University of Arkansas

Walton College

The Sam M. Walton College of Business

Episode 4: Neal Dellett Talks About the Value of Continuous Improvement

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December 26, 2018  |  By Matt Waller

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Neal Dellett is a Senior Consultant at Simpactful, a CPG/retail consultancy firm. Neal specializes in end-to-end supply chain and has a proven track record of leading organizations to best-in-class results.

Episode Transcript

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00:08 Matt Waller: Hi, I'm Matt Waller, Dean of the Sam M. Walton College of Business. Welcome to Be EPIC, the podcast where we explore excellence, professionalism, innovation and collegiality, and what those values mean in business, education and your life today. I have with me Neal Dellett of Simpactful Consulting. Now, Neal has worked with Andersen Consulting as a consultant. You were with Procter & Gamble for 20-some years.

00:41 Neal Dellett: 28 years.

00:42 Matt Waller: And I met you when you were at Procter & Gamble, and I remember someone told me, "Oh you've gotta meet Neal Dellett. Neal is the top Continuous Improvement expert at Procter & Gamble." Then they introduced me to you, and of course, you've done work with the university now on Continuous Improvement, it's really helped us a lot. But I wanted to talk to you a little bit about Continuous Improvement. I mean, I know when I was a student back in the early '80s, Continuous Improvement, total quality management, just-in-time, these things were big. And when you were at Procter & Gamble, I know I worked with you on a project with a large retailer, and you were actually implementing Continuous Improvement between Procter & Gamble and a customer which I thought was really interesting. You've done a whole gamut of Continuous Improvement projects for manufacturing to physical distribution, transportation, information systems, order fulfillment, all kinds of things.

01:50 Matt Waller: So I wanna talk a little bit about Continuous Improvement for people that aren't familiar with it, but I also, at some point, wanna talk about the future of Continuous Improvement with all of the disruption that's occurring in industry. It seems like there's a lot of room for application of Continuous Improvement. But would you mind just speaking for a little bit about your paradigm, your way of thinking about Continuous Improvement.

02:18 Neal Dellett: Sure. Back when I worked at Procter & Gamble, I was fortunate to be in the right place at the right time. We were getting ready to implement a Continuous Improvement program in the manufacturing area. We had hired Toyota Consultants to come and teach us. And so I was in the right job at the time and I became the point person for implementation of it in the plant that I worked. And I got the benefit of being trained on how to think about problems, how to break them down to a very detailed level versus working at trying to solve something at a very high level. They actually taught you to look at the smallest level of detail to understand what the problem really is all about, because typically the further that you break down a problem the easier it is to get to the root, and then you could scale it back up to understand the issues. So, one of the benefits I got was how to think that way early on in my career. And so whenever I had different types of assignments, I always went back to one of the consultants I always talked about. You have to go to the floor, you have to look at the data. And so any time I was posed with a problem in my roles, I always looked at... I need to see the data. What's the issue, how do I break this down to the smallest level so that I could then understand what the issue is and then solve it.

03:35 Neal Dellett: And so that's really formed how I think about things throughout my career is when I teach process improvement you have to understand the flow of activities. When you think about problem solving, you need to get into, "Well, what's the equation that I'm trying to solve here?" One of the earliest things I ever learned about was they taught us an example of... In a case study they were trying to teach us to problem solve a lighter that's not working. And so you have to understand what's the equation for fire. It's oxygen, ignition source and a fuel. And as we problem solve, you had to look at how do I understand each of those three elements to see what my issue is? Why is my lighter not striking? So when I go into a retailer and if you're looking at why am I out of stock, you have to understand what are all the different reasons that you could be out of stock and you have to gather data on each of those, because it's a very complex problem. And once you understand all the individual elements, then it becomes a lot easier to make progress and to improve the results that you're trying to get after.

04:38 Matt Waller: You mentioned, you were introduced to it from consultants from Toyota.

04:43 Neal Dellett: Yes.

