Jacob Stoller previously appeared on our podcast to discuss his last book, The Lean CEO: Leading the Way to World-Class Excellence. A number of years later, he has a new book: Productivity Reimagined: Shattering Performance Myths to Achieve Sustainable Growth.
This episode features a fascinating conversation about the evolution of Jacob's thinking between the writing of his two books that coalesced around the idea of productivity. Mainly, are we viewing the idea of productivity through the correct lens and how can companies approach the idea of productivity in a more sustainable way? One that benefits not only the company, but the people within.
Also on this episode, we touch on topics that are currently at the forefront of the productivity discussion, such as AI and remote work. Jacob's research into these aspects of productivity may surprise you.
Transcript
Jacob Stoller:
I really come to this whole field as a journalist. I've been a business slash tech journalist since around the millennium. So, I've been doing this sort of thing for a while. And I started with technology, actually, and then I discovered the Lean World in about 2010 and was really intrigued by it because all of a sudden here's this way of managing people that I'd never heard of before, but it's all about respecting people and using people's creativity to grow the business, help grow the business through higher productivity, better quality, that sort of thing. So, I became quite a follower of that and that led, eventually, to my book, The Lean CEO, which is how I met Bob Chapman. And The Lean CEO was really an investigation of the, I guess, executive angle on Lean. A lot of books about Lean talk about the practical things that are done in the workplace.
Very, very excellent books, by the way. But I felt there was a need for more understanding what happens in the boardroom, what happens, what do you say to shareholders, what do you say to the media, that sort of thing. So, I interviewed a bunch of CEOs, including Bob, and came to the conclusion that there wasn't really a common playbook in the Lean World. They were actually, every company seemed to have their own way of approaching it. So, that was really quite an eyeopener. Since then, I've been following the various issues and still talking to people and writing articles. I've found that what really matters behind Lean is not the techniques or the methods, it's that there's some very fundamental truths behind Lean. In other words, the reason Lean works is some very fundamental truths about human nature and where the rubber meets the road on this really is productivity.
Can we as a company grow our output with an existing set of resources? And that's what productivity growth is all about. And interestingly enough, the IMF, International Monetary Fund, just came out with, they have a magazine that they publish. It's called Finance and Development, and they've just dedicated their entire September 2024 issue to productivity. And the editor wrote something, and I couldn't have said it better, she says, productivity is a foundation of prosperity. The only way a country can raise its standard of living sustainably is to produce more with existing or fewer resources. It's that simple. Really that's what we're trying to do, I think with Lean, or as we can talk about some other methods as well, is again, do we increase our output with a given set of resources? So that's what it focused on in the book. How do we grow productivity? What are the methods behind it? And I found some very surprising things.
Brent Stewart:
It's been nine years since The Lean CEO came out. Obviously your new book comes from that and some of your experiences since then. But as the years went on before you, kind of, the ideas coalesced for your new book, what were you seeing in the aftermath of the release of The Lean CEO?
Jacob:
I have to mention right off the top, William Edwards Deming and the work of Deming. And I had not studied that as perhaps as much as I should have when I wrote The Lean CEO. But his ideas are just incredible. And I think his ideas are very relevant to companies like Barry Wehmiller because he really was very critical of the prevailing style of management. As a matter of fact, and I think Bob will love this, he dedicated his last book that he wrote just before he died in the 1990s. He said, this book is for people who are living under the tyranny of the prevailing style of management. So, he really saw what was wrong with the status quo, and he had a wonderful way of articulating that. So, I was fortunate to be able to talk to some CEOs and various folks that have followed Deming's methods and learned that there are, separate from Lean, although there's a lot of overlap, I mean, but separate from Lean, there's a lot of very excellent things happening in the workplace.
