Amazon and the endangered future of the middle manager

Amazon and the endangered future of the middle manager

Amazon and the endangered future of the middle manager, published Sun, Dec 15 20249:06 AM EST. By Trevor Laurence Jockims. Amazon CEO Andy Jassy speaks during a keynote address at AWS: Invent 2024, a conference hosted by Amazon Web Services. The Venetian Las Vegas on December 3, 2024, in Las Vegas, Nevada.

Amazon CEO Andy Jassy’s note sent this fall to employees about corporate culture drew headlines for his five-day-in-the-office mandate. But Jassy’s messaging on an increased ratio of individual contributors to managers raises a much bigger question about organizational structure: What is the right balance between individual workers and managers in overall headcount? It’s a question that corporations have long struggled to define with anything but anecdotal findings.

With companies now firmly in a post-Covid world, organizational experts say Amazon may be leading the way in a new look at efficiency gains related to corporate bloat, and especially middle management bloat.

“We have grown our teams quickly and substantially,” said an Amazon spokesperson, echoing the message in Jassy’s note: “When I think about my time at Amazon, I never imagined I’d be at the company for 27 years … Part of why I’ve stayed has been the unprecedented growth (we had $15M of annual revenue the year before I joined—this year should be well north of $600B).”

That growth, the spokesperson said, inevitably led to adding a lot of managers. Comparing Amazon’s plan to Meta’s recent year of efficiency, the spokesperson said the company ended up adding more layers than it had before due to its growth and now is the right time to bring the structure “closer to our customers” and reinforce Amazon’s “culture of ownership.”

Over the past few years, layoffs have been as prominent as hiring in the tech sector. In 2022-2023, the sector was in what could be called the years of the layoff. While that headcount continues, the Amazon thinking involves a broader rethink of how to right size the largest corporations.

Morgan Stanley analysts suggested that Amazon could cut as many as 14,000 management positions, with the corporate efficiencies accounting for $2 billion-$4 billion in savings. Morgan Stanley’s forecast was based on an assumption that Jassy made in the note that Amazon is targeting an increase in the ratio of individual contributors to managers “by at least 15% by the end of 1Q25, across all divisions.”

Jassy pointed to “artifacts” of headcount growth, such as the “pre-meetings for the pre-meetings for the decision meetings,” and has created a “Bureaucracy Mailbox” for employees to share processes that slow down decision-making and that he said, “crept in and we can root out.”

This is not a process that is unique to Amazon, said Joseph Roh, professor at the Neeley School of Business at Texas Christian University. Rapid growth can lead to the rapid addition of “management layers without reassessing whether these roles are necessary,” he said. In general, the flatter structure is in, and there is now greater emphasis on individual contributors across corporations. There is no exact formula, no “golden ratio” for contributor-to-manager. “My understanding is that the ideal ratio of individual contributors to managers depends largely on the nature of the work,” Roh said, but he added that it is generally in the neighborhood of 7 to 10 individual contributors per manager.

Investor and economic pressure play a role, and at a time when technology giants are spending billions on AI without being able to deliver to Wall Street immediate proof of the return on investment, a conscious effort to rein in other costs will be rewarded. And despite the fact that companies like Amazon want everyone back in the office, spit-balling ideas around the proverbial whiteboard or watercooler, there is a sense that AI already may be playing a role in a more direct way, with some middle management positions redundant.

“Digital transformation plays a significant role,” Roh said, “as automation and advanced technologies reduce the need for middle managers to oversee tasks that can now be monitored by software.” 

‘What you saw from Amazon is just the beginning’

“What you saw from Amazon is just the beginning,” said Naeem Zafar, a professor at UC Berkeley Haas School of Business and Northeastern University, with the downsizing of the managerial layer a larger trend set to play out across corporate America. Technology companies that have dominated the economy and grown rapidly are leading the way, preaching the return to an approach of being nimble and innovative, but Zafar said there are also cultural factors at work. “The new generation of employees are different and work differently,” he said, citing growing use of communication tools and a general work culture ethos that privileges freedom and balks at micro-management.

According to Roh, organizations are adapting to the preferences of a younger workforce that “values less hierarchy and more autonomy in their roles.”

Zafar said the rise of AI alongside a new generation of workers reinforces this evolving view of managers. “Amazon’s slashing of manager roles isn’t just about cost-cutting; it’s a glimpse into the future of work. Technology is eating away at the traditional corporate ladder, and middle management is feeling the bite,” Zafar said.

For decades, managers have been seen as “the glue holding companies together” and a key to translating strategy into action. But today, Zafar said, “AI-powered tools can analyze data, assign tasks, and track performance with unprecedented efficiency.” That makes it inevitable that the question will arise, “Why pay for a middleman when a machine can do it better?” he added.

Roh said Amazon’s growth may make it an extreme example, but it is perhaps also a leading indicator. “Amazon’s rebalancing reflects a broader corporate trend toward leaner, more efficient organizational structures, driven by the need for cost control, innovation, and competitiveness in rapidly evolving markets,” he said.

