The word prototype is formed by two greek words, protos (first) + typos (impression). We know how important it is to use prototypes as a first impression of our products and systems, as suggested by the origin of the word.
If I can’t picture it, I can’t understand it
Albert Einstein
When we think about web systems prototypes, we normally imagine high fidelity prototypes or at least computer made prototypes which are interactive so they can be used in usability tests.
There are many tools to build prototypes:
However, before making a high fidelity interactive computer based prototype, we can draft this prototype. This draft will serve as a tool for very useful discussions about the product and its features. And to build this type of prototype there’s no better tools than pencil and paper. It’s cheap, fast and very easy to use!
I’ll finish this post with some examples of prototypes draw on paper, and they’ll give you an idea on how powerful they are.
Last week Google’s announcement about the end of Google Wave made me review and rethink about some product manangement lessons.
Google Wave
Marty Cagan, former eBay Product Management VP and currently product management consultant, uses to say that all product management processes must start with a “product discovery” phase where we need to find out:
For Steve Blank, a retired serial entrepeneuer who started 8 technology companies, knowing the customer is so important that is not enough for the companies to have a product development process. They must have a “customer development” process prior to the product development, where customer demands and problems are the main focus.
More startups fail from lack of customers than from fail of product development.
Steve Blank
In a 2005 post at her “Creating Passionate Users” blog, Kathy Sierra shows happiness as a function of the number of product features. The chart is quite self explanatory:
Featuritis
As it is Google Wave screen. There are so many things one can do with Google Wave…
Every product must be:
We must always remember:
Tricycle
Source: http://flickr.com/photos/jevolella/437838621/
If ease of use were the only requirement, we would all be riding tricycles.
Douglas Engelbart, mouse inventor
Sometimes I find myself in an argument trying to show that my idea may be beneficial to the group or organization but the person I’m talking to is stuck with his point of view. In such scenarios it is hard to find an agreement. Both parties believe that their ideas are the best options. And part of this perception is due to the idea ownership sense. “If it is my idea, it surely is the best option”.
The situation described above reminds me of the movie entitled “My Big Fat Greek Wedding“. There’s an interesting scene where the main character, Toula, and her mother tried to convince her father, the patriarch of a very traditional Greek family, that Toula should leave the family business, a restaurant, learn how to work with computers and start working at her aunt business, a travel agency. They failed, so they decided to change their approach. Instead of convincing the father that it was a good idea, they made the father have the idea. As soon as the father has the idea and believes it’s his idea, Toula can move on with her new work.
If you prefer, you can download the mp4 file.
I just finished reading a very interesting book named “The Three Ways of Getting Things Done“:
by Gerard Fairtlough.
It is about hierarchy, heterarchy and responsible autonomy in organizations.
Gerard main thesis is that the human being is addicted to hierarchy and, because of this addiction, we are unable to consider other options for getting things done. He says that people organize themselves into groups (organizations) in order to get things done and since we are addicted to hierarchy, we believe this is the only way to get things done.
The first paragraph of the book:
The book explains not only why we are addicted to hierarchy, but also that there are other option to hierarchy besides chaos. He introduces two concepts:
Hierarchy, heterarchy and responsible autonomy form the Thriarchy. Gerard says we should use a mix of the three forms of getting things done, instead of sticking to only one:
There are three ways of getting things done in organizations and the combination of the three is called triarchy, which means triple rule. The Three Ways of Getting Things Done: Hierarchy, Heterarchy and Responsible Autonomy in Organizations.When I was young I thought hierarchy was the only way to run organizations. Although in those days I’d barely heard of the great sociologist Max Weber, I unknowingly shared his belief that an organization couldn’t exist without a hierarchical chain of authority. Now, after over fifty years working in organizations of many different kinds, I’ve come to realise there are two other, equally important, ways of getting things done and that it’s vital for us to understand these other ways. We also need to understand why hierarchy always seems to trump the others.
Today almost all the organizations use hierarchy almost all of the time. According to Gerard:
There is good evidence to suggest that, in the 21st century, organizations are significantly changing the way they get things done. The result, triarchy theory suggests, will be a gradual move away from hierarchy in organizations.
