In this episode of the MFGMonkey Podcast, we delve into the dynamic intersection of workforce challenges and technological advancements with industry expert Ron Crabtree. As businesses navigate the ever-evolving landscape, understanding how to leverage technology to overcome workforce hurdles is crucial. Join us as Ron shares valuable insights and strategies to help organizations not only adapt but thrive amidst change. Whether you’re a business leader or a tech enthusiast, this conversation offers practical advice and forward-thinking perspectives to equip you for the future.
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Workforce Challenges and Technology: Thriving Amidst Change with Ron Crabtree
In this conversation, Rob Crabtree discusses the forever labor shortage and the need for companies to be an employer of choice. He also emphasizes the importance of digital transformation and doing more with less. The conversation covers topics such as workforce growth, declining birth rates, and the war for talent. It also explores the role of culture in attracting and retaining employees, as well as the need for continuous improvement and value stream mapping. The conversation concludes with a discussion on the various aspects of digital transformation, including artificial intelligence, additive manufacturing, and edge sensor technologies. The conversation explores the challenges and opportunities of digital transformation in various industries and functions. The main themes include the impact of technology on manufacturing, the importance of employee buy-in, the role of AI in change management, and the need for a strategic approach to digital transformation. The conversation emphasizes the importance of involving employees in the decision-making process, focusing on specific outcomes, and being agile in adopting new technologies.
Welcome, Rob. How are you, buddy?
Hey, terrific, Dustin. Thanks for inviting me to join you here.
Yeah, absolutely. We were just talking a little bit offline about a trip that you got coming up to Torch Lake. It’s beautiful up there.
Yeah, it’s a beautiful time of the year.
Yeah, it’s one of my favorite places up there. I have a buddy in there, Bellaire, I think that is kind of parallel to Torch right?
Yeah, there’s a whole gaggle of water around there. I’m not familiar with all of them.
Yeah. Very good. He has a cottage up there and we go up and hunt every fall and explore. It’s fun stuff. So, we got you on here today and we wanted to talk about a few different subjects. We’re going to touch on the forever labor shortage. There are three things that you want to discuss that if you’re not doing, you should be, and it is too bad if you’re not. And some digital transformation and that’s such a broad topic that I’m interested to see where that leads us.
All right, very good.
Yeah, so I guess tell me more about the forever labor shortage and what that looks like to you.
Well, I began to pay a lot more attention to this. Last year, in I think November, some data came out and you can go Google this quickly and easily. It was based on congressional budget office data. And I’m just going to hold this up for those who happen to see it. And I’ll tell you where to go find it online. But this is based on workforce growth in North America. And they are helping paint this picture of this negative trend going on. For example, the last decade of the 1900s was about just shy of 12% of the workforce that was new that year. New people entering the workforce in terms of workforce growth. It dropped to less than 8 % between the first decade of the 2000s, it dropped to less than 5% for the most recent decade. They’re forecasting less than 4% in the current decade, and it gets worse. So, in North America, in fact, in most Western countries, absent big changes to immigration policy or something that increased birth rates dramatically, this is the problem that’s not going away. And then you take a look at job growth, and they reset the numbers, I think, in terms of new jobs created in the last year, but it’s still hundreds of thousands of new jobs being created in North America all the time. So that’s a tsunami, right? That’s everything working against us. The fact is we are going to have a war for talent and continuing pressure. I don’t care what industry you’re in, particularly in complex manufacturing, EVs, lithium-ion batteries, or any kind of growth industry. It’s even more acute as a problem because there are just not enough people entering the workforce to support any form of growth.
That’s an interesting stat, I have honestly never heard that before that it’s dropping that dramatically. And you would think with population growth, that would be the opposite. The more people that we have, the more people entering the workspace, what’s the cause of this?
Well, there’s a lot of dynamics going on, I’m certainly no expert in it. But birth rates have been steadily going down. They’re actually forecasting China’s population to peak and then not just in the future and then begin to recede. Imagine what that’s going to do economically as we get out into that timeframe.
Yeah.
And so, it’s just declining birth rates, various public policies, and the increase in access to birth control. Continue to move away from urban to more city-based people who tend to have fewer children because we’re on a farm. You’re hiring instead of having lots of kids to help you do all that.
Right.
So, there are lots of dynamics in play here causing the problem.
Well, I can’t see that because there are stats that I’ve read. Like my son’s age and my daughter’s age, they are having fewer kids and they’re that generation where they’re not in relationships like your generation and my generation were. That I guess does make sense now that I think through it where certainly this next generation that is in their early 20s, if they’re not having kids in their late 20s and early 30s, then there’s certainly going to be a change there. Do you have any idea what those numbers are?
I don’t.
