Making it in America takes an in-depth look at the dramatic comeback made by the American manufacturing companies thus making America the industrial powerhouse of the world. From mid 1970's till late 1980's, the American companies were overtaken by the Japanese and European companies. The very survival of the American companies was under threat. This book takes a close look at the comeback demonstrated by the American companies. This book identifies the revival path followed by the American companies that helped them forge the renaissance. The book highlights the contribution made by the leaders through their vision and bold action. It also highlights the spirit of innovation and the commitment to fundamental values demonstrated by the companies. Made it in America gives fifty real life company success stories to thoroughly document American industry's comeback. It describes the challenges faced by them, how they responded to them and the remarkable success achieved by them. The book points to the 'back-to-basics' movement followed by the American companies. The 'back-to-basics' concept talks about using the full talents, energies and creativity of the workers. It talks about treating the customers properly and understanding them. It talks of continuous process improvement - shaping and reshaping the processes until they run as efficiently and flexibly as possible. The industry people say that although the 'back-to basics' approach sounds simple the truth is otherwise. The chapters in the book go out in emphasizing the leaders' words.
The foreword for 'Making it in America' is written by none other than Lee Iacocca, the man who transformed Chrysler. Lee was instrumental in position turning around the company. He is the man who was instrumental in and who had contributed to the transformation of the American industry. The book identifies ten paths to success that form the 'back-to-basics' concept. Each of the ten paths is taken up and discussed as a chapter. The ten basic paths identified fit into three broad categories - workers, customers and process improvement - that every company need to address to succeed in its revival plan. These three categories are dealt as threes different sections: releasing the creativity of workers, pleasing customers and finding new markets and focusing on continuous empowerment.
The final chapter illustrates an importance truth; these paths to success work best in combination with one another. The more of these a company puts into play effectively, the better are its chances for significant success. The leadership has to show the commitment - to shake up the organization, to work towards achieving the basics.
PATH NUMBER - 1
Releasing the creativity and power of workers
Empowering the employees: The real frontline action in America's business renaissance started with giving respect to individual and his/her potential. The American business renaissance is all about respecting individuals thus helping him in unleashing the creativity in him. This includes all the employees of the organization right from the CEO to the lowest management level. But in an organization where does the real action take place? It is on the shop floor; by the workers. These are the people who know what the problems are and they could have a better solution to it than anybody else. The whole process begins with empowering the employees at the grass root level. The aim of the organization should be to bring out the entrepreneur in every employee - motivate him or her to do their job in the best manner possible. Every action has some people, expressing skepticism about it. It is true that there have been cases where the employee empowerment has been a failure. But, the point to be noted is that it is not concept of empowerment that is faulty. It is the process of implementing the concept - the way the management following - which is faulty. The authors say that employee empowerment must be seen in action to appreciate its impact fully. They give the example of US Steel, a steel company at Indiana, which was on the verge of closing down its operation because of poor quality and unsatisfied customers. The company empowered its employees, formed them into teams of five and asked them to interact with the customers, understand their needs and accordingly make any changes to the production process. The employees' initiative helped bring about a complete turnaround in the massive rusty dispirited facility. Within four years Ford Motors went from flunking its relationship in 1987 to give a Q1 award for top quality in 1991.
What is employees' empowerment: Many attempts have been made to provide a concise definition of employee empowerment. Looking at the companies that actually empowered employees three words appeared over and over again - trust, team work and communication
Trust: Trust is one thing that will make the employees do wonder. To quote Samantha Williams, a production stamper with Wilson sporting goods: "When I first found out what the words - you make a difference - really mean, I started to feel different about my job. Knowing that I have say made me like my job more. I don't feel I am doing it just for money anymore. To me empowerment means trust and I like working for a company that trusts me." Unless the company trusts the employee, it can't empower them. And without empowerment any transformation is not possible. The management has to have trust on itself and the employees as well as respect the employees. To paraphrase an executive "It is much better to employ the brains of thousands of workers than to rely on the brains of twelve gray- hairs holed up in the executive suite."
