Shipulski On Design

Cost Out, Cost Down, Cost Reduction, Should Costing – you’ve heard about these programs. But they’re not what they seem. Under the guise of reducing product costs they steal profit margin from suppliers. The customer company increases quarterly profits while the supplier company loses profits and goes bankrupt. I don’t like this. Not only is this irresponsible behavior, it’s bad business. The savings are less than the cost of qualifying a new supplier. Shortsighted. Stupid.

The real way to do it is to design out product cost, to reduce the cost signature. Margin is created and shared with suppliers. Suppliers make more money when it’s done right. That’s right, I said more money. More dollars per part, and not more from the promise of increased sales. (Suppliers know that’s bullshit just as well as you, and you lose credibility when you use that line.) The Design Engineering community are the only folks that can pull this off.

Only the Design Engineers can eliminate features that create cost while retaining features that control function. More function, less cost. More margin for all. The trick: how to get Design Engineers involved.

There is a belief that Design Engineers want nothing to do with cost. Not true. Design Engineers would love to design out cost, but our organization doesn’t let us, nor do they expect us to. Too busy; too many products to launch; designing out cost takes too long. Too busy to save 25% of your material cost? Really? Run the numbers – material cost times volume times 25%. Takes too long? No, it’s actually faster. Manufacturing issues are designed out so the product hits the floor in full stride so Design Engineers can actually move onto designing the next product. (No one believes this.)

Truth is Design Engineers would love to design products with low cost signatures, but we don’t know how. It’s not that it’s difficult, it’s that no one ever taught us. What the Design Engineers need is an investment in the four Ts – tools, training, time,  and a teacher.

Run the numbers.  It’s worth the investment.

Material cost x Volume x 25%

What happened to Vacation? It used to be a time to let go, to separate from work, to engage with family and friends, to work hard on something else. A time to refresh, to recharge, to renew. Not anymore – a shadow of its former self – paler, thinner, hunched over.

We still stay out of the office in a physical sense, but not in a virtual one. Our butts may be “on vacation” in that we sit someplace else, but our brains are not. They’re still fully invested in office things, running in the background as our butts enjoy their vacation. We’ve got all the downside of being out of the office with none of the upside. It’s almost worse than not having vacation. At least we don’t fall behind when not on vacation.

Who’s to blame? The technology? Our company? I don’t think so. We are. Sure the technology makes it easy: cell coverage across the globe (accept in New Hampshire), fast connections, nice screens, and full thumb keyboards to crank out the email. But, if I’m not mistaken, those little pda bastards still have an off switch. If your thumb can pound the keys, it can certainly mash the off switch. Can’t shut the damn thing off because you want to respond to the emergency work call? That’s crap. Work emergencies don’t exist, they’re artificial, self-made.  We create them to increase the sense of urgency. Don’t buy that? Here’s another rationale: you’re not giving others the opportunity to think while you’re gone. You’re telling them they’re not capable of thinking for themselves, you’re dismantling their self esteem, and hindering their growth.

Our company? Sure, they make it hard to let go, with implications that important projects must run seamlessly, that the ball must still be advanced. But, we’re the ones who decide what our brains think about. We must decide to give others an opportunity to shine, to give away the responsibility to someone who can likely do it better. If you ask the company what they want when we return, they’ll say they want us to come back recharged, ready to see things differently, ready to be creative, ready to be authentic. You cannot be that person without letting go. Without letting go, you’ll return the same worn soul who can but raft downstream with the current instead of swimming violently against it.

Take responsibility for your vacation. Own it, tell others you own it. Tell them you’re serious about letting go, working hard on something else, recharging. Use the all powerful Out of Office AutoReply as it was intended, to set everyone’s expectations explicitly (including your own).

Out of Office AutoReply: I am on vacation.

“Constraint” is most often an excuse rather than a constraint. In fact, there are very few true constraints, with most of them living in the domain of physics.

A constraint is when something cannot be done. It’s not when something is difficult, complex, or unknown. And, it’s not when the options are costly, big, or ugly. There are no options with a true constraint. Nothing you can do.

The Physical Constraint
If your new product requires one of its moving parts to go faster than the speed of light, that’s a physical constraint (and not a good idea). If your new technology requires a material that’s stronger than the strongest on record, that’s a constraint (and, also, not a good idea). If your new manufacturing process consumes more water than your continent can spare, that’s a constraint. (This may not be a true constraint in the physics sense, but it’s damn close.) Don’t try to overpower the physical constraint – you can’t beat Mother Nature. The best you can do is wrestle her to a tie, then, when you tire, she pins you.

