The Real Leadership Challenge

In my last post, I positioned an argument that the global economics are changing in a way that may support manufacturing returning to U.S. shores. I mentioned our President is talking about it and major big box retailers, such as Walmart, are making commitments to buy more “Made in the U.S.” goods. Many of you commented on or questioned consumers’ loyalty to pay more for locally made goods. Having spoken directly with the leadership of manufacturers in a wide range of industries, I can say that the issue isn’t loyalty, but pure economics.

That said, we have numerous opportunities to address – lack of skilled workforce, supply chain infrastructure, aged equipment and many more.

Milliken & Company is uniquely positioned to understand the changing pulse of U.S. Industry. Since winning the Malcolm Baldrige Quality Award in 1989, where we were required to open our doors and share best practices, we have continued to host companies from around the world. We estimate that over 10,000 companies have come to benchmark Milliken. This has been a great interchange of ideas, as Milliken also benefits from our time spent with some of these globally recognized best companies.

For the past seven years, Milliken has been hosting conferences at our headquarters on the topic of operational excellence in order to help other companies achieve higher performance levels. These companies represent primarily U.S. based companies. Milliken has a practice of surveying visiting leaders on key operational approaches, and the survey questions haven’t changed. With over 1500 leaders having attended our conferences to date, the survey results speak to the current managerial gap we need to address for U.S. competitiveness.

Let’s look at the survey questions and their results to see what conclusions can be made.

Question 1: The majority of my company’s improvement efforts are driven by everyone or management?

Everyone 47%

Management 53%

This is a leadership paradigm we’re familiar with. Years ago, Milliken had to deal with the challenge of overcoming the mindset that management has all the answers. We were a traditional top-down managed company. We had a term for hourly employees: “hands.” World-class organizations engage the hearts and minds of all their employees. Management does not have all the answers, but the challenge to let go of traditional power structures is often perceived as a threat to their personal authority. Making everyone in the organization problem solvers creates a new culture of accountability and innovation that is difficult to sustain in a traditional management hierarchy.

Question 2: My organization operates primarily by initiative approach or system approach?

Initiative Approach 57%

System Approach 43%

There are many studies that show only about one-third of all initiatives actually succeed in the workplace. We believe that people need the context of a well thought out system on how to do their work.

Taiichi Ohno, founder the Toyota Production System, said, “It is a system that says there is no limit to people’s creativity. People do not go to Toyota to “work,” they go there to “think.”

Milliken has a long history of initiatives. We can count over 125 initiatives rolled out over the past 30 years. The problem with initiatives is that the organization gets early results with the low hanging fruit but can’t continue or sustain those results over time. So, when a new initiative is rolled out, it may work great for a while, but over time, it tends to confuse the organization on what’s truly important. It was only when Milliken developed the Milliken Performance System (similar to TPS, but fits us) that the initiative mindset changed.

Question 3: My organization seeks cost reduction by?

Zero-based Thinking Approach 40%

Budget Approach 60%

Zero-based thinking challenges organizations to look at all opportunities from the perspective of perfection. It creates a picture of the overall cost opportunities and prioritizes where to go work. When organizations run only to budgets, meeting budgets is considered good management. However, the reality is budgets have a lot of costs built into them that the customer does not want to pay for. While budgets are necessary, zero-based thinking can take organizations to a new level of performance. Milliken’s history was very much “budget” or “standards” oriented. Getting the organization to think in terms of “zero” or “perfection” was very emotional. This kind of radical change must be supported from the top. Budgets don’t go away, but they need to co-exist with “Zero Loss Thinking” to fully optimize the organizational opportunity.

Question 4: My organization tends to have short-term thinking or long-term thinking?

Short-Term Thinking 67%

Long-Term Thinking 33%

Publicly held companies have to be accountable to stockholders every 90 days. That tends to push organizations to only embrace 3-month cycles of operating. To truly have a U.S. manufacturing renaissance, investments in equipment, training and infrastructure must be made. When organizations view these investments as “costs,” the trade-off is typically made for a short-term gain. However, that gain often comes at a long-term expense, and the actual cost isn’t truly captured. The real challenge is to make longer-term investments self-funding. Well-run companies accomplish this with a well thought out operational strategy that addresses both the short-term and the long-term opportunities.

Question 5: My organization relies heavily on individual heroics or team processes?

Individual Heroics 57%

Team Processes 43%

The “Hero” is an American icon. We grew-up watching them on TV and in sporting events. Management often rewards those who do heroic things on a daily basis to meet customer needs. The issue with heroics is the original problem is never totally solved, and when it returns, it will require yet another heroic act. This becomes an endless cycle. I often ask organizations who gets the credit in your company: the person that comes during the middle of the night, solves the problem and enables you the make the delivery on-time, OR the person whose process clicked on through the night without missing a beat? Most people, regardless of industry or company size, answer that the hero gets more credit.

Question 6: I spend the majority of my time firefighting or on focused improvements?

Firefighting 70%

Focused, Continuous Improvement 30%

While this question is closely linked to question #5, it is clear we have an opportunity in how we work. A problem may be solved for the moment, but it returns over and over again because the true root cause has not been addressed. As stated above, firefighting can be addictive, especially when management reinforces it. Our leadership visited several world-class companies in Japan after winning the national quality award. They told us they believed we spent 60% of our time firefighting. We didn’t believe them, so we surveyed all operational leadership in Milliken for a month. Our result: 58% reported they were firefighting! It’s much lower today, but firefighting can come to feel like daily operations when we constantly expect things to go wrong.

Question 7: My company’s solutions to problems come primarily from?

Experience 80%

Scientific Process Methodology 20%

The answer to this question is the biggest surprise each conference. I shared this data point in my last post. Our experience can be biased, not factual. Again, when management promotes a successful employee, they believe the success achieved in the last assignment should simply be applied to their new one. This can create a lot of variation in organizations on how work gets done. It also makes it difficult to replicate and sustain success.

We’ve found these survey results to be consistent from conference to conference. I use one slide to summarize these findings (tongue in cheek). It goes…

“In my organization….

“We make Improvements by driving Initiatives,

based on what’s in our budgets,

going for short term results,

that are led by managers working in teams

using their Experience.”

Surprisingly, most conference attendees say, “That’s my organization.” Several decades ago, you could have described the Milliken organization this way, as well. The challenge to surviving and thriving in very competitive environments is all about management letting go, giving the entire organization the proper tools and systems to run to business, and pushing the knowledge and decision-making to the lowest level in the organizations.

With the improving economics for U.S. Manufacturing, and the funding available, the real question is are we really ready for the Renaissance? Most companies are working hard on something. Most leaders are very knowledgeable about best practices such as the Toyota Production System, but when it comes to the discipline of making the managerial mind shift, our greatest opportunity is fundamentally changing the way we lead.

This article was originally published on LinkedIn by Craig Long. Craig Long has spent his 40-year career with Milliken & Company in a variety of executive leadership roles. In 2007, Craig helped launch the Performance Solutions by Milliken business to assist other organizations with the same challenges that Milliken has overcome. Craig’s experience includes business management, quality, continuous improvement, corporate education, industrial engineering, product development, and complexity reduction. For the past two decades Craig has led successful MPS implementations within Milliken and with 350 client operations in 23 countries to d