Category Archives: Value-Driven Manufacturing

World Class Manufacturing Leadership

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World Class businesses have world class leaders. So what does it take to lead a successful World Class manufacturing business in 2012? Here’s my view…

The leaders of World class manufacturers are highly driven; they need to be the best in the world at what they do. They have high expectations, they create a strong sense of urgency and they inspire the right people to join them on the journey.

They understand that you don’t have to invent anything new and different in order to be world class. What you have to do is configure a value chain that delivers unique value in a different way.

Here are some of the things that they do:

Purpose: they communicate the purpose of the organisation in a way that is meaningful

Performance: they inspire people to perform at their best and they do not tolerate mediocrity

Passion: they are personally invested in what they do – they get fired up and it’s contagious

Process: they create streamlined processes that deliver outstanding and unique value to their customers

People: they get the right people on the bus; they expect to make some people unhappy

These are just some of my own thoughts – what are yours?…

Leading the Value-Driven Business: Character

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People trust Leaders who demonstrate Competence and Character. In a previous post I talked about some of the fascinating Leadership research outlined in a recent series of HBR blogs. The most recent explains why Character is so important, and how effective Leaders should demonstrate this. I’d like to pick up on the main points here because they’re incredibly relevant to every owner-managed business, to every Continous Improvement approach, to every major change programme, and of course to every Value-Driven Business. Personally, I believe they’re so important to our day to day interactions that they’re intuitive – it’s how we behave, even without realising it. As you’ll see, they’re so common that they’re repeated and commented upon to the point of becoming cliches…

1. People need to know what you’re trying to achieve and why.

Whenever we first encounter a stranger we want to know: what is this person’s intent or motivation? Hence the cliched challenge: “Halt stranger! Friend or foe?” It’s why the first words of the alien in the 1950’s sci-fi movie, as it steps from its flying saucer, are: “I come in peace”.  It’s probably why so many novels and films feature encounters between strangers – we become immediately engrossed and our natural instincts are instantly engaged.

It’s why the method actor asks his/her director : “What’s my motivation?” It’s why the question:”Who are your heroes?” tells us so much about a person. It’s why the best situation comedies are so funny – great actors develop well-defined characters, and we enjoy and come to anticipate how the different characters will interact, each seeing the world from their own perspective.

In a business context, many owner-managers vastly over-rate the mind-reading abilities of their employees. It’s important that you explain what it is that you’re trying to achieve, and why you do what you do. We all know how important it is for a business to have a clearly stated purpose, but it’s also important when it comes to the day-to-day decisions and actions of the leaders in the business. And talking of actions…

2. People hear what you say but they believe what you do.

Words are important but actions are what counts. It’s about leading by example and doing what we expect others to do. We cannot always understand a person’s motivation so we judge people by their actions and behaviours. Again, this is so well understood it’s part of our everyday language. We have phrases like “Walk the talk”. We understand the emptiness of “Do as I say, not as I do”. It’s one reason why stories and fables are so compelling. It’s why we tell “war stories” and we recount tales of key moments in people’s lives, and how they behaved.

3. Consistency is everything.

We act in accordance with our values and beliefs so one way that we can judge the extent to which others are sincere or genuine is by observing how consistent is their behaviour. If a person acts inconsistently or in a way that does not match their stated values and beliefs, we take that as a sign of falseness. To quote Marx (Groucho not Karl): “These are my principles. And if you don’t like these, I have others…”

To read more, the original HBR Blog is http://blogs.hbr.org/hill-lineback/2012/04/for-people-to-trust-you-reveal.html

You can find other blog posts about Value-Driven Manufacturing here on the Manufacturing Times blog (helpfully categorised under “Value-Driven Manufacturing”!), and you can find out more about Value-Driven Business at www.ValueDrivenBusiness. co.uk.

Value-Driven Manufacturing and Value-Driven Business

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Value-Driven Manufacturing is an application of Value-Driven Business, in the same way that the Toyota Production System is part of the Toyota Management System. For an outline of the  main points there’s a free PDF download: What every Owner-Manager needs to know about Growing a Great Business

Leading the Value-Driven Business: Competence and Character

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“Your ability to eilicit people’s best efforts depends on their trust in you – their confidence that they can count on you to do the right thing” *. In a previous blog post we talked about the fact that this trust is earned by Competence and Character. Let’s look at how you can incorporate these principles into your Value-Driven Business System.

Firstly, the whole area of competence. For every role you need to  need to know what skills and knowledge are needed to do the job well. Critically you need to understand the core competences – the things that make the difference between an average performer and an excellent performer. The Value-Driven Business System uses core competences as a key part of the “People” system. Painful Truth #1: in a small business you won’t have the time or the resources to develop these so recruit people who already have them. If you want excellent performance, recruit excellent performers. This is particularly important when it comes to management. When I started my management career in the 1980’s British Industry was blighted by “Happy Amateurs” at all levels of management. Sadly, little has changed since. Management is an area of expertise in its own right – it needs specific knowledge and skills, and these have to be developed. Painful Truth #2: managers have to take responsibility for their own development, particularly when times are tough. If they don’t, don’t retain them. Regularly assess the skills, knowledge and performance of key staff. Where there are gaps, take action to fill them quickly. Either provide the right training and development, or move the employee out of the role.

