Applying the Socratic Method | Operational Excellence Quick Hits

Speaker 1: (00:05)
I went into a company that had multiple issues who sat down with the leadership team. We had five flip chart pages of issues. So I said to them, “Okay, I want you to go back and think about all these issues and what’s the cause of these issues.” So, we come back the next week, we go into the session, they say, “So, what’d you come up with ideas for the cause?” They were like, “We don’t know.” I said, “Okay. I thought about it, and I think the cause is you’re measuring the wrong things and the data is not timely so you’re not getting feedback out of your decision making.” They’re like, “Okay, what does that mean?” So I said, “Let’s take an example. In your company, do you price all products with a positive margin?” They’re like, “Yes, of course we do. We’d be stupid not to do that.” “Okay. So every product you produce has a positive margin. So if I take all the products that you produce in a month and produce them, I end up with a positive net profit at the end of the month. You ever end up with a month within the loss?” “Yep.” “How’s that possible? So, every product we produce has a positive margin. How can you have a loss at the end of the month?” They’re like, “That’s a good question. There’s a situation where everyone believes that all our products need to have positive margin, and we have a loss of the month. How can that be?”

Speaker 1: (01:36)
So, under their current paradigm, they’ll start to think. I said, “So, how can you end up with a loss if every product you make has a positive margin?” And the engineering vendor says, “Because we didn’t make breakeven.” “Yes, because there’s a value component of that, so in your pricing model, what are you considering for volume?” There’s no volume calculation in any pricing model that I’ve seen, and also, it doesn’t consider all the other products that are competing for capacity in the plan. So we price products in isolation but we don’t produce products in isolation in the plant. There’s no correlation there. So, what they’re using to make decisions on pricing has no relationship to their current operation. So, that’s the paradigm shift for them.

Speaker 1: (02:28)
So, now we can say, “Okay, let’s talk about months where you did have a profit. Did your capacity change?” “No.” “What changed?” “Oh, our mix changed.” “Ah, so now we understand that mix is an important component of profitability, so we better understand what’s the right mix for us.” We just don’t produce anything, we produce the right things. Another paradigm shift.

Speaker 1: (02:53)
But we need to start challenging those persons a [inaudible 00:02:57] is to challenge that person to articulate your cause and effecting in using their new paradigm or new way of thinking. Walk them through that process of change, changing the mindset, through the questioning. And we use examples and their reality to understand the current thinking in how what the flaw is in that thinking.

Speaker 1: (03:25)
Achieving buy-in overview of this section. One, understand the layers of resistance and, more importantly, the buy-in process. Applying the Socratic method. Prepare before the meeting or discussion. [inaudible 00:03:38] clearly understand what you’re trying to achieve. Two, never tell a person you’re speaking with that they’re wrong or don’t know what they’re talking about. Three, use the appropriate questions to create the conversation. Closed, open, probing, and leading questions. Next, use an analogy or example to demonstrate the change in thinking required to change the paradigm. Then practice, practice, practice. So, the only way to get better at coaching, and using the Socratic method while coaching is to practice. Of course, you’re going to make mistakes, but, right, learn from those mistakes and continue to practice.