The Magic of Self-Directed Work Teams: A Case Study in Courage and Culture Change

Palmes_Front-F.
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The Magic
of Self-Directed
Work Teams
A Case Study in
Courage and Culture Change
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The Magic
of Self-Directed
Work Teams
A Case Study in
Courage and Culture Change
Paul C. Palmes
ASQ Quality Press

Milwaukee, Wisconsin
American Society for Quality, Quality Press, Milwaukee, WI 53203

© 2006 by ASQ
All rights reserved. Published 2006.
Printed in the United States of America.
12 11 10 09 08 07 06 5 4 3 2 1
Library of Congress Cataloging-in-Publication Data
Palmes, Paul C., 1948-

The magic of self-directed work teams : a case study in courage and culture
change / Paul C. Palmes.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-87389-676-4
1. Self-directed work teams. 2. Total quality control. 3. Organizational change.
4. Corporate culture. 5. Northern Pipe Products Inc.--Case studies. I. Title.
HD66.P335 2006
658.4'022--dc22 2005035907
ISBN-13: 978-0-87389-676-4
ISBN: 0-87389-676-9
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Printed on acid-free paper

Contents
List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Preface: “It’s Always the Same…Or Is It?” . . . . . . . . . . . . . . . . . . . . . xi
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii
Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
Part I: The Old Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chapter 1: Welcome to Northern Pipe . . . . . . . . . . . . . . . . . . . 3
Chapter 2: Wrong Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Chapter 3: The Failure of Half Measures . . . . . . . . . . . . . . . . . 27
Part II: Out of the Darkness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Chapter 4: The A-Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Chapter 5: In Their Own Words . . . . . . . . . . . . . . . . . . . . . . . . 49
Part III: A New Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Chapter 6: There is No Plan B . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Chapter 7: Servant-Leaders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Chapter 8: Return on Investment . . . . . . . . . . . . . . . . . . . . . . . 83
Chapter 9: The Climb to the Top . . . . . . . . . . . . . . . . . . . . . . . . 89
Appendix: Quality Council Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
v
Figures
Figure 1.1 The Three-Tier System . . . . . . . . . . . . . . . . . . . . . . . 5

Figure 1.2 The Critical Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Figure 1.3 Worker Free Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Figure 1.4 The Four-Tier System. . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 2.1 Commitment and Change over Time . . . . . . . . . . 14

Figure 2.2 Letting Go . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Figure 3.1 Changing the Future . . . . . . . . . . . . . . . . . . . . . . . . 28
Figure 4.1 Necessity of Values, Vision, and Mission . . . . . . . 39

Figure 4.2 Lowest Hanging Fruit . . . . . . . . . . . . . . . . . . . . . . . 41
Figure 4.3 Letting Go . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Figure 7.1 The Process of Watering a Plant. . . . . . . . . . . . . . . 79
Figure 8.1 2000 Cost of (poor) Quality

Percentage Breakdown . . . . . . . . . . . . . . . . . . . . . . 84
Figure 8.2 2004 Cost of (poor) Quality
Percentage Breakdown . . . . . . . . . . . . . . . . . . . . . . 85
Figure 8.3 Cost of (poor) Quality as a
Percentage of Pound of Resin. . . . . . . . . . . . . . . . . 85
Figure 8.4 Conversion Efficiency . . . . . . . . . . . . . . . . . . . . . . . 86
Figure 8.5 Annual Efficiency Savings . . . . . . . . . . . . . . . . . . . 86
Figure 8.6 Pounds per Work Hour . . . . . . . . . . . . . . . . . . . . . . 87
vi
Foreword
F
eeling alive came naturally when we were kids—childhood is
a time when we live a life of learning and adventure as we
explore and master our worlds. We venture out bravely not
knowing the rules, adapt as we go, and have fun living out our
fantasies of being brave heroes and heroines who do good for others.
Somewhere along the way, conformity and compliance become the
rules—about the time we go to school, I imagine. From then on, most
of us sacrifice much of our courage and authenticity as we try to fit
in to be accepted by others in order to “succeed.”
As a college student at the University of Minnesota in the late
60s, I found part of that special energy in the love of study and
learning. I majored in sociology and psychology, and my school work
was my play. As a Secret Service agent who chased counterfeiters in
Chicago and protected presidents, vice presidents, and foreign
dignitaries around the world, I found more of the aliveness as I lived
a compelling mission and was a member of a great team. As a
recovering alcoholic for more than 30 years, I found power in the
12 Steps of Alcoholics Anonymous—a spiritual guide perfect for
leaders and followers alike in today’s chaotic world. I learned that
there are no quick fixes in life and that deep spiritual principles can
guide our lives better than rule books. In nine management positions
over 18 years at the Star Tribune newspaper in Minneapolis, I found
the strength of conviction, the power of truth, and the courage
required to live a value-driven life in a dysfunctional corporate world
where “inauthenticity” remains the first rule of survival and where
ethics are often an inconvenience. I learned to stand alone when
necessary. In my last leadership position, I led a 4500-employee
business unit through transformational change (a fundamental shift
of values, culture, and operating practices). When I left the corporate
world in 1994, the CEO of the company said my leadership had
vii
viii Foreword
changed the organization forever. I don’t know about that, but I was
certainly changed forever.
Now, with more than a decade of consulting experience, I realize
more than ever how difficult it is to lead change and how invested
many remain in ways of doing things that no longer bring forth the
results we want. Always on the lookout for what is genuine, I listened
to a group from Northern Pipe Products of Fargo, North Dakota as they
spoke at an ethics luncheon sponsored by The Center for Ethical
Leadership at Concordia College in Moorhead, Minnesota. They spoke
of their success in using new tools like self-managed work teams, open-
book management, and continuous learning, as well as the various tools
of the quality movement. Paul, the quality guy, was high energy and
exuded enthusiasm. Wayne, the president of the company, was humble,
soft-spoken, and easy to be around. Their colleague, Kristin, was being
prepared by them to lead in the future.
A few months later, I participated in a book discussion group led by
Paul, Wayne, and Kristin. At the end, Wayne invited me to visit the
company. We all met in the conference room with project leader Ken
Doggett. We talked with high energy for two hours, and they gave me
a tour of their plant. I thought, “These people are for real.” They are in
the midst of a special experience: It is evident in the way they talk, what
they talk about, their appreciation for the difficulty of true and
sustainable change, and the unwavering nature of their vision. They
have a grace and compassion about them, possessed by people in
pursuit of noble goals. They exude the quiet pride of true adventurers.
They have found their life’s work.
In the late 90s, the leaders of change at Northern Pipe Products
realized that the linear, mechanical process and quality tools of a
manufacturing plant were not the whole picture; they were embedded
in a living and dynamic system of high energy filled with creative
potential. Most of what is important in life is found in the grays that the
black-and-white “machine” model ignores. At Northern Pipe, the meta-
phor of the organization as a machine was replaced by the organization
as a dynamic system with a lot of machines in it.
The leaders at Northern Pipe Products still lead, but differently.
Instead of telling people what to do, they ask them questions and
provide them with information. They give employees time to be in
relationship together so the wisdom embedded in the system can
emerge. They give people freedom to make decisions and take action
about the work they do, while still holding them accountable. They
teach others how to do things for themselves and require them to do so.
Foreword ix
They listen instead of talking (well, Wayne listens; Paul loves to talk).
Most of all, they model the change they want to see in others.
The changes in employees at Northern Pipe were immediate and
obvious. Those who had been among the walking dead for years came
alive and made important new contributions. Leaders recognized
unnoticed talent in people. People took new initiative, and teams
performed great feats. The organization’s performance improved in
dramatic and unpredictable ways. Great employees now stick around
instead of quitting after hours or days on the job.
The courageous rebels and artists at Northern Pipe Products are at
the vanguard of organizational evolution. They rebel against the old
rules and create new forms to capitalize on human potential. But they
aren’t perfect. They know they will make mistakes as they march toward
their vision. They proceed with the confidence that they can learn and
adapt along the way. When they make a mistake, they say, “We are sorry.
Let’s fix it.” And then they move on with greater mutual trust.
As you read Northern Pipe’s story and learn from its journey, keep
in mind that you cannot copy what they did. You must take your own
journey; your personal and organizational reality is uniquely yours. You
can, however, learn about the process of change and many of the
experiences you can expect.
Why would anyone want to do this difficult and risky work?
Because we want to be truly human, we want meaning in our lives, and
we want a sustainable and safe world for all of our children. Venture out
bravely, make new rules, adapt as you go, and have fun living out your
fantasies of being heroes and heroines doing good for others. Should
you fail in a material sense, in a few years, no one will remember the
disappointment and at least the time spent will have been fulfilling. But
should you lack the courage to live your life’s adventure, you will regret
your cowardice for all of eternity. Which legacy do you want to leave?
Tom Heuerman, Ph.D.