Thiarchy has strong links to sociocracy, Peer-to-Peer theory, complexity theory and Spiral Dynamics.
It is a must read book on the participative management subject.
For those willing to read its first 2 chapter, you can use Google Books:
Actually, it’s quite simple, as Donna Spencer points out:
Just make it up.
Wait? Is it that simple? But in order to make it up you just ned one thing: information.
You need to understand what you are trying to achieve, what users of the service need and know, and you need to know the content well. If you don’t have these things, it will be hard. But if you do have them, pulling them together into a first draft is surprisingly easy.
Which one is the right product to invest?
Ice Cream Glove:
Snuggie:
Answer: there’s no way to know if you base your answer on opinions. The only way to be sure which one is the right investment is:
getting “out of the building” and testing ideas against reality, to find out what creates value for customers before spending all of our resources building it.
For those curious to know which of these products is a good product development investment and want to read more about how important it is to do customer research:
http://radar.oreilly.com/2009/09/is-your-product-an-ice-cream-g.html
I believe this will be one of my longest posts but the topic really deserves a lot of attention.
Two weeks ago I had the opportunity to talk to Mr. Clóvis Bojikian. He was Semco‘s HR director since early 1980′s. He worked with Ricardo Semler in the implementation of the participatory management framework that made Semco one of the most famous successful Brazilian company in the world.
1. Setting context – Semco
Clóvis started giving some context. Fisrt, about Semco, already a successful company 25 years ago.
Their main product was naval hydraulic pumps. The main concern was diversification away from the struggling shipbuilding industry, which was done through:
In 20 years the company grew from 300 to 4000 employees.
2. Setting context – Clóvis Bojikian
Clóvis master was in pedagogy. Some time later he studied business administration.
He first worked as director of the “Colégio de Aplicação da USP” an experimental school very famous during the 60′s where new teaching methods were experimented. One of the most advanced schools of its time. He left due to some pressures during the military dictatorship started in 1964. He then joined Ford, at the time with 4,000 employees, as HR manager. Ford was acquiring Willys, a 16,000 employees car maker. There was little freedom for the HR professional to work (“in a wining team no one wants to makes changes”) so he decided to leave and joined KSB Hydraulic Pumps where he was able to try out some ideas he has. But due to a CEO change, the freedom diminished. At that time, Clóvis went to talk with Ricardo Semler, “many hours of conversation” as Clóvis pointed out. Ricardo was only 22 years old at the time and just assumed as CEO of Semco. He was looking for an HR professional who could help him implement the participatory management concepts he was thinking about. Clóvis, 48 years old, loved this conversation and the synergy with Ricardo and decided to accept the responsibility to run Semco’s HR.
3. The roots of participatory management
Semco is a factory and, as any other factory, workers didn’t enjoyed going to work. Every week they counted the hours until the next weekend. That was Clóvis’ main challenge: “how do we get people motivated?” Some simple facts:
And one simple conclusion:
That was easy to understand. The ones “in charge” are the people who participate more in the business making decisions and watching the results of their decisions. More participation means more interest and more motivation.
4. Exercising participation
In order to exercise participation Clóvis recommended simple, non core business related situations. He gave two examples from Semco:
Employees restaurant: employees normally complained about the restaurant to the HR people. Normally the complain was documented and analyzed by the HR but not always an action was taken. One day the Hr decided to return the complain in a question: “what would you do to change it?”. The complainers got dazzled and, by recommendation of the Hr people, they formed a commission to study what could be done better. The commission end up wit very good ideas, and came back to the HR people who asked: “did you talk to the restaurant people about your suggestions?” and they didn’t. They went to the restaurant, discussed the suggestions, and again they came back to the HR people who just said: “ok, move forward and implement your suggestions”. Since then, the restaurant was run by the restaurant, with support of the employee commission, with no interference of the HR people.
Employees uniform: the stock of employees uniform was running low and a new purchase was due. Instead of just placing an order with the supplier for more uniform, they decided to run an election with employees so they would decide the color of the uniform. Some directors didn’t like the election idea because it would take time and probably would be a mess, but the fact that the democracy was being exercised in a non core business related situation gave run for the experiment. Two colors come very close at the end of the election, and the employees themselves proposed to run a second election, only with those two colors. Finally one was chosen.
