Read Part 1 of the Titanic Syndrome here


The Titanic Syndrome, Part 2


Identifying production and profit leaks leads to making the necessary corrections that will help shore up profits.




Last month I discussed the Titanic Syndrome, a situation in which a company's management thinks everything is great and firmly believes there is no way "our ship can sink," even after the business has already begun taking on water. The article went on to discuss how to go about conducting a Structured Operational Survey, which involves taking a good long look at your company to identify strengths and weaknesses.

The SOS is a top-to-bottom plant operations audit. It helps companies determine which compartments are ship-shape and which ones are leaking profits and are in need of shoring up.

I likened the weaknesses uncovered in the SOS to the leaking compartments on the HMS Titanic. If ignored, they can cause your business to sink. I reiterate that this topic does not apply to large companies alone. You do not have to be a giant cruise ship to sink! A small company is actually more vulnerable to the uncertainties in today's competitive environment than the large multiple-plant operations with all of their water-tight doors. However, as the owner or manager of a small company, you have an advantage. You can respond quicker to what threatens you from within. You can change course more easily.

Once you have identified all of your leaks, it is time to navigate a new strategy - to attack the problems and initiate change for the better. Nothing happens to further your company until change occurs. Some say knowledge is power. However, knowledge without diligent action is intellectual impotence.

Rapid Continuous Improvement Program

An aggressive Rapid Continuous Improvement Program begins when the SOS survey team hands off its information to the RCI steering team. This team will be motivated and challenged from the top on down by you, the executive manager, to develop a plan for change initiatives in the areas identified as needing improvement. This plan is your Managed Change Initiative containing time-lined, measurable goals for improvement in the deficient areas the SOS survey highlighted.

Each member of the steering team will work with his or her subordinates by forming smaller focused teams to develop detailed action plans to correct departmental deficiencies and to reach new goals. Regular periodic reporting of results will occur within the RCI team. (Note: If your company already uses a team concept to implement change, then you are ahead of the game.)

How to Initiate Change

The first step toward shoring up profit leaks is to assemble the RCI steering team consisting of your most creative and productive associates from different areas of your company. They should represent the departments covered in the SOS and include your top managers in manufacturing, personnel, accounting and engineering, plus anyone else who was involved in your SOS team.

In a small company, simply include your "key" people. After all, these people will have the best understanding of where you are in light of the survey and are the ones who will make things happen.

Next, restate the purpose of the SOS you conducted and review the findings of that survey with the team. Review the successes the SOS team experienced working together. Discuss how this new team should be structured to carry out the change initiatives which you are about to define. Conduct brainstorming sessions to look at where you are and where you need to go. Are you trying to grow your business and increase the bottom line, only to find that there are constraints everywhere? If so, then define exactly what kind of growth you want, with what products and in what plant. You may want to focus on cost-reduction, quality improvement or shortened lead times.

The third step involves documenting these objectives, taking into consideration the information you developed during your SOS exercise. You now know your strengths and weaknesses and are going to change course to build on these strengths and change the weaknesses. The goal is to develop a strong consensus among the RCI team regarding what direction to take and then record it. This document sets forth the strategic goals you want to reach and becomes your Managed Change Initiative.

For example, you and the RCI team may decide to include the following goals:


  • Improve operating income by 20%.
  • Reduce customer complaints and product returns by 75%.
  • Reduce employee turnover to less than 10% per year.

These goals collectively define the destination for the RCI teams to reach. Once the RCI team has agreed on the goals, it is time for them to take the very critical fourth step and assign smaller groups various responsibilities based on the action plans. There may be a Quality Group, a Materials Utilization Group, a Personnel Relations Group and other groups who must participate in a coordinated effort to assure the goals are reached. They will probe into their areas of responsibility and draft action plans to take the positive steps to address the goals the RCI team has set. These are the smaller teams who will correct the course out in the plant, with your suppliers or wherever change is needed. These teams will be the front line. They will work with their peers throughout the company to orchestrate those changes that will eliminate the constraints to reaching your goals.

In response to the goal above - "to reduce customer complaints and returns by 75%" - a Quality Assurance Group would be formed and led by the manager of your quality program. The members of this group would draw up detailed RCI goals in an outline format to give themselves focus and to get others involved in change initiatives. This document is very important to give the team focus to steer the correct course and to rapidly reach the goals you and the larger RCI team have specified.

How to Manage Change

Your part in all of this is to pull the RCI teams together to lead the formulation of goals. As stated earlier, curing the Titanic Syndrome is a top-down exercise. The teams will steer the course and decide on the changes required. However, your responsibility will be to keep the teams focused on the destination. If you want to assure the best possible course is taken, be sure to make prioritization of goals your primary focus. If the teams know where they are going, they will be more effective and accomplish more in a shorter period of time.

Corrections in the course will need to be made during the change initiative. Always listen to the crews - your teams. In most cases they will know the best course to steer. A caution at this point: Do not allow the teams to be overloaded with unrealistic goals or timetables. Constant discouragement and disappointment can kill an otherwise excellent RCI program. I have also witnessed it destroy very talented people. Change initiatives need to be aggressive - rapid and continuous - without being destructive to your associates!

This may be your first attempt at using "teams" in your company to solve quality issues, to break those production bottlenecks or to improve some other aspect of your business. The important point is that these teams working together can accomplish more than you and your staff can by working alone. Their involvement will mean more to your success than what your managers do. But it will take time and patience to train associates to work together. Expect some failures and setbacks. You cannot have aggressive change initiatives without failures or disappointments. Learn from them and teach others to learn from them. Give credit for the effort and encourage a new approach.

Years ago I heard an example of teaching through failure and have used it many times including the following situation. We were setting up a new cell to manufacture a new product line. I had just approved a young man to be the cell leader. As the new machinery was being delivered he wanted to begin placing it according to the layout plans. I told him that maintenance should do this with the proper equipment to move and place the machinery safely, especially the custom-built shaper that was very top heavy. The next morning I arrived at the plant to find that the young man, Keith, had tried to move the machine himself and in doing so toppled it. Luckily, no one was hurt. However, the machine sustained about $3,000 in damages. After Keith told me how this happened, I went over the reasons once more why there was a right and wrong way to do this job. He said he would understand if I fired him or took away his leadership responsibilities.

I replied, "Why would I fire you, we just invested $3,000 in your training! Just make sure you learned something during the process!"

Do you think Keith felt good about what he had done? No. Was the tuition too high? Maybe, but the lesson Keith learned made it worth it over the long haul.

Follow Up!

Your teams will need to meet together regularly to share progress and to coordinate their efforts and those of the smaller groups in the plant. They need to stay focused on the goals you and your top management have set. Constant feedback and reinforcement from you is a key ingredient to a successful RCI program.

As the process moves forward, new challenges will be uncovered that the original SOS failed to catch. These will be added to the RCI objectives, and the proper team will tackle them in due time. Take every opportunity to create another team to solve a new challenge. The more participation you have throughout the company, the better. Constructive change leads to additional constructive change. This is why it is called Rapid Continuous Improvement.

When you have most of your company involved in a Rapid Continuous Improvement Program, you will see phenomenal things occur. I have seen it lead to sales and profit growth in very large companies as well as small ones.

Hopefully these two articles have encouraged you to take a closer look at your company and pull together a team to help determine where you are, where you want to go and how to get there. Remember, you do not have to be a large company to use these ideas effectively. Don't say you do not have time for this! You must make the time to do this to whatever degree you feel you have the resources. Any effort, diligently applied, will bring about positive results -- removing any threat of the Titanic Syndrome and ensuring a course steered toward success.


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