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Don't just do something — stand there!
In recent years, we have all come to share an understanding of an industry idiom that says quality is "not a destination, but a journey." Indeed, the concept of continuous quality improvement has become part of our common vocabulary. Today, for many companies, quality has simply evolved to the never-ending pursuit of perfection.
For some companies, this pursuit has become a primary mission that touches (or should touch) every functional aspect of the business: manufacturing processes, product design and development, engineering, and front office processes. In some rare cases, the pursuit of perfection actually reaches beyond their four walls to touch customers and suppliers.
They relentlessly pursue the perfect process. They map, measure, assess and analyze. They plan, do, check and act, all in the name of continuous improvement. As they improve their business and manufacturing processes, and their people, they get better and better at what they do, building a clear, straight path to customers and ultimately to the future. They spend their energy in the relentless pursuit of "doing things the right way."
Yet, every once in awhile it is important to stop and ask ourselves the question: "Are we working on the right things?" We can perfect processes to create the highest value horse hame, but who knows what it is, let alone who would actually buy one? The truth is, in virtually every woodworking company across North America, capital and human resources are spent every day improving process and products that are quickly becoming obsolete.
If we don't believe it, consider for a moment the plight of the ready-to-assemble furniture industry. Over the past four years nearly every major producer has experienced significant financial challenges — some have filed for bankruptcy, some reorganizing, others failing entirely.
Several years ago, I had an opportunity to visit the factories of several of the RTA producers. At the time, all of them were struggling, but one of them in particular, following a first quarter debacle of a double-digit multimillion dollar loss, had launched an aggressive lean manufacturing implementation as a means to stop the hemorrhaging.
During a tour of the factory a vice president of the company showed me some of its quality initiatives and operational measurements, proudly explaining it had about 120 kaizen events under way at that time. And, as a matter of fact, the company had made some dramatic progress in improving its performance on the plant floor.
Regrettably, the business failed and filed for Chapter 11 only nine months later. Why? It failed because the business model, and its products and its prices, were simply no longer relevant in the competitive landscape of the day. The problem cannot simply be explained away by cheaper imported products from Asia. The cause of the collapse was the result of management's failure to understand and respond to structural changes taking place on the competitive landscape.
Instead of studying the marketplace and consumers and then improving its business model, the company chose to focus on fixing its manufacturing processes. It had made a valiant effort to save the sinking ship by rearranging the deck chairs — a pleasant, but futile gesture. The company was doing things the right way, but it was indeed not working on the right things.
As this manufacturer did, don't mistake action for improvement. Make sure that before you invest in any improvement — capital or otherwise — you stop, look and listen. Deeply understand your customers, your segments and your innovative competitors.
THE VOICE OF THE CUSTOMER
So how do we know what we should be working on? Begin at the beginning of the value chain. The best place to learn is from your customer. And not just the customer you sell to, but the end user. If we ask thoughtful, penetrating questions about what they want, need and expect from us, and if we listen carefully for understanding, we will learn what we should be doing short or long term. We may also begin to identify the unrecognized, unmet needs that will delight them.
While there is virtually no data available on what woodworking companies spend on marketing, there is absolutely no information on what might be spent on customer or market research. My own experience in working with industry companies suggests that the voice of the customer (the end user) seldom reaches the ears of manufacturers. Most certainly, except by only a very few savvy manufacturers, there is seldom any spending on market or customer research.
It is also rare indeed that industry companies are routinely conducting customer satisfaction surveys — whether in-house or through independent research firms. The grim fact is that most of the industry operates without any hard customer or market data.
When end users are isolated from the manufacturers (a common and challenging problem for manufacturing companies with distribution partners and networks), it becomes increasingly difficult and risky for the producer to know they are working on product and process improvements that are actually important or relevant to the end user as well as the distribution channel.
Without hearing that voice, we assume we know what it is they really want. We begin making investments in product and process based on those assumptions and half truths, or worse yet, on our view of the world through the manufacturer's eyes rather than the customer's. The return on capital investment for machinery, systems, software and employee training is put at risk if we do not clearly understand the wants, needs and expectations of customers.
