This article was primarily adapted from presentations made at Enterprise Minnesota’s Statewide CEO Council one-day event October 26 at the Minneapolis Marriott Northwest.
The event was open exclusively to members of Enterprise Minnesota’s 12 regional peer councils.
Attendees heard from four of Enterprise Minnesota’s top consultants on issues ranging from leadership, strategy, the new ISO standards, and continuous improvement. Joe Mulford, the recently-appointed president of Pine Technical & Community College, provided the luncheon keynote.
The event concluded with a wide-ranging panel, moderated by Kill, that included Dane Anderson, president & CEO of FAST Global Solutions; Verne McPherson, CEO of Tolerance Masters; David Rhode, plant operations manager with Detroit Diesel Remanufacturing, LLC; and Mulford.
1. Understand the Challenge
FIX THE GAP
Pine Tech’s Mulford outlines seven insights to address the skills gap
The solution to the skills gap won’t be an easy fix, according to Joe Mulford, the newly appointed president of Pine Technical and Community College. It will likely require that manufacturers collaborate on a concerted long-term strategy that requires proactive individual initiative.
In his previous role as system director for education-industry partnerships at MnSCU, Mulford developed a strong reputation for representing the interests of manufacturers within that college system, particularly regarding the skills gap.
He says the pathway that gets manufacturing in the right direction involves seven steps.
1. Understand that the problem is competitive.
Manufacturing isn’t the only industry getting thumped by the demographic shortage of workers. “Fundamentally, it’s pinching everyone,” Mulford says, adding that manufacturing is currently 41st on a list of business sectors that need employees, including retail, healthcare, IT, personal care, nursing, office jobs, childcare, and others.
“People who have the skill sets that you’re looking for have a lot of options,” he says. “If they’re somebody who has the intellectual capacity to be an engineer, they can just as well be an airline pilot, or a salesperson or some sort of medical technician.”
More to the point, MnSCU doesn’t have sufficient capacity to solve the problem merely by adding more coursework, he adds. The demographics of the millennial generation just aren’t there. “I could never turn out enough graduates from our college to fill every vacancy in the region,” he says. “I wish I could.”
2. Think strategy, not tactics.
Mulford cautions manufacturers to remember the difference between a plan and a strategy. “A lot of people have a plan to solve an issue on a particular day or in a particular economic cycle, but they just don’t have the longer-term strategy,” he says.
He advises companies to take a longer-term approach than traditional start-stop attitudes. “Companies get involved when there’s a crisis. They want to add a third shift or something, and they need a bunch of people. Then as soon as their needs are met, maybe it softens. The reality is it’s different this time, because the demographics have fundamentally shifted in our country and in our region.”
3. Sharpen your relationships.
Manufacturers can better compete for the attention of students by building personal relationships at two-year schools, Mulford says. In his experience, savvy manufacturers get on a school’s radar when they take an extra step beyond merely calling to post a job.
“It’s not complicated and it’s not expensive,” he says. “(They) come over with a box of pizza and talk to the class at night. They send over a production engineer. They invite the classes for a tour,” he said. “Most employers that I’ve worked with over the years have had effective strategies around that. They are very transparent and very predictable.”
4. Act as an industry.
Manufacturers need to think beyond their own company needs and even the needs of their regions: They need to market their industry statewide, according to Mulford. “It is branding, getting people interested in manufacturing, first of all (and) encouraging them to get the right skills,” he says.
5. Consider alternatives.
Schools simply don’t have the capacity to graduate enough people to meet the needs of employers, Mulford says. As they develop their forward-looking strategies, manufacturers should help facilitate apprenticeship programming or internships. “You can’t just think about going down to the college and hiring graduates, or putting an ad in the paper, or having some internal training,” he says.
6. Creative tuition.
Tuition reimbursement models, while generous, are too confusing and bureaucratic for some students, according to Mulford. In his experience many students are not sure whether they want to be a carpenter or a machine tool operator. Their decision, he says, is sometimes no more complicated than being attracted to a specific grant that keeps tuition down. “They’ll pick those careers,” he says.
7. Plan to be Awesome.
Reputation matters, Mulford says, both for your company and your industry. “There is too much competition out there for human talent,” he says. “Good isn’t good enough. You have to be awesome.” You have to have people refer to you as awesome, just as you do for your products.
“In higher ed, we talk about an alma mater experience,” Mulford says. “Are people going to drive around with your bumper sticker after they graduate? Are you an awesome employer?”
2. Perfect Your Strategy
IF WE'RE NOT GROWING, WE'RE ERODING
The optimal paths to successful strategic planning.
