Monthly Archives: March 2011

China and Change Management, The Burning Platform for U.S. Schools and Your Supply Chain

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I was struck by an article this week from the BBC announcing that China is predicted ‘to overtake the U.S. in scientific output in two years.’ We have been hearing that our school system is broken for years, but we as a nation have been unable to mount an effective campaign to address this problem to-date.  Hopefully this revelation serves as a wakeup call.

One of the key concepts in change management is the importance of having a “burning platform” that can drive the change process.  I can’t help but hope that the silver lining from this depressing article is that it will serve as the burning platform that education reform so desperately needs.

As a teacher, parent, observer from afar, etc., I have seen schools undertake constant efforts to “reinvent” themselves and become more successful.  To-date, none of those efforts has achieved more than a marginal impact on the way the typical student experiences the schooling process.  Over the years, I believe that there are three key factors that impel schools to those results.

First, the “Burning Platform” concept implies that the crisis has to be real and immediate.  There should be no question that something has to be done; disaster must be imminent and everyone “on board” must recognize that fact.  The story of the “Titanic” would not have resulted in such significant loss of life if, in the first 20 minutes after striking an iceberg, the entire ship’s crew and all the passengers realized that the ship was going down.

In the schools, one of the major barriers to effective change is that, even if the platform is burning, the impact is not immediate.  When will we be “burned”?  Arguably, low literacy rates, poor math skills, lack of science knowledge, etc. only affect the individuals, not the larger society.  At the very least, the impact in lost competitiveness, reduced productivity, declining GDP, etc. will show up long after the current crop of teachers and school administrators have retired to Florida, Arizona, or some other equally attractive destination.  For them, there is no ‘burning platform” regardless what the test scores and journalists might say.

Compare that to your supply chain.  While there are daily crises (just as there are daily failures in the schools) the system moves on without major disruptions.  Indeed, overcoming many of those daily crises in the supply chain are what allow supply chain professionals to go home feeling they’ve done a good job.  “If I hadn’t sat on that supplier, we’d have run out of parts”, can be much more satisfying than, “I struck a good deal 18 months ago and there are no problems to deal with”.  And, the problems that do exist are unlikely to have a major impact on the company as a whole anytime in the near future.  No wonder some supply chain professionals look forward to joining the teachers in Del Webb communities where both can lament the demise of their former employers while playing bridge.

Second, research into school reform has shown that the vast majority of school reform efforts survive only as long as their champion is in the local school.  In other words, change is largely dependent on there being a passionate voice for the change, someone who has a deeply held emotional belief in its importance and is willing to do “whatever it takes” to make the change happen.  When that person leaves, the change is overwhelmed by the system and quickly fades into the background.

As one case in point, I once consulted in a school district that, for a short time, embraced the “Open Classroom” concept.  The district even went so far as to build a school with virtually no interior walls so that students could experience a truly open learning environment.  That occurred several years before I came on the scene.  By then, the advocate for open learning had left and, significantly, the teachers in the school without walls had purchased movable dividers and had divided the open space into “classrooms” to “enhance” the learning environment.

Think about this the next time your organization reassigns a key stakeholder in the Supply Chain after an 18 month tenure in a position.  Two things happen.  Any credibility your supply organization gained with the departing incumbent will go with him or her.  And, the new individual is most likely to be looking for a way to “make a name” in the 12 to 18 months that have been allotted before the next round of musical chairs.  The net result is that the passion for changing from a transactional to a strategic focus in the supply chain gets sucked out of the organization.  If the schools are any indicator, once the passion leaves, the changemobile quickly comes to a screeching halt.

Third, continued poor performance can quickly become an acceptable norm.  At the very least, this year is not that much different from last year or from five years ago.  If things didn’t fall apart then, and we are doing the same now, what’s the worry?  I remember my cousin, who at the time was a relatively new teacher, describing his experiences as the head of a committee to select a new History text book for his district’s Junior High Schools.  The text book committee was formed in secret at the end of the school year.  Before it had even begun its work, the district “raided” all the Junior High Schools and removed the old books because experience had shown them that the vast majority of the teachers would not feel any “heat” to change their lesson plans to the new book unless they had no choice.

For a corollary in supply chains, look to the plant managers who refuse to honor a global contract because “their” plant is “doing okay”.  Then there are the engineers who resist any efforts to modify specifications because “we’ve always had these specs”.  Or, you might consider the sourcing professionals who say, “We’ve always sourced this way and we’re still in business.  Why change?”  The point is that even if the platform is ablaze for all to see, people who are not immediately threatened can narrow their focus and delude themselves that they are not affected.  When that happens, the case for change is lost.

