Company leaders, consider the following questions: How many surprises have you dealt with this week? How many customer relationships have had to be rescued or late orders escalated? How many apologies delivered, numbers explained, or presentations redone?
Every leader I know wrestles with these and other crises as a matter of routine. Yet leaders also recognize that running a business through constant firefighting puts them at risk of stressed-out employees, customer defections, a damaged brand, and safety or ethics catastrophes.
On closer inspection, the vast majority of fires are preventable. They are essentially “rework” — the added effort and cost required because something was not done right the first time. Unfortunately, firms can get stuck in a vicious cycle of rework, shortcuts, and more rework. I once worked with a workers compensation firm that discovered they could cut costly disputes and attorney involvement by contacting injured workers within 24 hours. Still, new claims would languish for a full five to seven days, because employees were dealing with all the prior claims that had gone to court. Unfortunately, this meant 80 percent of those new claims would also involve attorneys and disputes. In aggregate, rework costs can be huge. The Juran Institute estimated in 2010 that 15 to 20 percent of revenues for manufacturing companies went to rework; for service businesses, it estimated 30 to 35 percent.
How did we get to this point, where firefighting is standard operating procedure? And how do we get out? Thirty years ago, the godfather of quality, W. Edwards Deming, addressed a similar situation with his book, Out of the Crisis (MIT, 1982). Japan had begun making products with high conformance quality at lower cost than poorer quality products made elsewhere. Many U.S. executives assumed Japanese exporters must be dumping products at a loss, and responded with price wars, cost cutting, and blame for American workers. In his book, Deming focused on how leaders could shift their organizations from a short-term focus on manipulating numbers to more ongoing, sustained success. Although his work is generally applied to manufacturing or routine services, many of Deming’s “14 points for management” can be adapted to help managers in knowledge-driven, professional businesses to dig their teams out of constant crisis. Here are just a few:
“Create constancy of purpose.” Without a sense of the bigger picture — what you are trying to accomplish and why it matters — people naturally default to fixing problems. Unfortunately, this approach never creates the level of delight or innovation that wins you customers for life. Deming encouraged managers to focus explicitly on a mission and longer-term goals to counter-balance the pull of immediate issues. This means defining clearly what you are promising to your customers, so employees know what they should strive to deliver. Even in highly dynamic environments, such a meaningful mission can provide constancy while tactics and strategies shift.
“Cease dependence on inspection to achieve quality.” Most leaders these days strive to hire talented people and let them find their own way to a goal. Then, confronted with haphazard approaches, poor coordination, and embarrassing snafus, leaders gradually end up adding checkpoints, approvals, and red tape. Neither extreme is ideal. Deming’s approach to processes focused on building quality in from the start — reducing reliance on inspection and even individual performance reviews. Even for highly professional work, developing a few simple, repeatable processes for doing things right the first time can drastically increase your quality output.
“Institute leadership.” Once your team knows the goal and invests in repeatable processes, the next challenge is to avoid management “tampering.” Managers naturally want to act swiftly to address breakdowns — changing personnel, adding checkpoints, or escalating issues. Yet, as Deming put it in Out of the Crisis, “No amount of skill or pride in workmanship can overcome fundamental faults in the system.” Poorly thought-out quick fixes consume staff time, leaving them less time for the core work and, often, confused about expectations. Instead, Deming insisted that managers develop “profound knowledge” of their work processes and the root causes of any issues before making any changes.
“Drive out fear.” Deming highlighted the reactive behavior caused by a culture of fear. People generate fewer creative solutions and are more likely to gravitate to the familiar, cut corners, or hide data. These days, reactivity can also be caused by adrenalin, the thrill of the deadline. This can create an addiction to excitement and a focus on finding fires to fight — especially if the people who do so are rewarded by management. To help your organization sustain focus and build for the long term, Deming advised, “The leader, instead of being a judge, will be a colleague, counseling and leading his people on a day-to-day basis, learning from them and with them.”
Running a business through constant firefighting puts companies and leaders at risk.
Yes, some fires are urgent. But if you can take the time to provide clear direction; design simple, empowering processes; pause to get data before initiating change; and learn from teams who deliver without heroics, you will find your employees feel even more motivated and engaged. The workers compensation company I mentioned above? A year later, they had cut attorney involvement from 80 percent to 20 percent. A number of factors contributed, but one key was to reserve two hours a day for employees to contact each newly injured worker. No new technology, no new superstar employees — just a commitment. This mobilized a virtuous cycle of higher quality, a better brand, less stress, and lower costs: the sort of surprises leaders everywhere would welcome.