Michael Webb: Good morning, everyone. I am pleased to bring you my guest today, Bruce Hamilton. I met Bruce several years ago at a Shingo conference and Bruce has... Well, Bruce, let me just give you a chance to explain your background to my audience. It's largely sales managers and company presidents. Many of whom may not be familiar with the kind of work you do and much less the Shingo Institute. So take a couple of minutes and describe your background.

Bruce Hamilton: Thank you. And good morning, everyone. I appreciate whoever is joining in. Appreciate you being out there. I've been in a number of different careers in business, started out actually in sales promotion and spent seven years there. And I loved that position actually. And oddly, my interest in problem-solving led me to IT. So I spent seven more years in IT thinking that some of the issues we had in sales and marketing would be solved through IT.

Bruce Hamilton: And so the bad news is it's not really a panacea. I learned a lot about IT, however, and those kinds of problems. While information technology has changed remarkably since I was in that position, a lot of the thoughts behind computer systems have not so much. It's more or less has to do with the speed and scale that we have today, but the basic algorithms, as we say, not remarkably different. But systems led me into materials management. I worked in a manufacturing company and at the time we were implementing MRP and it was not actually doing much for us. And so I ended up transitioning from a computer systems to manufacturing. Never spent any time in manufacturing, not even in the manufacturing building. So this was an eyeopener for me, definitely. It was a world of pain with many problems. Some of them actually caused by the computer systems that I was involved with. And that brought me to the Shingo prize incidentally.

Bruce Hamilton: We were a company that had a lot of issues. We couldn't deliver on time. Like many companies back in the '70s and early '80s, our profits were flagging and we were trying to find ways to get around that. When I was in sales and marketing, we raised prices twice a year. And we Pat ourselves on the back about how our sales were increasing, but they actually weren't, we were just printing prices. So now I suddenly found myself on a different side of the coin, still with that thinking in mind from sales and marketing and focused on the customer. But I noticed I joined an organization that actually was shielded from the customer. We had very little to do with the customer. And this created its own set of headaches. But Shingo prize and particularly the ideas of, shingo and some of the others...

Bruce Hamilton: And they're not all Japanese. A lot of them came out of the US, but a lot of that thinking was critical for me? And it was just my good luck that since I had no background in manufacturing, I had no biases. And therefore I started to study this and that led to award of a prize for our company in 1990. And there were some remarkable improvements. We were still awful, but we'd made an awful lot of improvement. That in fact, led to some attention back in 1990 from Toyota, who at the time was for purposes of trying to be a good corporate citizen and trying to overcome an image of taking jobs, which killing American auto manufacturing, which they didn't really need any help. They were kind of hurting themselves.

Bruce Hamilton: They helped us out for or five years. And it was exciting, very exciting. They felt like as they like to put it, being dragged through a keyhole. So there was this technical knowledge from Shingo and some lot about behaviors of people. And then dealing with the folks from Toyota, understanding what management's role was in this. because I was not totally clear about that, about how the whole thing fit together. It's a whole system. It's not just one thing or another. One piece. We often talk about lean is a bunch of pieces and that can create a lot of confusion and misunderstanding. Because unless you're looking at it as a whole, you don't really get a decent understanding. That finally led me into general management. And at that point I was back actually working with sales.

Bruce Hamilton: So I started out in sales and I ended up in sales. Then 20 years ago, hard to believe, 20 years ago I quit my job. Loved the company, it was doing okay, but I got so excited about continuous improvement. And actually I think it was my interaction with the Shingo prize and the Shingo Institute and getting to go out and visit other companies, not just in manufacturing, but in lots of kinds of different businesses. It was exciting to do that. So I became a consultant and that's where I am today. I worked for a, not for profit organization that's been around since 1994 and it's our mission to keep good jobs, predominantly here in the US. We're parochial that way. Don't begrudge anyone else but we liked the idea of overcoming challenges that we have and particularly in our own region. So that's me and happy to be with you today.