The voice of the customer provides the context for improvement. Listen carefully, plan thoroughly and act deliberately.
RECOGNIZE STRUCTURAL CHANGE
Our marketplace is churning with innovative ideas; some good and some not. Some will flame-out quickly, while others will endure. The challenge is to understand the difference between fashion and a trend. There are some trends that appeared several years ago that continue to evolve across consumer markets, which suggest fundamental changes in how consumers think and how their buying behaviors have caused structural changes in our markets.
First, the middle market is disappearing. Customers are either trading down for low-cost products, or they are trading up for high-end products and services that satisfy their unique tastes or expectations. Where product attributes are not important to the buyer, price is becoming the deciding factor. When the buyer has a need for a unique product, a premium product or a more personal buying experience, they are trading up. If your company is in the middle market, you better make up your mind quickly about which way you're headed.
Second, the polarization of consumer markets is giving rise to the demand for more product personalization. Furthermore, end users want to participate in the design process that creates personalization. From the perspective of your own experience, how many more products do you co-design today as compared to 1999? Athletic shoes, computers, jeans, closets, furniture, cars — the list grows daily. If you are not thinking about how to effectively manage customer demand for personal choice, perhaps you should be. In this area alone the implications for product and process improvement are huge.
Failure to recognize fundamental changes in the marketplace can be catastrophic for a company. At the very least it is a time-consuming and expensive detour. Make certain you are aware of structural market changes that will impact your improvement investments and activities. Choose wisely what, where and when to invest.
PLAN FOR IMPROVEMENT
So many times, with the best of intentions, companies identify problems and begin working on an improvement without properly planning. Oftentimes I hear executives and owners proudly list a dozen or more improvement projects they are working on. More often than not, these initiatives are driven more out of personal interest than an understanding of how they will impact customer satisfaction.
How do we know? Simply ask the question: Who is this project more important to — the company or the customer? Clearly, there are some improvement projects that are absolutely necessary for the company that don't have a direct positive impact on customer satisfaction. But, those should be very few.
A planning process that begins by clearly stating how an initiative will improve customer satisfaction and how it supports the operational and strategic goals of the company will have the best chance of generating a positive return for everyone.
By knowing the answer to the question of customer satisfaction and company benefits, you will not only make sure you are working on the right things, but you will prioritize the work and expenditures you are making. Pet projects will disappear and the company will align its work to a common purpose and goal.
CONTINUOUSLY IMPROVING EMPLOYEES
Industry leaders consistently tell us that the single biggest business issue facing owners and executives is attracting, training and retaining employees. In every company I visit I hear the same thing. "Our most important asset is our employees." Yet, why do companies continue to struggle to find and retain good employees?
In my view, the answer is quite simple. We are not developing them. No company can succeed in today's market by depending on "finding" good employees. We must invest in them as we would in any other business asset. Period!
Developing not just good, but great employees is not a mystery. The difference between good employees and passionate ones is not in how they behave, but how they are treated. By "treated" I mean how they are trained and how they are rewarded, but also what they know about your business, markets and customers.
If you are not working on your employees, you simply are not working on some of the right things. Treat your employees like you mean what you say. If you really believe they are your greatest asset, treat them like they are! Continuously invest in their care and development.
A CULTURE OF SUSTAINABLE IMPROVEMENT
Sustaining a culture of continuous improvement is dependant on creating inspired and informed employees that don't just work in the business, but work on it as well. Employees that participate in the improvement, growth and success of the business become invested in its future health.
By its very nature, continuous improvement methodologies such as Lean Enterprise, engage everyone in the organization and redirect some of their attention and energy to improving performance for customers. Lean provides a structured framework for connecting customers to the business and teaching employees how to improve their personal performance in ways that impacts customer satisfaction.
Ed. note: Strategy and business adviser to the wood industry, Don Shultz of J.E. Moran Associates (www.jemoran.com) collaborates with owners and executives to discover new customer and market possibilities, and to foster improved operational and financial outcomes. He can be reached at (608) 279-8089 or by e-mail at dshultz@jemoran.com.
author: By Don Shultz