By Brian Lucas
“Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen.” -John Steinbeck
A glimpse of life in an agile business versus a non-agile enterprise.
At the end of the PCS status meeting held every other month the PCS CIO always asks if there are any comments or questions. He really doesn’t like to take questions, but the H/R Director convinced him to add this to the meetings since employee morale is low.
Paul Liticole (PCS-CIO): “So does anyone have any comments or questions?”
Sal S. Mann (PCS-Salesman): Mann clears his throat. He is somewhat worried about making a suggestion since they are usually ignored or criticized, but since his friend at ALS said they had great success with a water vendor called UltraPure he is willing to try. “I have a friend who works for another business and they recently replaced their national bottled water provider with a local service provider of water filter units. He says it saved them over 35% and the people like the convenience because the water never runs out and the company is great to deal with. I noticed that we use the same bottled water provider they were previously using. I was wondering since we have been economizing, reducing our hourly staff; could we save money by changing vendors?”
Liticole: “That’s in the building operations department, but send me an e-mail about it!”
Mann diligently sends an e-mail to Liticole, who immediately forwards it without comment to the PCS-CEO, Bossley Bigous’s administrative assistant, Gaetti Dunn. He copies Mann on the e-mail. Mann sends a follow-up e-mail to Dunn offering to find out who the representative is from the company that supplied the water service for his friend’s company and have him contact Dunn. When Mann doesn’t hear back from Dunn after a few days he stops by to see her.
Mann: “Hey I was wondering if you got my e-mail about offering to set up an appointment to have the person from the UltraPure Water Service company stop in and see if they can save us money? I actually spoke to him and he said since we are a national company with multiple divisions and offices that the savings can be substantial.”
Dunn: “Well we actually don’t do any centralized purchase of water, although building operations need to approve any item that is brought into the building. Each business unit that has an office gets its own and accounting approves the expense. We actually use several bottled water vendors and I know one division has installed their own filter products to save expenses.”
Mann: “Doesn’t that make it had to keep track of? I thought this was all thought through since the eating areas are part of building operations. Also the bottled water is a pain if we have outside customers in for a big meeting we are always running out of water days early if someone forgets to call the water company for an early delivery.”
Dunn: “Yes my friend in accounts payable, Goode Persin told me yesterday when I talked to her that early, non-regularly scheduled deliveries cost us 15% more and they want to be paid on delivery, which means she has to find out the cost ahead of time and have a check ready at the receptionist’s desk.”
Mann: “Good grief what a pain! Is anyone doing anything about this?”
Dunn: “Goode is going to speak to Mr. Oveur Werked, our CFO about it.”
Mann: “OK, do you think she’ll mind me sending her an e-mail about it just to keep the ball rolling?”
Dunn: “No she’s doesn’t get uptight and knows how to get around the system to get things done.”
Mann sends Persin an e-mail asking if he can send her contact information on to Jack Dalt the UltraPure marketing representative; Persin responses affirmatively. Dalt sets up an appointment with Persin and finds out that there are three different bottled water vendors. One vendor actually has 4 separate accounts with the company. One PCS business unit is only using simple water tap carbon filters and three business units are just buying stocks of bottled water at the stores and keeping them in refrigerators. 12 of the business unit managers refuse to supply bottled water and say that their employees should bring their own if they don’t want to use the chilled water from the standard building public water fountains.
Dalt: “That can make for some unhappy employees! Do you know, that based on what you have shown me, if you centralize the purchase of your water service, we can save you company over 65% on your current water service bill, even with supplying water service to 100% of your building locations and your people will never have to worry about running out of water. Furthermore, the water your employees will be drinking will be of a very high consistent quality free of contaminants found in some of the products that you are currently using.”
Persin: “That sounds good, but it is above my pay grade, I’ll have to talk to the Mr. Werked, our CFO and see what he wants to do. Thanks for coming in.”
Persin sends an e-mail recapping the meeting with Dalt to Werked and asks for instructions. Werked does not respond immediately since he is very busy and overworked and notoriously hard to get in contact with. Dalt keeps in contact with Persin and Mann just to keep the opportunity alive. Finally, Persin traps Werked in the hallway and asks him what she should do about making a centralized purchase for water service. Werked frowns at first not knowing what she is talking about since he has 100 other problems on his mind and she explains that a representative from a water service company has shown that PCS can realize a substantial savings with a centralized purchasing approach. Werked then tells Persin to get a number of competing proposals from various companies and make a recommendation to him with three options.