04:44 Matt Waller: And it's interesting because Toyota is such an interesting case, right? In the '70s, most Americans thought of Toyota as being junk. They didn't think it was a high quality car. And yet, by the '80s, we were trying to figure out how come Toyota had such reliable and dependable cars. Toyota is always, if you look at consumer reports, in terms of reliability they've always been a leader. I remember reading a book, must have been 30 years ago, about the Toyota production system when I was in school. Just the whole idea of just-in-time and the production system that Toyota uses. But, I think it's really interesting because when we think about quality, there's really different parts of quality. Toyota is unequivocally the best when it comes to reliability. But there's other types of quality. There's functionality, there's quality in terms of just beauty, aesthetic quality. There's all different dimensions to quality. And of course, Continuous Improvement isn't just about quality, it's also about productivity. So when you're working on Continuous Improvement projects, I would think that it must be really challenging to come to agreement on what you're gonna focus on in terms of making improvements.

06:12 Neal Dellett: Yeah, a lot of times when you go into an organization, what you wanna know is, what are your objectives? So it's commonly referred to as OGSM. What's your objectives, your goals, your strategies and your measures, 'cause that tells you where an organization is trying to focus their results. And once you understand what those elements are, then you can see what are the key metrics that need to be improved, and that's when you can utilize the different tools for Continuous Improvement on those types of results. As an example, I've been in organizations before where we needed to work on staffing. We needed to re-deploy people to other areas to focus on, so we had to make the current operation a lot more efficient. And one of the things that we did was we mapped out, as an example, how are orders received and processed on a daily basis. And in this example, eight people used to do a job that we figured could be done with two. By the time we were done, we piloted it and resulted in a six-person reduction in the work that was done. Those six people were then deployed to higher objective goals or higher strategies to implement. So, it was an example where, because the organization had these goals, they could then focus the proper tools, whether it be process improvement or scorecarding or daily management systems or problem solving, whatever the issue was, you could use these different Continuous Improvement tools to go after that problem.

07:38 Neal Dellett: So basically it's a understanding of what kind of issue do you have. Is it a metric that you don't know why it's not a goal, and you have a 20% gap? Then you need to get in to understand what are the different elements of that gap? Or if it's, you've got eight people that do the exact same job and you have a couple of people that really outshine the other six. What you really wanna do is establish best practices so that your other six people perform at the same level as your two top performers. And it's not because they work harder or they're smarter, it's because they probably have different methods that are better than the others, or that people are newer and they have less experience. So what you wanna do is take those learnings and make that the way that they do the work. That's typically how you drive results in an organization is, what's the focus and then what are the tools that you need to use to drive the results that you're looking for.

08:29 Matt Waller: One thing I've always been impressed with you in terms of how you conceptualize Continuous Improvement and implement it, is you always do start with a strategy. You start looking at, "Where's this company going? Why are we doing this?" And I would think that must be challenging 'cause I've noticed a couple of times when you've done that, people want to sometimes get into the details really quickly without really figuring out, "Where are we going, and why are we doing this?"

09:00 Neal Dellett: And I could tell you that after I've been doing this for 30-some years, I've had multiple different learnings. So every time I teach something, it's a new learning for me. I've been doing it 30 years and I'll come upon a problem I've never seen before. As I'm teaching people, I'm also learning from them. And so I use the methods that I've developed over the years, but I continue to refine those methods as I'm learning from folks as well. And I also, I step into topics that I don't know anything about. So I'm really using my background on how to execute the process with little knowledge of the topic that I'm working on. But what I do is I rely on the people that do the work every day, and so I use my methods to pull the information out of them and to guide them into the direction that I'd like to go. But at the same time, I've always got that open mind on if somebody poses something that's different than what I'm thinking, I'm always open to that, because I'll say, "Well, let's try both methods. Let's try both of them." And sometimes you...

09:54 Matt Waller: Well, I know the vast majority of your career has been working with consumer packaged goods and retail, but all aspects of that. I know when we first used you to help us in the university with some of our processes, I wondered, I thought, "How well will that expertise transfer to what we're doing?" Because I mean, CPG and retail is very different than higher education, especially higher education and business. You didn't miss a beat, it was no... You weren't even challenged by that. Why is that?

10:28 Neal Dellett: It goes back to the core things that I've learned is that if you have a... First of all, you have to get the right people in the room. And so typically when I'm asked to help with something, I go straight to the people that do the work. I'm not gonna walk in and try to say, "Here's what you ought to do. You ought to do ABC because I've done this in other locations." You have to get the people in the room, you have to map out or discuss what the issue is that you're trying to identify. And the people that do the work every day, those are the experts, those are the ones that are gonna come up with your solutions. And my job is really to get the answers out. And so based on my background, that's where I can walk into a situation where I don't know anything about a topic, and by just talking with the people that know the work, I know the right questions to ask or the process of how to map it out just to get them to offer up the solutions so that we can go to countermeasures and try and resolve those issues.

