SOURCE: Kay Sever | February 29, 2020
There is a misunderstood mismatch between traditional management system design and optimization goals. Management systems have been around in some form for centuries. They were first designed to report actual performance. When budgets were later introduced, management systems were modified to drive performance to meet budget goals. Optimization is a relatively new concept in business and new equipment and systems are viewed as the keys to achieving it. There is little recognition that the management system was not designed to help management teams achieve optimization and its design weaknesses must be “upgraded” to match this new goal. Without these upgrades, management teams face challenges and invisible barriers they may not understand. The good news is that management has TOTAL CONTROL over removing them if they know what to look for and what action to take.
Barriers to optimization either HIDE performance/profit potential or DIVIDE people. These barriers change the way you think… the questions you ask, the problems you solve and the problems you ignore. They limit what you believe about what is possible to achieve and change. They prevent you from tapping into the best your people can deliver. They put a box around management responsibilities and make management teams believe that there are some problems that cannot be solved, especially when it comes to people and departments.
When HIDE and DIVIDE barriers to optimization exist, three things happen:
- The earnings potential of the organization will be hidden. Costs will be higher than they could be, production is likely to be lower than it could be, and revenue may be less than it could be. These shortfalls are not budget variances. Budgets are often built using actual trends. If historical actuals contain these hidden losses, the budget will contain them too, which means that these losses will REMAIN HIDDEN. Without knowing these losses, management CANNOT eliminate them, which means that they CANNOT achieve optimization.
- People will not know how to work together differently. Fully optimizing an organization demands that people share a single overarching goal of being the best. When people are divided by invisible organizational barriers make it hard for people to work together as one team. They may be unhappy, they don’t trust each other, they don’t have the information they need to do a “great” job, their hands are tied when it comes to fixing some problems, and departments work as a separate company. We call this kind of work environment a weak or reactive corporate culture. Management teams may blame the workforce for these problems, not knowing that management system weaknesses are contributing factors.
- Management teams make promises about performance, problems, and projects that they cannot keep. These promises are often linked to ROIs expected from large investments in new equipment and systems. Expectations from the Board of Directors are high because these investments were supposed to minimize or eliminate production problems like unplanned stockpiles, poor quality or higher costs. Managers may also promise completion dates for projects that are continuously pushed forward because people are not collaborating to achieve optimization. These broken promises hurt the credibility (and maybe even the careers) of entire management teams, who may be doing their very best to deliver what they promised, unaware that the system they work in is working against them.
To sum up, the secret to achieving “full” optimization is understanding and removing your hidden barriers. Management systems need to be strategically “upgraded” to facilitate management’s success in achieving their optimization goals. These upgrades can be grouped into HIDE and DIVIDE categories and should be part of the optimization master plan. Many of the upgrades can be made before the new equipment and systems go into production. Future articles in this series will go into more detail of HIDE and DIVIDE barriers that may be holding your company back.
Kay Sever is a leading expert in reducing financial losses caused by corporate cultures, optimization and change barriers. She has developed a management training system called MiningOpportunity which is based on her 20 years of experience working with mines and plants to reduce the losses they never measure… losses linked to corporate culture, hidden excess capacity and change barriers. MiningOpportunity modules teach executives and management teams how to find and quantify their losses and apply strategies and tactics that stop them. Unique insights from Kay’s 3-year study of management’s barriers to change and optimization are included in the content. See MiningOpportunity.com for her contact information and several training options for your team, including the NEW “Spend a Day with Kay” option.
To comment on this story or for additional details click on related button above.