Avoid Failure. Succeed. What's the Difference?
Wouldn't it be great if you could sidestep problems with consummate grace and consistently head off problems before they happen? Well, actually no. This goal -- avoiding mistakes -- permeates corporations from boardrooms down to shop floors and acts as a decelerator on the growth of most corporations.
Manufacturing companies, with their focus on precise process control are particularly susceptible to the Failure Prevention approach -- which involves processes, activities and behaviors intended to avoid mistakes and reduce their negative impact. Yes, most managers can point to a project here or a department there which is focused more on achieving success (the Success Achievement approach) than averting errors. Yet, the very fact that they are exceptions, underscores the point that the overwhelming corporate mindset is to avoid failures.
At a once-revered, New England manufacturing company an R&D scientist confided to me that "the roads around here are littered with the corpses of people who tried something different and failed." Little wonder that company is not an innovation powerhouse, but are they so different from most companies? The widely-adopted "stage gate" approach to new product development is generally an exercise in Failure Prevention. This mindset is not confined to the lab; it runs rampant across all aspects of most organizations.
The Failure Prevention approach is deeply rooted in our non-business psyches. Our most primal instincts are tied to survival and avoiding harm takes primacy over thriving. We grow up in environments where, in response to making a mistake, we are told "No!" and "Don't do that" far more often than we are given growth oriented alternative. Upon entering the workforce we are quickly introduced to "career limiting moves" and learn to avoid them assiduously.
Translate this thought process to the complex, business milieu manufacturing leaders face every day and you will instantly recognize the world around you:
"The spinner on line three keeps going too fast, making the bearings seize. It's bringing down the whole line. Let's put a rate limiter on that machine and let's put some alarms in place which alert us if the RPMs are coming close to the danger point."
The solution -- a minor adjustment to a current process -- sounds reasonable and, in fact, it is reasonable. Processes, activities and behaviors morph over time based on a stack of similarly reasonable adjustments. After a while there is nothing obviously wrong with the process, and it may even perform admirably, yet it no longer supports growth efforts. Too many constraints are on the process now for it to be adaptive and expansive. Ironically, these process constraints seem hidden because they are no longer on the process; they are the process.
Failure avoidance blinds an organization to enormous possibility. In contrast, a Success Achievement orientation opens the door for growth -- often much greater and much faster than a company thought was possible.
For example, when the spinner in line three kept seizing, the Failure Prevention response was to add a limiter and an alarm so that dangerous speeds would not be reached. What would a Success Achievement response be? One would be, "How can we allow the spinner to sustain higher RPMs?" This could lead to a step-down gear mechanism. Another, even better response, would be, "How can we achieve higher throughput on Line Three?" which, in this case, led to the addition of a second spinner.
Often there is incomplete understanding of the effect of one action on the total system.
One consumer products manufacturer increased batch sizes to avoid costly changeovers and simultaneously redesigned their scheduling process to reduce excess inventory. These independent decisions, each designed to avoid a failure (unacceptable cost levels), interacted in a way which hampered their responsiveness. As a result, rather than growing, they started to lose customers. Individual Failure Prevention decisions combined to put a chokehold on growth. In contrast to a Failure Prevention effort, which typically targets individual issues, Success Achievement considers the company as a whole.
What can executives do to transform their companies into Success Achievement powerhouses? Two action steps will support your evolution from occasional examples of Success Achievement to broad scale, everyday success orientation throughout the organization.
Success Action #1: Mindset Shift. From the top of the organization down through the shop-floor manager, the response to problems must shift from "how do we prevent the problem" to "how do we achieve our goal?" There is a subtlety to this that isn't always obvious. For instance, one of the most common questions in every manufacturing company today is, "How do we reduce expenses?" This question encourages innovation, it is open ended, it has positive intent; therefore, it must be Success Achievement oriented, right? Wrong. The expense reduction question is really just another way of saying, "How do I avoid having expenses eat up all my revenue?" or, "How do I avoid losing money?"
Success Achievement organizations turn the expense reduction question on its head: "How do we efficiently increase customers' net preference for my products so that my company can grow." Both approaches may end up in the same place initially-cost reduction through some lean effort, but the rationale and the end result are very different. In one case you are saving some money which you funnel to the bottom line. In the better case, you are saving money and driving sales, which generates more money to the top line and bottom line.
At a recent analyst's meeting, the CEO of a mid-sized company crowed about his successes. He was rightfully proud of 35% growth on all four of his largest product lines. This CEO's Success Achievement mentality shone through. He talked about his role in helping the product line managers achieve growth. Never once did he suggest his role was to help them make better decisions, which implicitly means stopping them from making poor decisions. Rather, he focused on removing obstacles which impeded their ability to grow themselves and their businesses as much as possible.
Success Action #2: Structural Changes. The most powerful structural change you can implement is to change what you measure. How much of what employees in your company act on is based on success achieved, and how much is based on failure metrics such as cost, inventory, and down time? A sales manager once pithily remarked to me, "We respect what you inspect." If you inspect for failures, you will get Failure Avoidance. Unfortunately, you can't "unfail" your way to growth.
The best possible metric to firmly ensconce Success Achievement into your company is "Net Preference" which tracks customers' preference for you versus the competition. Many functional areas outside of Marketing and Sales are tied indirectly, if at all, to the customer, which makes it difficult for them to see how their efforts affect success. Using Net Preference allows you to link every employee's actions and every department's processes to a predictor of corporate growth.
A mid-size, parts manufacturing company used a "balanced scorecard" to track the effectiveness of areas including Operations, Purchasing and Sales. Unfortunately, none of the myriad measures on the scorecard could explain why the company was rapidly losing market share to an upstart competitor. While each department could proudly point to their performance as being virtually error-free, the company as a whole was sinking. When we instituted Net Preference as the overarching metric of success and charged every department with raising the number, a transformation took place literally overnight. Within weeks sales started trending upwards and by the end of the year sales and profit had both increased more than threefold.
If you are satisfied with small year-on-year gains then by all means keep focusing on eliminating the mistakes that are reducing your effectiveness. However, if you want to ratchet profit up to a whole new level then cast your gaze elsewhere: onto Success Achievement.
Learn how Success Achievement fits into a unique growth approach by downloading a free overview of Zoom Manufacturing here: www.ascendantconsulting.com/zoom.htm David A. Fields is managing director of Ascendant Consulting, LLC.
