Posted tagged ‘Congress’

Courageous Leadership? On the Line at GM

February 23, 2009

After a recent session that I presented on success measures, I was asked by one of the participants about the fiscal crisis plaguing our three major United States automakers, Ford, General Motors and Chrysler. The person was wondered why these three manufacturers, with all of the many intelligent and professional leaders in their employ, continued to build cars that the American public did not want to buy.

I responded by explaining that the automakers knew what they were doing and how their cars were being received.  In fact, the problems plaguing the car manufacturers were not one of knowledge but rather of courage.

Paul Ingrassia, Wall Street Journal writer and bureau chief, articulated this issue as it relates to GM beautifully in his Journal opinion column on February 19th.

According to Ingrassia, there are several issues that have created this predicament. Here are two.

(1)   The car manufacturers agreed to let auto workers retire with full pension and benefits after 30 years, This means that it is very conceivable for an employee to be paid for thirty plus years and not contribute to the end product. Couple this scenario with greater life spans and rising costs in health care and the cost structure take a painful hit. Add in the nation’s desire to have smaller cars with smaller price tags and competitive margins and the problem is exacerbated. One can only surmise that new and fresh ideas and the investment in R&D was limited because of these cost factors.

(2)   GM continued to keep two losing brands alive – Saab and Saturn – even though it was costing them money to do so. This was done because the company had spent $1.3 billion dollars to shut down its Oldsmobile brand in a way that allowed them to comply with state-dealer franchise laws.

Could this crisis have been averted? Very possibly but it would have required courageous leadership to take on the unions early on and absorb the short-term losses inherent with shutting down a failing brand early on.

Some weeks ago, we spoke about the concept of false kindness and the consequences of putting off uncomfortable decision s regarding staff. The car crisis today is yet another example of the need of leaders to be willing to do unpopular things, when they need to be done.

Types of Measures

February 20, 2009

There are three types of measures:

1. Activity measures

2. Output measures

3. Impact measures

Activity measures tells us how efficiently something was done. It answers questions such as:

  • How long does it take?
  • How productive is the department?
  • How many resources were used?

It focuses us on internal tasks, timing and resources but it is NOT about outcomes. As an example, profitability is an activity measure because it relates incoming revenue to internal operational costs. It measures the efficiency within which resources are utilized to produce income.

You’ll find activity measures are usually used with internal operations groups and frequently these are the measures used for multiple phases of processes

Output Measures emphasize the results of the work rather than the work activities themselves. Outputs tend to be physical products, services and communications that one group sends to another. These types of measures answers questions about what has been produced such as:

  • Does the product meet quality standards?
  • Was the product sent on time?
  • Was the product delivered on time?
  • Was the customer satisfied?

Output measures are about products NOT about production. They gauge quality, timeliness and evaluation by the CUSTOMER or USERS and therefore the measuring source is usually outside of the group producing the output.

Customer satisfaction is an output measure that requires obtaining feedback from outside the organization (this can be a customer internal or external to the organization.) Most output measures are using internal standards. These measures are useful when you are interested in whether the results meet certain standards.

My personal favorite is the last of our set and the one the President and our legislative leaders truly want to cause.

Impact measures ALWAYS require feedback or customer research to develop meaningful measures. So what is the difference between customer satisfaction measures and impact measures?

Customer satisfaction measures what the customer likes. Impact measures what the product does for the customer. It is all about value.

Impact measures answers questions such as:

  • Does the product make the customer more productive?
  • More successful?
  • Do the services make the customer more effective?
  • More influential?
  • Do the products help the customers reach their goals?

These measures require serious examination of the customer because there is no other way to get information about the customer’s productivity, success measures or goals without their input and evaluation.

Most important it shifts the focus to “What do you need from us to help you succeed on your own measures of success?” This type of measure alters relationships and makes what you achieve more valuable.

It makes you realize exactly what is the point of what we do.


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