May 21, 2025 • 28 mins
Are your business functions truly aligned? Ed Drozda chats with Frank Piuck from Organization Renovation on tackling silos and improving business efficiency. Don't miss this insightful conversation that's essential for all small business owners! #SiloBusting #Entrepreneurship
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:10):
Welcome to the Water Troughwhere we can't make you drink,
but we will make you think.
My name is Ed Drozda, The SmallBusiness Doctor, and I'm really
excited you chose to join mehere as we discuss topics that
are important for small businessfolks just like you.
If you're looking for ideas,inspiration, and possibility,
you've come to the right place.
Join us as we take steps to helpyou create the healthy business
that you've always wanted.
(00:45):
Good afternoon folks, this is EdDrozda The Small Business
Doctor, and I want to welcomeyou back to The Water Trough
where I am joined today by FrankPiuck.
Frank Piuck is the founder ofOrganization Renovation, a new
consulting firm that helpsbusinesses gain and maintain
alignment among all theirvarious functions.
He helps optimize the wholebusiness rather than the various
(01:05):
functions themselves.
Frank has worked in IT, websitedevelopment, business
operations, and manufacturing.
He has an MBA from ColumbiaUniversity.
Frank, welcome.
Thank you, Ed, glad to be here.
And I'm very happy to have youhere today.
I appreciate this opportunity tolearn more about balancing a
business by bringing things intoalignment.
(01:27):
So let's just jump right inthere, about business alignment,
and start by asking thequestion, are we aware?
I think people have the illusionof alignment as opposed to the
actual fact of alignment.
If you talk to a seniorexecutive of any company, off
the record, they will complainabout their peers.
(01:48):
They will complain about whatthe other department's doing
that gets in their way and maybe completely oblivious to what
they're doing that gets in theother department's way.
A very strong illustration ofthis is a company I worked for a
long time ago that soldscheduling software.
They did a demo for a plantmanager at a major company.
(02:08):
The plant manager said, Ooh,that's awesome.
I wish I could use it.
And they said, why can't I?
He said, well, because I ammeasured on machine utilization
and cost per piece and if Ifollow your schedule, I'm gonna
stop using a lot of machines asmuch as I'm currently doing.
Which will actually be good forthe inventory levels, but my
performance measures are gonnago to heck not to mention my
(02:30):
cost per piece numbers will riseeven though the throughput of
the factory will be better andthe delivery will be more
reliable.
And so I am impeded from doingthe right thing by the
performance measurements imposedupon me by the finance
department.
Interesting and financedepartment thought they were
doing the right thing becausethey're unaware of what's going
(02:54):
on, on the shop floor.
Absolutely.
Sounds like we're back to theold days of silos.
Maybe the silos never went away.
I don't think silos ever will goaway.
Mm uh, I mean, we do needexperts in disciplines, but the
expertise and the disciplinecomes at the expense of a
holistic understanding of thewhole thing.
(03:15):
And people do things that areobviously gonna make their
department efficient and runbetter with consequences over
there that they're not evenaware of.
Really good CEOs, really goodCOOs, understand that this is
going on and they will mitigateit.
But if they've been raised inthe same kinds of systems and
(03:36):
the same kinds of mindsets asthe people who are reporting to
them, they're gonna be obliviousto a lot of the opportunities
for improvement.
It's interesting because as asenior manager I have a
responsibility to theshareholders, presuming it's
that size, to make sureoperations are working smoothly.
(03:57):
So whether or not I've beenschooled in that environment
you'd think that would be theresponsibility I'd take on.
That I would be aware of and beable to mitigate these issues.
To the extent that you're awareof them, you're able to
mitigate.
The bigger the company, the lessyou're aware of them.
(04:17):
So what you're saying is thesize matters.
Size matters.
When a solo entrepreneur is theonly person in their business,
the only thing that createsdisalignment is neuroticism.
But, you get a few subordinatesand you trust'em, they have
issues with each other, you talkto them and you negotiate and
(04:39):
coordinate and you resolve them,and then you hire middle
managers or department heads,and you don't know what's going
on at the bottom level.
You're relying on reports, andthe reports have been
constructed on your behalf.
Most likely.
You have an IT department and afinance department that are
developing them, and they comewith certain mindsets and biases
(05:02):
that you may not be aware of,and those reports may be giving
you disinformation.
And if you come from one companyto another company and you
assume that the reports that usethe same words mean exactly the
same things, you are very likelywrong because the algorithms,
the data collection mechanismsare different, and therefore the
(05:24):
information summarization isdifferent, and you're getting
information that looks like itmeans one thing and doesn't mean
exactly that.
You gave a software exampleearlier.
While it might have beenworthwhile for operations to
adopt your system the plantmanager would suffer the
(05:46):
consequences because it wouldn'tbe aligned with the finance
department.
That's one example.
I presume you encounter thesethings repeatedly, which gave
rise to the concept of yourcompany.
Organization Renovation soundslike organization revolution to
me.
Well, that's a little tooambitious.
(06:09):
No, I guess my point is I'mlooking at you specifically.
I think the collective us wouldsay, this is true.
You must have encountered enoughcases of this to realize this is
a big issue.
Part of it was the company thatI worked for, where this was a
foundational idea.
It was called Creative Output.
It was founded by EllieGoldratt, an Israeli physicist
(06:29):
who had no preconceived notionsabout business when he came up
with software to schedule afactory and was constantly
surprised at the things thatpeople told him.
In many cases he wouldinvestigate and realize they
were right.
