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Published: August 27, 2013
 / Autumn 2013 / Issue 72

 
 

An Uncommonly Cohesive Conglomerate

UTC is a conglomerate that learns from itself because of the way it connects learning at three levels: the individual’s behavior, the day-to-day workplace, and the strategic direction of the company, as developed in its councils. These practices continue to be nurtured and integrated across the organization, from platform to platform, company to company, and team to team. In the end, this integration is what’s distinctive about UTC. It is what enables the ongoing improvements that sustain UTC’s high performance. 

The Turnback Factor

Like most other successful management initiatives, UTC’s Achieving Competitive Excellence (ACE) program depends on translating innovative concepts into day-to-day practice at a relatively large scale. One major concept for ACE is the “turnback.” A turnback is a mistake that hasn’t yet happened, such as a symptom of a failure before failure occurs, an inefficiency in an operation, or (in the official UTC definition) “anything that inhibits a task from being completed as expected.” Examples of turnbacks are unsigned work orders, incomplete or inaccurate instructions, the realization that someone is inadequately trained, the late arrival of expected parts or materials, or the identification of a potential safety hazard.

At UTC, efforts are made in every work area to enable people to quickly and easily spot and report turnbacks. Equally important, the company is organized to assess and respond to them rapidly. The work team might address the potential safety hazard through better training or instructions, or by changing the layout of the equipment, or both. The best solutions to turnbacks often combine short-term preventive measures with more fundamental long-term improvements. UTC’s auditing group, for example, addressed some of its turnbacks by improving specifications for procedures (short-term) and making changes in its Auditor Assistant software (long-term).

By making it desirable to identify and collect turnbacks, and valuing them as starting points for improvement, UTC addresses a fundamental problem that inhibits learning in most organizations: the fact that businesspeople do not like to talk about mistakes and errors. When mistakes are not considered discussable, people act defensively to protect themselves, which makes them less likely to share knowledge and ideas. The turnback process makes it feel natural to learn from mistakes, and it helps prevent potential problems before they either are noticed by customers or cause damage. Moreover, tracking the generation of and responsiveness to turnbacks gives UTC a quick and easy way to assess people’s engagement and each unit’s learning climate.

Reprint No. 00209

Author Profile:

  • George L. Roth is a research associate at the MIT Sloan School of Management and a visiting associate professor of management at the University of New Hampshire. He is a coauthor of The Dance of Change: The Challenges to Sustaining Momentum in Learning Organizations (with Peter Senge et al., Doubleday, 1999).
 
 
 
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Resources

  1. Ann Graham, “Too Good to Fail,” s+b, Spring 2010: Profile of India’s Tata Group, another successful conglomerate with a very different strategic orientation.
  2. George Roth, “United Technologies Corporation: Achieving Competitive Excellence (ACE) Operating System Case Study,” (PDF) LAI Case Study (Nov. 30, 2010, released Mar. 7, 2011): The in-depth case study, representing three years of observation and interviews, on which this article is based.
  3. Robert E. Spekman, “United Technologies Corporation: Supplier Development Initiative,” Darden School of Business, July 19, 2001: More detail on the supplier initiative, capstone to the ACE program.
  4. James P. Womack and Daniel T. Jones, Lean Thinking (Simon & Schuster, 1996): Describes many of the threads of theory and method underlying UTC’s quality work. Chapter 8 discusses Pratt & Whitney’s advances in the early 1990s.
  5. For more thought leadership on this topic, see the s+b website at: strategy-business.com/strategy_and_leadership.
 
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