In a recent article, The Economist explains how the electronic giant Honeywell International transformed “from bitter to sweet” over the last eight years following an XPS strategy. In my research I search for evidence for how and why corporate production systems (XPS) succeed and/or fail. The Honeywell article paints a picture of how the Honeywell Operating System (HOS) literally saved the company from bankruptcy and turned it into a multi-billion profit machine. Although the evidence is anecdotal, the managers interviewed in the article provide convincing statements of XPS success:
The Honeywell Operations System, introduced over the past eight years, has helped transform Honeywell from a troubled giant to one of America’s most successful companies. Honeywell’s sales in 2011 were 72% higher than in 2002, and its profits doubled to $4 billion.
At the Lincolnshire plant, a short drive from Chicago’s O’Hare airport, managers credit the HOS with a huge improvement in productivity—without which, they say, it would have struggled to survive the recent downturn.
It used to take 42 days to make and deliver a sophisticated toxic-gas detector, for clients including Intel and Samsung; now it takes ten. The production process used to consume the factory floor; now, it uses merely a quarter of it. This has freed up the rest of the factory to make lots of other products.
Headquartered in Morristown, New Jersey, Honeywell International is a conglomerate company that offers engineering services, commercial and consumer products,and aerospace systems. Honeywell is a Fortune 100 company with about 250 factories worldwide and approximately 130.000 employees, of which the half is US-based. Honeywell started implementing HOS in 2004/2005 and now – eight years later they report success with confidence.
It’s nice to know that the HOS has been such a terrific success, but what can it teach others? What does Honeywell report as explicit success factors? The article gives some few answers to questions like these; it points to the following factors that have helped Honeywell fundamentally transform its culture and productivity:
Yes, it’s the Lean Six Sigma thinking
As for most XPSs, HOS is based on the Toyota Production System, Lean production, and quality management philosophies such as Six Sigma:
The factory has experienced a leap in productivity due largely to the successful application of management theories: including Six Sigma, which sanctifies an intense regard to quality, and Japanese “lean manufacture”, which is based on minimising waste, keeping inventories low and doing things “just in time”. These are both integral to HOS, which is a customised version of the celebrated Toyota operating system. It was indeed drafted, in 2004, after dozens of Honeywell staff spent two weeks at the Toyota plant in Georgetown, Kentucky.
The key lesson learned is that a company must focus on quality, delivery, safety and all the other competitive priorities and not just cost, cost, cost… A cost focus is deemed to be only of short-term benefit, while building a robust core of safety, quality and customer focus has the potential of providing long-term health to a company.
Transform the culture: Behaviours are living values
Most companies have developed a set of corporate values that all employees should internalise and live. The Honeywell approach was to identify 12 behaviours that all employees should show, because just stating some values are too vague and hard to measure. The 12 Honeywell behaviours known as the One Hon are: (1) Growth & Customer Focus, (2) Leadership Impact, (3) Getting Results, (4) Making People Better, (5) Championing Change & Six Sigma, (6) Fostering Teamwork & Diversity, (7) Global Mindset, (8) Intelligent Risk Taking, (9) Self-Awareness/Learning, (10) Effective Communication, (11) Integrative Thinking, and (12) Technical or Functional Excellence.
This all relates to what the CEO and “transformer-in-chief” David Cote explains as one of the hardest things to do; “to get workers—many of whom had been doing the same job for decades—to adjust to a more decentralised power structure.” This takes time. Honeywell has allowed five years plus.
Meetings – many and short!
In succesful companies, people meet with each other. They do this because they know that not all information can be codified and shared through technology. In addition to making working days more meaningful and social, meetings also make people create sense and a joint understanding of the operations. Meetings are used to manage what has not been planned, what deviates from plans, and what cannot be planned (e.g. innovation and improvement suggestions).
In Honeywell, meetings are hierarchically structured and planned. Importantly the shop floor meetings are strictly confined to maximum 15 minutes. The article reports from a big clock in the Lincolnshire factory in Illinois that help visualise the timing of the meetings: “At quarter past the hour, which is when all meetings begin, the big hand enters a green-shaded segment that turns red at half past.” It also explains how the factory floor is painted with spots for each meeting attendant; so that if someone is missing it will be instantly evident. These two latter examples show how practical techniques support the overall XPS objective, and the other way around; how XPSs such as the HOS can go from long-term hairy goals to practical day-to-day actions and practices.
- Honeywell International: From bitter to sweet (economist.com) The Economist, April 14 2012
- The top-12 lean principles (better-operations.com)
- The World Class Manufacturing programme at Chrysler, Fiat & Co. (better-operations.com)
- Company-wide Quality Management: XPS of the 80s (better-operations.com)