Chapter 2 Knucklebusters and Sawdust The Tradition Stall This chapter looks at the most powerful cause of complacency: the unquestioning certainty that nothing will change or should be changed, which is brought on by repetition over many years and possibly even generations. You will learn how to understand when tradition should be challenged and abandoned for the good of the organization. Tradition: The Way It Was If It Ain't Broke, Don't Fix It A motorist asks a farmer for a glass of water. The farmer obliges, using a hand pump to draw water from a well. The pump handle is close to a board and the farmer curses as he scrapes his knuckles on it. Motorist: "Why not move that board? It serves no purpose." Farmer: "It's been there since my father's time. If it was good enough for him, it is good enough for me." This answer seemed ridiculous, of course. But the motorist later realized he too had long ignored a similar, senseless tradition. His house had a large knob on the outside door that was too close to the doorjamb. He usually twisted the handle to the right and cleared the jamb. Occasionally, though, he twisted the knob to the left and scraped his knuckles on the molding. The Level Playing Field As stalls of tradition go, knucklebumping is small potatoes. But serious tradition stalls are sometimes allowed to exist for decades, even centuries. For generations, sawyers' helpers were blinded by sawdust. Manning the end of a two-handled lumberman's saw, the helper worked at a lower level than his boss. The sawdust floated down into the helper's eyes. The sawyers' helpers could have used Frederick Taylor, who leveled a different playing field. Taylor, a pioneer in measuring work processes, might have extended and improved many lives had he lived hundreds of years ago. In fact, he did his experiments only a century ago. After watching bricklayers routinely heave heavy materials above their heads, Taylor used scaffolding to put man, brick, and mortar at optimum levels for minimum effort by the workers. Until Taylor defied tradition, bricklayers became crippled or disabled after a few years. With his new approach, an able-bodied man could work the job for a lifetime. In the business world today, employers are, in many ways, more attuned to workplace hazards. Most make serious attempts to limit obvious hazards to life and limb. More insidious than such hazards are the stalls that occur because a harmless tradition becomes subverted due to circumstances that have changed markedly. The resulting tradition stall may be more nuisance than travesty, but, even so, the stall can lead to low morale, reduced production, and lower earnings. Consider the next anecdote. Aping Human Beings Imagine a cage containing five apes. In the cage, hang a banana on a string and put stairs under it. Before long, so the story goes, an ape will go to the stairs and start to climb toward the banana. As soon as it touches the stairs, spray all the apes with cold water. After a while, another ape makes an attempt with the same result: All the apes are sprayed with cold water. Do this repeatedly and then just watch when another ape later tries to climb the stairs. The other apes will try to prevent it even though no water sprays them. Now, remove one ape from the cage and replace it with a new one. The new ape sees the banana and wants to climb the stairs. To its horror, all of the other apes attack. After another attempt and attack, it knows that if it tries to climb the stairs, it will be assaulted. Next, remove another of the original five apes and replace it with a new one. The newcomer goes to the stairs and is attacked. The previous newcomer takes part in the punishment with enthusiasm although it has no idea why it was not permitted to climb the stairs. After replacing the third, fourth, and fifth original apes, all the apes that had been sprayed with cold water have been replaced. Nevertheless, no ape ever again approaches the stairs. Why not? "Because that's the way it's always been around here." Sound familiar? Traditional Ways to Toe the Line The Pecking-Order Tradition: After You, Alphonse . . . Imagine that you were asked to speak to the top thirty executives of a very large company. The meeting runs late, and so the food has been sitting on the buffet table long past the lunch hour. Everyone is hungry and needs a break from the intense discussions of the morning session. The breather arrives at last and you, as the honored guest, are escorted through the buffet line first. Then, by company tradition, the CEO goes through the buffet line followed by each executive in the pecking order by descending rank. The most junior executives line up last. But there is a problem: This CEO is a fast eater. Within ten minutes, the CEO has gulped down his last bite. He promptly states that everyone might as well get back to work because there is a lot left to be done. He either does not notice or, having noticed, does not care that only he has finished eating. (A few juniors in the line haven't even filled their plates yet. You are ruefully pleased that you ate fast, too.) After the meeting, you ask the corporate planner what that was all about. The corporate planner explains that the pecking-order tradition was begun under the prior CEO, a slow eater who needed more time to finish than everyone else. The practice had become a tradition and was continued without challenge when the CEO who wolfed his food came on board. The Hazing Tradition: Get Down! In the 1970s, working conditions at the Kentucky Fried Chicken restaurants were hard. To help new executives understand the problems faced by the workers "in the trenches," the new managers were assigned all the dirty jobs in a given restaurant for a day. Eventually, this custom was transformed into a grand tradition of executive hazing. True, the executives became suitably impressed with the hard conditions the workers had to deal with, but they became so embroiled in the hazing aspect of the tradition that they missed key opportunities to address the problems. Mesmerized by a