Adapt or die - advice which will only work when everyone's involved. Malcolm Wheatley.
Something unusual is happening in the ballroom of the Leofric Hotel, Coventry. Three hundred people from the flooring company, Amtico - that's virtually the entire workforce - are spending two days listening to a man who has flown 9,500 miles to talk to them. Apart from a small team answering telephones back at the shop, everybody from the Courtaulds subsidiary is here. For the time being all production has been suspended.
The man they have come to hear is pacing up and down on the platform, speaking without notes as slide follows slide. The visual aids themselves - a mixture of diagrams, bullet points and rather amateur photographs of factories - are not particularly slick. Nor, indeed, is the speaker. At times looking crumpled and awkward, his stage technique is in stark contrast to the over-rehearsed performances so widely seen in the guru business. Yet he is a genuine big name on the guru circuit - US manufacturing expert Richard Schonberger.
And people are listening. Schonberger - whose early 80s books, Japanese Manufacturing Techniques, first brought Total Quality and Just-in-Time to the notice of British managements - pulls few punches. He relies more on convincing with detail rather than with rhetoric. Constantly on the move, he repeats his central theme time and again: there is a better way of doing things. Watch, listen, learn, believe - and act.
Making changes in business can be a painful process. With companies, as with individuals, the easiest path to follow is often the one already being travelled. Time after time, it takes some threat from outside, such as a recession or takeover bid, to get organisations to break the chains of inertia and alter the way they work. No matter how long it is overdue, it often needs the appearance of a predator to persuade the board to announce a re-structuring plan.
The irony is that change, in itself, need not be difficult. When it does come, the measures taken are rarely surprising. On the contrary, they have usually been accepted as necessary, at least tacitly, for a long time. What's often lacking is the will to drive them through - or over - the vested interests that stand in the way. This usually means just about everybody; those who are not direct beneficiaries of change are generally against it - few are neutral. For change to be effective, an organisation needs to win decisively the battle for the hearts and minds of its workforce. Stalled, half-finished or half-baked changes can be worse than the original status quo, sapping a company's strength and resources as management struggles to make sense of conflicting signals. The trouble is the managers, like everyone else, tend to concentrate more on the message than the medium. Taking the trouble to communicate forthcoming change is all too often seen as simply a tedious and last-minute precursor to the much more exciting business of getting on and doing it. And the more a management thrives on excitement, the less it will want to make life easy for itself by steering around obstacles rather than just smashing through them.
Regrettably, there are countless examples of management smashing on regardless, only to find quicksand (or worse) on the other side - even in companies that should know better. The latest top brass trying to dig itself out is at oil giant BP. Back in 1990, incoming chairman Robert Horton started taking the axe to BP's civil service-style management culture, in what The Economist has called "one of the most publicised management re-structuring exercises in corporate history". Project 1990, as it was termed, was intended to instil a culture based on empowerment and teamwork - and, not incidentally, to give the boot to thousands of managers. HQ staff has been cut by 40%, and analysts estimate that ultimately 10,000 BP staff could find themselves in the dole queue.
Unfortunately, the exercise appears to have back-fired. Observers talk of morale problems and the share price had slumped by a third against the FT index even before February when the announcement of the 1991 results sent it to its lowest level since 1989. The main problem, one analyst maintains, is that Horton "imposed change rather than nurtured it".
And so back to Schonberger on stage in Coventry: an intensive two-day nurturing session. At the end of the second day, Jeremy Paul, Amtico's production director, is visibly limp with relief. The employees are filing out, clutching their thick bound copies of Schonberger's slides and notes. The title, Working to World Class Standards, will leave them in no doubt as to the task ahead. "It was an enormous amount of material," concedes Paul. "But you have to go through it - and no one can say now that they haven't been told."