Deming was introduced to Americans, the wonderful story, this goes right back to 1980 when everybody was very concerned because the crown jewels of industrial America, were being defeated soundly by Japanese companies like Toyota. So, you have General Motors and Ford, all these companies in financial trouble. Well, I think Chrysler was the worst. I think they were bankrupt at one point. But anyway, this was a huge shock because America had been sort of the industrial champion of the world, really. So, anyway, there was a TV program that investigated this, why are we in such trouble? And it was called, “If Japan Can, Why Can't We?” And it turned out that the Japanese miracle, as they called it, had been largely enabled by an American named William Edwards Deming. And he had gone there as a statistician but turned out to be much more than that.
He understood management, he understood process, and he had helped the Japanese develop their systems, which enabled them to be enormously productive. This was productivity. You've got Japanese car manufacturing, outproducing American companies at by ratio of two to one. So, they were very, very successful based on productivity. And Deming's methods continued to influence Americans. He consulted with a number of companies and stuff like that, but it never really took off the way he'd hoped it would. But the ideas are still there and they're still enormously effective. So that was one part I think what I saw was the ideas of Deming and how powerful they are. But I also learned that there's a lot of what I used to call Lean-like thinking in companies that know nothing about Lean. One of them is an environmental company, a company that does sustainability projects. And what they do is they don't look at sustainability problems through the traditional sort of organizational chart-type logic.
They don't look at different departments and say, well, let's fix this. Let's fix that. They look at the whole holistic picture of how it all works. And that's very much like Lean because with Lean you look at value streams and that can cross through different departments. Well, this company, Enviro-Stewards does pretty much the same thing. They look at the whole big picture. They do an assessment of energy or resources and where they're being lost and they uncover that. So, that's one example. I looked at an anti-poverty organization that instead of hiring social workers to go into communities and tell people what to do to get out of poverty, it's about respecting the people that are poor and respecting the fact that they probably actually know how to get out of poverty. We have to listen to them and we have to give them the resources they need. So, that was another example because I think lean talks about respect for people, respect for the knowledge in the workplace. So, I realized that a lot of these kinds of thinking are pretty fundamental, and we need to look at that with sort of a little wider lens, I guess. And I would call that a productivity lens where we're looking at in general, how do we improve productivity?
Brent:
In your new book, Productivity Reimagined, right off, you talk about the command-and-control approach to leadership and to business. And one of the things you say right off the top is that there are five myths that make it difficult for leaders to abandon kind of the standard thinking about leadership or about running a business. Could you talk about those myths for a little bit?
Jacob:
Myth number one really is this idea that you can take pieces of resources in an organization, and you can separate them so that if the success of this department, if every department follows a set of metrics and they're successful, then the whole will equal to some of the parts. You put it all together and you'll have a successful company, and it actually doesn't work out that way. You wind up with all kinds of conflicts, and I'm just going to give you one example. I mean there are obviously hundreds of them, but let's say you have a sales department. Let's say you've got a company that's selling heating equipment, heating, ventilating, air conditioning equipment. So, you have a sales force, right? And the sales force has a quota, and if they make their quota, then that's a good thing. And then you have maybe an installation department that does installs and they want to be utilized full-time and whatever, so that's got a metric. And maybe you have your service department and their job is maybe to resolve service issues as quickly as possible, OK? So, you figure they've all got their independent metrics. So, let's supposing now a sales rep comes, it's the end of the quarter, the sales rep closes a big deal. So, now to close that deal, as we all know, it might've had to make concessions. It might be a high-volume deal, it might have special things that have to be done in order to make it work. So, the sales rep closes the deal, the bell rings and all that, and then the deal moves on through the chain and it goes to the installation department, and they find all these concessions mean, and all the spike in volume means they've got to do extra effort. They've got to hire people overtime to get the deal done.
So, their metrics by the end of that quarter, that next quarter, might not look so good, and then it passes onto the service department. Well, maybe some things were said or there were some misunderstandings, and the service people are now just getting all kinds of extra service calls that are very difficult for them to handle, so their numbers are going to be struggling, right? So, that's fairly typical. You get organizations where people and departments pursue their own metrics, but then that damages the other, what's going on in other departments. So, that's really what I call the myth of segmented success. The idea that if each department succeeds, then the whole company's going to succeed. And that's actually not necessarily the case.
