Challenge Your Organization to Do More After You've Simplified As Much As You Think You Can
66528
Business
Feb 10, 2008
donmitch
Challenge Your Organization to Do More After You've Simplified As Much As You Think You Can
Can leadership make a difference in simplifying? You bet! Here's how: An organization's leaders can establish goals that focus everyone's attention on simplification. Frank Lucier at Black & Decker did this well when he was the firm's CEO several decades ago. For each of the firm's major power tool products, goals were set each year to reduce the price and cost by about one dollar each. At first, these goals led engineers to substitute cheaper materials for more expensive ones. After a while, the engineers began to notice that reducing the number of parts by simplifying the design was a more predictable way to cut material and assembly costs. Product defects also dropped with simpler designs. After several more years, engineers began to wonder what would happen to expensive component costs such as electric motors if more than one product could use the same component. Voila! That proved to be another breakthrough in simplification. An unintended lesson of this experience was that Black & Decker probably could have accelerated its simplifications. How? The goals could have provided the direction. For instance, after understanding what simplification and parts commonality could do, the annual goals could have been made more challenging such as to reduce prices and costs by two dollars. Intel learned a powerful lesson from its CEO and cofounder, Gordon Moore. The firm had been a pioneer in memory chips and followed that with microprocessors. In 1965, Dr. Moore made a prediction that the number of transistors on a semiconductor would double about every 18 to 24 months. That prediction, which came to be known as Moore's Law, proved to be astonishingly accurate for a number of years. By 1978, however, many were skeptical that silicon-based technology could continue to improve at anything resembling that pace. To test that skepticism, I visited Dr. Moore and we chatted about what he expected. My impression at the time was that Dr. Moore felt that the law wouldn't continue to hold much longer. Fast forward to 2008: Moore's Law continues to work just fine, thank you. What's going on? Everyone knew about Moore's Law. Because of that knowledge, no one was willing to run the risk of falling behind other semiconductor companies. As a result, competitors vied to produce the next generation of chips with double the number of transistors every two years. Someone always found a way to keep the law operating more or less on schedule. Competitors would soon catch up or have to drop out of a particular product line. How long will Moore's Law continue to work? I believe it will be in place as long as semiconductor companies set goals to match the law's predictions. I often wonder what would have happened if Dr. Moore had originally set a more aggressive prediction. Today's chips are vastly more complex and larger compared to those in 1965. Those differences are important because more complexity and size, for instance, make it easier for engineers to design new products to use the latest chips. What do these more complex, larger chips have to do with simplification? The answer lies in looking at how semiconductors are designed and manufactured. The simplifications came in those activities, allowing greater complexity to flourish and be productive. Here's an example: Semiconductors are produced in part by creating lines on their surfaces. Such processes originally were so crude that quite a wide line had to be made in order to ensure that the circuit would work properly. As manufacturing became better, lines could be thinner. By focusing on making finer lines that worked well, much of today's progress occurred. Most of this progress came from employing equipment that was supplied to the chip manufacturers. Simplification was important there. For instance, semiconductor chip equipment makers learned that you could produce to finer tolerances if as much equipment as possible came from the same vendor. Applied Materials' CEO Dr. James Morgan realized this point early and used a combination of internal development and acquisitions to create an unparalleled breadth of mutually tuned equipment from the same supplier. How can you lead your organization to make greater simplifications that will further lower costs?
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at http://www.2000percentsolution.com .
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