Squeezing Greater Performance In A Tight Market - The New Business Paradigm

A recent study showed that 87% of Americans expect to continue to do things the same way and still get different results. Does this philosophy drive your companys performance?

In todays market, many managers have retrenched their approach to managing their company. Many have given lip service to new ways of managing while continuing to use old, outdated measures of performance and success.

Not enough business leaders are stepping to the plate and asking: Why are we in business? What is our vision? What is our true goal? The companies lead by these leaders equate growth with size, they implement Strategic Planning by multiplying the previous years volumes and profits by a growth factor derived from the value of the companys stock. What they are doing is taking a shortcut to sustaining growth; they are doing it in terms of physical expansion and short-term profit results.

These leaders are placing greater and greater unrealistic demands upon the infrastructure of their companies. These demands are not unlike the forces placed on the earths crust when the giant tectonic plates rub against each other. The results are the same in either case an earthquake.

How long can these companies sustain these artificial levels of growth? How long can the employees of these companies endure the added strain? The short-term focus of American Management has to change and it has to change for real. A new paradigm for business management is needed.

In the old paradigm, managers focused on what happened in the past to determine where they should head in the future. Often times they had little or no understanding of the causes of what happened in the past, they merely reacted to it. Budgets are generally based upon what you did the previous year and held to that level or less. Managers expect their employees to do more with fewer resources, yet do not have a realistic plan of action to achieve their objectives. The old paradigm also maintains that objectives are written to ensure performance in order to achieve maximum bonus, instead of needed results.

The old paradigm is nothing but an illusion that often confuses motion with progress. It gives us a false sense of hope and security, which often brings about economic instability. The old paradigm adds many distractions that distort the real picture of what is happening in business and creates an optical illusion.

A Paradigm Shift Is Needed

It is time to discard the old paradigm and usher in a new one. The new paradigm must champion creativity and innovation at all levels of the organization. It must foster true empowerment of all stakeholders not just the investors.

The old paradigm promotes firefighting and engenders a focus on problems and reaction to them. Its focus is in the past, not on the vision of what could be. It produces a CYA mentality and encourages an atmosphere of blame, all of which is counter-productive.

The new paradigm promotes creativity and innovation. It is based on the logic of:

* Continuous improvement
* Deployment of empowered cross functional teams
* Communication of information across all levels of the organization
* Organization-wide system of accountability

Differences Between The Two Paradigms

What are the differences between the two paradigms? Figure 4 below, shows the differences between the two paradigms. First of all, the old paradigm embraces responsibility rather than true accountability. Responsibility is assigned and limits the employee while accountability is negotiated and allows the employee a greater degree of anticipation and innovation.

The reliance on mass production often holds the organization firmly in the grips of the old paradigm. The system makes large quantities at statistically acceptable quality levels and disposes of unused inventory at fire-sale prices. Mass production is the comfort zone of most managers, it is what their bonuses are paid on, it is how they have been taught to manage, and it is ingrained in the cost accounting principles that drive traditional manufacturing. Lean production on the other hand requires new ways of looking at manufacturing, new processes and procedures, new management styles, and above all a new cost accounting system. It requires a system that makes what the customers want with zero defects, when they want it, and only in the quantities that they want it.

Under the old paradigm, budgets are built based on what the budget of the previous year was plus or minus a few adjustments here and there. Under the new paradigm, budgets are built according to the needs spelled out by the accountability system and requirements of the lean management system. The old paradigm encouraged a sharp focus on the needs of the investors (many of whom make up executive management) and less attention to the needs of other stakeholders. The new paradigm requires a balanced approach in addressing the needs of all stakeholders.

Organizational structure under the old paradigm promotes individualism and is often bureaucratic and primarily line and staff oriented. The matrix management system adopted by some companies still relies on the principles of the line and staff organization, it just spreads out and clouds the responsibility issues. Leadership under the old paradigm is primarily leadership by executive fiat and coercion. The new paradigm requires a truly empowered team-based organization where leadership is based on vision and broad participation.

Making The Change

Shifting from the old paradigm is not easy; it often requires a complete management style change. It requires the design and implementation of a total lean management system. Management considerations include:

* Setting up a lean management system requires assistance and time

* The process of transforming a company from the old paradigm to the new requires many physical procedural changes which are often accompanied by major upheavals in company structure and processes.

Despite these considerations, the question to ask is not: Can we afford it? Rather the question can we afford not to do it and still survive?

It is often tempting for many executives to try and piece-meal the transition and put in place many of the components. Still living in the old paradigm, they react when they dont get the results they expect and go on to something else. Success in making the transition from the old paradigm to the new paradigm requires bold initiative and a strong vision coupled with determined leadership.

A Complete System Is Required

Management must be totally committed to making the transition. The transition requires outside assistance from someone who is not tied to the old ways of doing things. The transition also requires the formation and support of a transition steering committee. The organization also needs to appoint a champion to execute the day-to-day planning and implementation of the transition.

At Alera, we help organizations build, nurture and support the logic and mechanisms that drive the transition to the new paradigm. Our Improving Performance Through Lean Management system is specifically designed to assist with the transition from the old paradigm to the new paradigm. The Alera Improving Performance Through Lean Management system is a practice built around several key concepts and physical tools. It is a comprehensive approach that builds, promotes, and sustains lean management by incorporating:

* Accountability structure
* Business renewal process
* Organizational learning structure
* Employee involvement
* Empowered team structure

We at Alera are committed to helping you make the transition to the new paradigm

http://www.AleraGroup.com

Brice Alvord has over thirty years experience as an internal and external performance improvement consultant. He holds a BA in Sociology/Psychology from Central Washington University and an MBA degree from City University of Seattle. He is the author of over two dozen books on continuous improvement and training.Adriana Blog71724
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