:: Paul Rauseo ::

by

Managing Multidimensional Organizations

Professional businesses today are structurally complex organizations with
many senior people overburdened by time-consuming and often conflicting roles.
Professional businesses often have some combination of
  • Business unit
  • Geographic markets or offices
  • Division or department
  • Product line/service offering
  • Industry group
  • Key account team
  • Committees (recruitment, training)
  • Task force or project team (service innovation, new offerings)
    Each of these organizational groupings can, and does, intersect with
    duplicated missions, overlapping membership, and common resource pools to draw
    upon.
    We frequently hear comments like this from members of management:
    “It’s not at all clear what each of these groupings should be responsible for
    and how their activities should be coordinated and evaluated. If you are a key
    player in this organization, you can spend an inordinate amount of time in
    meetings. There has got to be a better way to organize for effective
    operations!”
    There is a better way, but the way professional businesses organize
    and manage has not kept up with their increasing complexity. Eventually — we
    think sooner rather than later — this will significantly impede their continuing
    success.
    Not only do modern companies have more “types” of organizational groupings
    than in the past, but these groups now have broader responsibilities than the
    simple “generate and serve clients” goals of the past. To survive and flourish,
    individual groups within today’s organizations must be accountable for client
    loyalty, knowledge transfer, development of their people (junior and senior),
    and many other “balanced scorecard” items.
    To make it all worse, many of these groups are composed of people who,
    because of geographic dispersion, do not see each other regularly face-to-face.
    They have to operate as members of a “virtual” organization. Many would not even
    recognize some of the people in their own operating groups, with whom they have
    to interact regularly.
    As Marcel Goldstein, of the global public relations firm Ogilvy, wrote to
    us:
    “The modern-day professional business lacks much formal structure, at least
    when compared with manufacturers, government agencies, and other organizations.
    This is a great asset, as it allows the flexibility, creativity, and autonomy
    necessary to adapt to client needs. It can have a darker side though:
    inefficiency, confusion, and process breakdowns.
    “In many professions, clients are demanding cross-practice cooperation. But
    do we have the right structures and personal skill sets to successfully manage
    the integration of specialty expertise?
    “The highly matrixed professional business turns downright chaotic during
    times of great change: acquisitions/mergers; technology disruptions; and
    transitions to integrated, cross-functional service delivery.
    “Many professional businesses engage in acquisitions of great fanfare, only
    to have their value left unrealized by political undermining. In my experience,
    traditional manufacturers with structured, hierarchical management execute
    acquisitions with far less confusion and resulting paralysis.
    “We need structures that don’t squash flexibility and creativity but minimize
    inefficiency and confusion. We need help building the personal skill sets needed
    to manage ourselves and each other in these environments, especially during
    times of great change.”
    We certainly would not profess to have answers to all these complex issues.
    However, we believe that there are five perspectives that must guide any review
    of a firm’s or company’s structure.

    Imperative 1: Examine Structure, Process, and People

    The solution for an individual firm must always address three perspectives in
    any organizational review:
    1. structure (how we are formally organized);
    2. processes (how different types of decisions are to be made
      and how conflicts and trade-offs are to be resolved);
  1. and people (appointing the right individuals to play the
    complex roles that will make it all work).

    No one dimension will solve the problem: all three must be examined. However,
    we suspect that the importance of these three elements in the solution may be
    first, people; then processes; then structure.

    Imperative 2: Choose the Right Group Leaders

    Many organizations believe, as we do, that selecting the right leaders (and
    having enough of them) is more important than structure or process.
    Peter Kalis, managing partner of law firm Kirkpatrick & Lockhart, states
    the view forcefully:
    “Structure and process — while as essential to a law firm as a skeleton and a
    nervous system are to a human — are prone to ossification and thus are
    fundamentally at war with the dynamism of the marketplace. People, on the other
    hand, are not. We try to elevate the empowerment of our people over the
    organizational niceties of structure and process except to the extent that those
    structural and process features work to empower our people.”
    Choosing the right people for leadership positions was always important, but
    is even more critical in complex organizations. Consider just some of the (newly
    important?) skills that today’s group leader probably must have:
    • The ability (and interest) to motivate and influence people they never see
      in person
    • The ability to delegate and trust others to manage important relationships
    • The ability to play a “linking-pin” role, simultaneously thinking about the
      overall good of the firm while taking care of the needs of the units they are
      responsible for
  • The ability to manage people who have core disciplines other than the one in
    which the leader was specifically trained