Michael Webb: Looking back on that, a couple of points, I guess, to ask about, because I'm similar age to you, right? And so I went through different... Coming from the sales background, but during this period of time when first mainframe computers and then mini computers and then microcomputers were upending the way businesses managed themselves. And I remember observing, and I wondered if you did this to back in your days of IT, the IT department... I remember realizing, wait a second, if you're going to have a computer, that's going to be able to do all these real fast calculations and make reports. And people from all over the company are putting information in them. That means everybody has to define their terms exactly the same way. And that's not the way it works right now. That's a revolution to help over smplify things. Because that's one of the reasons that computer systems didn't work.

Bruce Hamilton: That was true back then and it's still true today. Different parts of an organization. We talk about language barriers, sort of the English versus Spanish or Vietnamese, but there are huge language barriers between engineering and sales. And when I was in sales that released. We would say it was released in sales promotion, that meant that there was a concept on paper and we were going to take it to a trade show. Whereas released in purchasing meant we purchased all the parts. Released in engineering meant we've finished the prototype. So every part of the organization had a different definition. They were all wrong. The computer system then tries to codify this, but the codes are all messed up. One of the better parts of MRP that I participated in was that it actually forced us to ask the questions. Ali White , who was an early leader, liked to say that it's a people system which utilizes a computer and he emphasized all people. This is probably the first time I think in my company where sales felt they had any connection to what was happening in operations.

Bruce Hamilton: And that was pretty reluctant too, it was like, they felt that you're putting us on the spot. Forecasts are very difficult because of the, let's say, less than friendly relationship between sales and operations. They're immediately on the defensive. So a lot of those conditions persist today. Organizations are, siloed, is a popular word. I used to say compartmentalized. We're all in our own little cubbies and we don't get out much. Even if there aren't physical walls, we just don't go to certain areas.

Bruce Hamilton: So the language is kind of messed up. Computer systems take that language and they make it look official. And once it comes out of computer, it must be right. I honestly did not have a concept. There was a guy back then called James Martin who was a futurist. And he talked about back before there was even a hint of a laptop. He talked about that and he talked about communication. He talked about computers and devices, but it didn't really hit me for 20 years, most of us.

Bruce Hamilton: And that's where we are now, what we've got is this connectivity and more processing power. And surely it amplifies the opportunities, but it also amplifies the misunderstandings.

Michael Webb: Yeah. So, then to build on that, because I went a kind of a similar path, only I was selling MRP systems for a while, integrating the wholesale distribution and then production control, cost accounting system and like that. And was very eyeopening for me to learn just how complex things were inside a production facility. And I was fortunate enough in high school and college to work in a couple of manufacturing plants. And my goodness, your eyes open up to all this stuff. And if you've ever been in that before, you don't realize the complexity of it.

Bruce Hamilton: It surely is. There's complexity in every systems. There's complexity in sales system. Some of it's just because things are complicated and some of it's because we make it unnecessarily complicated. Complicated in any system.

Michael Webb: As you help companies to improve in their profitability, their quality, their performance, a lot of it has to do with helping those people understand each other and what their words mean. I'm guessing that's a key element. I know Shingo model focuses a lot on respect for people and drawing on what they think and thinking jointly together. Why don't you cover that?

Bruce Hamilton: It's not the only thing. And the Shingo model focuses heavily on it. And it adds a lot to the opportunity for improvement. But I think you need to be careful that it's not just that. There actually are some concepts which are hard to wrap your head around and some tools which seem crazy at first glance. And so you need to get to be able to lead the horse to water. And it's often difficult if you haven't actually tried it. And this is where the interpersonal relationships become really important. Dialogue is a really important word for me. It's so easy to, the minute it's an argument, we're just back to where we always were. It's us and them. And that's where most organizations start.

Bruce Hamilton: As a Shingo prize examiner. I listened for those two words or those kinds of words, totally, all the time, because the minute I hear them, I know that there's issues with interpersonal relationships. And I want to know who them is? Who are they? Could be management, could be other departments, could be the customers. It could be the employees. And so if we are looking at this as a whole, we need to have more of a shared understanding. That's where the interpersonal relationships become so important.