Team work: Teamwork is a vital part of the empowerment process. The correct way of empowering the employee is by the management giving up power and hierarchical control. The management has to act like a coach with a bit of cheer leading - to let the power and potential of the team to be used. Two heads are always better than one.
Communication: Good communication in an organization begins with the top management listening to the workers. It must also give employees full information on the company's performance.
Encouraging lessons in empowerment: There are certain encouraging lessons from the act of empowering the employees as experienced by a few companies 1. The process of empowerment begins simply. It starts with the employers hearing the employees' thoughts and understanding their feelings. It happened in the case of Lord Corp. where the environment was horrible. Dave Lichtinger, the plant manager and Mike Smedley, an operator for fourteen years used to let the employees come in a team of six to ten employees and let them speak their mind out. Once 2. Empowerment leads to total turnaround, as in the case of US steels. 3. Empowerment occurs through many channels. The results of employment empowerment can't be fully reaped without the employees benefiting from the exercise. For benefiting they must fully embrace the concept.
Train and retrain workers
"Like good tools, craftsmen are fashioned with care"
Another path to success advocated by the companies is training of employees. The question that arises is whether this buzzword is a lasting phenomenon or just a passing fad. But the interaction with the successful companies made it clear that the American economy is increasingly becoming an economy based on knowledge. More and more companies, in the pursuit of taking on the competition are creating values by capturing and applying knowledge in new and creative areas. One major hurdle identified by the companies is that the employees are giving only 60 % of the efforts and that too not because they are lazy or stupid but because they haven't received proper training. Training of employees is necessary for taking on the competition. The following quote in Inc. (Dec 1992) clearly outlines the mood of the (re) emerging American companies on training:" What's striking is that these companies are all fashioning programs in-house to suit their needs. Moreover, none of them view training as a luxury for small entrepreneurial companies. Instead, it is seen as a necessity to build the kind of workforce they need." If still not convinced on the need for training employees listen to what the industry says. You train to release the full potential of workers. You train because it is the fundamental requirement for achieving world class manufacturing status. You train to boost productivity, lower costs, introduce advanced manufacturing technologies, and to save the company. And finally their belief is that training is absolutely required to thrive in the 1990's and may even be required for surviving.
Achieving the basic corporate goals through training: This chapter deals on the relationship between the corporate goals and the need for employee training. In this context two contrary ideas are discussed. 1. The principal goal of many companies is to lower costs. 2. To lower costs spend money on training
Cases: Will-Burt - The year was 1985 and the company was on the verge of closing down. The CEO, Harry Featherstone was given 1.5 months period to save the company. Harry's first step was to establish an ESOP. He decided to educate and train his employees. Although it would result in incurring extra cost and there was stiff resistance from the workers, he went ahead because of his conviction. This helped the employees gain self-confidence and resulted in bridging the communication gap between the managers and workers. The employee morale improved, quality improved, reduced cost and it did save the company. Chapperal: the challenge to the leadership was to produce low-cost steel. Thus workers were need to be taught and trained on certain aspects. Training had gone in well along with the work culture in the organization. The synergy created helped it in achieving its objective. Ford: In mid 80s, the company was losing a billion dollars a year. There was a major retrenchment exercise. The management realized that it is stupid to deny themselves the intellectual capability of tens of thousands of workers. Along with the employees (retrenched one also), it established the education, development and training program. Top executives also took training in teamwork strategy, the whole exercise helped it save the plant located at Sharonville from closure. In essence, it was employee training and involvement that helped the company in turning around.
Although it may sound ridiculing if we take a look at the results achieved by Chapperal steel. Training of employees leads to higher productivity and higher productivity leads to lower costs. This is what was precisely achieved by Chapperal steel.
Another main objective for any company that is in the process of continuous process improvement is to empower the employees and form teams. However, the results achieved won't be effective unless the team members are trained properly. This truth was discovered at the Sharonville plant of Ford motors. The employee training helped the employees in doubling the targeted goal for cumulative improvement within three years. Two other often neglected but important benefits to companies that have mentioned in this chapter are: 1. Great training help a company in attracting great people 2. Training helps make "times get better" for the companies
Benefits to workers: Workers are the ones who are benefited the most in this training program. The benefits include tangible ones like wage increase, promotion, job security and intangible ones like higher self-esteem, greater confidence, more satisfaction from their work etc. For the companies it is the loyalty and greater attachment to it displayed by the workers.
