Déjà vu All Over Again

The following advertisement for the International Commercial Truck, circa 1910, is on display in Maine’s Owls Head Transportation Museum:

“That the motor truck is an excellent substitute for the horse has been proven in every instance where businessmen have given it a fair trial. But the man who uses his motor truck simply as a substitute for horses neglects to make the most of his opportunities. The horse is not a machine – five to six hours’ actual work – fifteen to twenty-five miles – is its maximum day’s work. A motor truck can be used twenty-four hours a day if necessary, and it will travel the last hour and the hundredth mile just as fast as the first.  Businessmen who are using the motor truck in place of the horse and wagon equipment with the greatest success are men who have given this problem careful study. In most instances it was necessary to change the plan of routing – delays which were necessary to give horses rest were eliminated – plans were laid to keep the truck busy the entire day with as few delays as possible……….”

The use of new technology is the key to increasing productivity. However, often pre-conceived ideas or environmental pre-conditioning of our thoughts prevents us from realising the potential of new technology. There are some great examples. With the advent of the motor car in the late 19^th century in England, the Locomotive Act 1865, otherwise known as the Red Flag Act stipulated that self-propelled vehicles have a man with a red flag or lantern walking at least 60 yards (55 m) ahead of each vehicle at walking pace to warn horse riders and horse-drawn traffic of the approach of the vehicle. On a recent visit to Japan I had to wait until 10.00 am for the ATM to open (which was when banks opened) to access my bank account. None of these examples make practical sense.

In an earlier career as a transport manager, I was confronted by the long distance truck drivers I was managing telling me that each driver must have their truck (even though it was owned by their employer). This limited the distance that could be travelled per week to less than 3,500 kilometres, due to legal driving hour restrictions and the driver’s physically being unable to safely drive much further each week. Breaking this thinking was difficult. However, multi-driver trucks were introduced, with drivers rostered to the legal driving hours and with the trucks operating 24 hours per day for over 6 days per week. The average distance travelled per truck exceeded 9,000 kilometres per week (with some trucks doing 12,000 kilometres). This high truck utilisation resulted in significant increase in company profitability as fixed costs were covered early in the working week. Correspondingly, the number of kilometres per driver increased. As they were paid by the distance travelled they were winners too!

The challenge for managers is to do away with pre-conceived ideas based on history and experience and objectively look at where new technology can increase productivity and lower costs. My former accountants (note that I said ‘former’ accountants) continued to increase their charges each year, charging me for postage, when they could have emailed me documents, charging my business a direct debit fee for paying our account rather than sending a cheque and so on. When I queried why our fees kept on increasing I was told it was because their costs kept on increasing. Clearly they were not passing on the savings of implementing new technology and were trapped into the ‘old way’ of thinking. Not only did they lose our business they lost other businesses I was associated with.

Remember change is inevitable and what we did yesterday will not be good enough for tomorrow. If you don’t recognise this I can guarantee that your competitors have.

Are you trapped in your ‘old ways’?

Are working in your business rather than on it?

Beware the Operations hero…

Effective leadership is putting first things first. Effective management is discipline in carrying it out.

Stephen R Covey

Did you hear about the transport operations manager who worked all night to get the freight loaded  on the trucks and out on time? Or the warehouse manager who worked all weekend to relocate stock in the warehouse to make it more efficient?

If you were running these companies, what would you do?

(a) recognise them in the company newsletter

(b) promote them; or,

(c) reprimand them?

As  managers and business owners, most of us  would probably choose (a) or (b) wouldn’t we?

But is it really the right thing to do?

I recall working for a major transport company  many years ago. The company was characterised by a ‘can do’ culture where anything would be done to get the load out – in particular working long hours for at least 6 days per week. The operations managers like our examples above were treated as heroes. They embodied the values prized by the organisation – tough, persistent, and long hours of work. These managers were celebrated and promoted.

However, when you probed the situations in greater depth, it was clear that the real underlying problem was that these operations heroes had not been doing a good job of managing their day-to-day activities, in particular planning and training. In other words, the more mundane tasks were often not recognised. If these tasks had been done the crisis would have been prevented. However, by celebrating the ‘heroic’ actions, the company’s top management was telling the organisation that it was okay to not do the quiet, unobserved day-to-day work, as long as they responded forcefully to the problems that inevitably resulted. The quiet achievers were not recognised (nor rewarded).

The message was –  crisis response is more important than crisis prevention.

The transport company was subsequently taken over as it struggled to  provide the required returns to its shareholders. The top management left. Subsequently a new management team was installed that reorganised operations. The new top managers understood the importance of crisis prevention, and developed a new focus on planning, both daily and in the long term. One of the biggest problems was that the middle and upper-middle managers who were in place had been promoted for managing a crisis not for their management skills. They were not skilled in crisis prevention, and importantly, their personalities were more suited to the action-oriented crisis response than the more systematic and analytical process of crisis prevention. They soon followed top management out of the company.

We also see this in sales. When a major customer has a problem, the alarm sounds and everyone rushes to fix the problem. The sales manager is celebrated as a hero as they have saved the account and maintained the relationship.  Picture the leader on a white stallion leading his troops in a cavalry charge – noise action and recognition. By contrast, the sales reps who are skilled at maintaining and slowly growing major accounts often remain in the shadows, unappreciated and unrecognised.

In effective companies, sales leaders understand the process of quiet, steady account development. This involves mapping a customer’s buying process, understanding how to increase a customer’s profitability, and seamlessly involving operations managers with their customer counterparts to reduce the costs for both customer and supplier. This is a long, steady process, but it creates customer relationships with high sustainability, profitability and growth.

The question is: who is the real sales hero? The second question is:  are the operations managers – the ones who quietly drive major sales increases and cost reductions – the real operations heroes?

In my experience, most of these “heroes” are skilled at managing a crisis that was avoidable. Often their companies were suffering problems that should not have occurred in the first place due to poor management and systems. The real heroes in an organisation are those managers who have the wisdom and insight to develop systematic information, processes, and behavioural drivers that enable their managers and staff to coordinate their activities  to achieve more together. The result is that their management teams form effective coordinative processes and develop a culture of profitability. Effective leaders are not those on the white charger but the opposite. They are not dramatic, romantic, heroic or exciting – just very effective.

Like teaching, one of the truisms of management is that you get what you expect. If you celebrate the mythical operations and sales heroes, you will get mediocre performance and continual crises punctuated by occasional ‘heroic’ displays. A good manager must have the foresight to systematically create the conditions that enable your managers to improve performance and prevent crises thus creating a great business.

As a manager you have a choice…………