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6 Silent Killers of Productivity and Profitability

PM ADVISORY 

By Chris Majer 

USA
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The last decade ushered in an economic meltdown and technological breakthroughs that have forever changed the business world as we knew it. The changes have been so dramatic that most companies are still scrambling to figure out the new rules of the game.

We are facing a new world—one that calls for new approaches to generating consistent competitive advantage. Unfortunately contemporary management theory and practices have ill prepared us for our current reality. The near-universal rush to cut costs and headcount is more likely distracting us from, rather than enabling, the real work of retooling our enterprises to be competitive in this new world. The world is making tectonic shifts, which most business leaders are meeting with puny incremental responses.

Historic innovation often comes during times of historic difficulty, as these breakdowns create the demand for something new to emerge. As such, they are also times of great opportunity, providing a new way of seeing the world.

For example, at the end of World War II, the people of Japan faced historically unprecedented difficulties. Their infrastructure, morale, manufacturing capacity, and international relations were all destroyed. During this time, an engineer named Taiichi Ohno (known today as the father of Toyota) began the task of building a new capacity for Japanese industrial production.

Ohno was then a student of Henry Ford’s industrial process designs and innovations, but these would no longer work given the circumstances in post-war Japan. So where Ford incorporated everything into one integrated mega-plant, Ohno designed operations for a network of factories. And while Ford’s industrial model was designed to minimize opportunities for human error and standardize the production processes so that workers were interchangeable, Ohno’s model allowed all production-floor workers would be accountable for the quality and coordination of their work. His processes—which were based on the assumption that employees derive personal value from a job well done—required more skilled workers and a team-oriented environment. Ohno’s inventions became the foundation of the quality movement that swept the world starting in the 1970s and ‘80s and evolved into what is today known as the Toyota Production System.

To keep his workers thinking and engaged, Ohno developed a new way for them to think about waste—where “waste” is not a thing but an assessment or an interpretation. In other words, waste is not trash to be thrown out; it refers to the events, phenomena, experiences, and features that diminish our capacity to do what matters to us. In the business world, waste kills productivity and profitability.

For example, Ohno said that time workers spent waiting—for parts, for others to complete work, or for anything else—was waste.

Wastes are particular to specific concerns and moments in time. What was wasteful yesterday may or may not be wasteful tomorrow. The wastes the business world has been concerned with for the last 50 years (e.g., scrapped material, wasted movement, wasted time, and wasted resources) were invented in the traditions of the Industrial Revolution, manufacturing, and mass production. We are no longer living in that world.

In the U.S. today, what we call work has little to do with manufacturing. Instead work is about coordination. The value generators in today’s economy are no longer factory workers but what we call coordination workers. They create value not by making things but by designing what gets made, determining markets for products, and generating consistent customer satisfaction. And they do this through effective coordination with each other.

As a result of these changes, the historical, Industrial-Era wastes are no longer the most important wastes. In the new business world, it is time to distinguish a new set of wastes.

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About the Author

flag-usapmwj16-nov2013-majer-AUTHOR IMAGEChris Majer

USA

Chris Majer is Founder and Chief Executive Officer of The Human Potential Project and the author of “The Power to Transform: Passion, Power, and Purpose in Daily Life” (Rodale), which teaches the strategies corporate, military, and sports leaders have used to positively transform themselves and their organizations in a way readers can adept to their own lives and professions. He may be reached at www.humanpotentialproject.com.