The Legal Constraint
If your approach violates a law, that’s a legal constraint. Not a true constraint in a physical sense, as there are options. You can change your approach so the law is not violated (maybe to a more costly approach), you can lobby for a law change (may take a while, but it’s an option), or you can break the law and roll the dice. To be clear, I don’t recommend this, just wanted to point out that there are options. Options exist when something is not a constraint, though the consequences can be most undesirable, severe, and may not fit with who we are.

The Emotional Constraint
If a person in power self-declares something as a constraint, decides there are no options, that’s an emotional constraint. Not a true constraint in a physical sense, but it’s the most dangerous of the triad. When there is no balance in the balance of power, or the consequences of pushing are severe, the self-declared emotional constraint stands – there are no options. Like with the speed of light, where adding energy cannot overcome the speed constraint, adding reasoning energy cannot overcome the emotional constraint. I argue that most constraints are emotional.

Physical and legal constraints are relatively easy to see and navigate, but the emotional constraint is something different altogether. Difficult to see, difficult to predict, and difficult to overcome. Person-based rather than physics or law-based.

Strategies to overcome emotional constraints must be based on the particulars of the person declaring the constraint. However, there is one truism to all successful strategies: Just as the person in power is the only one who can convince himself something is a constraint, he is also the only one who can convince himself otherwise.

It’s the chicken-and-egg syndrome of the business world.  Does procedure drive behavior or does behavior drive procedure?

Procedures are good for documenting a repetitive activity:

1. Pick up that part.
2. Grab that wrench.
3. Tighten that nut.
4. Repeat, as required.

This type of procedure has value – do the activity in the prescribed way and the outcome is a high quality product.  But what if the activity is new? What if judgment and thinking govern the major steps?  What if you don’t know the steps?  What if there is no right answer? What does that procedure look like?

Try to modify an existing procedure to fit an activity your company has not yet done.  Better yet, try to write a new one.  It’s easy to write a procedure after-the-fact.  Just look back at what you did and make a flow chart.  But what about a procedure for an activity that does not exist? For an old activity done in a future new way?  Does the old procedure tell you the new way? Just the opposite. The old procedure tells you cannot do anything differently. (That’s why it’s called a procedure). Do what you did last time, or fail the audit.  Be compliant.  Standardize on the old way, but expect new and better results.

Here is a draft of a procedure for new activities:

1. Call a meeting with your best people.
2. Ask them to figure out a new way.
3. Give them what they ask for.
4. Get out of the way, as required.

When they succeed, lather on the praise and positivity. It will feel good to everyone. Create a procedure after-the-fact if you wish.  But, no worries, your best people won’t limit themselves by the procedure.  In fact, the best ones won’t even read it.

An amazing article by Andy Grove, co-founder of Intel, that puts things in perspective.  A country’s economy must be based on manufacturing and the jobs it creates.  It’s not about the designing and developing.  It’s about the manufacturing (and the jobs).  End of story.

This one’s worth the read.

Link to complete article

Please pass this one around.

That behavior was not appropriate; you did not finish that project on time; you made a mistake; you did not do it right; you did not build consensus; you did not do enough. Create an improvement plan, eliminate the shortfall, make up lost ground, re-attain the schedule. All negative, all day. I could scream.

We dissect people, identify areas for improvement, and put together plans to  improve weaknesses. How depressing. How demoralizing. How de-energizing. We demand folks become more of what they aren’t at the expense of what they are. And, to top it off, it takes a lot of our energy to manage this systematized negativity. We spend all our time on the folks who didn’t, can’t, or won’t. This is crazy.

Now, imagine a parallel universe of positivity. All positive, all day. Say nothing negative is the mantra. Ignore the negative and let it wither. Strengthen strengths. Help folks be more of what they are. Focus on the best performers. Ignore the can’ts, don’ts, and won’ts. This is a respectful universe, a supportive universe, a happy universe, but also a highly profitable and productive one. A good place to work and a great place to make money. Is this crazy?