Training is for everyone: From the chapter it is clear that imparting training to the employees is essential for any company's success. However, care should be taken that the training is not restricted to only a section of employees; all employees contribute to the success of an organization and all of them deserve to be trained.
Reward good performance
Another way of motivating the employees is through rewarding them for good performance. Rewarding good performance leads to better performance which in turn leads to still better performance: a self-reinforcing cycle is formed. Money motivates people to work harder. The words of Ann Blaise, a tester at Lincoln electric clearly brings out the mentality of workers: " Lincoln people are greedy. They like to call it incentive because it is a nicer word but it is greed. You want money. I've gone to seminars where you're told that people want to be told how good a worker they are. And yeah, that's true. It does feel good. But the bottom line is money. It boils down to money. To get that big chunk at the end of the year." Motivated employees make productive workers, which make for a highly productive company.
All kinds of ways to motivate: The methods followed by various companies for motivating their employees are different. Some companies do through profit sharing and gain sharing while others through employee ownership options. In case of Nucor, the incentive scheme was based on the Cases: Lincoln electric: this is one company where there is no paid holidays, no paid sick leaves, no health insurance, no coffee breaks, no Acs and still the workers love it. The reason: the company rewards incentives based on the employees' performance. This motivates the workers to work efficiently. The question of humanness is taken care of because the company satisfies the basic need of the employees. The question of camaraderie is also given due consideration. Unless the employees work as team they won't accomplish anything, which in turn would be detrimental to them in turn. Whirlpool: "Productivity used to be a dirty word. People thought they would have to work harder without getting compensated." The challenge faced by the company in 1987 made it clear to them that unless they produced quality outputs in quantities they can't tide over the problem. The approach followed by the company was "gain-sharing", wherein the profits made by the company would be shared by the employees. The results are to be seen to believe. The quality has increased by 98% and the productivity by 19%. Oregon steels mills: The company faced huge problems in 1982. The productivity was abysmally low, the workers were on strike - the morale was low, mistrust and anger among the employees etc. The initial steps taken by Tom Boklund was to remove hourly concept and make every employees permanent, removed reserved parking spaces. But still the problems persisted. Then the company gave the employees ESOP, giving them 100% ownership with the top management having 5%. There was a tremendous change in employees' attitude. The results were remarkable. Sales and earnings grew on average more than 40 percent annually. It became one of the low-cost producer.
efforts of the whole group. In case of Whirlpool, the incentive scheme started as a result of a crisis. The very survival of the plant was dependent on the output and quality. The management cut a deal with the workers by agreeing to share the profits generated. Most of the software companies are moving towards the third option - employee stock options (ESOP).
Pleasing customers and finding new markets
Exceed customer expectations
Today's condition is such that it is not just sufficient for the companies to satisfy the customers but to delight them. And delight them, to seek their affection and an emotional Cases: Great plains software: This company was started by a 27 year old based on his family's business value of serving your customers well and viewing them as lifelong customers. It knows every one of its 65000 customers. The success of the company could be attributed to the pride displayed by its employees in its mission and the environment. Team work is another ingredient for its success. The company had a wide database of the customers, charged them for the service offered: it was of superior quality, it had a guaranteed response time, automatic call distribution system. The superior quality service is a combination of system and spirit. The process starts with the hiring process, then the training and monitoring follows. Weekly review meetings are held. To motivate the employees a letter lane is also put up where all the appreciation letters to the employees for service are displayed. The results: revenues grow at 37% annual compound rate, adds 5000 customers to the list annually. Dell computers: A college student, along with 2 others starting a company and making it to 40 employees by the end of the year is the story of Dell Computers. The answer to this tremendous growth: service. Give the customer exactly what he wants, at a reasonable price and quickly. Again, this company has a wide database of its customer. "Dell vision - states that the customer must have quality experience and must be pleased, not just satisfied." The results: 70% of its buyers are repeat customers. JD Power, in 1991 ranked it no.1 in its first ever consumer satisfaction survey. Dell was the youngest CEO to bring a company into the exclusive Fortune 500 club. bond with them. It is an absolute necessity because the customer is the king and he must be served exceedingly well.