In many cases, he wouldinvestigate and think they
didn't know what the hell theywere talking about.
And so indoctrination is astrong word, but I have to use
(06:52):
it.
I was educated in that point ofview and it stuck and then I'm
looking for stuff and I can seeit all around me.
So, one of my favorite examplesis the hospital bed.
Famously, it's institutionalizedthat hospital beds are expensive
and to be minimized.
(07:13):
Hospital beds are not expensive,at least, you know, not compared
to the$3,000 a day thathospitals charge for'em.
What are expensive arehospitals, and if you divide the
hospital costs by the number ofbeds, you get a very large
number.
Every time you remove a bed tosave money, you decrease the
denominator, and it looks likethe hospital bed is even more
(07:35):
expensive.
This is a disinformation systembuilt in to the hospital.
It's in the regs for thehospitals, it's in the insurance
policies, it's probably in thelaws of the United States.
And it's wrong.
It's just a misunderstanding ofreality.
I've never worked in a hospital,but this is blatant to me.
(07:57):
Right, right.
Well, I think the root ofOrganization Renovation then
resides in the loss of alignmentbecause of misinformation.
Is that a fair way to put it?
That is a fair way to put it.
I would say that again, thetraining that a person with a
(08:19):
marketing degree has and thetraining that a person with an
accounting degree has, there aregaps in their information and
there are words that they usethat mean slightly different
things to them.
And when you have two peoplehaving a conversation using the
same word meaning slightlydifferent things, you get a
failure of alignment.
Unless they understand that theother person doesn't mean
(08:40):
exactly the same thing they do,at which point you can say, do
you mean this?
Oh, you don't mean this.
This is how I was taking whatyou were saying.
Where am I wrong?
And then you've enlightened eachother and you can get more
aligned.
One of my most recent podcastswas with a woman who had come up
through the ranks at a hospitaland was put in charge of
housekeeping, and she had beenin the hospital for a while, so
(09:03):
she was pretty well versed inhow it worked, and she saw that
her people were doing thingsthat didn't make sense to her,
and she told'em to do itdifferently, and she shut down
the operating room withoutintending to.
Had her head handed back to her,she reversed the decision,
started asking her peopleintelligent questions, overcame
their suspicions, because peoplehadn't asked them those kinds of
(09:26):
questions before and they hadn'tbeen trusted and they didn't
really expect to be trusted anddidn't trust in return.
And she became very, very goodat her job.
And the infection rates in herhospital went way down.
But even though she understoodan awful lot about how that
hospital worked, she made whatseemed to her, based on the
(09:46):
training she had, based on herunderstanding of the world, and
her people's jobs, she madedecisions to reorganize things
in ways that if the operatingroom wasn't involved, it
would've made perfect sense.
But it didn't make perfect sensebecause it's really important in
a hospital that the operatingrooms get cleaned up after every
operation very promptly, so thatyou can keep patients going in
(10:10):
there both for the sake of thehospital's finances and for the
sake of the health of thepatients.
This is a very smart,well-intentioned woman.
She missed it.
And that's not the only timeI've heard that story.
I've heard it about a differenthospital.
So you would think that there'dbe a sort of allure of hospitals
that they'd all be sharinginformation and be saying, you
(10:31):
get a new head of maintenance,you get a new head of
housekeeping, make sure thatthey know that it's better to be
inefficient around the hospitalin terms of human utilization to
make the operating roomefficient.
Are you making your customerservice department efficient by
measuring the number of callseverybody has and punishing
people who have too few?
(10:53):
Or are you screwing yourbusiness by alienating customers
and reducing the lifetime valueof the people you've spent a lot
of time acquiring its customers?
I think we all know the answerto that one.
Not the people who are measuringtheir customer service
departments that way, andthere're an awful lot of them.
This is true.
I'm sure that some of thosepeople making those idiot
(11:13):
decisions get really angry atthe customer service departments
of the businesses that they arecustomers of, even as they're
doing the same to their owncustomers.
Alignment comes in all shapesand sizes or misalignment.
I hear you.
You are seeking clarity insystems.
(11:35):
You've identified there aresilos.
We know they're out there.
Yes.
And, silos by definition haveclarity within themselves.
Yes.
But not adjacent silos.
Yes.
When Silo doesn't know what thenext one's doing, and assuming
that leadership is familiar withall of the silos, that's still
(11:57):
not sufficient for them tobridge the gap between one and
another.
You get an MBA, you go into thefinance department, you rise
through the ranks, they put youin charge of operations in some
place, and you learn a lot aboutoperations, but you don't know
the nuances of purchasing.
You don't know the nuances inmarketing, you definitely don't
know the nuances of sales, oryou come up as a salesman and
(12:18):
you don't understand operationsvery well.
And so you have a position ofgreat responsibility and you
understand very well the siloyou came out of, and if you are
smart and creative, and patientand committed to learning, you
know, you need to learn thatstuff.
But on the other hand, you'resuddenly hit with a whole bunch
(12:39):
of new problems and issues thatyou have to deal with quickly
and don't have the time to delvedeep, to understand the
underlying causes.
So you're gonna make the bestdecision you can with the
training you have, theinformation you have, and you're
never gonna learn all the thingsyou need to know.
And the bigger the organization,well, if there's a hundred
people in the organization, youcan meet every single person in
(13:00):
the organization.
If there's a thousand, you couldmaybe do that, but only at the
expense of some of your otherresponsibilities.
If they're 10,000, it'sabsolutely impossible.
Okay.
Okay.
