Chapter 3 One Size Never Fits All Missed opportunities Everything leads to cost-cutting The mechanistic mindset The growth mindset Southwest Airlines Match the vehicle to the voyage Five voyages Sustain growth
One Size Never Fits All
Excerpt from Go For Growth
By Robert M. Tomasko
"You sure look tired."
"I feel worse."
"I'm being zig-zagged to death."
"Do you know how many times our business has shifted course over the past five years?"
"Well, we still make microwaves...."
"That's not what I'm talking about. Five years ago we started worrying about cheap ovens coming in from Taiwan. So we launched a big cost cutting campaign so we could lower our price."
"Yea, I remember that. It was the one that eliminated the level of management I was hoping to be promoted to."
"Then we started getting all those customer complaints about quality."
"...and we all were sent to 'Quality School'. "
"Yep, sort of remedial education for middle management."
"Come on - cut the cynicism."
"Cynicism my foot. Do you know that just after I was empowered to pull the plug on the assembly line when tolerances were missed, headquarters announced the plant was shifting to "time-based management."
"No more shut-downs?"
"Only speed-ups allowed. But it wasn't all that bad. I went out and visited a lot of other company's plants. Even got a trip to Japan out of it. "
"Sounds like benchmarking."
"It felt more like I was some sort of 'industrial tourist' . "
"Did you learn anything.?"
"Yep. Just because something works well for one outfit, don't assume it will have an impact here. Every company is different."
"Did you learn that on your travels?"
"No, that's what I found out when I brought somebody else's great idea back here and tried force-fitting it into our operation."
"Have you e-mailed in your sales growth forecasts. I've heard headquarters is looking to see some pretty big top line increases."
"Increases? Growth? Who has any time to think about growth.? We're too busy fixing everything in sight."
Bouncing from fad to fad, from program to program, has become a way of life in many American companies. And just when a majority of the employees seem to be "getting with the program," the game plan shifts and a new direction is announced. The result: many cases of near-terminal whip-lash and a sense of chronic exhaustion arising from playing perpetual catch-up.
These frantic dashes to keep-up with the latest wave of management thinking do little to enhance competitiveness. How can they? Just as one company is mastering the technique of the moment, so are its competitors. Don't they all seem to read the same books, watch the same tapes, hire the same consultants? Often, what ever advantage is gained provides only fleeting distinction.
The net result of management by whatever ideas are most in fashion is a continual leveling of the playing field. Just when you thought your business was at the cutting edge, its slips to the middle of the pack. This is the corporate version of the Myth of Sisyphus. Sisyphus was an ancient Greek king whose exceptional cleverness embarrassed the gods, and brought him the punishment of spending his external life pushing a heavy boulder up a steep hill. Every time he almost reach the hilltop, the boulder would slip from his hands and roll down to the bottom, and his toil begin anew. Sound familiar?
A wolf in sheep's clothing
· failure to notice and respond to the clues customers constantly provide about unmet needs, and benefits they would like from your business in the future,
· failure to observe closely how competitors are dealing with these issues, and
· failure to listen to the insights of close-to-customer and close-to-technology employees - because the company is too busy getting them on board with the latest top-down improvement initiative.
·Downsizing's set out to eliminate bureaucracy, speed decision making and empower employees. Most, unfortunately, solely cut payroll.
· Out-sourcing is intended to "de-clutter" strategic focus and return a business to its core competences. Its net result, too often, is a search for the cheapest outside contractor.
· Quality programs start to find ways to exceed customer expectations; but end up justifying themselves with elaborate calculations intended to document the cost of rework and poor service.
· Finally, reengineering's bold promise to reinvent the business from scratch, usually through a heavy doses of information systems and software, is usually accompanied by an equally bold price tag. Cost savings need to be found to fund all the change that is required.
Cost-reduction is not necessarily wrong. But neither does it necessarily lead to growth. Usually the best it can do is allow for price cuts that - if not matched by an equally nimble competitor - may deliver short-term market share gains. Unfortunately this kind of growth is becoming less and less sustainable. Customers are demanding more than low prices. Competitors are fueling growth by discovering new technologies, new sources of supply, and substitutes for old products. Western Union was, at one time, the lowest cost provider of telegram services - something that matters very little in an age of telephones and faxes.
Avoid the mechanistic mindset
The best clues about how a situation is being, mentally, approached are found in the language used to describe it. How often have you heard expressions such as these:
· "We're going to cut-over to the new organization tomorrow."
· "Let's fix this problem so we can get back to business as usual. "
· "We need to shut down this operation, and pour on a little more fuel over there."
· "I can't afford any downtime . Get a consultant with the right tool kit over here ASAP.
