CONFRONTING REALITY
Doing What Matters to Get Things Right

How to Have a More Productive Workplace

People can be more productive in the workplace if they have better control of their free time. One approach is to give them their time off in different increments. Working, say, ten days and taking four off doesn't change the ratio of working to nonworking days, but for many people a four-day break would be much more desirable than the customary weekends.

What's important is to pick the initiative that's right for your business. A lot of corporate energy is expended on initiatives and "improvements" because they're the formula du jour — the latest fad or buzz-concept. We're talking not just about the obvious misfires (remember quality circles and zero defects?) but about anything that's suddenly popular that may not necessarily be a top priority given your circumstances at the moment. "I saw a company with a great supply chain," a leader will say. "Let's put that in." Or, "We have to do Six Sigma because everybody else is." Often as not, the organizational energy and resources end up being wasted. When the next initiative comes along, people groan and say, "Here we go again." 

The improvements you choose must be guided by the priorities in your business model. The critical areas are the operating strengths and weaknesses that affect the business's ability to generate cash earnings over time — things like cost, productivity, profitable revenue growth, differentiation, speed, and quality. For example, if you need to raise cash flow, look to such things as improving inventory turns or a process improvement that speeds the collection of receivables.

Whatever the choice, always be sure the initiative is something your people can handle. Remember that you're not only aiming for a specific improvement but also training the organization for adaptation and trying to build unity and alignment. If it takes an easy or uncomplicated task to get people ready, suppress your impatience and make sure you lay the groundwork.

We have seen operating initiatives designed with these criteria in mind literally save companies. In 1989, Emmanuel ("Mano") Kampouris was named CEO of American Standard. American Standard, then a $3.6 billion diversified manufacturer known best for plumbing products, had become heavily leveraged as the result of a management-led buyout undertaken to ward off a hostile takeover by Black & Decker. That left the company with a business model where cash was king: the company desperately needed to generate lots of it to preserve liquidity and reduce debt.

Kampouris's backers and lenders advised him to do what seemed obvious: sell off some businesses, use the proceeds to pay down debt, and focus on improving margins in the remaining businesses. But Kampouris, a seasoned and business-savvy leader, believed he could meet the model's thirst for cash and still keep American Standard largely intact. Most of the businesses earmarked for divestiture had strong markets and growth prospects; they just happened not to be generating enough cash, given the new debt load. If he could improve margins and asset utilization in those and the other businesses, they would produce enough cash not only to service the debt but also to position American Standard for growth. As the company improved its cash-generating ability, it could do an equity issue, further reduce the debt, and become bigger and stronger than ever.

Kampouris set out to improve the components of the business model, radically altering manufacturing flow, inventory management, and management of accounts receivable. Comfortable in international business settings, and a keen observer and listener, he literally traveled the world in search of tools and techniques that would help his company. He picked up a lot of ideas along the way. But he hit the jackpot at home when he met John Costanza, an information technology consultant in Colorado.

Costanza was developing something he called demand flow manufacturing (DFM), a system that aligned people, machines, and materials for the most efficient possible workflow. It was a system 180 degrees opposite to what every plant manager and operations manager had been taught, one that underlies the concept of "lean manufacturing." Working with Costanza, Kampouris personally mastered the concepts and details, drew in his senior management team, and then decreed that every manager be trained in it. The result was nothing less than total victory. American Standard's annual inventory turns almost tripled between 1989 and 1996, generating some $460 million in cash annually. The company held on to all the desired businesses in its portfolio and still was able to reduce its debt ahead of time. Its equity offering was a smashing success.

Copyright © 2004 by Larry Bossidy and Ram Charan. Published by Crown Business a division of Random House,  Inc.