Manufacturing + Supply Chain: On a Crash Course with Innovation Mediocrity

The old ways of improving manufacturing are no longer sufficient. Despite wild swings in geo-politics, intensifying global competition and the adoption of new regulatory standards, industrial customers still demand more — and cheaper, better, faster at that. Organizations are on an endless hunt to find every incremental time and cost savings possible, but the low-hanging fruit has already been plucked, and traditional continuous improvement methods only drive refinements of incremental progress. But what if this didn’t have to be so? What if you could create a more innovative environment where your workforce relentlessly embraced a self-motivated, problem-solving mentality that made change possible and enabled each employee to make a difference? What if you could get a 25% + boost in productivity and throughput without investing in new equipment?

There’s a Better Way

Operational excellence can be achieved through engagement instead of enforcement and attracting and retaining the right talent depends on it. Whether an organization is trying to get the most out of antiquated equipment in an under-capitalized environment or unveiling a new system, achieving operational excellence requires new ways of working, thinking, and leading.

We have found that market leaders in this sector share a few important, but rare leadership characteristics that define the difference between listless revenues and growth and enviable performance and award-winning cultures. The best part is, these leadership traits are teachable.

1. Customer Obsessed: Customer expectations have dramatically shifted in recent years from slow, steady and predictable to Veruca Salt-Esq expectations of “I want it now.” And because of these ever-increasing expectations, we’re seeing a shift of the power dynamic in the direction of the customer. The elite manufacturing companies are not waiting for this shift to happen. They are instead intentionally shifting from B2B to B2C because they see the intersection of speed, quality, and customer responsiveness as the only competitive path forward.

2. Emotionally Connected: Most organizations we observe are over-managed and under led. The severe focus on and pressure from near-term results come at the expense of a transformational vision necessary to remain competitive in the long-term. The most effective manufacturing organizations we work with, out-compete their peers, not because of their operational playbooks, but because their leaders have an uncanny ability to articulate a vision of the future in ways that enable every employee to be emotionally connected to the work. Creating an award-winning culture is not about HR policies and procedures, but about leaders who can conjure up both the emotionality and rationality of why change is possible, and enable every employee to see themselves in that vision.

3. Indisputably Empowered: Disrupt or be disrupted, goes the saying. Creating disruptive technologies, products, services, and processes require that everyone is empowered to improve an organization, not just the chosen few. Without autonomy and empowerment, organizations cannot adjust quickly enough to meet customers’ needs. However, the best leaders don’t just tell their employees that they’re empowered to work in new ways and hope for the best. Empowerment is a two-way street that comes with equal accountability. Just because you tell an individual, team, or organization that they’re empowered, doesn’t mean they understand how to be accountable.

4. Authentically Urgent: Are daily fires getting in the way of long-term strategy? Organizations that reward fire-fighting merely breed a culture of arsonists. Most organizations confuse false urgency with authentic urgency. Dr. John Kotter would define authentic urgency as that which focuses on critical issues, not agendas overstuffed with both the important and the trivial. Authentic urgency is driven by a deep determination to win, not anxiety about losing. With an attitude of authentic urgency, you try to accomplish something important each day, versus chasing every incendiary whim and suffering the subsequent scattering of requisite resources.

5. Genuinely Inclusive: World-class manufacturing facilities don’t place a value judgment on where their next best idea might come from; be it their top engineer or the least experienced shop-room-floor employee. I have personally been witness to countless stories of “unusual suspects” who have contributed multi-million dollar ideas to streamline supply chains, increase throughput, reduce CO2 emissions and delight customers. Look for ways to honor the diversity of the many vs. simply chose few you think are smart enough to solve tough problems. How often does your organization reinforce the importance that everyone can and must contribute their ideas to stay competitive?

The Innovation Paradox

Within every organization lies a dormant pool of untapped potential waiting to be unleashed with the right strategic vision to guide it. Yet, grassroots movements alone don’t work to build world-class operations and winning cultures. The movement must be top-down, bottom-up, and include everyone in between. The binding agent that integrates and amplifies all of these pieces is the way in which this grassroots energy is organized and channeled toward a greater purpose — the improvement of products and services. But how?

Our research (over 40+ years through the Harvard Business School) and decades of practice clearly show that great leadership and a flawlessly executed operational plan are insufficient to join the elite few organizations and leaders who outperform the competition again and again. High-performing manufacturing and supply chain organizations require a different type of operating model or augmented structure, one that paradoxically focuses on 1) delivering reliably and efficiently — think quarterly results — while at the same time 2) driving big, bold, fast change. What powers this structure are many, many people — your existing people — and more than are currently leveraged in service of driving change in your organization.

Take for instance the following story:

The manufacturing and supply chain of a global pharmaceutical/medical device corporation was struggling to deliver a product on time due to demand that far outstripped their most optimistic forecasts. While further manufacturing capacity was being built, it simply wouldn’t be fast enough. We convened a cross-functional team from across the globe, comprised of sales and marketing experts, supply chain, packaging, compliance, and logistics professionals all focused on one singular goal: accelerate the cycle time from manufacturing to product delivery in 90 days or less.

As the team began to struggle with the question of how to shave days off their cycle time, a junior distribution professional from the U.S. shared a frustration. “When we pack and sterilize the pallets to be sent to Europe versus other parts of the world, it takes us at least double the time it does for other geographies. Why is that?” Almost immediately, his German counterpart deflected the unintentional criticism by saying, “And it takes us twice as long to unpack any of the product that we receive from the U.S.”

After about five minutes of discussion, the group realized that they were complying with outdated policies that had long governed their global distribution practices. The most junior person on the team – our unusual suspect – identified a 10% improvement in cycle time in minutes. It was the first of many quick wins. Similar conversations unfolded throughout the team’s launch session and, just 90 days later, the team achieved a 35% improvement in overall cycle time, which far exceeded the senior leadership team’s expectations.

This is just one example of an unusual suspect contributing the most important thinking to the success of an initiative, which precipitates a number of questions for your business:

Does your organization systematically celebrate these types of wins or new ways of working and thinking? How often does your organization reinforce the importance that everyone can and must contribute their ideas to stay competitive? Do your people feel comfortable challenging the status quo, even if it means falling down and scraping their knee, only to get back up and try again?

The Harvard Business Review reported that 20% to 35% of value-added collaborations come from only 3% to 5% of employees. That’s not an accident. And that’s nowhere near enough.