Brent:
There's a couple of these myths that I think are pretty interesting, but the myth of techomnipotence, that's a really interesting issue right now because of the way AI is being championed as the solution to all the world's problems. Could you talk about that a little bit? This myth of techomnipotence? I know that AI is part of what you talk about there.
Jacob:
Yeah. OK. Well, again, if we circle back in history, I mean I think there was this period when technology was making, there were huge, huge gains in productivity with mass production going from the 1920s, 30s, 40s, 50s and stuff like that. But really what happened is that kind of leveled off, you had, and those gains were already realized. And so people are kind of hoping, can we have a return to that? And there's all kinds of hopes that the latest technology will bring that back. But so far that hasn't panned out, and especially between the crash of 2008, the investments in technology have not really turned into improvements in productivity. And part of the problem here is that we're dealing with a different world than we were way back in the early 1900s. We're dealing with a world where manufacturers, for example, are more called upon to do low volume, high mix type scenarios, right?
So, there's a need for a whole lot more agility, and it's very hard to get agility with machines. You set them up and they run well at high speeds and volume. But if you have to constantly make change, technology gets very inefficient. So what we're seeing with robotics now, for example, is that rather than having these massive totally automated lines, we're seeing collaborative robots. And that's the fastest growing area right now where robots work side by side with human beings. So, you get the ingenuity and the flexibility of people, and then you get robotics perhaps doing some of the more dangerous repetitive work. So, you've got your welding and maybe something, it's a huge piece of equipment or something that you're welding and maybe it involves getting up on a scaffold. So, you get the robot to do that, and now you can train a collaborative robot just by basically holding the tool that it's using and running it through a weld or whatever that is.
So, the collaborative side of this is very powerful, but it's not about replacing workers. That doesn't happen. There's still a shortage of labor. It's about making people more productive. But I think often the ROI that people are hoping for with automation is, I want to fire workers, I want to fire workers. And that's not panned out so far, AI, I think there were people thinking that was going to happen. I think the forecasts about AI are getting less and less, sort of, exuberant and a little more realistic. And I think we're going to have AI working with people, supporting people, helping people be more productive, but they're going to become tools rather than replacements of humans.
Brent:
Let's talk a little bit about the myth of the bottom line. What do you mean by that?
Jacob:
People tend to think that if they look at the financials, they know everything they need to know about how productive a company is being. But there are many aspects of productivity that defy financial logic, and one of them, actually Deming expressed this very well, and they call this now the Deming chain reaction, but in a production line. And I think your operations people will corroborate this, improvements happen together. For example, if you invest in quality, if you improve quality on a production line, that will, by improving your process, that will automatically make that it will solve safety problems, and ultimately it'll reduce costs because then you don't have the rework, you don't have the customer service problems and all that kind of thing. So, that's a known fact within the process logic of production. But people on the financial side don't see that because these are non-financial metrics.
So, what the financial people see is just inputs. They see everything having a cost labor, well, that's a cost materials, well, that's a cost. Well, facilities, that's a cost, all the costs. But what they don't see is that it's improving those processes and improving all those assets that we invest in, improving what we can get out of them that's really going to generate sustainable productivity growth over the long term. So, whether the finances don't show a lot of things, they don't show culture either, and the advantages of a productive culture and how people working together and excited about their work, how they can produce long-term financial prosperity. So that's kind of the myth of the bottom line right there is that you don't see a lot of the advantages, productivity advantages that you get from an engaged workforce.
Brent:
One of the other myths, the top-down knowledge myth, as you call it, that's something that's also very near to Barry Wehmiller's heart because it's one of the ways that we approach that we've integrated Lean and continuous improvement into our processes, by listening to our people. Could you talk a little bit more about this top-down knowledge myth?
