Case

M8-22 ANALYTICS o TEAMS • ORGANIZATIONS • SKILLS .fÿy' ÿ,oÿ ()V)g

The Strategy That Wouldn't Travel

by Michael C. Beer

It was 6:45 P.M. Karen Jimenez was reviewing the notes on her team-based productMty project tbr what seemed like the hundredth time. I31 two days, she was scheduled to present a report to the senior management group on the project's progress. She wasn't at all sure what she was going to say.

The project was designed to improve productiv- it3, and morale at each plant owned and operated by Acme Minerals Extraction Company. Phase one-- implemented in early 1995 at the site in Wichita, I(amsas--looked like a stunning, success by the mid- dle of 1996. Productivity and mo[ÿale soared, and operating and maintenance costs decreased signifi- cantly. But four months ago, Jimenez tried to duplicate the results at the project's second target--the plant in Lubbock, Texas--and some- thing went wrong. The techniques that had worked so well in Wichita met with only moderate success in Lubbock. ProductMty improved marginally and costs went down a bit, but morale actually seemed to deteriorate slightl): Jimenez was stumped,

approach to teamwork and change. As it turned out, he had proved a good choice. Daniels was a hands-on, high-energy, charismatic businessman who seemed to enjoy media attention. Within his first year as CEO, he had pretty much righted the floundering company by selling oft:some unrelated lines of business. He had also created the share- services deparnnent--an internal consulting organ- ization providing change management, reengineer- ing, total quailB, management, and other services--and had rapped Jimenez to head the group. Her first priority Daniels told her, would be to improve productiviB, and morale at the com- pany's five extraction sites. None of them were meeting their projections. And although Wichita was the only site at which the labor-management conflict was painfiflly apparent, Daniels and Jimenez both thought that morale needed an all-around boost. Hence the team-based productivity project.

She tried to "helicopter up" and think about the problem in the broad context of the com- pany's history. A few ),ears ago, Acme had been in bad financial shape, but what had really brought things to a head--and had led to her current dilemma--was a labor relations problem. Acme had a wide variety of labor requirements For its operations. The company used highly sophisti- cated technologB employing geologists, geophysi- cists, and engineers on what was referred to as the "brains" side of the business, as well as skilled and semi-skilled labor on the "brawn" side to run the extraction operations. And in the summer of 1994, brains and brawn clashed in an embarrass- ingly public way. A number of engineers at the Wichita plant locked several union workers out of the offices in 100-degree heat. Although most Acme employees now felt that the incident had been blown out of propo,'tion by the press, the board of directors had used the bad publicity as an excuse to push out an aging chief executive and bring in new blood in the fbrm of'Bill Daniels.

The board had asked Daniels to lead the com- pany in part because he came fi'om a prominent management consulting firm that was noted [br its

At the time, Jimenez Felt up tO the task. She had joined Acme in her late twenties with an MBA and a few years at a well-known consulting firm under her belt. She had been at the hehn of more than a Few successful change efforts. And in the ten years since she joined Acme, she had gained experience in a number ofmidlevel positions.

With a hardworking team of her own in toÿ\q Jimenez commenced work. First, she decided on a battle plan. For several reasons, Wichita seemed ideal as an inaugural site. Under the ÿbrmer CEO, the site had spent long periods of time on the mar- ket. The plant consistently tmderpertbrmed, and the old regime wanted to be rid of it. Periodically, frustrated by the lack of what he considered seri- ous of Rrs, the fbrlner CEO ordered improvement programs, which were ahvays abandoned alter a short time, Jimenez believed that the failures of those change programs were predictable: expecta- tions had been unrealistic,_there had been little commitment fi'om management, and the improve- ment-project team members had been given little authority to implement changi:s. As she consid- ered her mission at Wichita, Jimenez was certain that her new political clout combined with her experience as a consultant would make the project manageable. Moreover, she reasoned that because many previous efforts had Failed, her efforts would look doubly good if the project succeeded. If it

Module 8 . Mana oinÿ CbalLtÿ: in OiLmzuizatiems M8-23

failed, the situation could be positioned with the proper spin as an intractable set of problems tlÿat no one could solve.

The biggest problem at Wichita was clearly that labor and management didn't get along. As a result, costs to maintain the heavy equipment were significantly out'of line with those incurred by other operations. Wichita's high fixed costs and razor-thin margins meant that every dollar saved in maintenance was a dollar tbr profit. While operat- ing costs were high, too, the3: weren't nearly as high as maintenance costs.

