This blog will address a particularly common issue among manufacturers: unaddressed conflict between actions and objectives that leads to detrimental variability within organizations.
Manufacturing systems are interdependent, so when goals are pushed within one area, it has effects on other areas. For example, increasing quality often increases costs, just like increasing on-time delivery can also lead to increased inventory levels.
More often than not, the goals and actions within and between departments unintentionally end up in conflict, even when they are all working toward the goal of increased ROI, and we struggle as organizations to manage that conflict. We feel forced to waste time and money jumping from one problem to the next putting out (or decreasing the size of) fires because we don’t know how to stop the fires from being started in the first place.
How Conflict Occurs
The goal of any organization is to create ROI. To do that, we set goals for each department, which are fed by smaller objectives.
What often happens is leaders in the organization have meetings to discuss goals with department leaders. Sometimes these meetings even happen with all leaders in one room, creating a better opportunity for all team members and departments to work together. They determine goals that, if achieved, will work together to improve organizational ROI. Oftentimes, in addition to "big idea" goals, they’ll discuss the smaller objectives pursued by each department that will help them achieve each greater goal.
One example provided by Debra Smith and Chad Smith in their book Demand Driven Performance is, if the goal is to lower costs, the group might decide that the purchasing department needs to improve their performance (strategic objective that supports the goal). To do this, they need to make sure material is available and reduce the cost of direct materials (tactical objectives that support the strategic objective). Once everyone agrees on the goals of each department and the waterfall of smaller objectives needed to achieve each goal, the meeting is adjourned, and everyone leaves happy. They’ve discussed common goals, determined non-conflicting objectives for each department that will help achieve each goal, and everyone has a clear path to follow now! This happy feeling often lasts until each team starts taking actions toward these objectives and goals and somehow find themselves trapped in uncertainty and conflict. How can that be when everything was planned out so thoughtfully?
What happens too often is that when those big meetings occur to determine goals, objectives, and tactics, teams do not dive deep enough into the specific actions that will be needed to achieve each goal.
Take the previous example: purchasing needs to improve their performance so that the organization can achieve the goal of lowering costs. To improve their performance, they need to ensure the availability of materials and reduce the cost of direct materials. These seem like very actionable objectives that won’t be in conflict with any other objectives or goals in the organization. What happens, though, when they actually try to take action to meet the objectives?
To ensure the availability of materials, the department decides they should purchase from the most reliable supplier. To reduce the cost of direct materials, the department decides they should purchase from the cheapest supplier. What if the most reliable supplier is not the cheapest supplier, though (which is highly likely)? All of a sudden, the department finds itself in conflict, even when their goal and subsequent objectives made sense in the meeting.
Oftentimes teams focus on mitigating conflict between goals and objectives, or the “big ideas,” but they forget or don’t feel it’s necessary to address potential conflict between actions taken to achieve the objectives. That is because there is a fallacy that when goals and objectives are in line with one another, the smaller actions necessary to achieve those targets will be in line with one another too. This oversight, though, is a major culprit of conflict creeping into our operations and creating major issues.
What happens after these conflicts are brought to light? Well, the goals and objectives have already been agreed upon, so usually teams decide to focus on one action and/or objective over another. Using the example above, they might decide to focus on purchasing from the cheapest supplier rather than the most reliable supplier, because they believe that reducing the cost of direct materials will lower costs more than ensuring the availability of materials. Maybe they also start receiving extra pressure from higher-ups to reduce direct material costs because their financials aren’t looking too great.
While leaning toward one action/objective can obviously lead to improvements in that area, it almost always comes with negative effects as a result of sacrificing the conflicting action/objective.
What would likely happen with our purchasing team is they would focus on reducing direct material costs while the availability of materials suffered. This would continue to happen until leadership starts receiving complaints or starts noticing that orders are being delayed and they’re losing money because the availability of materials is so inconsistent and they’re having to do damage control. They might even send a demanding message to the purchasing team, “We need to make sure materials are available when we need them! This performance is unacceptable. I thought we discussed this at our meeting?”
Once the negative effects have been realized and new demands have been issued, they’ll swing, or oscillate, to the neglected action/objective: purchasing from the most reliable supplier to ensure material availability. While they work on minimizing inconsistency in material levels, improving client relationships by reducing order delays, and saving money on expedited material orders, the other objective will now suffer. They’ll start paying more for reliable suppliers, leading to smaller margins. Leadership might start seeing the organization’s financial performance deteriorate, become cash-strapped, and begin feeling pressure from shareholders. The sales team might get frustrated because they have less room for negotiation while remaining profitable and competitive. So what happens? The hammer falls again on the purchasing team: “We need to reduce direct material costs! Our financials are looking terrible and the sales team is suffering – we're spending too much on suppliers. There has to be cheaper options.” And likely again, the team’s actions and objectives will oscillate.
