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Craig Cochran

Quality Insider

A Quality Lesson from Hopeulikit

Don’t fail to strategize

Published: Monday, May 14, 2007 - 22:00

Last year, I had the good fortune of doing some consulting with B&C Specialty Products in Hopeulikit, Georgia. B&C does light manufacturing, primarily plastic molding and assembly, and they also distribute imported products produced by companies in the Far East. They have about 150 employees and are the biggest employer by far in Hopeulikit.

B&C was a perfect place to learn about managing and quality. Every day presented a new lesson. Usually the lessons were hard-learned, and those are the ones that really stick with you. B&C was gracious enough to allow me to interview their personnel about things that came up during my time there. Here is an interesting lesson: Don’t fail to strategize. The scenario is described by the people who actually lived it.

—J. T. Ryan, president

“Strategy is one of those concepts that looks great on paper. It makes perfect sense when you’re sitting in an ivory tower on a college campus, thumbing through textbooks. Build on your strengths, address your threats, plan for the future. The problem is that a strategy has more assumptions than a beach has grains of sand. It’s crystal ball gazing, at best. If you’re very lucky, the assumptions you make in your strategy will 30-percent correct. Ten-percent correct is probably closer to reality.

“If strategies were particularly successful, then other forms of speculation would also be successful. We’d all be making millions in the stock market and at the race track. Strategy is no different than those things: It’s a gamble that you’re going to guess right. The bottom line is that when real business begins, the strategy flies out the window. You manage on the fly, dealing with threats and opportunities in real time as they appear.

“I could write our strategy on a cocktail napkin. You want to hear it? Our strategy is to make money by improving quality and keeping our costs down. That’s been my strategy from day one. When I walk in here every morning, that plan is what I’m thinking about. Everybody has heard me say those same three words: Profit, quality and cost. Every decision I make is based on those three goals. We’ve got to be able to quickly analyze data and make decisions. Being flexible and nimble is our biggest advantage. Having a formal strategy might trick us into thinking that we’ve planned for every contingency and don’t have to be flexible.

“Here’s an example. An old friend of mine ran a manufacturing company in Atlanta. His competitors slashed their prices, and it affected his sales. I asked my friend, ‘What are you going to do about it?’ His response was that the strategic plan addressed that contingency. Sure, the magical strategic plan that takes care of everything. You know where my friend’s company is now? It’s out of business. The strategic plan lulled them into complacency. What they needed was analysis and fast action. Throw the crystal ball in the garbage and give me the numbers. That’s my motto.”

—Dr. Armand Barnyard, director of operations

“J.T. is our C.F.F.O., chief fire-fighting officer. The man loves putting out fires. He thrives on the excitement of facing urgent challenges. For J.T., business is all about reacting to threat and opportunities in real time, as they appear on the horizon. The operative word is ‘reacting.’ Everything we do is reactive. A customer, competitor or supplier does something, and we react to it. We’re at a point now in our business where we need to be less reactive and more proactive. In other words, don’t wait for someone else to make the first move. We need to decide where we’re going and take deliberate steps to go in that direction.

“I think J.T. is biased against strategy in part because it has an academic flavor. It sounds like something you might learn about during an MBA program, which naturally turns a guy like J.T off. I’m trying to get him to understand that strategy is nothing more than planning. Instead of reacting to what everybody else does, we’ll make the first move and let others react. That’s what leaders do: Make the first move. If we’re serious about being the No. 1 company in our industry, then we’ve got to start doing this.

“Another problem J.T. has with strategy is that he believes it’s an attempt to predict the future. Yes, that’s basically what it is. As with any prediction, you’re going to be wrong a lot of the time. Even if we’re only 10-percent right, that’s 10-percent better than we’re doing now. Our current approach is to not even try. We need to take a crack at defining some actions based on what we think could happen in the future. If events go differently than we expect, then we can always shift gears and react to changes. That’s an important point: Strategy and the ability to react are not mutually exclusive. They go hand-in-hand. J.T. seems to think that having a strategy might slow us down or keep us from making decisions quickly. The only thing it might do is prevent us from needing to make so many decision quickly.