From health care to finance, companies are realizing that flatter hierarchies mean faster decisions and potentially bigger profits. As with any effort to improve efficiency and the bottom line, there are risks in an era of corporate flattening. Sacrificing employee well-being and the crucial human elements of leadership and innovation are challenges that will be at the center of this reshuffling in corporate America, Zafar said. But he added, “The future belongs to companies that can build lean, agile structures, empowering employees to thrive in a world where machines do the heavy lifting.”

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Becoming Successful

Becoming Successful

In this week’s installment on Lifelong Learning, our Founder shares a blog post on all of the professional steps involved in becoming successful.

Everywhere you look and a large amount of what you read people are talking about attracting, finding, hiring, developing and retaining talented people. It would appear, at least from everything that is out there, that it would be easy to find a rewarding and challenging place to work. It appears that you would be able to show your talents and potential to these desperate employers.   

Good luck with that. 

Like most other things in life if you want to become successful you have to put in the work. That is easy to say, but what do you mean? 

Let’s be systematic and outline some steps. But first, please remember success is not a reflection of your job alone. It is a reflection of who and what you are as a person. 

Phase One 

Here, you have to do some serious self-reflection on what you think you need to do to represent the best person you can be. This is very personal, isn’t it? There is only one of you on the planet. Let’s be systematic; what are your values, your strengths and weaknesses. Are there things that you already know you need to improve on. Write them down. Is there anything that you have wanted to do forever, but never had the time to do? What about your physical being. Do you need to improve your health, your weight, your condition? Be brutally honest here. Never forget that the easiest person to lie to is your reflection in the mirror. 

Next let’s establish some action items and goals. There are many sources that tell us that setting goals is an important aspect of becoming successful. So, make it real, write it down. Make a list of what you want to get done, what you want to achieve. This is where you have to remember that your goals need to be achievable. Don’t be unrealistic. In this area it is extremely important that you are very specific. 

Finally, for this first phase, you have to make a commitment to yourself that these lists are things you are going to work on every day. No slacking off. In leading a team we have to be able to communicate to a group of people what you are trying to do. Then you have to have the discussion, the debate, as to whether or not that is the right thing to do. You MUST have that debate. Once everyone has had their say and you have reached a common understanding then and only then will you and your team be committed to make it happen. This time you are the team. You have to be all in, totally committed to making this happen.         

Phase Two

Find someone or something to be your lighthouse, you beacon, your spiritual guide. Don’t laugh at this. It is important. Find someone with whom you can talk. You will get discouraged and they can perk you up. Make no mistake, you are the one that has to get this done, but there will be times that you will need help and encouragement. I used to find a piece of music that motivated me. Those of you that have listened to any of our Podcasts know that the song “Everybody Wants to Rule the World” is one of those inspirations for me. Another thing that has helped me often is to have a pad handy or talk to your phone. When something strikes you record it. It is much too easy to forget those brilliant ideas you had in the middle of the night. A long time ago, I was a Data Processing Manager at a dealership. We were open 24 hours a day 7 days a week. I used to go to bed with a pad and a pen on the nightstand so that when I woke up with that brilliant idea, in the middle of the night, I could write it down I wouldn’t lose it. Isn’t that strange? Of course, I am sure you guessed it, I couldn’t read my writing in the morning, so I stopped doing it. Oh well.

Remember your goals from Phase One. Now might be a good time to go back and review those goals and break them down into more manageable chunks. Allow yourself the opportunity to succeed at those goals. Make them shorter and more easily achieved. As you begin to have more success at achieving those goals you can make them bigger. Remember Collins and Porras in their book Good to Great. They wanted us to create BHAGS. Big Hairy Audacious Goals. 

 Similarly remember those aspects from Phase One that had to do with your appearance. Dress for success. Exercise regularly. Eat the right food. And don’t be surprised if you have to make some changes. Sometimes you will have external influences over which you have little if any control. Focus on those things in your plan, in your activities, over which you have control. The things that you can influence.

Phase Three

Things are building you can feel a difference. You feel more in control of your life. This is a good time and it is a good place where you have your mind. However, you will have setbacks, you will fail at some things. Don’t get discouraged. Failures and failing are part of life. Edison famously said “I have not failed I’ve just found 10,000 ways that won’t work.” 

One of the things that has worked well for me is even though I knew I had failed I never took it personally. Remember that the mission you have is important. It is not necessarily going to be easy. Not everyone can be all they want to be. This where you might need that support figure. You don’t need to do this alone. Finally, trust your instincts, trust you gut. Intuition and contemplation are best when they work together. 

NEVER STOP.

Achieving your potential is a lifelong process. Your skills and abilities are dynamic, they’re constantly changing. That is true because you are constantly learning. Samuel Beckett wrote “Try again. Fail again. Fail better.” If you follow his advice and continue on the path to lifelong learning you will achieve your potential and you will have become successful.

The time is now. 

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Minimizing Owning and Operating Costs

Minimizing Owning and Operating Costs

Founder Ron Slee writes about another way to increase our profitability in business: minimizing our owning and operating costs.

The pressure is on everyone these days to be more mindful of costs. Inflation has provoked a lot of concern relative to the operating profitability of many businesses. Interest rates are in a serious phase of increases. Wages have changed very significantly. There is a lot going on. 