The drivers of success: It is understood that the customer has to be treated exceedingly well. There is no argument on this. However, how do you 'delight' your customer? There are five key ingredients that could be called drivers of success.
· Getting employees customer focus The process of delighting the customers starts with the hiring of employees for a job. Priority should be given to people who demonstrate the company's values and who understand what it means to take care of customers who have high need levels. Another thing that could be done is to train (previous chapter) the employees periodically on the subject.
· Installing excellent tracking and measurement systems Companies must have some method of assessing and measuring customer satisfaction. One common technique used is the 'questionnaires'. Xerox corporation sends out 55000 questionnaires every month to its customers to determine their satisfaction. It identifies the major areas of dissatisfaction and tries to address the root causes. Companies can make use of the Information technology in their measurement system. However, the companies should be ready to invest in these to get to know the customers. Companies across America are catching on to this tool: in 1994 the American companies spent around $1 billion on computers and related technology for customer service department.
· Paying attention to details Certain organizations like Xerox Corporation believes that customer service before the sale is important. Consequently the employees go to the customers' place before delivery and identify the problems. This helps the organization to provide solutions to the customers' needs rather than products. Dell Computers goes one step forward in this regard. If a customer calls a technical support line and doesn't get a staff person within five minutes, the company mails the customer a check of $25.
· Personally involving the CEO Nothing impresses the customer more than the CEO involving himself in meeting with them personally. It gives credibility to the organization's deeds. Moreover, it results in delighted customers and it does help the organization in getting new customers. Michael Dell of Dell computers makes sure that he meets the customers regularly. One manager of computer operations for a software services provider was amazed at Dell's attention.
Envision new products and markets
Perhaps the profound statement that has been made about new products and product innovation are two words of Hiroshi Yamauchi, CEO of Nintendo. When one of the game designers asked "What should I make?", his reply was "Something great." The problem with the organizations today is that the CEOs and managers aren't challenging their employees to make something great.
Why is product innovation so important? The following result of a survey done on the issues of what practices provide managers the greatest leverage in expanding their revenues and gaining market share provides the answer to it. Speed in new product development ranks highest in effect on both market share and growth of market share… Innovation - that is, competitively distinctive new products - ranks very high in depriving growth in market share. Three factors - getting to market quickly, feel for the market, and innovation-together have the strongest influence on growth in market share, and all relate to the new product development function. All have an especially pronounced effect on changes in market share, a finding that makes sense: all three relate to a company's ability to change and keep changing the competitive battle for customers in its favor.
Cases: Rubbermaid: Rubbermaid is not a normal company: it cranks put new products regularly. In fact in 1993, it came out with more than one product on an average per day. The organization constantly fosters innovation: it supports those ones who try but fail. Another positive aspect is that it does not suffer from as they call NIH - not invented here. Even within the organization, no body claims responsibility to any innovation. It is team effort and every one appreciates it. Microsoft: Bill Gates and Paul Allen, the founders of the company wanted to develop new products that would make Microsoft the intelligence behind the emerging Information Highway. The approach followed by Microsoft was to hire the best and the brightest, give them enormous challenges and with it freedom. It does rewards the employees who perform extraordinarily. The first factor is the environment at the organization. People are passionate about what they do. Secondly, the sense of insecurity drives them to develop better and new products. Third attribute is the leadership of Gates. Gates knows that the dominant position it holds now is not guaranteed. He seeks out new opportunities constantly. The result of all this to see. Starting with MS-DOS, Word, Windows, Excel, Windows NT, Microsoft Internet Explorer, it has pioneered numerous products, changing the lifestyle of the people in its way. Johnson & Johnson: J & J envision new products and new markets as any other company does. However, it is their culture and organization structure that attracts others attention. The company is completely decentralized and each unit is expected to come up its strategy of developing new products, tackling competitors, etc. The culture of licensing new technological and medical advances developed by others, absence of NIH syndrome, looking up at the customer for ideas etc. have helped it innovate new products. Freedom to operate and its nimbleness backed by resources helps J & J to develop new products.
