7 Lessons American Manufacturing's Decline Can Teach Any Company

The United States destroyed its enemies in World War II because it out-produced them. Its manufacturing capacity was enormous and efficient. Its workforce was inspired and committed. The government, suppliers, and competitors all collaborated to produce the biggest manufacturing juggernaut the world had ever known. It seemed there was no end to America’s manufacturing might.

But there was.

The end to America being a manufacturing powerhouse began during the recession of 2008. Millions of middle-class manufacturing jobs were lost. And they never came back. In fact, since 1979, manufacturing employment has plummeted by over 33%. That is worse than the job losses during the Great Depression.

So what happened? How did the world’s mightiest manufacturing machine end up as the equivalent of room service to China? How did the nation with the workforce that won the war end up with a workforce outsourced to India? How did the most motivated, inspired, and productive workforce on the planet end up caring more about their bowling scores than their production numbers?

There is no shortage of explanations. Some experts claim China is to blame. Others cite United States trade policies. And still others say it is because of the rise of the Millennials.

However, very few people point to the real reason. And that is a failure of American leadership on an epic scale; a failure of government to work with manufacturing instead of against it; a failure of business to adapt to the global marketplace instead of running from it. But most of all, it is a failure of leadership to harness and unleash the remarkable potential of the American worker.

You can’t unleash this massive potential without creating a “culture by design, not default”. A culture by design has a bedrock of carefully selected company-wide values that motivates employees, delights customers, serves their communities and sparks innovation and creativity. But most companies have cultures “by default, not design”. They have what I call “bumper sticker” values. Bumper sticker values are created in boardrooms because they sound cool. But they don’t reflect the real, underlying values of the organization.

One has to look no further than the Wells Fargo bogus accounts debacle to illustrate this. Two of Wells Fargo’s key values are “ethics” and “what’s right for their customers”. And yet what they did was clearly neither. How can a company with those supposed ethics commit such an act? It can only be because while those values look good on a bumper sticker, the real, underlying values at Wells Fargo are “profit above all else”. Now don’t misunderstand me, profit has to be the number one goal. The problem with that as a core value, above all else is people will act that way. And when they do, relationships between employees and customers suffer, quality suffers, the books get cooked, and all other manner of bad outcomes.

That is why it is so important to build a culture by design. Cultures by design contain foundational values that drive organizational behavior toward remarkable outcomes. Cultures by default contain foundational values that drive organizational behavior toward bad outcomes.

The key point here is that you should choose values and not let values choose you. Here are some simple steps to get started:

1. Understand the values your organization currently has. Some, perhaps all, the values may be perfectly appropriate. Some may not be. But remember, the underlying values are probably different than the bumper sticker values. Conduct an anonymous survey of every single employee and ask them. Don’t make this a human resource exercise. It has to come right from the top to be taken seriously.

2. Once you know the underlying values of the organization, decide which ones are worth keeping, nourishing, and promoting and which ones need to be discarded. And then you and your senior leadership team can decide which new values need to be implemented. This is not a slogan exercise. It is a gut-wrenching soul-searching mission. Which values should you choose? It will be different in every company but you should choose values that drive organizational behavior toward remarkable outcomes. Don’t choose values that sound cool in the C-suite but stupid to employees. Choose values that everyone in the organization can get behind and feel good about. Sound like a tough job? It is. The last time I did this it took a year.

3. Declare to the organization the new values that have been chosen and why. If you have chosen well, people will applaud you when you tell them. If you have chosen poorly, you’ll be a water cooler joke. Be very deliberate and comprehensive when you announce the new values. Explain completely what each value means, why it was chosen, and what you expect from employees in terms of behavior to support the values.

4. Now comes the most crucial part. You must be certain your senior executives live these values day by day. You can’t expect “people from below to do what the top does not”. Some of your executives won’t go along with the new values. Ask them to leave the company. Yes, you read that right. One loose cannon on the values ship can scuttle the whole effort.

5. Align all organization policies and practices to support the new values. Make them part of performance appraisals, standards for promotions, and compensation increases. Don’t let this become a “check the box to keep human resources happy” exercise.

6. Once the values are firmly entrenched, don’t let anybody in the front door that doesn’t believe in them. Do a “values check” as part of the interview process.

7. And finally, this has to be a CEO initiative or it will fail. Think of this as a strategic culture plan, requiring years to execute, not months. And give it the same time, importance, attention, and resources as you do the strategic operating plan.

About the Author

Steven L. Blue is the President & CEO of Miller Ingenuity, a global supplier of mission-critical solutions in the transportation industry and author of the new book, American Manufacturing 2.0: What Went Wrong and How to Make It Right. For more information, please visit www.StevenLBlue.com, www.milleringenuity.com and connect with Blue on Twitter, @SteveBlueCEO.