TAKE 2
Commentary by Ben Locwin
Ben Locwin is CEO of a healthcare consulting organization. He has held executive roles for top pharmaceutical companies and developed human performance models for a variety of organizations.
As with any business, there are multivariate issues at play simultaneously at Lightgate that are affecting the inputs and outputs of all processes. Getting to the heart of the most influential components takes good, structured analysis and experience.
Most fundamentally, processes are the problem within Lightgate. There are so many operations occurring without standard operating procedures that it’s unlikely any one employee knows exactly what to do in a repeatable way.
In addition, E.B. Callaway is unaware of how his organization is falling behind its competitors. Without a good external market analysis, it’s rather unhelpful to randomly try to eliminate old initiatives or commence new ones. If the company is lagging in public perception, then he needs to fix it through initiatives that address that particular problem. If it’s a problem of sales of a particular product, Callaway needs countermeasures to be more competitive in that area. Differentiation of operational strategy keeps the company focused on practical improvements to its business model, without wasting resources on random fixes. It needs to be systematic.
The case study notes that “lighting companies are increasingly joining up with IT to create smart solutions for a variety of uses…. It’s uncertain if a company like Lightgate can adapt and thrive in this new atmosphere.” There’s no guarantee of Lightgate surviving just because it “wants” to. However, if it changes in an agile way to keep up with new market demands and consumer preferences, then it has a chance of surviving. There is a saying popularly attributed to W. Edwards Deming: “Change is not necessary. Survival is not mandatory.”
It appears that the CEO is concerned about what things he may “need” to do to turn around revenue. Unfortunately, these tend to be short-sighted actions for short-term gains, like employee layoffs, and will never result in a long-term or sustainable strategy. Instead of looking at margins and employees as part of COGS (cost of goods sold), he should be considering how to best utilize his staff to meet the new product and service offerings that are necessary to survive in the market. Furthermore, his reasoning for hiring Theo in the first place suggests he is either a very visionary or very inexperienced CEO. Theo doesn’t have the depth of experiences to draw upon for sustainable gains, but certainly could be good for an initial shift in process and employee performance.
One thing Theo needs to do is rapidly implement the 5S organization methodology in the warehouse and all operational areas. In this strategy, each S represents a step in the process for streamlining operations: sort, set in order, shine, standardize, and sustain (BPI 2014). It’s a subset of lean production methods and gives employees guidance on how to improve performance, take pride in their workplace, and generate competitive performance for sustainable gains.
There’s also evidence of not paying enough interest to developing staff to improve their performance. Theo’s program for developing employees through on-the-job training is a good way to minimize interperson variation in performing repeated work processes. However, it remains to be seen if Evie, who is in charge of the training programs, will agree to the change.
Another major recommendation that I’d advocate for is a willingness to “trystorm” at the company. This is like brainstorming better ways of doing things, but you actually require fixes be implemented. You won’t lose anything by creating pilot operational studies—if they don’t work, you undo them and try something else. But, if they work, you’ve just improved the business’s operations, and likely by a substantial amount.
On-site safety is another huge problem—safety-related negligence alone can shut a business down. There needs to be a concerted effort to fix the safety program at Lightgate. Creating key performance indicators and a safety culture that starts with leadership shows the employees that good safety procedures are nondiscretionary. This may come at the expense of some staff who don’t want to adopt the new behaviors, but better the loss of incompatible staff than loss of staff due to injury or death. Reductions in recordable accidents and incidents of 90 percent or greater are achievable. It all comes down to developing rational goals, and using data-based decision making to determine the problems’ root causes. Then, address the root causes systematically and systemically so that they are removed or mitigated by better processes, rather than having people be more vigilant, which never works for long-term safety incident prevention.
As for a smartphone policy, Theo can address the managers if he chooses, emphasizing that if it’s important to the managers, it’s important to the employees. However, he also needs to remember that managers have different jobs, and there doesn’t have to be an equivalent policy for all staff in the building with respect to phones, breaks, and so forth. That’s also part of the next generation of successors aspiring to move up the ranks to get different privileges.
Here are a few additional recommendations for the organization:
• Devise a better system for analytics to determine the best- and worst-selling items, SKUs to be omitted, and which item types are most often damaged. This will help develop targeted improvements so the company stops wasting time and resources on underselling items, and can get a handle on its inventory shrinkage and breakage. Creating a Pareto chart (a specialized type of bar chart that can easily highlight quality-related factors) of the most damaged items could pinpoint the likely periods when damage occurs.
• Make employees accountable for breakage that occurs on their watch. There could be deeper root causes leading to breakage, such as insufficient packaging supports and foam to protect the materials. However, if that’s the case, address it by contacting product manufacturers directly. If the cause is careless handling, then a daily accountability board—with names—will stop material loss almost immediately. Nothing works better than public accountability in an insular work environment. Continuous recidivism can be dealt with by termination, but only if there’s reckless and willful neglect or gross incompetence that has been addressed previously by training initiatives.
• There appear to be serious personality issues throughout the hierarchy at Lightgate. They may be just as influential as the systemic issues and process issues within the company. Theo needs to be given the empowerment and jurisdiction to execute his role. And his work should include focusing on process more than “superheroes”—cultivating the soon-to-be retired Sam Winston, for example—and nonrepeatable performances. This will reduce variation and make the business much more predictable and profitable.