aMoreNaturalWay.com
Preface
IT’S ALWAYS THE SAME

Eight men arrive at 11:45 to start their workday. They will be relieved
12 hours later by another group of eight men to round out a 24-hour day
of continuous PVC pipe production. Quarter to noon or fifteen minutes
to midnight, it makes no difference. Invariably, someone will be late, call
in sick or decide—either consciously or unconsciously—to self terminate
employment by simply not showing up for work. Tensions mount
throughout the crew as one or two normally reliable workers—people
with experience and capable of running a line on their own—are
uncharacteristically late. Each worker knows that if he doesn’t show up
soon, the night is sure to be that much harder on everyone.
As the minutes pass, the supervisor looks through performance
data of each line, from time to time talking to the outgoing supervisor
and taking an occasional reading or two. It’s all part of getting adjusted.
He’s thinking mostly about the potential “no-shows” and how he’s
going to operate the plant without them. The pipe doesn’t care who’s
working the line. It just keeps coming in a steady flow, as regular as
clockwork. Too bad the same isn’t true of the workers he needs to
manage the process during the next 12 hours. It’s always the same.
And where is that kid that started two weeks ago like a house of
fire? Nothing got in his way, and the rest of the crew was starting to
think he just might become the next regular member. He caught on fast
and had a way about him that made you feel like he was actually
enjoying the work. He’s not here yet and hasn’t called in. That’s not
good, not good at all.
Jack’s here, but that’s about it. Probably drunk or stoned. He’s
hiding it well enough, but it’s just his style to get a little high before he
drives into the parking lot. He’s in no shape to run Line 2, that’s for sure!
That small diameter needs watching, and it moves fast enough so that if
xi
xii Preface
he’s half in the bag, there’s no way he’ll be alert enough to do a good job
inspecting and palletizing. No, Jack’s going over to 1 or 3 for the
upcoming shift. Can’t get into too much trouble on either of those lines.
And we’ve got two temps for the night. One of those guys did a
pretty good job when he was here last week, so it’s not going to be
totally Babysitting 101. But it’s still two temps, one possible no-show,
and Jack with whatever chemicals he has working through his system.
It’s five minutes before start of shift, and everyone’s in the lounge
waiting to be told what line they’ve been assigned to for the next
12 hours. The supervisor reads their first names and the line number.
There’s not much else to say and less to discuss. What’s the point?
Nobody’s really going to be any better off than anyone else for the next
12 hours anyway.
“Pete, Line 4. Jerry, take 6. Brad, you’ve got 7, and do what you can
to help out Jerry on 6, too. Seven’s running heavy wall sewer tonight,
and it’s slow enough to give you some extra time.”
Jack wants to know what’s up with that new kid. Everybody laughs
that nervous laugh which pretty much sums up what they already
know. Scratch him off the list. If there’s one rule around here, it’s this: If
you don’t call and don’t show up, don’t bother coming back.
Twelve hours from this moment, the same events occur, just as they
have day or night, year after year. It’s always the same.
OR IS IT?
That was 1999. In 2005, those conditions no longer exist. Toxic attitudes
and the denial of human potential no longer bind us to the unending
process of hiring replacement workers as if they were defective
machines from a sole-source vendor. Northern Pipe Products is today
experiencing unprecedented efficiencies, employee involvement, a
vibrant and desired training program, record output per work hour,
and the lowest overall waste in company history.
What we did and what we learned over the past five years is the story
of this book. Because it’s a true story, we know you will find pieces of
yourself within it. And because this experience has been overwhelmingly
positive, we expect that you, too, will be changed as a result.
This is about people. Our story could have taken place in a hospital,
school, supermarket or any other organization that requires people to
work together for the greater good. Regardless of the setting, be it
computer service, health care, education, manufacturing, or child care,
what follows could just as well be your story. It’s about people and their
unlimited potential to achieve extraordinary things; the manufacture of
Preface xiii
pipe is simply a metaphor. Any group of people facing another day just
like yesterday can choose to follow in our footsteps, regardless of the
style or color of shoes they wear. True opportunity is “one size fits all.”
ROCKET SCIENCE
What follows is rocket science without working equations, defined
weights and measures, reliable test results, and a known distance to
target. If nothing else, “self-direction” appears to be less science and more
art in that, at its core, the original plan is to “do good” and the outcome
is personal growth, mutual trust, and organizational improvement. But,
along the way, are thousands upon thousands of course corrections, each
requiring a higher degree of vertical involvement and/or awareness than
the classic hierarchical structure of top-down control and authority. Our
experience is that management must be in the game to act as coach, role
model, and guide to everyone in the organization.
Unfortunately, self-direction and teamwork are subject to any
number of books and articles that lay claim to successful techniques
regarding human interaction (as if any one approach held the key to
success). Others rely on relabeled common sense to paint the subject in
scientific terms. For example, our HR director, Ken Doggett, was amazed
to read that to be successful, team members needed to work in the same
location whenever possible! That might be scientifically correct, but is
little more than words on paper to most people. An equivalent statement
in the science of nutrition would note that “regardless of the chosen diet,
people must eat to avoid starvation.” As if we didn’t know that!
The science of self-directed work teams (SDWT) resides in the
realization that chance and stewardship are different sides of the same
coin. Admitting to the obvious truth of infinite human variation
dismantles the notion of being able to truly control people. If not by their
actions, surely in their minds and attitudes, people resent being told what
to do. They much prefer to be taught how something works and apply
their unique talents and strengths to manage the assignment. Leaders who
understand and respect individual differences use diversity to create
value—allowing the insights of others to create superior approaches. This
was the case when our “A-Crew” decided to buy T-shirts with target
production numbers boldly printed on the front. The idea was inspired by
leadership’s request to improve output and efficiency through awareness
and added care. In other words, leadership’s concerns became a fashion
statement. And it worked! Naturally, not one member of the leadership
group would’ve considered this approach. In fact, they assumed that
traditional training would be required. Instead, the A-Crew’s shirts
xiv Preface
created unity, commonality, color, interest, working uniforms, and, by the

way, record efficiencies and output.
Rocket science put men on the moon. The bulk of the effort was not
in developing more pounds of thrust and stronger alloys, but rather
creating a design that ensured the safety of the men in those machines.
As an aside, the Web site http://www.answers.com1 doesn’t relate to the
phrase rocket science at all. Instead, the term used is space science and their
definition states that this discipline, “draws on the conventional sciences
of physics, chemistry, biology, and engineering.” If the intended space
flight involves people, the following considerations become paramount:
Life Support for Human Spaceflight
Long-range life support must be provided in manned
spaceflight. This includes oxygen, food, and recycling of waste
material. Shielding is also provided against encounters
with micrometeorites and cosmic radiation that could
damage the spacecraft or be a health hazard for its occu-
pants. The spacesuit is a miniature life-support system for
the individual astronaut; it provides sufficient oxygen at
the correct pressure to sustain normal body functioning. In
more advanced projects like Apollo, the space shuttle,
Skylab, Mir, and the International Space Station, a “shirt-
sleeve” environment, in which the astronauts do not have
to wear any life-support equipment, is provided in a large
capsule. Space biology (or exobiology) and space medicine
study the reactions of human, animal, and plant life to the
physical stresses encountered in space, such as weightless-
ness and radiation exposure. Attention is also given to the
psychological effects on a group of people working together
in confined quarters under demanding conditions.2
What’s fascinating about this definition is that if one were to omit
space references, the same could be said about the daily needs of every
employee in every organization on earth:
Long-range life support must be provided for every
employee in an organization. This includes oxygen, food,
and elimination of waste material. Shielding is also provided
against encounters with known threats and hazards that
could damage the individual or be a health hazard for the
employees. The team is a miniature life-support system for
the individual employee; it provides sufficient information,
support and sense of community at the correct time to
sustain normal functioning. In more advanced and secure
Preface xv
departments such as design, management, and purchasing,

it’s possible to create a “shirt-sleeve” environment, in which
the employees do not have to be as concerned with safety
and health matters. Team biology (or “workobiology”) and
team medicine openly confront the reactions of people to the
physical stresses encountered at work. Attention is also given
to the psychological effects on a group of people working
together in confined quarters under demanding conditions.
Rocket science demands attention to variation and chance to build
in safeguards for unknown developments. At the end of the day, no one
can fully predict the outcome of any mission. But to be prepared, the
best recourse is to train and educate the team that’s about to fly. Training
and education are not the same, as one is a mental exercise and the
other, physical. Regardless of approach, each person learns, becomes
proficient and ultimately acquires requisite skills at different speeds and
levels of intensity. However, to a team, deep in space and fully com-
mitted to the mission, all those differences become less significant than
the cooperation required to succeed. Their strength, in many ways, is an
outgrowth of their differences; years of training together creates an
appreciation for each member’s talents and abilities.
All that variation goes unaccounted for when we’re reduced to
being ordertakers. And in the process, so does our desire to express our
uniqueness in the work we perform. Variation in people opens the
floodgates of chance and personal expression. The watershed that’s
unleashed to flow more freely throughout the company cannot be
uncontrolled, however; and to many, this appears to be a contradiction.
It’s not. No one expected that all the rules would be forgotten; that people
would simply come and go freely, or that production scheduling, main-
tenance, and shipping would now be under the exclusive control of
team members. Far from it. The first assignment of every team at
Northern Pipe was the development of a team charter to overcome
chaos and develop focus. Most important, the charter defined those
activities that formally were management concerns and would now fall
under team control. Ken Doggett and Mark Boutiette, our production
manager, can attest to hours of discussion with many teams at Northern
Pipe regarding their charters. Each team has their own charter, and time
spent discussing revisions based on an unexpected event or particular
behavior are commonplace in the development of a SDWT. For most,
the development of their charter represented a dividing line between
themselves and the company policy manual.
Wayne Voorhees, the president of Northern Pipe Products, was on
hand at the company’s ground-breaking ceremony 25 years ago. One of
xvi Preface
Wayne’s favorite stories is about the original policy manual (employee

manual) at Northern Pipe. Apparently, the founder finally agreed to
develop one on the advice of a lawyer and, true to form, it was a very
legal sounding document. To employees, it was a major breakthrough
because, for the first time, they could openly expect holidays, reviews,
vacations, and a whole range of other working agreements that were
previously ill-defined. Things were fine for several years, until one day
an employee asked about details of a particular benefit with which the
founder was unfamiliar. He was appalled to realize that the benefit was
clearly mentioned on page 12 of the policy manual, and he was
therefore obliged to stand behind it. That was enough of that!
What followed carried itself into the new century as revision
replaced revision, new restrictions mated to new penalties, and the
Otter Tail Corporation, which acquired Northern Pipe Products, added
a few notes of its own. In contrast to any of these preceding revisions,
team charters might be expected to be a model of leniency. The opposite
proved to be true.
For example, teams are particularly sensitive about latecomers and
no-shows. Their answer was to write in very clear language what is
expected of their teammates in regard to attendance and other
operationally specific issues. Their charters are far more detailed than
15 years of revisions to the original policy manual.
These changes have occurred in rapid succession over the past five
years, yet, upon reflection, it appears that we were heading in this
direction even prior to the official launch date of what we call self
direction. The seeds of this revolution were planted in the failure of early
20th-century thought. It was propagated by authoritarian middle
managers and supervisors who treated employees as expendable,
whose jobs depended on their ability to follow orders, and whose labor
was considered ultimately less valuable than the products they
produced. This all started long ago, based a simple observation: Most
people want to be treated with respect.
Acknowledgements
A
cknowledgements quite naturally begin with deep appreciation
to and for the people of Northern Pipe Products and our parent
company, the Otter Tail Corporation. To this day, our story
continues to evolve in full view of our shareholders, who justifiably
appreciate results and expect profitability as we experiment with new
methods to improve our working lives and realize our highest potential.
We are grateful for their recognition of our unique approach to open-
ness, transparency, trust, and communication.
Of course, it all starts at the top and as president of Northern Pipe
Products, Wayne Voorhees occupies the position and inherits the
results. He remained steadfast in this adventure and asked just the right
questions to motivate, encourage and offer guidance along the way.
Ken Doggett, human resource manager, continues to coach our teams
through their daily concerns, expressing his dedication to the better-
ment of our employees through action and involvement. Mark
Boutiette, production manager, deserves deep praise for having carried
the burden of traditional management training and experience into the
transition to self-direction. He, along with other key employees, who
initially struggled to come to terms with this new approach, are due a
special thank-you for their convert’s zeal and dedication.
Our employees are the heroes of this book. Unleashing their
potential continues to be a source of magic to us all. In that magic is
more than enough energy, inventiveness, strength, and frugality to
satisfy the most demanding customer within an increasingly
competitive marketplace. For every word contained in the pages that
follow are hundreds more in their own words that tell this story far
more eloquently than I could ever hope to do.
Kristin Munro stepped up to the plate on several occasions as this
book took shape, notably in the eleventh hour, volunteering her
organizational talents to the task of managing revision control and
xvii
xviii Acknowledgements
formatting figures and graphics. As I worked through reviewer’s

comments and final edits, her willingness to help and lend a sympa-
thetic ear is something for which I will always be most grateful.
And, as always, deepest thanks to the Pegster for help in final editing
and her continuous support.
While I beg my coworkers to allow a small degree of writer’s
prerogative, any omissions or misrepresentations are mine alone. If you
find time to visit us, our team members would enjoy meeting with you
to discuss self-direction. They are our best ambassadors and rightly
proud of their accomplishments.
Paul C. Palmes
Quality Assurance Director
November 2005
Organization Chart
Northern Pipe Products
Fargo, North Dakota
Otter Tail
Corporation
Northern Pipe Products

Wayne Voorhees, President
Mark Boutiette Ken Doggett Paul Palmes

Production Manager HR Director Quality Assurance Director
A-Crew
Day Shift
The Northern Pipe Products leadership

team also includes:
B-Crew Warren Etches, VP–Sales and Marketing
Night Shift Jeff Martens, VP–Purchasing
Lyle Ganyo, CFO
Vic Weigel, Engineering Manager
C-Crew
Day Shift
D-Crew
Night Shift
xix
H1270_Palmes_01Chap.qxd 1/24/06 11:58 AM Page 1
Part I
The Old Culture
120 96.0
Part I:
The Old Culture
95.66
104.6
100 95.5
96.2 95.32
MI L L I O NS O F P O U NDS O F P I P E P RO DU C E D
90.3
80 3 4 95.0
P E R C E N T E FFI C I E NC Y
77.2
75.6
72.8
94.53 94.55
60 94.5
94.44 1 2
40 94.04 94.0
20 93.5
0 93.0
1999 2000 2001 2002 2003 2004
2005
1 Kevin Berlin – 2 A-Crew 3 B-Crew 4 C- & D-Crews

Extrusion Coordinator SDWT SDWT SDWT
April 1, 2002 May 2002 April 15, 2003 May 20, 2003
1
1
Welcome to Northern Pipe
N
orthern Pipe Products is located in an industrial park on the
north side of Fargo, North Dakota. Three blocks to the east,
Interstate 29 runs north to Canada, and just two miles south
intersects Interstate 94 and the east-west corridor from Illinois to
Montana. An average of 20 trucks a day leave the plant loaded with pipe
of all shapes, lengths, and colors. Green 8-inch sewer pipe and blue
12-inch C-905, used in municipal water systems and heavily regulated,
join approximately 300 other pipe products making their way to
distributors and contractors throughout the upper Midwest and Canada.
Northern Pipe is known for quality. Since the very beginning,
quality and operational improvements have influenced decision-
making within the company. In an otherwise low-tech industry,
Northern Pipe was one of the first to computerize extruder controls,
building its own—and eventually selling—control panels throughout
the country, even to competitors! The entire blending operation, also
automated, was designed and in use long before most other U.S. pipe
plants. Visitors to the plant invariably remark about the level of clean-
liness and the obvious care given to machinery and tool maintenance.
They have to be. Making PVC pipe profitably is a game of fractions.
Even with all the quality in the world, this is a commodity business
where the price of resin dictates the selling price. In a market upswing
it’s wine and roses, but when things go the other direction, so does
profitability. And when those profits are measured in fractions of a
penny, having control of operations is critical.
Here’s an example: The largest expense to a pipemaker is what’s
called overweight. The ideal length of pipe uses only enough material to
meet all the expected minimum specifications. However, in the real
world of pipe production, all pipe contains a bit more material than
required, yet the selling price remains unchanged. The degree of
variation inherent in the extruding process forces a responsible
3
4 Part I: The Old Culture
manufacturer to run just a little above the minimum to avoid

occasionally falling below it. The result is overweight, to one degree or
another. And the sharper the tools to measure and control overweight,
the more opportunity for profitable manufacturing.
Every organization has its “celebrity critical control issues.” In PVC
pipe, it’s “overweights.”
In many service organizations, the celebrity issue is their ability to
meet the customer’s need in the minimum allotted time, but still
conclude the transaction with a delighted consumer. All communication
is actually on the clock, although the customer is carefully shielded
from the commercial realities of making a profit.
In our business, we try our best to make excellent products, but at
a reasonable cost. That’s what all successful businesses try to do in each
transaction. And within each is a celebrity, or most notable element of
control, that receives the lion’s share of the credit for keeping the wheels
on the road and maintaining a competitive edge. At Northern Pipe
Products, it has always been the maintenance department.
MAINTENANCE
Northern Pipe Products has, from its earliest days, valued “sharp” tools
to control costs. As a result, careful and detailed maintenance is a way
of life—an operational imperative that’s measured in several critical
areas. First and foremost, unanticipated machine downtime is considered
a major and unacceptable condition. The price of machine failure is
understood to have a negative effect on customers, reputation,
employees, and time forever lost—time that might otherwise have been
used to make pipe. Emergency repairs are typically short-lived,
primarily because parts rooms are well stocked. The contents of those
rooms are chosen carefully. Measurements are taken to determine what
best to have on hand in the event of failure so replacements can be made
in the least amount of time. The cost of maintenance, from overtime to
time required for special projects, is also measured and reported to top
management on a regular basis.
The machinery and their protectors, the maintenance staff, are
fiercely proud of their accomplishments. They are responsible for setting
up each production run because the degree of care in setup has a direct
impact on whether they’ll get called back to make further adjustments.
This was certainly the case in late 1998, when employees, skilled in
problem solving and experienced in the finer points of adjustment, were
few and hard to find.
So, driven by the need to make pipe continuously and within all
specifications, the maintenance department acted as the initial quality
Chapter One: Welcome to Northern Pipe 5
overseer of the production process, aided by the supervisor and his QC

(quality control) inspector who monitor and make small changes to
improve efficiencies. The other employees, who bundled the pipe at the
end of the line, were last in the chain, and functioned essentially as
packagers. Three tiers developed, based primarily on the degree of skill
required to perform each type of job (see Figure 1.1).
Tier 1
Maintenance Tier 2
Supervisor Tier 3 Skill
QC inspectors Packaging Required
Figure 1.1 The three-tier system.
Of course, this model is not uncommon in any operation where the

complexity of work requires specialization and experience in prepara-
tion and design. There is a lot to do when changing from 8-inch medium
wall sewer pipe to heavy wall, gasketed 12-inch C-900 water pipe. The
same is true of a metal stamping operation that requires fast changing a
160-ton press from a two-step manual to a fully progressive die. In both
settings, careful adjustment prior to throwing the switch makes the
difference between a working tool and a major repair. In other words,
it’s simply too expensive to trust this work to anyone but the most
competent worker. At Northern Pipe Products, the maintenance staff
enjoyed their status as the elite within the organization, as is often the
case when one department is considered most essential.
Northern Pipe’s current president, vice president of purchasing, and the

production manager share a similar background. They were all at one
time either leaders or members of the maintenance department. Many
companies share a similar “critical path” bias whereby promotion and
recognition follow most often from service within a single department.
Figure 1.2 The critical path.
Northern Pipe Products supervisors were keenly aware that