As Traci Fenton, from WorldBlu, mentions:
We are talking about distributing leadership, distributing decision making in a way that makes sense. So maybe, the decision making process can sometimes, depending, be slower. But execution is so much faster. And the reason it is faster is because people have a buy-in, because they have been a part of the decision. They have ownership in that decision. They wanna see it succeed. and that’s what make execution so much faster. And that’s were most of the companies fail, on the execution.
5. The next step – closer to the core
Some time later, the employees started to decide their own production targets, and they were normally higher than the ones defined previously by t the executives.
This shows how, when we start exercising participatory decision making with non core business related issues, it is easy, even natural to start moving into more core related decisions.
In Brazil there are holidays on Tuesdays, Wednesdays and Thursdays that people like to connect to the weekend so they have a longer holiday. Normally is the company decision to define who will connect the holiday and who will work on that holiday to compensate a previous holiday connection. After participatory decision making process was experienced the employees themselves decided on the holiday connections.
The next step at Semco was the design of the new roles, responsibilities and compensation plan. It was completely written by the employees with the facilitation and help of the HR people. When the plan was finally implemented, not only everybody knew everybody else’s salaries, but everybody understood why those salaries were paid and were in total agreement with that.
Another interesting example of participatory decision making was the hire of a new manager. Instead of being interviewed only by the HR people and the demanding director, the manager was also interviewed by other managers and by the team he or she would lead. The chosen manager had a great start, since he was not only known by his or her director but also by all the people he or she would work with. Semco also used 360 evaluations in order to have employees analyzing their leaders.
All issues were dealt with by temporary groups.
In order to let employees understand more of the whole business, they decided to change from assembly lines to small cells responsible for the whole piece.
At that point Semco had a framework of participatory management and decided to move to the next step.
6. The final step – a stake in the results
And Semco was ready for the final step, profit sharing. The owners decided to give twenty something percent of the profit to the employees and all the rest was decided in a participative manner. The employees created a set of principles. One of the main principles read more or less like this: “It is not enough to be transparent, we need to educate”. The idea is that not only all numbers of the company be open to all employees but all the employees must be trained to be able to read those numbers. Income statement, P&L and cash flow require some background in order to be read and understood. This is the basis of the Open Book Management:
Give employees training to understand the financial information. Give employees all relevant financial information Give employees responsibility for the numbers under their control Give employees a financial stake in how the company performs
Every month they run a meeting at Semco to discuss results and some very interesting situations happened during those meetings. One day an employee questioned why the executives had to always stay in five star hotels. Wouldn’t it be possible to stay at four stars hotels once in a while? At another monthly report review another employee noticed that Semco spent money on painting the factory in a month that the employees had some free time and they could have painted the factory themselves.
At that point Semco implemented flexible hours and flexible workplace, even allowing work to be done from home. Now that everybody has a stake in company success it is possible to implement such a policy. Of course it should be adopted where it makes sense. For instance, it doesn’t make sense for a receptionist to work from home. But if there are two receptionists to cover a certain amount of time, they could and should decide among themselves when each one should be there.
7. Conclusions
At end of our conversation, Clóvis mentioned that it only takes courage to implement participatory management in a company. Errors will happen and we should learn from them, but the end result, a company full of employees happy to come to work everyday is worth all the risks.
I asked him to tell us about an error or a moment they thought that maybe this whole participatory decision making process could not be a good idea.
He told us a very interesting story about the payroll time clock system. All employees had to checkin when arriving to work, checkout and checkin during lunch and then checkout again at the end of the work day. But this was a control for what is regular, and what a company really needs to know is what is irregular (extra hours, delays, absences). HR decided to change the time clock system so the employee only had to inform extra hours, delays and absences. And what was most important, the employee should inform directly into the system. She didn’t need to explain anything to her boss. The first month everything went quite well, but in the second month there were frauds, people were not informing the working hours irregularities correctly. They were taking advantage that no one was checking the information. Very concerned, the HR people discussed the issue with a group of employees who were in charge of this new system. The answer was: “leave it to us”! After that conversation the system worked very well with no frauds ever reported or noticed. Clóvis mentioned that the employees understood that “the more freedom we have, the more responsible we have to be”, and they acted accordingly.