We can agree that misalignmentoccurs and it's directly
proportional to growth.
The bigger it gets, the moremisalignment occurs for a
variety of reasons, such asyou've alluded to.
(13:22):
That is kind of a common sensething, not saying it's right,
but it's a common senseexpectation.
Bigger, faster means morecomplexity.
Bigger, faster means moreopportunity for misalignment.
So is misalignment somethingthat we can prepare for before
it becomes a legitimate problemwithin our organizations?
(13:48):
That's a tough question.
One can be intellectuallyprepared for it and looking for
it and miss it.
Again, the bigger theorganization, the more complex,
the harder it is to manage allthis.
But, one of the biggest problemsin avoiding it is simply the
fact that the more complex theorganization, the more senior
(14:09):
you are, the more time you spendputting out fires, negotiating,
browbeating, being browbeaten,trying to broker compromises
between the functions withoutunderstanding what the
underlying problem necessarilyis because neither of them is
explaining them to you, to yoursatisfaction, do you have the
(14:30):
time to spend?
It might take you two weeks tounderstand the problem deeply,
and you don't have two weeks,you have an hour to get these
people, these two knuckleheadsto cooperate.
And so they're gonna come upwith something that kind of
works for them, sort of, and mayscrew up something over there
that they're completelyoblivious to.
(14:52):
Hmm.
Okay.
Perfection in organizations isimpossible, even in small
organizations.
And the bigger they are, theless perfect they're going to be
but that doesn't mean that itcan't be improved and it doesn't
mean that if you have some sortof systemic process the way
Toyota developed Just in Time,that you can't make huge
strides.
(15:13):
So the process in Toyota, whichthey called taking rocks out of
the river, was to take a smallamount of inventory out of a
workstation and see whathappened.
And if nothing bad happened,they wouldn't put the inventory
back.
And if all hell broke loose,which undoubtedly happens,
sometimes they would put it backright away.
Right.
And if something came up thatthey could figure out, they
(15:35):
might put it back but go addressthe specific problem that they
saw and fix it.
And by the time they've donethat a hundred times, they have
a pretty good idea where theycan take the next batch of
inventory out without causingall hell to break loose.
And they can systematically.
Find a problem and fix aproblem, and find a problem and
(15:56):
fix a problem, and the systemgets smoother and smoother and
better aligned until it was somuch better than American
manufacturers, I read a bookrecently where American
manufacturers went to Japan andsaw an auto plant with next to
no inventory, and he said thisis bullshit.
You can't have a factory withoutinventory.
(16:18):
He just didn't believe his owneyes, but he did have a plant
with no inventory and it workedmuch better than his plant that
was full of inventory.
But he was conditioned, right?
He knew how his auto plantworked and he didn't think there
was any other way to do it.
So if you follow that Toyotamodel, you can get much, much
better alignment by solvinglittle problems systematically.
(16:41):
And I would expect that if yousolve what looks like a little
problem every now and then,you're solving a big problem
without even realizing it.
For so many things, one win caninspire us to seek more, and in
the case of Toyota, for example,this is clearly an example of
misalignment prevention.
(17:02):
yes.
Or I guess presumably there wassome degree of misalignment, but
they recognized that earlyenough to take steps to prevent
it from continuing or growingbeyond that point.
I've never been to Toyota and Ionly know these stories
secondhand, so I'm sure there'smuch more complexity to it than
I could intelligently talkabout.
Yeah, I don't think there's aneed to get into the finite,
(17:23):
details, but I do believe thatthere's a lesson here that one
must be aware first, that thereis misalignment.
Being aware is step one, as withso many things, being aware and
then of taking appropriateaction.
It shouldn't have to becompletely retrospective.
Though it seems to me that theidea of management of
(17:45):
misalignment should be anongoing concern such as
performance evaluations wherewe're not evaluating people
every six months or 12 months,we're consistently assessing
them so that we can prevent anissue at the six or 12 month
review time.
We're looking for opportunitiesfor efficiency and improvement
all the time.
(18:06):
Yeah.
Likewise, misalignment.
With misalignment we're lookingat something that can have
significant deleterious effects,right?
Absolutely.
But yet, if the mindset is thatwe're looking for them and
taking steps, then themisalignment we're dealing with
is far less outta whack.
(18:28):
That's really a good technicalterm.
If we ignore it, let it go, itwould eventually get to the
point where it might beproduction stopping versus
production delaying.
Yes.
Absolutely.
I have been in quite a fewfactories and some factories are
messy and chaotic, and somefactories are smooth and the
factories that are smooth, I wasin a factory that ran really
(18:51):
beautifully and was casuallytalking to one of the employees
who said three or four yearsago, this was so different.
The new plant manager came inand he just little by little
fixed things and now it's somuch better and it's so much
easier for everybody here.
So it absolutely can be done.
(19:12):
But this was a small company.
There were perhaps a hundredpeople.
Okay.
And, it was one plant.
If you had a multi-plant companyand you had a guy like cleaning
up one plant, it wouldn'tnecessarily cause the other
plants to clean up.
There might even be somebackbiting.
Hmm.
(19:34):
Yeah.
Mature people wouldn't do that,but not everybody's mature.
Yeah, that's for sure.
It seems that there's for thesmaller companies, for example,
you said this company is ahundred employees, they've got
more to lose.
The larger companies to somedegree have enough different
revenue streams perhaps thatthey can kind of overlook some
(19:57):
of these things to some degree,I'm not suggesting they should.
But the small companies reallyhave a lot to gain here.
Every company does.
