15 minute read
‘EMBRACE IT AND FACE IT’
Challenging times demand innovative approaches to leadership. Gathering in Detroit for Chief Executive’s annual Smart Manufacturing Summit, CEOs swapped notes on what’s working, what’s not—and what to do next. BY DALE BUSS
Advertisement
Detroit is the home of
manufacturing brands as old and fabled as Henry Ford’s blue oval and as new and cutting-edge as Shinola, a haven for both the heaviest of metal-bending American manufacturing and for the nimblest of new-age additive fabrication.
So there was no better place for hundreds of manufacturing leaders from around the country to assemble to talk shop, be inspired and learn helpful hacks at the recent 2022 Chief Executive Smart Manufacturing Summit, presented in partnership with the Michigan Economic Development Corporation. The highlight of the two-day event was a tour of Ford’s Rouge Electric Vehicle Center in suburban Dearborn, as Summit attendees comprised one of the first groups to get a thorough behind-the-scenes look at the futuristic factory where the automaker is assembling its revolutionary F-150 Lightning pickup truck.
Those attending the event in person and virtually also learned why the future of their own manufacturing operations might lie in creating a “listening” culture, in forging their own brands, in staying steady with their supply-chain philosophy amid unprecedented disruptions or in harnessing the iterative power of 3D-printing collectives. “It’s an uncomfortable time for many of us,” said Debbie Manzano, Ford’s director of manufacturing, in a keynote that focused on how the automaking titan is pushing its transition to the era of electric-vehicle making. “But we need to challenge ourselves in being uncomfortable, which drives change and learning. We need to embrace it and face it. And we can’t help but be excited by it at the same time.”
Here were some other highlights of what manufacturing leaders shared at the Summit:
Summit participants touring Ford’s Rouge Electric Vehicle Center in suburban Dearborn.
CREATE A DIFFERENCE-MAKING CULTURE
THE U.S. MANUFACTURING COMMUNITY has been grappling with the lack of skilled workers available to fill what amounts to millions of vacant positions in factories, on docks and in engineering offices across the country. But it won’t help CEOs to throw money at those jobs and hope that more-than-competitive compensation will attract and hold people. For long-term advantage, there’s still no substitute for building a cohesive and sustainable corporate culture. “Forty-four percent of employees are actively looking for a new job these days,” said Corey Stowell, CHRO for Webasto Roof Systems Americas. “It doesn’t matter what industry you’re in: You can’t afford [with compensation] to keep up with what you’re seeing in the marketplace today.” Webasto has been in the middle of this struggle, because the U.S. arm of a giant Germany-based manufacturer of automotive sunroofs has been trying to staff about 900 positions at its new plant in Plymouth, Michigan, southwest of Detroit. And the company has found its most effective recruiting tool to be the fact that Webasto completely overhauled its workplace culture five years ago in a transformation that continues to reverberate today. Eight years ago, Webasto was making several rounds of layoffs, freezing and cutting wages and “creating fear within as employees moved to the end of the week,” Stowell said. “Fridays became known as ‘Black Fridays,’ and employees would celebrate if they made it through.” Webasto had “created an environment full of fear and distrust, where collaboration rarely existed and people worked in their own little silos.” New management came in at that point and engaged a consulting firm that confirmed the bleak picture: It had never measured employee dissatisfaction at levels as high as those it found among Webasto’s workforce. So, leadership decided to leverage cultural transformation as a way of revolutionizing worker attitudes and even gaining new business. And it happened quickly. Within a few years, the same consulting firm tapped into Webasto worker attitudes and found record happiness with the company. Business was booming, and the company built a new headquarters locally in addition to the new plant. Here were the keys: Come up with a coda. Webasto wanted to forge and explicate its new commitment and document it as quickly as possible. The company chose a diverse group of employees from up and down the organization to address a series of questions about the future of the organization. “It generated emotional discussions and a hell of a lot of passion that went into them,” Stowell said. But it all helped Webasto produce a sort of corporate culture Magna Carta that it called the Compass. Now, operations folks get on a daily call in which they “pull up the Compass and someone talks about what it means to them or an example of someone living the Compass.”
