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Are You Qualified to Drive the Boat?

Randy Nelson, author of The Second Decision, is a speaker, a coach, a Qualified Entrepreneur, and a former nuclear submarine officer in the U.S. Navy. He co-founded and later sold two market-leading, Randy Nelsonmultimillion dollar companies–Orion International and NSTAR Global Services. Randy now runs Gold Dolphins LLC, a coaching and mentoring firm to help entrepreneurial leaders and CEOs become Qualified Entrepreneurs and achieve their maximum potential.

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What is Peter Drucker’s Legacy?

The Business Development Director of the Drucker Institute, Peter Gondolfo, joins me next week on the podcast to discuss Peter Drucker and the future of the institute. I think you will be quite surprised at how Peter Drucker’s Legacy is evolving.

An excerpt from the podcast:

To give you a little bit of background about the Drucker Institute, in 2006, following the 2005 passing of Peter Drucker, more than a hundred Drucker-like thinkers gathered in Claremont and they wanted to answer the question, ‘What is Peter Drucker’s legacy?’ In the end, they decided that it is a collection of ideas and ideals that should be acted upon for future generations of leaders responsible for companies and communities in which we work and live. And as a result of that, the Drucker family and the board of the Drucker archives decided that the best way to keep his legacy alive was not simply to look backward, referring to his writing and books, but to look forward by building on his wisdom and applying it to important contemporary issues.

Joe: Did Peter Drucker have a vision on how his legacy was going to play out or anything? Did he ever lay any groundwork for that?

Peter:    He helped create the archives, and he was intentional in that creating them, he did not set aside any financial resources for us. He believed strongly that if this was going to survive, it wasn’t going to be just be based on him setting up some legacy project that would pay homage to him. He gave them access to the intellectual property let’s say for using consulting services and working with different organizations. As he would like to say, he wanted the organization to fight for its like, just like any business or idea that his clients were working on.

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How to Think Simple

Is there a way that I can get started and gear myself towards thinking that way and trying to simplify things? – jd

Don Sull: Absolutely, I mean my advice would be to try it. I’ll just give you a concrete example. I’ve used simple rules many times in my life but I’ll give you a concrete example. About a year and a half ago I ordered a bunch of shirts and they were the same size as the shirts I had always worn and I get them and I’m a cheapskate so I ordered a lot of them because they were cheaper if you ordered a lot. And, I get them and they’re all too tight. I’m like “Oh, this is terrible.” I tried to send it back, they wouldn’t accept them back. I had a very concrete problem which is I wanted to fit inside these shirts. To do so, I need to lose about 15 pounds. The first step is to have clarity on the objectives. On that case, it’s pretty straight forward. I wanted to lose about 15 pounds.

The second step is identify a bottleneck, a critical activity or decision that keeps you from hitting that objective. So, in this case, the way I did it was for about a week I got an app on my iPhone. I got an app and I tracked how much I exercised and how much I ate and when I ate it. You know, it’s trivial now. Ten years ago it might have been a pain in the neck to do that. Today it’s trivial. There’re probably a dozen apps to help you do that. What I found was interesting because what I wanted to find was, should I focus on exercise, should I focus on how often I walk, should I focus on eating, what should I do? Complicated Problems

What I found was the following, exercise was okay. I was exercising, reasonably enough, probably didn’t have time to do much more. Eating during the day was okay. The real problem was after dinner, snacking after dinner and that’s when all hell broke loose. Basically discovered once I collected data for a week that I was eating the equivalent of a lunch or two every day after dinner in snacks. I said “Okay, great. My bottleneck wasn’t all these activities, it wasn’t exercise, it wasn’t even eating, it was after dinner snacking.” That’s a nice specific bottleneck and that allows you to develop concrete rules. Then, you go to the third step. You’ve clarified the objective, lose 15 pounds. You’ve identified the bottleneck, specific bottleneck, after dinner snacking. You develop the rules. And, here again, we come to this point, there’s not, you don’t take the rules off the shelf, you don’t read, you know, some book that says ‘this is the right diet’, instead you follow a process of, you know, talk to some people, look on the internet a little bit, play around with it and the rules are your rules. You develop them and they’re appropriate to your situation.

