First Posted March 9, 2010.
The last to change is the structure that organizes work.
Seth Godin's post today on The Factory in the Center speaks to the changes that are taking place in business today. Here's a relevant situation that I experienced ten years ago that still resonates with me today.
I was asked by a consultant friend to be part of a team that was going to re-engineer the production process of a hosiery mill. The company made the kind of men's dress socks that you find in department stores, outlet malls, Sam's Clubs, etc.
This family owned business was started by the father in the early 1940's. Now his son, son-law, and nephew were running the business. The father came to work everyday, even in his 80's, but the son ran the business. The son-in-law the marketing side and the nephew the production line.
It was the nephew who began the process of change. He saw that they were running out of money. He persuaded his uncle, the mill's founder to take a pay cut. He then convinced everyone that they need to change how they manufactured socks.
The problem was it took six weeks to make a pair of socks. There were 17 steps in the process. Each step had it own set up and staff to operate it. The problem was that each station operated independently of all the rest. The essential job was to produce inventory for the next station. As a result there was a lot more inventory sitting on the floor than there were orders.
The solution was to implement the Theory of Constraints system of organization. In effect, it was to connect each station with the one before and after it and only produce inventory from actual orders. This approach was implemented and within a few months, the length of time for manufacturing socks went from six weeks to six days. That change process was a success.
Imagine the excess capacity that they now had. To paraphrase, a famous sports saying, "Ladies and gentlemen, the constraint has left the building." This meant that once the production process was fixed, they needed to expand their marketing efforts to produce more orders. They were never able to do this, and within a year and a half, they closed the mill.
The problem in this instance was the inability to transition to a new way of understanding their business. I remember conversations about shifting from making socks to managing the inventory of stores by tracking sales, and producing only enough product to keep the store shelves stocked. Unfortunately, the family was stuck in a 1940's manufacturing mindset, and could not make a fast enough transition to a new way of operating. If they had made this shift 10 years before when they began to see the hand-writing on the wall, then they would probably be in business today.
Seth asks ...
What happens when the factory goes away?
You are no longer an owner. You are still a debtor, most likely, and employed by someone who out-thought you in order to change faster and more effectively than you did. That is if they would even hire you.
Here's reality. Today. Right now. This minute.
There is LESS risk in changing than in not changing.
If you think you can keep doing what you've always done. Good luck. If you are right, you are the exception, not the rule, and you should get on your knees every night and thank God that you were in the right place at the right time to survive what others have not been able to do.
You can change your ideas.
You can change who you know, listen to, and hang out with.
You can change the people your read, follow and who inspires you.
But if you are not changing how your business is organized and functions, then all the rest is going to have a hard time being sustainable over the long term.
This is just the way it is today.
The Real Truth about Organizational Structure.
More precisely, this is why the Circle of Impact Leadership Guides matter to your business.
The structure of your business is the most change resistant part of your business. It resists because it does not exist in the same way Ideas and Relationships do. A new idea may come at you every day. Relationships are incredibly dynamic, forcing your to constantly adapt to the fickleness of emotion and inspired thought every day.
The structure just exists in place, until you change it.
Structures as a result without any attention to them tend to dictate how new ideas and relationships are to fit into the system.
In the above illustration, no one in the business thought the way to make sox should change until it became apparent that something was wrong. Because they didn't change ten years before, and they didn't change the entire organization structure, like their marketing program, they structural change they did adopt was too little, too late.
Look at the 12 Transition Points page in the leadership guide set.
The first seven of these points of transition can all have a structural cause behind them. They just aren't a personal experience. They are a personal experience inside of an organizational structure that is no longer working.
To change requires openness and a willingness to change, not once, but often, regularly, and with clear purpose. The real truth is that without change, things like organizational structures die. This is what happened to the hosiery mill.
What could they have done differently. They should have gone hi-tech and developed their company into an information management company, managing the sock inventory of their clients. This would have been a wholesale change in approach as a company.
The problem would have been none of the owners were information management people. They knew how to do one thing, make socks. So, to change the structure, means that we have to change ourselves as well.
This is the reality that we all live in today.