Once there was a manufacturing executive who was concerned about the inaccurate financial information he was getting, so he moved his desk up to the accounting department so he could figure out what was going on. Soon he found out that about 80% of the way through month end close the accountants calculators’ batteries were dying so any numbers bigger than they could count on their fingers and toes were wrong, so he bought them all rechargeable calculators and the problem was solved.
Now that isn’t a true story, but it is the equivalent of the supposedly true story recounted in CFO Magazine. The story goes that the company had manufacturing problems so the CFO moved his desk to the factory floor.
“A key problem for the company was a high return rate for some products. For example, part of the process for making one product involved cutting 20 foot bars into smaller pieces and punching regularly spaced holes in them. But when the bar was down to the last piece, it tended to move slightly as the hole puncher tried to do its work. Lots of pieces were created with holes that were off by the 1/16th inch of tolerance called for in the engineering specs. ‘You could be an inch and a half off, and no one realized that or tested it,’ Litowotz [the CFO] says.
The simple remedy was creating a jig: a template for metal products similar to a stencil for painting on a wall. In order to make a hole in a bar, it was necessary to punch through a corresponding hole in the jig. The number of returns dropped immediately and dramatically.”
If that’s true the root of the problem was not a lack of jigs, rather an HR process that hired morons. If the people in production were routinely an inch and half out of a +/- 1/16″ spec and didn’t realize it they have much bigger problems than fixtures can resolve.
Don’t get me wrong – the idea of a CFO (or any other senior manager) moving his desk to the shop floor is a great one, but not so he can quickly see the stupid mistakes of the production people and fix them. It isn’t so he can fix and preach – it is so he can learn.
There is certainly value in having an outsider’s perspective – someone to ask the dumb, obvious questions – to point out the 800 pound gorilla in the living room who has been there for so long we ignore and work around it. But 999 times out of a thousand there is a very good reason for the gorilla to be there. Everyone knows it and it is still there because lots of good people have burned lots of brain cells trying to get it out of the living room and came up empty. The likelihood of anyone – especially an exec with little or no technical knowledge – going out to the floor and quickly solving the big problems through his superior powers of observation, logic and intellect are virtually non-existant.
The lack of respect and humility the CFO article exudes is stunning, but sadly, not all that uncommon. It is the top down mentality driven by an unshakable conviction that the people in management are simply smarter than the people doing the work; and problems are best solved by having those smarter people go out and straighten things out … then write a policy to make sure the dummies don’t screw things up again.
A far more likely scenario is fo the CFO to go out into the factory and find out that everyone on the floor knows the cause and the cure for the defect, but they cannot get past the budget restrictions and the financial justification hurdles necessary to get the jig made. The lack of common sense is not on the factory floor so much as it is in the management processes.
When senior people go to the gemba – the factory floor – any quick fixes they can contribute are most apt to be to learn how management can improve in order to enable the people doing the work to be more successful.
The title of the article: What Holds CFO’s Back From Operational Roles? The answer more often than not: Ignorance, arrogance, a lack of respect for the deep knowledge held by people on the cutting edge of the value adding effort. Managers must go to the gemba, but they have to go there with the mindset of a freshman walking into his first day of engineering school – excited but struck with a profound sense of how much he has to learn.