Our Conversations section features in-depth interviews with leading figures in business and risk management. Mark Siwik, founder of SandRun Risk, conducts this conversation with Dr. Robert Hall, Professor Emeritus of Operations Management, Kelley School of Business, Indiana University.
With a background in engineering and manufacturing at both Eli Lilly and Union Carbide, Hall taught undergraduate and MBA courses at Kelley Indianapolis from 1970 until his retirement in 2002. Hall is now chairman of the Compression Institute, an organization born out of his 2009 book, “Compression” which focuses on how to live better while using less natural resources. Hall received his Bachelor of Science degree in chemical engineering in 1959 (Rose-Hulman) and his master’s (1965) and doctorate (1972) in production management from Indiana University.
SandRun Risk (SR): Please share a little bit about your life and journey and how you came to work in operations and production management.
Dr. Robert Hall (RH): My experience with “manufacturing” began as a teenager for two summers in the little shop of Ed Tetzel in Terre Haute, Indiana. He was 75; I was 15. A big electric motor drove a shaft down the floor of the place, from which belts turned the machines. It was a relic of the 1890s. Ed did guns, locks, safes, and anything somebody technically challenged him to do. I opened the shop in the mornings, did his heavy lifting, any minimal skill work, and served as the butt of many jokes. Many of the jokes were “learning experiences” – like welding aluminum with a blow torch is not a great idea.
I graduated from Rose-Hulman Institute of Technology in 1959 with a degree in Chemical Engineering, after two summers working for large manufacturers. The intent of my first job with Eli Lilly was to fill in behind experienced engineers designing a polio vaccine process, but the vaccine failed to pass muster, and I was told I could help improve manufacturing in industrial engineering. That opened exposure to all kinds of processes, from formulation to distribution. I was hooked.
I switched to Union Carbide polymer sheeting, mostly polyethylene, until that division was sold to a company that squeezed it hard as a cash cow. Friends told me that if I wanted to do more than manufacturing engineering, I should get an MBA. I entered the program at Indiana University in Production Management, and that began an academic career of sorts. Not really enjoying the model building of quantitative theorists, much of my 33-year academic time was with practitioners.
SR: What people and experiences had the greatest impact on your career and why?
RH: Besides my parents, an influential guy was Ed Tetzel, the geezer with the belt-driven shop that I was telling you about. He had me reading all kinds of stuff, some technical; some not; an education unlike high school. And he told me to go to Rose-Hulman, get out of there and never come back.
The second influencer was Art Weimer who I worked with while getting my MBA and then my doctorate. Art was my boss at ARAC, a technical information research institute that served industrial R&D organizations. Art had been dean of the school of business at Indiana University for 25 years and retired from that job, taking on the institute for which I worked. Art talked me into becoming a professor. He was also a management mentor when I became the operations director of the institute. His advice then if an employee wasn’t working out, “Find a job for them somewhere else, encourage them to better themselves by taking it, and thereby strengthen both organizations.”
The third influencer was Jinichiro Nakane (Jim), a professor at Waseda University, Tokyo, and friend of Fujio Cho who became the CEO of Toyota. He regularly brought Japanese industry people to the U.S. to tour U.S. factories in the 1970s, and I escorted some of them on tours. His description of the Toyota Production System was intriguing, and he invited me to Japan; first time in 1979. It immediately became obvious that unless American manufacturing countered this system, the Japanese would eat our lunch. He became my primary sensei on what’s now called lean operations, and he was very insightful. He saw weaknesses as well as strengths.
The most interesting part of the lean learning was not the techniques; everybody began picking those up. The key was how people think, basic approach to logic, and basic approach to winning enthusiasm of people. We had a lot of long conversations with Japanese execs on “business culture.” Jim was a critic of Toyota, as well as cheerleader. (In the 1990s Jim’s opinion was that Japanese industry was losing its way; it had become too big, too bureaucratic, too much guided by money, and had not developed to be technically innovative enough. He began working with small-to-medium companies that created technological niches. That’s where the action and the future lay.)
SR: Looking back on your career, what professional values or principles are most important to you and how did these values influence your work?
RH: Usually, you are not consciously guided by principles unless a major decision must be made. That has been true for me. But looking back there were three:
1. Don’t pursue anything single-mindedly. Don’t chase the money. Don’t hitch your wagon to just one idea of excellence. Take as broad a view as you can of the consequences of actions.
For example, I was twice invited to leave academia to work for investors turning a manufacturing company around (with lean), and in three years we would cash out – sell the joint. I found the idea repellent. Why? Because from Day 1 my intent would be to build up the workers only to sell them out. Soon they would sense that too, if they were not suspicious when I walked in the door.
Likewise, I’ve never been a lean consultant. I’ve offered advice, but in the last 30 years, not for pay. If you write cases and stories, and judge prizes, it’s too hard to avoid conflict of interest. Instead, try to “call them like it is.”
2. For at least 40 years, I’ve been aware of the dangers of excess production, consumption, and profligate use (and disposal) of chemicals. Always ask, “Where does all this stuff go, and what does it do after it gets there? Today, we’ve reduced a lot of cosmetic pollution. Many places are not as ugly; but that does not mean that hazards have gone away; unseen, they may be worse. My daughter at age 8 had a wonderful expression to describe this, “It’s real easy to unsmart yourself.”
