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Lean Transformation

Larry,

First of all, my apologies for having to back out of the Houston meeting in two weeks. I hope you understand given the opportunity in front of me with my current position that I described when we spoke. In my absence, I wanted to provide a brief overview of my perspective on the GES Lean program as well as make sure you pass on my offer to speak with the CEO or delegate for your prospective client.

Set up & Background:

As quick background for the client, I was CEO of GES Exposition Services for four years starting in 2006 after 5 years as a Senior Executive in the company. GES produces tradeshows, meaning the design (look and feel + logistical), pre-show fabrication (structures, carpet, graphics, etc), installation, and dismantle of shows. As order of magnitude, GES produces greater than 3,500 tradeshows annually, spanning every industry across the United States, Canada, UK, and the UAE. The company produces some of the best known and largest shows in the world, including International Consumer Electronics, Chicago or LA Auto, Craft & Hobby, International Council of Shopping Centers, MAGIC, UK Spring Fair, etc. Overall, the company employees nearly 20,000 union and non-union workers, generating greater than $800MM in annual revenue as one of two clear US market leaders and the only true international player.

From 2004 to 2008, GES experienced record growth, driven by three principle factors.

  1. Global expansion plans through M&A and Greenfield start-ups
  2. Products and Services (e.g. exhibits, carpet, furniture, transportation) sales growth to exhibitors on GES shows
  3. Labor Productivity driven by best practice implementation and supported by technology solutions

Challenge (or Opportunity):

In early 2008, labor productivity gains had started to slow as the best practices had been in place for several years. Complicating that, labor costs were rising at a much faster pace than price increases creating margin compression on the business. It was clear that GES needed its’ next wave of transformation, which is when I met you and the Accenture team.

After an exhaustive assessment and some in-depth learning of our business by your team, you and Damian sat me and my COO down to outline the opportunity. I still remember the conversation as your slide showed a full potential of greater than $50MM of cost opportunity from a full-scale lean program.  This was a large number that was hard to get our heads around given the success and good work that we done in the recent past. Once we suspended our doubt and listened to your detailed thoughts, it became clear to me that you were underselling the opportunity. With a full lean transformation, there truly was greater than $50MM of opportunity in labor, materials, rework, and space requirements. This was a breakthrough opportunity that was formed by picking up “thousands of small bills” versus the “large, obvious bills” we had been focused on throughout the years.

Implementation:

As you know, we decided to move forward with the program, starting GES Lean in early 2009. The first order of business was to get the Senior team bought it and driving the results. With your suggestion, that was done through a series of actions – clearly outlining the opportunity, aligning incentives, assigning ownership within the team, etc. Next came the path toward execution. We wanted fast results, but we also wanted to create something that will last. With that, we chose a joint approach with your team focused on our four largest locations. We introduced concepts and let the teams gain their own buy-in, but we sometimes had to move certain people or obstacles out of the way if they simply refused to participate. Together, we generated some remarkable results that were previously thought to be impossible. In short order, we came up with process improvement opportunities that starting yielding multi-million dollar labor savings. We found ways to significantly reduce forklift rentals. We were able to reduce the footprint of our Las Vegas warehouse from nearly 1 Million square feet to just over half that size (keeping the same equipment). The amazing thing to me was that the solutions were simple and common sense. The only thing they required was open minded participation on what was possible.

Post Script:

As you know, I left GES at the end of 2009, but I am happy to report that GES Lean stills lives on. It is an important part of what they are doing moving forward.

You know the story, process, and results as well as I do, so feel free to fill in further details.

I hope that helps. Please make sure your prospective client has my contact information which is listed below, including my cell phone.

Thanks,

 

KEVIN M RABBITT 
CHIEF EXECUTIVE OFFICER

Performance Management

A friend recently asked me to tell him how I thought about some of the tactics surrounding performance management and more specifically how I spoke with new management personnel about them. Here are parts of that discussion:

Why do hourly count boards and performance management boards?