mindless tradition that emphasized hard work in tough conditions instead of imagination and initiative, the corporate culture delayed important improvements for many years. KFC should have been redesigning equipment and restaurant layouts to improve their efficiency and safety instead of merely subjecting the executive to hazing. The Necessity Tradition: When Gillette Was a Young Blade The habit of institutionalizing practices so they become stalls affects all companies. By tradition, formidable Gillette had always introduced new shaving products in the United States first, and then slowly introduced the same new product in its markets around the world on a piecemeal basis. Decades would pass before the new product reached the last country. Finally someone questioned the wisdom of the tradition. It was found to reflect Gillette's limited financial, marketing, and personnel resources in an earlier period. Finally realizing that it was losing sales by sticking with an outdated tradition, Gillette began to introduce new products more or less simultaneously around the world. Sales and profits immediately soared far above the historic level. The Time-Is-Money Tradition: How Much Is This Conversation Going to Cost Me? A company we know of has a tradition of not letting the CEO meet potential investors until the investor relations executive has met with those investors. While this tradition freed the CEO for other important tasks, the company's shares were shunned by that most important group of potential shareholders: the institutions, such as pension funds and mutual funds. Few of these institutional investors were prepared to invest millions of dollars in this company without first meeting the CEO. You can be sure they want the CEO's door to be wide open to them before and after they open their checkbooks. This company has failed to build a list of high-powered shareholders who can enhance its future. The more investors a company brings into the fold, the higher the potential for the price of its stock. When a company's shares go higher, money can be raised at a significantly lower cost. The Isolation Tradition: Solitary Confinement for Learning Development Harmful traditions have lasted for centuries in the past to the great detriment of the originators of the tradition. For hundreds of years, the tradition-bound Japanese refused trade access to foreign vessels, except for a small contingent of Dutch who were confined to a tiny plot of Japanese soil. Both Japan and its reclusive neighbor, China, built their societies around the idea that theirs were superior cultures, and they were unwilling to share their knowledge with the outside world. But for this tradition stall in Japan and China, the spectacular successes Japan won in the late twentieth century, for example, might have occurred hundreds of years earlier. Ironically, after centuries of isolationism, Japan in the post-World War II period has bought up many American innovations and profited greatly. Item: The Sony Trinitron television picture tube was invented by American physicist, Edmund Lawrence, who tried in vain to sell his superior color tube to U.S. concerns. In an isolationism of our own, company engineers are often so eager to create their own innovations they shun those brought to the company by outsiders. It is the not-invented-here hang-up, one of capitalism's isolation shortcomings. The Inertia Tradition: Fur on Ice Without innovation, traditions can freeze and clog business arteries. Think about the pioneering Hudson's Bay Company, one of the world's oldest corporations. The company dominated the fur trade in Canada. Furs are a natural resource business. Canada, with its vast riches in oil and gas, gold and other precious metals, and minerals, is a natural resource treasure-house. So it seems it would have been natural for the Hudson's Bay Company to branch out to become a leader in the natural resource business world. But company leaders failed to recognize this logical extension of the business model that might have made the company a preeminent enterprise worldwide. By defining itself as a fur trader rather than a natural resource company, Hudson's Bay Company missed out on huge potential profits in mining and in oil and gas. Instead, it wound up as a department store chain, a Canadian business of modest success. Stall Erasers Before you can separate the tradition stalls from your good practices, you need to challenge current methods. A good approach is to imagine doing things in quite different ways. If new ideas must be approved by the boss first, consider what would happen if new ideas were tested before the boss saw them. Some might fail. Some might become better in the testing. Having learned from that experience, you can move in lots of new directions. To whet your appetite, read on to learn about cases in which a nontraditional approach, a total change of direction, worked much better than the traditional approach. Good-Bye Memory Chip! Intel's chairman, Andrew Grove, wrote a book in 1996 entitled Only the Paranoid Survive (Currency Doubleday). In it he describes strategic "inflection points" that call for a fundamental change in the business plan on pain of compromising the business's viability. He also says that inflection points bring to bear forces ten times the norm in business. Intel faced an inflection point with the potential to ruin the company in the early 1980s. It was then a major producer of commodity memory chips. By contrast, microprocessors, the electronic brains that drive desktop computers, were a very small part of Intel's business in that same period. That's when large Japanese manufacturers set out to dominate the memory chip market. The Japanese made huge investments. Their capital costs were subsidized by low Japanese interest rates, which gave them a major competitive advantage over Intel and other American companies. Grove knew that many Intel customers believed the Japanese chips were superior to those that Intel made, which was even more alarming. By 1984 Japanese memory chips flooded