Conference 7.286::digital

                  I N T E R O F F I C E   M E M O R A N D U M

                                   Date:         07-Aug-1992 10:34
                                   From:         Bob Paulson @HAO
                                                 ROBERT PAULSON
                                   Dept:         EIS Consulting
                                   Tel No:       863-5207 (49-511-678-5207)

TO:  Remote Addressee                     ( Ideas Central @OGO )


Subject: Suggestion for self-managed teams

After receiving a training flyer for "Self Managed Teams" from 
Learning Services recently, I did some thinking about how this could 
really work (but not having taken the training yet of course).  In 
implementing this approach, I would also suggest concentrating on 
things like the following:

      - self-managed profit and loss: if all of us in our local 
        account team had real and full responsibility for our 
        accounts' NOR/profit and our salaries depended on it, we 
        could decide for ourselves whether this meeting or training 
        was really necessary, its cost vs. return on investment, 
        even decide to invest in a PC because it was seen to 
        directly benefit the business.  We should also be able to 
        manage our expenses budget and for example getting test 
        equipment quickly to customers in the same way - it directly  
        affects our profit, just like in a real business.  Being 
        flexible and efficient requires local responsibility, rather 
        than having to go through countless internal approval 
        battles.
      
Some may say that this is exactly what we are supposed to be doing 
with the new organization.  However, my observation so far, which is 
from the vantage point of an account consultant in a field sales 
office, is that the much touted "3 x 3 Organization" seems, to 
people here, to only apply to "Entrepreneur", Account Manager and 
above.  At the sales representative level, there is total chaos - 
many people still don't know what their jobs are, they get traded 
around like houses on a monopoly board regardless of skills.

The previous job of "account responsible" seems to have disappeared.  
A person I know who has done this job well, a Sales Rep II, but in 
reality an account manager looking after the total big picture, has 
been told "you are now a 'solution seller', account managers must be 
Sales Executive or above" - which now are often in a remote location 
from the customer!  There seem to be many more rules imposed from 
above this year, without thinking about how this affects our 
customers or even discussing the ideas first with local field people 
or customers, to really find out what's needed.  I question, in 
these trying times, whether we can really afford to not involve the 
intelligence of every single person in the organisation, including 
giving real responsibility to the local people in the field - which 
involves trusting the employees.

Speaking of which: I also attach a translation (which I did on my 
own time) of an article from the German "manager magazin", which I 
found both interesting and applicable; the author is a professor of 
management at the University of Mainz.  The main point of his 
article was that one should not just concentrate on "lean 
production" (in the manufacturing sector), but also on making the 
productivity of office and knowledge workers more efficient.  I have 
included the article in its entirety and leave it to the reader to 
decide which parts could be applicable to us.

                               Lean Times
                                    
                by Hermann Simon, manager magazin 7/1992
                                    
(translated from the German by Bob Paulson, distributed with the 
kind permission of manager magazin and Professor Simon, for internal 
use only)

     "Lean Production" is a popular buzz word these days.  Everyone 
is looking at the automobile industry in the hope of learning 
something about increasing productivity from their experiences.  
That's all well and good; however, just focusing on production 
itself distracts from the real productivity reserves.

     The biggest challenge for management is not how to make the 
process of manufacturing more efficient, but rather getting a handle 
on the productivity problems of the knowledge and office workers - 
including the managers themselves.  This item will be number one on 
management's agenda in the future.

     In the manufacturing sector, productivity has increased on the 
average by about three percent per year over the last 120 years, or 
roughly fifty-fold in total.  This trend will and must continue.  
However, this will only have a limited effect on the total 
production capability of our economy and its enterprises.  Why?  
Because only relatively few people are actually working on the 
factory floor.

     According to statistics, manufacturing industries contribute 
about 40 percent to our gross national product. But even in these 
industries today, there are more people involved in services than in 
production. For example, at BASF only one quarter of the employees 
are working in production. And according to a study of the German 
Economics Institute, only about 19 percent of employees are directly 
involved in the manufacturing process itself.  More than 80 percent 
are knowledge, office, service and management employees.  This is 
where the real productivity reserves lie.  Whoever utilizes these 
resources to the fullest will be at the head of the pack. This can 
become our secret weapon in competing with the Japanese.

