Does your organization need change, but you don’t know where to start? Here are some principles for heading down the turbulent path.

In my last blog I described experiences I’ve had with organizations in need of major change. Now I’d like to look at principles I’ve found helpful in starting down the turbulent path. Revolution is possible without them, but it runs a lot more smoothly when they are followed. I’ll focus on manufacturing, because that’s where I’ve had most of my experience, but the principles apply in any situation.

First, you’ve got to have a vision—and in the more detail, the better. Every factory runs on a variety of systems: to initiate orders, to schedule workstations, to store inventory, to measure efficiency, to assure quality, and many more. Some of these are clean applications of specific theories (Just-in-Time, Theory of Constraints, etc.), while others may have started clean, but have degenerated over time. Others were simply made up as the company went along. Typically, whatever symptom has triggered your need for revolution—bad delivery, quality problems, inventory issues—is the result of a breakdown of one or more of these systems.

It’s always tempting at this point to look for a silver bullet. You read an article, or go to a seminar, and you have an “Aha!” moment. “That’s it! Lean manufacturing [or whatever has caught your fancy] is the answer! All we have to do is install that, and our problems will vanish!”

But “all we have to do …” is a dangerous statement. If you leap into major change without fully understanding the implications—and potential unintended consequences —you’re likely to trade the old problem for a new one.

Next, clear the decks! Stop doing things that aren’t working. Early in my career, I struggled with a small company with three unrelated divisions. The largest was a perpetual headache, consuming most of management’s attention in exchange for occasional small profits. A second division was tiny and an also-ran in its market, overshadowed by larger and more professional competitors. The third was starved for resources, but had potential—and was central to my vision of what the company could become. But before I could work on that vision, I had to get rid of the other two divisions. I sold the larger one, to a yet-larger and more professional competitor, and I closed the tiny one.

Rid of those distractions, I was then able to concentrate on my vision. Sales quadrupled in seven years, and we turned a chronic loss into a perpetual profit.

Similarly, in another plant later in my career, there was a peripheral product line that we struggled to produce. Quality and efficiency were inadequate, and we invested enormous effort into trying to fix it. Our sales team felt that the product was important to our overall offering, so I arranged to simply buy the stuff, marked with our label, from a competitor. Profitability improved, but even more important, we removed a distraction — allowing us to focus on our primary business.

Before you start your revolution, ask yourself two questions:

1. Do you have a detailed vision?
2. Even more important, can you rid yourself of distractions so that you can focus on the vision?

Source: Industry Week

Rick Williams

Rick is the Managing Partner of Polk and Associates and Director of our Attest, and Manufacturing services divisions. He earned his Bachelor of Science degree in Accounting from Western Michigan University and earned his Accreditation in Business Valuation from the AICPA and is a Chartered Global Management Accountant. Rick is a member of the Michigan Association of Certified Public Accountants, American Institute of Certified Public Accountants, AICPA Forensic and Valuation Services section, Michigan Manufacturers Association, MMA Tax Policy Committee, SAE, Affordable Housing Association of Certified Public Accountants, and Automation Alley.

RWilliams@polkcpa.com