]imenez set about fixing the labor relations problem. And although things hadn't improved as smoothly or as quickly as she had hoped, Wichita was a great success. The problem was, Daniels had wasted no time in touting the earl), successes to stakeholders. In fÿct, not long at'ter the Wichita project had gotten under way, he described it at great length in a speech to the Financial Analysts'

Society on Wall Street. With characteristic embel- lishment, he cited the project as a vision tbr the fiÿttlre of Acme--indeed, he called it tl, Je organiza- tion for the nventy-first century. He all but told the analysts that the Wichita model would soon be rolled out through the entire enterprise.

limenez had been furious--and more than a little fi'ightened. She didn't want her fi:et held to the fire like that; she knew that reproducing Wichita's suc- cess might not be possible and that even if it were, it might not be accomplished in a cookie-cutter i-:ash- ion. In fhct, she had tried to let Daniels know of her fhelings on more than a few occasions, long before he spouted off'to Wall Street. She had met with him and sent him reports, e-mail, and memos. The mes- sage, it seemed, had fhllen on deaf ears.

motion, Wichita had shox\,lÿ little coordination or COnlmunication anlong these groups.

Jimenez knew that she had at least one stroke of good luck in Wichita in the tbrm of David Keller. Keller, a 39-year Acme veteran, had been looking fbr one last job betbre he retired, and he wanted it to be in Wichita, where his l-'amily had lived for eight years earlier in his career. He wanted to retire there. Keller was \videly respected in the company and Jimenez genuinely liked him. So, with the blessing of Daniels and the other senior managers, she had appointed him p,'oject leader.

She smiled as she thought about Keller. He was a Korean War vet who had relocated several times for Acme, serving in just about every possible line and staff" position. He joined the company in 1957 and was immediately baptized in the dust and heat of North Afi'ica, where the COlnpany had set up opera- tions soon after World War !I. Keller was a link to Acme's heady past, when it had thought nothing of clearing Allied land mines planted in the desert in its drive to expand. It struck Jimenez tlÿat Keller had joined the company befbre she was born.

Inside Wichita

Jimenez looked at the clock again: it was now 7:30: The $75 million project that could bl'ing Aclne into the twenty-first century was listing, she mused, and so was her career. She looked at her computer screen for inspiration, but it was blank. Maybe if" she reviewed the success story once more. She opened the file marked "Wichita" and studied the work-process flowchart. The site had been unexceptional in almost every way. There were thl'ee fimctional groups: operations, which consisted of hourly workers who operated and maintained the extraction equipment; "below ground," a group composed of engineers, geolo- gists, and geophysicists who determined where and how to drill for the desired minerals; and "above ground," a group of engineers in charge of

cursor), refinement and transportation of the min- erals. Before the team project ha&been put in

Jimenez thought about the Wichita project's rough spots. One of them had been the institution of a monthly "problem chat," an optional meting open to all staff to discuss unresolved problems. No one attended the first one. She and Keller sat there nervously, together eating six doughnuts before she called a secretary and had them carted away.

But over time, people began to sho\\' up. After about fbur months, the meetings were well- attended, lively problem-solving discussions that actually produced SOlne improvements. In one case, a maintenance worker explained to a thcilities engi- neer that one of the standard equipment configura-. tions was f:ailing as a result of high levels of heat and sand contamination, resulting in occasional down- time. With Keller mediating, the complaint had been taken well, without the usual fi'iction. The engineer easily fabricated a new configuration more suitable to the conditions, and downtime was \'irtu- all), elilninated. Such insights were common at the problem chats. Previously no organizational mecha- nism had existed for capturing solutions or transfer- ring them to other parts of the operation.

j'imcnez and Keller then introdtlced teams to "select a problem and implement a tailored solu- tiou," or SPITS. These were ad-hoc groups made up of members fi'om each of the functional a,'eas. The groups were formed to work on a specific project identified in a problem chat; they were dis- banded when the problem was solved. It was the implementation of SPITS teams that led some eight months later to a wholesale reorganization of the Wichita work site. ]imenez believed that SPITS had been a breakthrough that had shown

M8-24 ANALYTICS • TEAMS ÿ ORGANIT_ATIOIÿIS , SKILLS

her how to boost productivity and morale--the goal tlÿr Daniels had set lÿ)r her. The program had given cross-filnctional teams of 12 to 15 people fi'om operations, above ground, and below ground the responsibility and authority to address problems as they occurred without seeking the approval of management.

Jimencz reminded herself that even after SPITSÿ there were still some rocky moments in Wichita. Solne engineers resented having to work alongside operations personi}el. They told Keller, "These miners don't understand why we do what \re do." Likewise, some operations staff balked at having to work with engineers who "knew how to mine only on a computer screen."

But one },ear into the pilot, things began to hum. People weren't just working together, they were socializing together. At one of the problem chats, an operations worker jokingly suggested that the brains and the brawn duke it out once a week to get rid of the tensions. Keller jumped on the joke and had T-shirts made that said BRAINS AND BRAWN; he then challenged the groups to square of'f weekly in a softball game. EaHy into the first game, a 200-pound miner slammed into a thin, wiry engineer at home plate, and limenez, watch- ing fi'om the sidelines, was sure that her corporate change plan had just been called out. But the engi- neer simply d usted hilnsclfofl-; laughing and swear- ing at the same time. At the next game, the engineer showed tip wearing knee and shoulder pads, and Jimcnez heard both his colleagues and the operations guys laughing. She knew something had changed. Later that night at a bar, the beer flowed in massive quantities, but she happily picked up the check. Her BItAINS AND BRAWN shirt now lntmg on her of'rice all--a symbol of everything that was wrong and everything was possible.