    It has always been true that effective management required a complex mix of
    social, interpersonal, psychological, political, and emotional skills on top of
    the high intelligence and technical skills necessary to rise to the top. We
    believe that as organizations become more complex, possession (and development)
    of these so-called soft skills must play an ever-more-important role in
    influencing who is selected to perform managerial or leadership roles.
    Unfortunately, such considerations do not always play a dominant role in
    selecting group leaders. It is a common syndrome that all initiatives (client
    team, industry, geographic, functional, etc.) are seen as important, so the same
    senior people always end up on all the committees, often based on considerations
    other than managerial aptitude or even orientation.
    As a result, it is somewhat hit-and-miss as to whether the right people get
    selected for these roles, their mandate is clear, their performance as leaders
    gets discussed and evaluated, and whether they receive any assistance or
    guidance in learning how to perform their roles.
    Not only does this hurt the organization by (possibly) leading to less
    effective team leadership, but it’s not clear that it is wise to consume the
    limited time of valuable people by asking them to manage and/or get involved in
    everything. This is simple economics — a valuable resource should always be
    focused on its highest and best use.

    Imperative 3: Establish Mandates for Each Group

    Even if you have an ideal structure, there will always be problems with
    coordinating cross-boundary resources and dealing with conflicting priorities.
    You cannot make all cross-boundary issues go away by simply redesigning the
    boundaries.
    Beyond structure, companies must ensure that each group has a clear mission
    (or mandate) that is understood by those inside and outside the group.
    In our experience, many firms launch new business units, various committees,
    or project teams with ambiguous charters and then leave it to powerful (or
    not-so-powerful) group leaders to determine through negotiations over time
    precisely how the groups will interact.
    The case for doing this rests on the idea that internal competition
    is the inevitable result of shifting external market forces influencing each of
    the organization’s groups differently and that a flexible approach to the
    responsibilities and interactions of groups is an efficient way of responding to
    these external market forces.
    However, we believe that failing to discuss and resolve the issues of group
    responsibilities (and how groups will interact and resolve conflicts and
    trade-offs) rarely results in optimal outcomes.
    Under such an approach, power rather than principle determines group goals
    and how groups will interact, and this leads to lesser performance. Resolution
    of conflicting goals and clear, agreed-upon guidelines for decision making over
    trade-off situations must be determined in advance.
    We also believe that organizations must stop treating all groups alike, which
    many unfortunately do, for administrative convenience. It is possible to use
    different types of groups for different things: lots of little teams for
    client-level relationships or one large central group for financial and
    administrative services.
    A large, growing, and complex firm doesn’t have to be (in fact, can’t be)
    made up of units that have similar roles, look alike, have the same targets, and
    are managed in the same way. We discussed specific procedures for setting group
    goals and mandates in our book First Among
    Equals     (Free Press, 2002).
    In making all this work, it is almost better to stop thinking of permanent or
    semi-permanent “departments” and to begin to use the language of “teams.” There
    is a great deal of evidence that organizations work better when people feel that
    they are volunteers self-selected to small mission-oriented teams.
    This is not just a matter of making people “feel good.” It has always been
    true that winning professional service firms succeed most by designing their
    organizations from the bottom up — through the voluntary enthusiasm of
    individuals. You’ll be better off with a messy set of teams filled with
    enthusiasts than you will with a logically correct set of groups filled with
    good citizens.
    As Ben Johnson of law firm Alston & Bird remarked:
    “One problem is that too many ‘leaders’ are afraid to create more energy than
    they can control. I tell people I’d rather have created more energy than I could
    control than not created any energy at all. Here’s to structural complexity!
    Here’s to dispersed leadership!”
    On the other hand, it is also important that firms clarify the roles and
    responsibilities of group leaders and avoid the balkanization of the
    organization that can come from letting group leaders think that they are
    responsible only for their groups.
    Peter Friedes, the former CEO of human-resources consulting firm Hewitt
    Associates, had this to say:
    “I had 15 or so managers reporting to me. So I needed them to not be pulling
    the firm in different directions. One practice I had was to remind all those who
    reported to me that part of their role was to have my CEO perspective in
    managing their group. They were not to just be an advocate for their group or
    their people. They had to have a ‘whole entity’ view.”