11:23 Neal Dellett: It's one of those that every time I go into an area with a new topic, I'm a little hesitant because I don't have experience there. But like you said, once I've gotten into it, I realized that I have five to six examples of things that I've done historically with my work that directly reapply. I mean, as example, as you talk about student retention, I was on a phone call today and explaining student retention and what it's about, and this person asked me, "Well, do you think that would reapply back to companies that are having retention issues with keeping their employees? This company has got a 20% turnover in employees." And my first answer was, "Absolutely it would, because you need to understand if I'm having 20% turnover, you need to get into what are the reasons why?" And so, as we've kind of talked the retention at the U of A, there's some themes as to why, and that group is now diving into, what are the greater details to those themes of why people would leave, and where do we have data that backs up why those people are leaving? 'Cause when you wanna make a change, if I go do ABC I wanna know that if I have a 20% gap, that's worth 4% of my gap. You wanna be able to understand how the Prado is developed for your losses, so that if you go work on the top loss and you fix it, is that worth 2%? Is it worth 8%? How big a deal is that? That's why you always have to go back to what's the issue that you're working and how can you get data to go solve that?

12:51 Neal Dellett: I had a great example, when we were... A retailer talked about implementing a process where they measure your on-time results in full measures, and one of the first times I ever got a...

13:03 Matt Waller: On-time delivery.

13:04 Neal Dellett: On time delivery. And one of the first times I worked with a customer team, they asked me to help with that. And so I said, "Well, let's go look at your last 100 trucks. Let's go understand throughout the eight different steps in the process where did they start failing." And the response I got back was, "We don't have any data that we can pull on that." And I said, "Well, then you can't solve your problem." So you have to have data. So what they did was, they literally got seven people in a room with computers and each person said "Okay, truck number one, it got here on time. When it got to the second point, did it get there on time? Yes, it did." And so what they did was they started to build a database of 100 trucks just to understand where are they failing and they started to see themes of, "Hey, when we get to point number three, we're seeing 18% of our failures at that point." And that's when they could start to develop action plans. But it all goes back to, if you're wanting to improve a result, you need to be able to measure the result, and you need to be able to analyze the data that makes that result just so you could look at the trends, and you could look at the Prados just to see where your issues may exist.

14:12 Matt Waller: I remember one project that you worked on that I got to be involved in between a CPG company and retailer. We simply followed an order from a factory to a CPG DC to the retailer DC to the store. And we found out that for 1% of product, certain palette configurations were being done at the CPG company which were labor intensive. When we talked to them about why they were doing it, they said, "Well, this is what the customer wants." We got to the customer and we observed them undoing it all. You remember that?

14:50 Neal Dellett: Yeah, exactly.

14:52 Matt Waller: And it's interesting how on the one hand, there's very sophisticated tools in Continuous Improvement like statistical process control, which can help you find out when a process is out of control before it causes scrap and re-work, so you can correct it before you have losses. That's really sophisticated. But then on the other hand, it seems like when you implement these kinds of Continuous Improvement processes, you see, I guess you could call it low-hanging fruit, really easy things to correct.

15:27 Neal Dellett: You're referring to when we did a value stream mapping exercise. And a lot of times in the training materials, it talks about everybody works in their own little silo. "I work in the plant. I work in the DC. I work in the store." And you don't venture out beyond those boundaries. And it's when you get a team together of people who work in all those different silos, and you start to look at those issues that, I mean, you called it low-hanging fruit, but a lot of times it's just basically obvious things that when you get two people together, it's "Why do you do that?" "Well, I do it because I think you wanted me to do that." And they're like, "No I don't want that at all. You can get rid of that entire thing." That's kind of the benefit, again, of having the people that do the work but also working in a supply chain and getting together as a cross-functional team to help solve problems. It's one of the things I've done in my career. I spent 18 years in plants working total productive maintenance, and total quality, high performance work systems. As I got into the commercial environment, which has been the second half of my career, it's all information and data and people.

16:30 Neal Dellett: So in my opinion, it's a lot easier to solve commercial problems because you're not having to deal with the science of manufacturing. You don't have physics, you don't have chemistry. You don't have... Machines can't talk to you, so they can't tell you what's wrong. But if you get eight people that work on a supply chain in a room and start highlighting the issues, they immediately identify what the problems are and make it very visible and very easy to solve those kinds of problems.