Interesting, we’ll have to look that up. I wish I was a little faster at it and we would figure that out real quick. But where can folks find the link to the chart that you just held up?
Yeah, so the source is the congressional budget office, and it was published by Business Insider. So, if you went to www.businessinsider.com, baby boomer retirement surge, forever labor shortage, there are multiple things out there with some pretty good data and information to back that up.
Interesting. Yeah, we’ll put a link in the description and certainly on our blog to that. We’ll find that and get it up there for everyone. So, what are you seeing companies do to combat the labor shortage?
Well, there are lots and lots of things out there, but generically there are three things, and inside of which, the combination of these three things, is really the bulk of what you can do about it. Probably the first and foremost is, what are you doing to be an employer of choice? What are you doing to be the kind of organization people want to work for?
Sure.
Because the fact is, we do have a war for talent.
Right.
And inside of that, there’s a whole bunch of different initiatives that you should be considering. And what question is right off the bat is the strategic development of the future workforce, right? Developing skills and creating more incoming people into your business. If that’s not a C-level strategy, maybe it should be.
Sure.
And a couple of things that are important, just going to gauge where you are in this employer choice continuum is just ask some questions around what are we measuring? Some popular ones out there would be, what about retention rates? What about your glass door scores? What about the other things? And the other thing I thought was pretty interesting I ran into recently is this whole notion of the knowledge gap. And the premise of the knowledge gap is that the boomers are retiring, moving away from the workforce. We haven’t been doing nearly enough to give responsibility, significant responsibility, and development opportunities to the younger workforce coming in. Traditionally, we just leave out the gray beards, make all the decisions, and do all the critical thinking. But we don’t carefully and programmable set up mentoring programs and develop that workforce of the future, which, by the way, creates all kinds of loyalty. And people who like organizations, feel like they’re part of it, are definitely going to be sticking with your organization. And that’s one of the other tasks that I would always recommend is to ask people what they think about how they would define and describe the culture of your company.
And you don’t just ask your higher-level folks, you very carefully ask that question down through the ranks and across the various functions because then you can begin to uncover some of the things we do not like. Isolated, meaning there’s a particular management group, or management style going on here, the type of function creates some challenges with folks versus its really part of our culture.
So, if you need to ask those questions up and down, and what you’re listening for is, I feel like I make a difference. I’ve given them an opportunity to mix something meaningful with my work. I feel like I’m treated well, I’m heard, I’m valued as a person. And I feel like I’m part of something that actually matters. You get answers like, yeah, it pays well.
Right.
And they stop there.
Sure.
That’s a signal that, okay, so your competitors can pay a little more and they’ll be gone just like that.
Yeah, or maybe not pay as well, but their culture is better, and they still leave.
Exactly, in fact, training and developing people is the whole skills gap thing. I used to work with a printing company in the Cleveland area, and the owner was Jim Helms, a printing company. He’s since retired, but he had this practice, he had a little bookcase set up right outside of the employee break room. And he’d make it a point to buy books and put them on the shelves. And it was a wide variety of things, business books, personal communication skills, life, relationship management, and stuff like that. He put all those books in the library for employees to check out for nothing.
Sure.
Now one of the little signs he had there that I loved was the danger isn’t that we train people if they leave, it’s that we don’t train them, and they stay.
Absolutely. Yeah. I’ve definitely heard that before. And I think a lot of trainers use that to combat somebody who doesn’t want to train. And we have heard that especially in sales, if you’re not training your salespeople and they stay, what good are they? And that’s true across the board. We’ve had the owner of MRS machining up in Wisconsin do a fantastic job of mentoring now that you brought that up. Matt’s been on the podcast, and they start in kindergarten with just recruiting and teaching kids about what machining is and what it is to be a machine operator. And he created a coloring book and then they select a few kids in high school, and they bring them in, and they mentor them and send them to school to learn how to operate machining centers. And I do think that there are a lot of companies out there that are doing the right things, but there’s probably more that aren’t.
I would agree with that. Public-private partnerships and creating opportunities for organizations to be involved at the K-12 level all the way through kindergarten, you hit it right on the nose.
Yeah.
It is a massive opportunity, particularly when you’re in geographically limited areas. For example, you’re not near a major metro center, right?
Yeah.
You’re more rural. Where you’ve only got 50 or 100,000 people to work within that entire general area that can be there.
Yeah.
Do we want them to graduate high school, go to college, and never come back?
Sure.
I don’t think so.
