Why Your Company Could be Next to Melt Down: Visibility
What happened to the auto and banking industries may happen to service industries next. Without visibility to crucial data, CEOs of the world's largest companies run houses of cards, built on risk, says Lombardi Software President Phil Gilbert. But the solution, he argues, is not bailouts.
Tue, January 13, 2009
CIO — While many people see a bailout as the only solution to solve the liquidity crisis for the automotive Big 3, others believe the real problems rest deep within the white collar ranks, where a lack of visibility across company operations has created enormous inefficiencies and risks. Phil Gilbert, president of business process management firm Lombardi Software, is known as an efficiency expert sought by CEOs, CFOs and CIOs to help cut fat, at companies including Ford, Honda, AFLAC and Hasbro. In this opinion piece, Gilbert argues that the real problem facing the automotive industry has more to do with the lack of visibility and process efficiencies across all parts of the company, and less to do with runaway salaries and lack of technology innovation.
Blue collar workers aren't killing Detroit, white collar workers are. And since the entire service economy is built on white collar work, what happened in Detroit over the past thirty years and happened to banks in the last 10, will happen to everything else in the next three.
In fact, everything in the American economy is driven by service economy workers ("white collar workers"). But the model upon which this economy is built is broken. It is based on the unscalable heroics of artisan workers, who largely work outside the limelight. In the worst cases, they work outside any light at all. To prevent another industry meltdown, business leaders need a set of white-collar principles based on the bedrock of visibility.
While Congress debated over a historic bailout of the Big 3 car manufacturers everyone became an expert on what needs to change. According to one opinion in the Wall Street Journal the problems start with the big, bad unions and stop only if you can "gut" them. According to the Beltway folks, we're in this mess because the car manufacturers didn't produce enough hybrids or, in the vernacular, they "didn't build the cars America wanted."
Neither is right.
One of the three (Ford) is in demonstrably better shape than the other two, and it's no mystery why. Two years ago, when he took the reins of Ford, Alan Mulally identified two things that needed to change: parts costs have to go down, and engineering productivity must go up.
Get it? The white collar workers who design the cars have to move from artisan to engineer, and they need to work together across all the company's platforms to use common parts.
While cutting healthcare benefits and union concessions might help conserve another month or two of cash, neither would address the causal differences between old school manufacturers and those from a new school focused on white collar efficiency and cross-process visibility.
