Learning from the Succesful Implementation of Requisite Organization in Other Organizations

Speaker A I just can't say enough how a recent trip to Australia sort of solidified my appreciation for the theory. I remember at the last conference in Toronto, the film clips of Sir Roderick Carnegie and others in Australia from CRA days were talking about the real application of the theory in a real business that had real business challenges. Such as I'm faced with. The one of the key concerns we have in the leadership of the army right now is the staying power of real change. The army is a very resilient, self regulating organization. It looks at what everybody else is doing and if it's a good idea, it will regulate itself down that path, see who's being rewarded, see who's being punished, and it will take a good idea and run with it at a surprising pace. Once it's convinced of its utility, it's very hard to cram something down its 1,500,000 member throat. And we're not going to do that. I think we do have a good idea, but there is a marketing plan and a change management plan that you have to go about. So how does it survive? How do we get these good ideas to survive long after political appointees like myself are gone in this very resilient 200 year old plus organization? So I went to Melbourne to talk to Sir Roderick and assess for my own whether the follow on organizations to CRA which had such a dose of ro, were really practitioners now. And some of my friends had told me and assured me that they were. And certainly everything I heard in the last conference that Ken put on convinced me that they were. But I sort of had to go see for myself. And so Roderick had the great idea that we would spend some time with Julian Fairfield. And we talked to him because he was in on the ground floor of a lot of this and sort of set the stage. And Julian has been a very useful advisor and source of information about the theory and practice. But then, more important, we should go out to the west and see a mine. And Sam Walsh was steve Clement was with me, was very hospitable, and let us meet with some of his senior executives in Perth and then actually accompanied us out to the West Angeles mine. And again, very forthcoming, very open. Got to see a daily briefing that Dave, the mine manager, took from his staff on the problems of the day and what they were going to do. And very illuminating, very refreshing, a lot of good people doing a lot of real, honest work out there for a great company. But what we saw was both in the headquarters of Iron Ore in Perth and then out in the mine, at the railhead and at the port in Dampir, was the theory. We saw an organization that was the right organization for that job. We saw an organization that you could apply other practices like Lean Six Sigma to not as a forcing function for change, but as a tool and a toolkit, because when the organizations right, and that was really one of the great lessons that I learned from this. It is so powerful to the productivity mission that you can apply the other tools that you need sparingly. I mean, you don't have to do big change and big transformational efforts if you get it right. It has a chance to sort of self correct and have people at every level because they're in the right levels and they're the right people in those levels, work to their full capability. And that had been 20 years since the theory. And Sir Roderick was there for a couple of years and then was gone. And it's still there and they still remember it, and they still espouse theory. And that was very powerful. And one short story comes to mind where I think I saw the practice of this, and I'd never been to a mine before. So we went to West Angeles, and I was so impressed flying out there with just the color of these mountains. These mountains are red. I mean, it's 60% iron ore, I think. So the business practice is to knock the mountain down, put it in one of those big trucks, put it on a train, haul it over 500 outback to a port, all of which the company owns or has a right away from the government for, and then put it on a ship, and off it goes to a Chinese steel mill or a Japanese steel mill or wherever it's going. And the company gets revenue for that. And so this whole value proposition of ore on a mountain in a mine with several hundred people working there, and then put it on a train, and then it goes 500 port, where another 100 or so people are working and it goes on a ship, that's the value proposition. And so I thought if the army is looking at a process like this and we wanted to take some reductions or examine the overhead or examine the workforce in terms of capability and productivity, how would we do that? And typically we'd do a decrement drill. I mean, I'd go to the port and I'd say, well, we're going to cut you 5%. And I'd go to the mine and I'd say, I'm going to cut you 5%. And I'd go to the train and I'd say, well, how many people do you have on the train? And now they're down to one person on the train. The fireman is no longer there. They replace him with a microwave oven because the train takes 12 hours to get from the mine to the port. So the guy who's driving the train has to eat. And so now he gets a hot meal at the microwave, which is in the old fireman's station. So they've already sort of taken that and I'm sure in the army we would have said, well, we can't cut the one guy on the train. I mean, he's only one guy. So guess where Rio Tinto is going? They're going after the one guy in the train because that's the value proposition. That's where they've got the data. They've looked at the operation. The mine is lean, the mine is right, the port is lean, the port is right, the processes are right. And they see variability in how someone drives a train for 12 hours across the outback. And there is variability in there. I didn't know this, but you have to stop the train to go to the bathroom. So the whole value proposition of the company stops periodically on this twelve hour journey as it goes from mine to port. And so if you fly the train essentially from a remote location, which is a technology I'm very familiar with in industry, which you can do from the port and fly it right home, you don't have any of those variabilities. So I just thought, here, this is what you can do when you get the organization right. You can go after the value and take the one guy out of the train. And I don't think I'll soon forget that story.