Best Practices Q & A - Part 12

Question: “Your recent article on marketing and sales management best practices could have been written specifically about our company. We don’t really have a true sales process, as you wrote, so there are good months and bad ones. What can we do to improve this?”

Answer: “First, start openly discussing the fact that there is NO actual, defined process. Make sure you are clear that this is not a reflection on any manager or sales person’s capabilities per se. The person leading the sales team may in deed believe that there IS a process, thinking of the steps, scripts, etc. that may be in use. So, a head-on confrontation will not work. Instead, we suggest starting with a collaborative effort to document the process, as it is now, in whatever form. With this result in hand, the next step is to collaborate to define measurements for these steps, NOT the overall process only (“win / lose” the sale only).

The point is to measure the effectiveness of each step in the process, so that new ways can be devised to improve the process. If the process really isn’t followed, or can’t be defined well, this will become clear through these steps. If it is, great! The main feature of a defined, measured process we are most interested in is that it can be improved upon in significant ways over time. With continuous, consistent improvements in your sales process, sustained success is just a matter of time.”
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Marketing & Sales Best Practice

Article Summary: Does your company have “too much success” in the marketing and selling area? No? Really? We thought so. Well, you are not alone – this is one of the least understood, least worked on, most universal performance improvement opportunities, applicable to almost every firm. The message here is that Best Practice marketing and sales is a defined, understood, improve-able process, with its own performance metrics, business processes, systems, and continuous improvement program. Key topics in the article include:

• Symptoms identify great opportunities
• Widespread – lack of a defined process
• What to do, where to start.

Symptoms Identify Great Opportunities

In the marketing and sales area, it is rare to find a company with a well defined, well understood marketing and sales process, even though sales is the “life-blood” of any company. It is this lack, we believe, more than any other single factor, that kills off otherwise good companies, with great products or service offerings. Symptoms that one typically finds:

• Marketing, a separate world – often marketing is a separate organization from sales – it buys media time, advertising, creates art work, logos, ads, brochures, does direct mail campaigns, or other “bush-beating” activities. But often there is little or no coordination, even communication with the sales organization.

• Star-based sales – in many companies there is a small, often VERY small team of “hot-shot” sales people (“stars”) who bring the bulk of the business in the door. When one of these people leaves the company, often taking key customers with him/her, the company suffers a huge drop in sales. One company in our experience literally went bankrupt after its top sales rep left for a competitor and took the “A” customers with him. No joke.
  

• Coaching oriented – selling is seen as a motivational challenge, one wrapped up with personal egos, fears of rejection and the like. Sales improvement therefore involves personality attributes like confidence, charisma, speaking skills, and others. Coaching does have a role, of course, even in a well-defined sales process.

• No improvement over time – since marketing and sales are not structured, clearly defined processes, with inputs, steps and outputs that can be studied and improved, the company has good years, and not-so-good years. No one knows what else to do.

As a side note, we should comment here that the primary focus of these remarks is business to business marketing and sales. Consumer products, at least at the retail level, are typically more driven by effective (or ineffective) marketing – advertising especially. However, even with these products, the preceding steps from producer of the product to the retail shelf will frequently involve a considerable amount of “business-to-business” strategy, marketing and sales activity.

Widespread – lack of a defined process

What do we mean by a “defined process?” A process is a series of actions or functions between inputs and outputs that brings about a result. The elements of the process are therefore capable of being measured. If they can be measured, then they can in turn be controlled.

Anything that can be controlled, and therefore changed, and if it is changeable, it can be improved by comparing the effects of the changes on the results (outputs) with measurements.

In the absence of processes, there is, even under the best intentioned circumstances, a powerful element of randomness. If it is random, then the results cannot be reliably predicted over time.

In the sales and marketing arena, there are three distinct overall processes:

• Strategy
• Marketing
• Sales
  

Each of these is in a sense, nested within the others – sales within marketing, marketing within strategy. There is, then, a strong interdependence relationship between these three processes. The interdependence is there whether we like it or not, that’s not the question.

The question is, is the interdependence being intelligently and effectively managed? Further, it is a simple fact that in addition to these interrelationships, there are others with the rest of the company. Are these being intelligently managed, as interrelated, interdependent processes, with appropriate measurements, communication streams, information management, and improvement efforts?