    Imperative 4: Clarify Agreements Within the Groups

    Whether you are managing a division, a key client team, or a limited-scope
    task force, every group needs to have a very clear understanding of what “team
    membership” implies. As a matter of practicality (although not, alas, reality in
    some firms) there also needs to be a limit on the number of teams one person can
    join (and the number of roles one person can play).
    For teams to work, there need to be clear, explicit guidelines (even rules of
    engagement) that team members have agreed to observe. Clarifying team members’
    rights and obligations can go a long way toward becoming more efficient and
    effective. (Even as simple a rule as “You must do what you said you were going
    to do” would transform some organizations and save a lot of wasted meeting and
    planning time.)
    The need for such agreements, while always wise, has become ever more
    critical in a virtual world. As Harry Truehart, chairman of law firm Nixon
    Peabody, observed, “Getting people and procedures that facilitate effective
    ‘management at a distance’ is the biggest challenge in making groups work.”
    We believe that if far-flung groups made up of many autonomous individuals
    are to make cohesive decisions over time, then it is necessary that the group
    members agree in advance the principles on which they will base their decisions
    — the guidelines the group members agree to follow. Only with such an agreement
    in place can a decentralized organization make consistent decisions.
    Part of the solution, may involve thinking of (and formalizing) different
    levels of team membership. For example, levels of “team membership” might
    include (i) full decision rights — possible called Team Leadership, or (ii)
    right to be consulted — called team membership or (iii) right to be kept
    informed — called team affiliation. (These are examples only.)

    Imperative 5: Recognize Shifting Priorities in Structural Design

    Structural changes alone will not resolve conflicting priorities and
    competing demands for resources, but structure does nevertheless matter. The
    evolution of professional-service firms over time suggests that some structural
    approaches do work better than others. Most successful global firms, in a broad
    array of professions, have tilted the importance of their different
    organizational “axes.”
    For some time, there has been a general trend to make the target client
    industry the most important (and organizationally powerful) grouping. This has
    been driven by clients repeatedly telling their vendors and providers that they
    had better get to know and understand the client’s business.
    Next in authority and emphasis comes the specifically targeted client (or key
    account) team. Well-orchestrated client teams are the only answer to making
    seamless service across geography and product/service offerings a reality. Don
    Lents of law firm Bryan, Cave notes, “It is my sense that there is a growing
    focus on client teams and the need for such teams to be front and center in the
    thinking of firms.”
    Third, and with increasingly less power and responsibility inside most
    organizations, are the traditional product or service-line groups built around a
    focused technical specialty or discipline. Companies need to have highly focused
    and skilled technical people, but few are still primarily organized that way.
    Finally (and this is a huge revolution from the past), the trend has been to
    make geography the least important and powerful dimension of the complex matrix.
    In the past, the office head (or country head in mega firms) was the source
    of all resources and the arbiter of last resort. Today, in many organizations, a
    geographic head may preside over a location whose people all belong to groups
    headed and “controlled” by a powerful leader located elsewhere.
    This is not meant to denigrate the role of the geographic leader. As Bob Dell
    of law firm Latham & Watkins points out:
    “Having the right leader in an office can be extremely effective in
    facilitating the success of all the other groups therein. There seems to be
    something about physical presence combined with a leader who is perceived as
    less biased toward any group that can be very powerful in resolving competing
    demands.”

