The Necessity For Boldness
I am an avowed incrementalist. Try, test, and experiment are among my favorite words. I still fervently believe that a pragmatic, incrementalist approach to progress is sound. But I also believe the visions to which we aspire must be grand ones.
Not so much because inspiring visions are superb motivators (which they are), but because we must markedly pick up the pace of change in our businesses over the next five years. If we don't, we face the prospect of a permanently reduced standard of living.
SPEED OF INNOVATION: A recent Wall Street Journal article proclaimed the textile and apparel industries are testing productivity tools that will reduce their product development cycle (from gleam in the eye to fully stocked on the retail shelf) by two-thirds—from 66 weeks to 21 weeks. If we are to master the new competitive environment, shortening the product development cycle is imperative in every industry.
Raychem Corp., a Menlo Park, Calif., maker of high-tech connectors, regularly develops fully-tested new product samples or prototypes in one or two weeks. That's one-tenth to one-twentieth of the industry average. The Limited Stores, Inc., of Columbus, Ohio, radically changes the variety and displays of goods offered in its over 600 outlets weekly—more than 10 times faster than the industry average.
Bold Objective No.1: Whether retailer, banker or science-based company, reduce your product development cycle time—this year—by 50 percent.
PREMIUM PRODUCTS: Curtis Mathes Corp. of Dallas, Texas, offers unparalleled service, and often commands a 25 percent unit-price premium in television sales—and it's growing rapidly. Perdue Farms Inc.'s slavish devotion to quality permits the fresh chicken producer to garner a 10 percent to 15 percent price premium in that commodity-like business. The specialty steel, specialty retail, specialty chemical, and specialty forest product companies outperform the diversified and generalist members of their industries by 50 percent or more.
Bold Objective No.2: Through service, quality, and enhanced innovation, shift half of your product or service portfolio to differentiated, higher priced, and higher value-added plateaus in the next two years.
PEOPLE AND ORGANIZATION: Nucor Corp., the highly profitable Charlotte, North Carolina, mini-steel mill company, runs a three-quarter-billion-dollar business with just three layers of management and a corporate headquarters staff that numbers only nine.
Ford Motor Co. and General Motors Corp. have successfully eliminated the first-line supervisor's job in large parts of their companies, often replacing it with elected team coordinators.
At Worthington Industries, Inc., the successful Columbus, Ohio, specialty steel maker, 40 percent of the average employee's paycheck comes from a profit-sharing program.
Bold Objective No.3: Reduce the number of layers of management at any operating activity to two. Pare corporate staff by 80 percent over the next three years. Eliminate all first-line supervision jobs during the next three years. Get 100 percent of the people on the payroll into a profit-sharing program in the next 18 months.
PAPERWORK REDUCTION: A long-time colleague runs 25 remarkably profitable Burger King franchises. To enhance service, he believes that minimizing distracting paperwork is vital. Last year he reduced the length of his restaurant manuals by two-thirds. He plans to repeat the process again this year, to reduce manuals by another two-thirds. Years ago, Marcus Sieff, chairman of Marks and Spencer Ltd., the outstanding British retailer, reduced his store managers' written guidance from thousands of pages to just two booklets, 12 pages each.
Bold Objective No.4: Reduce the paperwork and procedures in every operation by half in the next year.
TIME AND ATTENTION: Sam Walton, America's richest man according to Forbes, has created efficiency and customer friendliness throughout his 800-store, $8 billion Walmart Stores, Inc. To underscore the importance he places on every store, Walton, age 67, visits each one annually.
Three years ago, Milliken & Co.'s Chairman Roger Milliken demonstrated his renewed commitment to his customers in the only way that counts. He began spending two-thirds of his time with customers.
Bold Objective No.5: This year, devote fully half of your time, as measured by a retrospective weekly calendar analysis, to the single strategic priority that is most vital for you to achieve lasting distinction in your markets.
Any of these five goals is imposing, especially for an older or large firm. Yet, I strongly believe these or like objectives are essential to the survival of most firms—high- or low-tech, service, or manufacturing.
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