It is well known that Product Support has as two of their major goals to assist customers in reducing owning and operating costs and protecting the resale value. It has also been known for a long time that maintenance is a key to this equation. However, we have many varied views on what maintenance truly is for capital equipment. 

I remember attending a homeowners meeting a number of years back where the association had contracted with a professional engineering firm to provide an assessment on the condition of the assets we had. We paid a handsome sum for their report which they presented to the owners at a meeting. It was a very serious report pointing out actions that needed to be taken. After the professionals sat down the elected board decided to take no action. I stood and asked a question of the board as to why this report was being shelved with no action. They said that they didn’t agree with the report. As a follow up I asked what credentials the board had to make that determination. They said they had no credentials in that area. They then asked why I asked the question. I told them that to spend a large amount of money on an expert’s assessment and then ignore it was not very businesslike. They asked with incredulity why I thought it should be run as a business. There is the issue for all of us. 

Equipment will last longer and cost less to operate if the recommendations from the manufacturer published in the owner’s and operator’s manuals are followed. It is that simple. 

Yet there are varying opinions as to what maintenance really is required. Many people believe that simply changing lubricants and replacing parts is sufficient. That is like the board I noted above. There is no evidence to support that position. 

Contractors everywhere are under serious cost pressures as noted. They need to reduce costs wherever they can. The majority of their operating budget is related to the costs of running their equipment.  

Let’s look at this objectively. 

Every piece of capital equipment has a maximum potential lifespan. That is true with everything working as designed. With abuse or neglect that life span is reduced. That seems obvious to me. The “if it isn’t broken don’t fix it” adage still prevails in the minds of many people. So, we are still challenged by many that preventative maintenance is a waste of money. Yet it seems obvious to me, that if we can prolong the life of a piece of equipment, that will reduce the overall cost of the machine. The other thing that is significant in this equation is unplanned downtime. 

Managing downtime is like many other aspects in our lives. Like our personal budget. It is going to be an issue sooner or later. You can either plan for it or just hope it doesn’t happen. More successful fleet managers plan for downtime in their budgets. Another truth that has been pounded into my head is that the costs to repair a component before it fails is in the range of 50% of the cost of repair after failure. Think of all the costs associated with a down machine in the field. The phone calls, the dispatching of a field truck and technician to try and fix the problem in the field, at the job site. The transporting of the machine to a shop. It is not simply the cost of the work order to fix the machine, there are a lot of other expenses. The wasted time, the materials while delivering the products or service, and rearranging priorities on the job. 

Preventative Maintenance which follows the manufacturers guidelines changes all of this. It streamlines the entire operation. The opposite situation is also true. It might prompt your customers to seek out alternative equipment in the future. Oh, and one more thing. I remember visiting a mine site. There was a machine parked at the edge of an open pit. It was not in an operating condition. It had been there for several weeks waiting for parts. Everyone saw the machine and asked the question “what’s going on there?” What do you think the impression of that machine and that supplier was for all that time? I would have moved the machine so that no one could see it.   

By now I am sure that you are nodding your head in agreement with my point. Preventative Maintenance will help you reduce the owning and operating costs. So, what do you think? Will you get more aggressive in your use of preventative maintenance or not? 

The Time is Now.

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Are Your Employees Assets OR simply Tools from a Toolbox?

Are Your Employees Assets OR simply Tools from a Toolbox?

In this, the second installment in our series on learning and education, our founder and managing member Ron Slee asks a fundamental question: Are Your Employees Assets OR simply Tools from a Toolbox? Your answer determines how you approach the education of your team members.

One of the common issues that I have had to deal with since I first arrived in this industry is the cost of payroll. Payroll has traditionally been measured as a percentage of sales. We have a payroll of $1,000,000 and Sales of $10,000,000 so we have an expense sales ratio of 10%. I have always believed that is the improper way to be looking at your employees. I believe that your employees are in almost all cases revenue generators The employees are also the ones who develop the relationship with your customers that improves customer retention and satisfaction. 

One thing that I have found quite interesting over the years, when talking with very smart, experienced people, executives in charge of parts and service is how they have viewed employees. Several of them have expressed surprise when we discuss head counts. One Executive Vice president of a large major brand equipment manufacturer told me that every time he hired a new employee for his parts business the sales revenue for parts increased. He expressed how surprised he was. My answer? Keep on hiring at the rate at which your business can absorb new employees until the sales do not go up.

Many of you are aware that I use a sales per employee metric that is based on three variables; the gross profit of parts, the compensation package for the parts department, and the average unit price for the parts sold. From this you can arrive at a specific standards dollar value for a parts department employee. Let’s use $750,000/parts person, excluding the management. We use that measure over a rolling twelve-month time period. I use a bracket around that standard, 80% as a floor and 120% as a ceiling. When we have three consecutive months below the 80% of standard level, we have to reduce the number of employees. When we have three consecutive months above 120% of the standard level, we have to increase the number of employees.      

Is there anything wrong with that approach?

The same thing is true with technicians as well as the teams that sell equipment, parts and service or rentals. There are dollar standards for all of these job functions. That is also true about the administrative job functions.