    Moving Forward

    We believe that there is a distinct process that firms need to go through to
    find their own customized solutions to managing a complex organization.
    The steps are these:
    First, assess the perception of “pain and difficulties” felt by the current
    organization, to determine people’s appetite for considering changes. This will
    usually require a process of interviewing key players across the firm. No change
    can be made unless there is a keenly felt sense of either pressure or
    opportunity.
    Next, it will be necessary to collect and assess the evidence as to how well
    the organization and its components are currently performing and interacting. In
    a recent issue of The McKinsey Quarterly (2006, number 3), Cross,
    Martin, and Weiss described a detailed and powerful methodology for “mapping the
    value of … collaboration.”
    Even if the approach is not this thorough, there will need to be an
    investigation of current organizational functioning, including not only an
    in-depth view of financials, analyzed according to numerous perspectives, but
    also an analysis of external evidence (including, perhaps, input from selected
    clients) and internal structural frustrations and performance inhibitors.
    It will be necessary to examine whether reward systems are in line with
    organizational objectives and whether profit-center accounting systems are
    contributing to a balkanization of the organization.
    At the other extreme, it would be worth examining whether the organization is
    currently being held together and energized by sharing in what is sometimes
    referred to as an “overarching purpose” or shared values. This is an approach to
    organization that is often fervently preached but rarely achieved.
    Next, in any organizational review, would be the need to design and implement
    a process to generate commitment to re-examine organizational structures and
    processes and explore the major alternatives (including possibly re-constituting
    key groups). Any redesign, must, of course, ensure continuity of strategy
    formulation and implementation through the organization.
    Finally, it will be necessary to examine, consider, and implement methods for
    the development of special managerial skills and competencies as well as new
    metrics that may give better indications of the organization’s functioning and
    response to external forces or internal pressures.
    It may also be necessary to design a process to get the organization to
    recommit to a clarified sense of purpose, values, and “rules of membership”: —
    the principles and practices that people must follow to remain members in good
    standing of the organization.
    Of course, to make any of this work, there is a need for key players to be
    willing to let other people decide some things even when they’re not there — a
    situation which does not exist in many companies and firms!
    We do not mean this to be a throwaway line. To effect real change,
    organizations must not try to establish “theoretically correct” structures and
    processes but must have honest discussions among powerful players about the
    types and nature of the firm’s group processes that would, in fact, be
    honored.
    We have seen too many firms go through the motions of putting in place what
    appear to be sensible organizations, when everyone knows that certain key
    players will not adhere to the policies that have been adopted.
    We’re not idealists here — we recognize the realities of the need to
    accommodate personalities and special situations. But we also do not believe
    that progress is made by pretending or obtaining “false consent.” That is why
    organizational solutions must be custom-designed for each firm and need to be
    the result of a comprehensive review, not, as is so frequently the case, the net
    result of an accumulation of a series of incremental changes driven by short-run
    pressures.

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Lean Thinking for the Supply Chain:GEMBA GUS:RAUSEO

Although lean thinking is typically applied to manufacturing lean techniques and focus are applicable anywhere there are processes to improve, including the entire supply chain. A lean supply chain is one that produces just what and how much is needed, when it is needed, and where it is needed.

The underlying theme in lean thinking is to produce more or do more with fewer resources while giving the end customer exactly what he or she needs. This means focusing on each product and its value stream. To do this, organizations must be ready to ask and understand which activities truly create value and which ones are wasteful. The most important thing to remember is that lean is not simply about eliminating waste—it is about eliminating waste and enhancing value.

The Concepts of Value and Waste

Value, in the context of lean, is defined as something that the customer is willing to pay for. Value-adding activities transform materials and information into something a customer wants. Non-value-adding activities consume resources and do not directly contribute to the end result desired by the customer. Waste, therefore, is defined as anything that does not add value from the customer’s perspective. Examples of process wastes are defective products, overproduction, inventories, excess motion, processing steps, transportation, and waiting.