It's easier in a small company.
Right.
If they have the right mindsetin the first place, it's easier
never to get in trouble.
And if they have the rightmindset at some point, it's
easier to get out of trouble.
Right.
(20:17):
GE was the most respectedcompany in the United States not
that long ago.
Jack Welch was amongst the mostrespected chief executive
officers, and he retired and hissuccessor bumbled, and then the
successor after that, basicallythe company collapsed and
they've broken it into smallpieces.
And an awful lot of that inhindsight, were problems that
(20:40):
built up under Jack Welch'swatch.
Right, right.
He was generating these verysmooth earnings because GE
Capital was a black box and theywere doing black box things and
some of those black box thingsblew up years later.
Right.
Eastman Kodak was a giant, itwas one of the top.
(21:04):
Fortune 20 company, I think hadworldwide market share, well
over 50%.
Invented the digital camera.
Yeah, and?
Eastman Chemical was a divisionthat still is viable and the
Kodak name has been resurrected,by people who bought the name
(21:26):
from the bankrupt company andare doing things under that name
that have nothing to do with thecompany that, I mean, there are
still film photographs taken,I'm sure, and it's very special
circumstances.
But, there's nothing Kodak couldhave done to preserve the legacy
photography business once theiPhone came out.
(21:48):
Right, right.
Failure to keep up.
In their case, they did an awfullot, for an awfully long time.
I did a consulting project theremany years ago when they were
still so prestigious and sosuccessful, and just walking
through the place with fresheyes I saw all sorts of stuff
(22:11):
that just is, why are they doingit that way?
They would mount huge roll offilm in the dark.
They'd run them throughchemicals to put the
photosensitive chemicals onthem, and then they take it off
the roller in the dark.
They put it onto another machinethat would slit it into the
strips of film and put thesprocket holes in.
Mm-hmm.
(22:31):
In the dark.
Now, if you're dealing incolossal amounts of film that
may very well have been the mostefficient way to do it.
But they were doing enormousamounts of quality control
testing.
They were throwing away lots andlots of perfectly valid film to
make sure that the film thatthey weren't testing was good.
They were also making specialtyfilms.
Why not cut the film in thelight, put the sprocket holes in
(22:56):
and run strips of film that werethis big and put the photo
chemicals on them.
Mm-hmm.
The quality control issueswould've been so much less.
Maybe it would've been lessefficient in terms of the
amounts of machines needed, butin terms of the chemicals and
the film wasted, it would'vebeen a huge difference and
certainly for small rungs offilms that were not billions of
(23:18):
units a year.
Mm-hmm.
It would've been a much moreefficient way to do it.
I emailed the CEO, I got a verynice letter back saying thank
you.
It would've been a smallinvestment and it would've been
a better process.
So, to some extent, the moresuccessful you are, the more the
blinders are on.
Yes.
That's true.
(23:39):
And that's assuming success willcontinue unfettered.
Unfettered.
Yes.
Now, the American auto companieshave been through some serious
substitutes in the last 40years, and I think they're much
more sensitive to the fact thatthey are vulnerable.
But I am sure there are stillthings they're doing that are
legacy that should bereexamined.
(24:01):
Right.
So Frank, our time is coming toan end.
What kind of thoughts do youwanna leave us with?
What are the things that youthink that we need to know?
It's hard not to soundself-serving, but people need to
come to outsiders like you andme for the perspective that they
cannot get as an insider.
We talked about that executivewho has a hundred decisions to
(24:24):
make every day and doesn't havethe time to dig deep.
Especially an executive who'sgrown up in an organization and
there are things that are justas natural as air to them that
are dysfunctional that you or Iwould see immediately or within
an hour or two anyway.
Mm-hmm.
So to bring one of us in andsay, let's have a conversation,
(24:49):
I am frustrated about thingsthat I don't understand why I'm
having these problems is a verywise thing to do.
I think it's that simple.
If you are managing and you arefrustrated because there are
things that you have a sense aresolvable, but you don't know
how, and you don't have time,get somebody like Ed, get
(25:12):
somebody like me to come andlook and we should be able to
help you very quickly.
We won't solve every problemovernight, but we can spot some
stuff and we can fix it.
I do believe that there's anadvantage to, I think it goes
back to what I had mentionedearlier, first, you have to be
(25:34):
aware that something is notright, but that does not always
mean you can know why it's notright.
It's just knowing something isnot right or sensing sometimes
that something is not right.
And I agree with you, havingsomeone whose perspective is not
clouded by the day-to-dayoperations is worthwhile,
(25:55):
because things can be playedback to you.
Things you had not thought aboutor not thought about in that
manner.
So I totally agree with you andI don't think it's self-serving
because the truth be told, ourintent, the intent of persons
like you and me, is to supportthe growth and development of
business.
Being in business for me as foryou, I'm sure for you as well,
(26:19):
is about supporting people.
If they win, I win.
I can't win unless they do.
I don't remember when I firstheard about win-win, but it made
all sorts of sense in the world.
To me it does and my pleasuresin life are taking care of other
people.
That's incredibly gratifying tobe helpful.
(26:40):
I agree.
I think it's a fundamentalhuman, desire, if not a need as
well.
So I thank you for that, Frank.
I am once again, very gratefulto have been joined today by
Frank Piuck, the founder ofOrganization Renovation.
Frank, thank you very kindly forjoining me, and I really enjoyed
(27:00):
this conversation.
Well, I did too.
This is Ed Drozda, The SmallBusiness Doctor and here at The
Water Trough, I want to wish youa healthy business.