There is no one single formula for churning out new products and succeeding in it. It might be wackiness, freedom, mystique, paranoia, fun, gestalt, and even a flying coffeepot that could go into a company turning out new products. What culture prevails in an organization that comes out with new products, which fosters innovation. Three characteristics stand out: · Spirit · Creative freedom · Ability to get ideas from everywhere
A spirit, A gestalt: Rubbermaid - a new-product generating company is an ideal case of where the spirit of the people leads to developing new products. There is no written material that highlights the 'innovation process', there are no signs on the walls encouraging innovation, but still it is felt in the spirited story telling that the employees engaged in. the spirited environment is translated into spirited products. Another case is Microsoft Corporation, where the new product development arises from the corporate gestalt - a mystique of being a Microsoft employee. Another factor that leads to new product development is insecurity. The competition scenario leading to insecurity in an organization fosters new product development. The fear that someone is going to come up with something better leads to product innovation.
Creative freedom: Creative freedom to employees is a must for product innovation. Ralph Larsen, CEO of Johnson &Johnson compares his role to an orchestra conductor who directs and inspires his people and gives them abundant creative freedom. Another unique approach followed by Thermo Electron is the 'spin-out' strategy. Anyone one who invents a product or finds a new market for a technology is made the head of his/her own spin-out company. One more approach could be hiring bright people in the organization as done by Microsoft Corporation. However, certain companies hire people who are not always the best but who have demonstrated their innovative capacity sometime or other. They could always do something for your company. The idea behind this is that the company is looking for a breakthrough product and breakthrough requires creativity. Creative freedom culture involves a sense of fun. It has to permeate through the work culture in the organization. True creative freedom implies a willingness and a desire not to be apart of the pack. To quote Masaru Ibuka, co-founder of Sony Corporation :" The key to success for Sony and to everything in business, science and technology…is never to follow others."
Look for ideas everywhere: Companies fostering innovation should keep their eyes and ears open. They should be ready to get ideas from customers, competitors, employees and top management. For instance, Johnson & Johnson uses consumer innovation groups, which differ from traditional focus groups by encouraging more creativity from the respondents.
Go global
Go global. For many American companies, that is a simple, basic imperative, often survival and certainly for growth. Fortunately, any company can become a world player. The companies in this chapter demonstrate that no matter how small you are, no matter where you are located, no matter what your product is, you can go global and reap handsome benefits. Whatever may be the reason given by a company for going global and whatever be the ways (exports, investments, overseas distributors), one thing that is common to all of them is that their overall growth is spectacular.
Seeing opportunities and establishing goals: Rust Evader, which develops an electronic corrosion control device, is a perfect example of a company that sensed opportunity and went global. The reasons being that the owners of cars outside United States tend to keep their cars longer. Another company bold enough to enter Japan was Sun Microsystems. They knew that to compete in Japan their products need to be high quality and they were pretty confident about theirs, resulting in the company capturing a niche market in Japan.
Cases: Sun Microsystems: The idea behind going global is that when the portfolio is diversified internationally, much more consistent earnings are obtained. It has defied all conventional wisdom of trading globally. Sun has a close relationship with all its partners in various countries. The vision of the leader is also an important aspect. Wadia Digital: Usually any company would try to get a foothold in the domestic market before venturing into the so-called global market. Wadia on the other hand aimed at the global market at the initial stages only. Its strategy was to attract the leading distributors, attend Consumer Electronics Show every year, have one to one meeting with the customers, distributors etc., and bench mark against the best products to produce quality products. Canondale: The challenge in front of the company was to enter the global market in general and Japanese market in particular. The company faced this by setting up a fully owned subsidiary in Japan. It participated in the races in the weekends, which got it free publicity. Once it got the attention, it gathered the market share because of its superior quality. Rust evader: The company didn't have any problem as such. But it saw an opportunity and seized it to improve its position. It found out that it had a bigger market outside US because of the longer time for obsolescence. The real key to their success was their readiness to go out and talk to the potential distributors and customers. Once entered the market, just consolidate it by concentrating on one distributor who can deliver the results.
