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Tuesday, December 1, 2015

The Iceberg of Ignorance Meets Transformational Management by Walking Around

The Iceberg of Ignorance MeetsTransformational Management by Walking Around

In 1989, Sidney Yoshida conducted a study which found that the top level of management was only aware of 4% of the problems in the company. The lower one goes in the hierarchy of leadership, the more that level knows about the problems in the company.

The study found that 9% of the problems were known to general supervisors, 74% were known to supervisors, and 100% of the problems were known to the line-level employees.

The study was named The Iceberg of Ignorance, the thought being that problems within a company are like an iceberg. Only a little bit of an iceberg can be seen above the water line. In a company, only a few of the problems can be seen from the top.

Transformational Management by Walking Around is a new name for an old style of management.  Often we see business consultants slap a new name on an old idea and try to sell the repackaged old idea as something new and innovative.

Proponents of the new Transformational Management by Walking Around insist that their way is new because there is a specific purpose behind the walking around.  Does anyone doubt that every one of the managers of old had a purpose behind their walking around?

In his book How to Win Friends & Influence People, Dale Carnegie told his readers about a time when John Wanamaker was making one of his regular walks through the store and he saw a customer waiting while employees stood nearby shooting the breeze with one another.

John Wanamaker slipped behind the counter and waited on the customer himself.  He handed the woman’s package to the salespeople to wrap when he finished the sale.  No words were needed.

Another example in the book How to Win Friends and Influence People is where Dale Carnegie writes about when Charles M. Schwab increased production in one of his mills by an act he performed while walking about. 

On a visit to one of the mills under his management, Schwab asked the mill manager why their production was so far behind that of other mills.  The manager told Schwab he could not beg or threaten the men to produce more. 

Schwab asked one of the people standing around how many heats they made that day. The man responded they made six.  Schwab took a piece of chalk and marked a great big 6 on the mill floor.  The night shift was coming on about that time and they wanted to know what the 6 was all about.

The next morning the night crew marked out the 6 and replaced it with a 7.  They were not going to be outdone by the day crew.  Each shift the number got higher, all because the boss was watching and they did not want to be outdone by the previous shift.

In the book, In Search of Excellence, Peters and Waterman tell of managers using the technique of walking about within their companies and keeping an eye on things within the company. 

Sam Walton had his own version of Management by Walking Around, which he called Management by Walking About, according to In Search of Excellence.

In Walton’s book Sam Walton: Made In America, he renamed his management approach Management by Walking and Flying Around since he was a pilot and used his plane to visit many of his stores.

Legend has it that “Mr. Sam”, as he was referred to by most of his employees, would show up on the loading docks at night and hitch a ride with Wal-Mart truck drivers. 

Mr. Sam learned that truck drivers had a pretty good idea of what was going on in each store and they had multiple stores by which to make a comparison.

An interesting side note: The Great A&P (The Atlantic and Pacific Tea Company) was once seen as the 500 pound Gorilla that Wal-Mart is now.  

From 1915 to 1965 A & P was the largest company in the world. And from 1915 to 1975 it was the largest retailer in the world. 

Through a series of miss steps, just like Walmart is making now, A&P is now out of business.  

In more recent history, Sears, Roebuck and Company was also once the world's largest retailer. Now it is a has been with very little hope of coming back, or even surviving. 

This Management by Walking Around was a real method of learning what was going on in a company. This is as opposed to what we see on such alleged reality shows like Undercover Boss
where each CEO has to cry at least once during the show or viewers apparently feel cheated.

Until recently, I thought that Walmart had lost the old Wal~Mart ways and was too big to practice MBWA.  However, I have seen at least one new manager expressing the feeling of the old Wal~Mart way by practicing a little of the old MBWA. 

I don’t know about the managers in all Walmart stores, but the new manager in my local store is there, on the floor, very often making sure everything is the way it should be.  And, for the most part, he appears to listen to his customers.

This is in keeping with the way Mr. Sam was taught.  Mr. Sam was impressed when he met Mr. J. C. Penny, who taught him how to wrap a package neatly while using a minimum of string and paper.

So, how does Management by Walking Around work?  Surely one doesn’t just walk through the business and abracadabra, poof, the business succeeds.  In a sense, it is that easy, but in another sense it is more involved than that.

The best way for the manager to learn what is actually going on in the company is to speak with the people who are actually on the front line.  They know better what is going on in the company than upper level management.

In the book, The Customer-Driven Company: Moving from Talk to Action, Richard C. Whitley talks about the ServiceMaster Company. It tells us that Allan C. Emery, Jr., was a prosperous wool trader who closed his business and invested in a ServiceMaster franchise. 

The training he went through required that he perform all tasks associated with a Servicemaster franchise. He learned from the ground up what problems and challenges his future employees would face.

Any company seeking to be the best it could be would require all top level managers from the CEO down to spend time in the field actually performing the tasks involved with the company.

In a perfect Wal-Mart, you would see the chief executives behind the deli case or pushing a pallet jack through the store with no fanfare. Not as a photo op for the annual report, but as a means of really finding out what goes on in a Wal-Mart.

It would seem that Sam Walton had the right idea when he wandered around at Wal-Mart. Perhaps Walmart wouldn’t leave so much money on the table if the powers that be would be in at least one store every day.

If before one could sit in the C-suite, they had to work in each line-level job there was, they would have a better understanding of what was going on in the stores.

When the front line employees see what upper level management pays attention to, they tend to focus their efforts in the areas that seem most appropriate.  The term “What gets measured, gets done” is very true.  Another way of saying this is employees pay attention to the things they know the boss will pay attention to.

In the end, Management by Walking Around is not just a quick walk through of a plant or store.  It is an actual fact-finding tour of operations to see how things are actually done at the lowest levels in the company.  The boss learns what is working, what isn’t, and how best to support the front line employees in accomplishing their tasks.

Management by Walking Around is a great way to melt the iceberg of ignorance.

This is what makes great companies great.  Many of the companies that were built on the principle of Management by Walking Around reached great levels of success.  When the company took their collective eye off the ball, many slid into oblivion.


The opinions or advice listed in this blog or website should be used as a place to start only. It is not a substitute for the use of a professional.

Please be sure to consult your attorney and/or accountant with any specific questions.

There is no one right answer to any business question that will cover all circumstances.

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