The best strategic plans for manufacturers, according to Enterprise Minnesota’s Mary Connor, begin with an intelligent scan of the company’s context.
Connor is a senior member of Enterprise Minnesota’s consultant team, with deep experience in business growth strategies.
“We need to take a moment to scan the environment and make a plan for our growth. Because if we’re not growing, we’re eroding,” she says.
Those scans should include:
- An internal scan assesses the company’s knowledge, skills, and abilities; it evaluates management systems and efforts as continuous improvement.
- An industry scan examines new entrants into the industry, suppliers, buyers, product substitutes, and gauges the intensity of rivalries.
- A competitive scan identifies, ranks and rates competitors.
- An environment scan assesses political, environmental, social, and technological factors.
Experienced planners will use these data-driven scans to identify high probability paths to strategic growth, Connor says. These paths typically include some version of growing the core business, viewing customers from different angles, and/or considering alternative sales channels.
Growing the core business, she says, requires an internal focus on systems, people, and continuous improvement -- or it might mean abandoning the present core for more profitable options. “We may even have to abandon what our core business is if it’s obsolete and move more quickly,” she says.
Connor’s overview of planning also includes identifying opportunities to introduce new products to existing customers. “We’re going to segment our customers now because not all of them are going to buy our new product,” she says. This should entail seeking a fresh analysis of customers’ buying patterns, paying closer attention to high margin customers and finding different ways to accommodate low margin customers, such as the Internet. “If they’re treating us like a commodity, maybe they want to buy like it is a commodity.”
Another strategy in Connor’s view is to offer current products to new customers. “This is appealing, particularly when your core business is throwing off some cash,” she says. This could mean recruiting a direct sales force, pursuing new markets, or maybe exporting.
An important component in the strategic thinking is to plan for execution. “We need a plan for growth and we need a plan for integration,” Connor says. “We’re going to choose a combination of this in our plan at the high level. How are we going to grow, and then we’re going to build some organizational capabilities?” Failed plans, she says, did not contemplate workforce, facilities or systems.
In the end, Connor prescribes five best bets for strategic planners.
- Authorship and ownership. Connor advises clients to encourage extensive participation at the beginning of the planning process because “authorship and ownership are connected.” Employees can’t follow a plan if it rests only in the CEO’s head. “You wonder, how come my people can’t follow me?” she says. “They don’t know the direction you’re going.”
- Shared communication. “This is a group process. It’s not a spectator sport. We need to come up with a significant and doable call to action,” she says, adding that managers should sustain the communications process. “Get up here at least once a month and talk about your strategy to your leadership team members.”
- Progress reporting. Connor prescribes bringing efficiency to reporting progress. “My favorite progress reporting is red, yellow, green,” she says. “If it’s green, we don’t need to talk about it at the strategy meeting. If it’s yellow, what do we need to get on track here? If it’s red, what resources do we need? That’s the one we need to focus on.”
- Empowerment. Empowerment and accountability are keys to successful strategies, Connor says. “They go together,” she says. “They’re in lockstep. Otherwise, you’ve got people running willy-nilly.”
In the final analysis, Connor says, a company’s strategic planners get to use the strategic planning process to decide what they’re going to give up in their core business, what needs to stay the same, and what needs to change. “But this comes with responsibilities,” she adds. They need to believe in their decisions, discuss their plans and convince others to share their vision, while anticipating resistance. “Convincing your folks back home is sometimes one of the harder dilemmas that you have to face. You need to be able to respond with speed and to keep your company resilient, remembering that every problem has a way out.”
Her final word: “Execute your plan. Don’t let the bozos get you down.”
3. Focus on Continuous Improvement
DOUBLE DOWN ON PROCESS DEVELOPMENT
Improving output is a combination of art and science
The leadership team of a particular company showed up at 6 a.m. one Tuesday morning to capture information before third shift employees clocked out and went home. As they walked between pieces of critical equipment and from work area to work area, one manager noticed that a particular piece of critical equipment had experienced an issue with quality overnight.
“Hey, how’s it going?” he asked the operator.
“Well, you know it started out OK,” she said, but during the middle of the shift, it started producing a lot of scrap.” She described how troubleshooting couldn’t identify any obvious problems, and neither could the maintenance person she called up for a second opinion.
She then wondered if the problem was due to faulty raw material. They changed it out and the scrap problem disappeared.
“I knew you’d be walking around today,” she told the manager, so she had recorded the lot number and a sample of the material and gave it to the purchasing manager. The manager thanked the operator for doing a good job, asked few follow-up questions and moved on.
