In the spirit of the holidays, we are happy to share two of this year’s most inspiring business stories, which I heard at a recent Deming Center board meeting. The Deming Center for Quality, Productivity, and Competitiveness at Columbia Business School is a consortium of leading institutions chartered to create operational excellence in major corporations worldwide. Below, we highlight insights from recent talks given by the 2013 Deming Cup winners: (1) Fisk Johnson, Chairman and CEO of SC Johnson & Son, and (2) Paolo Rocca, CEO of Tenaris and President of the World Steel Association. These two outstanding leaders provide incredible examples on using continuous improvement to drive corporate social responsibility, engagement, learning and growth. Please enjoy these thought-provoking stories.
Happy Holidays!
—David Niles, President
For Herbert Fisk Johnson, fifth-generation CEO of SC Johnson & Son, sustainability isn’t an altruistic loss. Rather, a culture of continuous improvement maximizes the triple bottom line: people, planet, and profit. In 1987, Fisk joined a company that had already received accolades for its corporate citizenship and record of driving sustainability. Under his counsel, SC Johnson designed Greenlist™, a patented system for using less harmful chemicals in its products.
Fisk recalled Edward Deming’s thoughts about management: “the factors that have the greatest impact in the long term can be quite surprising.” For SC Johnson, the most valuable long-term factor, which also drives sustainability, is a pervasive culture of continuous improvement.
Employee engagement is the center of that culture. For example, SC Johnson implements employees’ ideas. For example, a frontline employee generated the idea for the Waxdale facility cogeneration initiative, which cuts 47,250 tons of greenhouse gas emissions yearly by sourcing methane from a local landfill. Further, SC Johnson’s My Life/My Work system1 helps employees analyze time spent on various tasks, encouraging them to concentrate on those that yield more customer and personal value. With a direct hand in their company’s improvement, employees become important stakeholders who can evangelize its business narrative.
The results are clear: for the fourth consecutive year, SC Johnson secured an 84% employee engagement score, and 88% of respondents said they were proud to work there. SC Johnson’s culture touches its employees so fully that when closing a factory in El Salvador, the final meeting ended in a standing ovation from the people who were losing their jobs. “Even in the most difficult situations,” Fisk remarked, “the smallest things, including acting with respect and compassion, can be very powerful.”
As a private, family-owned company, SC Johnson can take unique risks, like bringing continuous improvement to unexpected regions. In 2003, SC Johnson partnered with Cornell University to develop the Base of Pyramid (BoP) Protocol, an operational guide for doing business with the world’s poorest communities. In Nairobi, Kenya, SC Johnson applies the BoP protocol to help youths start micro-businesses, such as car wash and cleaning services, using its products. Residents say the initiative provides young people an alternative to crime, women a place in the workforce, and hope to the community.
Some stereotype today’s business as concerned primarily with profit. But it could be celebrated as society’s greatest value creator. By extending Deming’s principles of operational excellence for “the benefit of everyone the company touches,” SC Johnson drives innovation, sustainability, community benefit and profitability all at once.
You can find a video of Fisk Johnson’s acceptance speech here.
Paolo Rocca is CEO and Chairman of Tenaris, an international supplier of steel pipes and services to the global oil and gas industry. From his grandfather, Paolo inherited a steel pipe producer with 4,000 employees. In 2007, Paolo launched a program to standardize best practices from the company’s various industrial facilities with the goal of reaching zero accidents, zero rejects, and 100 percent compliance. This resulted in a common set of operational standards and a culture that drives performance improvement. Today, with 27,000 employees and revenues of over $28 billion, Tenaris operates a global industrial system in over 15 countries and provides services in over 30 countries. Paolo attributes Tenaris’ growth to Deming’s principle of operational excellence, a “focus on process control, quality as a center business, and, the human being as the factor that transforms any activity.” Here are a few takeaways:
Continuously capture and share knowledge throughout the company.
Tenaris delivers consistent products and services because it has a process for sharing knowledge related to production, training, development and management across all of its locations. When individuals learn from experience, they share insights using the company’s centralized corporate learning center, TenarisUniversity. Mistakes – and lessons learned – are passed on through training. This flexible curriculum allows the company to stay abreast of the latest challenges before they become widespread. Most recently, Tenaris announced a new collaboration edX, a learning platform developed by Harvard and MIT to help universities blend online and classroom education to create a “flipped” multimedia learning environment. For Paolo, introducing technologically advanced education methods aligns with Tenaris’ goal of continuously innovating its training.
Improve education – even outside the immediate boundaries of your company.
Through investments in and establishments of R&D facilities worldwide, Tenaris innovates and passes next practices to employees throughout the supply chain. Beyond aiding internal operations, education also promotes corporate citizenship. For example, Paolo expresses his “confidence in education as a way to promote economic progress, social mobility, and growth in the social and economic sense of the community” by building technical schools and funding existing schools in the communities in which Tenaris operates. Though students may never work at Tenaris, educating them improves the company and the community.
Think globally; act locally.
To internationalize a firm, pair a global strategy with a local mindset. When Tenaris seeks out communities in which to operate, it looks for overlap between local values and Tenaris’ values. Community initiatives, too, are important, because “there is no success for an industrial business unless the community in which it serves is also progressing.” The greatest businesses make the communities in which they operate winners.
You can find a video of Paolo Rocca’s acceptance speech here.