16:58 Matt Waller: One aspect of leadership is getting people aligned, and it's a hard part of leadership. But one other thing I've noticed in working on industrial projects with you and even in the university, when you do these kinds of Continuous Improvement initiatives you wind up getting people aligned.

17:22 Neal Dellett: Yeah, exactly. And the other thing is like some of the ones that we did just recently, I call it a snowball rolling downhill, which is momentum. And a lot of times, if I can get in and do one project with a group with... And I strategically make sure that the right people are involved in those teams, so it's not only the people that do the work, but who are the decision-makers. So once they've seen the power of doing Continuous Improvement, they wanna do it over and over and over. The one that we did just recently with that one class, at the end of it, comments were like, "This exceeded all expectations." And the way that the students presented it and they knew the material, it was beyond what they were expecting. But then they also said, if you were to ask the students or even the advisors that were involved, people are like, "We could do this over and over and over." All we did was pick one work process, but I work in 15 work processes throughout the year. I could do the same thing on multiple different examples.

18:22 Neal Dellett: And that's one of the benefits that... One of the things that I like to see is, 'cause I like to coach and teach people, and when you see the energy coming out of it, that they wanna do more and more, that's exactly one of the outcomes that you're looking for.

18:32 Matt Waller: One of the people that was involved in it really wasn't excited about these kinds of things. But after that, he's really excited about it. That gets back to alignment. And so, when I became dean, I wanted to start implementing continues improvement because I knew it would gain alignment amongst people, but I also knew there's lots of low-hanging fruit, and we needed to do it. If we really wanted to serve students, if we really wanted to serve faculty and staff and other constituents, we needed to fix these processes that was just ridiculous, and some of the processes we didn't even need. I know I wasn't involved in one of the processes you worked on recently, but I know that my CFO called me in the middle of it and be like, "We've got... We just discovered a problem, a serious problem." [chuckle] It turned out to be not quite as big a deal as we thought, but while you're actually going through this, you come across not only ways of making improvements to the process, but you come across problems that if you wouldn't have come across them, they would have turned into terrible problems.

19:44 Neal Dellett: Yeah, exactly. And that's part of the... As part of continuous improvement, two of the things that I'm looking to do is one, is to deliver business results, but the second thing that you do is while you're delivering those business results, you're building people's capability, you're changing the way they think about problems so that when they're not on a project team just doing their daily work, they still have that continuous improvement mindset. So as you bring it into the university and start to work on problems, you're gonna not only fix those problems, but you're gonna be fixing problems that you don't even know that you're improving because now, you're building skills in people that they tend to use... They start to use those on a daily basis. And that's one of the unintended outcomes of doing it is that you're building the capability.

20:30 Neal Dellett: And I don't know if this is the book that you're referring to, but the Toyota book, I read one that was called The Machine That Changed the World, and it was about the production system. And one of the things that they talked about was that one of the reasons why Toyota is very successful is they focus on 100% of their people being involved in the program, where at the time that they were starting to come to their leadership position, their competitors had excellent managers but there was a disconnect between the people that made the cars and the people that were managing the company. And Toyota's focus was on what they called 100% employee involvement. And so if you think about in a university, if you engage all your people and in continuous improvement, it's gonna be unstoppable, all the things that you can uncover.

21:17 Neal Dellett: One of the other things that you mentioned was... I had an interesting example when I worked in Cincinnati, I worked in a finance organization, and the leader basically said every one of my individuals, next year, is gonna be on a team. And I was floored by it because it was, for me, it was great because now, I had to go train all these people, but I knew that once we did that, that finance group was just gonna just take off. Even some of the more difficult people, they became the biggest advocates. They enjoyed the process the most. They had some of the biggest learnings. And when other people saw those people turn and have a different way of thinking, they immediately lined up as well.

22:00 Matt Waller: I think when you get good at continuous improvement as a person, it reduces stress and anxiety because if you don't really have these tools and thoughts and processes down when you encounter problems, sometimes, you feel like, "Well, what do I do? Where do I begin?"

22:22 Neal Dellett: Sure.

22:22 Matt Waller: Whereas, when you've got these tools, you know you can tackle it. It's not really ambiguous, it's not equivocal, it's not uncertain. There is a process for dealing with this, and it can be done.

