You only have to look out of the window to see summer fades into autumn and inevitably into winter. So some change will be experienced by every business, organisation, institution, society or individual. Some embrace change and some resist doing anything differently, maintaining the status quo.
So You Think Targets Work?
You may be used to the conventional wisdom that if you want to increase performance, i.e. make a change, then the way to do it is to set a target. Usually managers make these up! Oh yes they do!
Faced with these, usually arbitrary, targets people may initially put in extra efforts but in the longer term they will resort to either fiddling the numbers or distorting the system. You don’t think so? Are you sure?
Someone I know was doing consulting work in a UK local authority. He was puzzled by the performance statistics, which were being reported to Whitehall.
Somewhat hesitantly he asked how the numbers were arrived at. He was stunned to be told, “We make them up!”
Back in January 2017 I wrote a blog that told the case of a furniture retailer. The sales people, who were set sales targets, at the month-end could be seen doing some very uncustomer-friendly things to meet the targets.
In the end this retailer stopped using targets, started improving their customers’ experience and ended up with the highest sales per square foot in their sector.
It can happen in manufacturing. Executives were puzzled why production output figures bore little relationship to deliveries and invoiced sales. The value of stock in the warehouse didn’t tie up either.
It was discovered that finished goods were being taken out of stock and passed down the production line again at the end of the month to meet output targets.
In the end human ingenuity knows no bounds. People faced with targets, especially those typically made-up S-T-R-E-T-C-H ones, will fiddle the numbers or distort the system.
Instead of targets there is a third choice, which is to improve the whole system. Engage people’s ingenuity to improve your organisation, as a whole system, bit by bit. We’ll come back to that ‘whole system’ later.
So how do you improve your organisation?
It Starts with Leadership
First, top management actually have to lead.
As I say in an article that I co-authored on the Chartered Quality Institute website, leadership is about people, including yourself. Effective leadership unlocks the potential of everyone in your organisation. It engages that ingenuity of your people to collaborate together to get work working better.
In the article I refer to Dee W Hock, who may be one of the most effective leaders that you have never heard of. Hock led the transformation of the failing BankAmericard to become VISA International.
Summarising what Hock sees as effective leadership, it is firstly integrity or values-led. Thus by example to release the leadership in everyone to build mutual respect and trust. In such an environment people can feel able to tell the truth and admit mistakes.
That’s an important point. We probably learn more from our mistakes.
If, as in the example above, production output is lower than expected, what could have been learned to improve productivity and hence competitiveness? The presence of targets distracts from the learning and improvement opportunities that lead to better competitiveness.
How Ya Gonna Stay Competitive?
Well Ghostbusters might not help. However, target-mythbusters might! ;-)
The mythbusters might start with leadership as we said above. They might point out that you have to accept the challenge of a world that is in a state of constant change. How dare it! And so to maintain competitiveness you and your organisation must change too.
Learning and using that knowledge to improve is what effective leaders encourage to maintain competitiveness in the face of change. There are very few environments more competitive and complex than Formula 1 motor racing. Leadership, learning and improvement have always been essential for success.
Back in the early 2000’s Ferrari was dominant at least in part due to the technical leadership of Ross Brawn, in partnership with Team Principal Jean Todt. Michael Schumacher did a bit too!!
Later, in 2008, Brawn joined the Honda F1 team, which became his eponymous team when Honda withdrew due to the world financial crisis. The Brawn team won the F1 World Championship in 2009.
The Brawn team was bought by Mercedes for the 2010 season. Even with a great leader like Brawn the lack of investment during 2009 meant the Mercedes F1 team did not win a World Championship immediately. However, it continued to improve and grow in competitiveness.
What was not apparent at the time was the amount of work that was being done in the background in preparation for the new regulations of 2014. Although Brawn left at the end of 2013, I would argue that just like with Honda before, his leadership in preapring for the new regulations contributed to subsequent success.
Brawn’s departure was due to a disagreement over his role, which left Toto Wolff and Nikki Lauda as the leaders of the team. Whatever the disagreement, the build up to the new regulations and the subsequent leadership resulted in six consequetive F1 World Championships for the team.
In Toto Wolff, it turns out, Mercedes F1 had another excellent leader. You don’t win six championships in such a highly competitive sport without great leadership and continual improvement. As Wolff says reflecting on their supremacy,
Every season we have done it, but it has been difficult for various reasons.
So there was an onging need to overcome difficulties, to improve. In an interview with Wolff for Autosport Plus, Wolff says the honesty within the team enabled them to face challenges and difficulties over the long term. There was no ‘blame game’.
As W Edwards Deming put it in Point 7 of his famous 14 Points for Management:
Institute leadership
Organisations as Whole Systems
There a tendency to break organisations separate silos and worse set separate targets for each silo. Naturally this leads to each silo taking a shortsighted view, possibly also to competition, and to hell with the consequences for other departments.
This is the last thing you want to do if your aim is deliver excellent value and service to your customers at the highest quality for the least cost, as fast as possible.
Like it or not an organisation is a set of interacting relationships. It is much more than the sum of the parts. Any barriers or disconnects that you create will stop the organisation working at its most effective. Cooperation is the key.
Leadership is required for an organisation to operate as a whole system. As organisations grow it is inevitable that boundaries will develop. It is the leaders’ job to keep the focus on the needs of the customers and find ways to encourage cooperation across boundaries.
Almost thirty years ago Jack Welch, CEO of US corporation GE, recognised the problem and advocated a “boundaryless organization” and to facilitate or encourage that he introduced what was later called the GE Work-Out process.
Work-Outs were structured meetings that brought together all those involved in a particular issue across hierarchies, levels, departments and locations. There would be a neutral facilitator from some internal consulting group.
The critical feature is that people are meeting face-to-face. Electronic and onlines means may help to a limited extent. Being in the same room makes a difference.
The point here is not necessarily the Work-Out process itself. It is just to illustrate that it has been found necessary for people to work together on an issue. The A3 process and report was found necessary by Toyota from 1978 onwards as another way of engaging people across boundaries.
Many other ways of enabling communication within organisations, like Open Space, several other large group techniques and Action Learning.
Bottom Line
The usual arbitrary targets are POOR ways of increasing or even maintaining performance. The critical element is leadership. Your external environment is forever changing, which means leadership is required to encourage and facilitate change within the organisation in response.
Boundaries will inevitably develop in organisations as they develop and grow. Leaders must remain vigilent and do nothing that turns these boundaries into concrete silos. Countermeasures such as Work-Outs, the A3 and other group working have been developed to increase collaboration and cooperation.
Thank you for reading this blog. Hope you have enjoyed it and found it useful. If you have any other questions do please use the button above. Also do please share this blog with your friends, colleagues and connections. Looking forward to sharing my next blog with you.
PS I offer a FREE 45 minute Discovery Session if you personally want to change things and might like me to coach you through solvable problems. [Solvable problems are those where everyone involved understands that they will have to make changes to resolve problems.]