I have come to the conclusion that it is impossible to achieve excellence – for some impossible to achieve mediocrity – until the leadership of the company decides what it is trying to accomplish and communicates that objective to the entire company. The goal of the company and its reason for existence has to be spelled out.
When I first visit a company one of the first questions I ask is what are your goals? I am usually met with silence, as everyone on the management team looks at each other to see if anyone has the answer, then they all look to the boss, who eventually offers up some silly platitude like 'enhance shareholder value' – one of the most meaningless phrases every conceived by the business community. Goldratt's famous Goal – to make money – is equa;;y hollow. Of course the goal is to make money, but when and how?
When there is no clear statement of the objectives and purpose, confusion, conflict and chaos reign. Some people are trying to figure out the best moves to make the numbers good in the short term – this month and this quarter, while others are looking out for the longer haul – five years down the road, say. Conflict is inevitable. Some managers think the company should lay people off to reduce costs immediately, while others want to invest in training to optimize capabilities down the road.
The same is true with outsourcing. Maximize shareholder value doesn't even address what business the company is going to be in. Anything and everything goes when that is the goal. Some folks are working on finding cheap sources for just about everything, while others are trying to improve in-house capabilities.
Lean is a philosophy and a strategy aimed at profitability in the long term, and it assumes that the critical value creation activities will be kept in house. In most companies, however, no one ever said that making money in the long term was the paramount objective – and there is ample evidence that making money now – this period – is the higher priority. So people advocating long term ideas run smack into those who think this month is the highest importance. Meanwhile, senior management plays both sides of the street, hiding behind vague objectives of shareholder value enhancement.
Maybe the senior folks like keeping it wide open – manage for the long term when that suits them – for the short term when it doesn't; vertically integrate and outsource, as the spirit moves them. This ad hoc approach to management may work for them, but it leads to confusion and frustration within the ranks.
The best companies have a very clear sense of direction, that makes very clear not only the 'what' – to make money – but also the 'when' and the 'how'. A statement of purpose such as, "Provide superior value to our customers in order to maximize long term value for our shareholders, and to simultaneously provide security and value to our employees, suppliers and the communities in which we operate" spells it out pretty well.
For that matter, "Make as much money as we can as fast as we can by any legal means possible" works well too. At least everyone knows what they are supposed to be shooting for.