Pursue total quality
As mentioned earlier American companies were getting beat by the foreign competitors not only because of lower costs but also due to better quality. That was precisely the reason for them to focus on quality. American quality journey started in late 70s and early 80s; they flocked to Japan, which had the quality movement running from early 50s. The evolution of the quality process from reducing defects to developing its own version of kaizen called Total Quality Management (TQM) has been tremendous. The objective of TQM is to make an organization highly efficient, with zero waste anywhere in the system. TQM really works well when the organization understands the customers' needs. There is an increased emphasis on maximizing "things done right" rather than on minimizing "things gone wrong". The authors say that despite all the attention directed towards TQM, two harsh realities remain: · Majority of the American companies has not launched any systematic effort to improve quality. · Many companies that tried the concept are disillusioned because the results were not as expected. The authors say that the reason for disillusionment is that the companies didn't follow the procedure correctly. The concept itself is not at fault. The problem was and still is, the way TQM is practiced by the companies. They also indicate the role played by the media in the situation. Although the negative examples cited by the press may result in loss of confidence in the concept, it will be short lived because quality has become a given. It 's foundational. It is what is expected of a company that wants to be a world-class competitor. What makes some quality improvement efforts great successes and others flops? The key ingredients of success identified by the authors in the companies that were studied are: · Focus · Leadership Know precisely what you want and have the top leadership in the company champion it with hands-on involvement.
Motorola sets the standard: Motorola is the undisputed quality champ. The first lesson learnt from Motorola is that, as mentioned earlier, commitment from the top leadership. Another lesson is that quality doesn't deal with products alone; it has to be there in every part of the company: accountants, patent lawyers, software managers have to be a part of the crusade. Motorola has achieved six sigma (3.4 defects per million) by total dedication to employment empowerment, teamwork, and training of employees. The process doesn't start at the company: it starts from the suppliers and includes partners also. One thing that need to be mentioned is that Motorola doesn't rest on its laurels. For those parts of the company that have already achieved six sigma level, they have already launched a beyond six sigma program which aims at improving their defects level ten times every two years.
Cases: Motorola: Motorola is one company, which is trying to be the perfect company. It established this ambitious goal which made its six-sigma concept look tame. There is a constant drive: continuous stretch goals, continuous improvement, continuous learning. Their quality system is simple: take whatever a person is doing and let him drive it to perfection in the lowest elapsed time. Quality at Motorola works because there is compatibility between the management and workers' views, continuous education and employee training, and teamwork.
Total transformation often called for: From what they have seen at Motorola, United Electric control and Hardinge brothers, they authors say that total transformation is required in any organization, for even one aspect of the old system slows you down.
Employee involvement and training are critical means: No organization can achieve success in its quest for quality without the participation of the employees. Without proper training it doesn't work even if the employees participate in the program. In case of United Electric Control the message was clearly given to the employees to challenge the way things are done and undo the way things have been done in the past. Hardinge brothers launched a massive program wherein the employees were formed into groups and they were given the freehand to redesign their production group to meet flexible requirements.
Quality through being the best-cost producer: Another important factor that needs to be taken into consideration is that any quest for quality involves certain cost. Companies will have to improve quality without incurring extra cost if not reducing it. The example of Emerson electric given in the chapter brings out this particular aspect. The company has its own unique quality program: Best-cost program, wherein the every product line is expected to exceed the highest global quality standards at lesser cost.
Achieve environmental excellence
This chapter talks about the role and functions needed to be performed by the companies in the future. The highlighted point is the contribution to the environment. Although it may seem like an oxymoron that environmental protection makes a good business sense, many companies have found this to be true. The two basic steps needed to be taken by the companies is to make the employees the frontline environment managers and invest heavily in environmental R&D. Environment protection is not an end of the production step. It is a part of the production process. It has to be integrated with the overall business strategies. This chapter takes it as an opportunity to clear the myth that environmental results take a long time to be achieved.
