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Thin Ice: Solving Future Manufacturing Needs with Yesterday’s Leaders

By Jill George, Ph.D.

Jill George, Ph.D

As anyone in manufacturing knows, digitization, automation, changes in customer demand, employee demographics, and expansion are transforming the industry. Collectively, these megatrends are referred to as “Manufacturing 4.0,” and are considered no less than the next industrial revolution. What is less known is how poorly manufacturing leaders are keeping up with production system advances. Recently, I toured an enormous General Motors Company V6 and V8 engine assembly plant. The plant is fully loaded with high-tech robotics lifting and setting heavy engine blocks in place with ease, machine-to-machine communication capability, and real time data access for teams and their leaders. There, a keen and savvy 30-year+ executive, who is no stranger to market ups and downs, said:

We expect more change in the next 5 to ten years than there’s been in the last 50—and with that comes real opportunity. As leaders, we must create an environment where every member of the team helps anticipate change and develops creative solutions to evolve, adapt, and respond.
— Bill Shaw, Manufacturing Manager, General Motors Company

The gap between leadership skills and advancing production systems is widening. M4.0 megatrends are changing leadership jobs at every level, creating significant variation in leadership performance quality—leaders’ ability to solve new, increasingly complex problems without the needed skills. This leadership variance leads to quality and cost problems resulting from dated skill sets. As far as leaders go, some perform really well, and some don’t; and as a plant leader, you likely know which leaders fall in which group. If you have differences in leader performance, you have leadership variance. Like in all other manufacturing processes, the goal is to minimize the variation and increase quality, but not reduce diversity of thought. How much impact does leadership variance have on your operation?

As an industry, manufacturing leaders are in last place when compared to any other industry on leadership quality with only 37 percent of leaders rating their overall leader quality as high, according to the Global Leadership Forecast 2014|2015 research. Auto manufacturers rate their leaders even lower at 31 percent. Unlike supply chain or automation systems, which drive performance consistency and take performance variance out of the system, the system driving leadership talent continues to lag and create subpar leadership performance that will no longer be sustainable. Clearly, the leadership quality ice is cracking in manufacturing.

According to the Manufacturing Leadership Council, “Manufacturing executives believe that the new Manufacturing 4.0 era of cyber-physical systems, digitization, and information-driven factories will require a major change in leadership approach and skills, but many believe their current leaders may not be up to the challenge.” In fact, as shown in the figure below, 90 percent of respondents agreed that the emergence of Manufacturing 4.0 will require a substantially different approach and set of skills on the part of manufacturing leaders.

Figure 1

Manufacturers who expect to capture market share and increase their competitiveness can no longer afford leadership variance due to subpar leaders. Yet, the solution to the leadership variance challenge is in plain view. The answer to raising the leadership quality bar and reducing leadership variance can be found in applying the manufacturer’s own lean system to consistent leadership behaviors, such as coaching, interaction with customers, quality orientation, delegation, and analyzing data. For example, most manufacturers have a continuous improvement process where team members and leaders identify quality problems, leverage data to identify the root cause, form contingency actions, communicate across functions, and share best practices, with support from upper management.

The right side of the figure below applies the throughput improvement process to improving leadership quality and reducing leadership variance via development simulations. Leadership development, such as high-frequency practice and simulations (think flight simulators for pilots) provides robust data on key leadership behaviors that are best-in-class for leaders who need to drive performance. The data identifies which behaviors require improvement, as priorities to fix, via feedback and development plans. Just like in a throughput improvement process, the simulation can create a common language of best practice leader behaviors and the development plan is the set of contingency plans to solve the problems, thus reducing the variance. Groups of leaders can then share development successes and wins with the support of upper management.

Figure 2aFigure 2a

How prepared is your organization to handle M4.0? Challenges with adapting to future megatrends will not be market problems, customer problems, or even technology problems. They will be leadership problems. Smart manufacturers will apply their own lean systems to proactively solve leadership quality issues, reducing a key but often overlooked source of future cost variance.

For more information on DDI’s Auto Manufacturing practice, visit www.ddiworld.com/auto-manufacturing.

Jill George, Ph.D., is DDI’s Global Manufacturing Practice Leader.

Posted: 05 Jan, 2016,
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