Well, yeah. We’ve had that conversation many times about trades versus college. And certainly, when I was in school, it was a huge push to go to college. And if you didn’t go to college, you weren’t going to be anything, and yada yada. And that tone has massively changed over the last 20 years. And I think that we’ve done our workforce a huge disservice where people are going off to college or they don’t have the skill to do the thing. Even programming, and machining centers, are moving in a direction where things are becoming automated. But if you don’t have an individual who can program that machine, the automation means nothing. And buddies of mine talk about it all the time where you’re like, yeah, we just bought this brand new semi-automated or automated pipe-cutting machine. But the challenge is finding an operator that can run the thing. And there’s a buddy of mine that owns Claypool Electric in Columbus and they’ve done a fantastic job with setting up, you mentioned partnering with the public where they have a training facility. I think it’s in Lancaster, I visited a couple of months ago. They’re an electrical company and they bring kids in, and they train them for free. And it’s not a JVS, but it’s a training center where they’re teaching these kids how to be electricians. And it’s just a fantastic place. You go in there and 50 people are learning to be electricians. And they’re getting a free education and they’re being paid well.
And they have to be.
Yeah.
You’ve got to be able to create the standard of living that makes it worthwhile to be an American and part of the middle class. And there’s no shame in any of that.
Absolutely not.
In fact, we need people who are okay with helping pick up the garbage or we’ll be buried in it in a big hurry, right?
Yeah.
And there’s no shame in any of that.
Nope, not at all. So yeah, there’s a lot of fun stuff going on in the industry.
Yeah, so a huge thing around company culture that I mentioned was around training and people feeling that part of it and they have the opportunity to do something with themselves if they choose to. But if you continue with this discussion about culture, I said suggesting ask people how they describe the culture of the company. Now I hear really interesting new jargon here. In COVID, we had the great resignation, right? Big waves of people just changing jobs to make more money. And then we got into quiet quitting. Remember that one?
No, I hadn’t heard that one.
Quiet quitting. That’s been rattled around out there pretty loud the last couple of years. People just showing up but really not doing anything. And then you’ve heard other jargon, I heard one recently called presenteeism.
Okay.
Means they’re there, but they’re not present. They’re actually disengaged. It’s kind of like that quiet quitting.
Where I’m actually physically there, but I’m not there, my mind isn’t there, my heart’s not there, I’m not interested in being part of what you’re trying to do here as an organization. I found that one was pretty interesting recently around this notion called presenteeism. I just found that pretty interesting. So, culture, right? And why would somebody want to work for you? And then the obvious ones, taking hard work at your pay and what you’re doing compared to competing industries in the area, parity, and all those good things. It’s expected nowadays you’re going to have more of a flexible work environment and better work-life balance. It’s expected. If you’re not moving in that direction, you’re going to have to keep up with the Joneses. But after you get past culture, then you start asking yourself, so I’ll just be the employer of choice, so people want to work for my organization. So, if you aren’t doing it and you haven’t been, probably should be taking a hard look at it.
The second one and the third one go together, right? It’s doing more with less and this whole notion of digital transformation. And in my mind, they’re co-mingle topics, right? So, I’m going to do more, doing more with less. If you’re an organization that hasn’t adopted it, I’ll call it Lean or A Manufacturing, E Six Sigma, continuous improvement, or some brand of that. And you haven’t really seriously made it part of the organization’s culture and the way we do business to continually look for waste. Look for activities where people are not adding value to what they do. And how do you determine if something going on in your organization adds value? And there’s a classic three-point task, but it bears talking about it for a second. You should take a look at the activity that our humans are actually engaged with. That’s our time, our money, our liberty resources, our people. And we take a look at the time they’re spending on something, and we ask three questions. First of all, is it something a customer actually cares about? Can we call it a value-added activity that if we were to list what that employee was doing on an invoice and said, that’s what you’re paying for, Mr./Ms. Customer, the labor that went into creating this value add. And they said, yeah, I see that as value add. So manufacturing, cutting chips, right?
Right.
Polishing, forming, and physically transforming the goods, that’s pretty easy to determine if that’s value add. Can we do it better? Of course, we will. As you move into the service sector, it gets a little harder, right? I like to tell the story of going shopping. If I walk into a store, I don’t want anybody running up to me and trying to sell me something. I’ve got a mission because I’m a man and that’s the way I shop.
Right.
But if it’s my wife going into that store, she’s hoping somebody’s going to come to her and talk to her and engage her.
Right.
So, we have very different opinions about what we see as a value add. It gets a lot trickier as you move into the service sector.
Sure.
And what is it that sets us apart as a business? How do we create the right customer experience for the chosen demographic or market that we sell to? So, when you talk about non-value-added activities, you’ve got to expand your mind and go well beyond the physical, tangible goods. But all the things that our people are doing to create that customer experience that makes customers value what we do as an organization and how we do it better or differently. So that’s the second part, right? Because the activity that consumes time is actually something that customers absolutely want to pay for. Now the second question is, are we doing it right the first time? Manufacturing that shows up as scrap, or rework, right? Defective goods, any kind of repackaging, re-handling, and whatever, pretty easy to track that down.