22:35 Neal Dellett: That's exactly right. And one of the things I also tell people, it's not where you are, where your results are today, where are your results a year from now? And so, that's what you need to be working on. So you're gonna go through daily fire-fighting and you're gonna have issues that come up, but just like you mentioned, you need to look through all of it, identify what the issue is, and then get rid of it so next week, you don't have to deal with that issue. And that's what continuous improvement is, is knocking off your problems and standardizing and making them part of daily work so that you do go through a routine every day, and you're executing processes so those don't become issues. And once in a while, you're gonna get a learning from a process you've already developed but then, you just improve that standard even more and so that that result doesn't come back.

23:24 Matt Waller: Would you mind talking just a little bit about the class you worked with? Most of the process improvement you're doing in the Walton College isn't in a class, but this one was. Would you talk a little bit about that?

23:35 Neal Dellett: So I did a process improvement class with Brian Fugate, and it was on student advising, and we worked with Jeff Hood. And when we were setting up the class to make sure that you have all the expertise in the room, Jeff made sure that all of his advisors participated. So we actually broke the class and the advisors into four different groups and focused on the student advising process, and we tried to break it up into four equal parts. And so for four days in a row, I met with a team, and one of the teams was, for example, addressing the walk-in registrations or walk-in process, and...

24:12 Matt Waller: For registering for courses for the next semester.

24:14 Neal Dellett: Registering, yeah. And it's at... It's high attendance. A lot of people show up. It's unplanned. I've got these 10 different issues and I need to address it now. And that's the walk-in process.

24:28 Matt Waller: Hundreds of students were in the halls.

24:30 Neal Dellett: Yeah, exactly. And so what this group did was we had two to three advisors in the room, and we had four to six students, and we mapped out what the process of walk-in was all about. And then we also had everybody on the team identify, "Well, what are the issues?" So for example, they're not using the sign-in system, they're not giving us any notice on when they step in my room to be advised, what kind of issue are they... Do they need help with? Do they even need to have an appointment, or can they have a frequently asked questions section that could answer their problem? And I think with this team, identified that potentially 40% of the students showing up could get their issue resolved without ever talking to an advisor. It's through, "Go look at this link on the website, go look at this." So it's out there already, the information is, to solve their question or answer their problem, but they don't know about it or they don't know where to look. And so that was an opportunity for improvement, it was to knock out 40% of the walk-ins right off the bat.

25:33 Neal Dellett: And I know Jeff is... Jeff and his team, they've looked at the feedback that came back from the students, and they have walk-ins coming up pretty quickly, and they're gonna take a lot of those key learnings and apply those, and then measure their impact of the results. That's one of the things that it's great to see the students involved and they're coming up with ideas but then, they also have to bounce them off the advisors to see, "Are these realistic examples?" 'Cause you're dealing with software, and how hard is it to modify the software. And they got some really quick answers. They pulled in resources from outside the group. And some people are like, "Yeah, we could easily do that." And they actually did some benchmarking across the university as well, looking at the other colleges to see, "Well, how do you do walk-ins?"

26:18 Matt Waller: This is really interesting because students have a vested interest in this. They want these processes to work quickly, smoothly, efficiently, effectively, and they've all experienced it. So by the time they're taking this course, because most of these students, I would think, in that course, are juniors and seniors.

26:37 Neal Dellett: That's correct.

26:38 Matt Waller: And so, did you team-teach that with Brian, or how did that work?

26:42 Neal Dellett: Yeah, I came in and did the mapping out of the flowcharts, and identifying the defects, and helping them get started on it. And then about a month later, I came back and they did a presentation just to start talking about what are the initial learnings they got, what are the actions that they're gonna do. One of the classes, they presented to me, and I gave feedback on that. And one of the common items to look at was, "Well, how are you measuring success? You were given a task to improve this process. What's your baseline? What are the things that you're gonna go do? And how are you going to get data that shows whether you improved the process or not?" 'Cause as you said, they're all juniors and seniors, they're getting ready to go do... Get full-time jobs. And their manager or their first boss is gonna say, "I want you to go fix this," and they're gonna need to know, "Well, where is it today? And how do you get to root cause on issues and eliminate those so that you can improve the result?" So it's something that I've done. I think this is the third class that I've helped with at the UofA where the professors led it, and I came in and helped out. The very first one I did was with Dr. Kent, and we did it on OSA with a retailer.

