Today vs. Yesterday and on to Tomorrow
In three separate talks that I have been giving, I refer to "A Model
of Highly Effective Companies." Within these talks I describe an operational
model that seemed to be present in every effective company I have seen. Actually
I should refer to models because I use slightly different models depending
on the audience and/or the topic of the presentation. For example, I
may split the Products Research category into two: brand improvement
and new products. Or, I may split Marketing into two categories: general
marketing and market research. However, the basic model is as follows:
- Production (either products or services)
- Quality Control
- Process Development
- Products Research
- Marketing
- Advertising
- Public Relations
- Sales
- Accounting
- Management
These models seemed obvious when comparing the more effective companies
with the other companies. That was yesterday. Today I am seeing
more and more of the effective companies making some major changes in the
way they do the day-to-day business. For example, at Procter &
Gamble, the company where I spent 40 years and was taught what little I really
know about business, announced that they had sold the Ivorydale Bar Soap
Plant to a Canadian Company. The Canadian Company will continue to
make Ivory Bar Soaps and other brands for P&G. Of all the buildings
and manufacturing facilities at the Ivorydale location where I spent over
half my life, today, P&G only owns two of the buildings in the entire
complex.
What does this do to the model and my concept of Highly Effective Companies?
Immediately I see it affecting the model in two areas: Production
& Quality Control. I have no doubt that in the operational analysis,
P&G found that there is a substantial savings by sub-contracting out the
business related to manufacturing facilities, personnel and production. But
at what expense? Quickly I can see a loss in product knowledge and
product quality. We also do not have the flexibility in working to
reduce manufacturing improvements & costs, experimenting with brand changes
and insuring brand quality. Yes, we can specify quality measures, but
how are they enforced? When you are planning brand upgrades, who handles
and pays for the EOs (Experimental Operations whereby changes are evaluated
using real manufacturing equipment)?
Having grown up in the OLD way of doing things, I have trouble understanding
the value of the new modern innovations in business. We have already
seen many companies sub-contract their sales force. We have seen many
companies sub-contract their marketing and consumer research. We have
seen many companies sub-contract their product research. We have seen
companies sub-contract their accounting. What is next? A corporate
office that houses a telephone that is automatically answered and you are
directed to punch a specific set of numbers depending on your reason for placing
the call? A computer that makes a management decision and forwards the
answer to the appropriate sub-contractor. We had one thing yesterday
and now we have another today, maybe the above will be tomorrow but I'm certainly
uncomfortable with the thought.
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