Yeah.
But it gets a little harder when you move into the service sector. It’s my job to triple-check the information that was just passed through.
Right.
As opposed to the mindset of, wait a minute, why do I even need to check the information? Because we did work way up front in the process to error-proof it, mistake-proof it, to get it right the first time.
Sure.
An example of that is a design shop. Let’s just say, we’re making steel buildings that you put the historic stuff in. And you’ve got a group of engineers that have to work with the customers to get all the design specs, all the permits, etcetera. Another set of engineers to do the product life cycle management side of it, the actual product design, generating drawings, and all that good stuff. So, if it takes you six weeks to do that and for the sake of discussion, 100 engineering hours and your customers need you to do it in three weeks for 50 engineering hours, all right?
Right.
That’s where you have to get really crucial around, are we doing it right for the first time, transactionally, well above and beyond? In fact, you’ve heard of D. Edwards Deming, the great quality grower, everybody’s heard of Dr. Deming.
Right.
He would argue that 95% of the bad results we see in manufacturing are actually our management’s cause. And what he was talking about was really looking at perfecting processes so that we gave information, materials, and everything needed to manufacturing operations to get it right the first time and inevitably many of the problems they fought with on the shop floor were actually management calls. I’ll give a quick example. It’s working with a decal printing company. Decal you hang on your windshield, hang on your rearview mirror, or stick to the window to get in and out of parking lots or whatever. Really cool company in the Chicago area. They had an ESOP, Employee Stock Ownership Plan, but more importantly, beyond the ESOP, it was profit-sharing. But they said, you know what, for all the money we put into the profit-sharing, we’re going to deduct a dollar for dollar every bit of scrap we have. So, in the printing business, if you print it wrong, there’s no reworking. The Machine is smaller or add some material back on. You throw it away and start over. And it was a big concern. Everybody had a dog in the fight. But what we discovered when we used this tool called Value Stream Mapping to really take a hard look at all of the stuff, we did up front during the customer onboarding cycle, testing specifications, what went on those decals, all of the minutia required to get it right from a customer perspective. Too many mistakes were being made. So, the information would get to the shop floor and the poor production folks would be scrambling trying to, there’s probably going to be a problem because these things aren’t trapping, you’ve got to trap different layers when you’re doing multicolor laying down on paper. I used to work in the printing industry at one time. And they would know there’s problems and they’d fight to try to get it fixed. And then they’re in this loop with customers and customer service, trying to get answers and it’s taking too long, and they have to ship it. So, they just do the best they can, and lo and behold. We found out that by basically spending a lot of time on the whole front-end process, getting manufacturing a little bit more involved during that customer onboarding process, and setting up the job to be run through the shop, they were able to drive out their scrap costs by almost 80% within just a few months.
Sure.
And that was a real happy phase. Customers were getting it right the first time. And we all got the share and benefit. That’s back to the company culture. How do you drive the behaviors that you’re looking for from a culture perspective? So that’s where, if you aren’t well down the path with lean, continuous improvement, and really being careful about what are we doing, why are we doing it, is somebody willing to pay for this? Is it a true value add or is it some form of necessary but still not value add? For example, government regulations, documentation, being compliant with paperwork requirements, and stuff like that. Probably your customer doesn’t really care about it, but you still have to do it.
Sure.
So, those are where you want to engineer those out. And now we get to turn to a much bigger topic. I’ll call it loosely digital transformation or the digitization of work. And this gets to be a really big conversation very, very quickly. I’m really passionate about this. Several years ago, one of our customers came to us, a large e-learning company, and they came to me and said, Ron, we need to revamp our digital transformation awareness programs that we sell to our corporate customers around the world. So, I pulled together a team of meta experts. These are people on our network that we use as interim resources for our customers who need to solve problems. I pulled in a little team of these meta experts who had different sorts of very deep technical expertise, manufacturing, services, etcetera. And we compiled a kind of laundry list of all the different forms of digital transformation that come into play. And there are more than 30 of them. And there’s a wide variety. Today, everybody talks about artificial intelligence, right? AI is going to save the world, depending on your point of view or AI is the biggest threat to my job, there ever was. Are you hearing that?
I’m developing a strong opinion about AI. I had a two-hour conversation yesterday with a very good friend of mine. We’re actually going to have a podcast, and I haven’t used any AI hardly at all. And since it became a thing, it’s quickly helped me become much more productive just in the last couple of days that I’ve been using it.
And there you go.
So, I encourage we’re going to implement it in our workforce because I think that it helps tremendously with tasks that you need to do. Something that would take four hours, you can get done in 30 minutes now. Yeah, and you do, you’re either going to have an opinion that it’s going to steal everyone’s job or it’s going to improve everyone’s lifestyle.
