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Management Meccas


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MANAGEMENT MECCAS

Once every month, the top officers of the company gather around a large conference table to discuss the most intimate details of operations. They reveal profit and sales figures, work in progress, and incoming orders. Sitting in the audience--yes, the audience--are more than 40 managers from such companies as Digital Equipment, Mobil, Eastman Kodak, and Union Pacific.

They are here, at itty-bitty Springfield ReManufacturing Corp. in the Ozark mountains of southern Missouri, to learn about a concept called "open-book management," which has propelled this private, $104 million company to cult status in business circles. Over the years, more than 2,400 outsiders have trekked to Springfield, Mo., to stroll through a gritty plant where workers reassemble diesel engines and to sit in on the 90-minute meeting.

Springfield is just one of many management meccas visited by tens of thousands of acolytes every year. Medieval pilgrims, beset by pestilence, war, and famine, sought serenity and certainty at Canterbury, Santiago de Compostela, or Assisi. Today's corporate palmers, ravaged by the modern scourges of globalization, downsizing, and technological change, look for solutions and security at Motorola, Microsoft--and Springfield Re. Some 2,000 devotees stream through at&t Universal Card's superefficient telephone customer service center in Jacksonville, Fla., every year, at $375 a pop. More than 5,000 supplicants have sojourned at Federal Express' expansive overnight package facility in Memphis for a $250 midnight hub tour and all-day seminar. usaa, the San Antonio-based insurer, has drawn more than 2,100 seekers to its monthly program from such far-flung locales as Australia, Italy, Japan, South Korea, and South Africa.

"GOGGLE-EYED." They come for inspiration, for ideas, and for fun. "People run through some of these companies in droves, as if they were theme parks for management," says Gerald Ross, co-founder of Change Lab International, a Stamford (Conn.) consulting firm. "They come out of these places goggle-eyed."

More is going on here than sightseeing, though. The visits usually represent a serious effort to absorb what works at the best companies in the hope of applying those precepts back at home. The phenomenon also reflects a sharp change in perceptions of the health of Corporate America. It's the standout U.S. success stories that are drawing most of these wandering managers--in contrast to the mid-1980s, when planeloads of executives, fretting about declining U.S. competitiveness, routinely traveled through factories in Japan in search of ideas. "There's a lot more in America to see and digest right now than ever before," says Norman Bodek, president of Productivity Inc., a firm that organizes industrial visits. This year, Bodek will lead only one study mission for managers to Japan, down from six or seven a year in 1985 and 1986.

The intense interest in examining the best that American industry has to offer is an outgrowth of the benchmarking movement of the early 1980s, and it's yet another example of the thriving marketplace for business ideas. To become more efficient, executives are gobbling up business books, hiring more consultants, and paying greater attention to the expanding roster of management gurus. It's only natural that they should try to learn from one another, too.

What is it about these cult companies that draws so much attention? Each of them has gained a reputation for excellence at something, whether it's superb customer service or true product innovation. Some offer visitors the opportunity to observe how a voguish concept, from "open-book management" to "self-managing teams," works in practice. Almost all of these organizations have gained outside recognition, by winning plaudits from a management guru or the media, by capturing a Baldrige Quality Award, or simply by earning the admiration of competitors for solid records of profitability or revenue growth.

Like any human enterprise, they can stumble, and their cult status may be fleeting. For years, hordes of visitors roamed through Stew Leonard's supermarket in Norwalk, Conn., which had been hailed by management guru Tom Peters as a model of customer-focused retailing. Managers from Citicorp, Procter & Gamble, and ibm flocked to the circuslike store with its singing, mechanized farm animals and petting zoo. "The store became a hot spot, particularly for the Japanese," recalls Peters. "They came by the jillions"--until 1993, when the company's folk hero and founder, Stew Leonard Sr., was sentenced to four years in prison for his role in a tax-fraud scheme. The company says visits have since rebounded. And despite a recent earnings plunge at Rubbermaid Inc. (page 80), the company remains a magnet for executives hoping to pick up a little of its new-product magic.