What about the effect on the 4 Essential Factors of the Best Practice Path of a non-process oriented approach to handling both overall business strategy and specifically marketing/sales strategy, marketing and the activity of selling? Let’s touch on these briefly:

• 1. Effective Systems & Processes – to the extent that these three critical-success-factor areas are not managed via defined, improvable processes, this vital factor will be seriously constrained, even if efforts elsewhere in the company are top-notch.

• 2. Continuous Improvement Process – by definition, if it isn’t a defined process, with measurements, controls and changes over time, it is not amenable to organized improvements. There will therefore be a strong element of luck in how things go with a company in this situation. Or “star” performers.
  

• 3. Education and training – there may be education and training, but where will it go, absent a structured process to apply it to? If it’s personal growth-style, with confidence development workshops and the like, there may be some improvement, but only as long as the individuals who took the workshop retain the material and stay with the company in that position. The best use of education and training is to apply it to the process improvement effort itself, so that improvements are permanent.

• 4. Effective Leadership and Culture – absent a structured process, leadership may have a very positive effect, but it is only temporary, as its effect is almost exclusively on the individuals themselves, not on the process or system that produces the results. It is important here to distinguish between the vitally important individual motivation, or better still inspiration that results from effective leadership and organization culture, and much longer-term results of having that effective leadership and culture applied to continuously improved, integrated marketing and sales processes.

Leading best practice companies have been working on their strategy, marketing and sales processes for decades; this is why, in part, they are consistently successful over such long time periods. Naturally, excellence in other areas is vital, but these, such as engineering and production are dependent on successful marketing and sales processes.

Some few companies with average-level products or services, but superior, high-performing marketing and sales processes experience sustained success for many years, with the only distinguishing characteristic being their highly effective marketing and sales process.

What to do, where to start

The good news in most companies is that their mere survival indicates that they are doing enough “good” things to at least stay afloat. Those of us who have been focused on business performance improvements are often the most enthused when we find un-worked improvement opportunities, as it is far easier to improve something that is already working, however poorly, than it is to start something from scratch.

And, if intelligently worked out changes are made, there is a very good chance that performance will improve substantially, simply because you have brought order into a previously random or even chaotic area.

By contrast, if you tinker in a major way with an already well-defined, very successful process, the odds of scoring a “home-run” are not as high – you may even do some damage. So, improvements opportunities are great news in most cases.

To provide a guide for you to place your company in perspective, we provide a series of questions that you can ask yourself, a checklist, to determine where your company is, and where the best place to start might be. This list, by the way, is by no means exhaustive or all-inclusive to all types of companies or industries.

• Strategy – McKinsey, in a recent global survey, concluded that most companies are not satisfied with their strategy planning process. If the overall strategy process is weak, then the market/sales strategy process will, of necessity, be weaker still in most cases. What is the strategy process your company uses – both overall, but specifically, the marketing and sales area? Is there a start-middle-end set of steps that are used repeatedly, the result of which is a set of actions? And, over time are these actions measured, then “re-processed” in the next strategy cycle in a systematic way so improvements in the strategy process can be made?

• Marketing – is it an “island?” Are managers in marketing measured by criteria such as how many ads are placed, direct mail pieces sent out, or other non-sales oriented factors?

• Does the marketing function work closely, via defined steps on a regular, consistent basis with sales and other functions? Are promotions made for which products are not yet available? Are selling activities and resources adjusted and coordinated with promotion campaigns and with production schedules? Are marketing performance measurements tied to sales volume successes and targets or better still, profitability and market share penetration? Or are these kinds of measurements absent?

• Sales – can you (or someone working in sales, at least) articulate the specific steps, the sequence in a structured, systematic sales process? Does the process start with tracking some type of initial contact or expression of interest and work step-by-step through the whole process to actual sales? Is there a sales “system” that is used? Are there measurements at each step in the process to enable sales managers to understand how to improve the process? Is it improved over time?

• Sales Forecasting – it is an axiom among sales managers that more managers are fired for poor sales forecasting than for inability to generate actual sales. What is the sales forecasting process at your company? Is its accuracy measured? Publicized? Has the forecast accuracy improved over time? Is it accurate overall, but terrible at the detail level? If so, what could be done to improve this? Do people make jokes in bad taste about the forecast?

• Is there an effective sales and operation planning process in use? How is the sale forecasting process adjusted to accommodate new product or service offerings, promotions, close-outs, soon-to-be-obsolete products and other non-linear factors? Is there an effective product-life-cycle management process in use?

• Mixed product and service business – increasingly companies have realized that integrating the two activities brings sizeable benefits – to customers, and especially the marketing and sales activity. Is there a service component to your company’s products?

• Is service even marketed at all? Or, is it treated as an after-thought, with the “real money” being in the product sale? Companies that have worked long and hard to develop well-integrated combined product and service offerings have frequently come to dominate their market, as customers come to depend on them, and are willing to pay consistently for the service that follows the product.

Is there a defined process by which services are linked to products or other integration opportunities. Is the “service or field support” manager a low-ranking person at the company? Or is he/she a real executive, with P&L accountability?

In conclusion, we have just scratched the surface here, as you may surmise. The thread through all of these questions is, once again, not whether you have “something going on” in the area. Rather, is it systematic, carried out by means of a clearly defined, consistently followed set of steps – a process that is itself independent of specific people and personalities.

And better still, is it consistently improved in its performance over time, so the results of that these processes themselves improve over time? If your company is like many, the good news is that there is a LOT of opportunity to improve performance, stability of the company, security of everyone’s jobs, happier investors (higher profitability), larger market share, and a host of other benefits that all result from integrated marketing and sales process management.

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Best Practices Q & A - Part 11

Question: “In your and other discussions of outsourcing to China and other foreign countries I keep reading and hearing about a variety of other, somewhat hidden costs. What are these, besides the more obvious ones of freight and customs? Why do we need to pay so much attention to them?”

Answer: “Mostly they are indirect costs, what we call the cost of coordination and communication. Since they are indirect, they are often more hidden, poorly measured, and with consequences that are not necessarily immediate and obvious. One company we know of, doing over $100 million in outsourced products to China has over 100 US-based people traveling to/from China, to meet with vendors, resolve problems with quality, deliveries, materials, processes and other issues. The travel expenses alone are huge, of course. And these are relatively simple products, yet substantial in-person communication is required.

Our favorite story of this kind of communication / coordination problem is old and involves a company with an “internal outsource” arrangement, where engineering design was in California, with production in Arizona, about a $ billion/yr operation. The complexity of communication between engineering and production was so difficult that a company study showed that about 5% of the entire manpower of the whole company was involved in this single communication activity, with scheduled company flights several times a day to/from the two locations. It’s seldom as easy as it looks, and when one adds differences in language, technical understanding, culture and other variables, it can easily escalate into a huge problem, a costly one – yet the unit cost and logistics costs can be as originally planned.”

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Outsourcing: Best Practice Impact

Article Summary: This article explores the practice of outsourcing of critical parts, products, services and processes. There are a number of impacts on the “host” company’s ability to improve performance – achieve and sustain Best Practice status in key areas. The message in this article is that there is a Best Practice to the process of outsourcing – a best way to initiate it, select products or services for outsourcing, select the appropriate supplier, and to manage the resulting, altered ongoing business process. Key topics include:

• Outsourcing – goals and basics
• Impact on Best Practices essential factors
• Planning for Outsourcing Success

Outsourcing – Goals and Basics

Every company purchases various goods and services, from rent and utilities. Many also purchase items that are its life-blood. However, the term “outsourcing” doesn’t usually refer to the every-day, basic stuff, or even exotic materials and parts that have always been purchased. Most often, the goals of an outsourcing initiative are in these categories:

• Lower cost – it is believed that an outside supplier can perform the tasks at a lower cost, compared to internal costs. This will provide a strategic or competitive advantage.

• Higher quality – the supplier may often have capabilities that cannot be matched internally, due to engineering or production expertise or that is difficult to provide internally.

• Outside focus area – management wishes to intensify the team’s focus on certain key areas that are truly critical success factors, and to increase capability and performance in these areas. Off-loading non-critical activities is a good way to improve this focus.

It is generally when we decide to take something that has been, until now, performed internally, within the organization, and have an external supplier, a different company, do the work or make the item. This decision, increasingly popular has potentially profound effects on both the company’s operating performance, and its financial results. So, our view is that it should be done thoughtfully, with serious rigor, and not be undertaken lightly. Business literature and informal stories are filled with stories of companies that rushed into outsourcing, only to discover that important aspects were not even considered.