Michael Webb: Since you spend a lot of time in production facilities and your focus is largely with management of those facilities. What was interesting, your sales background and many of your customers, your clients end up needing to engage the sales departments. I guess two questions on that. Why does that happen? And then what are some of the special problems that you've run into as you tried to do that?

Bruce Hamilton: There isn't a single answer for that. First off, not every organization has the same problems. Organizations can be very different. Different types of organizations. And they all look... You'd mentioned how you were surprised how complex systems could be in manufacturing, but sometimes that's easy to understand if you're building a jetliner, it'd be easy to say that's pretty complex, but if you're bottling water, you would say, nobody should mess that up.

Bruce Hamilton: In fact, each system has got its own kind of conditions and problems. And those problems are not just on the production floor. Coming out of sales, I think in sales promotion, I'm a very top line-oriented guy. I learned early along that management is much more interested in what you can do to improve the top line then what you can do to save money.

Bruce Hamilton: Not that I think saving money is unimportant and unfortunately, a lot of the things that organizations do to save money don't really make sense. They only save it on paper. That resonates particularly well with sales because sales is charged with generating revenue. Okay, so what can we do to help sales create revenue? And there's a number of things. Like margin flexibility is a really big deal, particularly today. A lot of companies just give up on certain segments of the market because they feel they can't compete. And they can't compete because they haven't managed to get that connection between what the customer needs and what operations can provide. And engineering, by the way, it's not just production. So that's one thing, margin flexibility.

Bruce Hamilton: Another thing is just things that are specific to salespeople, territory management. And oftentimes that hasn't been looked at, at all. We set up when certain areas of the country were not populated and had no industry. Now things have changed, particularly for older companies. And it's never been looked at. So you've got one person, salesperson who's out there trying to cover a million square miles. And another one who's basically rolling around in a neighborhood. There's so many different things in sales, like distribution policy, like pricing, like discounting, all of those things. They're all systems which are important to salespeople. So it's not so much finding a problem. It's more a matter of, well, what do you work on first? It's no different than working in operations. Yeah, we got lots of things we could fix, but what's bothering you the most.

Michael Webb: Which you have to find with any group of people, if you're going to get them-

Bruce Hamilton: That's right.

Michael Webb: So in all my years in sales, four different industries, a bunch of companies, and then consulting with hundreds of companies, you find that the sales department is often just like all by its lonesome. Yeah, we need to improve sales. So what do we need? We need sales training. So they hire these real expensive sales trainers because after all, if they weren't good salespeople, they would be cheap. So we teach the salespeople the magic words and they go out and they do their best to implement it. And then a year later it doesn't really look like much has changed. The sales department is still trying to push more proposals and more orders. And it's a tough thing. That's just the way sales is managed. Why is it that sales, from what you've seen, why is it that there's this division in companies between how sales is managed versus how the rest of the company is thought of as a system?

Bruce Hamilton: I'm going to maybe answer this in an oblique way. Salespeople and production workers have something in common. They're measured by their output and it's out there in hard numbers. You may feel it's unfair, but there it is. Other departments, not so much. Hard to measure some other departments that way. I worked in sales promotion and, jeez, nobody could really figure out how to measure us. It was like, how many leads do we get? How many qualified leads? But salespeople, they have sales quotas, things that they're supposed to hit. And that's what they would like. They'd like to figure out how to do that better. So in that respect sales, isn't really too much different than other organizations. I think as a whole, we continue to have a misconception that all the problems and all the opportunities are in operations.

Bruce Hamilton: So that's something to get by. Let's focus on pain first. Not saying that people are doing a bad job. Because that's what you hear in manufacturing. I know you're saying we're doing a bad job. When you say waste, you're saying I'm wasting time. No, I'm not saying that. I'm saying there are things that get in the way of your work. That's what that toast video was about. I don't know for those of you who had seen the toast video, it's just about somebody trying to provide a service or a good and struggling to do it. Has these problems, information problems, don't have the right equipment, don't have the right instruction. So for sales, oftentimes... I know in my own sales organization, the thing that they hated most was groveling. They did not want to waste their valuable time, apologizing, making excuses.