Persin works with two people she knows from building operations and technical services and Mann who she asks to help to create a formal request for a proposal (RFP). She gets a list of the current water vendors and then goes on the internet to find others and mails each vendor a copy of the RFP. All told this took about 200 person/hours since each manager in the chain insisted on reviewing the document and asking questions about why this was being done and where was the budget coming from. On day 60 Persin finally is able to release the RFP via e-mail.
Two of the vendors respond in 48 hours including Dalt. One vendor calls and asks many questions, three others just send marketing literature, one other asks for more time to respond and 5 vendors don’t respond. Persin creates a report that she sends to Werked. The report recommends the UltraPure proposal which provides the most service and the lowest price and is guaranteeing implementation in the shortest time. It includes another option for a vendor who offers the same filtered water at a higher price and includes a third option to discontinue all water services purchases. She knows that Werked will not go for the last one since he drinks a lot of coffee and the tap water in the building is very chlorinated and makes it bitter.
Persin keeps sending reminder e-mails to Werked about the water service proposals and that he needs to make a decision. Finally, she catches him late in the office one evening.
Persin: “Hey sorry to see you are working so late again I was just wandering do you want to go with the company I recommended for the water service purchases?”
Werked: “Will it cost us more money? We have to get our budget under control and economize because our profit margin is shrinking!”
Persin: “Actually it will save us 65%!”
Werked: “OK go ahead and do it.”
Persin: “Great, I’ll contact the vendor and send out a companywide e-mail letting everyone know.”
Persin contacts the vendor and sends out a companywide memo about the new water service being provided to all employees at all offices. Months later the final install is finished. There were coordination issues with the building operations department at PCS not wanting to commit resources to be on hand when the UltraPure installers did their work despite the fact that it was a policy they insisted on, but it was finally ironed out. Persin runs into Mann later that week.
Persin: “Hey! Good to see you! Do you know everyone is really happy about the new water service? A number of people in the satellite offices have actually called me saying they finally feel that someone from corporate actually knows they exist! Payroll announced in the staff meeting yesterday that we are saving enough money to keep another employee on the payroll. I want to thank you for being so helpful and persistent. I could not have followed through with this without your support!”
Mann: “Well that’s one of the traits a good salesman has – persistence. I was glad to be able to help. Still, it took us a long time to get here and while I can understand the need to have a lot of determination making a sale it seems just wrong to me that it is so hard to make anything happen at PCS. I’ll bet you spent at least 300 hours on this and I know I spent about 40 and the analyst from technical services and technician from operations each told me that they charged 120 hours to this. It seems a shame to have spent so much time and money when we are strapped for budget only to end up with the recommendation I had in the beginning. My friend said that it only took him a week to make the decision on UltraPure and his company is really only a bit smaller than ours. I wonder how they did it?”
At ALS, Wayne Brusche, the CEO always has monthly “all hands” meetings to report on company status, answer any questions and encourages employees to make suggestions. No one is ever criticized for a question or a suggestion, which are always answered directly and openly and followed up rigorously when action items are identified. Brusche enjoys these sessions and encourages all employees to think about not just their areas of responsibility, but the company as a whole and what they can do to make it a better organization. At times he will establish a special goal or objective for the month to focus the employee’s efforts.
Brusche: “So as you can see since our customers are experiencing a period of economic stringency our profit margin is down 45% and we have put our expansion plans on hold. However, we don’t anticipate any reduction in staff and in fact we expect to actually expand our customer base by offering a better cost structure to several of our competition’s customers that have gone out for proposals for consulting services. Does anyone have any comments or questions?”
Billy Weberelli (ALS Salesman): He is excited that he has something to share at the meeting and is looking forwards to hearing the reaction from his fellow workers. “I was trolling the internet looking for examples of good ads when I ran across a water services vendor who had a heck of an elevator pitch. They claim to be able to offer substantial savings over bottled water. I called and got some information from them. It seems impressive.”
Brusche: “That’s sounds interesting! With just a show of hands how many here think having a better water service would be a good idea? Wow! That is almost 100%.” Nodding to Weberelli he says, “Why don’t you stop by my office right after this meeting and let’s talk.”
Weberelli stops by Brusche’s office which is actually only another cubical on the main work floor of the corporate office’s 2nd floor.
Brusche: “Thanks for bringing this up at the meeting. We are always looking for ways to save money. You know we grew so fast in the last 4 years that this kind of thing has just slipped through the cracks and it is important to me and our company to treat our employees right. They are our most precious asset! So tell me – what have you learned about water services?”