Oscillation = Variability
You can see how this can become a problem. Because the conflict at the action level is not fully understood or addressed, the organization continues to swing from extreme to extreme with a slew of negative consequences. Oftentimes these oscillations also come with their fair share of personnel changes, whether elective or forced. Oscillation as a result of conflict is also the perfect example of management variation, or the controllable variation caused by the actions and choices of team members. As organizations, we so often lose sight of the initial goal, get caught up in the negative consequences of conflicting objectives, and run around putting out fires rather than focusing on resolving the conflict or readjusting toward the overarching goal (I.e. finding the source of the fire and dousing it). In doing so, we unintentionally create much of the variability that impedes the flow of our organizations.
How to Address Conflict
Be aware of it
Like most issues, the first step in addressing it is to be aware of it. You reading this article is a great first step. The next step is to assess how conflict might currently exist in your organization and be affecting your operations. Speak to your team members. Educate them on conflict and how it often occurs. Ask them to analyze how it might be affecting their performance. If you’re a member of upper management, take a moment to assess how your actions might be contributing to conflict or oscillation (like in the situation presented above). Once you have an idea of how conflict might exist in your organization currently and be feeding into oscillation, you can begin to address it.
Working with partners that understand the behavior and risk of conflict and can help you to understand it as well is another way to start addressing conflict. Repathis is more than just a manufacturing software development company: we are dedicated to breathing new energy into manufacturing organizations so they can excel in the modern industry. We have a deep knowledge of issues afflicting manufacturers today, like conflict, oscillation, and variability, and we work hard to understand where your organization is at and support you in making the process changes necessary while implementing software solutions like our manufacturing software, Revive. Contact us here to learn about how we can help your organization address conflict through new organizational processes and state-of-the-art, user-friendly, and customizable software.
Find balance - minimize oscillations
If your organization is stuck in a swinging pendulum oscillating between extremes, you need to find balance. Like we stated above, you first need to recognize that you’re being sucked into the trap of oscillation as a result of conflict. Oftentimes, it has to start with upper management. Once leadership realizes they’ve unknowingly and unintentionally been feeding into the pattern, they can begin fostering a healthier and more effective way of reacting to negative outcomes and get to the core of the issue: managing and minimizing conflict. If you’re unable to find non-conflicting actions to pursue in the short-term, encourage teams to find a balanced approach to pursue conflicting actions. In the example situation provided earlier, perhaps the purchasing team could be encouraged to assess which materials are most beneficial when purchased from the most reliable supplier and which can be purchased from the cheapest supplier. By finding balance between conflicting actions/objectives when determining non-conflicting actions/objectives is not an option, your organization can avoid the large-scale negative outcomes that come with pursuing each extreme rigidly.
Prepare – map it out
The next time that your organization plans a meeting to discuss goals and objectives, ensure that you dive deep enough into the actions each team will take to achieve each objective and goal. Make sure each meeting attendee is vigilant about recognizing potential conflict not only at the “big idea” level, but at the action level. Taking the extra time to predict and prevent conflict when planning will save your organization a meaningful amount of time and money down the line.
A couple tools are useful in identifying and mapping out potential conflicts. One is creating strategic pyramids that allow organizations to visualize goals (the top of the pyramid) and their subsequent objectives (strategic, tactical, and tactical prerequisites) and actions. Debra Smith and Chad Smith provide useful examples of these pyramids in their book, Demand Driven Performance. From there, teams can map out potential conflicts between actions (the bottom of each pyramid and the portion of the plan that is actually actionable) using conflict clouds and spider web conflict clouds, a visual tool from the book The Measurement Nightmare: How the Theory of Constraints Can Resolve Conflicting Strategies, Policies, and Measures by Debra Smith. Spider web conflict clouds allow organizations to visualize potential conflict between all actions needed to achieve all non-conflicting objectives that support a goal. Individual conflict clouds help organizations break down conflict between just two actions that support a single objective.
Regardless of which tools you choose to use, making the conscious effort to map out and address conflict before taking action will help your team avoid the negative outcomes associated with conflict and minimize the risk of out-of-control oscillation and management variability.