Chapter 8. Think Transformation, Not Just Improvement

With Larry Oglesby and Damian Morgan

You may recall the story from Chapter 1 about the hose-couplings company that achieved transformative levels of performance only when it improved process speed to the point at which it could offer breakthrough levels of service to its customers. Changes of that magnitude don't come about because of one successful improvement project, or even two or three dozen. It takes concerted effort across the enterprise, coordinated around strategic priorities. Here's another example of what goes into transformative change:

Several years ago, a consumer goods company found itself in a fierce battle to reduce costs. Across this particular industry, companies were rapidly moving facilities overseas to Mexico and China to reduce labor costs, in a desperate attempt to hang onto margins in a declining price environment. Most of the company's competitors were merely trading on labor price arbitrage, while this company was determined to transform its competitive position. Today, the company is the undisputed leader in its field and continues to quickly put distance between itself and the competition (Figure 8.1). In the end, the changes it made reduced labor by approximately 50 percent, reduced inventory by over 60 percent, and increased on time delivery by over 20 percent.

For this company, the "concerted effort" focused on three areas: (1) clarifying the vision and direction for the organization, (2) removing ...

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