Most companies — large and small — don’t seek outside help when things are going well. Often, external experts are called only after things have hit a breaking point. The tensions that bring these resources in always involve some combination of a need to move more quickly, to improve quality, and/or to work on culture. In short, companies tend to look for help when they need their organizations to be faster, better, or happier. These qualities are deeply intertwined and to improve the one you must work on the others. More and more business leaders are coming to understand this.
The success of the industrial age was built on efficiency — often at the expense of quality and worker happiness. This made good business sense in that era but in today’s knowledge economy, happiness, quality, and speed have become tightly linked and equally indispensable.
The Efficiency Era
During the industrial era, Frederick Taylor, the father of process reengineering, figured out that by shaving a few seconds or minutes off a step in a multi-step process you could save owners a lot of money and increase profit margins. A core Taylor-era innovation was to separate the thinking from the doing in an organization, with workers doing physical labor and owners and managers doing strategic planning.
Workers were seen as interchangeable cogs in a great machine — what engineers call “wear parts” (parts that wear out and must be replaced regularly) — while the owner class generated value for the economy and riches for themselves.
In Taylor’s era, it was common for owners to use coercion in the form of the National Guard, union-busting, and oppressive financial policies like company stores to keep workers in line and prevent them from organizing to demand better conditions or wages. It’s not surprising that some of the foundations of Taylor’s work came from data collected on slave plantations.
Management actively sought to remove “the burden of thought” from workers, making their jobs more like machinery than humanity. Henry Ford famously lamented, “Why is it every time I ask for a pair of hands, they come with a brain attached?”
From a business perspective, these policies worked pretty well and the rising tide of the economy helped many live better lives. The widespread prosperity many enjoyed in the 20th century was largely due to this efficiency mindset. But taken to an extreme, the efficiency mindset looks at human beings as machines and labor as a cost to be minimized. The worst expression of this mindset is perhaps Nazi Germany, where calories in work camps were doled out at a prescribed minimum level to keep forced labor productive. The Nazis were masters of efficiency — to horrific results.
During the last half of the 20th century, in response to some new thinking that emerged from psychology and industry — and perhaps a cultural aversion to the horrors of the past — a new mindset started to emerge around labor efficiency, effectiveness, and motivation. This thinking was the beginning of a shift toward more empowered workers.
W. Edwards Deming was an American management theorist and engineer who worked in Japan during the post-war reconstruction and who deeply influenced Japanese industrial practices. His work contributed to the revolutionary Toyota Production System (TPS) and was instrumental in shifting the perception of “made in Japan” from cheap to high-quality. Among other things, Deming emphasized eliminating fear in the workplace and insisted that if workers were afraid they would give you bad information, and thus make process or quality improvement almost impossible.
In the 1960s, MIT professor Douglas McGregor took these ideas further and described two competing theories of motivation. Building on Abraham Maslow’s hierarchy of needs, McGregor described Theory X and Theory Y, which summarized the fundamental differences in how management practices relate to how humans get motivated to do their work.
Theory X says that humans must be coerced to work well and tend to avoid effort and responsibility (you’ll recognize this as a slave-owner’s mindset). Theory Y, on the other hand, says that humans naturally want to provide value to other humans, seek responsibility, and pursue opportunities to creatively problem solve under the right conditions.
One place we’ve seen the tension between Theory X and Theory Y is in car manufacturing. One of my favorite stories about General Motors (GM) and Toyota from the ’80s illustrates this well.
GM at one time prioritized keeping the production line moving in its factories above all else. If a worker caused the line to pause even momentarily they could be severely reprimanded or even fired. Stopping the line was a sin at a GM plant because the theory suggested that keeping the production line moving was how output was maximized. But the policy actually reduced output, lowered quality, and caused misery for workers and management alike.
One of the main problems with not stopping the line was that inevitable manufacturing mistakes were not getting fixed at the point of error. Instead, they were passed down the line where other parts were put on top of the mistake, resulting in a finished car that had flaws buried deep inside.
Sometimes cars would have to be towed off the line because they wouldn’t start. For this and other reasons, an entire team was dedicated to going through the parking lot filled with “new” cars fixing defects. Sometimes they would need to disassemble much of the car to address problems introduced early in the assembly process and then reassemble the car once they’d been fixed. Not only was this approach inefficient, it also meant that cars were being hastily reassembled, often introducing new subtle flaws because the repair crew members were not experts in all aspects of the car.
This policy, designed to introduce speed, instead slowed things down and lowered quality. It also made people miserable, often putting them in physical danger — human bodies lose big if they get in the way of a relentless manufacturing line. But there was another way…and in the ’80s GM learned a powerful lesson.
One of the worst-performing plants in all of GM — known for labor problems and poor-quality products — was in the San Francisco Bay Area. Things were so bad that some days not enough people would show up to work to start the line and managers would scramble to hire people off the street. In 1984, GM management decided to shut it down.
About this time Toyota was beginning to be known for high quality and low cost, and GM leadership wanted to learn how they were doing it. Toyota also wanted more access to U.S. markets, which meant manufacturing in the U.S. So, the two companies struck an unlikely deal to create a joint venture at the plant, which they renamed New United Motor Manufacturing, Inc. (NUMMI).