I still find it interesting how many of the leaders of businesses in most capital goods industries look at a high sales per employee as a positive thing, and I understand that very well. However, we can easily be misled with that approach. Nothing is ever that simple, is it? 

Yes, a high sales per employee number provides higher levels of profitability for the business. That is clearly one of the metrics that owners are concerned with for their business. However, there are other factors that cannot be overlooked. 

Over the past 50 years market share has decreased. For parts and service, it has gone down by over 50%. Is there a correlation that we should be concerned about here? I think so.

Looking back at the past forty years we have had a relatively stable situation with interest rates and inflation. We all became accustomed to the way we needed to operate the business. Of course, there some variations but they, for the most part they have been of a short duration. Then the pandemic hit and we were forced to adapt how the business operated.

From January 2020 as a starting point until the end of June 2022 both employees and employers were forced to rethink a lot of things. Office spacing, masks, vaccines, working from home and many other adjustments were made. Education had a very serious change forced upon it. Virtual learning became commonplace. The teachers and schools, the School Boards and Teachers Unions all were forced into serious changes. Caroline taught from home for over a year. The results determined from surveys of scores and grades are not very good. The learners in K-12 have lost in some states as much as a year in their learning results. As a society we will be paying a price for that loss of learning for decades.

Today as the employees and employers reevaluate their work and operating methods, we are noticing big, significant changes. In many cases positive ones. These changes would have taken place naturally anyway at some point. However, the changes this time were compressed over a very short period of time.

Now we are confronted with the question in the headline at the top of this blog. Do you view your employees as tools from a toolbox that you can deploy to satisfy a job function need OR are they assets that drive your business?

I think you know where I stand on that question. What about you?       

The Time is Now.

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Staffing Guidelines

Staffing Guidelines

Guest writer Bill Pyles brings us up to the current situation in his blog piece, “Staffing Guidelines.” After being discharged from the United States Marine Corps, Bill started a lifelong career in heavy equipment dealer product support. Starting as an apprentice technician, Bill worked his way up to the General Service Manager for a multi-state Cat dealer. Bill continued to serve in similar roles as General Manager of Product Support to VP of Service for multistate OEM dealers. Coming up thru the product support ranks gave Bill an invaluable education of customer relations, dealer product support and an understanding of the dealers most valuable resource, the product support team. After 47 years of service, Bill has taken on a new career with Mechanics and Techs LLC, a recruiting company for all Product Support employees as well as Product Support Managers. Bill is living in Florida with his wife Diana and golden retriever, Shelby. Bill & Diana spend their time with their two sons and five grandchildren. Bill can be contacted at LinkedIn; www.linkedin.com/in/billpyles or wlpz28@verizon.net

As we come out of the pandemic and possibly slide into a recession, I’m sure there are dealers who need to ramp up staffing or consider a reduction in staff.  Today I’d like to share some ideas that worked for me during the good and bad times. During the good times, I’d get daily emails from stressed out service managers needing more techs, today, now. But something seemed out of place after looking at the facts. Facts do a good job of removing the emotional side of decision making. I’m being told we need techs, now, today, but the revenue recovery was very low, no overtime to speak of and some other locations are looking for work. 

I’ll focus mainly on technicians for this discussion of adding or reducing the workforce. It seems we’ve had tech shortage issues since the early 1990’s. During the dot-com boom, more and more talent ignored the trades, opting for the glamorous work of internet related jobs. You may remember even the U.S. Army started running recruiting ads showing soldiers launching computer-controlled missiles, running high tech equipment, staring knowingly into radar screens. No more dog faces covered in mud crawling in and out of fox holes!  Equipment dealers also had to dispel the myth that the mechanic’s (before they were technicians, notice the upgrade in the title) knuckles dragged the ground when they walked, and anything could be repaired with a sledgehammer and a torch! But dealers got it together, had great tech recruiting plans and business took off!  

Until the last horrible recession hit in 2008-2009 and many dealers were forced to reduce technician headcount. A very strange phenomena happened; after the recession eased up, all the techs that were laid off were nowhere to be found when business did pick back up. They likely went into other trades as tech recruitment became more of a full-time job at the dealership. It was no longer build a shop or hang out the hiring sign and they would come. The rules changed, wages accelerated, sign on bonuses where generously offered, the promise of a free set of basic tools were offered after so many days / months of employment and many other hiring incentives. 

Trying to forecast a technician reduction is like playing the stock market. Move too soon and you will lose good techs who may not come back when business picks up. Move too late, and your bottom line could take months to recover. I admit I erred on the later side as I wanted to do everything in the company’s power not to lose good techs. But the day would come when the difficult management decisions had to be made. Here are some guidelines I think can help.

Before pulling the reduction in staff trigger, I’d expect to see these items as facts. 

  • Revenue recovery to be 80% to 85% and trending upward.
    Overtime averaging at least 10% in the last three-month period.
  • No other locations have techs to transfer over to the location needing techs, now, today.
  • Labor sales per day are trending at 90% of your street labor rate. 
    • This is a technician efficiency cross check. 
    • Gives visibility to reducing labor rates to keep revenue hours up.
  • Operating profit at or above the forecast. 