Welcome to the Water Troughwhere we can't make you drink,
but we will make you think.
My name is Ed Drozda, The SmallBusiness Doctor, and I'm really
excited you chose to join mehere as we discuss topics that
are important for small businessfolks just like you.
If you're looking for ideas,inspiration, and possibility,
you've come to the right place.
Join us as we take steps to helpyou create the healthy business
that you've always wanted.
(00:45):
Good afternoon folks, this is EdDrozda The Small Business
Doctor, and I want to welcomeyou back to The Water Trough
where I am joined today by FrankPiuck.
Frank Piuck is the founder ofOrganization Renovation, a new
consulting firm that helpsbusinesses gain and maintain
alignment among all theirvarious functions.
He helps optimize the wholebusiness rather than the various
(01:05):
functions themselves.
Frank has worked in IT, websitedevelopment, business
operations, and manufacturing.
He has an MBA from ColumbiaUniversity.
Frank, welcome.
Thank you, Ed, glad to be here.
And I'm very happy to have youhere today.
I appreciate this opportunity tolearn more about balancing a
business by bringing things intoalignment.
(01:27):
So let's just jump right inthere, about business alignment,
and start by asking thequestion, are we aware?
I think people have the illusionof alignment as opposed to the
actual fact of alignment.
If you talk to a seniorexecutive of any company, off
the record, they will complainabout their peers.
(01:48):
They will complain about whatthe other department's doing
that gets in their way and maybe completely oblivious to what
they're doing that gets in theother department's way.
A very strong illustration ofthis is a company I worked for a
long time ago that soldscheduling software.
They did a demo for a plantmanager at a major company.
(02:08):
The plant manager said, Ooh,that's awesome.
I wish I could use it.
And they said, why can't I?
He said, well, because I ammeasured on machine utilization
and cost per piece and if Ifollow your schedule, I'm gonna
stop using a lot of machines asmuch as I'm currently doing.
Which will actually be good forthe inventory levels, but my
performance measures are gonnago to heck not to mention my
(02:30):
cost per piece numbers will riseeven though the throughput of
the factory will be better andthe delivery will be more
reliable.
And so I am impeded from doingthe right thing by the
performance measurements imposedupon me by the finance
department.
Interesting and financedepartment thought they were
doing the right thing becausethey're unaware of what's going
(02:54):
on, on the shop floor.
Absolutely.
Sounds like we're back to theold days of silos.
Maybe the silos never went away.
I don't think silos ever will goaway.
Mm uh, I mean, we do needexperts in disciplines, but the
expertise and the disciplinecomes at the expense of a
holistic understanding of thewhole thing.
(03:15):
And people do things that areobviously gonna make their
department efficient and runbetter with consequences over
there that they're not evenaware of.
Really good CEOs, really goodCOOs, understand that this is
going on and they will mitigateit.
But if they've been raised inthe same kinds of systems and
(03:36):
the same kinds of mindsets asthe people who are reporting to
them, they're gonna be obliviousto a lot of the opportunities
for improvement.
It's interesting because as asenior manager I have a
responsibility to theshareholders, presuming it's
that size, to make sureoperations are working smoothly.
(03:57):
So whether or not I've beenschooled in that environment
you'd think that would be theresponsibility I'd take on.
That I would be aware of and beable to mitigate these issues.
To the extent that you're awareof them, you're able to
mitigate.
The bigger the company, the lessyou're aware of them.
(04:17):
So what you're saying is thesize matters.
Size matters.
When a solo entrepreneur is theonly person in their business,
the only thing that createsdisalignment is neuroticism.
But, you get a few subordinatesand you trust'em, they have
issues with each other, you talkto them and you negotiate and
(04:39):
coordinate and you resolve them,and then you hire middle
managers or department heads,and you don't know what's going
on at the bottom level.
You're relying on reports, andthe reports have been
constructed on your behalf.
Most likely.
You have an IT department and afinance department that are
developing them, and they comewith certain mindsets and biases
(05:02):
that you may not be aware of,and those reports may be giving
you disinformation.
And if you come from one companyto another company and you
assume that the reports that usethe same words mean exactly the
same things, you are very likelywrong because the algorithms,
the data collection mechanismsare different, and therefore the
(05:24):
information summarization isdifferent, and you're getting
information that looks like itmeans one thing and doesn't mean
exactly that.
You gave a software exampleearlier.
While it might have beenworthwhile for operations to
adopt your system the plantmanager would suffer the
(05:46):
consequences because it wouldn'tbe aligned with the finance
department.
That's one example.
I presume you encounter thesethings repeatedly, which gave
rise to the concept of yourcompany.
Organization Renovation soundslike organization revolution to
me.
Well, that's a little tooambitious.
(06:09):
No, I guess my point is I'mlooking at you specifically.
I think the collective us wouldsay, this is true.
You must have encountered enoughcases of this to realize this is
a big issue.
Part of it was the company thatI worked for, where this was a
foundational idea.
It was called Creative Output.
It was founded by EllieGoldratt, an Israeli physicist
(06:29):
who had no preconceived notionsabout business when he came up
with software to schedule afactory and was constantly
surprised at the things thatpeople told him.
In many cases he wouldinvestigate and realize they
were right.
In many cases, he wouldinvestigate and think they
didn't know what the hell theywere talking about.
And so indoctrination is astrong word, but I have to use
(06:52):
it.
I was educated in that point ofview and it stuck and then I'm
looking for stuff and I can seeit all around me.