Check out this video from Traci Fenton, WorldBlu CEO, on organizational democracy:
A brief summary of the above video:
The motivation
According to the Gallup Organization, 73% of the American workforce is disengaged at work. In Japan is 91% of the Japanese workforce is disengaged at work.
The solution
At the WorldBlu website, we can find the principles:
The WorldBlu 10 Principles of Organizational Democracy™ 1 :: Purpose and Vision A democratic organization is clear about why it exists (its purpose) and where it is headed and what it hopes to achieve (its vision). These act as its true North, offering guidance and discipline to the organization’s direction. 2 :: Transparency Say goodbye to the “secret society” mentality. Democratic organizations are transparent and open with employees about the financial health, strategy, and agenda of the organization. 3 :: Dialogue + Listening Instead of the top-down monologue or dysfunctional silence that characterizes most workplaces, democratic organizations are committed to having conversations that bring out new levels of meaning and connection. 4 :: Fairness + Dignity Democratic organizations are committed to fairness and dignity, not treating some people like “somebodies” and other people like “nobodies.” 5 :: Accountability Democratic organizations point fingers, not in a blaming way but in a liberating way. They are crystal clear about who is accountable to whom and for what. 6 :: Individual + Collective In democratic organizations, the individual is just as important as the whole, meaning employees are valued for their individual contribution as well as for what they do to help achieve the collective goals of the organization. 7 :: Choice Democratic organizations thrive on giving employees meaningful choices. 8 :: Integrity Integrity is the name of the game, and democratic companies have a lot of it. They understand that freedom takes discipline and also doing what is morally and ethically right. 9 :: Decentralization Democratic organizations make sure power is appropriately shared and distributed among people throughout the organization. 10 :: Reflection + Evaluation Democratic organizations are committed to continuous feedback and development and are willing to learn from the past and apply lessons to improve the future.
The WorldBlu 10 Principles of Organizational Democracy™
1 :: Purpose and Vision A democratic organization is clear about why it exists (its purpose) and where it is headed and what it hopes to achieve (its vision). These act as its true North, offering guidance and discipline to the organization’s direction.
2 :: Transparency Say goodbye to the “secret society” mentality. Democratic organizations are transparent and open with employees about the financial health, strategy, and agenda of the organization.
3 :: Dialogue + Listening Instead of the top-down monologue or dysfunctional silence that characterizes most workplaces, democratic organizations are committed to having conversations that bring out new levels of meaning and connection.
4 :: Fairness + Dignity Democratic organizations are committed to fairness and dignity, not treating some people like “somebodies” and other people like “nobodies.”
5 :: Accountability Democratic organizations point fingers, not in a blaming way but in a liberating way. They are crystal clear about who is accountable to whom and for what.
6 :: Individual + Collective In democratic organizations, the individual is just as important as the whole, meaning employees are valued for their individual contribution as well as for what they do to help achieve the collective goals of the organization.
7 :: Choice Democratic organizations thrive on giving employees meaningful choices.
8 :: Integrity Integrity is the name of the game, and democratic companies have a lot of it. They understand that freedom takes discipline and also doing what is morally and ethically right.
9 :: Decentralization Democratic organizations make sure power is appropriately shared and distributed among people throughout the organization.
10 :: Reflection + Evaluation Democratic organizations are committed to continuous feedback and development and are willing to learn from the past and apply lessons to improve the future.