My goal was to support the decision of adding techs, not just adding more cost if not required. Adding techs can add revenues. But if your shop is inefficient (not meeting the requirements above), adding techs will only add to your cost. No need to add techs if another location is slow. 

Look at the larger picture, not one location.

I created a short form (regarding the points above) for the person requesting the addition headcount. This forced the person making the request to review and know their numbers and or realize it’s maybe an efficiency issue, not a headcount issue.

Hopefully (by the way, hope is still not a strategy) we will not be crushed by another deep recession. But if the time comes, here are some ideas that worked for me to support a reduction in staffing.

  • Recovery rate below 70 and trending downward
  • 0% Overtime in last 3-month period trending downward
  • No other local stores we can take technicians for the short term
    Labor sales per tech per day 60% (what your daily break-even rate is) or lower, trending downward

Downsizing is tough under any conditions. You should be doing everything in your power to keep the techs you have trained and coached on board. Good techs will quickly be picked up by a contractor looking to get a dealer trained and experienced tech at a lesser cost. One possibility is to go to a 32-hour work week. This keeps all your techs working although working one day less a week. This option is worth talking over with all your techs, get their buy in and no one loses their job.

If the downturn is looking like a short term, get your techs caught up on their training. I know you will already have marketing promotions out looking for work. Get your service trucks cleaned up and finally get to all those items in the shop that need repaired. It’s an investment into your dealership or business. Remember it’s your job to keep the shops full. Hopefully the downturn is short and soon your hair will be on fire (again) when the work picks up and you’re back in the tech recruiting arena.

Here are some ideas regarding support staff or as I called it an admin to tech ratio.

Administrative is defined as a Service Manager, Shop Supervisor, Service Admin, Service Writer, any employee charged to the service department as 100% expense/nonrevenue generating.

I suggest a starting ratio of one (service manager or shop foreman) administrative position for the first five technicians. At five techs, one person will be getting stretched to perform all the service department admin functions, i.e., quotes, labor entry, work order maintenance, customer calls, closing work orders.

Once a sixth tech is hired or being recruited, we can consider a second admin person in addition to the SM or shop foreman. Two service admins should be able to manage an additional 4 techs up to a total of 10.

When an 11th tech is required, consider a third service admin. This will cover the admin ratio up to 15 techs.

At face value, this ratio may look a bit on the high side. But I’d disagree, especially if your service administrative employees are doing all the functions required to keep a service department running smoothly and not burning out the service manager or shop supervisor. I’ll not try to list all the daily functions within your service department (but I bet there are many), but I’d suggest getting out a pencil and make a list of administrative activities being performed daily. And don’t forget to add following up after the work has been completed to ensure 100% customer satisfaction, after all, these customers are the ones who can keep your shops working when the slow down comes!

 

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It Is Time to Fail Faster

It Is Time to Fail Faster

Founder and Managing Member Ron Slee shares words of wisdom he heard recently in today’s blog post: It Is Time to Fail Faster.

I never thought that I would call for “failing faster” in my life. Imagine failure? Of course, if we think about this, a moment’s failure is important to anyone who is interested in getting better at how they do things. 

I was given this “line” by Stephanie Smith, Vice President of Marketing from Newman Tractor on a recent Podcast with Mets Kramer. We were talking about Marketing and the Digital Dealership and how fast change was happening. Stephanie calmly stated that we have to learn how to fail faster. I stopped her and asked her to repeat it. I found it to be so profound. Days later, to me it is still a very profound observation.

I was in school in the 1950s and the 1960s. It was a very basic education. Nothing particularly fancy. Reading, Writing and Arithmetic. My Mother was a teacher, she was the Vice Principal at the grade school I attended. She chose all my teachers. I couldn’t get away with anything. My Grandmother was a teacher in the proverbial one room schoolhouse. She got a Master’s degree from the University of Manitoba in the early 1900s. One year I was doing miserably in Geometry and Latin. I hated studying so I refused to memorize. I either understood it or I felt it was not that important. My Grandmother took over my schooling on the weekends. I spent several months with her every weekend. The first semester I got 38% in both Geometry and Latin. That was unacceptable to Granny. By the final report card, I averaged 78% for the year. I had no choice but to stop failing. I was “taught” a very important lesson that year. It wasn’t “don’t mess with Granny.” No, it was “apply yourself or there will be a consequence.” Did I ever learn! That, plus my experiences in the swimming pool as a competitive swimmer, made me who I became.

That led me to my favorite question: “Why?” It seems from a very young age I was always asking why. Perhaps every child does. But that meant I would try things. That was when I started experiencing failure. I remember one instance when I was doing some work in the warehouse at the Caterpillar dealership in Montreal. I think we were moving parts around trying to make more space. Bob Hewitt, the dealer principal, came out to the warehouse and put his arm around my shoulders. I was surprised. Here I was in a sweat shirt and jeans working and dirty in the warehouse. He was in a three-piece suit looking very elegant. He looks me in the eye and says “I am really disappointed in you.” Even in those early years I was rarely at a loss for words. I quickly responded “me too. Why are you disappointed?” I looked up at him and I could see his face start to twitch. He said “when you are finished come see me in my office.” The thing he was disappointed in was that the roads to a remote branch were closed for the winter and I had placed a stock order that wasn’t going to get there. I hadn’t planned for an early snowfall. I told him if I would have known that snowfall was coming, could have predicted that, I would be working somewhere else. True story.

