A while back, I had the opportunity to hear Mary Poppendieck speak at the BayAPLN. I just spotted the Agile 2007 90min video+slides version of it and had to watch it again. Of particular interest to me were the case studies. I was already aware of the Toyota Production System, how it focuses managers on coaching and on leveraging the combined intellect of the employees. This approach is in contrast to decision-making by decree. Toyota is also known, like Dell and a few others, for using a “pull” process – your car or computer won’t be built until you’ve requested and paid for it.

Fashion retailer Zara, was a new case study for me. About 61min into the video (slide 29) Mary summarizes what Zara doesn’t optimize for in order to attract their customers. Shipping costs and labor costs are high, while lot sizes and inventory are low. Traditional fashion retailers optimize all these in the opposite direction! To learn what they do optimize for and a little more about their business model I went to the press dossier and corporate report for INDITEX, the holding company. One section in particular stood out for me:

“The feed-back of the store staff to the commercial team is fundamental to the process of creation and design of the collections which each of the concepts in the Group launches. This contribution is simply the interpretation of the desires, comments and individual opinions of our customers by fashion specialists who are in direct contact with the market.

For this reason, the training of the store staff has two of its fundamental axes in giving them a specialised knowledge of the evolution of trends in fashion and, on the other hand, in the capacity to take in and to formalise the information which is supplied to them every day by the customers all over the world.”

– INDITEX annual report 2006, pg 30

Wait. *double-take* They train their staff in fashion trends and to collect and formally communicate the feedback from customers? The people they hire are probably just as smart as those working for the competition, but at INDITEX they are expected and trained to think - and listened to - not treated like automatons. This feedback loop truly puts the customer first, and leverages the collective intellect of the employees. They consciously avoid the sort of optimization applied by their competitors and strive to make the whole enterprise into a massive self-optimizing engine. Their results are impressive in isolation and astonishing next to their competitors’.

Compare and contrast with companies you have worked for. Are you entrusted, educated, encouraged and empowered to make daily contributions to the optimization of the enterprise? Do you at least have the correct incentives and measures to determine how your decisions align with the objectives of the enterprise? Hmm. Perhaps there are mechanisms in place to avoid different departments getting in each other’s way? Surely you have at least a suggestion box that and management reviews it frequently to show that your opinion, ideas and intellect count? Oh? Oh dear.

Perhaps you like so many of us have mostly worked at one of those places where the distribution manager has the incentive to minimize shipping costs. Every other department manager optimizes locally for their domain of control because that is what they are personally accountable for and they have little or no context of the enterprise anyway. The lifts in your building are probably optimized (with a fancy touch-panel) to minimize maintenance and wear-and-tear, rather than to minimize valuable employee or client transit time.

Enterprise optimization is not an afterthought. It must be built-in.

PS: I have added these related books to my personal reading list: