Spotting Dying Businesses

Do you want to know if your company is dying? Yes for two reasons:

One, you can intervene in the issue and improve your teams results. This puts you in a leader’s role with the resulting salary.

Two, you can be the first to find a new company to work with.  There are advantages knowing what you have to do and having enough time to start the process before you lose your salary, or experience the heartbreak of closing a company.

What are symptoms of a dying company?

1. Not Knowing Who the Customer Is

Big companies love processes. They are good because processes build quality controls and guarantee stable returns on effort. However your customer is not your co-worker who gets handed the work after you are done. He is a partner in satisfying the real customer who chooses and pays for your product & services.

Successful companies fall in love with their customers and dive deeply into their customer’s businesses. That way the company is focus outward, not inward.

2. Not Staying Up with the Times

Stable companies often have the belief their customers won’t change. They have always bought from us and will not leave. That is not true.

Customers retire, go out of business, or die. Businesses are run by people, and people always change.

Second technology changes. Eastman Kodak did not want to kill the film business, which brought in fortunes. The marketing failure was not realizing they could make more profits licensing their technology. Do you realize they could have had a Kodak Camera in every cell phone?

3. Not Creating New Products & Services

Unless 10% to 25% of your sales are new products and services less than 5 years old, your future is looking bleak. Mature products have to fund new investments to stay successful. What percentage of your sales are new products?

4. Illegal Business Practices
Bernie Madoff Ponzi schemes.  Double sets of accounting books. Inside trading. Bribes. Stealing secrets. Drug habits.

Any one of these practices can result in jail time, customers abandoning you, and being unemployable. Time to find new work now, even with a pay cut.

Check on a regular cycle how you and your company are doing. The only constant in life is change. Make sure you are doing everything you can to adapt and thrive.

Simple Productivity

What does every company need from their employees? Productivity.

What does every business owner want for himself? Productivity.

What do superior performers desire? Productivity.

How can we get our company to be more productive? Better processes, better procedures, better quality, better throughput.

So how do we get there? Simplify.

Have you looked at your processes and procedures recently? Your co-workers have to look through pages to get what information they need. Why can’t they be written in plain English with pictures rather than legalese?

Then look at your business from your customer’s eyes. How hard do you make it to order from you? Where can you make it simple?

How did Japanese automakers grow their market share? Their customers did not choose every individual option like American automakers. They offered standard and deluxe models with options included. The customer’s main choice was color. Inventory and pricing were streamlined, and they focused on making the models that were selling. Result - increasing profits. 

Where can you simplify today?

The Liar’s Club: Concealing Rework in Concurrent Development

MIT posted this interesting article about the issue of hidden rework in the development cycle. Your project can crash with surprise delays that destroy delivering on time, much less on budget.

http://web.mit.edu/jsterman/www/Liar's_club.html

Firms seeking competitive advantage to increase market share, profit, and growth have turned to concurrent development to speed the introduction of new products and beat their competitors to market. However like any other improvement process there are weakness and difficulties. Human nature does not want to be the bearer of bad news, and the managerial attention does not always help resolve the issue.

The F-35 is an example of concurrent development. While it looks like the development is now progressing well, the program looks like a money pit. The idea was instead of doing all the development on test planes, they could start production while still testing and writing the software necessary. Several years into the program design changes are still being made which require existing models to be changed, and the software is years behind schedule. The software on this program is critical to be able to use all the technology and weapons available.

The cost of the F-35 was getting close to breaking the Air Force budget before recently turning the program around. Some critic wondered if the day would ever come. (Don’t ask my thoughts on building one airplane to fill the needs of 3+ airplanes though) 

Did work with a smaller company that successfully implemented concurrent engineering in their development cycle. Why did it work? Reality was included with the plan, and being flexible enough to realize meeting schedule with an inferior product was worse than redesigning the product again.

On our first project we were working on the development schedule. The initial proposal was the standard design, prototype, testing, order machines & tooling, then start production. I asked, “Has any design worked the first time after testing?” The answer was no one could remember that happening. We need to plan for at least one redesign after testing and have a contingency plan for a second redesign. Including normal contingencies with average lead times in standard planning processes made the concurrent engineering process work. We used it both for new product development and product line extensions.

Back to fudging and hiding rework during development. This is a dangerous practice that can come back to hurt the team and the company. The natural tendency this setback is a small problem, and management does not need to know. What you don’t realize is your sponsor and other leaders may have more resources available that can speed up the redesigning and keep your project on schedule. Second the later a problem comes to the surface, the bigger the consequences for everyone involved.