Listen before anything else. Webasto hosted one-hour “listening sessions” for which it gave workers time off the factory floor to “come in and talk.”
“We urged people to be open and transparent, and talk about their hopes and fears,” said Stowell. Venues included roundtables, town halls and “coffee hours,” as well as a complimentary full-weekend conference for hundreds of employees at a Detroit hotel and casino. “We had to be taught how to listen,” said Stowell. “We actually went through a class about how to become fully engaged, how to look at individuals eye-to-eye, how to use phrases to get them to open up.”
Don’t argue. In the process of soul-baring, Stowell said, some workers threw out falsehoods about the company, such as one who said Webasto didn’t even offer him time for bereavement when a loved one died. “I knew that wasn’t true because we had bereavement,” Stowell said. “But I wasn’t there to argue with him. My goal was to listen and learn. People’s perceptions are reality, and it was important that we recognized there was a reason he felt that way.”
So, even if what you’re hearing “goes against the grain,” Stowell said, “listen to your employees.”
Expect instant results. Launching the listening process brought changes in employee attitudes and results. “It gave us time to focus on longer-term topics such as leadership development and improving communication,” Stowell said.
This includes the requirement that you act on what you hear. “If you take action, you’ll gain their trust and respect,” he said, even if remedies are as simple as installing a new light bulb in a parking lot to restore a sense of security when second-shift employees leave for the night. “Otherwise you’ll have the complete opposite effect on the organization.”
Embrace employees. “Give them a sense of belonging,” Stowell urged. “Give them the freedom to be themselves. The more connections employees have with the organization, the less likely they’re going to leave. Or at least they’re going to think twice about it.”
Webasto was soon the subject of a Harvard Business School case study and winning awards as a “best place to work.” Covid-19 registered a “hit” to Webasto’s culture, Stowell admitted, as the company “fought hard to keep our employees safe. But we didn’t have a single layoff. We experienced more turnover than we’d ever seen, so we need to focus on what we can do.” And most of that is to rely on the new culture Webasto had built quickly.
Recognize contributions. “You can’t do it enough,” Stowell said. “Give reasons you’re recognizing employees, and make it important.” Webasto even holds a national employee appreciation day each month.
INDUSTRY 4.0 REALITIES
WHILE HURDLES LIKE the risk of failure can be considerable, adding technology to operations is increasingly imperative for manufacturers. In fact, innovations that incorporate additive manufacturing, or 3D printing, have already changed the terms of engagement for American manufacturers deploying this crucial cog in the Industry 4.0 toolkit, noted Tom Kelly, executive director and CEO of Automation Alley in suburban Detroit.
Among them are members of Project Diamond, a collective of small manufacturers testing the capabilities of 300 carbon-fiber printers purchased by Automation Alley. The printers are stitched together by blockchain. Valentine Vodka, for instance, now designs and prints components for its distillery line instead of waiting up to six weeks for parts. And Air & Liquid Systems 3D prints its own valves for $2.50 each instead of paying $99 each for stainless-steel varieties. 3D printing, IoT, robotics, cloud computing, big data, cybersecurity and AI are “disrupting manufacturing all at once,” said Kelly, noting that “the business model of manufacturing is changing, moving from capital intensive to capital light or capital zero. This is the biggest organizational-disruptive force in our lifetimes.”
Kelly outlined five principles for manufacturers to thrive in a “new economy” where Industry 4.0 is setting the terms:
Champion software. Become a software company that happens to be a manufacturer. “It boggles minds to see that Apple just decided to make a car. How do they do that? Because the car is getting simplified at the same time [Industry 4.0] technologies can be applied to manufacturing. So you get all kinds of new entrants: technology players who understand resilience and agility. Variability becomes their friend.”
Think like the customer. Figure out, “How does the customer win?” from what you might do with 3D printing and the other tools. “You’re not in the manufacturing business but in the customer-services business.”