To Greg Langfield, this four-minute conversation perfectly illustrates how effective managers combine process improvements with engaged employees to produce seamless lean improvements.
Langfield is a business growth consultant for Enterprise Minnesota who specializes in talent development, lean enterprise, and ISO quality management. His expertise ranges from enterprise-wide lean transformations to targeted improvements including various lean workshops and lean certifications.
He deconstructs that leadership visit into various positive components. First off, he says, the operator had some type of problem solving skills. She knew how to troubleshoot that piece of equipment. Then, she knew to bring in the maintenance shop. And third, she kept a scrap, recorded the lot number and passed it on.
“One of the things we’re after here for daily improvements is looking for ideas that employees can implement. We’re not focused on just the ideas. We’re looking for the action that results from it,” he said.
Langfield says that the anecdote also demonstrated purposeful leadership. In the example, the leadership team actually took time to visit the production floor, where the work was being done. “It could be in engineering. It could be customer service. It could be anyplace in your organization,” he said.
The point is to match up how leadership and employees see problems in compatibly similar ways. “How well do they match up there?” Langfield asks. “What is really happening out here? What is really going on in this process? The whole point is to go out and see and learn what’s going on.”
Langfield also applauds how the manager used strategically artful questioning to find information. “Even though they could see that the quality was out of control, they didn’t start by asking, ‘Why was quality bad?’ They started with, ‘Just tell me about your day? How’s it going?’ The leaders focused on engaging the employee by looking at the issue from her perspective. How we ask the questions is more important than just being there. If we start off with why, we put them on the defensive right away.” In essence, they asked her first how she would describe and fix the problem. “Our goal is, through engagement, to get them to solve problems. If you walk out there and tell them what to do, they’re not going to learn how to solve problems.”
Another lesson from the anecdote is how the team had empowered the employee to know she had automatic permission to make an improvement. “The operator didn’t need to run up the flagpole and say, ‘Hey, is this needed or not?’” Langfield says. “We are focused on developing employee’s problem-solving skills. There are things that they can solve that we want them to solve. We want them to make their day better.”
Let’s talk about what it means to have purposeful leadership here. One is just like daily improvements, we’re focusing on the process. It’s just as important for leadership to understand value add and non-value as it is for employees. You have to go out there and see, “What am I seeing? What is the employee seeing? How well do they match up there?” You’re also looking for value add and non-value add. Your takeaway is, “What is really happening out here? What is really going on in this process?” The whole point is to go out and see and learn what’s going on there.
4. Focus on People
GENERATE NEW LEADERS
Leadership has evolved beyond the traditional command-and-control model
Most manufacturers agree that developing leaders is an important way to grow their businesses, yet few do anything about it. Pat Voyles, a leadership consultant at Enterprise Minnesota, likes to quote a recent report that discovered less than one-third of U.S. companies say they’ve identified critical roles and talent segments based on their business goals. Even fewer companies – less than 10 percent – are at a stage where talent management is actually part of their business planning process.
Voyles devotes most of her time at Enterprise Minnesota to help manufacturers realize and adapt to the evolving roles of leaders within their companies.
“Our attitudes drive our behavior,” she says. “Our behavior is what we say and how we say things, and what we do and how we do things. Behavior drives actions, actions drive results, and results drive performance. If we don’t like our performance, we might need to take a look back at our results and the actions that we take.”
Leadership requirements in modern manufacturing have evolved beyond the traditional command-and-control model, in which decisions are made at the top and implemented by underlings within the organization, Voyles says.
“That worked really well in situations where people don’t have to think,” she says. That’s no longer the situation, as technology, demographics and workplace culture have all combined to demand a different leadership mindset.
“We’re starting to see that the work is changing and things are becoming more automated,” she says. “Things are becoming replaced with robotics.”
In addition, today’s workforce often includes four generations of people working side by side, each with their own attitudes, motivations, and work styles. As boomers prepare to retire, millenials are becoming leaders and managers. In addition, workflow is changing, requiring different skills, competencies, and experience.
That evolving workplace requires a different kind of leadership, Voyles says: “We need people who can think, people who can make decisions, people who can solve problems, and resolve conflict. We need to develop leaders at all levels.”
Voyles describes a “true leader” in this new environment as someone who influences the thinking and behaviors of others, who challenges employees to tackle things outside their comfort zones. “A true leader is someone who puts others before him or herself and focuses on growing people to become greater and accomplish more than they’ve been able to do,” she says.
"Smart companies also devote time to considering how well leadership aligns to business strategies", Voyles says. “Companies spend a lot of money to put together strategic plans, but things don’t always go as planned. Aligning that business strategy and leadership is maybe easier said than done.”