Secondly, character. This is about values, beliefs and behaviour. Value-Driven Businesses are successful because they have clear values and beliefs – everyone knows “how we do things around here”.  Recruit, recognise and reward those who demonstrate the values. Painful Truth #3: if employees don’t live the values then you need to move them out of the company. Jack Welch, former CEO at GE, felt that any leader who did not live the values did not belong at GE. Bob Chapman, CEO of Barry-Wehmiller has a great phrase: “Some flowers grow better in someone else’s garden”!

The Value-Driven Business System incorporates a version of Jack Welch’s Performance-Values grid. Why? Because the Goal is to maximise the value of the business, and a large part of that value is based on the value of the company’s employees. It’s part of the Complete Balance Sheet, another component of the Value-Driven Business System.

[* Harvard Business Review (HBR) blog post – “Do your people trust you?”(http://blogs.hbr.org/hill-lineback/2012/03/do-your-people-trust-you.html ]

 If you have any thoughts or comments on these topics, or if you’d like to know more about the Value-Driven Business System,  please comment directly here or drop me an email at “an at nicholsonconsultancy dot com”

You can find other blog posts about Value-Driven Manufacturing here on the Manufacturing Times blog (helpfully categorised under “Value-Driven Manufacturing”!), and you can find out more about Value-Driven Business at www.ValueDrivenBusiness. co.uk.

Leading the Value-Driven Business

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I’d like to share a couple of examples I’ve seen over the last week, that reinforce what effective business leadership is all about. They’re absolutely core to Value-Driven Business and Value-Driven Manufacturing. The first is from a Harvard Business Review (HBR) blog post – “Do your people trust you?”(http://blogs.hbr.org/hill-lineback/2012/03/do-your-people-trust-you.html) . “…your ability to eilicit people’s best efforts depends on their trust in you – their confidence that they can count on you to do the right thing”. Tnat trust has two elements. Firstly, your competence – put simply, you know what you’re doing! Secondly, your character – “your intentions – what you’re trying to do, your goals and values as a boss”; whether you act in your own self-interest or you care about them, the group and the work.

At least the good news is that competence is learned. Character, on the other hand…

The second is from  “The 100 Best Companies to work for” in today’s UK Sunday Times newspaper (www.http://bestcompanies.co.uk/). They picked out “some common ingredients shared by all the organisations with the most engaged workforces”, which include:

  • Having confidence in the leadership skills of your manager
  • Having senior managers who listen rather than just tell people what to do
  • Having faith in the leader of the company / being inspired by them
  • Having senior managers who truly live the company values
  • Managers who support their team members and help them to fulfil their potential
  • Having middle manager role models who care how satisfied team members are in their jobs

And remember, these are not theoretical – all of these examples are based on current research of real businesses.

In my next blog post I’ll show you how to take these principles and build them into your Value-Driven Business System.

You can find other blog posts about Value-Driven Manufacturing here on the Manufacturing Times blog (helpfully categorised under “Value-Driven Manufacturing”!), and you can find out more about Value-Driven Business at www.ValueDrivenBusiness. co.uk.

Value-Driven Manufacturing

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I had the pleasure earlier this week of meeting with a highly impressive Operations Director, as we toured his plant in preparation for hosting a best practice visit next week. As always, we got to talking about what makes an excellent manufacturing business, and it turns  out that we share many common beliefs about this. Not surprisingly, they all revolve around concepts of value. I firmly believe that value is the key to business success, even more so in the current economic downturn. For manufacturers this translates into Value-Driven Manufacturing, which is based on three simple beliefs:

  1. The Goal is to maximise the value of the business
  2. This can only be achieved by delivering maximum value to the customer
  3. Success requires effective leadership, based on strong values and beliefs

Those are pretty strong statements so if you’re still reading at this point, I’ll assume that you don’t entirely disagree! Let’s look at what this all means in practice:

1. The Goal is to maximise the value of the business

Anything else is either subsidiary, irrelevant or “nice but useless”. Maximising value requires an excellent operating / management system. We’ve all heard of Lean and the Toyota Production System but many manufacturers don’t realise that this is only one part of the Toyota Management System. Here’s a challenge for you – put yourself in the position of a potential purchaser of your business, and walk the plant, trying to see everything through their eyes. Of everything that they see, what would genuinely cause them to pay more for the business?

2. This can only be achieved by delivering maximum value to the customer

Let’s be controversial – too many manufacturers are still internally focused and cost-driven, led by accountants who “understand the cost of everything and the value of nothing”. They use Lean and Six Sigma primarily as cost-reduction techniques. Do you understand your customer’s business / market / industry as well as they do? Do you understand how they add value for their own customers? Do you fully understand their needs and wants and are all employees engaged in delivering value? Do you regularly undertake “value-add” visits to your customers, and do you take your engineers and operators with you?

3. Success requires effective leadership, based on strong values and beliefs

Great leaders are believers – they passionately believe in what they’re doing and they inspire others with their values and beliefs. They’re humble, keen to learn and they expect excellence where it matters. Great leaders are rare but they exist in all walks of life and in all areas of business, at all levels. They need to be encouraged, developed and trusted to excel.

You can find other blog posts about Value-Driven Manufacturing here on the Manufacturing Times blog (helpfully categorised under “Value-Driven Manufacturing”!), and you can find out more about Value-Driven Business at www.ValueDrivenBusiness. co.uk.