Worked for a company that taught about Malpractice and the dangers to your career and the business. They made a video and repeated it yearly. Such danger for fudging, and little reward for doing it. We had one customer, the US Navy, and could have lost the business without their trust.

Leadership is doing the real work of getting things out of the way of your teams so your people succeed. Leaders have to make sure teams know they have your support to be comfortable to innovate. Besides only about 40% of software development project complete all features, on time, and within budget. Projects failing should not be a crisis but a normal situation to be handled calmly.

The quote jumped out at me ‘‘... don’t tell someone you have a problem unless you have the solution. You’re supposed to solve it—and then tell them.’’ This thought limits the chance to get more suggestions, ideas and develop more alternatives.

Found it helped if I showed up with the bad news, with some suggestions of my own or my teams, and was prepared for getting feedback & suggestions. More productive engagement came from being prepared and open. Make sure you are ready to deliver bad news and have leaders engaged when necessary.

How to Collaborate

First thing to do: Let the people know you are there to help, not to point fingers. 

(Focusing on processes is my viewpoint. People fail when not given the proper tools or training)

Ask questions and Listen thoroughly!!! The people working day to day are the best source of information. More viewpoints are better.

Define the purpose of the collaboration. So much time wasted with solutions for the wrong problem. A clearly defined purpose will lead to the right actions.

Come up with ideas, alternatives and combinations of steps. Root causes are usually the result of several factors, not just one. (Good ideas come from anywhere)

Decide on a plan to mitigate contributing factors and plan tests and monitoring to study the changes. Take actions with responsible people and deadlines. (Project management)

Follow up with all the people involved (Make sure they know their input and efforts are valued).

Review results looking for more improvements.

The Government Default

Today the news is the 2 parties are negotiating a 6-week extension raising the government borrowing. Only 7 days ahead of time. What a show of incompetence!

The Republicans thought they were winning. To paraphrase Governor Piyush "Bobby" Jindal, they have become the party of “Stupid”. This member is disgusted.

The Democrats think they are winning. Wrong! You are the irresponsible teenagers borrowing on your credit card. The day is coming soon where your card will be cut in half, and a very long stretch of your pay being docked is beginning. Debt has to be paid.

The US currently spends $23 billion of every $250 billion of taxes for borrowing. Because of good credit borrowing was 1%. Looking at Greece, Ireland, Spain and Italy the interest rate for over indebted is about 6% or higher.  At that rate the US would have to pay $138 billion out of every $250 billion of taxes for borrowing. How much spending is left for the Democrats? Look at Detroit.

Looking for a 3^rd party of adults to cut spending and raise taxes. Both are needed for the crisis we are creating. We need a sustainable economy, manufacturing and spending. Anyone coming forward?

Toyota Man

Interesting article about the culture at Toyota. Good read.
Steve

http://latimes.com/business/la-fi-toyota-man23-2010mar23,0,7100881.story

Toyota’s Runaway Case Gets Stranger

Poor Toyota. All they wanted to be was the number one automobile manufacturer in the world. They were so close. Good cars, great reputation, worldwide distribution, owners are fans, and the best marketing of any auto manufacturer. The successful launches of the Lexus and Scion lines changed the luxury and first car markets. Nobody was close to Toyota’s momentum.

Now their name is smeared with runaway cars, stuck gas petals and floor mats. Have talked about companies not believing complaints by customers, and over confidence in their product. Complaints are second chances given to you by customers to save the sale. You can look at the Big 3 in the USA ignoring reports by the car rental companies that the Japanese cars were performing better with less maintenance, and they ignored statistics proving them. It was hubris by domestic manufacturers.

Toyota is in a difficult situation. Too many lawsuits by too many opportunistic attorneys looking to make money, and government prosecutors looking to improve their political name by suing Toyota. If you read the previous article I sympathize with Toyota finding intermittent problems with multiple causes. They are difficult to see and harder to analyze than production problems, and a nightmare to resolve.

The San Diego case is strange, very strange. A 61 year old car runs away with him. 94 miles per hour. Police chase him and help slow him down. Makes the national news. Next day we find out he driving a car NOT recalled. It has a brake override system that if he was holding down the brake should have turned off the accelerator. Worse, the “victim” is $700,000 in debt and was about to lose the car along with the other three repossessed. He could be motivated to fake the runaway to make money.