Cookie-Cutter Conundrum

Jimencz again came back to the present. She closed the file, got tip ab,'uptly, and grabbed her cdat., She needed some air and some food and derided to walk the two blocks to the local sand- with joint. She felt a little like an inventor who had just dcvel{Jped a great new invention that is certain to make the compan.v tons of money. <'That's great!" an imaginary boss replies. "Now give me another 50 joist like it!"

As she walked, she tried to think objectively about the I,ubbock site. Lubbock was in better shape than Wichita to begin with, but not by much. Operating costs there were too high, and the plant rarely met its production goals. Acme had considered divesting itself" of Lubbock on more than one occasion. When Jimenez initially

planned the team-based productivity rollout, she had thought of Lubbock as a beta site; kinks fiom Wichita would be worked out there, and then the plan would be rolled out to the rest of the corn- pan}, over a two-year period. The shared-services department didn't have the staff" to oversee Wichita's fine-tuning and concentrate on Lubbock as well, so Jimenez assigned only one of her top internal consultimts, Jennifer Peterson, and two of Peterson's staff to the Lubbock PrOject. She then engaged Daniels' foriner consulting firm and assigned Dave Matthews, a vice president of the firm, on-site responsibility.

Bad news seemed to dog Jimenez at every turn. For example, Keller declined to be a part of the team. Mystified and a little hurt, Jimenez turned up the pressure a bit, hinting that it might look bad for him not to work on the Lubbock site. Keller was resolute.

"Look, Karen," he had said. "I'm 63 },ears old. My kids are all out of the house. I've relocated ten times for the company, but I plan to retire soon. I don't want to spend the next three years burning myself out traveling all over the cotlntry. I'm stay- ing in Wichita. If I have to, I'll take earl}, retire- ment and walk." Although Jimenez thought he might be bluffing, she couldn't afford to call his hand. Keller had many powerfnl allies in the com- pany and was viewed as the prototypical Acme man; his latest success with the Wichita turn- around was seen as yet another in a series of impressive achievements. Jimenez knew she couldn't afford to lose his experience and knoxsd- edge; if she couldn't get him thll time, she would do her best to pick his brain and transfer his knowledge to a project team.

Keller had promised full access to his entire staff; the consultants could interview and brain- storm and strategize all they wanted. Jimenez, Peterson, and Matthews took advantage of that opportunitB but even extensive interviews with Keller and his staff hadn't yielded any truly valu- able insights. No matter how carefully Jimenez and her group tried to recreate the circumstances and techniques that had worked so well in Wichita, they made very little progress. The Lubbock employees just didn't seem to react with the same enthusiasm as the Wichita workers had. Because no one was showing tip for the problem chats-- despite the "selling" of the meetilÿgs' benefits by Jimenez, Peterson, and Matthews--attendance was made mandatory. It was true that Jimenez's team had attempted to reduce 'the cycle time and "total time to investment recovery" of the project, but that goal hadn't seemed unreasonable. Jimenez thought that there would be fiewer mis- takes in Lubbock and that the project would need tess time and fewer resources than Wichita had.

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If" anything, just the opposite occurred. Prob- lems never encountered ill the Wichita project cre- ated havoc at Lubbock. One particularly vexing to Jimenez was that the Lubbock workers refused to engage in any of" the team-building exercises and events developed fbr them by the project team. The softball games that had been played with enthusiasnl in Wichita were skipped by the Lub- bock crowd until the project team finally off'ered to spring for food and beer. Even then, there was more eating than playing. I felt like I was bribing prison inmates, Jimenez remembered.

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expected, the improvements weren't enough--and Jimenez knew it.

There had been some improvements. The site had begun to meet its weekly goals more. consis- tently and had seen some reduction in operations and maintenance costs. Normally, Jimenez would have been complimented on a job well done, but in the context of'what had gone bef;ore and what was

She returned to her office, still without all answer. Full and generous fimding had been approved fbr the team-based productivity project by the steering committee at the personal request of, Bill Daniels; this level off filnding was not easily come by at Acme. How could she convince him-- without looldng like a f'ailure--that the project couldn't be rolled out with the speed and grace he envisioned? What's more, it was clear' that stalling the implementation would dull some o}: the pro- ject's luster and in all likelihood jeopardize fimding. She did think that the project would work, given time. But she wasn't exactly sure how. And any waf- fling might get her crucified by her colleagues.

The meeting with the senio," managers was rap-- idly approaching. What could she say to them?

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