Weberelli: “Well I learned quite a bit and found the facts startling. I called UltraPure water service and spoke to aJackDalt. He was a fountain of knowledge (pun intended). I then went to a consumer information website and verified the information. 40% of all bottled water is taken from municipal taps. 22% of all tested bottled water contains chemical contaminants above state health standards and is not tested for e coli. 17 million barrels of oil are used each year to produce water bottles, that’s enough to fuel 1 million cars for a year. Only one in 5 bottles is recycled leaving 3 billion pounds of waste from plastic bottle production. Also nearly one quarter of bottled water crosses national borders before reaching consumers. Adding in estimates for the energy used for pumping and processing, transportation, and refrigeration, brings the annual fossil fuel footprint of bottled water consumption in the United States to over 50 million barrels of oil; enough to run 3 million cars for one year. Furthermore, many municipal water distribution channels across American cities are in desperate need of replacement from old age and wear. Water contamination can occur at almost any point in the delivery channel including lead leaching from corroded pipe solder, bacteria entering the system from water main breaks, or gardening chemicals back-siphoned from a careless neighbor. Unfortunately most local and state governments do not have the financial resources to address these very expensive problems now or in the foreseeable future. To make matters worse, most cities also add chemicals like chlorine and fluoride to their water. The truth is, tap water quality in the US will most likely continue to decline in the coming years.”
Brusche: “Wow those are some nasty facts. We should bring Paul and Steve in on this.”
Burke conference calls the ALS-H/R Director Paul Marotte and the ALS-CFO Steve Romanov. After giving a brief background summary which shows he was listening to Weberelli they continue the discussion.
Brusche: “So Billy what’s the solution to the water dilemma?”
Weberelli: “A reverse osmosis drinking water system is the best way to protect us from the increasingly wide range of contaminants found in today’s tap water. RO is the most convenient and effective method – filtering water by squeezing it through a semi-permeable membrane. Non-RO water filters typically use a single activated carbon cartridge to treat water. They are much less effective, and the pore size on these filter media are much bigger. They can filter out coarse particles, sediments and elements only up to their micron rating. Anything finer and most dissolved substances cannot be filtered out. As a result, water is far less clean and safe compared to reverse osmosis filtration. The spring water supplier we are using does not use the most advanced filtering system and there can still be a number of organic and chemical impurities in the water that we are getting. UltraPure will give us all the water we need at a higher and consistent quality than bottled water. It is also much less expensive since it doesn’t require weekly and monthly deliveries. Furthermore UltraPure has units that offer hot water that is hot enough for tea, cocoa, whatever. Something our tea drinkers will like. I know that Paul does not like using the microwave to heat water for tea and keeps a hot plate in his office.”
Brusche: “It looks like this is an area we can save on and get a better product. Does anyone have any comments?”
Marotte: “Yes, we only have bottled water in the eating area on the first floor at corporate. That means employees from the second and third floors have to travel down one or two floors every time they want water. People usually fill up drinking containers they keep at their desks, but these don’t stay cold and I know I like cold water as a contrast to when I drink hot tea. I was wondering just how much time we would actually save employees if we put a water service station on each floor?”
Romanov: “Why not put several on each floor? Let’s get proposals from several companies for these “reverse osmosis” filter units with both hot and chilled water with one in every wing of the building per floor and in the main conference rooms.”
Marotte: “Can we include all our satellite business offices as well? Those people work hard and generate most of our income.”
Brusche: “Absolutely! If we can keep the price within 15% of what we are currently paying let’s make this happen!”
The meeting only took 25 minutes. Weberelli volunteered to work with Marotte to create a brief e-mail outlining ALS’s water service needs, identify a list of vendors to send the e-mail request to and recommend a vendor based on the responses. Romanov offered to review their recommendation and works up an account for the initiative and a budget based on Brusche’s limit of current expense plus 15%. Weberelli stops by Marotte’s office and they put together an e-mail based on the information the salesman downloaded from the UltraPure and consumer information websites. Marotte has layouts of all the buildings and the number of employees in each area. They put little sticky tags on the diagram in each area they plan to put a water service unit. Then they do a simple count for each building and roll this into their e-mail for the vendors. Meanwhile an H/R administrative assistant has visited the websites or called the vendors on the list to get their e-mail addresses which she created a blind carbon copy group for. Weberelli and Marotte read through the e-mail one last time and send it out to the group the assistant created. They request responses within the week. They also blind carbon copy Romanov, Brusche and the assistant. Marotte hands the building layouts to the assistant and asks him to scan them in and create an e-mail to go out to all employees informing them of the tentative plans for water service and ask them if they have any feedback on the locations tentatively selected. They are done in less than an hour.