Embrace the duality. The merging of digital and physical possibilities knocks down previous constraints. “Complexity is very expensive in manufacturing,” Kelly said. “But in additive manufacturing, complexity is free. It’s encouraged.”
Make small bets. VCs succeed in the digital arena unburdened by traditional notions of return on equity. “They place a lot of bets because if one hits, it pays for all of the bets they’ve ever made,” Kelly said. “This is total anathema to [traditional] C-Suite structure.”
To determine whether additive manufacturing can help your company, “You don’t have to bet the farm. Just start by thinking, ‘If I were unconstrained by the assets I have today, how would I put myself out of business?’”
PREVENTING ‘JUST-IN-TIME’ FROM BECOMING ‘JUST-IN-CASE’
WITH NO END IN SIGHT for the global shortage of microchips, supply-chain risk continues to be front and center for car makers. At Toyota, the crisis is serving to underscore the effectiveness of the kanban strategy it has used for decades—one that offers lessons applicable to other manufacturers, noted Jeff Liker, a University of Michigan professor, consultant and author of The Toyota Way: Stick with your knitting. “Their [supply-chain] principles are timeless,” Liker said. “They don’t change them often or quickly to deal with specific problems.” Toyota has and adheres to standards for normal operating procedures, adjusting them only after careful review.
Find your partners. “Supply-chain management is about continually learning to work together ever better for the customer,” Liker said. “If you want to improve your supply chain from this model, you have to partner with various entities to learn together. You, as a customer, can’t control anything. It requires interdependence. You need to learn to solve problems and improve together. That’s the ultimate vision.”
Toyota’s approach “is based on fair and honorable business relations; next-layer-up, stable, reliable processes; then clear expectations; then enabling systems; then learning enterprise. Synchronicity is crucial. The just-in-time system is rigidly enforced at the top of the supplier pyramid and allowed more slack the further a supplier is from the assembly plant apex. “System suppliers are integrated and tightly connected with little inventory” to the Toyota operation, Liker said. “Rookie or troubled suppliers are monitored and may be asked to hold more inventory.”
Perform exception management. Toyota’s strategy, Liker explained, is “to develop standards for normal operating procedures and respond to specific disruptions on a one-off basis, then reflect and learn lessons from that major crisis that become part of your new normal operating procedure. The basic principles of just-in-time don’t go away. You just have to decide what you need to modify based on what you’ve learned from the crisis.”
Your Goals. Achieved.
What could your organization accomplish if you could peer into the future?
Profit from the experience of your industry-specific CEO peers.
Chief Executive Network (CEN) allows you to profit—personally and professionally—from peer CEOs in your industry who have first-hand experience with the challenges and opportunities you face and are committed to your success.
Peer into the future and spot new opportunities.
As the CEO, you are uniquely responsible for synthesizing technology, customer, competitor, societal and economic trends. CEN provides peer and expert perspectives that can help drive your organization’s future.
Maximize your effectiveness in minimal time.
In just a few days a year, you will identify and concentrate on those initiatives that can have the greatest impact.
Call Rob Grabill at (201) 323-3716 or visit ChiefExecutiveNetwork.com
Are you ready to take your business to the next level?
Each peer group meets in person and online several times per year—and members also have access to world class conferences, a network of over 500 members, as well as subject matter experts. This enables our busy members to tap the collective experiences and knowledge of the network to make better decisions, faster, and to avoid costly mistakes. Find out more today.
BUILDING A BRAND TO BUILD A BUSINESS
SHINOLA IS A MANUFACTURING COMPANY that’s nothing if not audacious and ambitious. “We are building a lifestyle brand, more than just a watch company,” said CEO Shannon Washburn. “We’re determined to become the next great American lifestyle brand born in Dertroit.”
To that end, the startup that began by making bicycles and assembling watch movements in Detroit has added a Shinola Hotel downtown, a design cooperation with Lincoln for a version of its Aviator SUV, a merchandise collaboration with Crate & Barrel, the possibility of a Shinola toboggan and the prospect of Shinola eyewear by spring of 2023, in a collaboration with Marchon.