the market and Intel was reeling. So Grove (then president) and his then CEO, Gordon Moore, chose a radical departure for the business. They jettisoned the memory chip and focused on the remaining part of their line, the microprocessor. In effect, they completely changed the business that Intel was in. In 1985, Intel introduced the 386 chip, followed by the 486, and then by the Pentium chip and its successors, all of which became standards for the industry. The company has dominated the microprocessor market ever since. In fact, it has become the world's largest microchip manufacturer. So important are the chips today to computer users that computer builders' ads feature the words "Intel Inside." Delegate, Delegate Sit in for a moment at a meeting of some of North America's most successful and respected chief financial officers. They are seeking ways to be more effective. The consensus is that there are not enough hours in the day. It is clear that corporate budgeting is one of the biggest drains on virtually every CFO's time. In fact, one CFO reports that he used to spend more than 120 working days a year on this task. Now he has cut that time down to only three working days a year. This CFO usually works a normal day and gets everything done that needs doing. How, you wonder, is this possible? What caused him to change was the realization that not only was he spending too much time on budgeting, he was so overinvolved with the operating executives that he was losing his clout with them. He had to find a way to get the budgeting done in less time and save his clout for other, more important issues. After a brief conversation, the other CFOs learned that the man's secret involved delegation of less important parts of the budgeting tasks to the controller and, at the same time, assigning an assistant controller to spend half of his time doing some of the controller's less sensitive work. Interestingly, the CFO also appears to get better results for his company from his 3-day commitment than with the 120 days he had spent in the past. Why? Since the CFO has not been doing combat with the operating executives over the budgets, they are more inclined to pay attention when he raises questions about other important (and needlessly costly) decisions. As a result of careful training and coaching by the CFO himself, the controller learns to raise all of the issues that the CFO would have raised during the budgeting process. This CFO has truly found a 2,000 percent solution. By changing a process that tied him up unduly, the CFO helped move his company way beyond what the competition was accomplishing in the same time period. Get Tanked: But Not on Concentrate Hard-drinking W. C. Fields used to have a portable bar on the movie set with a fresh-made alcoholic drink he referred to as orange juice. One day an unwitting stagehand refreshed the comedian's drink. Fields took a long swig, looked startled, and cried, "Who put orange juice in my orange juice?!" The thoughtful CFO who resolved the budgeting process in a novel way clearly had the uncommon ability to make leaps of imagination in circumstances hobbled by tradition. Imagination of this sort is golden. So is orange juice on the eastern seaboard, thousands of miles from the groves. Most people would assume that all tankers steaming up the coast are carrying fuel of one sort or another. Tankers carrying crude oil are infamous for accidents that pollute our beaches. In the best of times, oil tankers are greasy and smelly. But imagine tankers with scrubbed decks and stainless steel compartments leaving orange juice docks loaded with squeezed juice. It is cost-effective to squeeze the juice near the groves, ship by tanker, and package the "not from concentrate" juice nearer the supermarkets in the Northeast. The stall deriving from the traditional use for tanker ships could have been leaped years earlier. But first, someone had to ask whether the old way, extracting water and trucking the concentrate overland for the consumer to reconstitute at the other end, was the optimum approach. Someone had to surmise that it might be preferable to load whole juice in a sterile tanker for cost-effective transport on the high seas where enormous amounts of juice would be transferred inexpensively. Luckily for orange juice drinkers, someone did. If Forward Does Not Work, Try Reverse Some traditional stalls call for a great leap backwards. In what a medical conference referred to as a "daring experiment," stroke victims were treated by reversing the plumbing of the body's circulatory system. Veins were used to carry blood backwards to oxygen-starved parts of the brain following a stroke. Normally, veins carry the oxygen-depleted blood from the brain to the lungs. As we breathe, the blood vessels in the lungs soak up oxygen to feed arteries leading to the brain and to the other vital organs. Strokes occur when a blood clot lodges in an artery that carries blood to the brain. Unless the clot breaks up fast--or doctors use clot-dissolving drugs--brain cells become oxygen starved and paralysis often results. Many stroke victims die. When the "front door" to the brain is blocked by a clot, Dr. John G. Frazee, the neurosurgeon who invented the reverse-flow procedure, uses the "backdoor." He uses an external pump to push blood from an artery in the groin through a tube to large veins in the neck. From there, catheters are threaded through the veins to the back of the head. The catheters empty blood into the veins, which carry it to the brain. The veins give the entire brain a fresh blood supply, but the blood is drawn especially to the oxygen-starved area near the clot. Doctors must begin the process within seven hours of the stroke and keep the backwards flow going for several hours. The clot then either dissolves or is washed away by the pressure of the reverse-flowing blood. The procedure was first used on six human patients following eight years of experiments with baboons. Four had virtually complete recoveries, escaping probable paralysis. The other two patients