Lessons on Operational Excellence Leadership

As manufacturers face ongoing disruption to global supply chains, unprecedented fluctuations in customer demand and critical supply shortages, operational excellence has become a mandate – not an option. But, in this era of transformational change, what does it mean to be operationally excellent?  

It requires starting with your company culture and your people says Matt DiGeronimo, Plant General Manager at International Paper, one of the world’s largest manufacturers and producer of fibre-based packaging, pulp and paper. Asking hard questions, being brutally honest and anticipating human error are critical to establishing operational excellence, he explains.  

Matt is an operations executive, co-author of “Extreme Operational Excellence,” and a retired US Naval Officer. 

In this interview, he talks to IX Network about why culture holds the key to operational excellence and what manufacturing organizations can learn from the US Navy.  

Diana Davis, IX Network:  I understand that prior to your more recent operational roles you had a job that not everyone can lay claim to: operating a nuclear submarine in the US Navy. What do you see as the parallel between leading in the navy and leading on the manufacturing plant floor? 

Matthew DiGeronimo: There's actually a surprising number of similarities. Let’s start with a little background. A United States submarine is composed of about 150 people with an average age of around 25 years old. It’s a highly technical, high-risk environment with almost no tolerance for error. 

But it’s also or revolving door of folks because it's not reasonable to assume that anyone could spend 20 or 30 years on a nuclear submarine. Our assignments are generally limited to two to three years. So even the most senior person on the submarine has only been on that particular submarine for a couple of years.  

Yet, notwithstanding those constraints, we have a zero-defect requirement to maintain mission readiness and operational excellence and safety.  

The stakes are a little bit lower in the civilian sector, but we still have similarities. We’re seeing a retiring workforce and people who are relatively junior enter into the workforce.

There's also a higher turnover; it’s more common to have a workforce that is tenured in the three to four years of experience versus the 20 to 30 years of experience of a decade or so ago. We also have the desire for operational excellence and minimizing defects and untoward events.  

I'd be remiss if I didn't quickly mention some differences. The nuclear submarine is a closed system. Once those hatches close and the submarine goes out to sea, there's very little external influence on the system of a nuclear submarine. Psychologically that is challenging, but it has organizational benefits. Your workforce is constant.  

The other thing I would mention is that the United States Navy spends a lot of time and money training people before they ever step foot on a submarine. 

I spent about a year and a half and training before I got on my first submarine. That training pipeline not only prepares individuals for submarine operations, but it also serves as a filter to weed out folks who may not be a cultural fit. That's a luxury that the United States Navy has that most organizations could never afford.  

Diana Davis, IX Network:  Are there examples of how you've been able to leverage the experience you had in the Navy while running your plant? 

Matthew DiGeronimo: There are some basic principles that underpin the operation of a nuclear submarine in the United States Navy.

The United States Nuclear Navy is a learning organization. A principle of nuclear submariners is that you're always striving to be better; striving to learn from your mistakes.

That requires brutal honesty in the wake of an untoward event or near miss. In a postmortem environment you need to analyse what went wrong, what went right and what can we learn and how we are going to be better.  

I’ve found that approach is near the top of the list of the things that I bring to the organizations that I've been a part of since I retired from the Navy. My experience has been that not every organization or team trusts management to the extent or to the level that is required for those types of learning processes to be effective. 

I've seen instances where all the right tools are in place to learn, but the culture isn't there. If the culture is not there, then the tools are not worth much.

You really need to establish trust and have people see the benefits of a real “learning event,” as I call them. 

I’ll give you an example. I was a plant general manager of a power plant in Kansas City. In the middle of winter there was a chemical that was added to our steam system. That additive had frozen over in transit and crystallized. The plant manager reported to me that ‘hey, we have a problem with one of our vendors. They didn't control the temperature of this in transit and we need to do something about it’. 

It would have been very easy and maybe even intuitive to just leave it at that - to pick up the phone, give the vendor a piece of my mind and then move on with life. 

But, it's been my experience that rarely things are as they seem. We're going to take the time to learn from things, even when we think there's nothing to learn. 

In this instance, I got my team together and said, ‘let's talk about this because I really want to understand what happened and why it happened’. We ended up learning quite a bit about the organization.  

It took us close to 36 hours to realize these chemical chemicals had crystallized. So I pushed a bit: why did it take us 36 hours? They said, ‘it took a while for the chemical feed pump to get mucked up’.  I said ‘let me see, let's take a look at the logs.’ It turned out that our operators recorded the level of the chemical additive tank every hour. But because the chemicals were so crystallized, that level of the tank didn't go down at all. Yet that wasn't noticed by anyone for 36 hours.  

I said to the team that ‘we log things for a reason. We do it so we can identify that things are operating as they should be. This is a perfect example of why we log things; someone could have recognized that there was a problem within the first couple hours.’ 