Shinola now employs about 450 people making leather goods as well as watches, half of them in Detroit, as founder Tom Kartsotis—who first founded the multibillion-dollar Fossil watch brand—and Washburn continue to build out the notion of what an American manufacturing brand can become.
Here’s how other manufacturers can move toward Shinola-level success:
Start small. For a year, Shinola’s initial watch-making workforce of about 100 people in Detroit did “nothing but build movements,” Washburn said, a labor-intensive skill that could involve putting together tiny assemblies of up to 120 pieces. Supervised by Swiss watch-making experts, the company’s core manufacturing workforce mastered the most important capability for a watch-making startup.
Improve the basics. Last year, Shinola introduced single-piece flow manufacturing in Detroit. “We saw efficiencies improve, quality go up, and lead times go down, and overall productivity and happiness within the team got much stronger,” Washburn said.
“It helped us see how we could achieve operational excellence and efficiencies and create really strong teamwork in the manufacturing space,” she added, “It became more about having the right product at the right time for the needs of our [customers] versus the organization of our equipment.”
Focus on your people. Developing its people has been key for Shinola. “We celebrate our manufacturing team members and give them opportunities,” Washburn said. “They’re developing new skills as we develop new launches; and it’s about education and letting them show their strengths.” Two of Shinola’s original hourly employees have become production managers.
Launch apprenticeships. Shinola works with its entry-level employees to elevate them within through its Be More program. “From positions in retail, customer service and manufacturing, where do they want to go next?” Washburn said. To help employees figure that out, Shinola holds “passion days” around different areas of the business to help them foresee pathways upward. Four of five people who joined the new apprenticeship program have already been promoted.
Communicate thoroughly. “I tend to overcommunicate, but I prefer that,” Washburn said. “People can’t do what they don’t understand.” That includes sharing the company’s success with KPIs, she said. “People want to know what they’re working toward, and if they do, the results can be outstanding.”
Stay in touch with customers. During Covid, while Shinola stores were closed, the brand “stayed close to our guests as associates sent handwritten notes,” Washburn said. “It wasn’t to say, ‘We want to sell you this or that,” but more to check in. ‘How are you doing? How are you feeling? When things open back up, we are here for you.’”
React to the moment. Shinola is looking to cut expenses by 10 percent this year in light of the muddied picture for the U.S. economy. It is also “focusing on our top 25 basic watch [SKUs] and go deep on those and be in stock, dedicating our manufacturing to those products,” after cutting down from 36 SKUs.
Stick with your DNA. Hotel, store or via e-commerce, Washburn said, “it all says, ‘Shinola.’ The consistency of what we want to be and what’s important to us has to be a touchpoint. That’s the only way to have authentic interaction” with customers.
And every new brand extension by Shinola “needs to be core to our DNA, which is stylish design, clean and classic. We are listening to our guests in terms of how they’re experiencing the brand differently.” CE
Unlock your board’s potential to become a greater strategic asset.
Great CEOs make great use of their board – but how do the best CEOs manage and lead their board of directors? Since 1998, Corporate Board Member has helped inside and outside directors improve their contributions as individuals and as boards, and in turn, strengthen stakeholder trust in the organizations they represent. Our community of exemplary leaders are setting higher oversight standards, distinguishing themselves—and their organizations—from their competitors. Join them as part of the Corporate Board Member Network.
Network with your peers.
Meet other CEOs and board members who have led from inside to get the firsthand insights you need to leverage the full experience of your board of directors.
Challenge the status quo.
Enable your directors to bring constructive debate to the boardroom— challenging business assumptions to make the most informed and impactful decisions.
Effectively lead your board.
Just as boards hold the CEO accountable, you must require the same of your board. Learn how to clearly communicate what you need from your directors and make your board a cohesive team.
Through exclusive peer-to-peer discussions—online and in-person— access to independent research and best-in-class resources and training, CBM Network is raising the bar in board education. To explore full-board or individual membership options, contact Rachael Gaffney at rgaffney@ChiefExecutiveGroup.com or visit