maintenance-department responsiveness was critical to their success,
especially during the wee hours of the night. As the adage goes: “Be
kind to the hand that feeds you.” For the most part, a well respected and
lasting supervisor was someone who could repair and adjust machinery
without having to call maintenance for assistance.
QUALITY
From the start, Northern Pipe Products has maintained two mottos,
both of which are considered mutually supportive:
• Keep the line running
• The quality name in PVC pipe
It might have been more appropriate to simply say, “Keep the line
running in order to make quality PVC pipe,” but it so happens that each
is a separate science.
To our customers, quality PVC pipe has several subjective charac-
teristics. A high-gloss white appearance is perhaps the primary of these,
and the most difficult to achieve. The extrusion process essentially melts
raw materials such as resin, wax, stabilizers, and other inert ingredients,
which, as they blend together, create a molten mass that’s pushed through
a round die to become pipe. However, at maximum melt, best use of
formula and at fastest extruder speed, the product will normally appear
dull with a yellowish cast. Northern Pipe Products must go beyond
standard practices to achieve a stronger, more attractive product than its
competitors. In the early days of our industry, yellowing PVC was often
an indication of brittleness and perhaps outdated product. While time
and improved formulations have largely eliminated any connection
between surface appearance and overall acceptability, public perception
remains unchanged.
In fact, Northern Pipe Products are not only gloss white; they also
have a longer-than-normal bell—another customer expectation that
makes installation easier and, with normal expansion and contraction,
reduces the chance of failure over time. Northern Pipe Products also
require minimal insertion force (compared to competitors’ products) and
are capable of withstanding very high flex and pressure demands. All
of these characteristics are product differentiators and workmanship
targets that remain centermost in daily practice, inspection and testing.
But, given the small margin of profitability mentioned earlier, these
characteristics carry a price that is only acceptable through tight process
control. Every nuance, each and every control point and setting, has to be
understood in relation to all the others in the complex chain of events in
the extrusion process. Once again, this is not a job for amateurs. Instead,
the expertise of Tier 1 and 2 maintenance and supervisory staff was
primarily entrusted with the work of maintaining Northern Pipe’s
reputation and competitive advantage.
TESTING
“Pipe,” as a customer once told us, “is supposed to have only two holes—
one at each end!” It is every pipe manufacturer’s nightmare to learn that
somehow they exceeded the maximum allowable number of openings.
Most often, these are one-time instances where a piece of foreign matter
becomes imbedded in the pipe wall and under pressure is blown or
washed out, creating a leak. Finding and replacing the defective section is
a costly and wasteful exercise; the expense is most often assessed to the
manufacturer. Early in its history, Northern Pipe Products began a testing
program to ward off such claims. To reduce risk even further, test
parameters were developed that go beyond industry minimums. Crush
and burst testing, for example, are basic to the industry, but at Northern
Pipe Products, the degree of stress applied to samples is typically in the
range of 140 percent to 170 percent of required minimums. Frequency of
testing, especially with thin-wall products, is also above industry norms.
Testing is a requirement of several regulations that apply to the
manufacture of PVC pipe. The production of potable water pipe, for
example, involves many stringent health-related standards and
regulations. In fact, if you look carefully at a manufacturer’s pipe code
(the printing that appears on the side of each stick of pipe), you’ll notice
quite a few industry watchdog logos and references to applicable sections
of industry and government regulations.
Testing pipe requires training, special tools, and accurate record
keeping. Regulators’ inspectors are regular visitors to the plant (one a
month is not uncommon), and those records are first priority items
during the audit.
In order to protect Northern Pipe Products from itself and from
outside regulators, a class of experts grew to occupy a favored status in
much the same manner as the maintenance staff. Called QC inspectors,
they were responsible for overall quality inspection and testing during
each shift. Their tools and records were under lock and key. Of course,
their job naturally required strong partnership with the shift supervisor,
who was charged with overall quality control. Together, the QC
inspectors and the shift supervisor had complete responsibility for
product acceptability. As was the case with maintenance, specialized
knowledge and experience defined the QC inspector’s position within
the company; they were involved, but also above the work of the lowest
tier workers who palletized or otherwise packaged the pipe. Their
specialization was considered a necessity, just as the skilled mechanic
brought his expertise to bear in a highly compartmentalized function.
QC inspectors carried out their responsibilities as experts among
experts, and watchdogs of the third tier, the palletizing workers.
THE THIRD TIER

Molten resin starts its journey at the extruder and, while carefully
maintaining its shape, is pulled through a series of cooling baths. The
faster the speed, the thinner the wall thickness, much like making taffy.
The puller is one of four pieces of machinery most in need of attention
during production. In order, they are the extruder, the puller, the cut off
saw, and the beller. An experienced line operator/palletizer can make
small adjustments to each over the course of a typical shift to dial in a
steadily more efficient use of raw materials. The key word in the last
sentence is experienced. In 1998, Northern Pipe Products had almost
200 percent turnover of its Tier 3 workers due to any number of reasons.
The palletizing of pipe consumes the bulk of a line worker’s time.
Continuous production is unrelenting; it just keeps coming at you,
regardless of time or temperament. A line worker is faced with having
to keep up with the speed of production by finding and maintaining a
rhythm. Appreciation and understanding for what and when a
particular task must be done, and just how long it normally takes to
accomplish it, grows with experience. Once the work pattern becomes
second nature, opportunities for spare time become available. Spare
time is a luxury in manufacturing, and an unwritten comfort among
line workers.
The same is true of any work in which the operator must be in one place
to perform a specific set of activities. Office workers and professionals
alike find their own “on-time free time” during the workday. The manu-
facturing worker differs from the clerk in the cubicle only in regard to
visibility and opportunity.
Figure 1.3 Worker free time.
Making pipe, however, does not yield much free time. In fact, a
well-operated extrusion line requires workers to move beyond the
basics of establishing a rhythm to attain much deeper levels of
concentration. The best operators are curious about the process and
enjoy the challenge of maximizing output and efficiency—something
that comes with experience and self-confidence.
Developing that confidence with the handicap of Tier 3 status was
a hard assignment in 1998, starting with the concentration of power,
authority, and responsibility in the hands of the maintenance and
supervisory staff. The lowest on the totem pole, Tier 3 workers were
leaving for one reason or another as a patterned behavior. At first, new

employees were challenged and eager to find their way, but would
leave after several months or even weeks. The first reason is as basic as
human freedom.
Operating a line, establishing a rhythm, and maintaining minute
control over a complex mechanical system is a full-time affair. The
dividing line between man and machine becomes blurred as each
demands the other’s attention. As a result, a line worker is committed;
he or she cannot just take a stroll, go to the bathroom, or leave their
station for any reason without transferring their responsibilities to
someone else.
Line workers are not free to wander away just to think. That’s Tier 1
and Tier 2 behavior. In fact, the most basic indicator of an upward career
path at Northern Pipe Products in the late 90s was a worker’s ability to
move into any activity that allowed freedom of movement within the
plant. Forklift driving was the first step up from line work, because it
allowed freedom of movement. As a result, the best pipe makers were
no longer rewarded by making pipe, but by transporting it!
Moving up in a more legitimate fashion from the perceived tyranny
of the line required becoming its master. If workers managed to remain
employed for six months to a year and chose to gain hands-on
knowledge of each extrusion line, they might be promoted to floater.
Floaters were essentially mini-supervisors, free to walk through the
plant and help wherever they were needed. A floater position was also
the first required to step in for an AWOL fellow worker, so the job was
not one that actually guaranteed freedom to roam. In that sense, a
floater’s status was only possible in the best of circumstances, and in
1998 those were a rarity.
Forklift operators, floaters, and QC inspectors occupied the upper
levels of Tier 3, and were natural candidates to become assistant
supervisors. As second in command, assistant supervisors operated in
much the same manner as floaters and QC inspectors. However, they
most often developed a particular skill such as adjusting dies,
“stringing a line,” or making detailed inspections that identified them
as special and valuable. These skills usually complemented those of the
supervisor, whose primary concern was to “keep the lines running.”
Therefore, supervisors typically served as machine maintenance
monitors, while their assistant supervisors tended to the operational
fine adjustments. Supervisors tended to park their tool carts alongside
the problem machine and stay there until the matter was resolved.
Assistant supervisors shuttled between the machine-bound supervisor
and the next less important set of problems facing the plant.
PEOPLE
Mechanical resources were the first priority in the late 90s. It’s no
wonder that several new employees excused themselves at the 2 p.m.
break and never returned. In fact, the rate of turnover among new
employees was so high that most were treated as if they were expected
to leave! As a result, people didn’t go out of their way to welcome a new
employee, let alone strike up a conversation on their first day or for
several days thereafter. Production blamed HR for setting the bar too
low when screening applicants. HR blamed production for scaring
away anyone with an ounce of promise. People skills was a phrase too
often spoken as if it were an oxymoron, which was sadly true. In fact,
the three-tier hierarchy was designed to accomplish anything but
nurturing skillful decision-making, empowering employees, or
developing a healthy team of workers. Instead, it was dedicated to the
hard assets, the machinery that truly occupied the uppermost tier and all
the attention of a four-tier system as depicted in Figure 1.4.
Tier 1 – Manufacturing Machinery
Tier 2
Maintenance Tier 3
Attention
Supervisor Tier 4 Given
QC inspectors Packaging
Figure 1.4 The four-tier system.
Little wonder that turnover was high, morale low, quality improve-
ments few, and newcomers shunned and unwelcome. The people were
first to grasp that they were last, even though this was never a conscious
operational decision. A degree of top-management concern was suffi-
ciently evident within the company to convince many people to stay
and fight the good fight. But a sense of helplessness and resignation in
the face of constant turnover had a chilling effect on just about every
major decision. Regardless of the subject, sooner or later someone
would remark about the inability to hire and hold onto people long
enough to recover the investment of training them, whether a potential
machine upgrade would be technically beyond the average worker’s
capabilities, or if the potential for damage was too high to entrust expen-
sive equipment to unsophisticated and marginally trained people.
In their landmark book, The Discipline of Market Leaders,1 Michael
Treacy and Fred Wiersema argue that there are really only three primary
types of businesses, represented as separate points of a triangle. Most
important is that each business type requires a different approach,
structure, and reporting system. The first is customer intimate, where
personal service and special attention to each customer is common-
place. The second is technologically advanced. These companies are
designing and producing products that are ahead of their time—
revolutionary and exciting stuff that often renders the competition’s
products obsolete. Last in the group are the operationally efficient types
that concentrate most of their resources on throughput. They know how
to move products and are constantly trimming time and other resources
from daily operations to accomplish more with less.
Northern Pipe Products was, and to a great extent still is, opera-
tionally efficient. The true Tier 1, manufacturing machinery, is at the
core of our success. Other than sales figures, most reports detail how
much and how fast pipe was produced on any given day. While we
have very loyal customers, they also buy from our competitors on a
regular basis strictly because of price. As a relatively small operation,
surrounded by giant competitors in a volatile industry, operating
efficiently makes it possible to at least be in command of something. At
Northern Pipe Products, everyone’s attention was on the machinery,
and upon reflection, the employees followed suit.
This is a story of how Northern Pipe Products changed a mechanistic,
four-tier structure into an organic, molecular organization where people
are entrusted to control their work, and leaders serve as coaches and
resource providers. We made more than a few course changes, revising
the program numerous times and, while we hope that you might learn
from some of our mistakes, it was necessary that we made them.
The vision of what we’ve become was, for many years, a dream of
Wayne Voorhees. And while it may have taken years, his patience and
subtle guidance was a source of strength to each of us along the way.
Patient, subtle guidance is essential, but that comes much later.
First, you have to let go!
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2
Wrong Models
D
emanding, strong, crude, or demeaning bosses often have
learned behaviors from a role model who bullied people into
doing things by fear, coercion, and intimidation. Autocratic
leadership, expressed as, “My way or the highway!” is deeply
embedded in the negative expectations and experience of most workers.
But that management style just doesn’t work anymore. In fact, it
takes more effort to sustain this type of leadership than it does to give
workers the authority to manage their own work. It’s harder for a single
individual to push others than to be pulled by the group. And, as you
will see, positive results greatly surpass anything accomplished
through strong-arm tactics. The notion of “park your brain at the door”
(and do what I tell you to do!) is no longer valid in the information age.
In a world of public education, the Internet and television, the average
worker is simply not the same as the 19th-century immigrant with
limited skills and minimal expectations. Ultimately, the 19th-century
model led to the appeal of unions as stewards of their collective rights
in the workplace. Members of the information age, today’s workers are
far more aware of their individual rights, talents, strengths and
aspirations. Today’s workers want to participate and do good work.
But regardless of the latest book, news story, or testimonial, the
hardest thing for most managers and supervisors to do is to let them.
Make no mistake, this is going to take a managerial paradigm shift on
the same plane as a religious conversion or resolution of a midlife crisis.
Know this: The whole subject of self-direction requires major adjustments
by management—more than by those who report to them.
Northern Pipe Products had to arrive at a point where we simply
were unable to accept or continue what was happening around us.
Wayne Voorhees, Ken Doggett, Mark Boutiette, and I were too often
upset at our conditions, our staff, our processes, our supervisors, or
each other. But whenever one or more of us brought our concerns to the
13
surface, the problem was considered impossible to resolve or required