So, one of my favorite examplesis the hospital bed.
Famously, it's institutionalizedthat hospital beds are expensive
and to be minimized.
(07:13):
Hospital beds are not expensive,at least, you know, not compared
to the$3,000 a day thathospitals charge for'em.
What are expensive arehospitals, and if you divide the
hospital costs by the number ofbeds, you get a very large
number.
Every time you remove a bed tosave money, you decrease the
denominator, and it looks likethe hospital bed is even more
(07:35):
expensive.
This is a disinformation systembuilt in to the hospital.
It's in the regs for thehospitals, it's in the insurance
policies, it's probably in thelaws of the United States.
And it's wrong.
It's just a misunderstanding ofreality.
I've never worked in a hospital,but this is blatant to me.
(07:57):
Right, right.
Well, I think the root ofOrganization Renovation then
resides in the loss of alignmentbecause of misinformation.
Is that a fair way to put it?
That is a fair way to put it.
I would say that again, thetraining that a person with a
(08:19):
marketing degree has and thetraining that a person with an
accounting degree has, there aregaps in their information and
there are words that they usethat mean slightly different
things to them.
And when you have two peoplehaving a conversation using the
same word meaning slightlydifferent things, you get a
failure of alignment.
Unless they understand that theother person doesn't mean
(08:40):
exactly the same thing they do,at which point you can say, do
you mean this?
Oh, you don't mean this.
This is how I was taking whatyou were saying.
Where am I wrong?
And then you've enlightened eachother and you can get more
aligned.
One of my most recent podcastswas with a woman who had come up
through the ranks at a hospitaland was put in charge of
housekeeping, and she had beenin the hospital for a while, so
(09:03):
she was pretty well versed inhow it worked, and she saw that
her people were doing thingsthat didn't make sense to her,
and she told'em to do itdifferently, and she shut down
the operating room withoutintending to.
Had her head handed back to her,she reversed the decision,
started asking her peopleintelligent questions, overcame
their suspicions, because peoplehadn't asked them those kinds of
(09:26):
questions before and they hadn'tbeen trusted and they didn't
really expect to be trusted anddidn't trust in return.
And she became very, very goodat her job.
And the infection rates in herhospital went way down.
But even though she understoodan awful lot about how that
hospital worked, she made whatseemed to her, based on the
(09:46):
training she had, based on herunderstanding of the world, and
her people's jobs, she madedecisions to reorganize things
in ways that if the operatingroom wasn't involved, it
would've made perfect sense.
But it didn't make perfect sensebecause it's really important in
a hospital that the operatingrooms get cleaned up after every
operation very promptly, so thatyou can keep patients going in
(10:10):
there both for the sake of thehospital's finances and for the
sake of the health of thepatients.
This is a very smart,well-intentioned woman.
She missed it.
And that's not the only timeI've heard that story.
I've heard it about a differenthospital.
So you would think that there'dbe a sort of allure of hospitals
that they'd all be sharinginformation and be saying, you
(10:31):
get a new head of maintenance,you get a new head of
housekeeping, make sure thatthey know that it's better to be
inefficient around the hospitalin terms of human utilization to
make the operating roomefficient.
Are you making your customerservice department efficient by
measuring the number of callseverybody has and punishing
people who have too few?
(10:53):
Or are you screwing yourbusiness by alienating customers
and reducing the lifetime valueof the people you've spent a lot
of time acquiring its customers?
I think we all know the answerto that one.
Not the people who are measuringtheir customer service
departments that way, andthere're an awful lot of them.
This is true.
I'm sure that some of thosepeople making those idiot
(11:13):
decisions get really angry atthe customer service departments
of the businesses that they arecustomers of, even as they're
doing the same to their owncustomers.
Alignment comes in all shapesand sizes or misalignment.
I hear you.
You are seeking clarity insystems.
(11:35):
You've identified there aresilos.
We know they're out there.
Yes.
And, silos by definition haveclarity within themselves.
Yes.
But not adjacent silos.
Yes.
When Silo doesn't know what thenext one's doing, and assuming
that leadership is familiar withall of the silos, that's still
(11:57):
not sufficient for them tobridge the gap between one and
another.
You get an MBA, you go into thefinance department, you rise
through the ranks, they put youin charge of operations in some
place, and you learn a lot aboutoperations, but you don't know
the nuances of purchasing.
You don't know the nuances inmarketing, you definitely don't
know the nuances of sales, oryou come up as a salesman and
(12:18):
you don't understand operationsvery well.
And so you have a position ofgreat responsibility and you
understand very well the siloyou came out of, and if you are
smart and creative, and patientand committed to learning, you
know, you need to learn thatstuff.
But on the other hand, you'resuddenly hit with a whole bunch
(12:39):
of new problems and issues thatyou have to deal with quickly
and don't have the time to delvedeep, to understand the
underlying causes.
So you're gonna make the bestdecision you can with the
training you have, theinformation you have, and you're
never gonna learn all the thingsyou need to know.
And the bigger the organization,well, if there's a hundred
people in the organization, youcan meet every single person in
(13:00):
the organization.
If there's a thousand, you couldmaybe do that, but only at the
expense of some of your otherresponsibilities.
If they're 10,000, it'sabsolutely impossible.
Okay.
Okay.
We can agree that misalignmentoccurs and it's directly
proportional to growth.
The bigger it gets, the moremisalignment occurs for a
variety of reasons, such asyou've alluded to.
(13:22):
That is kind of a common sensething, not saying it's right,
but it's a common senseexpectation.