In terms of how I talk to clients about Performance Management goes something like this:

  • I have done these type transformations a number of times.  Its not that difficult.  One time someone suggested that a 10 year old could do it.  I agree with them.   He could, if he had 30 years experience doing it.   The reason that is the case is that so many things involved in lean transformations involve items that are counter-intuitive.   You have to be an amateur psychologist or have a lot of pattern recognition to be able to establish the environment that gives you the highest chance of stabilizing and ultimately optimizing the business.  In all of my experience, there are two things that I would go to Vegas and bet your paycheck that you and the organization will underinvest in early and regret it later on – performance management and cultural work.
  • Let’s focus on a few elements of performance management and why they are important:
    • Cascading goals and metrics – by far this is the most important item in the transformation and yet it is also the one item that few attempt and very, very few actually implement well.   However, you are doing a brownfield transformation here and when I look to the best in brownfield transformations, Danaher is at the top of the pile.  At one point, they had outpaced the S&P 500 by over 24,000% in less than a 30 year period.  When you ask their top managers the secret to their success, it is rare that you don’t hear the term Policy Deployment.  This process, also called Hoshin Planning by others, starts by defining every goal a person has from long range to short range on one piece of paper.  It even includes how he is going to delegate that downward to his subordinates.   This is repeated all the way down until the literal point of impact.  Everyone in the organization are completely aligned and clear on how what they are working on supports their bosses goals and how their subordinates are lined up to support them.  There are several other pieces to that puzzle that we can talk about later but to test out whether you cascade goals effectively, pick a few goals that the CEO wants to accomplish and ask one downline of his people to tell you how they are aligned to support that goal and if they can show it to you in their official objectives.  I promise you won’t have many times when you will have to dig down to see if they monitor them at least monthly, problem solve around them and establish countermeasures to keep them on track.
    • Area boards – Area boards, often referred to as SQDC boards (safety, quality, delivery, and cost) are often found in varying formats.   Some companies like to have those four categories, some have up to 8.  That is not what is important.  What is important is that there is a common frame of what is kept on them and that they serve as the primary communication vehicle upward from the supervisor to the managerial team and downward to the operators.  The typical board might have a macro level metric in the top row, a more detailed metric in the 2nd row that is the current problem solving focus in the organization and a third row that is typically varied including things like team photo, countermeasures, etc.  Uses for this board are typically two fold
      • Daily shift startup meeting to ground the shift on what needs done and get a turnover from the previous shift
      • Daily walkaround processes where the managers from all the departments walk around to each others’ boards to get a view of what the big picture is for the shift/day and weigh in on issues that can only be solved by the senior group
    • Hourly count boards – These boards, sometimes literally checked every hour or even 15 minutes, for short cycle processes or as long as a half day for long cycle processes, are really aimed at driving process stability at the individual process area.   They provide a sense of the rhythm that is needed for the business and enable an operator to get instant feedback on whether they are having a great day or bad day.  In the best situations, they also enable the operator to engage the problem solving process and get assistance from those outside the cell (eg maintenance, supervision, etc) on things that will help them to improve their output.
    • Implementing the area boards and hourly count boards – I have found two big issues with implementing the area boards and hourly count boards and two successful ways to overcome the challenges:
      • The two big objections:
        • They fundamentally violate an unwritten agreement between the workforce and the supervisors – namely, you do your job and I’ll do mine and I don’t need your interference.
        • The typically overwhelm the organization that are getting these items forced on them at a time when they clearly see the additional work but don’t clearly see the benefit.
    • The way of working through it:
      • With the area boards, it is important to gradually work that into the organization and do it in a manner that they fully understand how it benefits them. Start out with one column of metrics, allow that to be worked with the organization for a week and then expand each week by one group of metrics.
      • With the hourly count boards, it is important to make the supervisors clear on what to do and how to do it. In particular, ensure that they have the skills to conduct the actual reviews but also understand how the operators might perceive it. The best way that I know to do this is through hands on role plays for performance dialogs.
        • I like to have about 6 hourly count boards around in a circle and an “operator” at each one. I give the operator a card with instructions like this:
          • You have been at this plant for 30 years and on the same job for 10
          • Your performance is quite average but not because you don’t care – you do the best you can with one exception.
          • The exception is that if a supervisor seems to not care about your well being, then you get way off message.   However, if they care about you then you work well with them.
          • If the supervisor only seems to care about the numbers, you can’t help but start talking about your new car stereo that you are excited to install this weekend.  No matter what they say, just keep talking about it until they focus on you and not their numbers.
          • The dialogues that come out of these sessions are great.  People realize that getting the numbers are critical but that it takes high EQ to judge the person and know when to go hard and when to use other methods to get the right performance out of the group.