27:53 Matt Waller: OSA stands for?

27:57 Neal Dellett: On-Shelf Availability. And we actually, the class, this was one of my favorite because we went to this retailer and the first week, the students participated in unloading trucks coming into the stores. The second week, they participated in stocking shelves at 10 o'clock at night. The third week, they looked at out-of-stocks on the shelf and then tried to understand what the reasons were. And at the end of the class, we actually went to the retailer and did a presentation in front of 30 people at the retailer. Personally, I was really proud of the students because after they've done their presentation, they were getting questions. And how do the students in the class... If somebody asked a question, you'd see 12 hands go up to answer this question immediately. And it was because they went and did the work, they experienced, and it was hands-on with a real-world solution, versus a case study or just something that they were given a PowerPoint presentation. So that's where it really feels like the learning really locks in and they really understand it when they actually have to go do it.

29:00 Matt Waller: No question about it. Yeah, I would think a company that has, I don't know, this is a research question, but I would think of a company implemented continuous improvement across the board, it would probably lower their turnover because people would be feeling more accomplishment, and they would be making their processes better to live with and work with on a day-to-day basis.

29:20 Neal Dellett: Yeah, exactly. And that's... There's a book, I think it's called If It's Not Broke, Break It. And it talks about the things that people have to have as a part of their job. And one of the things that they wanna have that's a base level is, "Oh, I need the tools to make me successful in the job, and I need the ownership of the results to make me feel like I'm making a difference." And those are... And if you don't have those two things, you have retention issues and you have turnover because people don't feel like, "I'm not giving what I need to succeed and... " And that's one of the things that when you look at turnover, the the more skills you build in people, the better, the more ownership that you give them, the better they feel about their job.

30:03 Neal Dellett: One of the things that... When I worked at Procter & Gamble, if you walked into a manufacturing plant, everybody in the plant had to be either an equipment or a system owner. You could point to different people and say, "What do you own?" And they would tell you exactly what they owned. So they were basically result owners and business owners. And it was a part of their high-performance work system, so you could go all the way from the objectives of the plant manager down to any employee in the plant and you could say, "What are you working on that works toward objective number one?" And that person can tell you.

30:40 Neal Dellett: So as you talk about the future of business and using continuous improvement, I basically would go to a company and say, "How... What is your strategy? How do you measure it? And how are you linking 100% of your employees to that strategy?" And once you've done that, people start to feel really good about ownership of the results and what they're doing in their work. And if something's broke, then they feel like they're a part of the solution. They'll be able to help fix that, which then gives people... It's that the internal satisfaction of doing something and making a change that really made a difference at your work. That's part of the whole continuous improvement cycle is, "How does the organization sets its goals? How do you understand what your key measures are? And then wherever you have issues, what tools like process improvement, problem-solving, value stream mapping, how do you use those tools to go solve those issues by utilizing all your people and making them... Building their capability and making them feel like owners in the business?" And to me, that's where the strongest organizations play, and it leads to lower numbers from people leaving.

31:46 Matt Waller: So looking at the future, I would think that there's lots of innovation occurring, lots of disruption. When new companies are formed, and you've got a lot of morphing going on 'cause you try to... A company starts or a company introduces a new product or service, they get feedback from customers and so, they have to keep modifying it. Then they start coming up with business models that they have to modify to get the business models right, and then they start scaling. And I think that a lot of times, entrepreneurial organizations, whether they'd be big companies or startups, when they get to that scaling phase, that's when they really need this in a big way because you gotta put processes in place if you wanna scale or it's gonna be very inefficient. You might scale the wrong things, the wrong processes that aren't scalable, and you could spend a lot of money and not get there. But that takes a big pivot from a mindset, not just from a product or service offering. How do you drive that kind of a mindset change?

32:58 Neal Dellett: Well, one of the things that you focused on was innovation. And there's all this innovation going on and I consider... I always talk about a two-prong approach. You have to have innovation to stay on what are the latest trends and what are the things that your customers and your consumers need and want. At the same time, you mentioned once you've achieved that level of innovation and it's in place, you have to have systems and processes and people that could run those processes in place to maintain it. Because what you're wanting to do is to continually innovate, but what you have to do is once you've had that S-curve and you're at the plateau, now, you need processes in place to maintain the result, so while you're coming up with the next innovation, which could be a year out, year-and-a-half out, you need to continually improve and continue to get gains in your results before you come out with the next innovation. And that's where, at least in my experience with my previous company, they did great on innovation, coming out with new products and processes, but they also were very strong in the continuous improvement work.