What’s the point?  Just because there’s a problem, doesn’t mean that you have a burning platform.  When pulling together your “burning platform” issues for a change effort, be sure that you remember three things:

  1. The impact of the fire has to be immediate and real
  2. The cause of the fire should be a new spark, not an old ember
  3. The firefighting equipment has to transcend individuals

I would love to hear your thoughts on this issue.  What are some of the best examples of a sustainable burning platform that you have seen?

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Battle Hymn of the Tiger

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A new book Battle Hymn of the Tiger Mother by Amy Chua is generating buzz and debate both on-line, in print, and on TV.  Chua’s goal in writing this book is to answer how Chinese parents raise such stereotypically successful children.  As counterpoint, Chua decries American parents as wimps who coddle their kids and accept mediocrity.

Used interchangeably in the book are the words “Chinese” and “Tiger” to describe Chua’s maternal ferocity and passion.  Chua’s parenting techniques are strikingly similar to “Tiger” companies found in today’s global supply chain.

The Quest for Perfection

Chua’s relentless parenting style demands no less than perfection.  On her balanced scorecard, Chua tracks only two domains: Individual achievements (such as winning a piano concert, or achieving straight A’s) and disciplined respectful behavior.   By those performance metrics, her children are superstars:  musical virtuosos, “A” students, masters of foreign languages, etc.

It is good for a customer and suppliers to have demanding metrics in place that encourage the right behavior. Certain “Tiger” companies (Wal-Mart, Home Depot, McDonald’s, etc.) stipulate high execution (on-time, fill, compliance, etc.) from their suppliers.  These companies know running low cost, high service supply chains demand perfection from all partners and that supplier unpredictability throws sand into their engine of efficiency.

While meeting these demands is initially challenging, successful suppliers should welcome these hurdles as both a way to improve internal operations and create barriers to entry versus other competing suppliers.  As a side benefit, operational changes made to satisfy more demanding customers often carry over to less demanding customers.

For a new supplier, the transition to this new performance is rocky-demanding an extensive toolkit, robust processes, and new ways of thinking about and doing work.  During this time suppliers should consider some of our Strategic Transformation tactics to achieve these desired results.

Tough Love

One area Chua is attacked by critics is her use of tough love with her children.  If a child doesn’t meet expectations, the “Tiger” parent assumes it’s because the child didn’t work hard enough.  Chua’s solution to substandard performance is to excoriate, punish and shame the child into higher performance.  As examples:

  • Chua rejecting poorly made birthday cards from her daughters and demanding new cards be made
  • Chua threatening to burn all of one of her daughter’s stuffed animals unless she played a piece of music perfectly
  • Chua calling her daughter “garbage” when she acted disrespectful

Widespread adoption of tough love sourcing tactics was one reason we proclaimed earlier that strategic sourcing is dead.   It is difficult for suppliers to constructively invest in a relationship when “Tiger” companies:

  • Threaten annual rebids despite stellar supplier performance and/or cost containment
  • Demand year over year price concessions regardless of underlying commodity movements
  • Refuse to do 360° business reviews where both parties are thoroughly evaluated
  • Refuse to concede that some fault may lie internally as opposed to externally
  • Constantly look to find supplier poor performance to build negotiation leverage
  • Challenge paying a fair price for a high level of supply chain execution

An old proverb states “It is easier to lure with candy than with a sticks…”  Tough love with suppliers is a dated approach that fosters a “fear-based” accommodation.  It is at odds with developing a sustainable value-based partnership.

Individual vs. Group Performance

Critics also point out that Chua’s focus is on her child’s individual performance and she misses encouraging the “team” approach essential to success in business and in life.  While individual achievements are commendable, our experience with High Performance Work Teams shows that team members with strong individual performance traits consistently make decisions that do not align with the best interests of the team.

Most people work in groups because groups are much more efficient at solving complex problems.  During our training we typically have highly structured breakouts designed to amplify group and team dynamics.  Inevitably we will have individuals who subscribe to “There is no “i” in team but there is in win” school of thought.  These students will challenge our initial statement that the only solution lies with the group and ask to be placed on a team of one.  They deliberately choose a path where they cannot win but believe they can perform better than the group.

Even worse, when placed in groups they will often withhold information to generate “the answer.” gained from other shared information.  Obviously putting two or more of these individuals together leads to an information impasse in which the team fails.

Supply Chains need information and partner participation to work.  These demand strong “team” competencies not individual excellence.