Bruce Hamilton: First of all, they couldn't sell when they were doing it. And second of all, it just felt awful. That's not what they're being rewarded for. So we focused on that. And of course, that goes right back to operations. What are those problems? Let's get specific. What can we do for you? Is it late delivery? Is it quality? There's this image that you often hear in lean of the problem funnel of taking a vague general problem and boiling it down to something specific and then fixing that. Okay. So that has two benefits. One is, it gives me a little bit of a boost because something got better. And second of all, it gives me an idea that there's a process which can make things get better generally. And that, in fact, in order for that to happen, we probably need to work together on this. Can't do it alone. Each of us has some significant part of the solution to the problem. But if I'm sales now, sales is the front line.

Bruce Hamilton: Sales is our front line. And I'm talking about people who are in the field, not so much the folks who are in the office handling complaints and taking the orders and so forth. And they're very important too, but I'm talking about the people who are out in the field, They're out there alone. Something didn't happen right. They got to deal with it. They don't want to be doing that at all. That's not sales. It's like rework. People in production hate rework. There's no plus in it. And then they get punished for it. It's like it's their fault or something. So in that sense, I think even though salespersons... It's a tough job. It's a tough job being out there and having to answer for anything that happens, having to put your best face on every single day, even when things are not working. Working with systems that don't work. I called that order in, where's that order go? That pricing is all wrong. All those things that go wrong, very frustrating to them.

Bruce Hamilton: So I think it's more a matter of just getting folks the same... Anybody, it doesn't matter which occupation you're in. I say in that toast video, it's not about the work. It's about all the things that get in the way of the work. It's all those things every day, which just gives me a headache. You can't find anybody who can't give you a long list of those.

Michael Webb: And by the way, we will include a link to The Toast Video. Very well worth watching in the show notes. When I work with sales organizations, one of the things... You talked about leading the horse to water. One of the things we have to get them to recognize is that whether you created value or waste in sales, you have a number at the end of the quarter, whether you made your number, but all the work that led up to that, which part of it's value? Which part of it's waste? That's invisible. You have to invent a way. We have to develop a way to determine whether we're wasting our time or whether we're creating value. And whether that value is for us or whether it's for the customer.

Michael Webb: We have to do things with the salespeople to help them have an experience, that says, oh, golly. I guess when I use the word customer, I'm referring to somebody different than you. What other terms might we have to define?

Michael Webb: Do you have that same kind of thing when you're doing that with production folks or when you start working with order entry or customer service or salespeople too? Have you gone through the same thing?

Bruce Hamilton: There's a kind of a spectrum, particularly I think in smaller companies. There's pretty good understanding of who the customer is. There's a shared understanding of the customer. Larger companies, even there. I think many organizations that we work with... Yeah, I guess I have to qualify. If we're just starting out with an organization, usually operations is removed, maybe twice removed from the customer. Their idea of the customer... Worst case, they see the customers as the problem. You have that kind of belief. I don't know if I'm answering your question here.

Michael Webb: It's not hard to go into a company and say to one department, who's the customer? And they say, well, it's the guy at the distributor who signs the cheque. Ask another person, who's the customer? Well, it's the person who's got their hands on our machine and using it in the shop. And somebody else says, well, no, it's the plant manager who's going to benefit from it.

Bruce Hamilton: Companies that have had some background with TQM will generally say, think of the internal customers the next process. And they're aware that, that leads to someone outside. Once you get outside, it gets a little dicier, depending upon the industry. Is your customer the patient? Is your customer the doctor? Is your customer of the hospital? Is your customer the insurance provider?

Bruce Hamilton: All of these are, actually like that term, stakeholder. And it's kind of relative to the problem we're trying to serve. We'd like to keep everybody happy. All those customers are important. And I worked for an organization that made products that might go into a piece of cooking equipment, but ultimately the customer might've been McDonald's. That's who we're really trying to make happy. The customer for a part that we make could also be the person who's taking that part and assembling it into the product our customer makes.