It may be crazy. But do an experiment and see for yourself. Next time you feel the urge to snuff out bad behavior, ignore it. And instead, stoke the blaze of fabulous behavior. Throw diesel on it, throw gas on it, do all you can to make it spread. Send the fire trucks to draw a crowd. Roast marshmallows. You’ll have fun and it’ll feel good. I guarantee you’ll get more fabulous behavior. And the bad behavior? Who cares.  Let it wither.

I read a refreshing article in the Washington Post. Defense Secretary Robert M. Gates wants to save $20B per year on the Pentagon’s spend. I could kiss this guy!

Gates wants contracts scrutinized more closely for inefficiencies and unneeded overhead. He said the savings could be shifted to support U.S. troops around the globe. Pentagon officials said they’re looking for annual savings in the $400 billion spent on goods and services. They’re looking to save $20B, or 5%.

Gates has it right. The government must stop overpaying. But how? Gates suggests improved contract scrutiny to eliminate inefficiencies and unneeded overhead. He’s on the right track, but that’s not where the money is. Gates’ real target should be material cost – that’s where the money is. But, can material cost bring $20B savings? Yes.

Assume the Pentagon spends $100B on services and $300B on goods. The cost of those of goods falls into three buckets: labor, material, and overhead, where material cost makes up the lion’s share at 70%, or $210B. A 10% reduction in material cost brings $21B in savings, and gets Gates to his target. But how?

To get the savings, the Pentagon must drive the right behavior.  They must must make suppliers submit a “should cost” with all proposals. The should cost is an estimated cost based on part geometries, materials, manufacturing processes used to create the parts, prevailing wage rates and machine rates, and profit. From these parameters, a should cost can be created in the design phase, without actually making the parts. So, the Pentagon will know what they should pay before the product is made. This cost analysis is based on real data, real machines, and real material costs.  There is no escape for defense contractors.  The cash cow is no longer.

Should costing will drive the design engineers to create designs that work better and cost less, something the defense industry thinks is impossible. They’re wrong. Given the tools, time, and training, the defense industry’s design engineering community can design out at least 25% of material cost, resulting in $50B+ in savings, more than twice Gates’ goal. Someone just has to teach them how.

Mr. Secretary, the non-defense world is ready to help.  Just ask us. (But we’ll go after a 50% cost reduction.)

About eight years ago, Hypertherm embarked on a mission to revamp the way it designed products. Despite the fact its plasma metal-cutting technology was highly regarded and the market leader in the field, the internal consensus was that product complexity could be reduced and thus made more consistently reliable, and there was an across-the-board campaign to reduce product development and manufacturing costs. Instead of entailing novel engineering tactics or state-of-the-art process change, it was a back-to-basics strategy around design for manufacture and assembly (DFMA) that propelled Hypertherm to meet its goals.

The first step in the redesign program was determining what needed to change. A steering committee with representation from engineering, manufacturing, marketing, and business leadership spent weeks trying to determine what was required from a product standpoint to deliver radical improvements in both product performance and product economics. As a result of that collaboration, the team established aggressive new targets around robustness and reliability in addition to the goal of cutting the parts count and labor costs nearly in half.

See link for entire article

You’re sitting in a big meeting discussing an issue, and consensus is nowhere to be found. There are two camps and you’re in neither. And the big kahuna has marked her territory – you know where she stands. Frustrated by the lack of consensus she looks you in the eye and asks, “What do you think?” What do you do? Do you tell her what you really think or do you tell her what she wants to hear? More and more, it’s the latter. We’ve become too conflict averse. We’re so conditioned to avoid conflict we don’t even consider saying what we think. We go right to what they want to hear. Sad.

I argue it’s best to be authentic at all costs – tell them what you think and why. This approach does not minimize stress in the short term, like the next several days after the meeting. But it’s the least stressful over the long haul. First, once the kahuna calms herself and thinks about what you said, she’ll be happy you gave her the truth. You educated her. Even if she does not end up agreeing with your thinking, you gave her a broader perspective, a more complete view of the situation. She’s smart. She’ll see what you did for her. She’ll come around. Second, and more importantly, you’ve been true to yourself – no internal stress whatsoever. You’ve been authentic. You’ve been you.

You’re most effective when you’re you. You’re comfortable, you’re genuine, and you’re believable. And you’re stressed as hell when you pretend. Not believable. Faking doesn’t feel good, and it’s hard. It’s like wearing shoes that are two sizes too small – they’re not yours, and they hurt. You’re hobbled by them. People see the wincing as you shuffle through your day. They see the tension in your body. They know something is not right and they judge your words accordingly. Bad.