Marotte has copied Weberelli on all the vendor responses with his comments on each one. He calls Weberelli to review them. They each spent about three hours total reviewing the responses.
Marotte: “I hope you are not too busy I know you are making a call on a customer out of state today.”
Weberelli: “No problem I just finished and have stopped into a cigar shop that has Wi-Fi. I don’t think this will take long since I am in agreement with you that the UltraPure response was the most economical and has the best units and they are the only ones that guaranteed an installation timeframe.”
Marotte: “Yes I actually called them earlier today since I received some feedback from our office in Boston that they would an additional unit in the alcove of their main entranceway lounge since they get so many customers at their location because it is a technology showcase. Dalt said they would provide us the extra unit at no cost since we were looking for a contract for all our buildings.”
Weberelli: “That’s great! This really represents a substantial savings for us, while we are actually going to be paying 35% less than we were paying before; we will be supplying water to all our employees in all our locations.”
Marotte: “Ok I guess we are agreed. I’ll send the recommendation to Romanov for approval. He sent me an e-mail last week saying he started setting up a billing account last week and just needs the vendor and the amount.”
Romanov gets the e-mail and reviews the recommendation on his smart phone while he is at lunch. He sees it is both under budget and provides a better service. He suggests that they do a test implementation of the service on the first floor of the corporate office which holds one of their largest development staff contingents. If it works out, they will promise to install in all the locations. He sends his approval on to Marotte providing him the job billing code and purchase order number to use. He copies both Brusche and Weberelli on the e-mail; complementing them on the great job they did. He also sends an e-mail to the ALS-accountant with the UltraPure information, so they can finishing setting up the transactions. He spent less than 20 minutes doing this. After receiving the response Marotte calls UltraPure and explains to them the plan to do a test install first, and if it works out, they will promise to proceed with the balance of the order. Dalt adds a clause to the contract stating that they will need to commit to the rest of the install by the end of the year; otherwise they will not receive the discounted price on the installed equipment and e-mails it out. Marotte also provides UltraPure with the building operations contact for the corporate location so installation can be coordinated and scheduled. He sends out a reminder e-mail to the contact letting him know that a person from UltraPure would be calling him to schedule an installation. Finally he sends out a companywide e-mail announcing the test deployment of a new water service, its savings and some of the background information he received from Weberelli about the ecological advantages of using a filtered water system and some additional facts from his doctor about the benefits of drinking plenty of fresh water. It took him only an hour to accomplish this.
The new water service has been installed in the corporate first floor location for almost a week. Marotte sends out an e-mail to everyone in the first floor asking for comments on the service. He gets a number of highly positive responses and puts together a brief e-mail to Romanov with a rough count of the positive comments and includes a few highlights. He copies Brusche and Weberelli. He receives and immediate response from Romanov to go ahead with the implementation. He had stopped down on the first floor to use the water unit several times and liked it a lot.
The last water service unit has been installed. As an afterthought, Brusche asks the ASL-CIO, Jason Keesch to set up a very simple website to get feedback on the water service and to send out an e-mail informing all employees when it is complete. Keesch calls one of his technical support staff and asks if they can set something up quickly. The staff member asks a few questions and says the site will be ready in about two hours. Later that day he sends Keesch an e-mail containing the link with instructions. Keesch sends out the information with a brief e-mail encouraging all employees to provide their feedback with the simple radio button selection of positive, neutral or negative and any comments. Responses come back almost immediately; the water service is viewed favorably by everyone. Keesch sends the results to Brusche who forwards it all employees with a note saying they should all look for ways to improve the working environment and that he was hoping to hear a lot more ideas at the next meeting. He also promises that there will be a prize awarded for the best suggestion of dinner and a popular musical for the winner and their family. They will all get a chance to vote. At the next meeting they receive a number of great suggestions that save the company another 5% and make the workplace more worker and family friendly. Productivity increases and profits begin to climb even in the downturned market.
