Mike Collins, Author, Saving American Manufacturing
American Manufacturers cannot grow in the new economy simply by focusing on internal improvements. They are going to have to adapt their companies to the changing marketplace.
There are many new opportunities being created in this marketplace. There are new industries, niches and thousands of new applications that will emerge in the economy.
U.S. manufacturers are geographically closest to these customers and can seize the initiative by offering innovative products and services to take advantage of the new opportunities.
Most manufacturers are still organized as Defender organizations. Defender organizations are very good at internal process efficiencies such as cost reduction, quality and continuous improvement in all operational systems.
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They work well when there is little competition, demand is steady and they can focus on a handful of good customers. But the Defender model is not working very well today – except where a Defender can still dominate a market with little competition.
To survive and grow in today’s economy, manufacturers need to find new customers and markets (diversification), invent new products and services (innovation) for these customers and create new sales channels to reach them.
This is a huge paradigm shift because it reorients the manufacturer from an internal process supplier to an externally focused marketer
There are many trained and experienced executives who did well managing “Defender” type companies 10 years ago, but many of them are having trouble in leading their company through the battlefields of globalization. They seem to be frozen in the headlights and continue to rely on the skills and experiences that worked for them in the past.
Change of this magnitude will require a new type of organization – The Prospector organization – and a different kind of leader. The leader’s job is to first develop a new plan or vision and then develop a new structure that will foster change. Once this is done the leader needs to encourage change, communicate change and if necessary, force the change.
The question is what kind of leader can do this and how does he vary from the current leaders? More specifically, what kind of leader will it take to make the necessary changes and “Sell the Future” to employees?
We are now in a completely different era – one that is driven by customers and external forces. The problem is adapting the manufacturing company to the new marketplace and the changing demands of customers.
The research of Daniel Coleman in his book titled Emotional Intelligence, suggests that the best leaders to manage change in manufacturing companies in the future may be people who are comfortable with the challenges of people, the ambiguities of customers and the intangibles of business. This will require skills in understanding and managing people rather than processes.
The most successful leaders I have met in progressive manufacturing companies are people who have the skills to understand customers, communicate, motivate and persuade people to follow them. Here is a profile of the CEOs of progressive manufacturers that are growing and thriving in the new environment:
Innovation
Foreign manufacturers have big advantages over U.S. firms including lower labor costs and government subsidies. U.S. manufacturers cannot compete on price and must compete on the total value they bring to customers. To accomplish this they must be continuously more innovative then their competitors.
Manufacturers who are successful in doing this almost always have a leader who has the authority, vision and respect to lead the innovation and remove the roadblocks.
Innovation is not just about new products and new technologies. In our hyper competitive economy, I consider innovation as ongoing changes to products, services, processes and organization. It is all of the things that drive improvements to customer value and can give the company competitive advantage.
The progressive manufacturing companies I have interviewed who are good at innovation have an innovation champion in the top job — a person with enough authority and respect to remove roadblocks across the company and convince the risk adverse managers to take chances.
New Markets & Customers
Changing the organization to find new markets and customers requires a lot of knowledge and market experience. The best leaders to develop the out reach to new markets and opportunities are usually leaders who have had sales and marketing experience in their careers.
By sales experience, I mean leaders who are comfortable sitting in waiting rooms hat in hand calling on people they have never met and conducting good interviews. It is this kind of contact with customers that allows the leader to see first hand the customer’s problems and to hear what they need.
Having the sales experience is very helpful in determining what kind of sales organization or sales channels will be needed when the company wants to diversify into new markets and customers.
If, on the other hand, the leader is a “things person” rather then a “people person” this is not going to work. I don’t think that you can change managers who are intimidated by people or uncomfortable with sales situations to suddenly become market driven. They need to find someone who can do this function at a senior level.
Empathy
Leaders who have good empathy have the ability to understand the emotional makeup of other people, and skill in treating people according to their emotional reactions. In other words, they have the ability to read people and identify with their needs and problems.
Empathy is a necessary part of interviewing which every leader must do everyday. Empathy is important for building teams which are an essential part of the decentralized organization
Teams are always composed of people who have different agendas, emotions, needs and views, but they still have to work together and make consensus decisions. It is essential that the leader understand the emotional make-up of the people to achieve team goals.
Empathy is also necessary to retain the talented people I call Hunters. Hunters are the people who get things done and are very difficult to replace. Retaining “hunters” must be a high priority of the leader because it costs too much to replace them. It takes skills in coaching, mentoring and empathy to be able to retain hunters and get them to follow you.
Social Skills
This is about proficiency in managing relationships, building networks, and building rapport with people. Surviving in the new economy has more to do with people than with things.
A real partnership is one of the primary objectives of prospector companies in building strong relationships with customers that can achieve. The leader must be able to build networks with vendors and find common ground with a wide variety of people if he or she is to succeed. The necessary social skills may include persuasion, knowing how to make emotional pleas and how to use your persuasion abilities to influence other people.
Discussing empathy and social skills may sound like business psychiatry, but they are used as skill sets by the most successful of today’s business leaders. These new leaders have the special social skills that allow them to deal with customers, customer groups and employees, unions, vendors, governments, competitors and people problems in general. They have another dimension to them that is beyond the administrative, analytical and technical side of the business. They are the types of leaders who can manage a Prospector organization.
Motivation
There are many executives that are driven to succeed because of monetary rewards, status, or stock prices, but Coleman’s research shows that the best leaders are motivated by a “desire to achieve for the sake of achievement”. These people have a passion for new challenges and like work that is new and interesting and requires fast learning.
It is the motivated and self-confident leader who also sets the example for risk taking. Many SMMs (small and midsize manufacturers) are going to have to take more risks –not fewer- to survive in the new economy. You can’t issue proclamations about risk to the employees. Here, your work must match your talk. If you want employees to take risks the leader must set the example.
To change companies from Defender cultures to Prospector culture is not going to be easy. It will take a leader who takes risks and wants to make the changes that really make a difference. “Technical competence alone will be insufficient, as managers will also need credibility and personal standing. The ideal future manager will be prepared to take risks and to use his/her influence and interpersonal skills to convince, and motivate colleagues.”
American Manufacturers cannot grow in the new economy simply by focusing on internal improvements. They are going to have to adapt their companies to the changing marketplace, which means the leader is going to have to implement the changes necessary to Sell The Future. The skill sets described in this profile are those of many manufacturing leaders who are growing and thriving in the new economy.
Mike Collins is the author of Saving American Manufacturing. His website is www.mpcmgt.com