Cases: 3M: The process of environmental protection started at 3M in mid 1970s. While other companies were looking for ways to reducing cost and preventing pollution at the end of the production process, 3M was looking at ways to eliminate the hazards at the place of origin. This led to the development of 3P (pollution prevention pays). It started a proactive approach towards controlling pollution. Finally, the impact of a product to the environment is assessed. Employee involvement is very important in controlling pollution. The employees are given awards for their role in this aspect. In addition to all these factors, the company has a commitment in environment protection. 3M spends huge amount in R&D towards environment protection. Cooper tire and rubber: In spite of having a good environment policy, the organization wanted to put more teeth into the operations. It wanted to reduce waste in the production stage and also focussed on the recycling its scrap tires properly. As the first step it formed an employee task force on waste minimization. Then it formed a written policy on waste minimization. Finally they involved the partners (suppliers, subcontractors) in its drive towards waste minimization approach.
Increase speed and agility
Successful companies today have to increase their speed and agility to maintain their status quo. They can use a wide array of latest tools that could help them increase their productivity. In fact, this is one of the latest additions to the total quality management. TQM aimed at improving the efficiency of the system; this required the organization to move the raw materials quick enough from the supplier and the products to the customer. Although a wide array of technology could be used, the two that stand out for their wide spread application and powerful impact are: CAD and JIT. CAD is used widely in manufacturing industry thus reducing the designing time and JIT is aimed at efficiency of production, reducing the production cycle time. But the underlying factor is that without necessary organization changes the desired effect would not be achieved. Only 40% of the companies surveyed used CIM (Computer integrated manufacturing) which would make the tools (CAD and JIT) effective. Even 90% of those who use CIM hasn't done the necessary changes in the organization (don't train their employees). At Ross Controls, only one person is needed to design a valve and program all the tool paths for machining and manufacturing the valve. While advanced technologies are important, they are not enough on their own. So, in looking at the issue of how to attain speed and agility, it is not just about computers, hardware, or technology. It is about a new process which would help the company in responding to the situation quickly and effectively. The unfortunate fact is that many U.S. manufacturers still haven't implemented these technologies in an effective manner. Companies can learn from those ones which have implemented these advanced manufacturing technologies. One look at Ross control where just one person is needed to design a valve and program all of the tool paths for machining and manufacturing the valve, would give them an idea of the benefits that could be reaped. No manufacturing engineers, machinists, or inspectors are required.
While advanced technologies are important, the key point to be remembered is that they are usually not enough on their own. Companies require continuous change in their manufacturing process. Increase in speed and agility is not just about computerization of the process, it is about introducing a new, exciting process capability that the company is embarking upon.
It's always technology and people: If a company is trying to increase its speed and agility, it is of no use if it does not gain any thing out of its efforts. It cannot achieve this if it cannot integrate the advanced technology with comprehensive employee training and empowerment. The reason being that the sophisticated technology needs skilled labors. Hence, training is of utmost importance to get the very most of the new technology. Cases: Allen-Bradley: Considered to be the factory of the future, it has the state-of-the-art manufacturing process in place at Wisconsin. The first step of putting the system in place was the formation of the core team with representatives from different departments. This made the involvement of all the employees in the process possible. Then the process of selecting the equipment was initiated and implementation team selected the necessary ones. After this, the start-up team was formed. People were selected based on their attitudes. Camps and training sessions were organized for the start-up team. It was made sure that its business partners were also included in this drive. The results obtained are bound to make others envy the whole manufacturing process.