Jacob:
Yeah, and I want to give you a bit of an example here. One of the problems with workplaces is that there are lots of problems and managers and consultants sometimes would like to think that these are great big problems that show up on a management report, right? OK, we're going to do an omnibus project and we're going to fix all our quality problems. But in reality, there are hundreds and even thousands of problems out there. So, I'm going to give you an example with a hospital, OK? This kind of will tie into the whole answer here. I asked one of the people that was featured in my last book, and in this one too, Dr. John Cent, who's dedicated to really trying to improve healthcare on a national level. But I asked him just why do you need a team of problem solvers in a hospital?
And he said, well, let's take an example. He said, let's look at something like medication error. Medication error is a big problem in a lot of hospitals, but it's not going to be caused by something that a manager can see on a report. It could be caused by the labeling that are on the bottles that doctors are presented. It could be how medications are presented on a tray. It could be the way medications are stored. It could be in the supply chain, it could be the lighting even that people are using when they read labels. So, you wind up with hundreds, or even thousands, of possibilities and the big gains in hospitals on improving medication errors are solving hundreds, or even thousands, of problems. So you can't have managers doing all that. You have to rely on the workers who work with these problems every day to see them.
You need the eyes and ears of every single worker in the workplace. So, that's one side of it, the fact that the problems are granular and you really need everybody, all hands on deck to solve them. The other of course, is that people who see things every day see problems that no one else can see, they're invisible because they're non-financial, so they don't show up in any kind of metrics. You need people that work every day with processes and who are also empowered to open their eyes and to look for problems and to understand that if I see a problem, I'm not being a bad person by bringing it up, I'm doing my job. So, maybe that's a long-winded answer, Brent, but I think we need people out there to see what they see in the workplace. And there's no way managers can know all the problems and there's no way they can understand what it's like on a day-to-day basis to deal with some of the issues they have to deal with.
Brent:
It's kind of a virtuous cycle too, when you think about it, when people are listened to, and this is the perspective we take, when our people feel listened to, they feel seen, and that adds to their job fulfillment and adds to them wanting to be more productive. It's that kind of circle too. It benefits the company for them to share their experience of what could be better, what could be, what's maybe not going right or could be better, but also it also is part of their daily fulfillment in their roles makes everything better.
Jacob.
Absolutely. And it's really a win-win because people want to be productive. They do want to be productive, and they feel good at the end of the day if they go home and they’ve solved a problem. I solved a problem of why we kept getting these defective parts. I found something that got to the bottom of it. And if you do the flip side of it, we have a crisis where people don't have purpose in their work and they go home. They just do what they're told and they do things which they know are kind of dumb, but that's just the way it is. And that's what the boss said, the way the boss said to do it. So, we have people very unfulfilled and very unhappy from not having that opportunity to share their gifts. And I think that's what Bob has been so strong about talking about.
Brent:
We actually get a reference in the book when you're talking about the myth of sticks and carrots. So let's talk about that for a second and why you chose Barry Wehmiller to be kind of a case study in there.
Jacob:
Well, I could have put Barry Wehmiller. Let me just say, I could have put them in other chapters as well. It's more for illustration. So, let's say, I know that Barry Wehmiller would've fit very nicely in the top-down knowledge myth chapter or any of the others, for that matter.
Brent:
You got to be fair. You give everybody, you got to give everybody a little bit.
Jacob:
I interviewed a lot of people, so you've got to make it reader-friendly. But anyway, it was really that the idea that Bob is so, and you guys have done such a good job with Truly Human Leadership, of recognizing that people aren't motivated just by money, but they are intrinsically motivated to do good work, and that produces fulfillment. You guys have worked very hard on that. You've focused on that, and it's a perfect match, I guess the experience and what you've done and the whole idea that workplace motivation really is based on fulfillment, on achievement, on teamwork. I think teamwork's important too, and you certainly have emphasized that, as Mary Rudder said, It's the person on your left and the person on your right. That really defines the workplace in a lot of ways. So yeah, just treatment of people. The fact that there's a crisis, I think because people don't have that fulfillment in their work, I think, and Bob did express that, so that also fit well because of that.