You don't have to read too far between the lines to find the underlying theme in these common expressions: the company is a machine, a bundle of fine-tuned machinery. This is still a very pervasive mind set in American business, despite the warnings of Tom Peters and Bob Waterman, despite our own common sense.
Get the metaphor right
Managers are heavy users of metaphors. Some will borrow language from football or baseball to signal they view business competition along the lines of sports rivalries: "Who's on first?" or "It's time to pay more attention to basic blocking and tackling." More aggressive executives may favor the metaphor of war: "We've just launched a take-no-prisioners marketing blitz."
Metaphors are the tip of the mental iceberg. They are efficient communications tools. They are visible signs of the underlying mind set, or paradigm, that is actually guiding (or hindering) a business' development.
The business-as-a-machine metaphor was ushered in by Adam Smith over two hundred years ago at the birth of the industrial revolution. Its logic was codified by the father of scientific management, Frederick Taylor, and put to practice by Henry Ford in the early 20th century assembly lines. Its principles were institutionalized in the form of work rules and seniority rights in the labor contracts of mid-century. The machine metaphor has proven very durable - it has become deeply entrenched in our psyches. It has dominated recent waves of business improvement programs (productivity, quality, reengineering) But if managers really want to grow their businesses, they must loosen the grasp of the mechanistic mentality.
The era that Adam Smith and Frederick Taylor ushered in is showing signs of coming to a close. Michael Hammer's reengineering may be just what is needed to expose its fatal flaws. Reengineering is something done to a machine, not to a living, breathing, forward-moving enterprise. To the extent a company reengineers things it shouldn't be bothering with in the first place, it is fated to slip behind. Machines are things that get designed, operated, fixed and eventually written-off and replaced. Their components are interchangeable and discardable. Machines crave stability. They run, not grow.
A very bright, but still caught-up in this old school of thought, consultant, observed many companies finally possessing a "well-tuned machine." They are now wrestling, he feels, with the issue of "where to point it?" It is an astute observation, but only half right. Later the problem of "tuning" an organization will be considered. But first, it needs to be pointed in the right direction, a direction that may - depending on the company's situation - run counter to how it's "well-tuned" machine is operating.
· "Getting from here to there ."
· "How fast can people come on board ?"
· "We've a long way to go, now is the time to get moving ."
· "The business seems stuck . Find someone who has been down this path before to give us some directions. "
Heavy use of language like this, throughout the organization, is a leading indicator that top line growth is on the way.
The underlying message is one of motion, of being on a journey, not a static mechanical apparatus needing some updated engineering. The essence of managing for growth is acting now to influence some future happening. Today's actions need to be keyed to that future objective, not to the logic of some about-to-be-outdated business process.
Put out your antenna. Listen for the kinds of language used in staff meetings, over the water coller, or at lunch. What words, what metaphors are msot common? Waht clues do they provide about the direction your business is taking? Is it moving forward or fixing up?
Southwest Airlines vs. People
Southwest, founded a few years earlier, was less addicted to a machine-driven vision. It lets its customers needs, and a strong sense of how to improvise, set its growth course. It learned early on the dangers of too rapid growth. Flights began in June 1971 with three aircraft. Business was so good a fourth was added that fall. Unfortunately payroll costs rose faster than revenue, and the fourth plane had to be soon sold to maintain a positive cash flow.
Rather than let its style be cramped by too few planes - and too few flights to attract regular business commuters - Southwest innovated its way out of adversity. One of its employees, perhaps concerned about his own long tern career prospects, invented the "ten-minute turn." This is Southwest's now famous ability to, in ten minutes, deplane passengers and baggage, board new passengers and belongings, refuel and clean the cabin. This allowed the airline to maintain the same number of flights with one fewer airplane.
This was not an idea dreamed up by a chief executive-to-be in a three-color business proposal intended to circulate among venture capitalists. It was not part of the logic tree in a "cover all the bases" contingency plan. It was not produced by a multi-year, multi-phase reengineering project. It came from within an organization where every employee was deeply involved in doing whatever it took to keep the business on course. Southwest discovered, and continues to discover, its growth tactics while it stays in motion.
People Express is a disappeared airline, a money-looser forced into a merger. Southwest is one of the few airlines that has been consistently profitable. Its unique growth path is now seen as a threat by every major, long established U.S. airline.
Reflect the new realities of growth
· A unique competitive advantage,
· Matched with an unmet market need, and
· Oriented at making the business better, not just bigger;
· A willingness to view rivals as co-inhabitants of a shared turf, and
· An ability to turn mistakes into positive advantage.
