By Kevin Meyer
An article on CNN this morning gave me some pause: Fareed Zakaria wondering whether Russia should move its capital from Moscow to Vladivostok – 4,000 miles east. There are several reasons, here are a couple:
Well, the person who proposed the idea, Sergei Karaganov of Moscow’s Higher School of Economics, wrote in a state-run newspaper that a capital in the far east would make Russia part of what he calls “the rising world” — closer to dynamic Asian economies and further away from an aging Europe.
Moscow has 78 billionaires — more than any other city in the world. Those billionaires, along with others in the rest of the country, account for 20% of Russia’s GDP. Far higher than any country. That doesn’t leave much of Russia’s economy for businesses and the other 141 million people in the country.
In typical Zakaria style over 90% of the article has nothing to do with the premise suggested by the title, but those two tidbits are worthy of some thought. Fundamentally to shift the perspective of the country, to level certain key demographics, and to develop new opportunities.
It’s not the first time something like this has been tried. Turkey moved the capital from Istanbul to Ankara, India’s capital moved from Calcutta to Delhi, and Brazil created the inland city of Brasilia – specifically to focus on the untapped opportunity of the area. Most seem to have had some success, although Brasilia is an interesting case. Our friend Tyler Cowen over at Marginal Revolution wrote about it a year ago. From an opportunity standpoint it was a positive, from a physical layout and architectual standpoint it left some things to be desired.
Corporations do the same – Halliburton moving from Houston to Dubai and Boeing moving from Seattle to Chicago, for example. Every now and then there are rumors of Microsoft moving from Seattle to Vancouver, Canada to free itself from tax, visa, and judicial issues in the U.S. In the article linked above, Phil Condit believes the Boeing move was a success in both expected and unexpected ways. One interesting tidbit, albeit a little outside what I’m discussing, is this:
One of the big surprises from the move, he said, was the cohesiveness of the Chicago business community, where Condit encountered CEOs frequently gathering to nail down civic goals ranging from landing new companies to building world-class parks.
“I was surprised by how much that happened,” Condit said. “For whatever reason, Seattle does that way, way less. A meeting in which Starbucks, Microsoft, Costco, Boeing and Weyerhaeuser and a bunch of small businesses are all in the same place — rarely happens in Seattle,” he added. “It happened all the time in Chicago.”
Lean folks understand the concept of the gemba – where value is created. Generally that means the factory floor, and we encourage spending as much time as possible at the gemba to truly understand – and improve – the value creating process. We decry executives that never visit a factory and never dive into learning the root cause of problems – let alone lead by example to teach others how to correctly go about seeing and improving value at the gemba.
At the medical device company I run we leverage the quick daily stand up meeting to accomplish some aspects of this. Shop floor and department level daily meetings roll up to an 8:20 standup by our executive staff, which is videoconferenced to include staff members at our other major facilities in southern California and northern Michigan. We have a set agenda of WOW moments, safety, visitors, key metrics, key projects, monitoring leader standard work, and issues that rolled in from other stand up meetings that day. Yes we do it in under ten minutes, and the level of communication, understanding, and sharing between facilities has improved dramatically.
But where should executive staff – or the heads of governments for that matter – be located? The traditional gemba where value is being created every day? A potential new gemba where opportunity for new value exists but isn’t being exploited or managed properly such as moving from Moscow to Vladivostok? Close to the customer? A central location to all facilities and customers as Boeing did?
We wrestled with that issue in a much smaller way when we built our new northern California facility. Should the executive staff and value stream managers be spread out in each of their operations to provide immediate feedback, teaching, and understanding? Or should they be co-located – upstairs from the actual manufacturing floors due to the nature of the footprint we had – to improve communication to create a common long-term strategy?
We actually agonized over it. I had visions of my president’s office being a podium on wheels on the manufacturing floor. Remember this example of a cosmetics company from my lean tour of Japan a few years ago? The leaders were literally in the middle of the mayhem, completely connected to the value-creation process.
But our organization had a couple other issues. Our value stream managers and executive staff were strong, and by being embedded with their operations they naturally made a lot of decisions. The leadership growth of next level supervisors and team leaders was being stunted by this. In addition, the executive staff was often sucked into a short-term mindset by focusing so much on the issues of the factory floors, and intra-executive communication was too infrequent and ineffective.
During the building construction we were forced to move several people into a triple-wide trailer. We decided that should be our executive staff and value stream managers. Now co-located, still close to their operations, but far enough away that continual contact wasn’t possible. At the same time our staff went through the exercises proposed by Patrick Lencioni’s The Five Dysfunctions of a Team. Phenomenal book and if you take a year or so to take a team through each dysfunction – and really work on it – you’ll be amazed at the results.
By the end of the two or so years of construction we had a very cohesive executive team that worked better together and focused more on the long term, and a stronger leadership bench of team leaders, supervisors, and managers. So we decided to co-locate the executive team upstairs and not right on the shop floor, with the understanding and commitment that we would go to the gemba, and folks from the gemba would not have to come up to see us. We have been in the new building just a few weeks and so far it’s working. And we’re happy to be out of a no-frills triple-wide.
So whether you decide to locate an executive team on the existing gemba, into a new potential opportunity gemba, or close to customers it really comes down to leadership. All sources of value, potential value, suppliers, or customers are important. All have innovation, customer, human, and operational processes that can be developed or improved.
You just have to figure out what the problems and opportunities are, go directly to where those situations are and really dig into what is happening, and develop and execute a plan to create as much value, from the perspective of the customer, in the most efficient way possible.