In my earlier post, I note how the only constant in today's economy is change. I also mentioned how U.S. industries lost out to Japan in the post-World War 2 era. This was, in large part, due to the fact that U.S. managers clung to management orthodoxies that proved to be of a passing era.
Sadly, management orthodoxies still stop most companies from changing in ways that would make them more profitable. Far too many managers and executives still envision their organization only in terms of production lines and departments. They manage them the same way. They still firmly believe that optimizing some part of the organization makes the whole organization--the whole system--perform better.
This reminds me of the folly of the 1980s, when a major U.S. automaker announced that it had improved its accounts payable processing. The firm had invested tens of millions of dollars in new automation that allowed it to pay its vendors faster and more "efficiently." Nevertheless, this automaker--along with most of the other U.S. automakers--were stilling losing money at unheard-of rates. Losses ran into the billions while executives teams tinkered with "accounts payable" and other departments that were clearly not the system's bottleneck to making more money.
Meanwhile, the U.S. auto industry's Japanese counterpart was making improvements that really mattered. They were speeding the work, eliminating waste and accelerating the flow of inventory end-to-end in their operations. They disconnected the accounting department from plant operations. To the accounting department, the flow of inventory through production was a "black box." Nevertheless, these plants became increasingly successful at producing products people wanted--even in America--at prices people were willing to pay. And, to the consternation of orthodox-bound U.S. management, these Japanese auto producers were making money, too.
The Japanese learned to collaborate with their supply chain in everything from small parts to the very machines and equipment that became capital investments in their plants. While U.S. automakers still were taking days to change over some production machines from model-to-model, the Japanese had worked with their machine tool manufacturers to produce equipment that could be changed from model-to-model in less than an hour.
Executives and managers are bound to their old ways--to their orthodoxies--mostly by the fact that they have no idea how their "system" works. Far too many executives and managers still believe that "more data" and "more technology" will actually make them better at what they do. They believe that they can be guided by data in the absence of a theory--a framework by which to understand the data and its interaction with the "system" they intend to manage.
As a result, such managers are befuddled as to what "levers" to push or pull to effect changes based on the data the "system" is feeding back to them. It is not a lack of data that trips them up. It is a lack of "theory" as to how the system they are supposed to be managing will respond to varying inputs.
What these managers lack is a tool to help them map the informal paths that information takes through their organizational system. They lack a way to come to a sound understanding of the "tribal knowledge" that really makes their operations work hour-by-hour and minute-by-minute.
Such tools have been around for decades--tools that will help these managers understand and document how employees interact and where costly undetected bottlenecks lie. The tools are available--such as Goldratt's Thinking Processes--but all too frequently management orthodoxy stands in the way of executives' applying these tools.
Don't let management orthodoxy bind your organization on a downward path when there are ways of escape. Investigate them and apply them to improve. In today's challenging economy, businesses need such tool now more than ever.