I recently traveled to NY and took the chance to visit “New York Label and Box Works”, a family business based in New York established in 1878. Sharing some insights from the CEO Steven Haedrich on how quality and innovation kept his company alive after so many years in business.
Since 1878, New York Label and Box Works has provided packaging services for companies. Over the years they have evolved to meet the demands of a sophisticated market such as cosmetic, health, food and beverage, pharmaceutical and nutraceutical industries.
I interviewed Steven Haedrich, CEO to talk about his secret ingredient to success in the long term.
“Our key recommendation is to work to continuously expose the system to improve quality and promote innovation unleashing workers ideas. Everybody today wants “instant pudding”, and that is not how it works.” He mentioned that suppliers and clients were seeing what they do, and they see the value they provide, but they still not practice the same methods because it takes a mindset change from the top.
Changing a company culture to make it more agile and ready to adapt to customer needs is not easy. As Steven says, takes years of implementation, new habits, policies, and a clear purpose to serve the customer. They decided then to apply Edwards Deming teachings like the PDSA, the 14 principles, the chain reaction and the System of profound knowledge to help them change their current behaviors.
The Deming Chain reaction
When you improve the quality of the company as a system you have less re-work, fewer mistakes and fewer delays, so you end up having lower costs. Therefore your productivity improves, capturing a bigger market share, staying longer in business. If you stay in business you provide more jobs and keep on lowering costs as turn over costs are reduced as well. That’s the Deming chain reaction.
After many years in business, NY Label realized the way they were working was not as effective as it used to be so they hired consultants to help them promote innovation among workers. “We started in 1993 with an external Deming consultant, worked with him for 5 years, we thought that we were fine on our own, but then we hired another one again in 2007.” Usually, companies need an outside observer to see things they get used to doing.
The power of unleashing workers potential
Steven could see that unleashing workers potential was the way to improve and innovate. Companies like Apple and Facebook had great innovators as leaders, but they had a team with them to help them. In the past companies would survive without changing too much their product offering, but nowadays customer have more information about different options and competitors, so they become more selective and sophisticated.
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Now big international firms look for their products because of the quality and their innovative offering. Their labels are customized, include key security technologies, anti-diversion and anti-counterfeiting.
What is their magic pill to innovate? “We basically let the innovator play with no fear”.
The three pillars of his company are: quality, innovation and joy at work.
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Quality
Improve quality by satisfying and delighting customers. Improved quality can bring reduces costs by reducing delays, re-work and complaints, but reduced costs only in on department without considering how it impacts other departments, can reduce quality. So processes have to be analyzed as a system, from the customer order to the delivery. For example, most of the companies provide bonuses and incentives only to the sales team, why is that? Are they the only ones providing value to the customer? What about the rest of the company? Did you know that when people are motivated by money they tend to do whatever it takes, and that could hurt the company in the long term? https://www.youtube.com/watch?v=u6XAPnuFjJc
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Innovation
Edwards Deming would say “let people think, help people to think out of the box with no fear”. Steven firmly believes that “Workers want to be innovative”, but as Rafael Aguayo says in his article Why Deming, Why Now, for innovation and improvement to occur with regularity “individuals in the organization need the confidence to bring up new ideas. A company must tolerate even encourage new ideas”. There could be a failure while testing some innovative ideas, so management has to be really clear on not punishing failure, driving out of fear and promoting innovation. Otherwise, individuals will not take the risk.
RECOMMENDED COURSES: Agile innovation in the workplace
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Joy at work
When employees have no fear of proposing ideas, know they can contribute at work and are being listened, they will have joy at work. And if they feel joy at work, they will stay longer and help the customer better. So they will contribute with more ideas for improvement and this becomes a positive snowball effect.
Some things they did
Big changes came when they changed the following rules:
- Eliminated sales commission
- No quotes required
- Eliminated yearly performance evaluations, around 75% of the companies have them, but they only frustrate employees.
- Promoting joy at work by making them talk about what they need
Now they have no turnover rate and new products for their customers.
How to start?
Steven started working project by project under systems thinking. “Start with a pilot, what we call “low hanging fruit”. You can get quick wins by focusing on small problems that generate a big cash impact. Focus the projects on solving issues that save time or money. Big barriers or constraints to make more money. Get the help of an external consultant, because even when you as an owner learn about how to improve, is not always possible to see it in your company, you need someone from outside to help you see things differently. Mainly because 94% of the problems are caused by the system that the leadership built, so leaders need to change a lot as well.”
Steven Haedrich With Luciana Paulise’s book SOS Pymes
We recommend companies to start with a Deming Workshop our with our Leadership training that is based on the Deming principles and an innovation and creative problem-solving project to put the learnings to practice. It’s a long way, but you have to start some day. Good luck!
Lu Paulise
luciana@biztorming.com
@lupaulise
Biztorming Training & Consulting
Contact us TODAY to book your training!
2 Comments
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