In my case, my rules were, well, initially I said, “I’m never going to eat dessert again.” Well, that’s not going to work. I came and said, “I’ll only eat desserts on the weekend.” Another one was I read some research done by a guy named Brian Wansink who has done a lot of work on portion control and what he finds is that if you eat snacks out of a bowl rather than out of a bag, you can cut your calorie consumption by half or more. So, I said, “Okay, I’ll eat snack, I’ll eat the chips out of a bag, sorry, out of a bowl rather than the bag.” Another rule is not to stockpile snacks. If you buy a case of Snicker bars, you’ll eat all the Snicker bars. If you buy one Snicker bar, you can only eat one unless you got out to the store again. Very simple rules from multiple sources but they were right for me and, you know, in that case it worked. I lost 15 pounds, so. It took me a couple of months but I did it.

Related Podcast and Transcription: Creating Simple Rules to Handle Complexity

Dr. Donald Sull  is a Senior Lecturer in the Technological Innovation, Entrepreneurship, and Strategic Management group at the MIT Sloan School of Management, where he teaches courses on Competitive Strategy and Strategy Execution in Volatile Markets. His recent book, Simple Rules: How to Thrive in a Complex World offers some great thoughts on reducing complexity.

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How do you Introduce Job Instructions?

 I want to jump back to TWI and dig a little deeper. You had mentioned to me that Job Relations is really two programs instead of just one. What are they and how is Job Relations introduced in your thinking? – jd

Mark Warren:      If you take the original Job Relations pocket card and they had pocket cards for each one of the programs so you could follow them, it’s kind of an outline, on one side you have basically problem solving. So what do you do when you have a major people problem? Well, step one, you go get the facts. On the other side you have, what do you do — it’s more of a proactive side, what do you do to kind of minimize having people problems? And if we put this into context, this program was actually created in Harvard University, so they used case studies. The trap we have gotten into in following this traditional piece is we just approach it and use all of our examples of management disasters, where somebody has really overstepped their bounds and the supervisor has just been a terrible boss. And so we go about well, we think about the steps that he went through, and what did he do, and why did he do it, and maybe it’s not the right way to behave, but if you really look at it, this problem solving is a very generic sort of tool and it’s almost the scientific method of just go get the facts, wait in the side, think of multiple solutions, and you also try to think ahead and maybe what will happen if I do this. Job Instruction

We’re trying to get people to think strategically as well and this is one of the things in the integrated program that we begin to put together is originally the first two groups that we worked with, we did the traditional Job Instruction, then Job Relations, then Job Methods. So when we got to the Job Relations point, we asked the group to define a generic problem and of course everybody tries to come up with the largest, most difficult problem they have that’s kind of ‘save the world from world hunger’ kind of thing. But when we begin to peel it back, we find there’re lots of little details and as we use basically the 5 Whys and actually validate the answers, we use a process called FOG- fact, opinion, or guess. We assume that every first answer isn’t just a guess; at best, it’s an opinion, so we try to push people to go get facts. Once we begin to get the facts, then we ask better questions for the next level and almost everyone of the examples people brought is being added to you in people problems turned out to either be Job Instruction where one, we hadn’t taught the people well or two, we hadn’t communicated our expectations well – now, that’s sad. Or on the Job Methods or process side, we had really lousy processes, and we were still expecting people to make daily production. And that’s why the people have kind of an attitude. It’s more we’re the management, we’re holding the steering wheel, and yet we’re not really doing our job well.

On the proactive side, what we find is it talks about respecting people. I mean this is where the respect for people came from was from the proactive side of the Job Relations program. What we began to found is we looked at it and also with an internal program that TWI had – Follow-Through and later renamed Follow-Up, this was the critical coaching piece that the manager needs to do and during the managing of the coaching session, you actually begin to build a personal relationship, managers to supervisors, and if you can do this between managers Mark warrenand supervisors, the supervisors have a pattern that they can do with their behaviors between them and the workers. Part of it was we set up the expectations – it’s kind of a joint coaching operation.