Consider the non-manufacturing example of a flight to the Bahamas. The value-adding part of that process is the actual flight itself. The non-value-added parts of that process are driving to the airport, parking at the airport, walking to the terminal and then to check-in, waiting in line at check-in, walking to the security check, and so on. Many times the non-value-added time far exceeds the value-added time in this type of process. Where should our improvement efforts be focused—on the non value-added steps or on making the plane fly faster?

Understanding the difference between value and waste and value-added and non-value-added processes is critical to understanding lean. Sometimes it is not easy to discern the difference when looking at an entire supply chain. The best way is to look at the components of the supply chain and apply lean thinking to each one and determine how to link the processes to reduce waste.

· Creating Value

· Lean principles focus on creating value by:

· Specifying value from the perspective of the end customer

· Determining a value system by:

· Identifying all of the steps required to create value

· Mapping the value stream

· Challenging every step by asking why five times

· Lining up value, creating steps so they occur in rapid sequence

· Creating flow with capable, available, and adequate processes

· Pulling materials, parts, products, and information from customers

· Continuously improving to reduce and eliminate waste

The value stream consists of the value-adding activities required to design, order, and provide a product from concept to launch, order to delivery, and raw materials to customers. To develop a value stream map for a product, you select a product family and collect process information. Then, you map the steps in sequence and by information flows; this is called a current-state map. The current-state map provides a clear picture of the processing steps and information flow for the process as it exists today. Next, you search the map for improvement opportunities using the concepts of lean, and create a future-state map. This will portray a vision of the future for the process or supply chain you are creating. This future-state map helps you to visualize the roadmap to get from the current state to the future state.

Mapping the value stream for the supply chain is a similar process. However, the current-state map includes product flow, transportation links, defects and delivery time and steps, and information flow. After creating the current-state map for the supply chain’s value stream, supply chain partners should scrutinize it for bottlenecks, waste, and process improvements. They should use what they discover to create future-state maps for the supply chain. An ideal-state map can also be created that provides a vision of how the supply chain could look if perfect integration of all components were to occur. This is in effect an entitlement map for the supply chain process.

Here’s how it works: A current-state map might indicate that flow within facilities is well defined, but that transportation methods between facilities is creating excess inventory and is not cost effective. The current state map may also show a weakness in the information flow that is not adding value to the process. The future-state map should create flow between facilities, leveling pull within each facility, and eliminating waste. The method for leveling pull might be to install frequent transport runs or milk runs. Information flow could be improved by installing a Web-based process to allow real-time flow of information between all supply chain partners as demand changes. The ideal-state map of this supply chain might have a greatly compressed value system with relocated operations and short transportation deliveries.

“Waste” Reduction

The “Waste” reduction process begins with the question “What can we do to improve?” Some answers may include:

· Stop defective products at their source

· Flow processes together or change the physical relationship of components of the process

· Eliminate excess material handling or costly handling steps

· Eliminate or reduce pointless process steps

· Reduce the time spent waiting for parts, orders, other people, or information

In manufacturing environments, these waste reductions create the benefits of reduced manufacturing cycle time, reduced labor expenditures, improved product quality, space savings, reduced inventory, and quicker response to the customer. When waste is reduced or eliminated across the supply chain, overall cycle time is improved, labor and staff costs are reduced, product quality and delivery are improved, inventories are reduced, and customer lead-times are shortened. The net effect is the entire supply chain is more efficient and responsive to customer needs.

Components of the Lean Supply Chain

1. Lean Suppliers

Lean suppliers are able to respond to changes. Their prices are generally lower due to the efficiencies of lean processes, and their quality has improved to the point that incoming inspection at the next link is not needed. Lean suppliers deliver on time and their culture is one of continuous improvement.

To develop lean suppliers, organizations should include suppliers in their value stream. They should encourage suppliers to make the lean transformation and involve them in lean activities. This will help them fix problems and share savings. In turn, they can help their suppliers and set continually declining price targets and increasing quality goals.