the cooperation of someone else who was part of the problem. We
concluded these meetings with promises to do better or try harder, but
knowing deep inside that no one had really arrived at a solution for
permanent and positive change. Looking back, our transition began
with the decision to either (1) hire a replacement production supervisor
who took a job elsewhere, or (2) start something completely new: self
direction. Replacing the departing supervisor with a duplicate made no
sense. To do so would continue the same behavior, the same pattern of
machines over people, and the same results—production staff would be
discounted, disenfranchised, and only marginally connected to a
quality product.
We’ve come to believe that what separates our transition from most
management-driven programs is that we had to make fundamental
changes before our production workers.
COMMITMENT AND CHANGE

Here’s what normally happens when a company decides to go in a new
direction: Top management analyzes the current state of affairs and
notices an opportunity. The logic of making certain changes is so clear
that they become committed to a change of direction or the implemen-
tation of a new program. However, moving forward will require that
everyone in the company sign on to the new plan and make certain
changes to how and what they do during their work day.
Top management is committed, and the workers must change. In
other words, the first to commit is the management group, and the first
required to change are the workers. Look carefully at Figure 2.1:
Management Workers Management and Workers
High Are Committed Need to Change Are Changed and Committed
Low Need to Change Are Committed
Program Start Program Success
Time
Figure 2.1 Commitment and change over time.

Chapter Two: Wrong Models 15
But notice that management and the work force are initially
divided—separated by the traditional leader/follower model. Managers
are committed, while workers must make changes to accomplish what
management has decided they must do. Conversely, workers are rarely
committed from the start. Most change programs are begun reluctantly,
and commitment is more show than substance. But, given time,
especially if things work as planned, people naturally become committed.
And as this happens, management finds itself having to change! If
only because a committed and changed workforce brings new things
for top management to decide, decision-makers at some point find
themselves having to regularly respond to and incorporate the results of
the program. They are the last to change.
This is exactly what happened when the former owner of Northern
Pipe Products faced one worker’s questions in regard to an item in the
original employee manual. You will remember that the founder, inspired
by the advice of a lawyer, became committed to the need for an
employee manual. The employee was at first put off by legalese, but
eventually changed his assessment through use and familiarity with the
new tool (something he was directed to read and understand). The day
he challenged management to deliver on its promises was a stark
moment of disclosure, and the change/commitment scorecard was
updated to read: “Workers 1, Management 0.” Prior to that moment, the
working staff thought the score was even—that management would not
require change of them if not for both having changed and become
committed to the new program themselves.
Management occasionally unveils initially high-commitment initia-
tives that produce less-than-desired performance. Waning commitment,
however, is readily apparent to staff members in all organizations.
Often, they are first to sense diminishing enthusiasm from their leaders.
In this event, the employee manual question would never have
surfaced. In its place would be the classic complaint of corporate life,
“Another Flavor of the Month!”
To the extent that change is physical, commitment is intellectual.
Traditional management imagines a better future, enlightens and
energizes its key players, and then relies on staff to build it. Stripped of
all the trappings, this ultimately results in leadership telling people
what to do.
LETTING GO
Transitioning from an organization that orders people around to one
that allows them to make their own decisions turns traditional
management on its head! Instead of directing others, the transitioned
management group (this was true in our case) progresses through the
following phases:
1. Feel: Awareness grew first in the gut. We were walking in a
circle. Corrective actions didn’t take hold, and no one really
thought they would in the first place. We felt helpless,
demoralized, even angry about the callousness, lack of
respect, and low quality of life in our work environment.
2. Think: Once we exhausted all the “likely suspects,” the people
and processes most often found wanting, it dawned on us that
we were the only ones left to blame. Talk about change! The
one constant regarding all past performance was that we
delegated responsibility to everyone but ourselves.
3. Act: Not a tough decision, and not difficult to implement, we
not they had to embrace all the above and take charge of the
turnaround. Our hands needed to get dirty, our ears had to
hear these problems, and our answers had to follow in
real time, face to face, not filtered through layers of middle
managers and supervisors.
4. Admit: These are both simple and difficult, and both flow from
the above observations:
a. No matter how much management tried to help our
supervisory staff to shift our cultural gears, the company’s
transmission remained stuck in neutral.
b. Although unsure of exactly how to proceed because of a
history of partially successful programs, in order to move
forward we needed to take the driver’s seat ourselves,
place our hand on the shift lever, and calmly, humbly,
but confidently ask our passengers what to do next.
We needed to let go. We needed to admit that some things weren’t

working and that we didn’t really know what would work in their
place. We maintained control of the vehicle, but were reduced to asking
instead of giving directions to those we once expected to be our drivers
and passengers. Whatever fears we faced were primarily driven by our
heightened level of self-imposed accountability. We now realize that

what we actually let go of was our insulation, our protection from direct
involvement as change managers. We had to let go of our privileged
position of being able to walk away from a set of problems that no
amount of delegation would ever solve.
Letting go requires management, not workers, to change first. Members

of the management group are the ones that must lead this movement.
This is not something that’s mandated to “others,” it’s required of them.
Before they can be certain that things will really work out, managers
have to learn to let go and develop trust within their organizations
based strictly on logic and faith. They have to be both committed and
willing to make fundamental changes to the manner in which they carry
out their work. They must become committed to change themselves.
Figure 2.2 Letting go.
At Northern Pipe Products, the commitment to change was built

atop a series of improvement campaigns over many years. It culminated
in the decision to develop and register to the ISO 9001 quality manage-
ment standard and to actively develop competence within the fourth
tier to satisfy competency requirements. Work began in the fall of 1998,
and registration was achieved in December of 1999.
1999
Many of Northern Pipe’s initial changes were designed to improve
basic communication:
• An “in-out” board was added to the lobby wall for sales and
management team members to record and make visible their
whereabouts.
• Internal e-mail addresses and messaging was established and
training provided to management, office, and sales staff.
• Computer workstations were installed on each extrusion line,
and operators’ names were added to the company e-mail post
office listing.
• Operators were trained on basic computer skills, how to
send and reply to e-mail messages, and given introductory
classes in navigating through word processing and spread-
sheet applications.
• A daily e-mail message (the Daily Dose) was sent to everyone in

the company in order to allow workers to practice what they
learned in computer training, to keep quality concepts in the
forefront of company discussions, and to encourage feedback.
• A book club was started; it met each Wednesday at noon for
pizza and conversation about subjects contained within
supplied business books (see bibliography).
This new concentration on training included several key accomplish-
ments, as well:
• Supervisors assembled all documented training materials, sifted
through each, and developed a 40-page Skills Training Manual
designed to progressively develop competence through a three-
level program.
• A new position of trainer was established to work with each new
employee and thereby unify the approach to initial training.
• New employees were assigned to a “buddy” on their first day
and given work that gradually brought them to more demand-
ing tasks.
• A written process was developed for training that was subject
to management review and non-conformance when found to
be deficient.
• All training was recorded and minimum training hours
required of each employee in Safety, Communications, and
Continuous Quality Improvement. Those who failed minimal
requirements faced a smaller year-end bonus.
• Monthly classes were presented on a variety of topics within
the three broad categories just described above. Instructors
came from within the company (QA, engineering, sales,
administration, finance, and other areas).
• ISO training took place as each new process was published and
distributed throughout the company.
In order to plan, assess, and make improvement recommendations,
management practices underwent changes as described in the follow-
ing points:
• Weekly management meetings were renamed quality council
and declared open to everyone. (Appendix B, the QC Charter.)
Meeting minutes were also recorded and distributed to
everyone in the company via e-mail. All attendees were

encouraged to offer suggestions or concerns.
• A monthly production roundtable was established to allow
three representatives from each shift and a member of the man-
agement group to meet and discuss matters of mutual concern.
• Monthly manager’s meetings with our Otter Tail corporate
liaison were also made open to the company, and each depart-
ment manager developed and presented a brief written report
of the month’s activities and performance to goals.
• A Five Pillars committee (often called 5S) was established and
included a member of the management group whose work was
to sort, set in order, and make the plant floor less cluttered. This
group eventually painted lines for special materials placement,
walkways, and other identification designed to promote order
and create a more visually attractive workplace.
• With the help of our staff cost accountant, management
developed and implemented a robust Cost of (poor) Quality
reporting system that was also distributed electronically each
month to everyone in the company. A goal of less than 5
percent CO(p)Q was determined as the test of effectiveness of
the entire ISO quality management program. (And no, we
didn’t achieve the goal that year. In fact, it would take full
implementation of the self-directed work team concept to
finally reach the goal in 2004!)
The supervisor and QC inspector roles were changed:
• QC inspectors joined the ranks of assistant supervisors.
Inspecting product on the line became an operator’s respon-
sibility as training and competence took hold. Sample testing
(a regulatory requirement) and final inspection privileges were
delegated to line workers after they successfully tested for
certification as a certified quality specialist.
• All assistant supervisors were assigned to training duties
whenever possible. They were also encouraged to work directly
with the packaging staff more often to improve their work
habits, inspection skills, and to provide more frequent relief
time during the shift.
• Supervisors and assistant supervisors began to meet monthly

