12.4 Invest in People as Your Most Valuable Asset

Eventually you must ask, “What is the true source of my company’s competitive advantage?” Few managers grasp the importance or implications of their response to this question. Getting the answer right, however, will determine your company’s future!

Consider a brief history. Since the 1990s, managers have invested in technology as the source of competitiveness. Most have, however, discovered that whether it’s hardware or software, anyone can buy and implement the “hottest” technology. The fact is that competitors replicate most technological advances within a year. This is true of both product and process advantages. The result: The race for technological superiority usually ends in parity.

By contrast, a few companies have invested in people as the foundation of their success. For example, in 1947, P&G CEO Richard R. Deupree claimed, “If you leave us our money, our buildings and our brands, but take away our people, the company will fail. But if you take away our money, our buildings and our brands, but leave us our people, we can rebuild the whole thing in a decade.” Managers at P&G claim that the quote holds true today—people are still P&G’s most valuable asset. David Neeleman, founder of JetBlue Airways, warned, however, that if you rely on people as the source of success, your work is never done.

Sadly, too many managers talk about the importance of their people but fail to live up to their own rhetoric. Scott Adams mocks this reality in his highly popular Dilbert comic strip. Amazingly, Adams gets most of his ideas from readers who share their real-life experiences. Guess what Adams puts at the top of his list of “Great Management Lies”? (See Table 12.1.) Here it is: “Employees are our most valuable asset.” Such cynicism threatens the engagement and collaboration needed to implement lean six sigma.

Your takeaway: People are either the bridge or the barrier to success. You begin to make people the bridge to success by investing in their capabilities.

The Cross-Trained Worker

Cross training came into the spotlight with the emergence of lean manufacturing, which is built around a cross-trained, empowered, and responsible workforce. At Toyota, a tour of an assembly line reveals that workers are never idle. They move with purpose—seemingly in sync with the machines on the assembly line—in a carefully choreographed display of precision and efficiency. At Toyota, human and technology systems are integrated. The payoff is clear—Toyota achieves outstanding productivity, high quality, consistently satisfied customers, and unbeatable profitability year after year. You need to understand three fundamental facets of Toyota’s investment strategy: job enlargement, empowerment, and personal accountability.

Job Enlargement

Job descriptions at Toyota are expansive. When Toyota took over management of General Motors’ Freemont, California, assembly facility as part of the NUMMI joint venture, it reduced the number of job descriptions from over 200 to 3. By giving workers more responsibility and then providing them with a challenging work environment, Toyota avoids the monotony of uninteresting, narrowly focused tasks. Workers are motivated to be both productive and creative.

Empowerment

Jidoka, which literally means “man and machine system,” gives individual workers the authority to shut down the entire production line when quality or other problems arise. Such responsibility requires that workers possess not just good production skills but also a high level of familiarity with the entire production process as well as sound judgment. Worker participation in every facet of the value-added process is the social norm. This practice contrasts sharply with programs that limit a worker’s participation to suggestion boxes. Of course, to make this all possible, Toyota had to make a series of clear choices to (1) view its workers as an integral part of the value-added system, (2) invest time and money in worker training, and (3) delegate to workers diverse responsibilities and real authority.

Accountability

In Toyota’s JIT system, small lot sizes mean that a problem anywhere in the process can bring production to a halt—costing $10,000 per minute (or more). Toyota, therefore, invests heavily in the problem-solving skills of its workforce. Workers are trained on the problems they are in the best position to solve, and they are held accountable for their own performance. Workers are also expected to maintain their own equipment, keep the surrounding area clean, help each other when difficulties arise, and contribute to continually improving both product quality and the production process.

Let’s review. Your ability to integrate workers more fully into the value-added process depends on worker-manager relations. If an adversarial relationship exists, your attempts to increase worker participation will be met with skeptical resentment. Cross training only works when you (1) give workers the chance to make real decisions that make an impact and (2) reward them for the value they create. Taking these not-so-simple steps erases the “we against them” attitude, replacing it with a collaborative spirit focused on meeting customers’ needs. A truly cross-trained workforce is a real competitive weapon.

The Cross-Experienced Manager

In the old days, you joined a company as a functional specialist (e.g., inventory, transportation, or customer service analyst). After a year or two, you transferred to another geographic region and a new functional area, but with more supervisory experience. Then you moved to corporate headquarters to work on customer teams, helping develop new products or design more efficient fulfillment systems. After 10 years, you were well rounded, well connected, and ready for a senior leadership role. Today, neither companies nor their millennial and Gen Z hires are patient enough to invest a decade to develop the cross-experienced leader.

Yet, today’s complex and competitive decision-making environment demands cross-experienced managers more than ever. Your task is to fast-track the cross-experiencing process into a couple of years. You do this by setting up an extensive rotation program for new-hire supply chain managers. You might even begin the process during your internship program. Leading companies like Honeywell and Kimberly-Clark have experimented with 18–24 month rotation programs that give new hires first-hand experience in four to six different assignments in the following areas: the assembly line, production control, purchasing, logistics, marketing, accounting, and finance. The goal: Help new hires to

1. develop an appreciation for customers’ needs and front-line workers’ contributions

2. gain a better perspective of what goes on in the different functional areas and how they work (or don’t work) together to meet organizational goals

3. learn the “language” spoken in each area (in preparation for future intra-organizational communication)

4. build stronger, more collaborative relationships with colleagues across the company

5. gain an understanding of how suppliers (both product and service) contribute to product development, production, and distribution

Naturally, you need to seek diverse experience throughout your professional lives. After all, at most companies, upward mobility that leads to the “C-Suite” requires that you be a holistic thinker with a well-developed personal network. Simply put, you need a proven track record across a range of lateral or out-of-the-functional-box assignments. You may be able to compress this cross-experiencing process by working on cross-functional task forces and project teams.

