A story told by Jay Goltz to illustrate his strategy for learning from mistakes highlights common errors that many business managers and owners commit.  Though Jay’s story takes place in one of his small businesses these errors are indeed common and committed regularly by managers in both  small and large companies.

 

The Approach

Jay approaches error correction or problem resolution following the belief that “most mistakes fall into one of three categories: planning, procedures or performance.  Accordingly Jay contends “it’s important to understand what kind of mistake has been made before you try to deal with it.”  In other words it seems that Jay first determines the category of the cause of the mistake.  Is it a planning mistake, a procedural mistake or a performance mistake?

 

Jay tells of a situation involving the ordering of custom shopping bags for his picture-framing business.   The plot of the story centers on ordering—more accurately double ordering—custom bags.  Jay’s bottom line summary of the situation sums it up fairly well, “It turned out that a second order of bags had been placed only six months after a previous order.”  Given that each order provides about a 3-year supply of bags, this double ordering resulted in considerable inventory on hand.

 

The Investigation

Jay’s investigation provides the following account:

“I asked the purchasing person how this could have happened, and she told me that our inventory manager had said we were running out. I called the salesman from the bag company who I had been doing business with for many years and asked him if he thought it was odd for us to be reordering so soon. He said he did. As a matter of fact, he said he told the buyer that it was impossible that we needed to reorder so soon and that she should check the stock again. Which she did. Once again, the guy in charge of inventory told her we were running low. They put the order through.”

 

Following his approach Jay asked: “Was this a planning problem? No. Was this a procedure problem? Yes. The purchasing person was fairly new and someone should have been overseeing what she was doing more carefully. Was it a performance problem? Absolutely. The inventory manager had been careless before. After being told that the order must be a mistake, he should have figured out what was happening.”

 

So applying the planning-procedure-performance approach Jay concluded that it was not a planning mistake but rather mistakes in procedure and performance.  So whose procedure and whose performance?  After all one does need to find those responsible.

 

The Solution

Making a short story shorter, Jay talked to both the purchasing and inventory persons in the presence of the operations manager about what to do when a question of this sort arises.  Inevitably both these people proved irresponsible and were replaced.  As Jay concluded “This situation was mostly the result of having the wrong people in important jobs.”  (Can’t help but ask, who hired the wrong people?)

 

If as Jay claimed, “responsible employees do not have to be told they messed up”, then the solution seems quite clear, don’t hire irresponsible people!  If you have irresponsible employees then you’ve made the (first) mistake!  Was it a planning, procedural or performance mistake?

 

A System’s Perspective

The above approach is one based on reductionism in that it seeks to break the problem into discrete identifiable parts.  Unfortunately reductionism is not appropriate here as the concern is for the functioning of the whole—the performance of the enterprise—and its affect on the constituent parts, and not merely separate parts locally transacting.

 

In other words a business organization is a system—a network of constituents in mutual relation—and breaking it apart into separate parts will not afford understanding of the functioning and performance of the whole.  Performance is an emergent property and thus it can’t be understood through reductionism.

 

Let’s flash back in time to the early stages of a new enterprise where the business hasn’t grown enough to warrant employing others to help do the work—the time before employees. Let’s estimate the probability that this mistake would have occurred if the owner or two or three partners were doing everything.  The probability is near zero.  Why?  Many would say, because they are the owners and they care.  Although the fact that they care can’t be denied—and caring does have an affect—it isn’t the primary cause for the probability being near zero.

 

What the most likely reason is that (before employees) they would be in possession of all the information that they need.  Further they would have an understanding of how each and every function/activity that comprises the work of the business interrelates—they understand the works as a whole.  In short, they wouldn’t decide to act one way that would negatively impact them carrying out another activity. The decisions would most likely be informed decisions with an understanding of the impact each has on the business as a whole (i.e. the system) and on each of the other functions/activities within the system.

 

In summary why is it unlikely?  Those doing the work understood the system and their role in it as they perform each of the activities.  Unfortunately, the very popular way of organizing—dividing the work and managing each component as if it is not integral to the whole—is so very wrong.  Yet because everyone does it it is rarely questioned or challenged; it is the way management.

 

Different Perspective, Different Understanding

With this perspective the first mistake was in the structuring or organizing of the work of the business itself.  It appears that the work of the organization—which begins as a whole—was divided and parceled out as tasks for individuals to carry out.  Evidence of this is the purchasing manager did the purchasing and the inventory manager did inventory; each had their own separate responsibility.  When the purchasing manager was told “when a vendor or anyone else tells us that something doesn’t seem right, we need to look into it” and the response was “when you say we, who are you referring to?” suggests a lack of appreciation for the interdependent nature of each functional activity.  That is, the activities parceled out to at least this employee are not integrated with the (interdependent) activities of others—the work lacks wholeness and jobs lack connectedness.

 

What we have is divided responsibility, and with divided responsibility no one is responsible for the purchasing-inventory work of the organization.  What would make this even worse would be if employees were required to meet his/her own separate numerical goals specific to his/her individual job.

 

Different Mistake Identified Means Different Solution

What’s needed is shared responsibility, which is determined by the way the work (of the company) is organized/structured.  Of course the work of the organization has to be divided among many people but the many jobs also have to be integrated.  The work of the company must become whole again.

 

Not integrating it into a cohesive whole was (quite likely) the first mistake made by those in authority.  It is a mistake of management to organize and structure the work in a way that fragments it.  This sets people up for failure since it increases uncertainty about one’s role and makes it unnecessarily difficult.

 

Furthermore, the fact that the purchasing person was “fairly new” and apparently not properly trained and prepared was another contributing cause of the over ordering.  Recall, Jay even noted that the “inventory manager had been careless before”! Surely he/she is not responsible for his/her own training!  This is management’s responsibility to ensure that employees have the, support, knowledge and skills necessary to successfully do the work.

 

So the situation involves: a) not training new employees; and b) structuring the work so that responsibility is divided. Also the solution involved talking to those who made the mistake—with the implication that they were to blame—asking them not to make the mistake again, without looking deeper and further into the system itself seeking systemic causes and rectifying.  The actions taken only ensure that this kind of mistake will happen again, irrespective of the individuals employed to work in the system.   It would be more by luck that things went well!

 

Management must develop and maintain the system as well as prepare people (with education and training to build knowledge and skills) so that they can be successful in supporting quality in the work of the organization.  Quoting Deming, management works on the system, the people working in the system.  Management must do their job so that others can be successful at doing theirs!