Shake up the organization
All the companies that are discussed in this book have registered a remarkable comeback. However, while going through their history it is evident that most of them were formerly very successful. Then what was the reason for their problems? Success went into their head and these companies relaxed. They had it too easy, resulting in losing their focus. The words of Mr. Benjamin Rosen, Chairman of Compaq, amply demonstrates the view held by the industry - " There will never be a time when we can relax. We relaxed once, and do not ever want to go through that again. Prosperity is very dangerous." When a company starts relaxing, it allows giant, stifling bureaucracy to develop. The cure is simple, feels the industry. Stop relaxing. Act. Shake up things. "If your change isn't big enough, revolutionary enough, the bureaucracy can beat you. When you get leaders who confuse popularity with leadership, who just nibble away at things, nothing changes." - come the words from the mouth of the man who had(s) shaken up the giant monolith of General Electric - Jack Welch. Leadership, points out the industry, is very vital for a change in any organization.
Get focussed, set tough goals, act: Before embarking upon any action plan, the management has to identify the problem areas and focus its attention in those areas. The case of Compaq Computers, wherein Eckhard Pfeiffar spent his first weekend in going through a few words on apiece of paper, identifying the problem areas. The next step is to set tough goals. Setting tough goals is not mandatory, however it does help the company. Pfeiffar set tough goals like reducing the cost so that the price could be reduced by 50%. However, as felt by most companies radical changes are impossible without the will of the leadership. Finally, it is the turn to act. And act quicker, say the industry people, for better. Again in Compaq, it was Pfeiffar, who acted fast. He set the target to be achieved within one year. That was the urgency shown by Pfeiffar.
The big five paths: The companies that made a tremendous transformation used five important paths to achieve their goals. These were Costs cutting, employee empowerment, satisfying customers, developing new products, and acting fast. As mentioned earlier, Compaq is one company that could be cited as best example of cost cutting. Chrysler is the one to look at when you talk about employee empowerment. It was a pioneer in this aspect in its industry. It dismantled its traditional hierarchical structure and installed four divisions, each one for small cars, large cars, minivans &jeeps, and trucks. The employees were empowered with authority - as well as responsibility - to make decisions. The third path of satisfying customers was well demonstrated by Compaq. It priced its products low in spite of improving its quality. Intel is another company that involves its employees right from the stage of design. Thus, it is able to develop new products which satisfy its customers. The fourth path of developing new products has led Intel to the front in the race over its rivals. Its historical decision to abandon DRAMs - which Intel pioneered - and develop microprocessors led its Japanese competitors way behind. Another phenomenal success story is of Compaq, which entered the low priced, entry level end of PC market helped it to come out with forty-five new personal computer products. The final path to success - speed and agility - was amply demonstrated by Intel. After the Japanese shock of mid 1980s, it made it a point to act fast in order to retain its competitive edge. In fact, Andy Grove ordered that they "double-up" on design.
Cases: Intel: "Only the paranoid survive"- the words of the CEO, Intel, Andy Grove makes the company's culture clear. And shake up it did, when the Japanese had flooded the market with EPROM, threatening the very survival of the company. Apart from pointing the finger at the Japanese, which every other company did, Intel had the sense and courage to look within itself also. Intel entered the Microprocessor market after leaving the EPROM market, which it had developed. It knew that it had to focus its efforts on the microprocessors to outdo the Japanese. It benchmarked itself against the best in the world. it invested a huge amount in R&D. It knew that it had to beat the Japanese through quality and by coming out with new products constantly. After the mid 80s crisis, it knew it had to concentrate on the operations side. The organization overhauled the whole manufacturing process, gave importance to statistical quality control, and gave attention to equipment selection and management. The most important strategy of Intel was to double up design. This process helped it to save a lot of time in developing new products. In fact Intel was bent on cannibalizing its own products. Intel also started involving the customers in the developing process, thus becoming consumer oriented. Employee empowerment was practiced to the core in Intel. They were given the authority to demand action required on any executive. Information access was not restricted to anybody. Perhaps the greatest strength of Intel as Andy Grove admits is that it doesn't rest on its laurels. It keeps scanning the horizon.
Conclusion: "Making it in America" gives many valuable tips on how a company should be run. In fact, it is book on how to run a company during any crisis and how to come out of it. Taking fifty companies from the American Industry, it tends to prove that any company can become world class if it the urge to become and if it puts the required efforts.