Let’s be clear up front – we believe outsourcing is a potentially very powerful tool, one that has the potential to transform a company’s operating and financial performance. We have performed major, extensive projects on both ends of this spectrum – companies whose entire strategy depended on successful outsourcing, as well as contract manufacturing and services companies providing this outsourcing capability. These experiences have made us quite aware of the many factors involved, and what success in this area involves. We even built an entire ERP system for a client, driven primarily by their outsourcing management needs.

The key aspect to this decision is to understand that the key difference between a “supplier” and an “outsource supplier” is that the outsource supplier is really much more of a partner in your company, compared to the arms-length transactions with typical vendors.

There are several major factors involved in outsourcing that are common threads that “run through” other areas. These include:

• Internal Communication and systems – transferring what is currently an internal function or operation to an external location changes how communication to/from/with it will work. Much informal communication may be involved, which must be replicated or formalized. We once built an entire ERP system for a client to help resolve this challenge.

• Cost impact – these include the obvious (unit costs, transportation, etc.), but more importantly, the not-so-obvious, such as additional communication, problem resolution challenges, and information and work flow dependencies. It is failure to identify, and manage the not-so-obvious cost impacts that typically causes the most trouble.

• External communication - Language – typically the outsourcing supplier is outside one’s home country – abroad. The people who run the supplier company, and who will be doing your work are not native English speakers, or writers, and more importantly, even if they are educated appropriately, their education is typically not in English.

• Having spoken, and written a couple of foreign languages ourselves at different points in life taught us the painful lesson that all of the knowledge and expertise one acquires resides in the vocabulary and understanding of the language in which it was learned. Translating this highly detailed, often subtle understanding into words that a native speaker, or writer, in another language would use, is difficult and challenging. It requires, really, to learn the additional vocabulary and usage subtleties. Technical language is called “jargon” for a reason – it is a form of local usage, like a dialect.

• During our recent project in China we were never far from the awareness of these facts. The written Chinese language is completely, ah... inscrutable to a foreigner. Even foreigners who speak good Mandarin readily admit to a difficulty with the written language. So, the opportunity for serious misunderstanding is ever-present.
  

• Key Documents - Engineering drawings, specifications, service or maintenance procedures, software design specifications, and other documents are critical to the success of an outsourcing initiative and must be considered in this context. Someone who can speak fluently, “do lunch” well, and is friendly, may have no clue whatsoever what is meant by various notations on these documents. People who have never wrestled with another language, especially writing it, have almost no effective way to grasp this particular challenge and its extent.

Impact on Best Practices - The 4 Essential Factors

The impact of outsourcing will fall also on the company’s efforts to achieve Best Practice status in key areas. Briefly, the impact in each of what we call the “4 Essential Factors” includes:

• Effective Enterprise Systems & Processes – these are the communication and coordination functions of the company. If a key process is transferred to an external source, how will these essential systems/process flows continue to be effective? How will information that will now reside within the supplier’s infrastructure be integrated to internal sources that need it?

• Continuous Improvement Process – does the supplier have an effective continuous improvement process? How will it integrate, or support your own process? Will you have to educate, train and support the supplier’s staff to achieve continued improvements downstream?

• Attempts to “install” leading initiatives such as 6 Sigma often produces what we call “eyewash” charts. Walk around and you see nice looking charts and graphs, while your guide says the appropriate buzz-word phrases he learned from the consultant. Look closer and often you find that the dates on these charts are months old. Speak to people (difficult: remember, they don’t speak your language) and you’ll find that often they don’t really use any of it on a daily basis.

• Education & Training – Since you depend partly on your education and training program to both maintain capabilities of your team members, as well as advance them, what impact will transferring a key function to an outside firm have? Do they have an effective education and training program?

• Effective Leadership & Culture – will your Best Practice-focused culture mesh well with that of the supplier? The highly participative work environments typical to well-run companies in the west are normally not found in 3rd world countries, where the “command and control” style of management is standard. Improvements are something the boss decides in these companies. And they never forget who the boss is.

Planning for Outsourcing Success

In order to insure your best chances of real success in your outsourcing initiative, we suggest using the following as a starting but incomplete checklist:

• Plan carefully – make sure all important steps are covered. Especially critical is to plan in detail the transition, providing for pre- and post-support activities. Don’t expect instant benefits to appear unless what is being outsourced is really simple and plain. We suggest using proven project management methods and tools to perform these initiatives. Don’t just hand a list to a buyer and say “call me when it’s done.”