Brent:
You had a realization of these myths that are keeping people from moving beyond. So, talk to us a little bit about the structure of the book where you give people the reasoning or help them have the ability to move beyond those myths. Talk a little bit about how the book is structured for that.
Jacob:
Well, it is really sort of a four-part thing here. I talked about the whole productivity crisis in part one, and also an introduction to the toolkit, and it's not limited to Lean tools. I also talked about some of the Deming approaches, which are very compelling. The second part of the book, I talked about the myths, and there are five of 'em that there was, as we talked about, the myth of segmented success where you think you can move every part that's successful contributes, and if all the parts are successful, the whole equals to some of the parts. I looked at the myth of the bottom line, this idea that financials tell you everything you need to know, top-down knowledge myth as we talked about, the myth of sticks and carrots, and then finally about technology and omnipotence about technology. So, I went through all those, just giving stories about how companies had dealt with those.
I thought to just illustrate the meaning of them in the context of real working companies and got some wonderful examples of course. And then part three, I looked at how people are countering these same myths to just make a better world. So, we looked at environmental, we looked at healthcare, we looked at anti-poverty initiatives, and finally we looked at actually looking at people who have disabilities, or what are called disabilities, in the workplace and how we can have inclusive workplaces. And finally, the idea of joy at work. I mean, people should enjoy their work. That's where fulfillment is. And looked at a company doing that. That's a CEO named Rich Sheridan. I think you folks have been connected with him.
Brent:
He's a good friend of ours.
Jacob:
Good. Yeah. Well, there you go. And that company, by the way, is Menlo Innovations in the software world, which is very different than what you do. But again, we focused on how these companies are making a better world. And then finally I looked at that, the last chapter looked about just steps for moving forward and how companies can move forward with continuous improvement. And interestingly enough, part of my growth since the first book was the importance of really laying out the purpose and establishing trust before you start to teach methods and things like that.
Brent:
One thing that you mentioned there, an industry that you took a deep dive into was the healthcare industry. Man, they've had, especially since 2020, there's been a lot of challenges there, especially in leadership, especially in retention. Talk about what you found in the healthcare industry.
Jacob:
Of course, many, many problems. Healthcare has actually been pursuing these problems for a long, long time. Even way back early in the Lean days, there were people following Deming, so they've had a head start. What I found is that, in one of the studies I have in there is safety is so, so important, and not just talking about physical safety, which certainly is a reality in healthcare unfortunately, but also psychological safety. And this was the case study I looked at. That's Salem Health in Oregon, but they took a long journey into establishing safety and employee safety and working very, very hard on that before they undertook any Lean because the CEO didn't feel they were ready until they had really established that. So, that was a big lesson for me. And I think, yeah, I mean in healthcare in general, I think we have to make people feel safe when they come to work, and then we can start to work on things like productivity.
Brent:
The COVID-19 pandemic in 2020 and beyond really has changed things in so many ways. There's so many advances that came out of that. There's so many things about the way that we work that have changed. One of those things was remote work. Many companies, people were completely remote for a long period of time, and there's been a lot of debate about remote work and its effect on productivity since then. Could you talk a little bit about that?
