A Culture of Improvement

Moving forward: Kerry Green, chief executive officer and president of Germane Systems, LC.

Q: What counsel would you share with fellow executives on meeting the challenges of implementing and sustaining a culture of continuous improvement?

To manage the changes you want to implement so that they don’t have an adverse effect on your operations. Our culture of continuous improvement is a natural by-product of our experience. In the beginning, we operated lean without realizing it — we had never heard of “lean.” Every time we contemplated an order, we’d say to ourselves, “That was harder than it should have been. How can we do it better next time?” Due to our small size and low volume, we have operated with constrained resources for buying components, building, and selling our products (desktop PCs and servers, etc.). We carried no inventory and got paid the day we shipped. Our communications were quick and effective. Only now do we realize that we just operated lean naturally: Due to our small staff, we could offer quick customer response time; due to small orders, we would buy “just- in-time;” and investing in resources as we could afford them.

As we grew and evolved, we found it increasingly difficult to consistently get products to our customers on time and provide the information that they needed. One of the ways we felt we could improve was to move into a facility that was better suited for manufacturing. However, we eventually discovered having extra space cost us critical visibility into waste (motion, communication, and inventory), and created inefficiencies. It became difficult to manage inventory as we started to buy “just in case” to alleviate delivery challenges and get volume discounts. The effectiveness of our processes deteriorated. All of this began to impact our quality and customer satisfaction.

Then, we were invited by a customer to a week-long kaizen event. We formally learned about lean for the first time, and that a culture of improvement — managed change — matters. Lean is not just a philosophy or theory, but something that is lived out day to day.

We’ve started on the lean path, first with a pilot cell and then re-layout of added work areas. We’ve trained all our builders and production personnel about lean tools. Although we feel as if we’ve just scratched the surface in lean operations, we’ve improved tremendously in a short period of time: lower internal and external defect rates, better throughput and cycle times, decreased finished goods handling, lower inventory levels, and other gains. We are looking forward to implementing more lean tools, not just in the plant but throughout the rest of the company.

Some factors that have helped us along the way: Learn from experience; never give up when facing challenges; plan and communicate your improvement opportunities; focus on customers — always ask what you can deliver to the customer that will help their business; keep a longrange view in business relationships; and don’t forget to celebrate milestones (look at what you’ve been able to achieve). We have a recognition program at the end of the year, publicly acknowledging people in every business unit, highlighting individual successes at our monthly all-hands meetings, taking a team out to lunch, and otherwise showing appreciation for their efforts.

Q: What strategies proved useful in gaining buy-in for changes needed to support the company’s customer-focused philosophy, and handling resistance to change?

We have a strategic planning session, and we all agree on where we are heading towards our future. We develop a short list of annual goals — five, not 25. These filter down through the departments and become clear goals for the individual. We have learned that our goals need to be communicated over and over at different levels. People need to know how what they are doing impacts the company’s overall performance.

Culture matters. We keep in mind how customers interact with us and why they buy from us. They are not just buying a product, but also the services and support that go along with that server. We bring people into the organization who have a creative and service-oriented mentality, and who understand that doing the right thing matters.

Q: Describe effective ways to build trust and communications effectiveness as you continue to strengthen the organization’s performance.

Modeling behavior is important. Leadership — everyone — needs to operate with the highest level of integrity. Building trust means being upfront and honest. We try to deal with issues head-on; no playing games. We also rely on accurate and timely communications. We can’t make our best decisions if we’re operating in a vacuum. Also, we don’t shoot the messenger!

Q: How is Germane Systems improving its performance in building leadership effectiveness and competitiveness at all levels?

We need people who are aligned with our business goals and philosophy and are willing to grow with us, from the executive team on down through all levels. Promoting an atmosphere that supports creativity and innovation — thinking outside the box is one of our core values. We have developed a business system mentality, streamlining our processes. We continuously focus on performance improvement.

We believe that one of our competitive advantages is staying focused on the customer — we are here for them and this kind of initiative helps us make product that is specifically suited for their needs and streamlines our manufacturing process. We take a look at our customer’s environment, and then we find a way to reduce their costs. We make our units more transportable and secure. For our military customers, we use commercial components that can withstand a harsh environment. We emphasize life cycle management. Many components traditionally have a 6- to 18- month life cycle. In some servers, we have extended their life to 6 or 7 years. Because of our focus on customers, we had compound growth of 20 percent from 2007 through 2010. This growth has taken place in a down economy. If we can successfully and profitably conduct manufacturing just outside of Washington, DC, it can be done anywhere in the United States. Let’s bring manufacturing back home!

Lea A.P. Tonkin, Target editor-in-chief, lives in Woodstock, IL.