Exactly. Well, I’m just going to rattle off a few of these and I’m talking about what we did, right?
Okay.
But basically, we kind of mapped this a little bit. There are five different functional groupings within the typical organization.
Okay.
There’s a grouping around the supply chain, sales, and marketing. I’m sorry, start over. So, the sales and marketing side of the business, product development, sales, marketing, bringing something to market, that whole functional group. And then you have the supply chain, getting all the materials, the goods, everything in so we can do something. Then you’ve got your operations folks, people who actually make the product and the quality organization. I’m sure we got it right the first time. And then you’ve got finance and IT. And then you have HR and change management and culture, right? So, five buckets of functional, of focus. And then we kind of mapped in there, we took a look at this big, long list of different things that kind of mapped out interesting ways. For example, new products, and new service development technologies. Cyber securities, cyber risk management, and how that’s designed into the products that involve technology and also how we design our processes to be robust, protecting organizations from those sorts of risks.
Yep.
Depending on your industry, that’s a massive, massive problem. Now, if I’m making fasteners, that’s one thing, but if I’m making components that have software or transmit data like the EV industry would be a great example. Extremely massive issues around cyber security coming into play. Digital mapping, artificial intelligence, and mixed lists are certainly important there. In additive manufacturing, we’ve heard of 3D printing obviously. Anybody manufacturing has heard of 3D printing and that’s what’s called additive manufacturing and advanced materials. You have the Internet of Things, IOT. They have things called edge sensor technologies. These are different technologies in the field that basically provide data and information all the way out to the customer at the point of consumption, sending signals back into the supply chain, then all the way out on the supply side where they’re monitoring the growth of crops and fields. They’re going to end up in food and all the different pieces of data and information available to support decision-making, right? And making a shift. It’s a pleasure to work with one of the world’s largest cereal manufacturers. We had some interesting conversations about their challenges for feedstocks and making cereal everywhere in the world. Autonomous supply chain technologies, blockchain, cloud computing, performance risk management. Let’s see, here are a few more enterprise information management, DevOps, and then you have robotics and robotic process automation. Now manufacturing, we quite often think about that as the articulated arm machine picking and placing parts. And robotics is in the electronics industry, it’s been a massive game changer over the last 20 years. It’s really coming a long way in the warehouse distribution industry.
Absolutely.
They’ve automated a lot of that.
Yep.
But it goes well beyond that to electronic robotics, right? Or robotic automation. In other words, virtual robots make routine decisions, right? Taking different conditions and actually making the decision to move you through. By the way, robotic process automation, when it comes to freeing up our people’s time, is kind of like one of the key things we have to be looking at. And that’s where artificial intelligence ties in here with respect to identifying what it is that needs to be automated. And then using tools to be able to speed processes up and take people out of decision-making processes that don’t add a lot of value or add no value at all and bring up their time to do things customers actually care about. Or things that allow you to actually expand and grow your business without hiring more people. So that’s a really important one in my mind.
So, what do you see companies do that are having challenges with team member buy-in?
I love that question.
Yeah. So, you mentioned the possibility of the likelihood of jobs going away. And if you’re trying to automate, regardless of what it is, you’re having challenges like that, what are companies doing to combat?
Well, let’s just segue to that, because I was not even halfway through my list, but we’ll come back to that here in a minute. You brought up a really good point here, Dustin. I’ve been doing some public speaking and working with audiences around this forum for more than 20 years now, off and on, IT and the adoption of IT. And I’ve always been very fascinated with organizational dynamics and what works in organizations, what gets people motivated to do something different or better. I did a little mock survey. I was presenting at one of the Lean conferences here in Michigan. I had an audience of Lean practitioners. And I said, so let’s just talk about automation and digitization. And we kind of brainstormed through why we could really leverage that better in the practice of Lean. And then I turned around and said, so what about the success factor? How many of you would say this will actually fly? And 8 out of 10 said probably it wouldn’t fly because people would be scared of it. They wouldn’t understand it, etcetera, etcetera. So, there’s multiple, again, there’s no silver bullet cure here, but basically, I advocate don’t try to do everything because that’s really going to make things scary and crazy, right?
Sure.
So very carefully select which technologies we want to focus on automating. And I generally would say, AI is one of those. Let’s just pick on that a little bit. So, if we simply announce to people that we’re going to leverage AI and it’s going to change your world, look out. It’s going to be a long uphill battle and a lot of resistance. You’re probably not going to be successful. If you pull people in and you have a meaningful conversation at their level, let’s talk about the work that you’re doing. Let’s talk about the things that make you crazy. Let’s talk about the things that you see yourself are not particularly value add and aren’t doing anything to help us be successful. Help them understand that as an organization if we’re not innovating, if we’re not learning how to do more with less, right? If we’re not recognizing there’s a forever labor shortage in front of us and we have to get better at getting more done with the people we have, we need to do that. So, they need to be informed enough so they can understand that we have a burning platform and that there’s a need to do something different. And you’ve got to meet them where they are. And everybody’s going to have little different needs. But at a high level, you have to get them involved with the conversation about why, and how we’re doing this.