There is a strong common thread behind each of these new rules for growth: success goes to those who customize . Rewards will flow to those best able to match their game plan, their strategy, with the specifics of their competitive situation. There is no longer one path to growth appropriate for every company. One size does not fit all.
Match the vehicle with the voyage
Defining the most common competitive arenas and what it takes - organizationally - to prevail in each is the purpose of the rest of this book. It addresses a problem common to many businesses: trying to use an organization successful for yesterday's growth journey to carry it on tomorrow's. You wouldn't try to cross the Atlantic in a yacht built for an America's Cup competition; nor would the special features of a speedy hydrofoil be of much use if your mission were that of a lumbering tug boat.
It can follow the conventional wisdom of seeking out marketplace requirements, developing products that address customer needs, carefully producing them, aggressively promoting and selling, and providing flawless customer service and support thereafter.
These straightforward, tough minded businesses excel at grabbing market share. They know well the rules of competition. They know how to use them to their advantage. They know how to play the game. They play to win. They take a given situation and make it grow. These are the Coca-Cola's, Marriott's and Procter & Gamble's.
Let's call them Game Players.
But there are other ways to be successful. You don't always have to follow the rules. Just ask Herb Kelleher at Southwest Airlines.
Some businesses thrive by breaking them, by changing the basis of competition. They may be aware of the rules, they are just better at getting ahead by ignoring them, or upsetting them in a way that plays to their particular strengths. These business rebels cultivate their inventiveness. They enjoy being pioneers - they must, because they really don't know any other way to behave. MCI in the early-1980s fit this mold. So did Federal Express, in its start-up days, a decade earlier. These are industry Rule Breakers.
Success often breeds greater success. Some market share acquirers eventually manage to out-compete all rivals. And a few pioneers make such better mousetraps that customers wait in long lines to buy them. These businesses eventually find themselves in the enviable position of defining the industry standards. They dominate their markets. These are the Wal-Marts of the '90s; the IBM's of the '70s.
They don't just play by the rules, they make them.
Although many companies may compete - and find growth opportunities - in an industry, there is room for only a few such standard setters, or Rule Makers. Some businesses compete very successfully as Specialists, serving only a particular type of customer or making a very customized product. In their often narrowly-defined domains, they frequently are market leaders, though they seldom attempt to dominate an entire industry. Consider AMP, star of the connectors segment of the electronics industry, or Midwest Express, king of the Milwaukee airport.
Others lack this sharp focus. They make up for it, though, with speed, cunning and flexibility. They are Improvisers, and have a special knack for shifting their strategies to meet the needs of the moment. They survive, and sometimes thrive, by rolling with the punches - a great skill to have if you were a stockbroker in the 80's or working in parts of the publishing industry today.
Sustain growth by changing course
One type of company is not inherently better than any other. One-time industry dominators as varied as IBM, Sears and the Pennsylvania Railroad have found the fall from market dominance a steep one. Glamorous innovators like Atari and People Express are no more, and their stronger peers such as Club Med and Federal Express find once unique market positions crowded with imitators.
Specialization, clinging to a market niche, is no guarantee of survival, either. Commodore Computer's unique focus wasn't strong enough to resist the digital marketplace's ongoing tidal changes. Even Microsoft, today's consummate Rule Maker, will someday find its moment in the sun has past.
One size never fits everyone
Each type of company has a particular ethos associated with it. The kind of organization best suited to one might cause another's failure. Some are able to thrive in certain stages of an industry's development and in certain competitive positions - and to decline in others. Each has unique strengths, as well as special blind spots and excesses.
There is no one best way to organize and manage a business. But, for a given situation, some ways are much better than others. And, as the marketplace and competition change, a company's structure and management practices must also evolve.
Not every business neatly fits into one of these situations. Some companies. such as the ones mentioned above, are close to "pure plays." Many, though, are hybrids of two, and sometimes three, of these types. For example, Xerox has worked hard (and still is) to combine the Game Player (its traditional copier business) and the Rule Breaker (the stream of innovative product ideas that flow from its famed Palo Alto Research Center). Exxon, at the height of the oil price boom struggled and ultimately failed to create a corporation built around the combined attributes of Rule Makers, Specialists and Rule Breakers.
A company on a growth trajectory is not a machine requiring repair. It's a vehicle that needs to go somewhere. Let's look, one-by-one, at five of the most important sources of growth, and consider when and for whom each is best.
Those called Rule Breakers make a good starting point.
These are the creative risk takers. Rule Breakers are the
most exciting of the five growth types. They are also the most
problematic. Rule Breakers provide the most trouble for their
competitors. They are also the most dangerous to themselves.
© Robert M. Tomasko 2002