Most managers yearn to visit the headquarters and plants of high-profile corporations--the likes of Motorola, Hewlett-Packard, Microsoft, and Wal-Mart. No surprise there. But these pilgrims also wind their way to much less familiar sites, such as Springfield Re and Johnsonville Foods, a Sheboygan (Wis.) sausage maker, where they learn how "self-managing teams" have transformed a floundering family business into a dynamic, fast-growing company. "At first, I couldn't believe that anyone would be interested in what some sausage company in Wisconsin was doing," says Ralph F. Stayer, Johnsonville's ceo. "But it has been truly amazing."

Johnsonville's Stayer and Springfield ReManufacturing's ceo, Jack Stack, have become widely quoted gurus in their own rights, thanks to their companies' fame. They've written business books, they tour the lecture circuit, and they spend several days a week consulting while still holding down their jobs. Stayer averages 25 speeches a year. Stack says revenues from Springfield's "Great Game of Business" tour, videos, books, and consulting business will hit $1.8 million this year.

Yet another cult company off the beaten path is Lincoln Electric Co., a Euclid (Ohio) maker of arc welders and welding supplies that has long been considered a model of how to motivate employees and hike productivity. Since 1983, nearly 12,000 outsiders have visited Lincoln's headquarters and factory to learn about the company's innovative incentive plans. General Motors Corp. alone has sent more than 120 people to Lincoln Electric, and gm's Saturn unit has publicly acknowledged that it has borrowed some ideas from the company.

So widespread has the company tour become that some consulting firms, including Boston Consulting Group Inc. and csc Index Inc., now commonly use such on-site visits as a key part of their problem-solving methodologies. Management teams in the midst of efforts to revamp their own companies routinely visit dozens of these shrines before tackling their own transformations. Groups of managers from Nynex Corp., for example, recently visited an astounding 152 separate companies, including British Airways, mci, and Roto-Rooter, to glean workable ideas that they could apply to a major reengineering effort. Managers from gte Corp. raced through 80 companies for the same purpose in the summer of 1992.

FEELING THE FABRIC. Proponents of the corporate hajj say such trips allow them to see how various strategies work in practice, rather than merely consider a new approach in the abstract. "You get a real sense for the culture of a company, for what the people are like and what the place looks like," says Jay Michaud, a vice-president with csc Consulting. "There is a real thirst and need for these visits because most of the innovation in business today is happening in the field." As William LeStage, a Nynex assistant vice-president, puts it: "You get to know what kind of wood it takes to make shingles, and what kind of leather you need to make shoes."

Visits to at&t Universal Card, Delta Air Lines, and ge Credit, for example, convinced LeStage and his colleagues that large service centers--with 1,500 to 2,000 employees--boasted far greater efficiencies and competitive advantages than did Nynex' smaller centers, which average 55 employees each. "It's much more difficult to change pricing policies or launch new products when you're dealing with hundreds of work centers," says LeStage. Nynex is now consolidating 374 customer-contact centers with a total of 20,500 employees into 53 with 14,700 employees.

Managers keen to implement a new idea also want to talk to others who have been through the experience. "Everybody just wants to see something working," says Springfield Re's Stack. "Before they buy another car, they want to see the engine is there and the tires are brand new. They come in here and look under the hood, and they have a revelation."

PONY SHOWS? Some critics, however, charge that these "best practice" workshops and visits are so brief, superficial, and stage-managed that they amount to little more than industrial tourism. Teams of managers often jump from one company to the next, delving no deeper than the jet-lagged traveler on a seven-countries-in-seven-days tour. Skeptics also charge that companies try too hard to put on a carefully prepared show that's long on hoopla and short on reality. "Many of these companies aren't as good as they are cracked up to be, so you're getting packaged answers and the party line," says Change Lab's Ross. "When you have a few beers with a manager late in the evening, you usually find out the real story." Another consultant, paid to lead a group of BellSouth Corp. managers through Intel Corp., jokes that the highlight of their visit was a sighting of Intel ceo Andrew S. Grove with Microsoft Chairman William H. Gates III in the company cafeteria.

Even so, most managers who travel this business circuit do so to lay the groundwork for major changes in their own organizations. Earlier this year, for example, a group of 21 "change agents" from Munich-based Siemens Nixdorf came to the U.S. to make the rounds. Each manager, selected by the board of directors, has been charged with a specific mission, from helping launch a business unit to increasing international sales for Europe's second-largest computer maker. Members of the group visited 50 U.S. companies, studying operational efficiency at Federal Express Corp. and product leadership at 3M. "The visits were exceptionally fruitful," says Tyrone L. Morris, a Siemens Nixdorf financial controller whose title is now "change agent."