Bigger, faster means morecomplexity.
Bigger, faster means moreopportunity for misalignment.
So is misalignment somethingthat we can prepare for before
it becomes a legitimate problemwithin our organizations?
(13:48):
That's a tough question.
One can be intellectuallyprepared for it and looking for
it and miss it.
Again, the bigger theorganization, the more complex,
the harder it is to manage allthis.
But, one of the biggest problemsin avoiding it is simply the
fact that the more complex theorganization, the more senior
(14:09):
you are, the more time you spendputting out fires, negotiating,
browbeating, being browbeaten,trying to broker compromises
between the functions withoutunderstanding what the
underlying problem necessarilyis because neither of them is
explaining them to you, to yoursatisfaction, do you have the
(14:30):
time to spend?
It might take you two weeks tounderstand the problem deeply,
and you don't have two weeks,you have an hour to get these
people, these two knuckleheadsto cooperate.
And so they're gonna come upwith something that kind of
works for them, sort of, and mayscrew up something over there
that they're completelyoblivious to.
(14:52):
Hmm.
Okay.
Perfection in organizations isimpossible, even in small
organizations.
And the bigger they are, theless perfect they're going to be
but that doesn't mean that itcan't be improved and it doesn't
mean that if you have some sortof systemic process the way
Toyota developed Just in Time,that you can't make huge
strides.
(15:13):
So the process in Toyota, whichthey called taking rocks out of
the river, was to take a smallamount of inventory out of a
workstation and see whathappened.
And if nothing bad happened,they wouldn't put the inventory
back.
And if all hell broke loose,which undoubtedly happens,
sometimes they would put it backright away.
Right.
And if something came up thatthey could figure out, they
(15:35):
might put it back but go addressthe specific problem that they
saw and fix it.
And by the time they've donethat a hundred times, they have
a pretty good idea where theycan take the next batch of
inventory out without causingall hell to break loose.
And they can systematically.
Find a problem and fix aproblem, and find a problem and
(15:56):
fix a problem, and the systemgets smoother and smoother and
better aligned until it was somuch better than American
manufacturers, I read a bookrecently where American
manufacturers went to Japan andsaw an auto plant with next to
no inventory, and he said thisis bullshit.
You can't have a factory withoutinventory.
(16:18):
He just didn't believe his owneyes, but he did have a plant
with no inventory and it workedmuch better than his plant that
was full of inventory.
But he was conditioned, right?
He knew how his auto plantworked and he didn't think there
was any other way to do it.
So if you follow that Toyotamodel, you can get much, much
better alignment by solvinglittle problems systematically.
(16:41):
And I would expect that if yousolve what looks like a little
problem every now and then,you're solving a big problem
without even realizing it.
For so many things, one win caninspire us to seek more, and in
the case of Toyota, for example,this is clearly an example of
misalignment prevention.
(17:02):
yes.
Or I guess presumably there wassome degree of misalignment, but
they recognized that earlyenough to take steps to prevent
it from continuing or growingbeyond that point.
I've never been to Toyota and Ionly know these stories
secondhand, so I'm sure there'smuch more complexity to it than
I could intelligently talkabout.
Yeah, I don't think there's aneed to get into the finite,
(17:23):
details, but I do believe thatthere's a lesson here that one
must be aware first, that thereis misalignment.
Being aware is step one, as withso many things, being aware and
then of taking appropriateaction.
It shouldn't have to becompletely retrospective.
Though it seems to me that theidea of management of
(17:45):
misalignment should be anongoing concern such as
performance evaluations wherewe're not evaluating people
every six months or 12 months,we're consistently assessing
them so that we can prevent anissue at the six or 12 month
review time.
We're looking for opportunitiesfor efficiency and improvement
all the time.
(18:06):
Yeah.
Likewise, misalignment.
With misalignment we're lookingat something that can have
significant deleterious effects,right?
Absolutely.
But yet, if the mindset is thatwe're looking for them and
taking steps, then themisalignment we're dealing with
is far less outta whack.
(18:28):
That's really a good technicalterm.
If we ignore it, let it go, itwould eventually get to the
point where it might beproduction stopping versus
production delaying.
Yes.
Absolutely.
I have been in quite a fewfactories and some factories are
messy and chaotic, and somefactories are smooth and the
factories that are smooth, I wasin a factory that ran really
(18:51):
beautifully and was casuallytalking to one of the employees
who said three or four yearsago, this was so different.
The new plant manager came inand he just little by little
fixed things and now it's somuch better and it's so much
easier for everybody here.
So it absolutely can be done.
(19:12):
But this was a small company.
There were perhaps a hundredpeople.
Okay.
And, it was one plant.
If you had a multi-plant companyand you had a guy like cleaning
up one plant, it wouldn'tnecessarily cause the other
plants to clean up.
There might even be somebackbiting.
Hmm.
(19:34):
Yeah.
Mature people wouldn't do that,but not everybody's mature.
Yeah, that's for sure.
It seems that there's for thesmaller companies, for example,
you said this company is ahundred employees, they've got
more to lose.
The larger companies to somedegree have enough different
revenue streams perhaps thatthey can kind of overlook some
(19:57):
of these things to some degree,I'm not suggesting they should.
But the small companies reallyhave a lot to gain here.
Every company does.
It's easier in a small company.
Right.
If they have the right mindsetin the first place, it's easier
never to get in trouble.
And if they have the rightmindset at some point, it's
easier to get out of trouble.
Right.
(20:17):
GE was the most respectedcompany in the United States not
that long ago.