Yep.
Have a careful conversation, what does good look like? So, in other words, we know we’re doing it this way today, and these are the things we’re experiencing. And in the future state, it looks like this, right? And what is that? So, people begin to wrap their heads around it. Then we have to back up and say, okay, for that particular application, have we skilled people up to actually be able to do it or do we have to start there? And do some training and education, to help people learn how to use some of these technology tools. The younger folks that are coming into the workforce, they kind of grow up with a cell phone in their hand, right? And they’re pretty comfortable with interfacing with technology to find information and make a decision. Once you get into folks who are older than that, particularly an established, long-tenured workforce, they’re going to resist it because they don’t understand it. It’s scary.
Sure. Yeah.
They see that as a real threat. So, we’ve got to meet them where they are and help take them where they need to go and then really work with individuals, down at the individual level around their employee development plan. Maybe you’re using a versatility diagram or some other technique to map out, here all the skills we need for the workforce in the future. Here’s all our people on the other side of that. And how do those match up? And can we create an environment, a safe environment to encourage the workforce who need to gain those different skills to self-educate and start to get in front of it and start to understand that change is coming. Either I have to get on board or decide I’m going to do something different and move on. So, to me, it’s a lot around involving them, but you have to educate and share enough information about why we are doing this. What would be good? What would a good outcome look like? And then, okay, great. So, what do I need to know? And how do I tap into that and become part of that going forward? And it’s not a real snap of the fingers and I’m not a big fan of trying to boil the ocean.
Right.
And that’s why I like to go back to the nature of value stream mapping. I’m going to delve into this for a moment.
Yeah.
In the last 15 years, I’ve really been careful when doing value stream mapping activities that involve a lot of people, where it’s a lot of transactional stuff. You’re moving off the shop floor, your basic Toyota-style learning to see the physical mapping of making a product. When you move off the floor, and start moving into complex processes like design, order entry, all the other things that go into making something, that gets a lot harder. So, going back to the example, the organization that was making buildings, they designed, built, and installed these buildings that you store stuff in, right? Self-storage buildings. As we were going through mapping the activities, the salespeople, the engineers, and the other folks who did to get it all the way up to production-ready release. So, here’s the activity, here’s how long it takes, here’s who does it, this is how much time it takes to do it, this is the laytime, this is the quality problem we’re having. And up to the right of that, we added a column for each IT system or source of information that they might work with. There were 17 different kinds of IT touches possible in whole sales and CRP on the sales side of it, customer relationship management, Salesforce, etcetera. And then just got down to design, you got into product life cycle management, Excel, and a whole bunch of other PRP and what have you. So, there were more than 30 different IT systems or sources of information people needed to do the work. At the step level, we force some discipline around. Okay, when you do that work, which of these IT touches are primary and which are secondary, right? Primary means each time I do the task, I catch these three different systems to do that work, right? But if I have a problem, missing information, dated information, or questionable information, there are five other systems I have to look at to find what I need to be able to complete my information. So, from that, we’re able to create a heat map and then do basically a Pareto analysis to break it down. Okay, of the 20 different steps of the process that consume 80% of our human time, which with common IT systems, we had multiple and then primary touches. And then we could go back and say, okay, great. These four systems were forcing our people to go in and out of hundreds and hundreds of times every day. And we began to look really hard at what we could do. In their particular case, they discovered by going upstream and integrating the customer permitting process. With this permitting process and then the regulatory requirements for that particular type of construction into the CRM they could close all that loop very, very quickly and early in the cycle. Gave them the criterion to then do the first time right for the engineering loss because then they understood from a structural perspective what they’re going to have to work with downstream on the process. So, it allowed them to aim really, really tightly. Part of that process is we brought in the people who do that work who would probably fight us tooth and nail for making those changes. And they became part of the decision-making process. We allowed them to have a voice in prioritizing which technologies we were going to change and who was going to do stuff differently, right? Where we were going to put quality control in, saying, it’s just not going to escape. You’re not going to hurry up and get it done so you can push it into the process. We’re going to force it to stay here until we can close the loop and get to the first time right level of data information and quality before we release it into the design process and then all the mess would start after that because everybody would be trying to fix or anticipate a problem all the way through the process and eliminate that upfront. So, a long-winded answer to a pretty simple question.