with the production manager to work through issues and
directly communicate with each other and top management
away from the plant floor.
• Supervisors underwent training to improve their “soft skills”
and communication talents.
As a result, several positive developments occurred:
• Attention devoted to ISO process development and the
Five-Pillars efforts produced tangible evidence of new controls
and improvements.
• Communication between the shop floor and management was
greatly improved.
• Systemic failure rate decreased significantly. (This is in
reference to past behavior, where occasionally large amounts
of non-conforming product were produced despite frequent
documented testing and inspections to the contrary.)
• Positive morale and a sense of hope grew in place of pessimism
and sarcasm.
• Women began working at the plant. The introduction of women
also changed the tone of conversation and promoted a healthy
male/female rivalry in regard to workers’ abilities.
SALES
But some things didn’t change. For 17 years the sales department was
at the top of the food chain. With years of too few line workers amount-
ing to anything of significance, it was natural that they assumed
nothing would ever change. Their habit of taking a break by standing at
the periphery, smoking cigarettes, and watching workers sweat through
15 minutes of their day, often without even acknowledging them, was
developed over time. In fact, within a small but vocal group in the sales
department, ISO was just another in a string of improvement initiatives
that represented a waste of time and money; it would die away sooner
or later due to lack of follow-through or the introduction of some other
new idea. I wrote the following memo in early 2000. It was distributed
and discussed among the sales staff with their director:
Sunday, February 27, 2000

The subject is the “culture” of a company.
How a group or groups react to or with each other and the

work they must do to make a living has been the subject of
many books and lectures on quality in the past 10 to 15 years.
The reason is pretty simple: All the statistical methods and
analytical tools in the world are ultimately managed by people.
So, if you want great quality, you not only need great systems
and procedures, but great communication and mutual trust
between people to achieve it. Look at quality in the 70s when
Japan combined systems and people-management techniques
to become a giant in automotive and consumer electronics.
Their success at motivating through what we later called TQM
techniques, combined with several analytical tools (SPC,
Statistical Process Control; FMEA, Failure Mode Effect
Analysis; and DOE, Design of Experiments) produced quality
levels that delighted consumers and frightened U.S. manufac-
turers. I can well remember early in the 80s when it seemed as
though every major customer demanded that we employ SPC
in our operations. They all demanded analysis to point the way
to improvements.
But the numbers, as numbers, were not enough to really
make the breakthroughs they wanted. Lowest cost and highest
quality were tough to achieve just through data analysis that
may point out weaknesses, but does nothing to correct the
problem. For that you need cooperation between companies,
and between groups within the company itself.
So, the next step was to work on the reasons why people
either promote communication and trust, or maintain
relationships that prevent growth and promote distrust. XYZ
Corporation, who I’ve mentioned before in a Daily Dose, was
one of the first companies that really got it right as they opened
new and unheard of channels of communication between
themselves and their suppliers in the early 90s.
They started internally by transforming themselves from a
collection of groups to a company that, at least on the surface,
worked on things together, regardless of who had the idea first,
or who stood the most to gain from completing the project. And
it took four years! The route they followed was classic, one that
every “evolving” company eventually goes through in convert-
ing themselves from a place where staff and workers spend
their time surviving, to a place where everyone thrives.
Every company, every group, every relationship, in fact,
has a period in which just getting by is the main job. As things
develop, we learn the limits of ourselves, of each other, and of
other departments. We learn how to survive poor cash flow,
poor performance, poor planning, poor purchasing, and a
multitude of other disappointments in the process of just
getting the company going and growing. The same is true in
families, charity groups, and governments, but that’s another

week’s worth of writing.
In this type of environment, not everything works well.
People form opinions to help them survive the day. If one
group gets disappointed by another group enough times, the
opinion that “they” are “dumb,” “unresponsive,” “self-
centered,” or otherwise unreliable makes sense. After all, “Fool
me once, shame on you, fool me twice, shame on me!” People
develop thick skins, learn to distrust “them,” tell the same
horror stories about “the time they did that to us,” and
generally find ways to protect themselves from the other group
and the lack of connection and professionalism that “they”
prove to each other each day.
Fast forward a bit. Now, the shipping department routinely
calls the guys in purchasing a bunch of prima donnas. They
smile at the “suits” when they show up at the dock to check
an incoming shipment, but behind their backs they call each
of them names I won’t print here. The people in the finance
department think that nobody can fill out a single form that
involves numbers without a mistake, the QA staff is convinced
that all operators are one brain cell shy of the lowest member of
the monkey family, and even the janitor is certain that the home
bathrooms of everyone at work have never been cleaned! The
culture takes on a survivalist mentality. More specifically,
getting things done by avoiding the very people that could
provide the most help is the way things get done. “If I can’t
trust anybody to do it, I might as well do it myself!” Production
is filled with idiots, the front office is staffed with fools, the yard
crew is manned by jerks, and only my department can be
counted on to do anything right.
I’m describing XYZ Corporation. They turned around one
department at a time. They showed them how to work as a
team, how to use the data they generated to reach out and to
eventually help other departments. Management provided
direction in developing processes and worked constantly to
develop small groups that contained members from several other
departments. “Jerks and fools and idiots” began to work
together, but not right away. Too many years of relying on just
their department made it tough to rely on someone else. For
years, their survival depended on putting down the other guys
and making nasty comments about the idiots that led them.
How could anyone expect that it would be easy to change a
system where everyone got through the day by trusting that
others were less competent than they were?!
It took courage and time. And about midway through the
effort, XYZ Corporation’s management realized that the
engineering group just wasn’t “on board” with the improve-

ments that many other departments were experiencing. While
working relationships and conditions were getting better in
production (numbers were going up every month, people were
staying and seemed to be happier), the engineering group
remained aloof and convinced that progress in other areas was
“all just a farce!” The engineering manager and all his people
were regularly too busy to attend meetings, worked their own
hours, and generally stayed to themselves in the lunchroom.
They went to “their” bar after work on Fridays, where they
were assured that they’d be far from anyone else at the plant so
they could talk openly about the deficiencies of other depart-
ments. They didn’t change. They saw no reason to trust anyone
else, and as long as they kept their distance, there was no reason
to think anything was any different. By remaining separate
(behavior that made sense before things started to get better
around them), they couldn’t see that other departments were
becoming professional, responsive, and communicative. By
maintaining that the place was always going to be run by fools,
they never became aware that a new day had arrived and
things were improving from top to bottom.
Before long, the attitude of the engineering group became
apparent to the other departments who were now learning
to trust each other and their decisions. At first, the “snooty”
engineers were labeled as, well, snooty. That’s until the other
departments realized that the cycle was starting all over again.
The “healthy” departments, with the help of management,
realized that the energy it took to resent the engineering
department prevented them from working well between
themselves! They decided to call a truce. Instead of repeating
the old pattern of condemning the “other” department, they
adopted a “patience program.”
Groups sent invitations that weren’t returned, mailed
meeting minutes that weren’t read, and openly praised the
work of the engineering group when they did something well
without expecting appreciation or thanks. At first, they got just
what they expected. The wall remained intact. For a time it
appeared as though nothing was going to tear it down.
Engineers are a special breed. They have lots of stories to tell
because of the unique role they play in the company. Nothing
they design is ever instantly accepted, in fact, most new projects
are tough to handle on both sides of the design process.
First, there’s the customer who’s never really sure what
they want or need, but always certain that they can design it
better. The first set of prints is little more than a starting place,
a place from which the client can start playing games to cut
costs and delivery time. What they said they wanted in the first
place was the equivalent to diamonds, but when they see how
much it costs, suddenly they want the same look and function-
ality for the price of glass. So then it’s time for the redesign
phase. Every engineer knows that’s the same thing as planning
to build a better boat as the stream carries you closer and closer
to the rapids. They want it cheaper, they want it tested, they
want it to do everything, but they still want it by the original
date! Engineers are used to working on designs as the date for
production draws closer and closer.
Then, there’s the production group. They know some new
project is coming because the top brass are so quick to brag
about all the money “everyone’s going to share!” Seems like
every day they have to remind engineering that time’s running
out to build the tooling or order materials. The engineering staff
has to take it from both sides as the heat builds up to produce
the most in the fastest time for the least money. After awhile it
feels like all they do is to take care of whiners. Stuck in the
middle isn’t really the most fun place to be, and XYZ
Corporation engineering learned the hard way not to trust
some new program that’s supposed to make everyone sud-
denly get along and work as a team.
It’s always the same, they said. Get some posters, have
some stupid meetings, and give out some cheap awards for
marginal improvements. In a month or two it’s back to the same
games. Didn’t anyone realize, they thought, that without their
brainpower and design smarts, there would be no XYZ
Corporation in the first place?! The company was founded on
design, after all! The company name itself, stands for technical
excellence, not production, who never appreciated designs, but
just complained about how tough they were to build. Not
purchasing either, who made a religious rite out of buying
substandard components, barely at the bottom of tolerances,
just to save a penny. “So please,” they said through their
behavior, “play your games without us because we have real
work to do!”
The chief operating officer spoke to me about the day he
sat down with the engineering department manager in his
office. His message was simple. He said that he realized the
engineering department felt they were responsible for the
success of the company, and asked the manager if he agreed. At
first, he hesitated. To agree might sound conceited. But it was
the truth, he finally said, when you take away all the hype and
talk about everything and everyone acting as “one big family.”
The COO then asked him if he and his staff were being paid
enough to carry that burden every day. I’m told the manager
didn’t know what to say. And with that, the COO simply
walked out of the manager’s office. But before he cleared the
door, he turned back and told him that while he appreciated all
the concern for saving the company, there were lots of others
throughout the organization that wanted the chance to help out.
And as long as he and his staff kept possession of all that stress,
there wouldn’t be any way they could understand how to work
with others and share the load.
The next day, they talked again. This time, though, the
manager came to the COO’s office. Frustrated, he looked at him
and blurted out, “Just what do you want?!”
“Your best, just like always!” was the COO’s reply. “Just
share some of it along the way with the rest of us. No one
person or department deserves to carry the whole weight of
this company’s success on their shoulders. Maybe in the past
that was necessary, but in the process your group isolated itself
from everyone. While you don’t believe it, things have changed
around here, and it’s because of your isolation that you can’t
see it.
“Start with production. Ask for them to help by working
with them and the client as a team. Make production part of the
design process so they can’t complain about deadlines; instead,
they will plan more effectively because they can see the whole
picture. They’ll also better understand the difficulties you’ve had
to face alone in dealing with clients.
“As the design develops, include purchasing. Let them
hear what goes into the decision to use one type of component
or another. Have them order the prototype parts to open up the
time they may need to establish vendor contracts, and to also
insure that what you really intended to use for components
ends up in the final assembly.”
It took time, but more importantly, it took leadership and
patience. Engineering started to open up to other departments,
and before long there were a few successes. Little things, really,
but enough that the engineering staff started to relax and listen
to others outside their department. The biggest breakthrough
came when one day someone on a design team from the
assembly line mentioned that the prototype could be packaged
upside down and save lots of time and effort. Engineers who
once had to think of everything suddenly realized that genius
wasn’t only found in their department.
Today, a typical design, initial build, and shipment takes half
the time it took to produce the design alone four years ago.
Customers love it; in fact have grown to expect it. Sales even takes
along an “Implementation Team” when they make their proposal.
They all explain what they need from the customer to insure that
everything will progress smoothly and how the design will