Morris' task is to help Siemens create an information-systems outsourcing business. So he also visited several outsourcing companies, including Roadway Logistics Systems, which has taken over distribution for Dell Computer. "My strategy was to learn and learn and learn," says Morris. "We discussed lots of ideas, and we built up a network of people to rely upon in the future. I've already called some of the people I met on the trips for advice." One contact, for example, informed him of the steps necessary to develop the best sales prospects for outsourcing.

How much of what they learn can managers actually apply to their own companies? Sometimes, not much--especially when there's a wide gulf between corporate or national cultures. After recently touring Universal Card's facility in Jacksonville, where visitors are often dazzled by the upbeat work culture, Santiago Muoz is skeptical. Muoz, a planning manager for Madrid-based Airtel, went through Universal Card in search of inspiration and ideas for a cellular-telephone startup in Spain. But he doubts that he could transplant Universal Card's measure-and-monitor approach to Spain, where workers are likely to rebel against a tightly controlled atmosphere. At Universal Card, employees are measured on how quickly they answer the telephones and how long they stay on the line with customers. Overhead monitors often exhort staffers to work harder and faster--things that Muoz believes would outrage workers in his country.

Still, in many instances, these cult companies have inspired major changes. Consider Stack's open-book concept. The idea: to train employees to understand the company's financials, to share those numbers routinely with the workforce, and to use bonus systems and incentive pay more creatively to put some fun into meeting numerical goals. At Springfield's so-called heavy-duty plant, where workers tear down and put back together huge diesel engines, employees racked up 1.5 million man-hours in June without a single accident that cost the plant time. Their surprise reward: leather bags for each of some 400 employees. Earlier, the plant's general manager had promised to wear a dress if the workforce could reach 500,000 accident-free hours. When they did, he slipped on a frock, and employees paraded him around the plant on a forklift.

Silly? Sure. But it put "fun" into work, transforming a serious goal into a game of sorts. And Springfield's open-book approach intrigues many companies experimenting with employee empowerment. "It's the next logical step after you've given self-directed teams the power to make decisions owners once had," says Donald L. Robb, a manager at a division of R.R. Donnelley & Sons Co., which is considering a pilot program of open-book management. "It integrates all of the other things we've been doing and gives some focus to it."

Dozens of companies, from Allstate Insurance Group to upscale sportswear maker Patagonia, have implemented Stack's "Game of Business" or portions of it. To improve a paltry 2.9% return on equity at Allstate's Business Insurance Group in South Barrington, Ill., President Jack D. Callahan eliminated layers of management and installed incentive pay plans and self-managed teams in 1991 and 1992. The changes helped, but not enough to meet Callahan's profit goals.

NOW, A DISCIPLE. That's when he turned to Stack's approach. The unit's 3,500 employees were trained to understand the importance of financial measures such as return on equity, and were then provided with the information on a regular basis. The result: "It got employees involved and committed, and it gave them some ownership," says Callahan. "They understood they had an impact on the bottom line." The Allstate unit's roe hit 16.5% last year--and Callahan took early retirement to open his own consulting firm in Chicago to spread the gospel to other companies as a Stack disciple.

"Open-book" management has even spread to Zambia, where the world's fifth-largest copper mining company is using Stack's ideas to reduce costs and eke higher productivity out of its 55,000 employees. As largely uneducated workers march into the front entrance, they can't help but spot a 50-foot-high scoreboard that lists monthly and year-to-date financials, from "copper revenue" to "corporate depreciation."

And for all the criticism of whirlwind multicompany tours, it's often the cumulative effect of seeing the same idea enacted at several places that has real impact. After visits to General Electric, Lands' End, and Fidelity Investments, teams of managers from gte learned that they could vastly improve service by giving employees more information and control to solve customer problems. All three outfits--widely applauded cult companies--aggressively employ technology to eliminate handoffs to other departments and employees. "After seeing what ge and Lands' End do, we were inspired to incorporate those ideas in our business," says David P. Allen, a process team leader at gte Telephone Operations. "The visits caused us to look for the technology that would allow a service rep to take an order without having to pass work downstream."