     In order to get to lean management, many sacred cows will have 
to be done away with. The roles and image of the manager will have 
to change radically. The age of management feudalism will have to 
come to an end.

Increase the Span of Leadership

     Let's begin with a simple arithmetic example.  Suppose Company 
A employs 10,000 employees at the lowest operational level.  With 
today's typical span of control of six  (each manager is responsible 
for roughly five employees), this company has 2000 managers, for a 
total of 12,000 employees.  Now if we increase our span of control - 
or better the span of leadership - to 10, we reduce the number of 
management by 1111 to 889.  If the average manager costs Company A 
150,000 DM, we will save just from this measure alone 133,3 Million 
DM.  With a revenue per employee of 200,000 DM, the profit before 
tax increases by an unbelievable 5.55 percent.

     Further supposing that we were also able to reduce these 
first-level employees by ten percent while increasing the span of 
leadership as above, we have reduced the total number of employees 
by 16.7 percent and the number of management by 50 percent - even 
more unbelievable. In view of the personnel reserves in many typical 
enterprises today, I see this example as an absolutely realistic 
scenario.  And lately there is an increasing number of real examples 
that this scenario works.  Also, with this purely quantitative 
analysis, we have not considered the qualitative natural selection 
effects which come with every reducing diet.

     We can make a corresponding example in the other direction: 
with 2000 managers, how many additional people could we employ?  By 
increasing the span of leadership from six to 10, we arrive at 
18,000 instead of the original 10,000.

Delegate Responsibility

     However, such restructuring requires drastic changes in mindset 
and behavior. The most radical of these is the delegation of 
responsibility to those "below", one of the main supporting columns 
of "Lean Production". Spans of leadership in this range only work 
when there is management-by-trust, and when all the intelligence and 
responsibility of every last employee is utilized to the fullest.

     Konosuke Matsushita comes to the heart of the matter:  "We will 
win, and the industrial West will lose.  There's not much that you 
in the West can do about it, because the cause of your downfall lies 
with yourselves. Your firms are based on the Taylor Model, your 
complete way of thinking is Tayloristic.  In your system the bosses 
think and the workers just carry out their orders. You are deeply 
convinced that this is the best way to manage. We have long since 
gotten over the Taylor Model.  The competitive scene today is so 
difficult and complex, the survival of a firm so constantly in 
danger, the surrounding circumstances so unpredictable, competitive 
and risky, that achieving enduring success requires the continuous 
mobilization of the total intelligence of every single employee in 
the company."

     Just think about this for a moment. Then reflect on the 
consequences.  Speed is of the essence, as the necessary changes in 
the behavior of you, your management and your fellow employees will 
require a lot of time.

     Of course, lean management also requires control. But this 
control filters down to each employee and their units or groups.  
The effectiveness of group control is very high.  Hewlett-Packard 
has never needed time cards to control their employees. And we in 
research know that group standards are much more effective than 
management standards.  The latter only provoke workarounds and are 
usually not accepted by employees.

Down with Management Feudalism

     A reducing diet also brings other consequences to the life of  
management: over-dimensioned administrative overhead has lead to 
Arabesque and Baroque personnel complements.  Parkinson was right.

     Let's start with the secretary - an absolutely required status 
symbol of every real manager. According to a study, secretaries were 
seen by 91.6 percent as necessary, and not only as a typist, but 
also as organizational and allround help. But how much work does the 
typical manager give to his secretary?  Does he produce so much 
paper?  Does he make so many appointments?  Does he drink so much 
coffee?

     I maintain that a large part of the secretarial capacity is 
unused.  A good secretary can handle two to three normal managers 
with no problems.  The same goes for many assistants and staff, as 
well as headquarters personnel.

     With a reducing diet, a large amount of today's workload would 
also disappear in a puff of smoke, and the loads of the people 
performing this work would be lightened.  The divisions of a firm 
which has a 2000-person headquarters told us that they would have a 
lot less work if their headquarters only had 100 people.  I am 
convinced that companies with a smaller central headquarters are 
more well-managed and well-led than those with a large HQ staff.