Yeah. But it is important you touched on it earlier with Deming. If you’re not setting your folks up for success, and they’re missing their mark. One: Deming is not a fan of piece price and I’m losing my thoughts. If you make x number of widgets and you hit your rate, you’re getting a bonus. Deming’s not a fan of that at all. He says to create a system that they can hit the rate every time and pay them a fair wage. So, as you said, if you’re setting your folks up for failure, and you’re not involving them upfront on how to better the system, then you’re going to have issues that are going to lead to what we talked about even earlier with culture.
Exactly, and that’s where collaboration tools, another layer of technology out there are really helpful. Creating this safe environment for people to ask questions. Community of practice, and being able to say, hey, I’m running into this, can I put this out to the community of practice and get, not hate mail, right?
Right.
I’m not finger-pointing, saying somebody did something wrong, this is what I’m experiencing.
Yeah.
And what can we learn from that? And it’s just really powerful if you can create the culture and the sort of environment. If you put on the virtual or the physical wall what’s going on in the process, which steps in the process are consuming most of our human resources or people? And then inside of that, which of those steps are fraught with waste or mistakes or misinformation? And to be clear, a lot of times people think they’re doing a great job, right?
Yep.
But it wasn’t until downstream in the process it manifested as a real problem because they didn’t know.
Sure.
They didn’t know what they didn’t know. So, now we get everybody involved with that value stream having a view of how they fit to the bigger whole and how they can bring more value to the picture and then that creates other powerful things. Well, hey, now that we know that, why don’t we do a little job sharing?
Well, and it creates a sense of pride. If somebody brings an idea to the table and it works, and then it’s their idea that gets implemented into the process, they have a lot of pride in that. And if it’s done correctly, it’s encouraging to everyone to bring ideas to the table. And not all ideas are going to work like you think that they will work. And there’s no shame in it. And there was a gentleman that told me one time, his sons took over the company. And he said we do things my way until they find a better way to do it. And if they have an idea and they implement it, and they double the production, then guess what, we have a new way to do it. And it’s no longer my way. And I thought that was such a powerful thing for him to share. And if they try something, and it’s not as good as the way it was before, you go away and go back to the way you were doing it before and move on and figure something else out to improve.
Yeah, there’s no silver bullet here, Dustin, and here’s the other bit of advice I would give around digital transformation. What technology to go after, and why are we going after them? It’s so tempting to go after the silver bullet or the shiny object if you will. If we just drop in AI, everything’s going to be better. It’s just not that simple. I like to describe it for organizations more like a death by a thousand cuts. There’s lots and lots of pieces
Absolutely.
Where automation is going to make a big difference is how we perform. So, I’m a big advocate of another Deming. Deming said, if you can’t describe it as a process, you don’t know what you’re doing.
Exactly.
So, if you’re describing it as a process, you’re capturing enough data and information to be able to analyze it and say, okay, what’s going on in the processes that are consuming scarce resources, creating defective results, whatever they may be. And very carefully dialing it down to the one, two, or three digitization actions. And very carefully say the good, the outcome, is if we do those things. The result is this return on investment in terms of freeing up people’s time to invest elsewhere or not being choked up because you can’t hire somebody. You can at least continue to grow and change as an organization and then create an actual ROI. And then the second piece of advice is if you can’t get it done in 90 days, why are you doing it? Because what? There’s this constant in business. That starts with a big C, change. Technology is changing very quickly. Business conditions are changing very quickly.
Right.
I was listening to somebody the other day who described the Fortune 1,000 and how many didn’t exist, 50 years later back in the 19th century. You take the same snapshot and the rate of failure for Fortune companies has doubled in the last 30 years. The rate of annual failures for Fortune sized companies has doubled in the last 30 years. Well, the number one thing I can think of is changing technologies. Definitely. A key component of that and the organizations that were able to keep up with that taking advantage of it. You got to really figure out what you can turn pretty quickly on. The days of putting this enterprise resource planning system that does everything for us, the big bang, IT solution, those days are gone. You have to have a good integrated ERP system, no mistake.
Absolutely.
You start to move your way into some of these other things, more than 30 different things you might tackle. Get really, really precise about why you’re doing it, and the specific business outcome. And then you’ve got to look for a relatively quick one, arguing 90 days, if you can’t get to the win, demonstrate a success so that you can scale it. You have to question why you’re doing it. Because so many things will change, and you’ll also see people coming and going in the technology market with respect to new stuff. And somebody that’s got pretty good technology today, doesn’t mean in six months that there will be a leader.
Sure. Right.
It’s changing so quickly. You can’t hitch your horse to one technical wagon. Nowadays, you better hedge your bets and pick the things that you can turn on pretty quickly to demonstrate a specific outcome for the business that you’re looking for.
Right. So, speaking of chain with AI being such a hot topic now, what is your opinion on AI and how have you used it? As you promote change?
