Rx. An Original Revolution

Tom Peters

Our organization structures are in need of drastic overhaul. Today’s are carry-overs from an era of stability—mass production, long runs of single products, infrequent introduction of new products.

Six principles, each at odds with conventional wisdom, form the basis for a survivor’s structure:

1. Slash the layers. “Flattening the structure” is becoming commonplace; but most moves aren’t radical enough. Ken Iverson, chairman of profitable steelmaker Nucor Corporation, is unequivocal about the role played by excessive layers: “The most important thing American industry needs to do is reduce the number of management layers. … We have four … we have a foreman, and the foreman goes directly to a department head, and the department head goes directly to the general manager, and he goes directly to this office.”

My advice: No more than four or five layers of structure, regardless of firm size.

2. Bash debilitating functional barriers. The desired result: cross-functional skid greasing will replace turf guarding. This must occur to cut order lead time and new product-development cycles by the 90 percent required for survival in most industries.

In the book Attaining Manufacturing Excellence, Robert Hall boldly proclaims, “Management excellence cannot come from fragmented contributions by various functional staff … The most difficult job is integrative thinking.”

The Japanese have been successful at integrating design, engineering, and manufacturing at the lowest levels in their firms. Speed and high quality result. Consultant Masaaki Imai states, “Cross- functional management is the major organizational tool for realizing Total Quality Control improvement goals … In Japan this is considered simple common sense, but that is not always the case in the United States.”

A notable exception is Chaparral Steel chief Gordon Forward, who explains, “Our largest challenge is to cut the time it takes to get technology out of the lab and into operations. … We’ve tried to bring research right into the factory and make it a line function. … The plant is really a laboratory—even though it is one of the most productive steel mills in the world. … If you put a production fellow and a maintenance fellow and an engineer together, you’re gonna find pretty quickly whether something has a chance of getting off the ground.”

Ford’s “Team Taurus” effort is another brilliant example. In the old days, says Mary Walton in her book The Deming Management Method, “Designers designed the car on paper, then gave it to the engineers, who figured out how to make it. Their plans were passed along to the manufacturing and purchasing people. … Then came marketing, then legal and dealer service departments, and then finally the customers. … In each stage, if a major glitch developed, the car was bumped back to the design phase for changes.”

With the Taurus approach, Ford got everyone together from the start, from hourly workers in their own and suppliers’ plants, to insurance companies, dealers, and customers. Ford says the new routine is now a way of life.

Integration must involve the lowest levels from the start of new product and service development, and must include outsiders.

3. Use teams. Self-managing teams are regularly taking on everything from 100 percent quality inspection, maintenance and repair, shop-floor layout and housekeeping, to budget and inventory management, even to assessment of new recruits. Heavy training and pay-for-knowledge schemes, which provide incentives to learn all the jobs in a plant are necessary.

Make the ten-to-thirty-person self-managing work group the basic organization building block.

4. Eliminate first-line supervision—as we know it. Self-managing groups, as noted, are proving their worth everywhere. There’s no role for the traditional concept of first-line supervisor as scheduler, cop, and rule enforcer.

5. Put the staff on call. In the book World Class Manufacturing, Richard Schonberger observes, “Having salaried people (engineers, schedulers, buyers, plant managers—everyone) on call is common in Japan.” An American scheduling chief was stunned at the difference, when he moved to a Kawasaki plant in the U.S., “I hardly spend any time in my office.” Schonberger adds, “The biggest change for manufacturing engineering is getting used to the idea that the best way to make a contribution is on the factory floor, not in the equipment manufacturers’ catalogues.”

The staff experts must, then, “report” to the front-line operation in the brave new world.

6. Make the middle manager a facilitator. Criticizing middle managers is commonplace today, and well deserved as the role is now conceived. In fact, the new middle manager will be more important than ever before—but with a reversed role. The “new” middle managers will proactively eliminate hurdles between functions that slow down action. They must be rewarded on the basis of speeding action among functions, not protecting their own function.

These six principles add up to nothing less than an organizational revolution. The structural practices are easy to describe, as I’ve done here. The deep-seated attitude change required to make the revolution will be the tough nut to crack.

The good news is that thousands of experiments dot the countryside, in small business and large, in service and manufacturing alike. The bad news is that the task is daunting and there’s not much time left to do it.