• Document everything – rigorously documented work flows, processes and parts are the exception. Often consistent high quality and repeatability depends on personal knowledge and expertise within your staff. Make sure you “capture” this information – after, of course, identifying what it is. Then – have them translated by someone YOU know and trust, generally not the supplier.

• Recognize the new competency – outsourcing important items (products or services) to an external supplier, and managing the ongoing result is a NEW skill for your team. Understand clearly that you most likely don’t have this skill now, but can and must, acquire it. High blood levels of testosterone are not a substitute for this skill.

• Select carefully; start simple – if you are new to outsourcing, we urge you to start with simpler items, those with a low-rate of change, that don’t challenge the supplier and your team’s ability to communicate about it. Use these as a learning device to gain the new management skill in managing outsourcing that your team must acquire. It’s harder than it looks. Other selection factors to consider:

• Don’t outsource your core competency items – these are products, component parts, assemblies, services that constitute your strategic and competitive advantage. Not sure what your core competency items are? Uh-oh!

• Strive for low rate of change – don’t start with an unstable process, or manufactured items that are highly engineered, in a constant state of change. Your supplier will never keep up with the changes, nor will your internal staff.

• Labor intensive – preferably, select items that do not involve a lot of skill or experience to do successfully, and consistently. In our experience, consistency is preferable to erratic, but sometimes high, sometimes low quality.

• Simple / standard inputs – your first outsourced production project is not the place to start if it is made of the proverbial “unobtainium” – material that is hard to get, harder still to work with, and involves subtle specifications that even your people have trouble understanding.

• Shorter lead time – the reason to select short-lead time items is so you will have time to recover from problems – which there most assuredly will be.

• Perform serious vendor due diligence – we suggest evaluating a vendor as though you were going to be a significant investor in the company. In a way you ARE becoming an investor; you ARE staking a part of your business success on their ability to perform well. Highlights of a good due diligence process from this point of view:

• Evaluate internal processes – production, work flows, factors like dual-controls.

• Quality – built into the processes, or by inspection-&-reject / supervision?

• Information systems – effective, or antiquated? Capable of supporting integration with your system?

• Skill and expertise – these should be at least equal, if not greater, to your internal capabilities. If they are not, they MUST be capable of being improved by training or you WILL have problems.

• Stability – how long as the company been in this business? Financial strength? Who are the (real) owners?

• 3rd world country factors – in general, companies in the 3rd world have less in the way of management capabilities, non-participative culture with authoritarian management, and less advanced information systems. Conversely, they often have excellent work habits, and are very intent on “getting it right” with their customers. And, of course, the cost structure is what opened the door in the first place, which can often be dramatic.

• Political factors? – no due diligence checklist for outsourcing would be complete without at least mentioning the political hot-button factors you should consider. Is the vendor really operating what many call a sweatshop? Are there environmental concerns? Is a revolution about to happen, or just did?

We have long learned that the optimum meshing of internal and external partners (i.e., careful outsourcing) can really strengthen a company’s performance – but with some caveats. Careful planning, real thought, discussion, and collaboration are essential threads through the points and factors that we’ve discussed above. Here, we have endeavored to “hit the high spots” of the many factors involved in this decision and process and trust that the reader will regard these as a good start in side-stepping the potential pitfalls and create lasting success in your outsourcing initiatives.

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Best Practices Q & A - Part 10

Question: “Our company is considering outsourcing some of our production items to China. We have heard about the low cost structure, of course, but have also heard about some of the difficulties others have experienced. What would you suggest as a starting point for this process?

Answer: “First, consider getting some assistance. Remember that it is not like domestic sourcing, where you just put out an RFQ and wait for some responses. And it is not just about the unit cost. Companies that succeed with China outsourcing either engage long-term support, have the ability to provide in-country support themselves, or add indirect staff (read: higher overhead costs) to provide “liaison” with Chinese vendors. There are, as we have indicated above, ongoing translation and other issues. Don’t just assume that the vendor will be fully English and western business practices oriented. The ideal is someone who works for your company, or is a 3rd party who works for your company, and also has permanent in-country resources fluent in Chinese language, culture, business practices, your technology and the government.”

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Who Owns the Work

Article Summary - This article discusses the common thread of ownership of work activity, or process ownership – a Best Practice common thread that runs through all of the 4 Essential Factors on the Path to Best Practices. Here, we discuss how this powerful concept acts as a catalyst and powerful leverage of excellence in each of the 4 Essential Factors.