2. Lean Procurement

Some lean procurement processes are e-procurement and automated procurement. E-procurement conducts transactions, strategic sourcing, bidding, and reverse auctions using Web-based applications. Automated procurement uses software that removes the human element from multiple procurement functions and integrates with financials.

The key to lean procurement is visibility. Suppliers must be able to “see” into their customers’ operations and customers must be able to “see” into their suppliers’ operations. Organizations should map the current value stream, and together create a future value stream in the procurement process. They should create a flow of information while establishing a pull of information and products.

3. Lean Manufacturing

Lean manufacturing systems produce what the customer wants, in the quantity the customer wants, when the customer wants it, and with minimum resources. Lean efforts typically start in manufacturing because they free up resources for continuous improvement in other areas, and create a pull on the rest of the organization. Applying lean concepts to manufacturing typically presents the greatest opportunity for cost reduction and quality improvement; however, many organizations have received huge benefits from lean concepts in other functions.

4. Lean Warehousing

Lean warehousing means eliminating non-value added steps and waste in product storage processes. Typical warehousing functions are:

· Receiving

· Put-away/storing

· Replenishment

· Picking

· Packing

· Shipping

Warehousing waste can be found throughout the storage process including:

· Defective products which create returns

· Overproduction or over shipment of products

· Excess inventories which require additional space and reduce warehousing efficiency

· Excess motion and handling

· Inefficiencies and unnecessary processing steps

· Transportation steps and distances

· Waiting for parts, materials and information

· Information processes

Each step in the warehousing process should be examined critically to see where unnecessary, repetitive, and non-value-added activities might be so that they may be eliminated.

5. Lean Transportation

Lean concepts in transportation include:

· Core carrier programs

· Improved transportation administrative processes and automated functions

· Optimized mode selection and pooling orders

· Combined multi-stop truckloads

· Crossdocking

· Right sizing equipment

· Import/export transportation processes

· Inbound transportation and backhauls

The keys to accomplishing the concepts above include mapping the value stream, creating flow, reducing waste in processes, eliminating non-value-added activities and using pull processes.

6. Lean Customers

Lean customers understand their business needs and therefore can specify meaningful requirements. They value speed and flexibility and expect high levels of delivery performance and quality. Lean customers are interested in establishing effective partnerships—they are always seeking methods of continuous improvement in the total supply chain to reduce costs. Lean customers expect value from the products they purchase and provide value to the consumers who they interact with.

Benefits of Lean Systems

Speed and Responsiveness to Customers

Lean systems allow a supply chain to not only to be more efficient, but also faster. As the culture of lean takes over the entire supply chain, all links increase their velocity. A culture of rapid response and faster decisions becomes the expectation and the norm. This does not mean that decisions are made without careful thought. It simply means that a “bias for action” becomes the new corporate culture and anything less will not be tolerated. Slow response or no response becomes the exception, rather than the rule.

Reduced Inventories

In the lean paradigm, inventory is considered waste. Many would argue this point, but manufacturing can take place efficiently with little or no raw material, work in process (WIP), or finished goods inventory.

Many companies today produce directly into trailers and maintain no other finished goods inventory. All quality inspections and checks are performed within the process, rather than after production is complete. In this true make-to-order scenario, all goods are shipped directly to the next link in the supply chain when the trailer is full, and overproduction is not possible and cannot be tolerated. No space is designated to store finished goods. The system is not designed to carry them.

Applying one-piece flow and pull systems can reduce WIP dramatically. A visual signal for more goods to be moved forward to the next process can accomplish this procedure. Although the ultimate goal is to eliminate WIP, minimal WIP is normally the result. The elimination of bottlenecks is one goal of a lean supply chain, but a bottleneck will always exist to some degree. As a result, WIP must always exist in front of a bottleneck or the bottleneck operation will be starved and will stop.

Raw material inventory is a different matter. Although the leanest organizations have arranged just in time deliveries to support manufacturing, this approach requires the absolute highest degree of competency and coordination within the supply chain.

