In the interest of protecting client confidentiality I won't name the town. Recently, however, I was out west in a beautiful spot in the Rocky Mountains working with a company doing extraordinary things in its commitment to lean. Like a few of my other clients they are making money doing what is supposed to be impossible – manufacturing low-tech consumer products and not only selling them in big quantities in the USA, but exporting them. By coincidence I happened to be staying in the same hotel as a film crew.
Thirty four people – count 'em – thirty four of them – were there to spend four days filming 2012 Toyotas driving in the snow. They were not actually filming a commercial mind you – just creating fim footage for an advertising agency that would sit on the shelf in case either Toyota or its dealers wanted to make a commercial that included Toyotas driving in snow. Most of the 34 were flown in from Los Angeles for the task.
A few weeks ago I wrote a piece that pointed out the fact that Ford spent $3.9 billion on advertising in 2010- a billion more than they did on value adding direct labor. They are right in there with the rest of the auto industry and well behind the spending levels at major league advertisers like P&G – $11 billion plus. Now I am sure there is a lot to the advertising game I don't know, but I do know that 34 manufacturing people working 4 full days would create a pretty impressive pile of valuable stuff and I have to wonder exactly what the value is of the product of these folks work. They are basically creating inventory that may never be used.
More important, I know that 34 manufacturing people would be micro-measured and there would be relentless pressure to challenge whether what they are doing is needed at all and, if so, to see how it could be done with 33 people. I have to wonder exactly where is the value in this – and in advertising in general? It seems to me that advertising spending is driven more by conventional wisdom than by the relentless pursuit of data and the continual cost/benefit focus on the operating side of the business. This was at least a $25,000 venture by the time they were finished and what executive would spend $25,000 on a manufacturing investment without demanding precise justification, cash flow and ROI analysis and a comparison to alternatives?
Perhaps I am the odd person out there, but I do not buy cars or beer, book airline flights or do much of anything else based on advertising. (Oh I know that the ad folks would say that I actually do based on some subliminal impact – sounding a lot like the global warming folks who say that blizzards are also proof of global warming – the old, no matter what happens I'm right argument). I TiVo through all the ads I can and hit the delete button on virtually every ad that pops into my email inbox. If the occasional ad sparks my curiosity and I try something I certainly do not decide whether to buy it again based on advertising once I have personal experience with the product.
So I have to question just how a company – the fact that the company in question is Toyota notwithstanding – claim to be lean and focused on customer value and send 34 people into a resort town to take film of cars in snow that create no value at all for its customers?
Donna says
I think you must have missed a 0 in your calculation of what the film footage cost? Unless you’re only talking about their airfare?
Also I really enjoyed this post minus the dig at global climate change. Your ax to grind there makes you sound like a grumpy old man – just let it go, please, or start another blog about it.
Dino Morson says
This reminds me of a story from long ago. My previous employer was a major US based multi-national office equipment manufacturer. Before they exited to the far east for manufacturing their products, they embarked on a LEAN/Six Sigma program – but that is a whole different story….
I remember sitting in a strategy meeting where our Operations Manager was laying out the plans for a cost reduction/cutting plans for the new year. In the process of laying out the strategy he put up several pie charts categorizing the various costs percentages to the corporation. What struck me was that manufacturing accounted for only 14% of the total costs while other categories Like “G & A” accounted for over 45% of the costs, “service” another 20%, etc…. Being the naive young engineer I was, I piped up and asked why was manufacturing tasked with reducing the costs by (at that time) 10% when we only accounted for 14% of the overall corporate costs?
The answer was simple – we don’t have control over that.
I guess that explains why I we closed down the manufacturing site in 2000 – we don’t have control over that!
Steve H says
Ha, I could have done the same with a $350 HD Panasonic camcorder and the crappy Ontario weather weve been getting. I would charge them $100, or $120 if they want me to wash my car.
Matthew Zito says
I agree partially with what you’re saying, but isn’t one of the ideas behind lean the idea that you can adapt rapidly to changing conditions?
That is, if they spend some money filming Toyotas in snow *now*, then when there’s a blizzard in New York, they can throw together a commercial in a day that they run two days later, and hopefully pick up some sales off the back.
This way, instead of spending two weeks getting the crew together, picking a venue, flying them out, etc., they can react in an agile fashion.
Bill Waddell says
Donna – I’m sure you’re right – the cost was far higher than my guess. Regarding climate change, I am neither a believer nor a non-believer, but rather someone frustrated and disgusted with the lack of objective data and the unwillingness of the scientific and poliical communities to engage in rational, fact based discussions of what seems to be a very important issue.
Dino – You captured my point succinctly!
Steve – $20 to wash a car in Ontario??? I thought you could buy a car wash franchise in Ontario for $20.
Matthew- Having the ability to film quickly in response to need is lean. Putting a ‘just in case’ inventory of film footage on the shelf is very un-lean.
Steve H says
Well, my car is very dirty so it will take an hour and I’m charging atleast $20/hour for my time. It has to be worth it for me to take the day off work! Haha.
Jim Fernandez says
I was wondering why they decided to do this filming; until I read your last sentence. They sent 34 people into a “resort” town. I’m guessing it was a nice paid vacation for the 34 people. And I wonder how much sking was done and how many spouses were there.
Mark Welch says
…Not to mention that those doing the filming had not even consulted with their potential client on what they wanted/valued in the commercial in the first place. Not only was it worthless work, they were aiming in the dark.
Rick Bohan says
Donna…Bill is inclined to pull political discussions into lean discussions, whether or not they have anything at all with his primary point. Maybe he saw a connection between global warming arguments and filming cars in the snow, who’s to say.
The datum regarding money spent on advertising vs. value adding direct labor is useful, though.
Bill Waddell says
Rick,
It struck me as a pretty good analogy. Both sides of the climate change issue cite data that is called into question by the other side … both sides cite the data that supports their position and ignore data that does not. I have no opinion one way or the other for the simple reason that there is no objective forum where the issue is being discussed objectively. I have heard the self-serving arguments of both sides and put little faith in either.
You come across as having a lot in common with the advertisng community – steeped in one sided data, no interest in data that does not support your opinion, unwilling to acknowledge the possibility that your data might be limited if not downright erroneous, and quick to cast as ignorant anyone who dares to question your opinion.
Rick Bohan says
Hey, I said I liked the ads vs. direct labor data, didn’t I? Sheesh.
Walter Stockwell says
Bill,
You are wrong about climate change. I am guessing when you compare “both” sides you are not actually thinking of scientists. Go to the NASA or NOAA websites and read the actual science if you are interested. Or look at realclimate.org, a blog run by actual scientists. There is no scientific dispute that the global climate is changing, and the change is caused by humans burning fossil fuels.
There is still a scientific debate about the magnitude of the effects. Will the change be bad or will it be horrible? And of course the real debate is not scientific, but policy. How do we deal with this and who will pay? Unfortunately, one side (the side afraid their taxes will go up) are trying to skew the policy debate by attacking the science. This is simple sticking-your-head-in-the-sand behavior and will hurt us all in the long run, whatever side of the policy debate you sit on. We should face facts and deal with what is in front of us.
Barnie Rossum says
Walter,
Unless the entire planet changes, it won’t matter. We’ll just export all of the jobs to the places without expensive environmental controls.