Bruce Hamilton: So it doesn't stop at the purchasing department or the stock room. It goes right to the person who is going to then need that part. And that's important relative to problem-solving. So if there's a problem with a part, it tends to get discovered at the point where... It's not discovered, typically. It might be a might get discovered on receiving, but it might get discovered when, I'm the assembler and I'm trying to put it together and it doesn't work. So if I don't have that frame of mind as my customer. I'm not going to solve the problem. I wrote a post about it called The Salesman's Gamble . We made a sensor and it was a type of RTD sensor, had three wires. And the three wires had a particular protective coating on them, an armor prevent the wire from being damaged.

Bruce Hamilton: But when we manufactured this, we sometimes nicked one of the wires and then that would be rejected, its customer. And we spent hours and hours analyzing the work, trying to figure out how we could manufacture that part without nicking it. And it was hard because it wasn't really concentric. So we get into manufacturing issues. And we were struggling. We're getting better, but still the stuff would come back from the customer, we nicked the wire again.

Bruce Hamilton: One of our field salesman from the Midwest was in the plant and we invited him to the meeting, and he asked this question, why do they need the armor? Now that's a question, that armor on the wire. None of us would ask that. It was just a given. He asked the question, why do they needed the armor? And I actually traveled to that company with the salesman. And the first person we asked was the buyer. And she pulled out the prints. She says, the armor is absolutely necessary, but we pursued it onto the floor. And we talked to the person who was assembling it. And he said, and I'm not exaggerating here, He says, not only do we not need the armor, it's a pain in the neck. It's hard to get that armor to thread through when we do the assembly. And when we've dug into it, what it was, was it was a repurposed sensor that we had made years before. And they just use the sensor in new equipment. And in the new equipment, A, the armor was not needed. And B, the armor was a problem.

Bruce Hamilton: So because we had all that engagement and particularly from our field sales guy, we actually reduced the cost of the part because we didn't need the armor anymore. And they got a part that they wanted. So there's a perfect example of how, when you have the right interpersonal relationships, you can really solve a problem. In another environment, that would have gone on and on forever. We probably would have lost the customer.

Michael Webb: Think of an environment where salespeople are measured strictly on revenue production, not on nuanced understanding of what the customer's problem is. That's what a lot of young kids today who go into sales and hired by these companies, into telephone boiler rooms and make a million calls a week and it's just push, push, push. There's no real analysis of what's the value to the customer. Is there an easier way to get some attention and create something useful for them as a way of getting engaged. Salespeople today are struggling so hard because customers are trying to avoid them. And so we had to step back and take a more value-oriented way of redesigning sales processes and stuff.

Bruce Hamilton: Yeah. Salespeople, as I said, have a very hard job. And there's a certain set of skills which are unique to sales. A type of sales training is very valuable. I coached soccer for a while. And not that I know much about soccer, but the first thing you do is you teach people how to dribble and you teach them the basic skills. And that's essential. You can't play the game if you don't do that. And then there are tactics that you... How you're backing around and how you manage the field. And that's important, just as it's important in sales. But then finally, there's this overall strategy of how are we going to win the game. And this is typically where organizations tend to... They don't put enough effort into that. And we win the game. As I used to say, we beat better players because we're a better team. Because we play as a team. Same story is true in healthcare, manufacturing, anywhere. So its' our ability to look at the problem from many sides to solve it.

Michael Webb: As they say at Toyota, I think, we build people before we build cars. The people have to understand each other. They have to understand the problems they're trying to solve. They have to use evidence and data instead of opinions and biases and drawing people through that critical thinking. As I understand it, that's management's primary role.

Bruce Hamilton: But there's another piece behind this, which can make it difficult, Michael. And that is how we're measured. Manufacturing will be measured in such a way that does not necessarily promote good customer service. And you can't blame them for that. It's normal to cherry-pick jobs in order to hit a bogey. And it just is it's normal in sales to pull orders in that the customer doesn't need, so that they can be...

Michael Webb: That's something that we really don't want.