Reduced Costs

Traditional mass production tries to minimize unit costs by increasing total production over the life cycle of the product. High development costs are the result of this model. To recover the enormous development and initial capital costs sunk into the product before it was produced, mass producers forecast and run long production cycles for each SKU. Consumer preferences and variety suffer in this scenario. Costs still need to be minimized, but not at the expense of what more sophisticated consumers now demand.

Improved Customer Satisfaction

Lean promotes minimizing new product development time and expense. This delivers the product to market faster, making it easier to incorporate current requirements into the product. Lean also promotes the use of less capital-intensive machines, tools, and fixtures, which results in more flexibility and less initial cost to recover. As a result, product life cycles may be shorter and product developments incorporated in newer versions of the product more frequently. Profitability does not suffer and brand loyalty is increased, as customers prefer to buy products and services from a perceived innovator.

Supply Chain as a Competitive Weapon

A strong supply chain enables the member companies to align themselves with each other and to coordinate their continuous improvement efforts. This synthesis enables even small firms to participate in the results of lean efforts. Competitive advantage and leadership in the global marketplace can only be gained by applying lean principles to the supply chain. Thought, commitment, planning, collaboration, and a path forward are required.

Path Forward to a Lean Supply Chain

Lean is a cooperative process for survival and for success. Supply chains that want to grow and continue to improve must adopt lean. Lean concepts require an attitude of continuous improvement with a bias for action. The concepts of lean apply to all elements of the supply chain, including support departments such as product development, quality, human resources, marketing, finance, purchasing, and distribution. The challenge is to bring all of these areas out of their traditional silos and make them work together to reduce waste and create flow. Duplication and a lack of appropriate and timely communication run rampant in these traditional organizations. A lean supply chain is proactive and plans for the unexpected by positioning all resources for effectiveness. Downturns in demand can be addressed without layoffs or significant productivity losses.

Leaning “other” areas presents a larger challenge than it does in manufacturing. Supervisors and factory workers embrace change that results in making their lives less complicated and more successful. In the hierarchy of support areas, it is more challenging for the people to understand how lean can benefit them. The answer is simple: What benefits the organization as a whole benefits the supply chain.

Because the Internet provides us with unprecedented opportunities for sharing information and conducting transactions across the supply chain, companies should have a sense of urgency about adopting lean concepts. But all chain partners have to be on the same playing field, and the lean concept is intended to let everyone reach new levels of efficiency and effectiveness. Supply chain leaders should not delay—it’s urgent to act now to implement lean concepts in the supply chain.

Bruce Tompkins

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The Opportunity of Risk

What is your distinct approach to risk? Ever thought about it?

In life, it’s better to stick to a few simple values and aims; the same holds true for business. One guideline that you can rely on is that if a new business road has the potential to damage your brand in any way, you should not invest in it.
When it’s time to decide whether or not to go ahead, the decision must come from your heart. If you must pursue your passions, your ideas will be more likely to succeed.
I learned to follow my passions at the beginning of my career, when some friends and I created a community music program to give a voice to classical music, a less that sought after genre. As for the actual business aspects, such as paying the bills… well, we had to sort that out later. We just hoped that we would draw audiences to stay afloat and learn the business side as we went along.
With almost every venture I’ve gone into since then, I have made the move because I saw a gap in the market. It works.
Over the years, my colleagues and I have developed quite a reputation for risk-taking. It’s true that we have been fearless about taking on new businesses, sectors and challenges even when the so-called experts told us that we did not know what we were doing.
But while, to all appearances, we do have an unusually high tolerance for risk, our actions always spring from another principle: Always protect the downside. I think it should be a guideline for every entrepreneur, or anyone involved in business ventures.
Recently, I have made other bold moves into new businesses, financial services and coaching both nationally and internationally. It’s people who make a company exceptional or average. Like you, I have had to assemble a team of acclaimed experts.
Have you identified the gap in your industry?