Topics include:

• Work Ownership – the continuum.
• How Ownership Supports the 4 Essential Factors
• Alternatives
• Powerful Results

Work Ownership – the continuum.

One of the most fundamental issues in understanding how organizations work is the question of who owns the work – i.e., who has felt or perceived responsibility for the work itself and the results it engenders. In a full-fledged, many-layered bureaucracy, there may be thousands doing work, being busy, creating documents, etc., but actual approval for actions, signatures, and therefore the “real” authority and responsibility is highly centralized. By contrast, in a highly decentralized company, people either doing the actual work of the company, or those very close to it, have final decision authority, and may bind the company in various ways.

These contrasting ways of organizational functioning can be said to comprise a continuum, with bureaucracy at one end, and a high-performance, highly decentralized, highly delegated organization at the other. Of course, most organizations are somewhere along this continuum. Let’s explore the ends of this continuum a bit further with examples.

Bureaucracy style - In a traditional military bureaucracy, historically everything was done “in the name of the King.” This translates in more modern settings to everything being done in the name of the commander. People who are essentially clerks prepare documents, but have no real authority, and so no real responsibility. These documents are sent, often through a series of reviewers, to a final “approver” who has the actual authority, and therefore the responsibility for the action. Each reviewer will “endorse” the action (or sometimes not), and then forward it to the next person in the chain.

Consequences of this method include:

• Diffused actual responsibility – since many prepare and review a document, they are to a degree “involved” in it. However, since there are others “downstream”, the perceived or felt ownership is minimal.

• Time-delay – it takes a while to “process” an action through multiple steps. This aspect also reduces flexibility, since actions are tied to the organization structure.

• Paperwork intensive – since all communication is via written document, the document is THE thing, adding to the preparation time. Reviewers, endorsers and approvers must have all the information they need for their actions, so it has to be in the document, or attached to it. There are no informal, or oral communications with this method.

• Approval authority remote from action point – the initiator of the action is always in the best position to know the most about the situation, what action is needed, and why. However, since all of this must be written down, then forwarded “up” the chain of command, subtle aspects are lost, and there is a CYA aspect to the whole process. Finally, the approver simply cannot know enough to insure the best possible action in every case.

• Senior level approval – this is a highly desirable method for accomplishing actions that have a major impact on the organization as a whole, bind it in a major way via a contract, or are strategic in nature. These are the kinds of actions that should NOT be delegated down to the front line levels of a sizeable organization.

Highly Decentralized / Empowered style – this method is often referred to as an “empowerment” model for an organization. This means that the authority and responsibility to act are in close alignment, and as close to the “front line” workers as possible. In many cases, those on the production line, for example, will have authority to initiate what are considered capital projects in other companies, responsible for the return on investment it involves. Or, for customer-facing workers, the person may have what is essentially a blank check to do what is needed to take appropriate care of the customer.

Southwest Airlines became the most profitable airline in the US, earning more total profits than all of the other airlines combined. They buy their aircraft, parts, fuel and airport gates at the same places as all of the others, so what are they doing differently? In a word – employee empowerment – focusing on their people, what they need to do well, giving them authority and responsibility, plus the room to try and fail.

One of the most remarkable success stories with empowerment is Harley Davidson, which made business history by transforming its failing, over priced, bottom-level quality motorcycles of the 1970’s and early-mid 1980’s into the business power-house we know today. Here is a link to an excellent article describing why the company won the Catalyst Award in 2004. (PDF)

The highly decentralized / empowered style involves pushing authority and responsibility as far down the organization as possible. Leadership, rather than management control, is emphasized. The result is that individuals “doing the work of the company” feel personally responsible for its success, for the achievement of its vision and mission. In a word, they “own” their jobs and the activities it involves, regardless of where in the organization they function. Other examples of these companies include Whole Foods Market, the Container Store, and SAS Institute.

How Ownership Supports the 4 Essential Factors

We view the issue of work activity ownership as the common thread running through each of the 4 Essential Factors on the Path to Best Practices. When the level is high, there is the opportunity for true excellence in each of these areas, and for gaining the maximum benefit and synergy with the other Essential Factors. With a low level of ownership, it is quite difficult to achieve anything like excellence in the 4 Essential Factors. Here’s how each is “powered up” by high work activity ownership:

• Effective Enterprise Systems & Processes – in the bureaucratic model, system implementation is experienced as something people are doing for the “higher ups” in the company. Often, they have no notion that the system is there to help them in their jobs at all. Conversely, with high levels of ownership, implementation is not even considered until everyone at the “lowest” levels of the organization fully understands and has enrolled in the benefit the system will bring the company, and sees how their work results will fit into the overall structure. Then, even the most challenging implementation will go well.