The objective of the session was twofold. Firstly, to educate. People can't move towards Just-in-time or Total Quality without understanding the principles. Fine and conventional enough but the second objective is less so: to make a company-wide statement which will not only demonstrate the company's intent but also win employees' hearts and minds. For both Paul and MD John Harris are absolutely adamant that change will take place: the company is going to become "world class". And in fact, Schonberger's presence indicates that a small bridgehead has already been established. With the help of Schonberger's UK consultancy arm, Hampshire-based World Class International, a product line that, in Paul's words, "was so bad that it couldn't get any worse", has been successfully transformed.
The manufacturing time has been cut from three weeks to three days. A tortuous process that took the product on a four-mile journey through five separate departments has been replaced by a single manufacturing cell with a total flow distance of a hundred yards. Inventory levels have dropped by 65%; and quality has improved.
Now Paul and Harris want to move on. But stepping up from one cell to 15 - from just one part of the factory to the whole of it - is an enormous leap. Change on that scale cannot simply be imposed from on high; it has to be achieved collectively. The stakes, too, are high. One of Paul's objectives is a tenfold reduction in the company's internal defects rate - from 5% to 0.5% - within the year.
They have, in Schonberger's eyes, already overcome one of the biggest obstacles to change that they faced: the "commitment barrier". "The man at the top has to get religion before the troops will," he says, warning that "sometimes they are just too busy playing with mergers and acquisitions". And change on this scale requires getting religion in a big way. Even back in the US, which Schonberger regards as being hit more severely by Japanese competition than the UK, many companies get it too little - and too late. Large companies, he warns, are too liable to get bogged down in internecine warfare between the various power factions. There's often a tendency to concentrate on reporting efficiency rather than achieving it.
But if getting commitment from the top is vital, so also is building it lower down. Hence the two-day Coventry session. Schonberger is an advocate of the "big, visible commitment", which sends a clear message about a management's determination. It's also, in Paul's eyes, a very efficient way of making sure that the training content itself gets across to the employees. "You can dish out the books to them", he says, "but how do you get them to read them? The easiest, quickest and cheapest way is just to stick 'em in a room."
And once in there, Schonberger hammers home not just the mechanics of change but also its importance: adapt or die. He alternates between comparing and cajoling. Abstract slides on the theory of Just-in-Time and Continuous Improvement are followed by practical examples. He works to generate enough understanding and enthusiasm for the change process to "go critical" and become self-fuelling. And finally, a checklist of 48 "go-away-and-do" items.
The objective is clearly to kick-start the change process and give it enough force to keep it from getting tangled up in grassroots inertia. With the workforce fired up, the intention is that Schonberger's consultant colleagues on the ground can work with the company to finish the job off, Schonberger himself returning only to carry out a health check in a few months' time.
You don't have to look too closely at what is going on to see the aspects of this are a departure from considered norms. Although hiring external consultants to act as catalysts of change is nothing new, closing the factory for two days is. Equally, while managements now commonly accept the need for greater communication - especially at times of transition - they usually opt for structured communication, tailoring the message to the individual audience. Not Schonberger: at Amtico, the entire workforce are seeing the same presentation, with nothing edited or omitted because employees "wouldn't understand" or "don't need to know". And the presentation itself breaks some rules, too. Forget concise, uncluttered slides making simple succint points: Schonberger's are wordy, complicated and crammed with detail.
So it's different - but does it work? Three months later, the reaction is still very positive. "The shopfloor are still talking about it all," enthuses Paul, although conceding, not surprisingly, that Schonberger's approach didn't score a bull's-eye every time. But bringing together the whole organisation has helped shift the focus away from it being "simply a manufacturing thing". Other areas of the business, such as purchasing, are establishing continuous "improvement" groups and Paul is optimistic that the company-wide transformation will take place - although not perhaps as quickly as he would have liked. The concept of "interim management" is another approach to achieving change.
The basic idea is simple: a company identifies a change that it wants to make, and buys in a temporary manager to make the change for them. The manager is not a "consultant"; he is not there to just advise or plan - he is there to do. But unlike a company's own staff, he comes already convinced and hands-on from the start.
