Wednesday, February 11, 2009

An example of innovative design.

When Ford's Engine Division learned it would have to develop and produce a new engine for the 1991 Lincoln town car that was equal in cost and quality to the best V-8 engine in the world, George Pfeil, the manager responsible for producing the new engine, knew this would be impossible using traditional plant structures and processes. He would have to create something quite different if this program was to be successful. He knew that some plants at Ford had significantly improved their performance by using flat, decentralized, team-based work structures. Pfeil decided he'd create the first Ford plant in the United States to organize its entire operation at all levels around these new management concepts.

He told me at the time, "You ultimately reach a point where you can’t solve new problems using old principles. I think we’ve reached that point in manufacturing at Ford. When you go back to the principles which our current companies are built on — standardization, specialization, hierarchy, and so on — you realize that these aren't bad principles in themselves, but they're inadequate for the challenges ahead."

To produce the new high-tech engines, Ford rebuilt and retooled a one-million square foot manufacturing plant in Romeo, a small town just outside Detroit, at a cost in excess of $1.0 billion. This facility was on the site of a former Ford tractor plant which had just been closed down because of bad quality and poor performance. Most of the 700 hourly employees who would work at the new plant were formerly employed at the tractor plant and had at least 15-years previous experience working for Ford in very traditional work settings.

Pfeil and his management team approached the UAW Local 400 who represented these employees and tried to explain what they had in mind. The union’s plant committee agreed to jointly explore innovative management ideas with the executive team, although not everyone on the committee was as certain as they are today that this was the route to success.

“When we first met with the management people," UAW Chairman Pete Piccini remembers, “we thought they would have all the answers. We soon found they really didn’t know a lot about this concept or how to make it work either.” Together, management and union leaders began to design an organization and a way of working they thought would best fit the Romeo situation.

I was brought in as an external consultant specializing in innovative organization design because I'd worked with other successful Ford startups in Mexico (Juarez and Hermosillo) and Europe (Pamelia in Portugal).

The Romeo organization was designed around five key design ideas:

1. Simultaneous product and manufacturing engineering.

2. Decentralized local control of process variations.

3. Just-in-time manufacturing.

4. Continuous employee development.

5. Decentralized, team-based responsibility.

I'll explain these and the design process used in more detail in subsequent posts.

2 comments:

Jon said...

"You ultimately reach a point where you can’t solve new problems using old principles"

This sums up so many things in our day and age.

john cotter said...

That's for sure.