| Ian Dover's Journey to Simpler Business |
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The concepts and techniques of Simpler Business have developed over the duration of my career, initially as an engineer then as a manager. For those readers who have an interest in the defining moments, or perhaps defining projects, of my Simpler Business journey, here are the few key milestones that made me think twice about keeping things simple. The Boat Builder My first job after graduating from college was as an Engineer for Alcoa. I worked with Alcoa's customers-and sometimes the customers' customers down the supply chain-to improve the way Alcoa's products were applied and used by customers in their own products and processes. When Alcoa's salespeople encountered a problem with one of their customers-or some technical or process barrier to a sale to a new customer-they often sent me in to see if there was any way to add value, either by reducing costs or increasing quality In one case, a builder of aluminum boats wanted Alcoa to reduce the price of the aluminum sheets that they used to fabricate their boats. The customer wanted to reduce their price to the consumer and hence make their product (a 14' dinghy in this case) more competitive. They had gone through their processes and decided the only way to lower their price was to reduce the cost of the materials. Naturally, the Alcoa salesperson was not keen to do this, so he asked me to have a look at the boat builder's fabrication process to see if there was any other alternative. I found that they were getting special lengths of aluminum sheet cut by Alcoa so they could optimize the "nesting" of the patterns for the different parts of the boat, in the same way that a dressmaker works. I figured that if they could use a "standard" sheet length for this product, they would immediately save the amount of money they required to make the product competitive. So, I worked on the possibility of rearranging the nesting so that they could cut all the parts from a standard sheet. However, my efforts were fruitless and I soon realized that the designers had done a good job of efficiently nesting the elements of the dinghy. I then checked with the engineers about the dimensions of a 14ft boat-did it have to be exactly 14ft? Well, the answer came back "Of course." I did one final check with the boat builder's salespeople, and I received the answer "I don't think I've seen any customer actually measure it to see if it is exactly 14', so I don't think a couple of inches here or there is likely to matter." This then gave me the green light to look at a slightly modified pattern that could be cut from a standard sheet, which I then relayed back to the MD and his sales staff. They were ecstatic-although the engineers had their noses out of joint a little! The outcome? The customer got what they wanted-a more competitive boat. The Alcoa Sales person got what he wanted-more sales without having to discount his products. And I learned an extremely valuable lesson about looking for simple solutions to cost reduction before heading into the realms of costly and often long term process improvement. The Car Manufacturer My next critical lesson in Simpler Business came while I was still with Alcoa, but working on an industry wide project involving the application of aluminum sheets to the body panels of automobiles. The problem was that aluminum sheets came from different manufacturers, and sometimes from different batches from the same manufacturer, to be used in the same process. Of three different coils of aluminum being considered, one coil formed with very few quality problems, one had an average number of quality rejects, while the third coil had a massive number of rejected parts. Yet all of these coils were well within the technical specifications required by the automaker. How could they be so different? This problem spurred a major collaborative project within the aluminum and car industries to find a solution. After all, a lot of new sales were riding on a positive outcome. However, forming any material is often a complex process, with many factors interacting-the material itself, the way the material was processed in the first place, the design of the part to be formed, the design of the forming process, the rate of forming, how the sheet is cut, the type of lubricant, and so on. I was part of a sub group of this project, one involving two professors from the School of Engineering at McMaster University in Hamilton, Ontario, Canada-John Duncan and David Embury. Both John and David had ways of looking at problems that were new to me as a young engineer. John was making a name for himself in taking complex processes and breaking them down into smaller chunks that could be analyzed more simply in order to develop an understanding of what was going on in the real world. And Dave had an approach to analyzing complex material transformation processes by initially using "order of magnitude" calculations to ensure that you were looking in the right jungle for your solution, and not off in another jungle hacking a trail that would lead you way off course. With guidance from Dave and John, I applied these two problem solving principles to this complex industrial problem. I came up with the correct answer at a very low cost compared to my colleagues in other industry research labs who were pursuing different approaches with their teams. And a final lesson I took from my association with John and Dave-the real experts in this world can explain complex situations in a way that even the layman can understand, and that is what makes their lessons so attractive. The Steel Tube Manufacturer In 1984 I started my PhD research with steel tube company Palmer Tube Mills (which some years later took over the Welded Tube Company of America). My project was to reduce the tendency of the steel tube to bend outside standard quality tolerances during and after its production and subsequent storage. The complexity of this problem was enormous-the variables included the supplier that provided the coil steel, the steel production process itself, the coil strip thickness and diameter, the position in the coil, the shape and size of the product being produced, the speed of the mill, the setup measurements at the mill, the conditions of the welding process, the type of coating applied, and the ambient temperature. As part of my research it was necessary to do some mathematical modeling of the process. At that time, the accepted method for mathematical