Charlie and the Management Factory

What the Ooompa-Loompas can teach us

Published: Wednesday, August 10, 2011 - 11:56

Charlie Bucket and his adventures in a chocolate factory may be fantasy, but anyone watching realizes that the Oompa-Loompas provide most of the innovation and work at the factory. Yet in today’s service companies, the emphasis is less on the Oompa-Loompas and more on the Willy Wonkas.

Manufacturing has it easy. Identifying waste could be measured in the amount of rework done and scrap accumulated. We used to call this the “hidden factory.” There are two factories at work—one that produces good products, and the “hidden factory” that produces the waste.

Service industry has different issues. Waste can’t be seen. John Seddon came up with “failure demand” (i.e., demand caused by a failure to do something or do something right for a customer) to help us measure waste in service. Yet this waste is almost wholly achieved from a different kind of factory—one that my company refers to as a “management factory.” It’s a factory created to control the organization.

There are three groups of people in a service organization:
1. Those that create value
2. Those that add value by enabling those that create value
3. Those that do neither

Management can’t create value. In service organizations, that work is reserved for those who actually interact with customers and do the work. As many times as I visit Disney World, I could care less about its CEO, Robert Iger. I do care about the cast members that make my stay very enjoyable. However, Iger can add value to those who create value by doing the right things. This usually proves difficult for the management factory.

The management factory creates waste and also is responsible for the majority of the causes and manifestations of costs. In service, the management factory produces reports, data, audit, policies, rules, and much more work that the customer doesn’t value. Customers only care about what they value, and they don’t care about many of the items that the management factory holds dear. Things like:
• Functionally separating the work
• Outsourcing
• Shared services
• Inspections and audits
• Contracts, financial statements concerning what customers value
• Placing more importance on supporting services (e.g., HR, finance, auditing) than those that create value for customers
• Technology

We’ve all seen it: management-inspired projects to enable workers, although these projects are never asked for by the worker. The most nefarious is the management factory and its infatuation with technology. This is almost always a product of the management factory and its cohorts, the technology vendors. “More technology, fewer people.” Technology is like gum to Violet Beauregarde, food to Augustus Gloop, material possessions to Veruca Salt, and television to Mike Teavee. The result is more people needed for the management factory to deal with projects, fallout, reports, and auditing. The bottom line from that, of course, is more costs.

In service, the management factory can be helpful if it has the right focus, but it is important to remember that the only people who can create value are those on the front line interacting with customers. The problem with the management factory is that it spends much of its time disabling or entrapping the worker with assumptions about how to add value. Important decisions are made by the management factory, given lots of data, meetings, and input, but no knowledge is ever produced. Knowledge is derived from the work and interaction between the customer and the Oompa-Loompas.

In Willy Wonka’s search for a successor, it’s the Oompa-Loompas who help weed out candidates with shortcomings. Unfortunately, for those of us stuck in the real world, decisions are made by the management factory that creates shortcomings. A bit more of the Oompa-Loompa mindset might be the cocoa beans in the chocolate.

About The Author

Tripp Babbitt

Tripp Babbitt the managing partner for The 95 Method - Executive Education and Advisors. The 95 Method is about giving organizations a method to use new theories to grow business.  Babbitt can be reached at tripp@the95method.com. Reach him on LinkedIn at www.linkedin.com/in/trippbabbitt

Tripp also has a podcast and YouTube channel called, The Effective Executive.