Such assignments help you expand your network and stay in touch with the needs, responsibilities, and constraints of different organizational units. One final thought: You should take advantage of professional development courses to augment skill development and enhance teamwork and collaboration across your company’s management team.

Regrettably, cultivating cross-experienced managers is costly—and difficult to justify. After all, the 18–24 months managers spend in rotation represents a serious investment. Given that today’s highly mobile managers often change employment after only three to five years, companies hesitate to establish extensive cross-experiencing programs. In one instance, a company with a great reputation for developing outstanding cross-experienced leadership scaled back its efforts after competitors began hiring away its newly minted managers. Rivals discovered that it was less expensive to “headhunt” bright and capable managers than to develop them in-house.

Cross-Functional Teams

Michael Hammer, the guru behind reengineering, proclaimed, “Teams will provide the foundation of organizational design.” What did Hammer mean? Answer: Teams are now used to not just make critical value-added decisions but also to drive most strategic implementation projects. You may be wondering, “Why is teaming such a big deal?” Answer: Putting the right people in the same room and getting them to focus on a common goal changes the dynamics of decision-making. Properly designed and well-managed teams go a long way toward reducing turf protection and improving collaboration, which leads to better decisions that are more quickly implemented.

Despite these benefits of teaming, teams aren’t always appropriate. Sometimes task complexity doesn’t require the diverse talents teams bring together. You simply can’t justify the costs associated with teaming. Further, even when they are the right tool, teams often aren’t easy to manage. After all, teams are composed of busy managers who possess functional biases, distinct working styles, and personal idiosyncrasies. Conflict and dysfunction often arise. In fact, you’ve undoubtedly experienced the dysfunctional team at least once.

To help their people learn how to make the most out of teaming, supply chain leaders like Deere dedicate serious resources to training on team design and team management. Table 12.2 lists classes that Deere offers both to its own and to supplier employees. Which classes would you find useful—that is, which would help you get the right people on the team and then get them to work well together?

Team Composition

The first step in building an effective team is to get the right people on the team. This means asking a lot of questions. For instance, you should begin with two pivotal questions:

• Is a team really necessary? Teaming is costly. Only use teams when they are truly needed.

• What skills does the team need to succeed?

And don’t forget that team members still must perform their normal duties. Thus, you should ask, “What time commitment is really required?” Take time to answer three other questions:

• Who will lead the team? Does this individual have the skills and clout necessary to guide the team?

• Who are the best people—those with the right knowledge, experience, and relationships—to participate on the team?

• Does the team composition consider different personalities and working styles?

This last question raises a warning. The selection of team members usually focuses on functional expertise. Too often, other characteristics like working styles are overlooked. Kathy Kolbe, a teaming consultant, argues that teams perform best when each of the following four working styles are on the team. Leaving any working style out leads to dysfunction.

• Quick Starter: Highly energetic, sees an opportunity and quickly mobilizes energy.

• Fact Finder: Very meticulous and oriented toward detail and analysis.

• Follow Through: Determined and focused on carrying out a task to its completion.

• The Implementer: Very task oriented, with a penchant for hands-on work.

You might use other instruments, including the Meyers-Briggs personality profile and David Kolb’s Learning-Style Inventory, to help design more effective teams.

Team Chemistry

If you are a sports fan, you’ve seen teams composed of great athletes that never win a championship. What are they missing? Answer: Chemistry. They never learn to play great together. What does this imply for you? When you are building a team, you need to take the time to cultivate chemistry, making sure the following are in place:

• Leadership: Find a well-respected leader who grasps team dynamics.

• Common Goal: Make sure everyone buys in to a common goal.

• Communication: Exemplify and expect open, constructive communication.

• Cooperation: Exemplify and expect cooperation even if someone must compromise.

• Specific Roles: Clearly communicate specific roles and responsibilities.

• Accountability: Hold everyone accountable for individual and team performance.

• Measurement: Establish clear and precise measures.

• Resources: Invest in adequate resources, including information.

Because some teams outperform their counterparts, researchers have tried to figure out exactly what makes a winning team tick. They have identified five stages as critical to building a winning team: forming, storming, norming, performing, and adjourning.

• Forming is the process of deciding who should belong to the team.

• Storming is the process of establishing common ground, defining individual roles and responsibilities, and establishing performance milestones as well as rewards for both the overall team and each team member.

• Norming is the process of establishing team rules and procedures to help the team find its own uniquely collaborative rhythm.

• Performing is the process of identifying problems and opportunities, establishing a plan of attack, and then implementing the plan. This stage is easy if you’ve done your homework.

• Adjourning is disbanding the team when the task is completed, freeing up resources for continuous improvement elsewhere.

Team Measurement

For years, companies have taken teams to rope courses—or more recently, escape rooms—to give team members the opportunity to bond. The goal: To break down traditional barriers that exist back at the office, helping improve communication, establish trust, and build important relationships. How effective do you think these socialization activities are? Sadly, most aren’t effective at all. At most companies, team members return to work to measures that promote individual or functional excellence. Measurement overpowers the new norms that began to take shape during the team-building exercise. Simply put, you need to support socialization efforts with measures that both promote team outcomes and ensure personal accountability. Team-building activities that are not supported by collaborative measures become fun but expensive get-to-know-you sessions.