Situation: A CEO’s company has experienced margin erosion due to designs that did not transfer well to manufacturing, and inefficiencies in the transfer process between design and manufacturing engineering. He wants to transform the culture without losing technical performance while meeting cost targets and delivery timelines. How do you improve internal processes and procedures?
Advice from the CEOs:
Reinventing the culture of a workforce is an organizational design challenge.
The heart of the challenge is understanding the motivations and desires of the individuals involved – particularly the natural leaders within the groups.
Learn this is by speaking with them one-on-one, either as the CEO, or through individuals with whom they will be open and trusting.
Once their emotional drivers are understood, design accountability and incentive solutions that will align their personal reliability and accountability drivers with their emotional drivers.
Tailor the language of communication with the organization so that it responds to the emotional triggers discovered during the 1-on-1s. For example, if there is a negative reaction to sales within the engineering teams, use a different term like client development.
Expose the designers to the “hot seat” that gets created when their designs produce manufacturing challenges. The objective is for the designer to see the manufacturing group as their “customer.”
Involve manufacturing engineering in design architecture meetings. Do this early in the process so that they can communicate the framework and constraints under which manufacturing occurs and suggest options that will ease manufacturability.
Shift from individual to team recognition on projects. Instead of recognizing the contributions of the design component or the manufacturing component, recognize the contributions of the team of design and manufacturing engineers that produced a project on time, on budget, with good early reliability.
To kick off the new process:
Identify some of the waste targets.
Involve individuals who are known to be early adopters.
Have them look at the problem, develop and implement a solution.
Deliver ample recognition/rewards to these individuals.
Next use these people to mentor the next level of 2nd
Situation: A CEO is in conversation about combining with another company. One option is for the other company to absorb his company. What are the pros and cons of this option? Are there other options that will better serve both owners and employees? How do you improve a business model?
Advice from the CEOs:
The company has a great model today. The option under consideration looks like a double compromise – it alters both the company’s strengths and its fundamental business model.
The company’s strength is lean and mean – moving from a hourly/fee-based model with high utilization to a salary-based model, as the option on the table proposes, will change this. It also changes the dynamics of who will work for the company.
The magic of the current model is that it attracts top talent by offering them the best of two worlds: high individual billing rates with ready access to billable hours. Over the long term this has also made it very profitable.
Explore an alternative – how does the company transform its existing business model while retaining its strengths – lean, mean, low overhead – while transforming the model so that it builds “products,” perception, and recognition for the company?
A longer-term alternative is to look for a financial acquisition of the company. It has good net margins, good cash flow, and even spins out cash. This is valuable to a financial buyer.
What is the role of the CEO right now? Another CEO was asked “Do you have a job or a company? What happens if you leave? If the company dies, you have a job. But it may not be necessary to change much to become a company.”
Situation: A company is the leader in an expanding market. To sustain growth, they must transform how their people operate so that they better address and serve the needs of their target customers. How do you transform company culture?
Advice from Joe Payne:
We have a saying at Eloqua: Culture eats strategy for breakfast. More important than this year’s product strategy is the culture you build that let’s employees make decisions on the fly because they know “that’s how we do things at Eloqua.”
Look at how you pay and reward your people. We all receive bonuses on the same team metrics: company sales, profitability, and customer satisfaction. If the team wins, we all win.
We are not a democracy, but everyone has a voice. Although we make decisions as a business, we avoid top-down management. We push as much authority and accountability as far down the organization chart as we can. You can only do this well with a strong culture.
We adopted a mantra to guide our way, “Get it done – Do it right”, and a set of metrics to make it part of our culture.
We created a two-by-two grid, with “Get it Done” on the Y-axis and “Do it Right” on the X-axis on which all employees, including the Executive Team, are plotted. If rated in the top right quadrant, that employee is doing well. If someone finds himself or herself plotted in the Upper Left quadrant (getting it done, but not doing it right), that person has one quarter to improve. Lower Right people get two months. Lower lefters are out that day.
We can measure “getting it done” using standard quantitative metrics, but “doing it right” is more qualitative. We ask questions like, “Is the person a positive source of energy for the team? Does she go above and beyond for other staff and for customers?” We provide examples to help evaluators plot individual performance.
Once we instituted this matrix, one of our top selling sales reps was evaluated as being in the top left quadrant. When he only paid lip-service to changing and didn’t correct this behavior after a quarter, we let him go, numbers and all. This decision was both a major “wow” and a major win for the company.