Summary

Chua is not a bad parent.  She cares deeply about her children.  She is willing to devote extraordinary amounts of time to ensure her children reach the high expectations demanded of them.  Where there is a breakdown is Chua’s tough love tactics and her narrow focus on a set of performance metrics that don’t prepare her children for some of the real world challenges they will eventually face.

Today’s supply chains conditions are some of the toughest ever.  But do tough conditions demand tough “tiger” tactics?  Here are some questions for our readers

1)      Culturally, is America slipping in terms of national expectations and achievements versus other more hungry “tiger” nations such as India and China?

2)      Does customer tough love and high expectations generate better long term results?

3)      Is Chua’s approach sustainable for a supply chain?

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Up Close and Personal?

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The March 2nd edition of The Chicago Tribune had a short article that really caught my attention.  The Supreme Court’s ruling in FCC vs. AT&T was, in a somewhat surprising outcome, unanimous agreement that corporations are not protected by a right to “personal privacy”.  While a discussion of the various reasons that may have brought conservative and liberal justices to the same conclusion would be really intriguing, I want to focus on some of the implications and risks for businesses.

First, a little more detail about the case.  AT&T was accused of overcharging schools and libraries for internet services.  The charges were investigated by the FCC and the company paid a $500,000 settlement.  Now, some of AT&T’s competitors are seeking release of the documents from that investigation under the Freedom of Information Act (FOIA).  AT&T resisted, using the argument that there is a provision in the law that allows for withholding law enforcement records if they might result in an “unwarranted invasion of personal privacy.”  Basically, the Court said that ‘personal’ does not apply to an impersonal company.

So, what are some of the implications?  First, the immediate (and presumably intended) consequence of the Court’s ruling is that the files generated by ANY investigation of your company by an agency that has police or (I assume) regulatory powers can be obtained by your competitors under FOIA.  That deserves repeating.  Get investigated, whether for criminal or other form of violation and the documentation of the case fair game and must be released if anyone, like another company, requests it under FOIA.

But, wait a minute.  The court just ruled that companies do not have personal rights!  How then does you competitor get to assert a right to information under an act that was designed to help PEOPLE obtain information from GOVERNMENT entities that might want to withhold that information?  First, your competitor may be a “person” under contract law but, according to the Court, your competitor does not have the rights of a person.  Oh, well.  I’m sure the lawyers are all over that and we’ll get another decision in, oh, say 5-7 years to clarify.  Of course, in the meantime, FCC vs. AT&T is the “law of the land” so, for the foreseeable future, you’re at risk.

Oh, and by the way, the right is retroactive.  A competitor can go get the results of investigation into your company’s alleged misdeed that was conducted in 2001, 1991, 1981, etc.  Do you say, “Hey, that was a non-issue.  The whole case was thrown out!”  Don’t count on it.  The ruling says that if a governmental agency holds the information and receives an FOIA request, they have to give it up.  Good luck trying to get ahead of that one before (or after) the spinmeisters have released the story (documented through SEC or FCC, OSHA, EEOC etc. files) as they see it.  Even your efforts to be a good citizen by self-reporting inadvertent violations could back-fire if there’s a record of the investigation.

What about the longer term issues?  What if a competitor wants to get a leg up?  How about an anonymous tip to any regulatory or police agency they can think of?  If agency opens an investigation, they can get their hands on the files.  All it takes is a little convincing that there enough smoke to go looking for a fire.  And, one has to assume that the same rules would apply to any kind of investigation.  So, the results of that audit by a regulatory agency are likely to be open as well. 

Now, I’m sure that most companies would take the high road here and we won’t see a flood of FOIA requests for information that has, in the past, been considered confidential.  But, if we look at what is going on with, for example, WikiLeaks, the potential for a huge negative impact is there.  Again, the issue was not around the requestor’s status.  It was all about whether the company that was investigated should be protected from an “unwarranted invasion of personal privacy”.  So, that disgruntled employee, extreme environmental group, unhappy consumer, or any other individual or organization can now get the goods on you and, of course, send them spinning into cyberspace. 

On final thought.  The Supreme Court reversed a lower court ruling that was based on the definition of “person” included in the FOIA.  The definition specifically includes a “partnership, association or corporation”, similar to the concept of “person” that permeates contract law.  How long a leap is it from the Court’s ruling in this case to a challenge to the broader arena in which the corporation as person is the basis for much of our entire economic system?  As if there weren’t enough drags on the economy!

Is this no big deal, something to think about, or a major sea change for businesses?  Let me know your thoughts.

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