have implemented value based tools and techniques for years with tremendous success (Toyota, Boeing, GE) . For example using a lean framework, Center for Ledelse interviewed 400+ companies concluding that only 7% had realized more than 80% of their expectation in their Lean program. This only confirms that these companies need to take action now in adapting Lean leadership behaviour and mindset in to their company culture.  Every leader deserves a chance, but remember you will have to fight a lot of scepticism down that road (insert reference). You will likely need to convince the team members by showing them what is in it for them personally. People will change when they realize that their leaders really want to empower them. Leaders need to be consistent in what they ask for. They should not reduce their requirements. They should not change their communication. Consistency it required and we must accept the fact that it takes time sometimes many years for this change to fully reflect in the culture.

Dedication is required of each team member to strive for self-improvement. Commitment is needed for each team member to ensure the values and principles will be followed and the team will hold itself accountable. Courage, because the emotions that empowerment invites,  will be unlike anything the employee has ever professionally experienced.  Avoid non-dedicated team members or “partial allocation.” A team member who is in multiple teams does not have the same commitment and shared responsibility as the other members. Part-time people equate to part-time commitment. Part-time commitment leads to team failure. To the maximum amount possible, all members are 100 percent allocated—fully dedicated to their team. The amount of management waste that disappears is amazing.

What you do from this point forward is exciting.  The possibilities for your firm are endless.  There are many sceptics who think value based programs cannot work for them.  They are right, if they keep that mind-set then it can’t.  There is no doubt the concepts presented in this paper can work for you.  From the world’s largest auto maker to the smallest organization you can make this work.  It can work for you, your vendors and even your customers.  Take the time to explore your leadership potential and realize that anything is possible.