The difference in these two approaches is striking. PCS consumed over 500 hours in their effort which took almost 7 months and left Mann wondering if there was a better way of doing things. He actually was frustrated that it took so much persistence on his part and he received no positive feedback from management. The only recognition he received for his efforts was from Persin. While his suggestion was finally implemented he felt unappreciated by management and decided not to make any more suggestions. In contrast, the ALS experience was a positive one from the beginning. It took them less than 3 days of effort and everyone felt as if they accomplished something worthwhile. They know that being a good partner to the community they reside in is important and reducing waste and energy consumption is a significant act. In fact, this one suggestion and the way it was handled, led to other positive initiatives which had a significant effect on ALS’s bottom line. In short, PCS took a suggestion made it an expensive and barrier laden process to implement and frustrated its people. ALS on the other hand, spent very little time, went about accomplishing the goal in a natural and informal fashion and left all its employees with a feeling of satisfaction.
How did ALS accomplish what they did?
1) Empowerment: ALS management views all its employees as valuable resources, each possessing an intellectual capital that is important to the company to tap. They encourage employees to take initiative and responsibility. They want feedback and they use the entire employee body as an information resource. Weberelli was on the lookout for something that would benefit his company and was anxious to share it. ALS management trusts its employees to be capable of independent thought and be self-managing. They have taken serious steps to align the vision of individuals, business units and the overall enterprise so they know that employees understand what benefits the company also benefits them. ALS employees often volunteer to accomplish something especially on initiatives that lie outside their normal job description when they are interested personally. Because ALS employees feel empowered they accomplish more and are more responsible. While ALS encourages employees to make suggestions; PCS only grudgingly allows them. Liticole got out of the loop as soon as possible because he saw no personal benefit in it and was not incented to drive the new idea. Mann was reluctant to offer his suggestion in the meeting and only did so because he was encouraged by Weberelli. PCS views employees as workforce that must be managed and reserves all decisions and input on decision making to the management chain. They share as little information as possible, even with managers and make decisions as far up the management chain as possible. They always assign work directly to individuals and seldom discuss it with them ahead of time. This strategy causes many in senior management to be overburdened and difficult to reach for simple decisions. This slows down PCS operations as wastes a considerable amount of workforce time as they wait on decisions from management.
2) Fluid Networked Structure: ALS is fluid in structuring workforce to accomplish an initiative. People come together naturally and work together to achieve a goal without worrying about usurping anyone’s authority. Brusche endorsed the opportunity Weberelli identified and Marotte and Weberelli became a project team of two that used minimal resources as needed with oversight from Romanov. In fact, Weberelli simplified the whole process by treating Dalt as an information resource for ALS and Dalt was astute enough to operate that way. Dalt knew that he offered one of the best products and that his service record was both excellent and economical; so rather than hiding information and making a hard sales pitch he took the approach of educating the consumer Weberelli and let him sell himself. Crossing business lines to get things done is encouraged from the top by the CEO and over the five years the company has been in existence everyone has built a solid working relationship and respects their coworkers for their expertise. PCS on the other hand has very strictly defined business units and territories and managers are not incented to provide
value added to others and share resources. Whenever a project crosses lines it is always an internal struggle as to who will control the project.
3) Communication: ALS communicates well, providing good information flow to all stakeholders and getting feedback from the employee base wherever possible. Because of this, ALS employees know more about what is going on in the company, collaborate well and are supportive of initiatives. At PCS, management only communicates information as a fait accompli and often instructs line managers not to share what executive management feels is sensitive information with the workforce. As a result of this, workers are often suspicious of management activities and meetings and cooperate as little as possible when involved in a new initiative.
If you are a CEO in which category is your company? Where do you want your company to be? Possibly the most valuable lesson you can learn as a CEO is to cherish every employee in your workforce. Peter Drucker, W. Edwards Deming, Walt Disney and Lee Cockerell, amongst others, tell us the same thing; CEOs who can’t leverage the intelligence of all their workers are doomed to fail.
Instituting programs where you can get suggestions from your workforce and treat these ideas honestly and with respect is a good way to start making your employees more engaged in your company and its success. Suggestions for work environment improvements are the least political way of introducing the subject of change. Remember, even far reaching initiatives don’t always have to be big productions; if the people involved are incented and want to work together. Notice that both Mann and Persin teamed up in a lattice fashion to work around the bureaucracy to actually accomplish something. This was because Persin knew that the current PCS system would just let this idea languish and die through inactivity and turf wars. This is the way most efforts, at least the non-standard ones, live or die, get accomplish or fail in every organization. Instead of resisting fluidity and empowerment, embrace it, and use it and your entire employee population to its best advantage and till next time, keep agile!
 Actually it’s the ALS salesman.