It takes big balls to be authentic. There are negative consequences. Some get pissed when you tell it like it is. So be it. And clear, focused thinking can be threatening. So be it. But the positives outweigh the negatives. Your organization is better for your thinking, and, most importantly you get to be you. Priceless.

Level 5 Courage is hard to describe and harder to recognize.  What is it?  Who has it?  What is it good for?  To understand it, look to the rodeo clown.

You’ve seen the rodeo clown. A strange looking thing – funny clothes that don’t fit, a silly hat that doesn’t stay on, and bright red suspenders meant for bulls not pants. He’s all fun and games on the surface, but serious as a heart attack when seen at depth.  Underneath the clownness he does serious, meaningful work, work for the benefit of others.

Surely the cowboy needs gumption to sit atop a big, angry bull, a bull whose sole purpose is to use his raging bullness to enthusiastically eject his unwelcomed rider. Certainly the cowboy has courage.  But is it Level 5 Courage?  Maybe.

What’s the first thing the cowboy does after being pitched to the dirt? He gets up and runs like hell away from the bull. And the clown?  He runs like hell toward the bull. When everything natural says run away, the unnatural rodeo clown runs toward. And he runs with purpose, with precision, with intent. He runs at the pointy parts, and he runs to re-aim them.  Level 5 Courage – guaranteed.

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This cannot be taught – rodeo clowns are born, not made.

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When the crowd sits in the grandstand they want to see the cowboy.  But when the cowboy sits on the bull he wants to see the clown.  Sitting atop an angry, frothing bull, knowing the fury to follow, the cowboy finds comfort in the funny clothes hiding behind the barrel. With the briefest eye-to-eye connection the pact is made.  The cowboy knows it will be all right.  No mater what, the clown will be there – guaranteed.  Even at the expense personal safety. The clown gets meaning from this work.  This is why he is a clown.

There is a powerful bond between clown and cowboy. And cowboys always buy the beer.  Always.  Cowboys understand clowns are special and clowns like to be appreciated for what they really are.  It works for both.

Cowboys are right – rodeo clowns are special, but they’re hard to recognize; you must look deeply to see them.  So keep an eye out.  Once you recognize them, don’t make them turn in their funny clothes and suspenders. Appreciate them for what they are and they will make things all right.  Level 5 Courage – guaranteed.

Balsamic Vinaigrette – done well it’s made from good balsamic vinegar and extra-virgin olive oil (EVOO) with a couple minor players thrown in as needed. Balsamic – dark, rich, full of spirit, bold, big personality. EVOO – deep yellow-green, thick, unflappable, broad-shouldered. Separately, they have their strengths and they know what they’re good at. But together they’re magic – strengths amplified, weaknesses canceled – which is strange, because they really don’t like each other. When co-located, it’s grapes with grapes and olives with olives, circling the wagons for self preservation, like two teams in the same locker room, two sects in the same country, or two silos in the same company. For old grape juice and olive blood, co-location is not enough. An external force is needed – their bottle must be shaken a little.

When it’s game time, when it’s time to perform, when the shit hits the fan (or lettuce), grapes must make nice with olives and vice versa. But who makes the first move? How can an old grape reach out to a squished olive and still stay true to the Balsamic cause? How can they be mixed, shaken, and poured for the common cause? It’s all about the mixer/shaker/pourer.

Here is a little inside information about grapes and olives: Grapes don’t take direction from the chief of clan EVOO and olives don’t listen to the boss Balsamic. What’s needed is a mixer/shaker/pourer that is BOTH a trusted old grape who has lived through a good foot stomping AND a trusted old olive who has experienced the pain of a first pressing. Trust is essential. Look what we’re asking them to do: parachute from their bottle, hit the battle front together, and fight as one. That’s scary. Trust is needed.

The best mixer/shaker/pourers are an enigma – part olive, part grape, yet neither; sometimes misunderstood but always trusted; supportive of team members while pushing them out of their comfort zone. They earn their salt – they get it done. They bring people together and make it happen. They amplify strengths and shore up weaknesses to achieve the multiplicative effect where team output is greater than the sum of the parts.

These folks have an important and difficult job. And it can be a bit lonely, as they are never wholly part of any one community. So when you see them in the hall, give them a smile. They like to be understood.