And the lessons learned:
1. The more complex the product or service your company is developing the more democratic the process should be. 2. Accountability — where everyone knows what he or she is responsible for and what everyone else is responsible for as well — is the best antidote to the entitlement mentality that plagues many companies. 3. Freedom takes discipline. It expects the best of each one of us. 4. Being democratic isn’t always easy. We’re all still learning and sometimes it can be really, really hard. 5. Sometimes even democratic leaders throw a fit. But just know that if they do, they feel really bad about it. 6. Being a democratic leader is all about tough love. Command and control or authoritarian leadership is easy. Democratic leadership – which requires heart and backbone — isn’t for the weak. 7. Running a company democratically is about changing people’s lives – as well as the world – for the better. 8. Try to take personality out of the equation. Develop robust democratic systems and processes based on principles, not personality. 9. The role of a CEO in a democratic company is to see the big picture, rally people around that vision, and make sure they have the tools they need to get it done. A democratic CEO must be an evangelist. 10. It’s all about positive peer pressure rather than creating a police state. Transparency creates the positive peer pressure on everyone. 11. Every company should have a VP of Transparency. 12. Democracy isn’t just great internally; it’s a great way to engage your customers and build brand loyalty too. 13. As long as people feel like there’s open communication, they don’t feel like they have have a ton of meetings. 14. When hiring for a democratic company, you have to look for people who can recover quickly. When the spotlight of transparency is always on — no matter your ups and downs – you have to be able to recover quickly and with grace. Not everyone can handle that, so chose your team wisely. 15. There are trade-offs to running a company democratically. You’re going to get noise, passion and confusion at times. The result, however, is more innovation, less turnover, a high quality product, etc. It’s worth the trade-offs.
1. The more complex the product or service your company is developing the more democratic the process should be.
2. Accountability — where everyone knows what he or she is responsible for and what everyone else is responsible for as well — is the best antidote to the entitlement mentality that plagues many companies.
3. Freedom takes discipline. It expects the best of each one of us.
4. Being democratic isn’t always easy. We’re all still learning and sometimes it can be really, really hard.
5. Sometimes even democratic leaders throw a fit. But just know that if they do, they feel really bad about it.
6. Being a democratic leader is all about tough love. Command and control or authoritarian leadership is easy. Democratic leadership – which requires heart and backbone — isn’t for the weak.
7. Running a company democratically is about changing people’s lives – as well as the world – for the better.
8. Try to take personality out of the equation. Develop robust democratic systems and processes based on principles, not personality.
9. The role of a CEO in a democratic company is to see the big picture, rally people around that vision, and make sure they have the tools they need to get it done. A democratic CEO must be an evangelist.
10. It’s all about positive peer pressure rather than creating a police state. Transparency creates the positive peer pressure on everyone.
11. Every company should have a VP of Transparency.
12. Democracy isn’t just great internally; it’s a great way to engage your customers and build brand loyalty too.
13. As long as people feel like there’s open communication, they don’t feel like they have have a ton of meetings.
14. When hiring for a democratic company, you have to look for people who can recover quickly. When the spotlight of transparency is always on — no matter your ups and downs – you have to be able to recover quickly and with grace. Not everyone can handle that, so chose your team wisely.
15. There are trade-offs to running a company democratically. You’re going to get noise, passion and confusion at times. The result, however, is more innovation, less turnover, a high quality product, etc. It’s worth the trade-offs.
Maybe you already heard about Ricardo Semler:
CEO and majority owner of Semco SA, a Brazilian company best known for its radical form of industrial democracy and corporate re-engineering. Under his ownership, revenue has grown from $4 million US in 1982 to $212 million in 2003 and his innovative business management policies have attracted widespread interest around the world. TIME featured him among its Global 100 young leaders profile series published in 1994 while the World Economic Forum also nominated him. The Wall Street Journal America Economia, the Wall Street Journal’s Latin American magazine, named him Latin American businessman of the year in 1990 and he was named Brazilian businessman of the year in 1990 and 1992. Virando a Própria Mesa (“Turning Your Own Table”), his first book, became the bestselling non-fiction book in the history of Brazil. He has since written two books in English on the transformation of Semco and workplace re-engineering: Maverick, an English version of “Turning Your Own Table” published in 1993 and an international bestseller, and The Seven Day Weekend in 2003.
I’ve just read his 1989 Harvard Business Review article entitled “Managing Without Managers”.
It is worth reading. Even though it as about the experience if a manufacturing company, it talks about management issues that many companies have, independently of the type of the organization:
And many of his ideas are in sync with the Open-Book Management ideas I mentioned earlier in this blog.
I’ll highlight some parts of the article in order to motivate you to read it!