3. Try to do the right thing and don’t worry about being popular or prosperous. So far that has not made me a social outcast or dependent on food stamps.
SR: You were one of the first examiners for the Malcolm Baldridge National Quality Award and a judge for the Pace Award (for innovation among auto industry suppliers). What are some of your favorite memories from these experiences?
RH: I was in the first wave of examiners 1988-1991, when the criteria were being adjusted. No company I examined became a winner; well done, but no cigar. Being an examiner was and is an opportunity to ask probing questions that ordinarily turn managers stone faced. The criteria pry into almost every area of a company. You sign a confidentiality agreement.
The Award process was well designed from the get-go. We had three days of exercises to calibrate our judgments to the criteria; good learning experience for all examiners. On-site examinations were fun. Judges working out a consensus feedback report for each company was less fun, and time consuming, but the feedback is why any company should apply. The feedback tells you what your next stage of advance should be, area by area.
As an examiner I met great people and once went to the White House for an award ceremony. There I met Joe Juran; interesting conversation. He and Deming were struggling past a life-long tiff. Joe regarded Deming as a statistician with too little operative experience. Joe favored the Baldrige Award; Deming wanted nothing to do with it. And so it went.
The first criteria were too lengthy and complicated, which added to the judging load. In two years’ time, criteria dropped from 44 categories to 28, I believe; much better. But what I remember years later was writing the stories of several winners for Target, a publication of the Association for Manufacturing Excellence. The contrast in effort spent on applications was huge. For example, Xerox assigned an army to work up a slick looking app; after all, image was the heart of their business model (they also won). However, at pint-sized Globe Metallurgical, another winner, a single preparer put the app together on a Mac home computer over a weekend. Plain Jane to read, but the performance was great, so it was an easy story to tell.
Where were the holes in the original Baldrige criteria? Finance was one. One of the early winners went bankrupt within a year. Great quality products and service, but customers didn’t pay. Another weakness was light treatment of innovation.
By contrast, the PACE Award for Innovation by Auto Suppliers centers on innovation. It’s sponsored by Automotive News. A brilliant idea is not enough. Judging calls on your engineering experience, but the hard calls are more subjective. A winner has to demonstrate that their innovation is used in practice, or sold in a market, and that that it is stirring change in the industry. It’s beyond being “bigger and better” or a nifty engineering adventure that will never affect a driver on the road.
What we really looked for is “platform innovation,” a change that other innovation could build on. For example, JCI’s Homelink, digitally connecting your home to your car, was prophetic, but at the time hard to explain to the public as anything more than an improved garage door opener. Another was Timken’s high purity casting, free of almost all inclusions or porosity. Not having to allow for these flaws when designing helps make 10-speed transmissions possible, and high-speed four-banger engines that rival the horsepower of yesteryear’s lazy eight engines.
The PACE Award began in 1992, kicked off by Lee Sage, who was also the first president of the Association for Manufacturing Excellence. Over 18 years, three trends were obvious. One is that since the early 90s, the industry is ever more dependent on supplier innovation, some right out of the blue. For example, a computer gaming company was a co-winner for devising image rotation software for automotive displays. Today, suppliers are innovation partners. The big auto companies can’t support either the financial load or the human talent staffing required. Indeed, if just the supplier innovations of the past 15 or so years were all applied in a single sedan design, the vehicle should easily get 56 mpg without being hybrid.
Second, the march toward autos being rolling computers seemed fast from the outside, but slow from the inside. An ordinary car today has at least 15-20 controller boards and at least 10 million lines of code. It became common to meet an innovation team consisting over half of software engineers. Integrating this code zoo is a major effort. Today if a design, hardware and software, will not pass computer simulation tests, there’s no point building a physical prototype. Putting it all together in a quality package is well beyond yesterday too. A 1960s all-mechanical design is like assembling Lego blocks compared with today. (I used to stand next to the engine under 1960s pickup hoods. Now the engine compartment is stuffed, but the vehicle is lighter.)
Third, collaboration in design is mandatory to make anything happen. Management has slowly caught on to this, but useless competitive rivalry, inside companies and between them, is a major impediment to innovation. We need a different kind of innovative inspiration.
And changes in the auto industry so far are but a warm up. Within 10 years the players and the business models will be totally different. PACE should give an award for business model innovation. That’s where the driverless, on-demand action is going to be. And hopefully the motivations for the business models will be substantially different.
SR: What three or four books would you recommend that every business leader should be familiar with?
RH: I don’t give much advice on specific books. Most ops-oriented managers like those old classics, Steve Covey’s Seven Habits and Goldratt’s The Goal. Most like relatively easy reads and formulas that help manage better with little modification of their current paradigms.
To anyone interested, I suggest cultivating reading or videoing in areas that provoke different perspectives. Compression might be one. Right now, for example, I’m reading Capitalist Realism by Mark Fisher, a critique of the present economic system by a guy whose interests were deep theme movies and weird pop music. He became so depressed that he committed suicide. What did this guy sense that business types don’t, and why did he obsess so much about it?