Jack Welch was amongst the mostrespected chief executive
officers, and he retired and hissuccessor bumbled, and then the
successor after that, basicallythe company collapsed and
they've broken it into smallpieces.
And an awful lot of that inhindsight, were problems that
(20:40):
built up under Jack Welch'swatch.
Right, right.
He was generating these verysmooth earnings because GE
Capital was a black box and theywere doing black box things and
some of those black box thingsblew up years later.
Right.
Eastman Kodak was a giant, itwas one of the top.
(21:04):
Fortune 20 company, I think hadworldwide market share, well
over 50%.
Invented the digital camera.
Yeah, and?
Eastman Chemical was a divisionthat still is viable and the
Kodak name has been resurrected,by people who bought the name
(21:26):
from the bankrupt company andare doing things under that name
that have nothing to do with thecompany that, I mean, there are
still film photographs taken,I'm sure, and it's very special
circumstances.
But, there's nothing Kodak couldhave done to preserve the legacy
photography business once theiPhone came out.
(21:48):
Right, right.
Failure to keep up.
In their case, they did an awfullot, for an awfully long time.
I did a consulting project theremany years ago when they were
still so prestigious and sosuccessful, and just walking
through the place with fresheyes I saw all sorts of stuff
(22:11):
that just is, why are they doingit that way?
They would mount huge roll offilm in the dark.
They'd run them throughchemicals to put the
photosensitive chemicals onthem, and then they take it off
the roller in the dark.
They put it onto another machinethat would slit it into the
strips of film and put thesprocket holes in.
Mm-hmm.
(22:31):
In the dark.
Now, if you're dealing incolossal amounts of film that
may very well have been the mostefficient way to do it.
But they were doing enormousamounts of quality control
testing.
They were throwing away lots andlots of perfectly valid film to
make sure that the film thatthey weren't testing was good.
They were also making specialtyfilms.
Why not cut the film in thelight, put the sprocket holes in
(22:56):
and run strips of film that werethis big and put the photo
chemicals on them.
Mm-hmm.
The quality control issueswould've been so much less.
Maybe it would've been lessefficient in terms of the
amounts of machines needed, butin terms of the chemicals and
the film wasted, it would'vebeen a huge difference and
certainly for small rungs offilms that were not billions of
(23:18):
units a year.
Mm-hmm.
It would've been a much moreefficient way to do it.
I emailed the CEO, I got a verynice letter back saying thank
you.
It would've been a smallinvestment and it would've been
a better process.
So, to some extent, the moresuccessful you are, the more the
blinders are on.
Yes.
That's true.
(23:39):
And that's assuming success willcontinue unfettered.
Unfettered.
Yes.
Now, the American auto companieshave been through some serious
substitutes in the last 40years, and I think they're much
more sensitive to the fact thatthey are vulnerable.
But I am sure there are stillthings they're doing that are
legacy that should bereexamined.
(24:01):
Right.
So Frank, our time is coming toan end.
What kind of thoughts do youwanna leave us with?
What are the things that youthink that we need to know?
It's hard not to soundself-serving, but people need to
come to outsiders like you andme for the perspective that they
cannot get as an insider.
We talked about that executivewho has a hundred decisions to
(24:24):
make every day and doesn't havethe time to dig deep.
Especially an executive who'sgrown up in an organization and
there are things that are justas natural as air to them that
are dysfunctional that you or Iwould see immediately or within
an hour or two anyway.
Mm-hmm.
So to bring one of us in andsay, let's have a conversation,
(24:49):
I am frustrated about thingsthat I don't understand why I'm
having these problems is a verywise thing to do.
I think it's that simple.
If you are managing and you arefrustrated because there are
things that you have a sense aresolvable, but you don't know
how, and you don't have time,get somebody like Ed, get
(25:12):
somebody like me to come andlook and we should be able to
help you very quickly.
We won't solve every problemovernight, but we can spot some
stuff and we can fix it.
I do believe that there's anadvantage to, I think it goes
back to what I had mentionedearlier, first, you have to be
(25:34):
aware that something is notright, but that does not always
mean you can know why it's notright.
It's just knowing something isnot right or sensing sometimes
that something is not right.
And I agree with you, havingsomeone whose perspective is not
clouded by the day-to-dayoperations is worthwhile,
(25:55):
because things can be playedback to you.
Things you had not thought aboutor not thought about in that
manner.
So I totally agree with you andI don't think it's self-serving
because the truth be told, ourintent, the intent of persons
like you and me, is to supportthe growth and development of
business.
Being in business for me as foryou, I'm sure for you as well,
(26:19):
is about supporting people.
If they win, I win.
I can't win unless they do.
I don't remember when I firstheard about win-win, but it made
all sorts of sense in the world.
To me it does and my pleasuresin life are taking care of other
people.
That's incredibly gratifying tobe helpful.
(26:40):
I agree.
I think it's a fundamentalhuman, desire, if not a need as
well.
So I thank you for that, Frank.
I am once again, very gratefulto have been joined today by
Frank Piuck, the founder ofOrganization Renovation.
Frank, thank you very kindly forjoining me, and I really enjoyed
(27:00):
this conversation.
Well, I did too.
This is Ed Drozda, The SmallBusiness Doctor and here at The
Water Trough, I want to wish youa healthy business.
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
Ridiculous History
History is beautiful, brutal and, often, ridiculous. Join Ben Bowlin and Noel Brown as they dive into some of the weirdest stories from across the span of human civilization in Ridiculous History, a podcast by iHeartRadio.