actually be the best ideas of two companies working together.
And that’s not because they have the best oscilloscopes, the
fastest data retrieval systems, or the finest SPC program. It’s
because they invested in all those things as well as their culture
that they enjoy success today. They invest in and protect their
culture as something that adds value to their company. They
work on it through continuous training, after-work parties with
families, strong team participation, and immediate rewards for
anyone that does something special. They turned it around, one
department at a time, until the company reflected its people: Fast,
united, friendly, open, and in partnership with their customers.
CASUALTIES
Our experience in turning around these perceptions did not work well
in the long run. Most of the previously mentioned vocal minority is no
longer with us, as is true of several others who chose to apply
stubbornness more than patience and objective observation.
They refused to change and therefore couldn’t commit.
The list of casualties eventually included the production manager
and several supervisors. Even though self-direction hadn’t even begun,
the foundational work of ISO process and system management,
improved communication, and workers taking greater responsibility
was too threatening, too difficult to remember, or presented uncom-
fortable challenges. For whatever reason, the period between early 1999
and mid 2000 represents an even mix of success and confusion, but the
groundwork remained. Those who could let go past sins and disap-
pointments and begin to work with others more effectively experienced
positive results. Unfortunately (or fortunately, for the rest of us), those
who nurtured past discretions they couldn’t forgive found themselves
working in a place that no longer tolerated or understood their predict-
able negativism. A last major casualty, one that in retrospect was a
welcome event and the subject of the next chapter, characterized the
period from mid 2000 to the birth of a planned pilot program for self-
directed production in 2002.
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3
The Failure of Half Measures
MIDDLE MANAGEMENT
Chapter 1 made clear that Northern Pipe Products’ supervisors were
primarily responsible for maintaining the highest product quality and
maximum machine output. More often than not, the best way to accom-
plish both was with a wrench in one hand. Adjustments and minor
repairs were expected to command a supervisor’s time throughout the
shift. With the new call for training and improved communication came
the obvious need to help supervisors make the transition to a more
inclusive and open leadership style.
In late 2000 Ken Doggett, HR manager, Mark Boutiette, production
manager, and I developed a series of six formal training classes for
production supervisors. These classes were held at the Otter Tail
Corporation’s headquarters conference room approximately every two
or three weeks from 6 to 9 p.m. The class text was The Team Handbook,1
and many sections were utilized during months of training and regular
homework assignments.
THE VISION
One of our first assignments was to draft a new vision. We challenged our
group of supervisors to recognize how difficult change can be without a
clear vision of what things will look like once change takes hold.
The foundation of Steven Covey’s 7 Habits of Highly Successful
People 2 is “begin with the end in mind.” If you can’t see it, you won’t
know when you’ve arrived. If you can’t imagine the quality of life, the
benefits, the look and feel of the destination, how can you plan the trip?
The end result is just that. At the end, what will be the result?
Knowing where you’re going also provides an opportunity to measure
progress toward the destination. Travel from Miami to Minneapolis in
27
January, and you’re assured of several changes—and as each takes

place, it becomes clear that the destination is growing closer. It gets
colder, the landscape changes, the sun’s angle is lower, and snow
blankets the ground.
Our supervisors responded exceptionally well to the challenge of
developing a compelling vision. In fact, I can well remember one night
when several of us remained after class talking excitedly in the Otter
Tail Corporation’s parking lot of how inspiring the evening’s work had
been. There was a feeling of having risen above ourselves, of having
done something exceptional. And perhaps most important, there was a
sense of new hope. We could finally see a fresh approach, another more
rewarding way to work together, and in the process make Northern
Pipe Products a much better place to work.
This is the vision we crafted that night, and I display the original
flipchart page in my office to this day:
Together, we will change the future through personal growth, belief,

self-motivation, trust, and a positive attitude through communication,
commitment, and teamwork.
Figure 3.1 Changing the future.
Not only were we excited by our work that evening, but when we
reread our vision it became clear that we’d already begun what we set
out to become! The magic had taken hold, as if all it took to accomplish
a major cultural upgrade was to believe in a “new future.” Of course,
our naïve exuberance was soon to be tested by our lack of experience
and the truth contained in the phrase, “Wishing does not make it so.”
The following days and weeks were business as usual. Demanding
schedules and missing employees continued to pull us away from our
ability to control the present, let alone create a new future. Habits
formed over too many years were easier to use than new theories,
philosophies, visions, or operating models.
Most important, the belief that autocratic supervisors can change to
an inclusive management style turned out to be unworkable in an
environment where workers relied on the safety of being told what to
do. Training supervisors alone was a mistake—what we now see as a
“half-measure.” Changing an entire culture is an all-inclusive exercise—
something we learned the hard way. Our supervisors were perhaps
disproportionately challenged to become different people, to manage as
coaches and mentors while weighted down by years of practice and
Chapter Three: The Failure of Half Measures 29
experience as authoritarians. They had no role models. No one was

working alongside them, patiently coaching them to become coaches
themselves. And coupled with a workforce that was naturally suspicious
and at times eager to prove any new direction to be a mistake, the odds
of middle management rising above an autocratic approach were slim.
Kevin Berlin was our senior supervisor. After years of work at
Northern Pipe Products, Kevin’s approach to making pipe was naturally
grounded in starting out right. He understood the long-term value of
making very detailed setup adjustments. In fact, when Kevin helped
maintenance set up or change over a line, it was understood that the
operator was bound to inherit a well-running job.
Of course the emphasis was still on the machinery, not the people.
So, Kevin tried an experiment, something he thought would move
things in the direction of our new vision. As mentioned earlier, the shift
change was little more than assigning people to machines. No discussion,
no extended explanation—if you show up for work, you’re assigned a
job. Kevin understood this cold-natured approach as something in need
of changing, so one morning he brought in eight playing cards, ace
through eight. The idea was to soften the approach by allowing each
crew member to choose a card rather than being told which line to work.
This is a great example of how far we’d strayed off course, and at
the same time, how much middle management was struggling to
comprehend, adjust, and make progress toward their new vision. Kevin
was sincerely trying not to tell his crew what to do, but to instead, allow
them a choice. And it worked to an extent. No one had ever “allowed”
a production employee to choose work assignments, even though
Kevin’s playing cards simply exchanged chance for planning. After a
string of “unlucky draws,” employees found themselves preferring the
care their supervisors previously applied to shift assignments and
looked at the playing card experiment as certainly fair, but even more
cold-natured than before—and decidedly impersonal.
Six classes, three books, and several months later, Mark, Ken, and I
came to believe that we were pushing a rope uphill. For each gain, there
would be two or three setbacks. Ken and Mark tried to spend time with
the supervisors as they worked with their crews, but just when we
thought things were moving in a positive direction, disaster would strike.
For example, we hired a talented and bright black man. On his
second day of work, the supervisor came by to let him know that the
crew enjoyed and would like to continue telling racial jokes!
The supervisor explained later that he simply wanted to be
“friendly and open” with his new employee.
We faced several such amazingly mixed messages and outcomes as

a result of training a group of good mechanical technicians to manage
organically. The deck was stacked against them, even though the
number of cards was reduced to just eight.
LET’S CALL HIM “BOB”

Bob answered our employment ad with lots of enthusiasm and an
assurance that he knew how to reach people. We’d reached the end of
our rope with our middle managers and thought the answer was to hire
an outsider—someone with proven people skills. The idea was to find
and put in place a model team leader, someone who would lead the
way and show by example how to empower people. One of our super-
visors had recently left, and instead of our usual pattern of hiring from
within, we decided to change the paradigm. We would look for
someone to “break the mold” and open the door to management by
relying on the skills of the crew instead of the mechanical abilities and
experience of the supervisor.
Our thinking was fairly basic. We would throw all the dice at one
time, reasoning that if we really believed in the power and potential of
people, we wouldn’t be at risk. Instead, we’d be openly challenging the
traditional system; the supervisor would now have to trust and take
direction from the workers themselves. In turn, the new supervisor
would function more as the workers’ advocate to top management,
providing them a stronger voice and linkage with decision-makers.
Looking back, we were still delegating change management to
others. Training our supervisors or, as will soon be apparent, other
change agents, to carry our values and hopes into the working life of the
company was yet another mechanistic and insular approach to an
organic problem. Though we called it training, we were still essentially
telling our supervisors what we wanted them to do. We were still
looking for someone other than ourselves to fix conditions that devel-
oped during our watch.
Bob was excited to start, but said he just needed a little time to
understand the way things worked. He often said that he needed time
to organize and prioritize Ken’s, Mark’s, Wayne’s, and my ideas as well
as those of the workers he would eventually lead. We often met with
Bob to discuss what we’d used for training with the current group of
supervisors. We shared books and magazine articles about self-
direction, worked with him one on one to deepen his appreciation of the
foundational aspects of what we’d originally envisioned, and tried our
best to be available whenever he needed advice or direction.
Soon after Bob joined the company, and along with his assistance
and support, Ken Doggett distributed the following memo to everyone
in production:
To: All NPP Employees

RE: 2002 Production Department Improvement Initiative—
Implementation of a Self-Directed Work Team
This is to inform everyone of a pilot project that involves
utilizing one of our production crews to operate as a self-
directed work team. The purpose of this e-mail is to share with
you what a self-directed work team is and how we will begin
implementing this program. We are excited about the
opportunities this program will bring to the organization and
thank you in advance for your support!
What is a self-directed work team?