Mark Warren, of Tesla2 Inc. has decades years of experience working with Tier 1 and 2 suppliers to improve their manufacturing productivity and quality. He travels the world to learn and teach about Lean and most specifically TWI.

Related Podcasts and Transcription: Implementing TWI into Daily Routines

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Losing 1M a Day, Improve Your Process

Joe: I don’t think a lot of people realize the trouble that Caterpillar was in the early 1980s. I would think that time period is correct. They were losing a million dollars a day or something?

Craig Bouchard: A million dollars a day for three years and in that third year which was 1984 where they lost a $150 million. That was the year that Schaefer said, “We’re turning the place around. We’re turning to start, in fact, to compete with the Japanese, Komatsu, etc.” They entered the first of the six big decisions which was the plant for the future. Schaefer committed $1.8 billion dollars to upgrade 37 of their main plants and make them the most modern plants in the world. They did that after losing a million dollars a day. Imagine that decision at that time, which is staggering – nobody could believe it – Wall St, the New York Times, everybody called it their last stab at avoiding bankruptcy to make such a big change. It was a survival decision by the estimate of most people at that time. As it turned out, it set the stage for successful Six Sigma, Lean set of programs for the company over the coming years.

Joe: I think there’s a lot to be said about that. There’s a whole chapter on Lean and Six Sigma in the book and, of course, my listeners are familiar with this. So is that an important part of the Caterpillar story?

Craig: It’s a huge part. It’s one of the six major decisions, and it’s probably the biggest one in its definite scope. So in the year 2000, Glen Barton had taken over as Chief Executive Officer and him on the board, and he called and described in the book – fascinating interviews backing all these material and some consulting with – so he called all the senior executives around the world into the auditorium in Peoria. They did some planning all day long; they had all kinds of things going on. Barton was scheduled to appear at the end of the day, late in the day. Everybody’s going, “Where the heck is Barton?” At that time, everybody at Caterpillar wore suits – they were sitting there in ties and the suits whole day – imagine that being said. Towards the end of the afternoon, everybody started to check their cellphones for text and messages – back in 2000 that was a new innovation basically – and a gong sounds in the auditorium and they all jumped up.

Here comes Barton in a black-belt karate uniform with four people behind him and people were astounded. Barton basically said, “Look, we’re here today for a very important reason. We’re going to change the company, and you’re all going to help with it.” He then explained that something that was true, there is$20 billion dollar revenue sphering that exists out there, so it’s like a legendary elephant graveyard of a library. A lot of companies have hit that level of revenue, people that have successfully reached $20 billion; it’s very hard to scale and grow beyond that because you’re doing big that you start to screw up a lot of things. Barton had realized that there’s one key cost that’s rising dramatically in the equipment out in the field, and that was a big red flag for him and he was smart enough to get it. He said, “We’ve have a quality problem and secondly, we stagnated. Our revenue has been consistent about $20 billion dollars for three-year, we’ve hit the ceiling and we got to fix that. I’m here today to give you your objectives as a company.” He got a lot of attention because of this, of course. He said, “We’re going to grow $20 billion of revenue to $30 billion of revenue in the next five years.” That caught everybody’s attention. And then he said, “While you’re doing it, we’re going take a billion dollars of expense out of our cost phase. So we are going to grow at that amount, and we’re going to take a 10% of a billion dollars out of our operating expense. And finally, you’re going to be accretive – the cost of this program that you’re going to enter into, which is Six Sigma, we’re going to pay in revenue-enhancement in cost reduction” and everybody is wondering “What the hell is accretive”. He said, “Here’s what it means; we’re going to revenue increase this year and cost reduction this year; we’re going to pay for this program. We’re paying for it ourselves in the first year.”

