Can you guess:
What causes operating margin to leap up by 20% of sales?
- Cost cutting?
- Raising prices?
- Discontinuing lower margin products?
- Replacing old technology with new technology?
- Improving resource utilization?
- None of the above?
Answer: None of the above.
Most CEOs would say they’ve already done these things. In fact, many CEOs would find it hard to believe there is more margin to be found. But there is. The 20% lift is still ‘out-there’. Often it is bigger than 20% of sales! And, the source is not on the list above.
When Toyota first started building cars in the US they brought in engineers to set-up the plant as perfectly as they could. Toyota had engineers with tremendous expertise in the field. The engineers did a great job of setting up the plant. Despite the good work of their expert engineers, Toyota understood that under normal circumstances the people who knew the assembly line best, were the line workers themselves. However, in this case they were hiring union workers whom GM had dubbed the worst workforce in America. If fact, GM had fired all these people. So how many margin improvements did these ‘worst’ workers make to the nearly perfectly engineered assembly line? In the first year, and every year thereafter these 3,000 workers implemented about 10,000 changes. How did that impact operating margin? When compared with a similar GM plant, the Toyota managed plant had a 57% stronger operating margin with much higher quality!
Accept this as a fact: the opportunity for margin growth is much larger than you currently imagine it is. Believe it or not, the big delta will come from your employees! It is the hundred and thousands of little improvement that your workers would like to make that will drive this leap for you.
Right now we are offering a special free and risk-less program that enables us to prove to you the value you can get from boosting your workforce to the level Toyota enjoys. We will take an existing team of your people, implement Behavioral Advantage™ with them and you will see results before the training is complete. (This is not Lean or Six Sigma)
Call me and I will tell you exactly what we are going to do, and what you can expect as a result. If you’re not in a position to do this yourself but know someone who is, we happily pay a generous referral bonus upon a successful engagement. 847-984-0976