I have made an unbelievable number of mistakes over the course of my lifetime. They continue even today. The trick with mistakes from my perspective is very simple. You are going to make mistakes, that is clear, identify the mistakes as quickly as you can and make adjustments, corrections, fix it. Fast. Today with the rate of change in society, in technology, in telecommunications, in fact in nearly every aspect of our lives is dramatic. Change is coming at us so fast it is impossible to keep up. At least that is true for me.

When Stephanie made the comment, we have to “fail faster” I was amazed. It was so appropriate. It was profound to me. It was an “aha” moment. It forced me to think about things again in a new way. I needed to pick up my pace and make more changes more quickly. Don’t worry about making mistakes. Don’t worry about failure. That is going to be a consequence of doing more things. Mistakes and failures are also a part of the process of learning. You just have to recognize when things don’t work and make adjustments. Make corrections. Everything will continue to be alright. No one is going to shoot me. At least, not for making a mistake. 

Thank you, Stephanie.    

The Time is Now.

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Why Lean Manufacturing Doesn’t Work Today

Why “Lean Manufacturing Doesn’t Work Today”

Guest writer Bruce Baker shares with us the reasons why lean manufacturing doesn’t work today: the reasons are not exactly what you might think…

Whether you own a bookkeeping business, cabinet-making business or legal practice, all businesses are made up of routines, which rely on consistent, one-at-a-time processes. Everything we do that keeps society “together” relies on repeatable activities. Whether it’s brushing our teeth, getting dressed or eating breakfast, all rely on repeatable processes.

For those who are not aware of the practice of Lean, allow me to provide you with a brief history and definition. Lean is the concept of efficient manufacturing/operations that grew out of the Toyota Production System in the middle of the 20th century. It is based on the philosophy of defining value from the customer’s viewpoint and continually improving how value is delivered by eliminating every use of wasteful resources, or that does not contribute to the value goal. In short, taking things one step at a time is the make or break of business and general success in life.

Many have heard before… “take it down a notch…one thing at a time”. Several months ago, I wrote a short article called “Your Interpretation of Time,” where I stressed the importance of how reactive we have become as a society, including business. Our interpretation of time today is drastically shorter, and the general consequences of failure, impressively higher and more extreme than before. This inevitably leads to reactive, narrow, and short-term decision-making. Albert Einstein once said, “When you are courting a nice girl, an hour seems like a second. When you sit on a red-hot cinder, a second seems like an hour. That’s relativity.”

My bold statement of “…Lean doesn’t work today” is not that the practice and methodology are ineffective; on the contrary. Lean is applicable in every industry and every business and mentioned in the beginning of this article, in your personal life. The practice and adoption of Lean are fantastic when a business and its people adopt this “way of business life.”

A challenge we are all presented with is that if we adopt Lean as a practice, we need to accept that our reactional, short-term, and high-crisis manner of thinking will always stop us from adopting practices like Lean.

Building and growing a business is never easy emotionally, but requires a strict set of routines and processes, and each process must be executed effectively. This can only happen if each process performs effectively in an individual manner parallel to its fellow processes. This requirement is not limited to the business world but the very nature of our world, yet we insist on a short-term, high-crisis manner of thinking.

As I write this article, I sit in a Lean manufacturing training session with Quantum Lean. Lynn (the Lean instructor) mentioned that adopting Lean “takes time” and that “people do not like to change”. Although I completely agree with Lynn, people resist change primarily because they fear the unknown. Statements like “I don’t see the reason to change,” “I don’t have time to wait for them”, “I have so many problems to deal with, I don’t know where to start” or finally, “Oh, I’ll add this to my list of problems I have to solve…I don’t have time to deal with little issues like this now!”

In conclusion, if you have or are anticipating implementing Lean in your business, remember this. It all starts with the leader of the business. If the leader does not make this mind shift, the rest of the team will not make the shift either. Lean is not another tool or method. It is a change in the state of mind and subsequently changing the business’s culture from fighting fires to experiencing the inherent joy of work and life in general.

As a wise mentor of mine once said, “one step at a time, grasshopper….”

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Quality of Communication Channel

Quality of Communication Channel

In tonight’s blog post, guest writer Ryszard Chciuk walks us through the information our customers need and want to know. The quality of the communication channel directly impacts your customer’s purchases, especially as they move through the research phase before buying.

Ron Slee reminded us (see From Paper to Glass) what he had talked perhaps for decades about the three questions that a customer asks when they need to purchase parts from a dealer:

  1. Have you got it?
  2. How much is it?
  3. How long do I have to wait to get it?

These are the same questions customers have when they want to purchase something else or they are looking for any information regarding their equipment.

So, what does your customer do when:

  • they are going to replace their old machine with the new one?
  • they want to get rid of their old equipment?
  • they think about additional attachment to their old machine?
  • they are looking for spare parts?
  • their machine is down in the middle of nowhere?
  • they are looking for the spec sheet of the older machine model?
  • they miss somewhere an Operators’ Manual?
  • they have to estimate the total quantity of fuel for their new project?
  • they immediately need any other kind of information related to his fleet?