Profit-sharing
Lots of things contribute to a successful profit-sharing program: low employee turnover, competitive pay, absence of paternalism, refusal to give consolation prizes when profits are down, frequent (quarterly or semiannual) profit distribution, and plenty of opportunity for employees to question the management decisions that affect future profits. But nothing matters more than those vital statistics—short, frank, frequent reports on how the company is doing. Complete transparency. No hocus-pocus, no hanky-panky, no simplifications. On the contrary, all Semco employees attend classes to learn how to read and understand the numbers, and it’s one of their unions that teaches the course. Every month, each employee gets a balance sheet, a profit-and-loss analysis, and a cash-flow statement for his or her division. The reports contain about 70 line items (more, incidentally, than we use to run the company, but we don’t want anyone to think we’re withholding information).
Lots of things contribute to a successful profit-sharing program: low employee turnover, competitive pay, absence of paternalism, refusal to give consolation prizes when profits are down, frequent (quarterly or semiannual) profit distribution, and plenty of opportunity for employees to question the management decisions that affect future profits. But nothing matters more than those vital statistics—short, frank, frequent reports on how the company is doing. Complete transparency. No hocus-pocus, no hanky-panky, no simplifications.
On the contrary, all Semco employees attend classes to learn how to read and understand the numbers, and it’s one of their unions that teaches the course. Every month, each employee gets a balance sheet, a profit-and-loss analysis, and a cash-flow statement for his or her division. The reports contain about 70 line items (more, incidentally, than we use to run the company, but we don’t want anyone to think we’re withholding information).
Hierarchy
The organizational pyramid is the cause of much corporate evil because the tip is too far from the base. Pyramids emphasize power, promote insecurity, distort communications, hobble interaction, and make it very difficult for the people who plan and the people who execute to move in the same direction. So Semco designed an organizational circle. Its greatest advantage is to reduce management levels to three—one corporate level and two operating levels at the manufacturing units. It consists of three concentric circles. One tiny, central circle contains the five people who integrate the company’s movements. These are the counselors I mentioned before. I’m one of them, and except for a couple of legal documents that call me president, counselor is the only title I use. A second, larger circle contains the heads of the eight divisions — we call them partners. Finally, a third, huge circle holds all the other employees. Most of them are the people we call associates; they do the research, design, sales, and manufacturing work and have no one reporting to them on a regular basis. But some of them are the permanent and temporary team and task leaders we call coordinators. We have counselors, partners, coordinators, and associates. That’s four titles and three management layers. …. We have other ways of combating hierarchy too. Most of our programs are based on the notion of giving employees control over their own lives. In a word, we hire adults, and then we treat them like adults.
The organizational pyramid is the cause of much corporate evil because the tip is too far from the base. Pyramids emphasize power, promote insecurity, distort communications, hobble interaction, and make it very difficult for the people who plan and the people who execute to move in the same direction. So Semco designed an organizational circle. Its greatest advantage is to reduce management levels to three—one corporate level and two operating levels at the manufacturing units.
It consists of three concentric circles. One tiny, central circle contains the five people who integrate the company’s movements. These are the counselors I mentioned before. I’m one of them, and except for a couple of legal documents that call me president, counselor is the only title I use. A second, larger circle contains the heads of the eight divisions — we call them partners. Finally, a third, huge circle holds all the other employees. Most of them are the people we call associates; they do the research, design, sales, and manufacturing work and have no one reporting to them on a regular basis. But some of them are the permanent and temporary team and task leaders we call coordinators. We have counselors, partners, coordinators, and associates. That’s four titles and three management layers.
….
We have other ways of combating hierarchy too. Most of our programs are based on the notion of giving employees control over their own lives. In a word, we hire adults, and then we treat them like adults.