As a result, the average time it takes gte to complete a customer order has fallen to less than two hours from three to four days. And the tourist has become a tour guide: Allen has hosted hundreds of outsiders who have come to gte in the past two years to learn from his experience.

Does that sound like a frenzy that's getting out of hand? Some companies are starting to feel that way. The ever-increasing demand for visits has led more and more to close their doors. Ford, Xerox, Hewlett-Packard, and General Electric have drastically cut back on the number of sightseers they'll admit. To gain a peek at J.C. Penney Co.'s telemarketing operations in Dallas, Nynex's LeStage says he had to call a Penney manager who once coached his son's pop football team in Wilton, Conn. "The challenge in getting into some of these places is unbelievable," he says.

To keep the flood of outsiders from causing costly, time-consuming distractions, many companies now confine visitors to formal workshops and tours, often with their own sites and staffs. The avalanche hit usaa in 1990, after the insurer gained attention for its innovative human-resource policies and customer service. By 1991, it had established a formal, day-long seminar program. "It was getting to be onerous," says Angelo de Guttadauro, who runs the program. "We just didn't have the time to devote to all these ad hoc visits."

"A DISTRACTION." At one point, General Electric's Answer Center in Louisville, which will handle 3.5 million telephone calls from consumers this year, was also struggling to cope with thousands of visitors from around the world. ge charged $500 a person for a one-day seminar and tour at its 800-number customer-service center and $4,800 for a more intensive, four-hour consulting session, a program that occupied four ge managers full-time. But now ge allows only customers and suppliers to visit--and has gotten eut of the consulting business altogether. "It was becoming a distraction," says James E. Cabral, one of the managers who ran the program for visitors. "After a while it became so burdensome, some of us couldn't get our own jobs done."

On the other hand, lots of companies continue to put up with all the corporate tourists and even encourage them. Universal Card may be the Disney World of management theme parks: It has hosted nearly 8,000 outsiders since 1992. Chief Executive David Hunt believes the time invested is well worth it. "We showcase at&t's technology here," says Hunt. "Our suppliers better understand the need to live up to our quality standards, and we've developed a lot of friends who are willing to share information with us."

LITERARY LION. And being the high priest of a management cult can confer extraordinary status on an executive. Johnsonville Foods' Stayer still professes incredulity at the attention his little family-owned business receives. The interest began after Tom Peters featured Stayer and his company in a pbs special in 1987. Johnsonville was a pioneer in the use of self-managing teams to run a factory. Teammates were even given the power to hire and fire colleagues and dish out monthly incentive bonuses to one another. The changes have helped Johnsonville increase its revenues by nearly 20% a year for the past decade. "After the show, they all wanted to come and talk and see," Stayer recalls. Multitudes of managers from such corporate heavyweights as Campbell Soup and Ford descended on the company.

Things really took off after Stayer wrote an article entitled "How I Learned to Let My Workers Lead" for the Harvard Business Review in late 1990. "It was like an explosion," he says. So many people wanted to visit in 1991 that Stayer launched the company's one-day seminar, featuring candid chats with five Johnsonville "members" and a bratwurst picnic lunch for $235 a person. Stayer now spends most of his time consulting with such companies as Frito-Lay, bmw, McDonnell Douglas, and Browning-Ferris. He contends his absence hasn't hurt his colleagues back at the office because he has delegated authority to three key teams. "I'm not in charge of doing," Stayer says. "I'm in charge of leadership, of stirring the pot, of coaching."

Many of his visitors have brought back to their own facilities the stories behind Johnsonville's move toward self-managing teams, hoping to learn from Stayer's successes and mistakes. Yet even Stayer has misgivings about the worship Johnsonville inspires. "I've always been concerned that people were making us a lot better than we are," he says. "Johnsonville is a heck of a lot better than it used to be, but coming here is not going to solve all a manager's problems. If you don't produce results for customers, you don't stay in business."

Amen. Modern managers are wise to learn from other companies willing to share their ideas, but they can't forget that all the tours in the world aren't going to give them the competitive edge they need to survive and thrive. It still comes down to the obvious: Produce a product people want at a competitive price and you will succeed. Simple as that idea may be, however, the path to true enlightenment is never easy.By John A. Byrne in New York


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