Barton set out that very aggressive schedule, he’s walking around the room with hundreds of people in the auditorium going up to the ceiling, and he could see faces going “Ngggnh, I have heard about this Six Sigma, I heard about this; G.E. and 3M did it recently. Sounds good, those other guys can do it.” You could see it in their faces. And so Barton said, “I can see it. The train is leaving the station; you’re all going to be on this train, or you’re going elsewhere. And right now we’re going to start and have every person in this room walk down the stage, look him in the eye, shake my hand and promise him to fully support the Six Sigma program. Every single person and that’s how they started. They took 750 of the top employees of the company out of their jobs in the next 30 days and put them in black-belt training and if that wasn’t enough, think about that investment – 750 of your best people out of their jobs, in their black-belt training full-time. Then they took 3,500 people and put them into green-belt training to support these 750 guys. In the next two years, then they did what they called ‘The Tsunami Change’ inside CAT. G.E and 3M are two great examples of big companies who’re successful in Six Sigma. They rolled it out division by division across the globe – it took them years investing in Six Sigma. And he said, “We’re all going to do this year.” Nobody believed that. And he had his 750 people right away, and he had 3,500 to support them. By the time, the program was two years in, he had 30,000 employees involved in Six Sigma program. Never before and never again has anyone committed that many resources in that period of time.

They made their $10 billion in revenue one year early, four years later. They got their billion dollar cost reduction and they shattered the $20 billion dollar ivory elephant graveyard ceiling, went on to $40 billion, went on to $50 billion, and they went on to $60 billion in recent years, and in the next couple of years it’ll go over $70 billion. Glen Barton gets a lot of credit, and that’s the commitment it took the tsunami of change that made it all happened otherwise people may have lost interest and that all happened in that first year.

Craig Bouchard, author of the book, The Caterpillar Way: Lessons in Leadership, Growth, and Shareholder Value, discussed how CAT got it right in a Business901 podcast

Related Podcast and Transcription: How Cat Got it Right

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Are Lean and Agile Equal Partners?

An industry thought leader in Lean, Kanban, Product Portfolio Management, Scrum and Agile Design, Alan Salloway helps companies transition to Lean and Agile methods enterprise-wide as well teaches courses in these areas. He is the founder and CEO of Net Objectives

In a past podcast (Related Podcast and Transcription: Shalloway on Agile), I asked Alan about the relationship between Lean and Agile.

Joe:  You always talk about Lean – Agile, how does Lean and Agile play? Is one the umbrella over the other or are they equal partners in your mind?

Alan:  Well, OK. You caught me, Joe. I think part of this is marketing. I actually think Lean is the big mantra. I think Lean is about respecting people, having a systems approach, working at how it became a business, improve the structure, folks for delivery and improving the team organization. So I would say yeah, Lean is actually the umbrella for it all and we put Lean-Agile into it, because Agile has some other things that I think are actually implied in Lean but aren’t necessarily as explicit in Lean as they are in Agile, which is this cross-functional team notion. Steve Denning talks about, in his Radical Management book with how will you endorse, about cross-functional teams being able to create or delight customers.

Steve Denning management is about creating teams that can delight customers. So Radical Management is really saying it’s radical because you’re saying, well, we’re going to have teams self-organized. We’re going to direct them from a management point of view. But to manage by directing, I mean we’re going to play in the right direction but then how they get there is up to them.

I think this is the thing that’s often missing in the Agile community. You can create, I mean there’s no question, Scrum is a great process, it really is and the timing works out for us. Scrum is a great framework for creating a cross-functional team, or excuse me if you have a cross-functional team; Scrum is a great framework for getting that team to work together well.

I’ve actually never denied that. I’ve always said it. That objective probably has trained us much or more than anybody, but maybe one or two other companies out there and we’re still very active in the Scum training world. But what we suggest is Scrum is fabulous if you have a cross-functional team to use it to self-organizing and to deliver value to the customer. But what’s missing is how you really manage multiple teams across each other, what that means is how do you do product portfolio management, how do you decide really where the value is across all the teams.

The way Scrum is set up is if you have a value of the effort to return where a person getting lots of value in the first few releases and then it stars failing up. If all you’re doing, the worst thing to the customer, that customer is going to keep saying, “Give me more, give me more, give me more,” because to him, that tailing value, even though you’re not getting as much a return every time is very valuable. it’s valuable like him. To another customer, there might be something of much greater value that can actually be detected by business drivers.