First of all, am not going to assume this was faked. Am going to analyze the situation and ways to investigate this. I am not convinced by investigators who can not make the car do it again. How can you know how to trigger it unless you know all the possible causes and combine them all? Right now that has not been settled.

Would love to see the video if I were investigating. Per Toyota if he is stepping on the brake the acceleration should stop. The police cruiser video should show solid brake lights if he is pushing like he claimed. Were there any highway cameras or news copter pictures of the incident? Did they as for witnesses?

If he was faking, he had to overcome the brake override system that should have turned off the accelerator. There would be evidence of that unless he was a top flight programmer. Most people do not know how to reprogram a car.

First impressions by the police are good evidence. Did they smell the brakes catching up to him? Yes. Did the brake lights stay on the whole time? Maybe not, he was reportedly pumping the brakes until the police had him apply the parking brake and stay on the brakes. That may have finally activated the brake override system. How did the victim act when they stopped? The brakes should have been too hot to touch. The wheels hot too conducting heat away (unless they were aluminum or magnesium. They might conduct heat away too fast, but the hub would be hot.

Physical evidence needs to be checked. They would have had to fade. That may glaze the face of the pads or show other damage on the pads and discs. Experts can tell. The reports are the brakes were worn out.

If the evidence is he let go of the brakes to accelerate, would suspect fraud. If not, Toyota would be well served to assume this is a possible real problem and keep looking for combinations of problems. How likely is a 61 year old to panic when his car acts irrationally. Know a lot of teens through fifty year olds who would panic. My gut feel is this is a real runaway.

Okay, what possible problems are there? Physical, Hardware, Firmware or Software. Physical has been exhausted with petal recall and changing the floor mats. Hardware is what it is. Firmware and Software are really the biggest culprits left. My partner believes it is software. Too much probability with the diversity of runaway cars over so many models and years. Also he is a systems expert unlike any inside the auto industry with too many years of experience to fall for the first good probable answer and would dig deeper.

Toyota would be wise to hire an expert like him, but suspect it would not happen. Mainly for litigation reasons. Toyota is better off with non English speaking help who would be tough to be interviewed on a witness stand. (Especially if the company help was hard to find?). Disclosure rules in the US would eventually flesh this out, but still makes the attorneys’ jobs harder with all the difficulty of translating exactly technical jargon to English. Can’t blame Toyota here, is any country more litigious than the US?

Don’t think Toyota’s problems are over. Cruise control runaways are happening too. Would expect more recalls and finding more causes. Some people are saying a brake override software solution and reprogramming the on/off button to shut off under repeated pushing is all that is needed. I have doubts that covers everything unfortunately. Technology is too complicated and simple solutions often miss part of the problem like the sticking petal and floor mats.

Toyota will recover like Ford did from the Pinto fiasco, and will focus like Ford on making great cars again. May take a few years, but Toyota’s great reputation will return.

Till then I would know how to shift my Toyota into neutral, or hold the start button down for 3 seconds. Yes I would still buy a Toyota before this is resolved, because the odds of it happening are under 0.1% and going down with every improvement.

Drive safe,
Steve

Eliminating Sales Quotas May Stimulate Profits

The Stanford Graduate School of Business recently reported on a study conducted about the effectiveness of using sales quotas to motivate and reward salespeople. Based on an experiment at one Fortune 500 company, the researchers concluded that removing the sales quotas resulted in a 9% increase in overall revenues. 
http://gsb.stanford.edu/news/research/Nair_sales.html

Jim McIngvale is the founder of Gallery Furniture store in Houston, Texas. Many years ago, he called on W. Edwards Deming to help him improve his business. McIngvale often tells the story about Deming telling him to change his salespeople from commission-based pay to salary. After failing to convince Deming that it wouldn't work in the retail industry, he gave in and changed his pay practices and put his salespeople on salary. In The New Economics, Deming wrote about the results of the change. " . . . steady increase in sales. Older salesmen now help beginners. Salesmen no longer try to steal business from other salesmen. they now help each other . . . sales go up month by month. Moreover, profit per square foot of floor space advances even faster." McIngvale agrees.

Like so many elements in business, it goes back to effective leadership and hiring practices.

My question is What motivations are you offering your people by your rewards? Too many companies do not reward initative or superior success. Do you?
Steve