She suggests four paths to correcting this:
- Identify critical roles and talent segments based on your business goals.
- Develop formal training plans for critical roles in your high potentials.
- Provide formal coaching or mentoring for critical roles in those emerging leaders.
- Create succession plans or career paths for your top talent that are based on your business goals.
Voyles recommends that companies devote time and energies to developing the art and science of leadership. “We won’t become good leaders just by reading books or watching videos,” she says. “We have to try things; we have to practice things.”
One way to accomplish this, she says, is to adapt the thinking of Jim Kouzes and Barry Posner, two leading authorities on leadership, and co-authors of The Leadership Challenge. She endorses their five-step plan for developing leaders.
1. Modeling the way. Do you do what you say you’re going to do? Do you lead by example? “If you say that you’re going to do something, can people trust and rely on you and depend on you, that you’re going to follow through and do what you said you’re going to do?” Voyles says. “That’s the way to build trust and credibility with people the organization.”
2. Inspire a shared vision. A lot of leaders have a vision in their head, but they don’t always share it, Voyles says, so people don’t know exactly what it is. As a result, they don’t inspire people to move from the current state to the future state.
3. Challenge the process. Leaders help people get outside their comfort zone and ask them to do things that they might not feel comfortable doing. When they do that, it helps them to grow and develop.
4. Enable others to act. People who are empowered are probably going to be energetic, enthusiastic and motivated, Voyles says. Companies can undermine this empowerment by prescribing how they are supposed to act. “It’s not very empowering, it’s not very motivational.”
5. Encourage the heart. Effective leaders make their employees feel like the heroes, Voyles says. “They don’t try to take the credit for something that’s well done,” she says. “They put the people in front of themselves. They set small goals and accomplishments so people can see those small wins along the way. That’s what motivates people.”
5. Strengthen Management
ISO IS A MANAGEMENT SYSTEM
Companies agree that ISO certification makes them better companies
Manufacturers who will strategically address the skills gap through a strong management system increasingly rely on ISO 9001, according to Enterprise Minnesota business growth consultant Kent Myhrman.
Manufacturers sometimes may not initially appreciate ‘management system’ as a phrase, he says, but it makes more sense when they consider the interrelated functions they have to manage and the advantage of having a system for managing them.
ISO 9000 was first introduced a couple decades ago to tackle quality issues. Today, it’s evolved into a business system, a management system. In fact, today ISO 9001 is the most widely accepted management system, according to John Connelly, Enterprise Minnesota’s director of consulting. He says manufacturers should rely on ISO “because it provides a well-thought-out infrastructure for how a successful organization is managed, not just a successful manufacturer but how a successful organization is managed.”
Connelly says that ISO-certified manufacturers mostly agree with this, but sometimes they reach the conclusion by an indirect route. Manufacturers initially pursue ISO certification for one of three reasons, he says: First, a significant customer requires it. Second, it is a business development tool; prospective customers require it. And third, they want the efficiencies that come by operating under an ISO management system.
The overwhelming majority of manufacturers initially look to ISO because of customer-driven motivations, Connelly says. But, after working in an ISO environment “virtually every one of them will say ‘My business is better off because we did this. We will be stronger. We are better positioned to grow. We’re better at measuring, communicating, and adapting because we operate an ISO system.’”
Connelly says the newest iteration of ISO incorporates process, effectiveness, and risk -- all key elements.
Manufacturers are also finding a clearer connection between ISO and lean process improvements. In fact, Connelly says, “I think the two of them belong together. ISO is about a system that thrives on being effective and that comes from using best practices. Lean is a methodology to be able to identify best practices and continuously improve them.
“That’s really the focal point, that we strive for best practice,” he says. “Lean helps us figure out what that practice is and ISO provides the system that demands it, prioritizes it, orders it, helps us sustain it.”
Connelly says that Myhrman and the other ISO specialists at Enterprise Minnesota will spend time with clients synthesizing the requirements of ISO. A popular activity, he says, will be to develop gap audits that identify the holes between the current system and what ISO 9001:2015 will expect. “There are 7 main elements worth digging into and saying, ‘How do you handle these things today? How will the management system expect them to be handled?’”
How to pursue the upgrade is a significant business decision. Connelly says that auditors will be competent and broadly available by the summer of 2016. “So our advice to clients is if you’re ISO 9001:2008 right now, the appropriate place for you to pursue an upgrade would be at the time of recertification,” Connelly says. “If you’re just starting, if you’re making a decision to pursue ISO, then pursue 2015 right now.”