Jacob:
I just wrote an article on this, and it was very interesting because I went back to one of the consultants that helped me with the book, Kelly Allan, and he said, when you look at productivity of remote versus in the office, he said, you're asking the wrong question. He said, productivity is determined by how successful you are at building collaborative teamwork. And he said, collaborative teamwork, by definition, it depends. He defines it this way as people voluntarily working together. So it's based on trust, right? There's a whole lot of trust to this kind of collaborative teamwork. But he says, where you want to be is that people are working because they're motivated to get a job done, not because someone's watching them. And they have to feel, the boss is watching me. They're using software to make sure I'm logged in. I better sit here for another hour and make the keys move. He said, if you have that atmosphere of mistrust and your organization, you're already in big trouble. So, I think we’ve got to start asking questions about culture, and we're not seeing enough about that in the news, but we need to have a trusting collaborative culture first. And then I think we can come to terms with remote work scenarios that actually work and where people actually are productive.
Brent:
Tell me one of your favorite stories from the book that really influenced your way of thinking.
Jacob:
Boy, I got so many of them, but let's talk about Rich again. Rich Sheridan who, and he told me that he has a lot of visitors right now because it's a famous company and they've got great culture and people want to know how you do it. And he said he takes them into his office and it's a software development firm. And of course they expect to see people in cubicles or offices with dedicated workstations and plugged in. And what they see is a very kind of, I don't want to say raucous, but somewhat noisy office. Lots of people interacting with each other, talking, milling around perhaps. But people sitting at workstations paired, you have two people working on the same workstation, and people are surprised by this so that they talk to Rich after the tour and they say, well, how come you got two people working at one workstation?
And Rich says, well, he says, the amount of cross-training I get is just invaluable. It's just incredible. He says, normally I might have five things that I need to make the project work, types of cross-training, but he says, I'll get 30. It's just two people working together. And by the way, they shift them roughly every week. So it's always different. So someone with a traditional background would think that's crazy. But then Rich says, then they ask me the question that I know has been burning in their brain. They say, how do you measure individual productivity? And Rich says, I don't care. And then he says he likes to watch their face being shocked, but he says, then he explains to them that the productivity that matters is team productivity, and that's what he monitors and that's where he's so successful. So, I think that's a great story because team productivity is really what we're all working on. That's what drives continuous improvement.
Brent:
I think this has been kind of an interesting journey for you from your first book, from The Lean CEO to this book. And I think it's an interesting lens to look at things, especially like you said at the beginning, productivity is a foundation of prosperity. And as we've talked about through this whole conversation, it's about resources, but it's also about people and how people can be better fulfilled. We at Barry Wehmiller, when we talk about Lean, one of the things we talk about is we want it to remove frustrations, and that's productivity is about not being frustrated in your work. And then you're able to do more, want to do more, happy to do more and feel fulfilled that you've done more.
Jacob: Absolutely. Very well said.
Brent:
At the end of the day, when your book is out in the world, what's your hope for a leader that picks it up and thumbs through it and sticks with it? What's your hope for that leader?
Jacob:
Yeah, I love that question. Actually, I worked a bit with a coach on the book and she asked me a similar question. She said, you got to think about what would be the really outcome you would hope for. This is going to maybe sound a little crazy from a business writer, but I would love to see it where some little girl maybe went home from school and she's happier at home because her parents aren't arguing. And the reason her parents aren't arguing is that a company actually changed the way they managed and started respecting her father, and he's got fulfillment. And that came from reading my book that they saw, the CEO saw that we can't run the company this way anymore. We have to change. So, that may sound farfetched, but that's the kind of image I keep in my mind. I really would like to see better workplaces.
I'd like to see fewer people, husbands or wives or partners coming home downcast with looking at the ground as they come up the walkway and feeling discouraged and to be happier at the end of the day. I started the preface with something that kind of very much in line with the sort of things you folks talk about. And I'd say start I open by saying people want to be productive. The urge towards something that matters is the force that gets us up in the morning, keeps us going despite obstacles and compels us to do better than we did last time. And we see the impact of that. It gives us pride and satisfaction. But then I go on to say that there's a disconnect between people's productive inclinations and what actually happens in companies. And I talk about all the things, the adversarial relationships, fear of speaking out, poor coordination, lack of support, all these things that get in the way. So, that's I think why we're here.