Business units
When we made the decision to keep our units small, we immediately focused on one facility that had more than 300 people. The unit manufactured commercial food-service equipment—slicers, scales, meat grinders, mixers—and used an MRP II system hooked up to an IBM mainframe with dozens of terminals all over the plant. Paperwork often took two days to make its way from one end of the factory to the other. Excess inventories, late delivery, and quality problems were common. We had tried various worker participation programs, quality circles, kanban systems, and motivation schemes, all of which got off to great starts but lost their momentum within months. The whole thing was just too damn big and complex; there were too many managers in too many layers holding too many meetings. So we decided to break up the facility into three separate plants. To begin with, we kept all three in the same building but separated everything we could—entrances, receiving docks, inventories, telephones, as well as certain auxiliary functions like personnel, management information systems, and internal controls. We also scrapped the mainframe in favor of three independent, PC-based systems. The first effect of the breakup was a rise in costs due to duplication of effort and a loss in economies of scale. Unfortunately, balance sheets chalk up items like these as liabilities, all with dollar figures attached, and there’s nothing at first to list on the asset side but airy stuff like “heightened involvement” and “a sense of belonging.” Yet the longer-term results exceeded our expectations. Within a year, sales doubled; inventories fell from 136 days to 46; we unveiled eight new products that had been stalled in R&D for two years; and overall quality improved to the point that a one-third rejection rate on federally inspected scales dropped to less than 1%. Increased productivity let us reduce the work force by 32% through attrition and retirement incentives. I don’t claim that size reduction alone accomplished all this, just that size reduction is essential for putting employees in touch with one another so they can coordinate their work. The kind of distance we want to eliminate comes from having too many people in one place, but it also comes from having a pyramidal hierarchy.
When we made the decision to keep our units small, we immediately focused on one facility that had more than 300 people. The unit manufactured commercial food-service equipment—slicers, scales, meat grinders, mixers—and used an MRP II system hooked up to an IBM mainframe with dozens of terminals all over the plant. Paperwork often took two days to make its way from one end of the factory to the other. Excess inventories, late delivery, and quality problems were common. We had tried various worker participation programs, quality circles, kanban systems, and motivation schemes, all of which got off to great starts but lost their momentum within months. The whole thing was just too damn big and complex; there were too many managers in too many layers holding too many meetings. So we decided to break up the facility into three separate plants.
To begin with, we kept all three in the same building but separated everything we could—entrances, receiving docks, inventories, telephones, as well as certain auxiliary functions like personnel, management information systems, and internal controls. We also scrapped the mainframe in favor of three independent, PC-based systems.
The first effect of the breakup was a rise in costs due to duplication of effort and a loss in economies of scale. Unfortunately, balance sheets chalk up items like these as liabilities, all with dollar figures attached, and there’s nothing at first to list on the asset side but airy stuff like “heightened involvement” and “a sense of belonging.” Yet the longer-term results exceeded our expectations.
Within a year, sales doubled; inventories fell from 136 days to 46; we unveiled eight new products that had been stalled in R&D for two years; and overall quality improved to the point that a one-third rejection rate on federally inspected scales dropped to less than 1%. Increased productivity let us reduce the work force by 32% through attrition and retirement incentives.
I don’t claim that size reduction alone accomplished all this, just that size reduction is essential for putting employees in touch with one another so they can coordinate their work. The kind of distance we want to eliminate comes from having too many people in one place, but it also comes from having a pyramidal hierarchy.
Information
A few years ago, the U.S. president of Allis-Chalmers paid Semco a visit. At the end of his factory tour, he leafed through our monthly reports and budgets. At that time, we had our numbers ready on the fifth working day of every month in super-organized folders, and were those numbers comprehensive! On page 67, chart 112.6, for example, you could see how much coffee the workers in Light Manufacturing III had consumed the month before. The man said he was surprised to find such efficiency in a Brazilian company. In fact, he was so impressed that he asked his Brazilian subsidiary, an organization many times our size, to install a similar system there. For months, we strolled around like peacocks, telling anyone who cared to listen that our budget system was state-ofthe- art and that the president of a Big American Company had ordered his people to copy it. But soon we began to realize two things. First, our expenses were always too high, and they never came down because the accounting department was full of overpaid clerks who did nothing but compile them. Second, there were so damn many numbers inside the folder that almost none of our managers read them. In fact, we knew less about the company then, with all that information, than we do now without it. Today we have a simple accounting system providing limited but relevant information that we can grasp and act on quickly. We pared 400 cost centers down to 50. We beheaded hundreds of classifications and dozens of accounting lines. Finally, we can see the company through the haze.
