Organizational Performance Part 37: Challenging the Organizational Mindset | Operational Excellence Quick Hits

Quick Hits share weekly tips and techniques on topics related to Operational Excellence. This week’s theme relates to underlying assumptions that block breakthrough performance. We hope you enjoy the information presented!

Speaker 1: (00:06)
In last session, we talked about establishing the mindset for change, which is made up of four elements: conscious awareness, reactive to proactive attitude, shift in perspective and change in paradigm. So in order to get breakthrough improvement in companies, so we’re not just looking for small, incremental changes, we’re looking for major change that’s going to improve the company performance significantly. How do we do that? So we have to challenge the current mindsets. So there’s a lot of mindsets that I’ve seen in companies that block them from getting better performance, so I’m going to list out some of these challenges in mindset that we’re going to challenge over the next several weeks. And a lot of people believe that these things are true, but I’m going to challenge those and provide evidence that not all of these mindsets are correct, and we need to change our mindset regarding some of these ways of thinking.

Speaker 1: (01:02)
So first of all, “Productive employees are employees that are good multitaskers.” So I see all the time, especially in ads for employees, “Oh, you must be a good multitasker.” So we’re going to challenge that and see how good multitasking is for productivity and quality. Next is, “100% inspection is 100% accurate.” So I see a lot of companies doing inspection techniques, and we have processes that aren’t capable. They’re putting 100% inspection in place and assuming they’re going to find all the defects. Next is, “A resource standing idle is a major waste.” So if somebody’s not busy, find work for them to do and make them busy, so that they’re productive. Next is, “The sum of the local impact of changes is equal to the overall company impact.” So if I do a bunch of changes in a bunch of different departments and I measure the impact of those changes, it’s going to translate into improved company performance.

Speaker 1: (02:03)
“The best way to manage work is to ensure that each task is completed on time.” So if we get our employees and say, “Oh, you got to complete all these tasks and you got to do it on time.” That’s the best way to ensure that the work is going to get completed on time. “The better way to service the customer to hold more inventory.” So if we hold more inventory, then of course we can service the customer better. “The price to charge a customer for profit service is based on the cost, the material, labor, and overhead plus profit margin.”

Speaker 1: (02:41)
Another mindset I see is, “Increasing the margin on a product will improve the company performance, so we need to focus on how we can improve margin to improve company profitability.” Another mindset I see is, “Waste reduction is the primary needs to improve company performance.” But I also see companies that think reducing variation in all processes and making all process efficient is the best way to improve company performance. So what is the best way? “Being busy is synonymous of being productive.” As long as someone’s being busy and they’re being active, they’re being productive. “Running overtime to increase direct labor hours work reduces the overall overhead of the company.” So if I can run more labor hours, I’m going to absorb more overhead. “The earlier that work has started, the sooner it’ll be completed.” So if we start work, as soon as possible, we’ll finish it more much sooner. “Cost reductions based on labor savings translate into improved company profitability.” So if we can identify where there’s labor savings opportunity, and we can implement those actions, we’re going to improve company profitability.

Speaker 1: (03:55)
“All problems in the company should get the same level of attention.” So I see all problems are created equal. So no matter what the problem is, it gets the same level of attention. “Reducing batch size of orders will increase cost.” “Running products on less sufficient processes will also increase costs.” “Increasing the number of changeovers on a process will increase cost.” And lastly, “The increases in cost due to more changeover, smaller batches and using less efficient processes will reduce the overall company profitability.” So these are a few things that I’ve seen in companies. There’s a lot more. As I come up with more of them I’ll list them, and start addressing in the next few weeks, we’re going to start going through some of these current mindsets and showing how these mindsets might be hurting company performance, not helping company performance.