Although the concept is well established on the Continent, it is still something of a rarity in the UK. Nicky Cutts, an international headhunter formerly with John Stork and Partners, also runs the Devon-based agency, Barton Interim Management. She is in no doubt that interim management is an idea whose time has come. "Change is no longer the exception in business," she says; "it is the rule." Arguing that the process of change itself must be flexible and adaptable, she urges companies to recognise that there's often no point in change that comes too late or takes too long. See it as a part of commercial life, she says, and learn how to use it to your advantage. Like Schonberger, she insists that managing change means more than simply designing and organising: "It means selling it, too. Unless people take on an idea as their own, they will either reject it or simply revert back."
Doug Shopland, managing director of Tiverton-based sawmill machinery manufacturer Stenner, used Cutts's agency when he wanted to radically re-structure. "Strategically, the focus of the company had evolved into feeding the machine shop," he explains, and away from the design and production of finished equipment. "The emphasis was in the wrong place," he recalls. It was time for a change. So rather than making all their own components, why not buy them in from sub-contractors? That way, Stenner could concentrate on what it was good at - and their component suppliers, with newer and more efficient machinery could do what they were good at. Familiar logic - but would it work?
Interim manager Peter Lusted's brief was first of all to check the idea out - and to help sell it to the board of Stenner's holding company. With a background in engineering Lusted worked his way up to the position of managing director of a JI Case unit before entering interim management. The change of direction would transform the company from a typical engineering outfit into one purely concerned with design and assembly, and reduce employee numbers from 120 to around 40. It was vital that the change be made smoothly but no one in the company had the experience that would carry the required assurance of success. "We knew what we wanted to do," says Shopland, "but wanted to buy in someone who had done it before." And although the axe had to be wielded on the manufacturing side of the company, whole new skills had to be developed in areas such as subcontractor assessment, contract negotiation and planning. The goal was clear: a flow of parts that would henceforth come from not one machine shop but nine - and a better factory layout that would yield an assembly flow to turn them into finished products more quickly.
Lusted had the requisite skills and by working alongside Stenner people, he helped the company select suppliers and establish component flows. The cultural shock was immense: in a lot of cases people had been with the company for 30 years or so, and suddenly the old ways - and faces - were gone. Fresh doubts and worries surfaced constantly as the project evolved: constant communication was vital. "You have to be absolutely inured", sighs Lusted, "to answering the same questions over and over again before people actually assimilate what it's all about."
What it was all about is now apparent. With a better layout, and more efficient product flow, leadtimes and inventory levels have shrunk. Capacity, says Shopland, has actually increased, despite the workforce shrinking by two-thirds: the old machine shop constraints can no longer hold them back. "And it's amazing how your break-even changes," he reflects, now that a large slug of fixed cost has become variable.
It was obviously an uncomfortable time: re-structuring is never painless, and cuts on this scale can cause deep wounds. But both Shopland and Lusted himself are at pains to emphasise the latter's role in the change process: not a hired "Dr Death" but a short-term additional member of the management team, who possessed particular skills. "We did it ourselves," says Shopland. "Peter helped us - guided us at times - but we did it. We own it."
Amtico's Paul says much the same thing. While convinced that they needed outside guidance, and that they would have struggled without it, Paul is adamant that the will for change must come from within if it is to work: "You can't just wheel in a heap of consultants."
Simple enough lessons - and familiar ones, too. Taking the trouble to build ownership and conviction are hardly revolutionary concepts. Closing a factory for two days and flying in a US expert may sound excessive. Equally, bringing an outsider onto the management team is an admission of insufficient expertise in-house. Managements have to judge what is required and act accordingly. Many either fail to do so, or judge incorrectly. BP's management is not the first to see the ship of change founder on the rocks of its own staff, nor will it be the last.
For reprints of this article, contact Anne Oakley (071) 413 4336.