It’s powerful, just a simple thing like ChatGPT, it’s just amazing. You admitted you’re experiencing the same thing, just suddenly if it’s this leapfrog of productivity in terms of something I didn’t know much about and being able to pull that together. So, there are immense applications in, I’ll call it, knowledge management and the generation of information. Tremendous gains in all of that where that actually matters, okay. Beyond that, then you just start getting into robotic process automation. That’s why the line, isn’t such a clean line. It’s kind of a gray line of how we leverage things like AI and robotic process automation, which is digital robots. How do we begin to merge those together a little bit or help us identify what are the activities that humans are involved with that maybe shouldn’t be for two reasons? One is they always make the same decision anyway.
Yeah, any repetitive activity. Yep.
So why not let the computer do it? Or at least get us to the decision, near the decision point. One of the pieces of advice I’ve been getting about AI from a lot of smart people who know a whole lot more about it than I do is use it, but don’t abdicate. In other words, start teaching your people how to have critical thinking, because I’ve had a lot of people say to me, I left this AI thing to its thing and the answer it came back with was just crazy wrong. Way off the park. And to think about AI that I’ve learned, and I’m no expert on this, but what I’ve learned is the knowledge base upon which AI is built is actually years old. So, it’s this collective gathering of data and information out there. But AI does fall victim to the database, the repository that it’s working with, is actually dated. And the more you get to a very current situation, things are actually dynamic future looking. The efficiency of AI begins to degrade. So ICAI is yet another tool, one of many, but we have to be careful about its application, where it actually can be effective, and that opens us up to risks with respect to really dumb decisions being made based on assumptions that are no longer true.
Yeah.
So, I don’t know if that helps with your question.
Well, I just wanted to know your opinion.
Okay.
It is a very interesting tool. I do agree that you can’t just blindly use it. You have to review what you’re getting out of it. And there’s no way it’s becoming dumber. I mean, with all of the people using it and the information going in and learning and remembering and the evolution of it, it’s definitely a very powerful tool.
You cannot ignore it, make no mistake, you cannot ignore it and proceed with caution.
Yep, absolutely.
It’s not a silver bullet, right? Can’t just apply that to everything. You’ve got to very consciously pick your battles.
Yeah, nothing’s a silver bullet, right? Absolutely. For sure. Did we get through your whole list? I know that you had a list of things that you wanted to touch base on there. And I think we kind of scrolled off that at one point.
No, we kind of got there. Because we started with my team and we put together this big list, and we started with, let’s just create industry courses.
Yeah.
So, for the medical industry, what are the technologies that really impact the medical industry? Then we went through it and let’s take a look at finance, FinTech, financial services, all kinds. What are the forms of digital transformation that are really impacting those industries?
Sure.
Then we took tangible goods firms, manufacturing, just to be involved with tangible goods. And the last bucket would be government, non-profits, those sorts of organizations. We kind of created these industry focuses of all these, just kind of mapped out which technologies have the most impact on certain industries. And then we flipped it and said, okay, now let’s do a functional course. Then we had to talk about the five functions. You have sales and marketing, and new product development, getting something to market.
Right.
Engineering, and all of that. Then you have the supply chain, then you have your operations and quality, IT, finance, HR, and change management. And then we mapped it that way. Like, flipped outside and did it that way.
Sure.
And so fast forward a few years later, our customers, Gunker and Magic Quadrant for their global digital awareness training. So, I was just really happy to have a hand in helping them bring that to market. And that’s part of the reason why I have some strong opinions is I had the opportunity to rub elbows with some really smart people and hear the success stories and the horror stories that are going on.
Yeah. You learn more from horror stories than you do from success stories.
You do.
Absolutely. Well, if people want to get a hold of you, Ron, how do they get a hold of you?
Well, I’m always going to be connected on LinkedIn. We have metaexperts.com. So, M-E -T -A -E -X -P -E -R -T -S and metaexperts.com. And my team can get in touch with you rather quickly if I’m not available. I’m rcrabtree@metaops.com.
Okay.
And then my phone number is out there as well. If people need that, we can get to that quickly.
Yeah, and it’ll be in the description and in our blog and all that fun stuff. So, I really appreciate you coming today for a wealth of information. So, my mind is definitely full of thoughts now that’ll consume me for the rest of the day. I’m a big fan of Deming as well. So, I’m glad that we touched on the positive things that Deming brings to the table and it’s very interesting to me that he proposed all these ideas to the big four in the United States and the only one that embraced him was the Japanese. So, he definitely proved his theories work and they’ll forever be utilized.
All right, awesome. Thank you, Dustin.
All right, buddy. Thanks for coming on.
Thank you, Sir.
Talk to you soon.
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