A few years ago, the U.S. president of Allis-Chalmers paid Semco a visit. At the end of his factory tour, he leafed through our monthly reports and budgets. At that time, we had our numbers ready on the fifth working day of every month in super-organized folders, and were those numbers comprehensive! On page 67, chart 112.6, for example, you could see how much coffee the workers in Light Manufacturing III had consumed the month before. The man said he was surprised to find such efficiency in a Brazilian company. In fact, he was so impressed that he asked his Brazilian subsidiary, an organization many times our size, to install a similar system there.
For months, we strolled around like peacocks, telling anyone who cared to listen that our budget system was state-ofthe- art and that the president of a Big American Company had ordered his people to copy it. But soon we began to realize two things. First, our expenses were always too high, and they never came down because the accounting department was full of overpaid clerks who did nothing but compile them. Second, there were so damn many numbers inside the folder that almost none of our managers read them. In fact, we knew less about the company then, with all that information, than we do now without it.
Today we have a simple accounting system providing limited but relevant information that we can grasp and act on quickly. We pared 400 cost centers down to 50. We beheaded hundreds of classifications and dozens of accounting lines. Finally, we can see the company through the haze.
I’ve written some posts on leadership on this blog. Recently we discussed largely about this topic here at Locaweb so I decided to write yet another post about leadership. It is about 4 thoughts on leadership.
leadership = motivation
If someone asks me to define leadership in one word, I would use the word motivation. Leadership is essentially about motivating the team. The leader should support the team so they can get to their objectives, execute their work and projects the best possible way.
In order to create a motivating environment, the leader must use management styles. Some writings about this topic mention that there are 10 management styles; others mention 6 management styles and other mention 4 management styles. In fact, it doesn’t matter how many management styles but the concept of management styles.
The idea behind the concept of management style is quite simple: a management style is how a leader must react given a certain situation. For instance, when the team is clueless, unable to decide on their own what’s the best way to move forward, and the time to take the decision is almost over, this is a good moment to use the coercive / authoritarian management style. Using this style means that the leader say exactly what must be done by the team. When the team is in the beginning of a project, it’s a good time to mix directive / orienting with democratic / participative management style. Being directive, the leader says what must be done in that project, why it must be done and under what circumstances – timeframe, budget. Being democratic, the leader let the team decide on the detailed planning of the project.
Let’s leave aside the corporate world and think a bit about parenting. How many times we heard some parents saying that sometimes their kids ask for reprehension? That’s the moment when the kids ask for a coercive / authoritarian parent.
This concept of managerial style can be applied in any situation of our lives. Each situation demands a certain reaction from us. And there are more appropriate reactions and less appropriate reactions.
We should consider two aspects about management styles:
leadership = model
Another very important aspect about leadership that even the best leaders forget about is the being a leader means being a model. The better the leader, i.e., the better motivator a leader is, the biggest are the chances of this leader becoming a model for her team. The leader may not like being a model or even may not be able to see heself as a model, but her team will always see her as model to be followed. So if the leader has a certain way of behaving at the office, at some point her team will start to act similarly.
leadership = practice
I’ve already commented that the best way to improve is to practice a lot (in Portuguese). The same is valid for leadership. No one is born a leader. Like any other skill, it requires lots of constant and mindful practice, with a good coach and in a appropriate environment.
leadership = be led
Eventually all leaders are led. 100% of all leaders are led by another leader. Almost all are led by a boss, but even when we think about leader in its highest rank, she is led by someone. If she is the owner of the company, she is led by the market. If she is the president of the country, she is (or should be) led by the people of this country.
The quality of the leadership must not be analyzed only with regard of the team. The team may be in perfect synchrony with its leader, very motivated, but if this leader is not in sync with her own leader, there’s no deal.
Summarizing
I know there are tons more to say about leadership. Just type leadership at Google to see hundreds of millions of pages about the topic. And I’ll write more about this topic in the future but, for now, here goes my 4 thoughts on leadership:
leadership = motivation leadership = model leadership = practice leadership = be led
Please check my other posts on leadership.