were not helped. One sixty-one-year-old California patient had a stroke that left his left leg and hip paralyzed. Frazee set up his experimental procedure within hours. The paralysis began to disappear and soon went away entirely. The patient walked out of the hospital five days later. In a similar imaginative leap, savvy engineers in Chicago reportedly solved a serious problem of lake pollution by reversing the flow of the dirty Chicago River away from Lake Michigan and into the Mississippi River system. At first this may seem like merely sending the pollution to someone else. But pollution in a river system is reduced by the aeration that occurs due to the water's movement, something that does not happen in large lakes. So the pollution is reduced as well as redirected. Sometimes, backwards is better. No Experience Required The traditional approach has been to fill organizations with people who are overqualified by education and then give them very little room to maneuver. A better solution is to observe the person who does a given job in the most expert manner, and then make that person's knowledge available to ordinary people so that they can make decisions and take actions reflecting the expert's savvy. Let's say you call Sears because your overhead garage door is not working properly. Traditionally, Sears would arrange for a mechanic to visit your home, which often resulted in scheduling difficulties: Householders would take a day off work, but the mechanic would get stuck on another job and not show up. Call these days and the Sears representative will determine the model number of your overhead door, turn to the page in the repair manual for that model, and say, "Explain the problem." You tell her the chain that is supposed to raise the door does not move when the opener is used, though the gear cogs are clearly intact. The motor runs, but it makes an awful racket. You are startled when the woman tells you the worm gear, to which the cog gear was attached, is shot. She offers a new worm gear assembly ($27.98) and an optional tune-up kit for a total cost of $35.70 including taxes. "Expect delivery in fifteen days," she says. The parts arrive on schedule and the repair is straightforward. She has solved the problem. Has she ever installed a worm gear for an overhead door? Maybe it was part of her training, but it does not matter even if she has not because she can read her expert directions. Likewise, NCR (National Cash Register), which was part of the computer business spun off by AT&T, has also jumped on the call-in bandwagon. In the 1990s, NCR has specialized in bank, retail, and airline reservation computers. NCR's repair approach is so direct that a high school dropout could field calls. The technician will ask, "Is the screen light or dark?" "Dark." "Is the equipment plugged in? Someone at the computer site may have knocked the cord loose, say, in vacuuming." During the call-in process, the technician can address dozens of common and telephone-addressable problems. In fact, NCR satisfies 90 percent of such cases by phone. Problems solved over the phone cost NCR about $10 each. Clearly, it is more cost-effective to deal with the unplugged cord and other obvious problems by telephone. Sending an engineer to the work site, the common approach in the good old days, cost NCR ten times that, over $100 per visit. NCR can save its experts for situations in which they are really needed. The telephone solution clearly represents a trend as more and more companies discover this low-cost process can be expedited by alert, nontechnical people with a major, positive impact on the company's bottom line. Trust Thy Customer Once the expensive tradition of sending mechanics was challenged, manufacturers looked for better ways of serving customers who needed to return defective merchandise. Usually, you must return the item first. Then, if the item is found to be defective, your manufacturer will either replace it or return your money. The whole process may take a month or more. Not a nice prospect in a vacation setting. Consider the golfer who thought he faced a bleak vacation on Hilton Head Island when he took a swing on the golf tee and watched the head of his Callaway Big Bertha driver leave the shaft and chase the ball down the fairway. When the golfer arrived at the clubhouse, the golf pro told him, "If you call Callaway right now, this afternoon, they will airfreight you a new one and you will get it in time to tee off again late tomorrow morning." The Callaway clerk who answered the phone said, "Send back the broken club in the box the new one comes in, along with a service number I'll give you." To the golfer it seemed that Callaway was too trusting. What was to keep a golfer from falsely declaring that his club was broken? He could order a new club and keep the old one, assuming he wasn't a con artist who didn't even own a Callaway Big Bertha golf club. Then the woman on the Callaway end said, "I'll need a credit card number so you can pay for shipping." This was Callaway's insurance policy. Had the golfer not returned an old club, Callaway could bill the new club to the credit card number. Perhaps this stall of tradition could have ended half a century ago. The American Express card has been around for fifty years, and the U.S. Postal Service offered special delivery in 1885. It may have taken two days then. The golfer would have lost only one more day of golf without his golf club. Powerful solutions can be devised beyond what we, because of our mindless adherence to tradition, can imagine today. Callaway found a 2,000 percent solution by figuring out a new way of organizing the process, turning the traditional manufacturer-comes-first equation upside down. This is powerful medicine, since it puts the customer first, in a way that has a trivial impact on the company's business routines and, we can definitely assume, in a way that has a positive impact on sales over time, since Callaway has enjoyed rising sales for many years. 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