* The redefinition of work. When work meant hoeing a field or tightening four bolts on a motor assembly, employees didn't need to know much. The rules of factory labor, so it was said, were designed so that any plowboy fresh off the farm could begin doing a job on day one. Today, of course, factory jobs are likely to involve producing diverse collections of parts or maybe putting together intricate subassemblies, all while monitoring just-in-time inventory levels and statistical-process-control readouts. Service-industry jobs, which typically involve processing information or interacting with people, are seldom any simpler. Employees undertaking complex tasks invariably have to confront and solve unexpected problems. For that, they need information.
* The computerization of the workplace. In the past, information was scarce. Accounting might still close out the books and produce an income statement. But if you wanted to know how much revenue a particular machine generated or how much one salesperson's customers did in repeat business, forget it. At Re:Member, John Davis is planning to extend his system to the customer service department, which means tracking every call that comes in and ascertaining which employee is responsible for closing it. Before computers, such information gathering would have required an army of clerks.
Look closely at how these trends affect a company's day-to-day operation, and you'll see why information sharing is spreading so quickly. Five years ago, for example, a seasoned NCR Corp. executive named Malte von Matthiessen agreed to take over the presidency of a small manufacturer then known as Yellow Springs Instruments Inc., in Ohio. Von Matthiessen had his hands full from the start. The business wasn't growing, and financially it was barely breaking even. It was overstaffed but undermanaged. No one, for example, knew much about who was buying the company's probes and measuring devices, let alone what these customers might want to buy next year.
Von Matthiessen set about reorganizing things: targeting specific market niches, setting up joint engineering and marketing teams, laying the groundwork for strategic alliances with other companies in the United States and overseas. One critical element of the revamping was a boost in product quality, so that the newly renamed YSI Inc. would come to symbolize the best products. A second was the company's new focus on products with higher added value, not just sensors and probes but systems capable of gathering, recording, and transmitting information. At the same time, von Matthiessen was quietly letting the work force and managerial ranks shrink through attrition. Resources were tight.
Higher quality, more complex products, no spare managers to mother-hen YSI's 360 employees -- the only way through this potential Gordian knot, von Matthiessen figured, was to give employees the information they needed to regulate their own work. The company already distributed financial data, along with a good deal of information about its plans; it was partly owned by employees, and YSI managers had always treated the workers more as partners than as hirelings. Still, von Matthiessen wanted to go a good deal further.
So last year he began a program of what he likes to call empowerment. One by one, shop-floor units have been reorganized into work centers. The centers are responsible for hiring their own members, solving their own production problems, and acting as first-line quality inspectors. And what's the key element of this devolution of authority? You guessed it. The centers have explicit rights of access to all the information they need to do their jobs effectively -- information about customers, inventories and budgets, manufacturing procedures and engineering alternatives.
One way for a YSI team to gather such information is simply to invite a specialist -- a customer service rep, say, or a manufacturing engineer -- to attend a regular weekly meeting. Another method, often simpler, is to ask the computer. Last year YSI introduced a new MRP-II software package capable of tracking not only inventory levels and production records but also job costs and quality variances on every project of every work center. Dozens of people throughout the company were trained in a query language called Sequel, and computer terminals were installed all over, on the shop floor as well as in the offices.
Today product leaders such as Marilyn Capper of the Bioanalytical Products center pull rolling three-week workloads off the computer, which her teammates then use to divvy up and schedule their work. Computer-generated charts show the centers exactly which decisions pay off and which don't. The bioanalytical group, for example, knew that customers wanted a more even flow of the Model 2300 glucose-and-lactate analyzers it manufactured. So the group decided to switch from batch production -- several constructed at once, over a week or 10 days -- to "daily build," with three complete analyzers turned out every day. Presto: they could see from the chart that labor variance, measuring actual building time as compared with budgeted time, dropped like a shot. "It made me a lot more confident we were doing the right thing," says Capper.
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The most powerful reason for the spread of open-book management, of course, may be the fact that it works. J.D.'s departmental deficit plunged. In the year or so since von Matthiessen set up work teams, YSI's manufacturing costs have dropped from 56% of sales to 52%, saving roughly $1 million and pushing earnings up "to levels we never saw before." By the Darwinian law of the marketplace, companies that gain so sizable an edge are likely to elbow their competition aside.
A more immediate reason, though, is that information sharing isn't an all-or-nothing proposition. American managers are a pragmatic lot: despite the fads and fancies that periodically sweep through the business world, most are loath to turn their companies upside down in the pursuit of the Grail of Good Management. But show them an approach they can try out a step at a time, making mistakes if need be, then stand back and watch things change.
