Updated: Sep 11
Ford’s North American plant managers are masters of cost control. For decades, they managed the business to minimise fixed overhead costs, and control employee headcount. Their reporting, their bonus systems, and their culture all reinforced the same set of behaviors. But they recently realised that some of these behaviours were in direct conflict with the need to improve quality, build brand loyalty among their customers, and ultimately create value for the shareholders (SVA). ProfitAbility was challenged to help produce a mind shift, away from 70 years of “control labour and overhead” and toward “Think Shareholder Value”.
Our development team interviewed most of the plant managers and a variety of subject matter experts in sales, quality, engineering, HR, and other disciplines. A picture was built up of the knowledge, attitudes, and concerns of the target population. A range of daily management decisions in the plant were also identified where the managers’ normal response would destroy SVA, while minimising labour and overhead. By building these situations into the simulation, we could make the managers confront them again and again. By defining success in the simulation as an increase in customer satisfaction, profits, and SVA, it was possible to get them to move out of their habitual mind set, and start behaving in such a way as to enhance SVA, even when it meant doing the exact opposite of the existing cultural norm.
Given the learning outcomes Ford required, we had to build a simulation that modelled the whole business, and had considerable detail in the way that manufacturing is shown, so that key plant management decisions could be built into it. This meant that the lessons learnt were directly recognisable by the participants, as relevant to their daily work.
After the simulation, one Kentucky plant manager took control of the planning session and gained a commitment from his managers to $60m dollars in financial improvements during the current financial year. Although they only achieved a $34m improvement, the impact was transformational.
When asked what the simulation had done for him, the same plant manager said that all his team now understood the importance of shareholder value. He added:
“I could not have got those results without the ProfitAbility simulation.”