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Dick Strojinc
RSM McGladrey
Director Performance Improvement Group-Practice Lead

The Power of Creating a Story - Additional Vignettes

GREAT LEADERS LEVERAGE COMMUNICATIONS

The traditional method of the executive in communicating with management and the work force is well known and there is a plethora of articles about effective presentations and effective meetings. Having used these as a routine course of action, I have found that on occasion, there may be more effective ways of gaining attention and achieving follow through actions by others. These ways rely on several underlying principles. First, virtually everyone desires to meet the expectations of the leader so long as those are not irrational or unethical. Second, irrespective of what the leader thinks, others are always watching and their behaviors will be somewhat dependent upon the leader’s behavior. Third, leaders communicate their priorities and expectations more clearly by where they spend their time not by what they say. Fourth, if the leader can somehow enlist others in the communication process and they repeat the core principles, then the effectiveness of the message will be pervasive and enduring.

 

THE POWER OF STORIES REPEATED

Experience oftentimes is the result of having to learn from something that resulted in failure or at least ineffectiveness. Hopefully, its lessons are acquired through observation of others rather than through direct learning.

In the mid-1980s at Frito-Lay, we embarked upon a strategic initiative of rapidly introducing many new products. Many of these had the potential to deliver $100 million plus in new revenues. From a revenue standpoint, this initiative was extremely successful resulting in a tripling of the growth rate of this large complex firm. However, from an execution standpoint in Marketing, Sales, Manufacturing, and Distribution, this strategy was overwhelming. All new product launches were accomplished on time, but at extraordinary cost. The market also became a constraint in that there was a limit in how much new product (shelf space) would be committed by our retail customers. This resulted in cannibalization and reduced the revenues with the highest profit items that had been staples in the line for years. The overall effort resulted in a reduction of profits despite the major increase in revenues.

The normal executive business meetings to address corporate level problems continued and on a monthly and quarterly rhythm results were reviewed, opportunities identified, and corrective actions implemented. Most functional areas continued to implement initiatives which further drove revenue growth and the commitments to re-establish commensurate growth in profitability fell short. These meetings were characterized by thorough and detailed slide presentations which suitably addressed the issues, but sorely missed the point. Each meeting was hours long and it was important that each executive presented in a thoroughly professional manner.

However, the modus operandi needed major change. The Executive Vice President who oversaw the process and the meetings (and was famous for the best, most detailed, and well done presentations) broke the mold. When he kicked off the first meeting of the year, all had prepared for a repetition of the same. However, he started the meeting and had only a single slide. Basically, it said “Net Operating Profit Is King”. His presentation lasted less than a minute. The meeting was immediately adjourned with no further discussion. He clearly reset the agenda for the coming year, if net operating profits would not increase in the short term, then initiatives were not to be done or continued.

Hardly an hour passed before those of us at the 30 plus manufacturing and 200 plus sales locations understood clearly the direction. This resulted in a discontinuation of some products, deferral of others, but a large increase in profitability.

 

IMPACT BEYOND THE IMMEDIATE (SETTING THE TONE ACROSS THE ENTIRE CULTURE)

At Newell Company, before the acquisition of Rubbermaid and when the firm was ranked in the Top 20 of the Fortune 500 for return on investment to shareholders and while it was a very strong culture focused on consumer products and strong execution, the following story was repeated for many years. Personally, I was not involved in any way and the facts may be somewhat off, but that is the point of this article. Stories are repeated and turned into legends which have important implications for the culture. One does not have to be present for the message to be received and for it to become an overarching principle.

One of the divisions of Newell was incurring large shortages with customers due to successful sales efforts that vastly exceeded capacity. While this major customer shortage issue was a division problem, its effects extended across the enterprise in that the large retailers would leverage poor performance at one division against the others. In this case, the adverse effects were across nearly 20 divisions. The division went through the normal process of physically expanding capacity to meet demand which would take some time while new machinery was ordered, construction was done, and equipment installed.

Division executives were summoned to present the issue and potential solutions at corporate headquarters. When asked to present options, the plan to double capacity at a cost of $5 million was proposed. When asked if there were any other alternatives, the response from the President, VP of Finance, and VP of Operations was that all options had been explored including 3 competitive bids and that this was indeed the only way to resolve the chronic shortage of product issue. The Chairman of the company, slapped his hand on the table, and presented the option of increasing price dramatically which would then reduce demand, resulting immediately in increased profits, and avoid spending $5 million in capital. A plant expansion could be undertaken later at a higher average unit price. Meeting adjourned.

 

LEADERS ARE ALWAYS WATCHED FOR THEIR REAL PRIORITIES

At Intercraft, a recently acquired division of Newell Company, high waste was perceived to be a chronic problem. It occurred routinely every day and as such it was not unusual and there was no particular attention paid to the issue and its causes. Throughout the manufacturing plant, there were dumpsters for trash and this scrap product was promptly discarded in these dumpsters. There was no apparent waste build up due to the efficient housekeeping of the manufacturing floor. This reinforced the premise that a well- organized, clean plant was a productive plant. While not always true, the inverse is true. A poor looking plant runs poorly and is less productive.

To change the minute by minute focus of the operators and supervisors, I invited the President to tour the manufacturing floor with me. While there, I asked him to look in the dumpster, pull out a discarded picture frame, look at it closely, visibly frown, and then throw the picture frame back in the dumpster. He asked me what he was supposed to be observing, I informed him that it was unimportant and that he did not need to be a quality control inspector. Someone had already determined that the frame was defective. His role was to call attention to the problem, not to diagnose it in any way. He dutifully followed through. He and I then moved to a mezzanine area nearby and looked back at the dumpster. Gathered around the dumpster were the supervisor and a group of operators trying to determine what was wrong with the picture frame and why the President of the division was unhappy. We repeated this every so often. Supervisors and operators reacted to the issue and resolved many of causes that would result in defective picture frames. No formal problem solving, just an engaged workforce.

 

COMMUNICATIONS IN A DIFFERENT WAY

Note that in each situation, the normal issue identification and problem solving had occurred. The regular process had been followed. What precipitated the extraordinary event was the basic fact that the process was not working because these problems were there every day and did not stand out to the management team as anything unusual, just a part of the ordinary course of operating the plant. When first identified as an issue, it was not readily apparent that there was anything wrong with the way things were being operated or how teammates interacted with the production environment. By doing something extraordinary in a highly visual way, this called attention to the problem areas. As I have learned through many years of experience, managers and the workforce are great problem solvers, but generally much worse at seeing the problem. Oftentimes as managers, we think that we must solve the problem. Many times, it is better to identify the problem and just get out of the way.

By communicating in a visibly different way, the story that is told is simplified and told in a dramatic, impactful fashion. If it is repeated across the organization, the impact is both pervasive and enduring.

 

Pivot Toward the Future

Business growth is dependent on the shift from primary reliance on past knowledge and aging practices, to a forward-facing perspective with a clear view of evolving business environment and best-practices aligned with conditions in today’s marketplace.