     Personal assistants, personal chauffeurs, executive dining 
rooms - all these feudalistic trappings should be closely examined.  
100 years ago it was unthinkable for an upper-class family to exist 
without a large staff of servants.  Who can afford and/or justify 
servants today? You can just as much afford corporate feudalism 
today.

     Your competition is already lean.  In a firm I know which 
employees 3500 people and has outlasted 10 competitors, the three 
managing directors sit in one office and share one secretary. 
Everyone knows and is informed about everything, paper is mostly 
superfluous. As one of them let me out of their factory one evening, 
he was alone, locked the factory door himself and drove home alone 
in his own car.  In a similar situation in another company, there 
were five people unproductively standing around waiting for us to 
finish: one waiter and security person on the upper-management 
floor, a secretary, a security officer at the main entrance, and a 
chauffeur.

     Along with all this, external appearances will change as well. 
A short while ago I visited an 1100-person factory, and the floor 
manager was wearing the same uniform as the workers.  The 
productivity was world-class.  Offices, jobs and the image of the 
manager were radically different.  The alternative is clear: just a 
few more years with feudalism, or lean survival for the long-term.

    Great article!  Maybe someone listened to you?  It appears that all the
    worker bees are being elimnated, making us lean.  Next, with less
    worker bees, we need less drones; more lean. Finally, there will be too
    many queens too handle the hive and the battle of the fittest takes
    place makest us a lean, mean fighting machine.  (I use 'us' loosely as
    it may not include me).  After all, we are eliminating all the extra
    "fluff stuff" that the "Old DEC" was centered around.
    
    In a world of automation and less manufacturing requirements, I can
    only envision much smaller companies, DEC included.  The next wave of
    entrepreneurs will be the service companies; after all, they are
    already springing up everywhere.
    
    The smaller the company, the less overhead involved, the more
    profitable it becomes.
    
    And, I agree, all avenues of the business should be known by all
    employees; all employees should be included (empowered, if you will) to
    be involved in  the decision making process.  The Saturn manufacturers
    work that way and they seem to be doing pretty good.
    
    I think someone listened as well as finding someone with new vision to
    take the blinders off the company.
    
    Reg.

    worker bees run the show. They push and starve the drones out.
    They make new queens.  And force her to leave with them when
    they TAKE all the honey they can carry.  Workers feed the queen
    and force her to lay eggs she can do nothing unless they let her.
    
    
    but that system has been around and tested for a few more years
    than DEC ( or even man ).  
    
    Buzz

    re .4
    
    Biologically, that doesn't happen, even though the myth is nice.
    
    Queen bees respond to chemicals that the community puts out.  Under
    some conditions the queen lays eggs that are destined to become queens. 
    Two queens are too many, and one of them gathers part of the hive and
    leaves to start another hive.
    
    Sorry to burst your bubble,
    
    Dick

re .5:

His name's Buzz, and *you're* telling *him* about bees?

    touch�!
    

     re .3 etc.

     Maybe you can see it when *you* look around, but from here I
     don't see anything along those lines yet (but then I've always
     been impatient).  I didn't agree with everything in the article
     myself - as far as applying to Digital - one of the first
     groups of people to go out here were from the unit secretaries
     (the head count mentality), who were doing lots of work for
     lots of people.  And now a lot of work just doesn't get done. 
     But I guess the author was really talking about private
     secretaries for upper management and status symbols.

     I find that a lot of customers are still investing - sometimes
     I think that orders are lying around in the street waiting to
     be picked up, but we just can't respond fast enough when the
     organizational structure changes all the time - the informal
     people network you set up last year gets the rug pulled out
     from under it, etc.  HP can get a workstation to a customer for
     a test almost immediately (which may be the start of something
     big), we have to make phone call after phone call, find out
     who's looking after it this week, try to convince people, argue
     about who's paying for it, why, how long, etc. etc.

     From out here the company looks a lot like a civil service
     bureaucracy - lots of inflexible rules, everybody in the field
     as assumed to be at the same level - namely dumb, and they want
     to steal the company blind (IMHO).  The only difference is that
     a civil service agency gets its customers automatically :-)

     Just me flaming again.