Bruce Hamilton: And I don't hold them accountable. It's the measurement systems that we use. And this is where senior leadership really, really can play a part. They're the only ones who can look at this and say, you know what? I'm not going to argue with Gap accounting. When we pay our taxes, this is how it's done. It's done a certain way. We can't do much about that.

Bruce Hamilton: So we're not going to fight it. We are just going to fail to take it seriously because we know, because we can see, because we're business people. And we realized that building something just because we want to activate resources is not actually making us money. It's not turning into sales. In fact, it's eating up our resources that we could use to sell products to our salespeople. One of the first things I tell companies, the nonproduction departments, I tell the financial people, be prepared for an excess of cash. That's the first thing that's going to happen. Because when we stopped doing things that we never should have done in the first place, making policy decisions. Eli Goldratt called them evaporating clouds. Just like, we made this decision, and now we're just not going to do it. A controller of my former company said, I think we just need to stop forcing orders at the end of the month so that we look good this month and then have nothing to build the following month.

Bruce Hamilton: He needed to say that. That's an evaporating cloud. It was a policy decision. It was a self-inflicted wound, that we were not late to customers. Well, we were late the first of the month, because we ran out of parts building things that weren't needed. So that's one kind of thing. And what I say to salespeople is, you best be prepared to find new markets for all the capacity that we have now. Otherwise, we're going to have that problem. We stopped making things that were not needed. And now we have this capacity and with this capability, let's make sure that we use it. Let's go out and sell the factory.

Bruce Hamilton: One of the challenges that I had early on was, there are people from sales who would say, Oh, you see what this is doing? Our backlog is dropping. I said, no. Our backlog is not dropping. We are not forcing customers to order a half a year in advance of when they get to the order. We are just the same amount of sales. We are just not not forcing companies to make decisions that they really can't make, because they don't know. As a result, we're putting heavy pressure on our competitors because they still are taking six months to deliver. And guess what? We can do it in a very short period of time. Sell that. And that worked, actually. It worked, after a while we figured this out. And our marketing programs started to talk about how we can deliver quickly customers love that. Customers are a good spot to go to get support for this process. And that they'll talk to salespeople. It's a great opportunity.

Michael Webb: When you are leaning out and making the production operation so responsive to the market, I think your point is huge. Now the salespeople have to go out and find new markets and new customers. That is not a trivial thing, right? The whole scientific method, so that you can be pretty confident in the sales forecast.

Bruce Hamilton: That's the strategy I was talking about. We're beyond tactics now. Where are we going to move? We're going to move out. Are we going to develop new markets or are we going to develop new products? Are we going to develop new sales channels? Where do we go? And this is what salespeople can and should.

Michael Webb: All this critical thinking. Respect for people is hugely beneficial. It's the only way that I know of to help organizations actually be more effective. So if someone wants to learn more about your organization, how would they get in touch with you?

Bruce Hamilton: We are at Gbmp.org, we're online presently like a lot of organizations. We do a lot of things virtually. You can find us at www.gbmp.org. You can find us at the Shingo Institute as well, since we're an affiliate of the Shingo Institute. If you'd like a few minutes of entertainment once a month, write a post under the heading of oldleandude.org. And also if I may, make a plug for our upcoming conference, which is in October seven and eight, and it's virtual as well. And it's called 21st century lean. All the things that we see in the 21st century. And this has certainly been a rip-roaring 20 years. If you think about it. Of all the things that we have had to struggle with and the changes and how do we pivot quickly. And we're all trying to do that right now. So the theme was kind of prophetic. We set it up over a year ago.

Bruce Hamilton: We had no idea what kind of a mess we'd be in right now. That you can find us at northeastleanconference.org. So there's several ways to get in touch with us. I'd be happy to get with anybody. So thank you. A hope that we will see a couple of folks from your listeners at the conference and happy to chat with anybody. And I appreciate you asking me to participate with you today, Michael.

Michael Webb: Well, my pleasure. This has been a great opportunity. Thank you very much. This is really valuable. I'm sure we'll be talking real soon.

Bruce Hamilton: All right. Thank you Michael. Peace.