Lean Leadership

Lean Leadership: Breaking Down the Silos

Call them silos, stove pipes or departmental barriers, natural forces create them and detrimental forces seem to maintain their existence. To be sure, true supply chain management will never be realized until departmental barriers are removed from our organizations for good.

Hence, the question is why do departmental barriers exist and what can we do about them? I would argue that the key drivers of departmental barriers are:

  1. Processes and Knowing the Customer
  2. Systems Thinking and Measurement
  3. Teamwork, Imperfection and Defensive Behavior

Processes and Knowing the Customer

Departmental dysfunction can be witnessed within two key groups of any organization. These two types of processes can be called Core and Enabling processes.

Core processes are the processes that directly generate revenue for the firm. They are on the front line; they communicate and interact with the customer daily. In the case of manufacturing companies, sales typically manage the core processes and in the case of service industries (3PL’s for sure), the core processes are managed by sales and front line operations. You know if you are part of a core process if your direct customer is in fact the external customer.

Enabling processes are the processes that support the core processes. They are the functional areas where the immediate customer is the “internal customer”. Finance, human resources, and procurement all represent enabling processes where their customer is busy satisfying the ultimate customer.Print Production

Herein lays the problem. Not all groups are in front of the real customer. For enabling processes, if there is no common understanding of the ultimate customer, it is simply too easy to create false perceptions of what is important. Consequently, enabling process department heads can make ineffective decisions that sub optimize the firm’s potential and have no bearing on the ultimate customer.

In contrast, the core process people are continuously in front of the customer. These employees can become “shell shocked” by fiercely driven customers who continuously demand price reductions and increased service. At worst, these employees can suffer from the “Stockholm Syndrome," where the captured slowly become the kidnappers (remember the Patty Hearst story?). When this happens, the core process employees become so focused on the customer that they can easily forget about necessary internal business realities.

Consequently, there needs to be a very healthy balance between customer requirements and internal requirements. One approach that successful companies take is to ensure that senior managers and aspiring leaders have worked in the different departments throughout their career. There is absolutely nothing more sobering for a sales person then to work inside and gain an appreciation for operations and it is equally sobering for a CFO to sit in front of an irate customer who is reading you the riot act.

Bridging the gap between core and enabling processes will lead to a common appreciation of internal business challenges and customer needs. When this happens, we will be successful in aligning core and enabling processes in a systematic way. A systematic approach, or “systems thinking” is required to further break down functional silos.

Systems Thinking and Measurement

Similar to all living things, organizations are impacted by natural laws. Among some of these natural laws are growth, variation, change, balance and cause and effect. The law of “cause and effect” is of interest to the supply chain professional. In essence, cause and effect describe three critical points:

  1. An action today will create one or more effect in the future (sound Newtonian?)
  2. The future effect caused by an action today will generally be felt and managed by someone other than the person creating the initial action.
  3. The future effect caused by an action today could be felt tomorrow or years from now, depending on the significance of the action.

Looking at these three key points more closely, we are saying that quality decisions (actions) should not be made without considering their short and long term impact (effects). In other words, to quote an overused cliché, we need to “stop making decisions in a vacuum!" Decision making in a vacuum is nothing more than a sign of functional barriers well entrenched. It is vital we understand that our organizations work as a “system” where each decision will necessarily impact in the future, and across functional divides. We need to pro-actively manage the systems effect of decisions and ensure that measurement systems describe the global impact of decisions made prior. The quintessential example of organizational systems thinking is in fact a supply chain dynamic. The continuously discussed, but rarely managed concept of Total Cost has its roots in systems thinking. For example, ill conceived purchasing decisions today result in increased warehousing costs six months from now and inventory obsolescence two years from the original purchase. Sadly though, because the ultimate effects took two years to germinate, the root cause will go unseen and unmanaged.

Effective measurement systems are crucial to manage cause and effect. Measurement systems need to represent both transactional measurements and global-corporate measurements. Transactional measurements include on time performance, fill rate, and other measurements driven by single events. Corporate measurements include more global metrics such as total cost, quality, time elements, and revenue. Corporate measurements are not derived by single events, but rather are the aggregate (or result-effect) of multiple transactional events. Consequently, all managers need to be responsible for transactional measurements, but more importantly, they need to be accountable for corporate measurements. The challenge that many organizations face is to truly understand how each department contributes to overall corporate success.

Yet, why does it seem so hard for companies to design and implement measurements and processes that have a systems approach? Teamwork is part of the answer.

Team Work, Imperfection and Defensive Behavior

Teamwork describes working as a high functioning group trying to reach a common goal. Teamwork will also help us in bridging core processes with our enabling processes. This is intuitive, as each functional area recognizes the weaknesses in the other functional areas of the company. That is, employees from one area see and recognize what needs to be corrected in other areas of the organization. Yet, communicating these weaknesses and solving problems in a team environment remains a difficult task.

No human being is perfect. Therefore, we can deduce that no CEO, Vice President, or manager is perfect. As professionals, if we are not perfect, this would suggest we all have areas we can improve. Knowing this, should we not embrace critical and constructive feedback from colleagues in our companies who recognize these weaknesses when we may be blind to them? Although this sounds logical, effective execution of cross functional feedback is certainly a challenge.

Co-workers see our areas for improvement because they are not as close to the situation as we are ourselves. This describes the quintessential fresh set of eyes concept that is the winning formula for most consulting companies. However, our natural defensive behaviors do not allow us to be open or receptive to the feedback from our imperfect co-workers. Put another way, we are not willing to accept critical feedback from a colleague who in fact has many issues within their own department (due to the fact they are not perfect either). So, we think to ourselves “how dare you recommend improvements in my department when your department is in shambles!" Sadly though, their comments about areas we can improve are probably accurate and their observations of our weaknesses have no relationship with how well they manage their own area! In other words, a colleague may be completely incompetent in their own work, but their observations about our work may be 100% accurate.

Getting over this destructive cycle requires a mutual understanding that we are not perfect, that others see the imperfections in our work and that critical feedback is not in fact critical, but rather constructive to reach the combined goals of the company. And that is teamwork!

Breaking Down the Walls

If the Berlin Wall can be broken down, there is no question we can dismantle the invisible walls within our organizations. Although it is not an easy task, the beginning starts with understanding and having respect for our imperfections and consequently encouraging and embracing critical feedback from colleagues. The successful companies will complement this increase of corporate self confidence with a total systems approach to measurement and they will effectively bridge core and enabling processes. With all of this accomplished, team work will thrive, costs will reduce, revenues will grow and customers will be in awe.

Written by Robert Martichenko, CEO of LeanCor

Posted by LeanCor Supply Chain Group

LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.

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