    I guess the point I was attempting to make is that someone is making
    DEC a lean machine. How? the best way they could come up with: 1)
    layoff all underlings considered excess due to project cuts and reorgs,
    2) cancel all "Old DEC" fluff stuff  3) find out how many people will
    leave due to DEC's culture changes 4) find out how many managers per
    employees we have  5) reorg and increase manager to employee ration and
    layoff all excess management  6) find out how much overhead is left
    after all the #1 layoffs and restructuring and 7) layoff redundant
    VP's, etc.
    
    I think we've been experiencing 1+2 for the last couple of years with a
    little bit of 3 thrown in; in essence: we've been weened (sp). 3 thru 7
    will happen fast and furious, kind of like being thrust into potty
    training and taken off the bottle at the same time as well as being
    made to get dressed by yourself.  We are ready to experience this
    "transition", how many will remain?
    
    Reg.

    re: .8
    
    The current corp. climate reminds me very much of my 7.5yrs in the
    military, with two very important differences: 1) Every organization
    had an I.G. (INspector General) function, not to be confused with an
    "open door" policy, and 2) people could at least contact a state
    senator or the equivalent.  This maintained some minor degree of checks
    and balances in the beauracracy(sp?) that Digital doesn't have.  Other
    than that, we are the same walking contradiction that the government/
    military is/was.  We are dealing in $2000 hammers and toilet seats,
    while our customer base is shifting to Home Quarters and Sam's discount
    club.  And the cost of the hammers/toilet seats can't be explained by
    anyone, can't be fixed by anyone, so let's reduce headcount.
    
    Not one of my better days,
    
    Jim

     re .9

     But get lean and mean to do what?  What's the overall plan, or
     do we just get leaner and see what happens, and depending on
     the skills of whoever's left do that? (last one out please turn
     off the lights :-)

     We could become another Intel, sell software, advise customers
     on finding the right technology solution for their business,
     target for OEMs, end users, etc. etc.  We have damn good people
     in each of those and other areas, and when things settle down
     again, will we be able to do all of them half as well, or just
     a few of them real well, or what?  It would be good to know now
     in what direction we are going and concentrate on that and do
     it well, because I don't think we'll be able to continue trying
     to do all the things we have been doing much longer.

     At the moment it seems to me that too many are running around
     like chickens with their heads cut off.  And (here I go again
     with my field soapbox) too many things are being done
     half-heartedly with no focus, just going through the motions. 
     In spite of all this chaos, I think we urgently need to get the
     *basics* right - being able to make a sale, be flexible in
     understanding and orienting toward the customer's needs and
     delivering on time, instead of still having internal systems
     and rules which (arrogantly) assume a seller's market instead
     of the buyer's market we have now.  We still get statements
     from HQ like "if the customer doesn't like our new
     non-discountable "street prices", then cancel their contract"
     (which took a year of hard legal negotiations to set up in
     order to have a framework to do corporate-wide business with
     them at all).  I think the time has passed where we can pick
     the customers we want and stay in business.

     Just one example of many...

     - Bob

     re .10

     hmmm, never had the pleasure to serve in the military, but
     recently talked to someone who was involved with the British
     army, who said that in times of *crisis*, the main things the
     officers at all levels were concerned with were that the troops
     had what they needed to do their job well, and that their
     infrastructure worked, that their cares were looked after etc. 
     Because in a crisis situation the last thing they knew they
     needed were de-motivated troops on the front lines.

    The coming on the lean is happening and in doing so we're getting mean 
    (in our attitudes and dispositions 8^) ), but I don't know what
    direction we're heading in.  I could prothetize and speak my own
    personal opinion, but I'd be really uncomfortable having those words
    emblazened on me. 
    
    I guess we'll find out Sept 30th when BP gives us our new direction and
    morale uplifting speech.
    
    Reg.

    
    The analogy of the military is a good one because it points out most
    distinctly the importance of quality control in management as much as
    quality control in product.  I don't think anyone can dispute that the
    military cultivates its leaders; raising them up through the ranks to
    positions of command.  You're not likely to have field grade commanders
    who recently job-hopped from merchandising at Kmart because this new
    management position would look good on a resume.
    
    Management at any level in a company which is in decline is grievously
    challenged.  Ours got detached somehow from its purpose and roots.
    Hopefully we'll hear some more about quality management this week.