You need the business driver to know where to point the guns, so to speak, and then you need the team, the self-organizing, cross-functional teams to do the job well, and that’s where radical management play.

You have these different pieces of, how do I create great teams to delight customers, how do I create a business to make sure the teams are working on the right thing, how do I get management so the teams can coordinate and work together well. In my mind, so I’m just good at one of those and not good at the others, and my company is really about transforming. We’re all working all sized organizations; we work for companies really small, on up to the thousands, but we know how to actually work with companies in the hundreds of thousands. That ends up being where we spend a lot of our time.

That’s where you need something bigger than just the Agile team?based approach, and that’s why again we call Lean-Agile to kind of present the idea of this overreaching bigger view.

I’ve heard some people say, “Agile is what you do in teams, and Lean is what you do at the enterprise,” and that’s wrong. You’re talking about a whole systemic approach, and when you work with systems, you cannot decompose them.

In other words, even though I’m talking about business and management and team, you don’t really have different parts of systems. If you decompose the system, it’s a teaser, those teasers are not the system, it’s like when they are put together. They’d be like say taking an airplane, let’s take a 747, break it down into pieces and then see how each of the individual pieces fly. Well, none of them fly on their own, but you put them together, and it works.

You can’t just say, “Well, this does this, and this piece does that and that piece does that.”

It’s the way they interact with each other is what makes it work.

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Are You Fit to Be an Entrepreneur?

Randy Nelson is a speaker, a coach, a Qualified Entrepreneur, and a former nuclear submarine officer in the U.S. Navy. He co-founded and later sold two market-leading, multimillion dollar companies–Orion International and NSTAR Global Services. Randy now runs Gold Dolphins LLC, a coaching and mentoring firm to help entrepreneurial leaders and CEOs become Qualified Entrepreneurs and achieve their maximum potential. Randy is my guest for next week’s podcast where we talked about his new book, The Second Decision. Qualified Entrepreneur

An excerpt from the podcast:

Joe: The Second Decision, maybe is kind of out of place. Maybe it’s something you should read before you make the first decision.

Randy: You know, it’s great, it’s a great point. I got interviewed last week, and here’s how I answered the question. They said, “Who do you think should read the book?” I thought, “Tell you what, I’m going to answer it two ways. I think the people who need to read the book are the people who are in the middle of building a business. They may not necessarily like what they hear or read in it, but they really need to read it.” Some of them when they start to read they’ll say “Oh, that’s a lot of work, and I’m not sure I want to involve myself in all that.” I think the people that will absolutely read it are the people who are about to start because they’re soaking up as much knowledge as they can, and they want to know how to build a business. I think the people who are just starting will read it and say “Boy that makes all the sense in the world.” The people who are in the middle of the fight, they’re going to look at it as a little bit of work because they’re not necessarily doing these things right now.

Joe: I think it’s interesting that you break it apart into that leader, role player and creator because what I see a lot of entrepreneurs do is when they start out in a company they end up hiring a mirror to themselves, if there’s someone like themselves because they just can’t get it all done. They just need someone like them, they think. What you’re doing is you’re setting in place, those areas that they need support even if it’s just a relationship to be able to talk to. I look at not only about who I am but also who I need to surround myself with.

Randy: Yeah, and it goes back to the definition of self-awareness which is you’ve got to become aware where your shortcomings and weaknesses are hurting the company and then understand how to either overcome or compensate for them. This is the difficult part for entrepreneurs is I think to get that self-awareness, that be a little vulnerable because we love self-confidence as entrepreneurs, that’s what makes us great. With a little vulnerability and understanding we don’t have to know everything, and then it because a little easier to at some point. I’ve built two businesses from scratch to exit but I have turned both over because it came to a point in the company’s operating cycle that I knew I wasn’t going to be the best guy in the next five years to run the business. It was becoming a little bit operational and that wasn’t my absolute strength and love so I turned over my first business at thirteen years and my second business in 12 years and the person who came into that business was much better than me at that point. That allowed me to go back and start another business.