Your customer is doing the research.

Mets Kramer in Candid Conversation with Ron Slee (The Digital Dealership) said:

  • … of the 85% of all the research the customer does is now done digitally, online, prior to making a phone call.

Seven years ago Acquity Group, part of Accenture Interactive made a survey of 500 procurement officers (B2B) with annual purchasing budgets in excess of $100,000. What did they find?

  • Only 12 percent of buyers want to meet in person with a sales representative when determining a purchasing decision and 16 percent want to discuss their purchasing options with a sales representative over the phone.

In the 2014 Acquity Group State of B2B Procurement study they also stated:

  • Thirty percent of B2B buyers report they research at least 90 percent of products online before purchasing.

I am afraid a majority of dealerships are not able to interact with their modern customers in a new way. As a born realist, I think nobody in the construction industry is ready for that, despite everybody is having at his disposal proper technology.

Your existing and, even more important, potential customers changed their search behavior, within the last several years, but you have not noticed that. If you are going to neglect that fact, your company goes into dire straits. Be aware that:

  • 80% of B2B Buyers Have Switched from Suppliers That are Unable to Align Their Services with Buyer Expectations (from the Accenture report for 2019).

Your company, like most dealerships, from time to time is running sales campaigns. Usually, it is done with the use of an electronic channel. Are you aware, it has no advantages over the 20th-century traditional campaign (with the use of a phone or snail mail)? It is because you present your offer on your static website and it contains extremely exciting form “Please contact us for the price or additional information”. How many times a year do you receive back that form filled in?

You fail because you stubbornly stick to so-called Billboard Marketing. If you want to change that, please read about Digital Marketing. Mets Kramer presented there his view on today’s marketing. Mets differentiates Billboard Marketing from the more 21st-century alike Engagement Marketing.

In fact, it does not matter whether the campaign is run with help of any e-mail platform (newsletters), Google, Facebook, or others. A successful campaign brings your potential customer to your dealership, to have a look at your yard, warehouse, service vans, and workshop. This is the way you can easily initiate customer’s thinking about starting or strengthening friendly relations with your staff. The physical presence of a customer on your street is not necessary. In the 21st century, your website is the main place where this can happen. Does it? Be aware that:

  • 83% of buyers use supplier websites for online research (from the Accenture report for 2014).
  • only 37 percent of B2B buyers who research a supplier’s website feel it’s the most helpful tool for research (from the Accenture report for 2014).

Of course, your IT provider can change static pages into dynamic ones, they can use new software for generating modern layouts with nicer pictures or even short videos, etc. Everything looks wonderful, but it is only face lifting. The question is if you provide your customers with the information they are online looking for.

Mets Kramer, in the series of articles about Digital Dealership (search for “digital dealership” on the blog), reminded me of my dreams about a “digital” after-sales department. I began to think about it at the end of the 20th century and it never became real. In the next article, I am going to present to you some obstacles which I had to struggle with. It’s a pity, I’m certain that after a quarter of the century later, your road is cobbled with similar or the same problems.

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The Future Work Place

The Future Work Place

The Future Work Place – What Will it Look Like?

The Pandemic has had a devastating impact on life around the world. Many of us have lost close friends, co-workers, associates and family members. It has been very personal. On top of that many of us have had either short term or long-term changes in our jobs as well as in the nature of our work. And interestingly some of us have reevaluated our lives and how we live them. It has been a very dramatic change in almost all of what we got used to prior to the Pandemic.

Now I have questions. What will be the future of our work? Will we work from home or in the office, or some hybrid? Obviously, technology will play a much larger role in our work and home lives. We can already see rather stark statistics. Ed Gordon has been publishing and providing us with blogs called Job Shock. He is pointing to the difficulties that the education work is having providing work ready people to the work place. Education has changed and is undergoing serious challenges where standardized testing is going away and not being used by universities for admission purposes in many cases. The value provided by the ACT and SAT tests and even Briggs-Myers are being challenged. Diversity issues have become much more important in the work place. Demographics are working against us as baby boomers are leaving the work force. Then we see an amazing fact: currently there are ten million job openings in the US, which is more than the total number of unemployed people looking for work. So yes, I do have questions.

Even before the pandemic things were changing but it was slow, as in most changes. Four-day work weeks were becoming more common. Second and even Third shifts were becoming more common in distribution and other Industries that had not seen much in the way of the shift world. The generational stress between the baby boomers who expected people working in the office was pitted against the Millennials and GenX who wanted the opportunity to work remotely.

A recent Gallup survey found that 40% of the US workforce was actively looking for a change in their jobs. The main reason being that the employees did not feel engaged. Into that mix comes the Society for Human Resource Management. They are suggesting that flexible work arrangement can provide several advantages.

  • Improved Employee Retention
  • More Success in Recruiting
  • Reduced Hiring and Training Expenses
  • Improved Employee Productivity
  • More Diversity in the Workforce
  • Increased Employee Engagement

Harvard Business School, in recent research, found that 81% of employees either didn’t want to go back to the office or would prefer a hybrid schedule going forward. So, we are going through another change where business will have to support employees who can and want to work at home.