modeling was to write an analysis program in a language such as FORTRAN and run this on what was called a mini computer. Desktop personal computers were just being introduced-they were very slow and did not have the RAM capacity to run the FORTRAN programs. However, if my work was going to be useful to the industry, then the modeling needed to be done on a personal computer that could be afforded by the average sized company. So, I took the bold step of trying the new "spreadsheet" programs and a different approach to modeling the process. This kept the analysis simpler and allowed me far more interaction with the workers and supervisors on the factory floor. This in turn put the results in reach of the average company supervisor and even some of the workers on the factory floor-a great result for me and also for them. This experience drove home for me how much better it is to communicate with the staff of a business when you genuinely try to help them do their work more easily. And this is done by helping them understand the processes in which they are involved-in their terms. It showed me that simplifying the explanation of complex processes actually helps the people who operate these processes to do their work more effectively. These days, I translate this as "doing their work more easily", which means achieving more output for a given number of staff. In fact, I'll go so far as to say that the average worker will love you if you help make it easier for them at work-and in return they'll give you better quality in their job as well. My time at Palmer Tube Mills also showed me that there are some people who naturally think "simply" to get their problems solved. The owner and Managing Director of the company at the time, Ross Palmer, was an example of this. He was continually focused on achieving outcomes and would always work backwards from this to the point where a problem lay in his processes. This approach to solving problems was transferred to his key people in the company and resulted in a number of initiatives:
You might think these ideas are nothing new in today's manufacturing environment, but they were certainly not common practice at the time. This was well before the term "Lean Manufacturing" was coined, but in hindsight they were initiatives that held the key elements of what we now know as the Lean approach to manufacturing. It just seemed like a lot of common sense at the time! My First Business Turnaround This happened in 1990-91. The company was a developer and manufacturer of weighing and tracking technology for food processing companies. It had seen rapid growth in its early years and had expanded overseas to service international markets. But in the late 1980s the company began to experience blowouts in product development costs, and also in the costs to service its international clients. When I joined the company as its General Manager of Operations, it had used most of its capital and was in difficulty. It didn't take long for me to realize that one of the key problems was getting the managers to accept responsibility and take control of their departments. As the new manager, I was finding that the departmental managers were very comfortable in bringing me their problems, expecting me to solve them and pass back the solutions for them to implement. (Since that time, I have found this to be a very common problem in the management of all sorts of businesses, but one that requires a strong senior management team to resist and force managers to make their own decisions.) As part of my review of methods to turn companies around, I found a short article about the 80/20 principle in an industry journal. However, it was not about the normal application of this "principle of predictable imbalance". Instead, it was about how to "think 80/20" in relation to decisions in the business, By "thinking 80/20" I mean regularly asking the question "How can I get a major improvement in this particular issue or area of the business for only minimal input in terms of people's time or dollars?" Incidentally, this article was five or six years ahead of the first book by Richard Koch that talked about "thinking 80/20". Armed with this new way of thinking, I set about applying it to the problems in the business, including getting other managers to think the same way. I soon found that 80/20 thinking applied in this way was seen either as a savior or a threat. Some managers found it to be a brilliant way for them to improve their performance and get much more out of their days, while others were alarmed that this would remove their ability to be "complete" or "thorough" in all that they did. In the longer term, those who could not entertain using 80/20 as a way of being selective rather than exhaustive did not last in the company. Cutting straight to the outcomes, applying the 80/20 principle and looking for ways to simplify the business wherever possible, we simplified the product offering, delayed working on a new product while other existing products were enhanced, formed stronger relationships with a small number of suppliers, reduced the sales staff but added in a greater component of customer service, and increased the focus on the important consumable sales as a means of maintaining cash flow. Within a few months we had achieved a turnaround. And we formed a much stronger relationship with the company's bankers. This was based on a simple business plan, regularly inviting them to visit our facilities to "see" what was actually happening, and providing an agreed set of just a few performance indicators monthly. Seeing the Benefits of Simplicity After these defining projects, it became clear to me that solving seemingly complex business problems in the first instance by trying to keep things simple generally gave very good results. In many cases, a simple approach was all that was needed, and both the simpler thinking and the tools to achieve this could be applied again and again to sustain a "simpler" business with the performance advantages. One thing that stood out, even at this early stage of my experience in simplifying businesses, was the increased flexibility for change that a Simpler Business contained. This allows any business to react rapidly to competitive threats and new opportunities, especially in the important phase of assessing these external issues and making a decision about what to do - "paralysis by analysis" does not apply to Simpler Businesses. The words "agile" and "innovative" are currently being used to describe businesses such as these. |
