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24 January 2006

The Myth of Culture

I have spent much of the last 24 hours looking at the various news reports, reading the other bloggers, and delving into the particulars of the announcements from Ford yesterday concerning their "Way Forward" plan.  My bias has been to try to see it as positive.  I like Bill Ford.  I am steeped in the history of Ford and my book, Rebirth of American Industry, digs pretty deeply into the evolution of lean manufacturing in Henry Ford's day and its transition to Toyota.  I drive a Ford for the simple, irrational reason that I like the Ford family and it is a dumb, little way for me to pay my respect to the greatest manufacturing organization in history - Ford from 1903 to 1947.  After all of the digging, however, I end up empty.  It looks to me as though Bill Ford's actions are nothing more than the same old, failed Detroit solutions, leavened with the most hollow and meaningless aspect of lean - the myth of culture.

The concrete elements of the plan boil down to massive layoffs, saving money through economy of scale by increasing parts commonality, and promises to create more exciting cars.  This has all been said and done before - at Ford as recently as a few years ago. Cutting 30,000 jobs, getting billions from suppliers and by making product components the same - nothing new there.   And the great Holy Grail of Detroit - another Mustang - is never far from their thinking, but there was nothing specific - just hopes and promises.

What seems to be getting a lot of press and favorable comment is the heart warming stuff Bill Ford said about culture.  "Here is what we will not stand for: incremental change, avoiding risk, thinking short-term, blocking innovation, tying our people's hands, defending procedures that don't make sense, and selling what we have instead of what the customer wants.  In short, we will not stand for business as usual."  The fellow Ford has tapped to drive the "Way Forward", Mark Fields, is very big on culture, too.  He has had signs put up around the headquarters offices stating that 'culture trumps strategy'.  It sounds wonderful.  It also sounds very lean.  Absent other significant changes at Ford, however, it is, in the words of Shakespeare, "a tale told by an idiot, full of sound and fury, signifying nothing."  Bill Ford is not an idiot, of course, and neither is Mark Fields.  They are both far from it, but I would have to be one to put much stock in Ford's passionate speech.

Is there anyone in charge of any company in America that does stand for those things?  Did Ford used to stand for incremental change, short term thinking and blocking innovation?  Of course not.  No one deliberately instills such a destructive culture.  There are deep rooted, underlying forces that have turned the big companies into such cultural wastelands and unless Ford identifies and roots out those forces, the culture will not change.  Bill Ford and Mark Fields simply saying things will feel different at Ford will not make it happen.  If it were that easy - just a CEO saying that the company would be innovative and so forth - they all would have said it and it would have happened everywhere.  In fact, most companies have said similar things, posting slogans and value statements about the worth of people and the importance of customers and quality.  Saying things like that and posting cleverly worded, nice slogans have not made a dent in most company cultures.

Culture is not a product of what management says, it is the result of what management does.  Layoff notices at 12 Ford plants affecting 30,000 people send a very clear message to every Ford employee about the culture of the company.  Putting the same transmission in Volvos and Land Rovers, compromising the customer value of one product or the other or both in order to get volume discounts, also sends a loud and very clear cultural message.

When the accounting system of the company has defined production employees as 'variable costs'; when managers are measured by reports that define people as 'headcount'; when the authority for decision making is vested in offices rather than on the factory floor; when suppliers are measured primarily on the basis of purchase price; when information systems are focused first on providing data for management and only secondarily on supporting production people; when quality is based on inspection; when the factory investment criteria is ROI; or when inventory is an asset that defers overhead accountability, the culture of the company will reflect those values - which is the antithesis of Ford's speech.

Since Tom Peters wrote In Search of Excellence long ago, the great myth of American manufacturing has been that of culture.  Senior managers wax eloquently about it and consultants charge great fees for helping to instill it.  It has not worked.  It will never work.  A production person is subject to hundreds of little decisions every day: Should we run the parts or shut down the machine for maintenance?  These parts are borderline, should we accept them or reject them?  Can I take the afternoon off to see my daughter's soccer game? We are behind on production, should we postpone the safety meeting? On and on it goes.  The answers to these questions set the culture of the company.  What senior management said in a speech, or what is written on the wall poster has next to no bearing on the matter.

Culture follows the management scheme.  Bill Ford fell into the same old easy trap that managers have been falling into for decades.  He thinks culture change is as easy as saying - and genuinely believing - good things.  It ain't that simple.  Every member of the Ford 'headcount', whose paycheck is a variable cost, only as secure as the ups and downs of the market, knows exactly where he or she stands in the Ford culture, Bill Ford's lofty principles notwithstanding.

So don't expect much change at Ford as a result of the motherhood and apple pie flowing from Dearborn yesterday.  And Mr. Fields, culture may well trump strategy, but accounting trumps culture every time.


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Amen! I've been meaning to add "culture" to the irreverent dictionary thus:
"Culture is the way we do things around here." You illustrated that eloquently.

And think about a culture where 54-year-olds come in to work every day just wishing someone would offer them early retirement packages. They are not going to recover from their daily beatings very quickly.

The automotive business is brutal, albeit less brutal than it used to be. Culture changes at glacial speed.

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