Freedom, Inc_ - Brian M. Carney [61]
“The third and last illness is poor product quality. And I have no cure for it. But it’s you workers who can do everything. We in the offices, what we can do is to listen to you and try to help you. But note: It’s you and only you with your equipment who can do everything.” Zobrist concluded, “I’ve been watching you working for almost one year. Your mastery has convinced me that you hold in your hands the solutions to our problems.” Zobrist then left as abruptly as he had arrived.
He was addressing FAVI’s frontline people and using a powerful metaphor to convey a vision of the company he wanted to build, but he knew that much of what he said was a direct threat to his “how” managers. Although his ideas would likely occupy the minds of frontline people, the time had come to deal with the managerial rocks. Later he recounted that he felt as if he had just jumped with a parachute—a sensation he knew well—because of the irreversibility of the measures he took and the tension of nine months of “flowing around and under” the company’s managerial practices.
NOT DELEGATION, BUT BACKWARD DELEGATION
Zobrist called his first-ever official managers’ meeting and used it to announce that the traditional managerial role of telling people how to work, controlling, rewarding, and sanctioning was over. From now on, managers would facilitate, guide, and help others to measure their own results. He also announced that his first managers’ meeting would be his last.
In place of the middle-management layer, he broke up the plant into some twenty self-directed, single-product, client-focused “miniplants,” each of which was responsible for every aspect of its own business, from hiring and training to purchasing, budgeting, and, of course, production. Having done that, he abolished the human resources and legal departments, too. He left one person in place in IT. That done, he ditched FAVI’s traditional budget process and controls. In their place, he instituted a single annual meeting between the leaders of all the mini-plants. There, they would agree to a business plan for the coming year. As in Gore’s 150-person plants, the duplication of support activities—since each unit had its own—was wasteful only on the surface. In reality, once the hidden costs of the centralized bureaucratic processes are taken into account, moving the support activities to the frontline led to dramatic increases in efficiency and, therefore, to cost savings.
By making each mini-plant responsible for its own costs, Zobrist reversed the traditional bureaucratic incentives. In a traditional firm, all departments—especially “support” departments that are cost centers, not profit makers—strive, first, to maximize their share of the budgetary pie. Then they make sure they spend it all before the year is out—so they don’t see their budgets cut the following year. Under Zobrist’s new organization, each mini-plant was judged by its results, as if it were a stand-alone business. And because most of the support functions had been pared back or integrated into the miniplants themselves, the plant leaders’ incentive was not to maximize resource extraction from the company, but to show the best results for their unit at the end of the year.
Three further principles guided Zobrist as he liberated this traditional, bureaucratic “how” manufacturer. The first was “backward