• Continuous Improvement Process – this area is, in truth, very difficult without high levels of work activity ownership throughout the company. If people at the line level have little authority, responsibility or involvement, improvements must be generated by “experts” – i.e., staff-level people such as industrial or manufacturing engineers, consultants, business process engineers, or teams of managers. Companies attempting to achieve improved performance this way seem to never quite make it. Witness the current situation in the US with the auto industry. Those that have mastered the empowerment culture, and with it, have generated powerful continuous improvement processes, are literally slaughtering companies that have not – the “Big 3” of Detroit, still stuck in the command & control culture of decades ago.

• Education & Training – if individual workers are just carrying out instructions, narrowly defined guides for what and how they do their jobs, they feel like uninvolved cogs in a machine. As one such worker told us years ago, “You are confusing me with someone who gives a s___.” Adding education and training into this non-fertile field is typically a waste of money, as the worker has little he/she can do with the new knowledge. Conversely, in a highly empowered culture, education and training is like adding oxygen to an already hot fire – leverages the fuel already present to intensify and speed up the combustion rate.

• Effective Leadership & Culture – When a person with otherwise good leadership ability assumes leadership of an otherwise bureaucratic organization, most of what he/she has to offer ends up being wasted or so completely diffused as to accomplish little. Exciting visions of the future for the organization are filtered “down” through layer after layer of entrenched bureaucracy before ever reaching the line level. This is why putting a new Cabinet-level official in a government agency typically has so little effect, or why a new leader in a big-city school system seems to accomplish little. In the private sector, we have seen truly exciting leaders step into CEO roles at large corporations only to accomplish little, due to their inability to change the ponderous, change resistant non-empowered organization culture. By contrast, if the new leader is able to substantially alter the culture towards a highly empowered work environment, then the vision for the company’s future, its possibilities and potential, and mission, can all serve to inspire and motivate the empowered, now-capable individual workers in the company to become individually high-performing, collaborating team oriented contributors towards that success.

Alternatives

Since leaders of organizations are faced with the reality that their company is somewhere along the bureaucracy – empowerment continuum we outlined above, the alternatives facing them are simple on the surface, while involving some difficulty at the detailed level. Having engineered several of these organization culture changes ourselves, plus our research, we can offer some suggestions:

• Move now – delay, extensive consideration, deliberating, all convey a not-too-subtle message of fear, lack of confidence in both yourself and in your coworkers. Success seems to go to those who act boldly, expeditiously, and with courage.

• It’s not as hard as you think – much of the details of how to operate effectively in a newly empowered culture can and will be effectively worked out by those who do the work. You do not have to resolve every issue a team of left-brained thinkers comes up with.

• Act from the heart – inspiration, courage, and confidence do not come from the logical, left-brained parts of our beings. People have an inherent desire to make something of value with their lives – leadership’s job is to give them the chance to do this. When one actually takes in an inspirational vision articulated by a good leader, something powerful within them shifts. Remember that there are tears of inspiration, joy and meaning – altogether different from the tears of sadness, grief and loss. Do not confuse them – allow the former to occur.

• Ask for help – an effective leader, who “gets” the servant leadership concept, confesses his limitations frankly and openly, asking for those he is leading for their involvement, caring about results and performance, and their knowledge and effort to achieve the vision for the organization. This is where each person’s inherent desire to be useful, valuable, if not blocked by cynicism and resignation, comes into effective play.

Powerful Results

Increasingly we are seeing a global world where companies that have mastered the principle of work activity ownership – of empowerment cultures, are leading the way into the future in their industries. It is vital in seeing this to not be distracted by short-term successes, of companies who are, for the moment, leading in their industries because they went to China first (or to Bangladesh), have a ring of patents around their processes, or other such historical or strategic advantage.

The fundamental fact is that, even in these situations, there is an untapped advantage, potential that is not being put to use, in making the most of each person in their organization. Moving to a low-cost country, such as China, will give a temporary advantage – very temporary, however. When high levels of empowerment and work activity ownership are added, the advantage is the same as in a higher cost environment – better performance, higher profitability, growing market share, more secure, predictable performance.

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