—Dennis “Cowboy” Kelly, finishing department supervisor

“We could really benefit from some direction around here. I asked J.T. what our strategy was and he said, ‘Make money, improve quality and keep costs down.’ That’s a slogan, not a strategy. We need to chart a clear course and tell everyone what that course is. I’m not a business expert or anything, but it seems like running a business without a strategy would be like sailing a boat without a rudder. You’re going to go wherever the tide carries you, not where you really wanted to go.

“You may be asking, ‘Why would a finishing supervisor care anything about strategy?’ After all, I’m not a member of top management by any stretch of the imagination. The reason I care is that our lack of a strategy affects me on a daily basis. Most of our machines in the finishing department are as old as dirt. J.T. bought them used when the business was started, over 25 years ago. God knows how old they were then, but they’re definitely ancient now. You can’t even get spare parts for these beasts. Our re-roll table is down right now. If we can’t get it fixed by tomorrow, we’ll have a bunch of late orders and some very angry customers.

“We need a clear plan for replacing each and every machine in the department. It’s not for our convenience or enjoyment, it’s so we can continue making products. J.T.’s approach to equipment problems is to call in favors, use lots of creativity and brute force, and pray for the impossible. That used to work when we had a dozen employees and two machines. Now it doesn’t. Call it strategy, planning or basic management, but we need to get ahead of the curve before it’s too late.”

—Leo Corley, president of Corley Corp. (B&C’s largest customer)

“Strategy? That’s a fancy word for a simple concept. We call it our Game Plan. Our key people get together for a day every year in November and decide what we’re going to do in the coming year. We divide our world into four basic categories: strengths, weaknesses, opportunities and threats. We’ll brainstorm what we believe to our prospects in each category. Who will be our strongest competitors? What will be our most promising new products? What will our customers really want? We’ll lay these out, prioritize them and then we’ll come up with specific actions to address each one. The actions will take advantage of the strengths and opportunities, and fight the threats and weaknesses. Each action has an owner, assigned resources, time frames and a measure of effectiveness. We make sure everyone understands what we agreed to and then we publish the strategy throughout the whole organization. Our strategy is common knowledge. The key measures that support the strategy are also common knowledge. You can ask anyone here about our strategy and key measures, and they’ll be able to tell you about them.

“B&C doesn’t have a strategy? You’re joking. That’s business 101, one of the most basic concepts imaginable. I can’t believe a smart guy like J.T. would consider managing without a strategy. They’re our biggest supplier, so their lack of planning will eventually affect us. I think I’ll offer to facilitate a strategic planning session for them. I’ll make it a condition of our next contract. That will get JT’s attention. After all, strategy is just basic planning. Without planning, success becomes a matter of dumb luck.

When you’re establishing your strategies, remember:

  • Strategy is nothing more than basic planning for the future. It’s essential to an organization’s long-term success.
  • Everyone in the company should understand the basic points of the strategy and objectives that support it. Most importantly, they should understand their role in helping to achieve the strategy and objectives.
  • Strategy is typically composed of identifying strengths, weaknesses, opportunities and threats related to the organization. Actions are then defined for building on the strengths and opportunities, and counteracting the weaknesses and threats.
  • There is no guarantee that the conditions identified in a strategy will come true. It’s the organization’s best prediction of the future, informed by data, analysis and experience. A partially accurate strategy beats no strategy at all.
  • The ability to interpret events and make quick decisions is a strength, but it’s not a substitute for planning. Ideally, an organization will develop a strategy and also be able to react quickly to unexpected developments.
  • The lack of a strategy affects everyone in the organization, its owners, its customers, its suppliers and the surrounding community. Failure to develop and fully deploy a strategy indicates profound negligence on the part of top management.

Discuss

About The Author

Craig Cochran’s picture

Craig Cochran

Craig Cochran is a project manager with Georgia Tech’s Enterprise Innovation Institute. Cochran is the author of The Seven Lessons: Management Tools for Success; Problem Solving in Plain English; ISO 9001 in Plain English; Customer Satisfaction: Tools, Techniques, and Formulas for Success; The Continual Improvement Process: From Strategy to the Bottom Line; and Becoming a Customer-Focused Organization, all available from Paton Professional. His most recent book is ISO 9001:2015 in Plain English, also available from Paton Professional.