In the 1980’s and 1990’s when the rate of change was slower employers were able to find the required skills outside the company and hire the skills required. That is no longer the case. Yet many companies are still in denial and refuse to spend money training their current employees.

Then the recent McKinsey Global Survey states that 69% of the reported respondents reported an increase in skill building. This pandemic has disrupted the skills foundation dramatically and companies are starting to acknowledge that they need to build new skills internally. Skills are lacking in empathy and leadership, adaptability and communications and problem solving. Critical thinking skills are seriously missing. According to Deloitte it can cost six times more to hire externally than to develop skills by training internally.

All of this is pointing to a serious challenge to our leaders. One that they have not had to face and deal with in their careers. The most important asset in any business is their employees. Yet this is the one asset that leadership has completely disregarded. They hire people and then leave them alone. If the skills required are no longer available, they get rid of the current worker and hire new people. It has been true and, in their minds, working for over three decades. This is no longer working. It should never have been the strategy. People are the most important asset in any way you look at it. And please don’t forget that this need for employee development is at every level in a business, from the owner to the least important job function.

I have advocated for years that we have skill sets tied to job functions. We put our assessment programs in place specifically to address this issue. We also wanted depth charts like in sports. Who is in line to follow the current leadership? We wanted succession planning. We also wanted annual performance reviews. These reviews allow positive discussions with each employee to determine the needs and wants of each employee. They provide an audience for discussions on continuous improvement. We have a lot of talent in our employees. Everyone of them. You all know I am interested in helping people identify their potential and then help everyone achieve that potential.

We must get going. Time is passing. And time is an element we don’t get back.

The Future Workplace will embrace new thinking. It will experiment more. We will try things. We have to make more progress in improving everything we do for our employees and our customers and our suppliers. We have to provide an environment where everyone wants to learn. We have to stop reacting and start innovating. We need to be able to adapt more readily. Some people call it agility. I call it basic common sense.

As a teacher I have always said common sense isn’t particularly common. Today we have a huge opportunity to turn the negativity since March 2020 into a positive response. Making the future of our desires and abilities. Are you ready?

The Time is Now.

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The 6 Behaviours of Successful Business Owners

The 6-Behaviours of Successful Business Owners

In tonight’s blog post, guest writer Bruce Baker shares the 6 Behaviours of Successful Business Owners. These key behaviours can make the difference in keeping your business thriving.

You have undoubtedly heard the depressing statistics of how many businesses fail within their first few years. I am one of the many who talk about the causes of failure and what to do about it and have the privilege of looking from the outside-in and the inside-out. I to have and continue to have my own experiences and understand why some business owners succeed and others fail repeatedly. Business owners only succeed because once they know what they want, they:

  • First, accept the challenge and work that builds their success and the failure that naturally forms as part of these efforts.
  • Choose to partner with those that have been successful not because of their “success” but because of what they learned from their “failures.”
  • Relentlessly execute to achieve what they’ve set out to do but not at their demise!

Human beings only make progress because of adversity and their insistence and commitment to execution – nothing more, nothing less. I wrote an article several years ago trying to explain (and justify, I suppose) how business owners fall in love with their goals but out of love with the actions that make these goals a reality.

The notion that business owners/CEOs would not grab what was staring them in the face to ensure success was mind-boggling.  I asked myself, “are people lazy?”; “are people this complacent?”.  Many are guilty of laziness and complacency when they don’t execute and fail as a result. Still, many also act out like a “wounded animal,” blaming everything they can other than themselves. Why? Because they become driven by their goals first instead of being aware and committing to the concessions they will have to make as part of achieving success.

Business owners I work with achieve their success because they choose to think and behave differently in the following six ways:

  1. They decide what they want but become excited by what they must do to become successful, regardless of whether it’s gaining or sacrificing.
  2. They expect and plan for failure.
  3. They seek out those that are successful as a result of their failures.
  4. They map out their plan and system(s) they will use to respond to inevitable failure that they will use to achieve success.
  5. They will succeed and be motivated to succeed again.
  6. They will fail and be motivated to fail again in the name of increasing their strength and resilience.
  7. They will not point fingers to justify their failures but identify the reason for failure and use it as a reason to continue to succeed.

I would love to take credit for their success, but realistically, I can’t. I provide business owners guidance and best-in-class business practices, but only they can decide if they want to succeed. I experience their successes and failures with them, but the successful ones see their failures as building blocks, not obstacles to their achievements.

You don’t need to be an expert Accountant or have a post-graduate degree in business to be successful. What you need is resilience, drive and a sense of humour!

Do you truly understand yourself?

  • Do you know exactly what your natural behaviours are that are either driving your success or holding you back?
  • Can you identify and take advantage of what drives you and what demotivates you in building your business and know what to do about it?
  • Do you know what the core competencies you need to develop to enhance your chances of business success?

If any of these questions resonate for you, send me an email at bbaker@4workplaces.com letting me know why they resonate with you. I’ll send you a complimentary assessment to complete so you can start discovering what you are not aware of about “you”! Once you become aware, your world opens and your mind is officially blown!

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