This wasn't punitive. We weren’t trying to punish those who were taking the logs. Instead, we were able to identify a gap between who we are compared to who we want to be. We want to be a thoughtful, inquisitive organization that has a questioning attitude when faced with data.  

It's not easy to make the time for these types of events. It always feels like there are too many other things to do.  

But it really moves the needle towards operational excellence when you take the time to honestly assess events without assuming you know all the details, asking hard questions and then being brutally honest with what the answers to those questions reveal about the organization. 

Diana Davis, IX Network:  How do you establish that culture of trust so that people will open up to you and not feel like they're going to be blamed? 

Matthew DiGeronimo: It's certainly not easy. Ultimately, the character of your leadership results in trust. When you combine character with capability that results in respect. And if you combine, trust plus respect you can then develop a culture where people understand that they’re not in punitive environment.  

The principle that I learned in the submarine force and the one that I try to establish in my roles since then has been that nobody comes to work wanting to mess up that day.

Nobody comes to work and says, ‘I can't wait to violate company procedure and screw something up.’ The entering argument has to be that we have hired people who want to do a good job. If there's a failure, it is most likely in the organization's processes and leadership.  

The reason I say that is this: as long as organizations are made up of human beings, human beings will make mistakes.

Therefore, mistakes in an organization will be made. 

To say something as simple as that sounds obvious, right? 

It shouldn't surprise us when people make mistakes. The organization should have processes and procedures in place that create a buffer so that when an individual makes a mistake, it doesn't necessarily result in an untoward event for an organization.  

When an untoward event happens, the question is what do we have to do going forward? As your people start to see a couple examples of where you could have pointed the finger and you, instead, changed the way the organization operates, you start to gain trust. 

Then, you combine that with the character of authenticity and vulnerability and transparency of leaders. In time I believe this can develop a culture where everybody can buy into a culture of continuous improvement and operational excellence. 

Diana Davis, IX Network:  Lots of organizations can agree on a definition of what operational excellence is. But the reality of how we all approach really varies from company to company. What does it look like at your facility? 

At our facility it’s about a journey. It's about how we as a facility - as a team - are focused on providing our customers the best possible product with the best service. It’s knowing that each day we can be better than the previous day. That takes not only a commitment to high standards, but it also takes a commitment to brutal honesty, and it takes a commitment of being willing to question the status quo.  

A questioning attitude is at the heart of operational excellence. Let's ask the hard questions, even if we think we know the answer. And let’s get used to assuming that the status quo can be approved upon. 

I'm not saying that we want to change just for the sake of change. I mean, a constant day-to-day commitment to saying, ‘hey, why do we do it that way? And is there a better way to do it?’ 

The really valuable answers to those questions exist at the base of the organizational chart - not at the top. Those are the key elements that I try to drive home in any organization that I'm privileged to lead. 

Diana Davis, IX Network:  You've touched on this in your earlier answers, but I wondered if you could elaborate on why you think that culture and people are the keys to achieving operational excellence? 

Matthew DiGeronimo: We live in a world where the biggest limiting factor or, conversely, our biggest opportunity, remains a human one. In the most technical environments that I've been in I have found that the human element remains the element with the most variability. You can't program away human variability in your organization. You just can't do it.  

Ultimately, what we're looking for when we talk about operational excellence is sustained superior performance.

That assumes that you are getting rid of variability in ups and downs and peaks and valleys; human error, in my opinion, represents the largest variable that any organization has to deal with. 

Diana Davis, IX Network:  To say it's been a turbulent few years for manufacturing is probably a bit of an understatement. What do you predict will be the key operational challenges for next year that your facility will face? 

Matthew DiGeronimo:  We've seen a significant labour shortage in the marketplace and that labour force is becoming more demanding. Not just in terms of wages, but more demanding of companies and of management.

Rightfully so.

The days of the Industrial Revolution mindset – the ‘hey, here's a manufacturing job and you should be happy to have it. Now shut up and go do your work’ - are over.  

I recognize there are other elements and variables that contribute to the labour shortage but the one that we can control is to give people a reason above and beyond the dollar sign to join us.  

I truly believe that everybody wants to be part of a winning team.  Younger generations, in particular, are demanding an environment that's different than their parents demanded. It's been my observation that many organizations are slow to realize this. 

I'm energized by this opportunity because I think we are on the precipice of an opportunity to redefine what it means to have an environment and a workplace that is magnetic and attracts people.  

That's the challenge that I see that we can control.  

It is something that I think leadership needs to address. It needs to recognize that the operational excellence journey, the journey to safety, and the journey to higher reliability, is all hand in hand with creating a workplace where the team is more engaged and where the base of the pyramid is respected for their ideas and their ability to identify problems and bring solutions to them.