A New Organizational Model Using Logic, Cost-Effectiveness and Customer Service, Part 2


Reading time ( words)

Words mean something, it seems, unless you are a politician.

No matter what your political views, it is hard to dispute that the recent U.S. election was unique and certainly not in a way that makes us want to stand up and cheer. Before the email deluge begins, let me make it clear that I’m talking about the election process.

Speaking truth to power has a romantic and compelling draw. However, this campaign was no Mr. Smith Goes to Washington. I have often counseled young engineers that being right on a technical point is not enough—that the package you put your information in is as important as the information itself. In team dynamics we call this aligning constituencies, and it is an important element in influencing other team members. It’s hard to gain the support of others after you’ve used your command voice—or worse, called them the devil’s spawn.

On the other hand, there is an attractive and refreshing quality to being direct when making a point, and calling one out when it is warranted—remember the child on the parade route screaming: the emperor has no clothes on! The art of rhetoric—persuading one to agree with your position on an issue—is walking the sometimes very fine line between the two approaches.

Production Volumes Take Off

Our corporate production organizations have been in place since Henry Ford created the assembly line in the early 20th century. Each line worker was given a small, repetitive task to perform in the overall assembly of an automobile. This reduced production costs and correspondingly, automobile prices. More and more of the population were able to afford this product. Production volumes skyrocketed. With the exploding volumes, more workers were needed. As the technology became more complex the workers developed areas of specialization. These workers had to be managed, so they were grouped in departments based on common skill sets and job responsibilities. A manager was assigned for each department in order to coordinate, assign and measure the activities of the group.

Management’s objective became one of maximizing the output and quality of the workers by controlling them—planning their work, reviewing their performance and keeping their nose to the grindstone. It was the Hamiltonian worldview that the workers (masses) were the beast and the beast must be controlled. See Fritz Lang’s Metropolis (1927), or on the lighter side Lucy and Ethel working on the chocolate assembly belt in the episode, Speed it Up!

So, we became chained to a production organizational model that was hierarchical and laden with supervisors whose goal was optimizing worker productivity.

There have always been areas of specialization such as wheelwrights, blacksmiths, plumbers and later soldering, welding, etc., but mass production for the first time brought many of these skills under one roof—working for one employer and grouped in departments.

Even before Henry Ford, in the 18th and 19th centuries, workers were employed in ever increasing capital-intensive industries such as textiles. Customer demand for these products caused workers to leave their cottage operations and join together in factories. Replacing water mills and other equipment with those that were steam-driven, permitted the factories to be located anywhere, not just near a source of running water.

It sounds counterintuitive, but in the early days of the new republic as this transition of the workforce took place, "[the] primary reason for the rapid industrialization of the United States was very high labor costs...American wages were high because employers had to compete [for employees] with the exceptional opportunities of self-employment in order to attract adequate numbers of qualified workers."

This competition in production still exists today. Because of the high levels of automation now required to deal with very small components in electronic products, companies that do their own product assembly have thought they could hire cheap labor to just push the buttons and let the machine do the hard stuff. Developing, programming and maintaining the automation was relegated to others with the necessary skill sets. This fit nicely in the hierarchy and organizational power pyramid.

However, now with sources of low labor rates that the global economy has ushered in, high production wages become a convenient excuse to offload the manufacturing and assembly of their products. Companies are finding that producing their products remotely to take advantage of these lower rates can have some serious drawbacks. To me there are only two reasons to produce your products remotely:

1. You want to sell them into that remote marketplace (a good reason)

2. You can’t compete with those remote sources of production (a bad reason)

In previous columns, we have talked extensively about the one of the controllable components of labor cost: the counterweight to competing against low labor rates—using automation to reduce labor content. Over the next few months we will drill down into the other controllable component of labor cost: indirect labor.

Why Do We Do Things This Way? Because We Always Have.

Does art imitate life or does life imitate art?

Is product production a result of our organizational structure, or is our organizational structure a result of the needs of product production?

It seems we have hierarchical, pyramid shaped organizational structures because they are rooted in the past, not because they are necessarily best. They certainly cost more than alternatives. If the traditional structure is not the closest to perfection, what alternative is?

Plato believed we are born out of perfection and true reality—the World of Ideas. As we begin our human existence, all we have is a quickly fading memory of that perfection. It’s as if we’re tied up in a cave, watching only shadows flit about on the wall in front of us, projected from the World of Ideas. The shadows. We mistake the shadows for reality. They ultimately become our reality.

Aristotle, Plato's student, believed we start with a tabula rasa, a blank slate. What we think and perceive become impressed on that slate (our mind) and we are quickly corrupted by the reality of our surroundings. Pick your philosopher.

So, many things have changed in our technological world. One thing that hasn’t changed is how we organize the personnel in high tech production operations. Our production reality is formed by centuries of doing things a certain way. Breaking this organizational paradigm is a daunting challenge.

The Greek theater was therapeutic for the people (polis). It permitted all the bad human impulses to be cathartically dealt with, and reinforced noble, virtuous behavior. Do we have a comparable, lesson-teaching method today? Most of the entertainment I see today has things blowing up or people rolling around together—art, I guess.

In Plato's world, juries were formed with an average of 501 members to ensure justice. Why? Because it is difficult to bribe that many people when conspiring to rig a jury verdict. Back then, if the Greek laurel wreath didn’t fit, you must acquit.

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