34:05 Neal Dellett: When I worked in a manufacturing plant, I'll use our budgeting process as an example. If we spent a dollar this year, next year, our goal was $0.97. And so you didn't, at the start of the year, you didn't know how you're gonna get it, but what you had to do is identify losses and opportunities for improvement, and drive those losses out because at the end of the year, you're expected to spend $0.97. And so you had that... That's not huge step change, but to be told that you're gonna be go down... You're going down in budget every single year, that puts you in that mindset of the continuous improvement of, "There's all kinds of losses out here." In my company, I was working in the total quality, total productive maintenance, high-performance work system environment for 25 years, and we were continuing to turn out millions and millions of dollars of savings on base business. And so as the innovation came out, you actually take that lens of continuous improvement and you apply it to the innovation before it ever comes out because you know when you roll it out, you're gonna have certain kinds of issues. Well, why don't you fix those before you ever roll it out? That way, you don't have to go back and eliminate those losses. So innovation is important, but continuous improvement is important to maintain the game.

35:22 Matt Waller: I even wonder, if you think about it, the morphing process, the pivoting process of an entrepreneur or an entrepreneurial company. They come out with a new product or service, they introduce it to the market. One key to success, maybe the most important key to success is customer feedback. "What do you like about this? What do you not like about it?" And then incorporating that into the product or service. I would think there's probably an opportunity to develop a process for doing that.

35:56 Neal Dellett: There is a front-end engineering, is an example, where they take, if you're gonna use the car example, "What are all the things that have gone wrong with the car in the first year? And let's plow that back into the design phase. Let's take all that feedback so when we design the next model," which they typically go three-year... Turn out a new model every three, four years, they take all that feedback that they're getting and design it in. And that's one of the elements of what Toyota taught us, was, is that early equipment management is what they called it, but it's really taking all that feedback and putting it in the design so you have clean design. So when you're cleaning up on around spills and things, it's easy to clean, so you don't have to spend time doing that, that you have in containment of issues. So that's an example that Toyota is really good at, is taking all that feedback from customers and plowing it into design to make the next model even better so that when they start to get feedback again, they're not getting the same kind of feedback year after year.

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36:55 Matt Waller: Neal, thank you so much for joining me and talking about this really important concept, both for productivity and quality, but also for innovation.

37:04 Neal Dellett: Well, thank you very much for inviting me to come over here. I really enjoyed it.

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37:10 Matt Waller: Thanks for listening to today's episode of Be EPIC Podcast from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us wherever you find your podcasts. Be sure to subscribe and rate us. You can find current and past episodes by searching "beepicpodcast," one word, that's B-E-E-P-I-C podcast. And now, Be epic.

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Matt WallerMatthew A. Waller is the dean of the Sam M. Walton College of Business, Sam M. Walton Leadership Chair and professor of supply chain management. He is also the host for the Be EPIC Podcast for Walton College.

 

Walton College's EPIC values -- Excellence, Professionalism, Innovation and Collegiality -- are the heart of Dean Waller’s podcast. Since the beginning of the series, Waller has interviewed business professionals, industry experts, CEOs and Walton College students to bring listeners first-hand accounts directly from the entrepreneurial world.

 

Waller is an SEC Academic Leadership Fellow and coauthor of “The Definitive Guide to Inventory Management: Principles and Strategies for the Efficient Flow of Inventory across the Supply Chain,” published by Pearson Education. He is the former co-editor-in-chief of Journal of Business Logistics. His opinion pieces have appeared in Wall Street Journal Asia and Financial Times.

 

Waller received an M.S. and Ph.D. from Pennsylvania State University and a B.S.B.A., summa cum laude, from the University of Missouri.





Walton College

Walton College of Business

Since its founding at the University of Arkansas in 1926, the Sam M. Walton College of Business has grown to become the state's premier college of business – as well as a nationally competitive business school. Learn more...

Be Epic Podcast

We're sitting down with innovators and business mavericks to discuss strategy, leadership and entrepreneurship. The Be EPIC Podcast is hosted by Matthew Waller, dean of the Sam M. Walton College of Business at the University of Arkansas. Learn more...

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