Because of the power of the auto workers union, however, one stipulation of the deal was that no workers could be changed. In other words, this new plant would need to operate with the same people.
Same plant, same people, same product, different process — sounds like a license for disaster, right? Yet, in the space of a few years, the NUMMI plant went from the worst in the GM system to its best.
Toyota brought U.S. auto workers to Japan to train them in the TPS (the movie “Gung Ho,” starring Michael Keaton, was loosely based on this story). It was a difficult transition for many workers, but they were also highly motivated because if this didn’t work, they would lose their jobs when the factory shut down.
There are many revolutionary insights in the TPS — like just-in-time inventory and continuous improvement. But TPS is designed with people in mind; a core tenet is that you can trust workers to do the right thing and take care of quality — that people want to do a good job, and will if given the chance. In other words, the TPS is firmly rooted in Theory Y.
GM’s policy of not stopping the line was rooted in the belief that workers were lazy — in other words, in Theory X. The idea was that if given the chance, they’d stop the line all the time to avoid work. But at Toyota things were different. Rather than penalizing folks who stopped the line, they celebrated them. A distinctive feature of the TPS is something called an “andon cord,” which is ubiquitous in Toyota factories. Any worker at any time can pull this cord to stop the line to fix a quality problem or prevent an accident. When the cord is pulled, a happy tune plays.
The U.S. workers described their initial reluctance to use the andon cord, and some described experiencing intense emotions the first time they used it. In this and other ways, TPS leverages a Theory Y mindset and assumes that workers do not need to be coerced or controlled, but under the right circumstances are capable of taking great pride in their work.
When they employed the TPS at NUMMI and began to treat people like human beings, the results were incredible. The workers became invested in the new system and they learned to take pride in their work. One worker went so far as to carry self-addressed, stamped postcards with him to leave on the windshields of cars that he encountered in his local area that he knew had come off the NUMMI line. He wanted to know if the driver liked the car and hear their feedback directly. This is what worker engagement looks like.
When the plant closed in 2010 (it is the TESLA factory now), many workers were in tears and told reporters that the place had changed their lives and given them a sense of pride and dignity — something notably missing from the previous incarnation of the factory.
This kind of employee-first thinking is growing increasingly common. Zappos famously empowers employees to delight customers, and it enjoys a stellar reputation for quality, customer service, and culture. Sir Richard Branson, founder of the multinational Virgin Group, sums up the philosophy well:
“If the person who works at your company is 100% proud of the job they’re doing, if you give them the tools to do a good job, they’re proud of the brand, if they were looked after, if they’re treated well, then they’re gonna be smiling, they’re gonna be happy and therefore the customer will have a nice experience. If the person who’s working for your company is not given the right tools, is not looked after, is not appreciated, they’re not gonna do things with a smile and therefore the customer will be treated in a way where often they won’t want to come back for more. So, my philosophy has always been, if you can put staff first, your customer second and shareholders third, effectively, in the end, the shareholders do well, the customers do better, and yourself are happy.” (Inc. 2014)
Quality, speed, and great culture are the result of positive feedback loops and they address these issues holistically — starting with the culture of the leadership team (and often with the “All In Method,” which is the subject of my new book, Radical Alignment).
Happy people tend to do better work and solve problems more quickly. And people who are doing great work tend to be happier. It’s as simple as that.
Rich Sheridan, author of Joy, Inc., and founder of Menlo Innovations — a software shop that is known for its quality, efficiency, and a playful company culture — said, “Think of two teams that are equally skilled and have the same set of tools. One team dislikes each other and doesn’t enjoy coming to work each day. The other has fun at work and deeply enjoys each other’s company. Now imagine you have an important project to work on. Which team would you choose?”
We would choose the joyful team because we intuitively know that joy is a kind of lubricant. It makes any interpersonal problems that arise easier to resolve and makes communication more common and complete. Not to mention that if I have to spend a significant amount of my time with people at work, I’d rather not spend it with people I don’t enjoy. Life is too short for that.
We can sum all this up by saying that treating people like people is the best way to improve quality, efficiency, and morale in your organization. Not only is it kind, but it also makes good business sense — especially for the long term. And your focus needs to be on a long-term commitment because it will be tested in the short term.
Inevitably in the life of every business, there will come moments of distress or opportunity. At times like this, it can be tempting for leaders to sell out their teams and treat them as interchangeable wear parts by firing them too quickly or becoming demanding or coercive in their management style. In these moments it’s important to remember your commitments and your values. If you’ve been successfully doing this, you will likely find your people to be more loyal, forgiving, and flexible in helping you deal with any downturn as a team.
Surviving and thriving through the challenging times will likely come down to the team you have around you and how able they are to pull together to solve difficult problems. A foundation of a resilient and creative team is a leader who puts people first, customers second, and investors third.
Bob Gower is a guest blogger. He co-authored the book, Radical Alignment: How to Have Game-Changing Conversations That Will Transform Your Business and Your LifeBack to TriumIQ