A team is a small number of people (7-15) with complementary
skills who are committed to a common purpose, performance
goals, and approach for which they hold themselves mutually
accountable.
In traditionally designed organizations, work associated
with a given process is divided into various tasks and each task is
assigned to a specific employee. For example, some employees
are line operators, while others are quality control technicians,
maintenance mechanics, or forklift operators. In the self-directed
work team, employees are cross-trained to execute all of the jobs
associated with the process.
Members of a self-directed work team are involved on a
routine basis in decision-making, goal setting, scheduling,
hiring, planning, peer review, discipline, compensation, and
problem solving. They determine how they will work together and
how they will rotate through the various jobs associated with the
process. They have a part in developing performance measures
for the team and in setting goals around these measures. They
are intimately involved in the hiring process; new members can-
not be brought into the team without approval of its members.
The supervisor’s role is quite different from that of the
traditional supervisor. Their job is not to direct and control the
subordinates, but to develop the team’s self-directed capabilities by
coaching, mentoring, motivating, and developing the individuals
within the team. The team leader also has the responsibility of
managing the interactions between other operating crews within
the department, maintaining teams focus on performance goals,
and communicating these to the organization.
The self-directed work team is capable of very high levels of

performance because it maximizes employees’ capabilities to
contribute to organizational performance and fosters an
extremely high level of employee commitment. The success of
this type of organization is also attributable to the fact that it is
extremely lean. Because of the self-directing design, team leaders
can effectively handle very large spans of control, and therefore
very few management layers are necessary.
Overall, self-directed work teams lead to a reduction of
turnover and an increase in productivity. Why?
Workers are generally more happy! The team concept
satisfies our basic need to be part of something. Members of
self-directed work teams understand the value of their work
and how it contributes to the overall goals of the organization!
They are challenged by the opportunity to be part of a team
responsible and accountable to each other, has clearly defined
performance goals, the tools and equipment to do the job, and
actively involved in all decisions of the team. It’s hard work, yet
rewarding and fun!!
When will this be implemented at Northern Pipe Products?
The team will begin sometime in April and run through
December 31, 2002. This team will serve as a pilot project so we
can determine its overall effectiveness. The goals will be those
we currently track in production today.
Members for the team will be selected from the existing
four crews utilizing specific selection criteria. Once the members
are selected, training will begin. During this time, the team will
develop its own mission statement and purpose, develop their
own charter or set of rules that outlines the expected behaviors
of its members, and begin designing team performance goals,
incentives, and compensation structures.
Why did the company decide to do this?
1. To improve employee retention.
2. Change the working conditions, so people have an oppor-
tunity to enjoy and find satisfaction in performing their jobs.
3. Belief in the talents of our people to make this program
successful.
What is the company’s vision of this program?
Vision: A nurturing environment where work is accomplished
and people are valued.
Goal: To create an atmosphere that is participatory and meaningful.
How can I find out more information about self-directed

work teams in general?
Beginning next week, February 25th through the 28th, we will
be holding question and answer (Q&A) meetings in the large
conference room between the hours of 4:30 p.m. – 5:30 p.m.
Everyone is invited to attend!!!
Bob chose a team from a pool of employees who volunteered to be
the first truly self-directed crew. We did our best to give Bob the time he
needed to explain, recruit, and promote the concept of self-direction.
Regardless of Bob’s future role, discussing what such a team could
become and how work would change as a result was a key success in
preparing everyone for the start date.
As the memo states, we had also decided to go all the way this time
and train an entire crew, not just their supervisor, or team leader, as we
came to call Bob. Our mostly failed experience training only the top
brought us to the conclusion that this whole subject of trust was mean-
ingless if we didn’t begin training everyone from the very beginning.
This was to be a two-pronged approach: We hired a proven people person
and also planned to train everyone as a group. To set the pace and make
a statement, we rented first-class training rooms at the Skills and
Technology Center in Fargo. Bob worked with Mark, Ken, Wayne, and
me on the final selection of his crew members. But as the date
approached for our first class, things rapidly fell apart.
Bob still had questions. Major questions. And as training grew
closer, he seemed less and less confident, even fearful of the degree of
uncertainty that we were about to unleash on the operation. It all came
crashing down about a week before the first class, when Bob and Ken
experienced a disagreement that became Bob’s exit song. Particulars
aside and with the luxury of hindsight, Bob’s dismissal put us exactly
where we needed to be, but we could not fully appreciate this at the time.
We had to move forward just as we were: three well-meaning
managers and a dozen employees without a leader. Like a wedding
where the best man suddenly vanishes and the families hold a meeting
to decide whether to go ahead with the ceremony, we assembled the
team members and asked them if they were willing to go ahead despite
the setback. To their credit, they all wanted to proceed—especially since
Bob was initially envisioned as their facilitator, and they would be the ones
actually running the lines, and making policy and operational decisions.
THE A-CREW
This was the start of the A-Crew, a group of dedicated employees that
ultimately revolutionized how we work together, and paved the way to
efficiency and productivity improvements that no one could’ve
imagined in early 2002. In large measure this is their story, though what
they discovered was also adapted and improved upon by others within
Northern Pipe Products. The training and nurturing of A-Crew brings
us to Part II of this story and the transition from the limited success of
parts and machinery to the unlimited potential of people, including
ourselves.
Part II
Out of the Darkness
120 96.0
Part II:
Out of the Darkness
95.66
104.6
100 95.5
96.2 95.32
MI L L I O NS O F P O U NDS O F P I P E P RO DU C E D
90.3
80 3 4 95.0
P E R C E NT E FFI C I E N C Y
77.2
75.6
72.8
94.53 94.55
60 94.5
94.44 1 2
40 94.04 94.0
20 93.5
0 93.0
1999 2000 2001 2002 2003 2004
2005

35
4
The A-Team
I
f you were alive in the 80s, you were aware of Mr. T and the other
characters in a weekly action-adventure TV show called, The
A-Team. Mr. T was brusque, tough, and mean-mannered to the
point of appearing perpetually angry. Each episode would feature a
segment, however, where the rough-and-tumble Mr. T would save a
kitten or help an elderly woman across the street in a Hollywood
minute designed to portray his softer side. At Northern Pipe Products,
we had 14 Mr. Ts in each of our four crews. And, truth be told, several
of those were ladies.
With a new sense of order and use of the process approach through
application of ISO 9001:2000, the plant was a better place to work in
2002. Our ISO program was actually developed and first registered in
late 1999, but many of the expected 2000 revision’s elements were
already built into our system. We also undertook a fairly aggressive
Five-Pillars program that went a long way toward changing the look
and feel of the plant floor. Wayne refers to our ISO development process
and the pride brought about by registration as one of many stepping-
stones in the progression of events necessary to bring us to the point
where self-direction was possible.
However, we were still far from an open and empowering environ-
ment on the plant floor. The addition of women into the crew mix
during the timeframe from 2000 to 2002 had a softening effect.
Improved plant conditions and processes designed to reduce confusion
created a certain momentum and believability in regard to
accomplishing what we set out to do. So, by the time the A-Crew was
ready to begin training, there were four women and eight men ready to
take this new work concept for a spin. Ken, Mark, and I retooled the
materials we previously used with the supervisors and walked into the
training facility with high hopes and expectations.
37
38 Part II: Out of the Darkness
Wayne joined us to begin that first training class. I suspect that

anyone who was in the room on that morning will never forget his talk.
It came from the heart. It was deeply personal, and when he closed his
remarks, each of us sensed that a solid foundation was in place for all
that followed. He gave us all permission to try, if only because it was
right to do, regardless of the outcome. His message was the same we’d
heard for years that, given the opportunity, ordinary people can
accomplish extraordinary things. But this time, he let us into his
personal world to explain how a less privileged life experience crafted
his vision, in turn revealing a deeply held belief that if he could succeed,
anyone could succeed.
The business world is littered with well-intended, but ultimately
doomed programs, each sharing the common trait of top management
lip service, or more accurately, the kiss of death. Wayne’s ten-minute
talk established perhaps the most important starting point of the entire
effort: top management’s unwavering belief in the unlimited potential
of people. Our experience has taught us that if self-direction is ever to
succeed, this is its bedrock position, its most fundamental truth.
Without this most basic, guiding belief, many of the twists and turns to
come would’ve been insurmountable. When you truly and completely
believe in the unlimited potential of people, errors in judgment,
arguments, hard times, and roadblocks are no longer the deal breakers
they once were.
Wayne’s opening comments made crystal clear that there was no
turning back. Whatever we were to become would, at the very least, not
resemble what we had become. Ken, Mark, Wayne, and I discussed this
carefully in meetings prior to his address; that the mechanistic,
autocratic model of assigning work to people had to end once and for
all. The old model was put on notice and our job—everyone’s job—was
to invent a new one.
If there was one thing that seemed to hang in the air, it was that we
were going for broke. There was no turning back. The way forward was
far from clear, but the commitment, willingness, and support to begin
the process was without question. In that sense, management was both
committed and changed from the outset. A powerful statement that put
teeth to the call for change was the fact that three members of the
management group and the president of the company researched
materials and accepted this project as their responsibility out of a
conviction that anything had to be better than the existing system.
Chapter Four: The A-Team 39
VALUES, VISION, AND MISSION

We remain convinced that Northern Pipe’s values, vision, and mission
statements are the foundation of who we are and why we operate as we
do. Through repetition, print materials, and open discussion during initial
training, we did all we could to make clear that they were far from
corporate slogans. There are numerous books and articles about corporate
values, vision, and mission statements, each with a similar message:
• Values, vision, and mission statements provide a foundation for
organizational growth.
• To be effective, they must be truthful and direct.
• Having them is better than not having them.
• Design and content is a matter of choice.
With all the potential for good that’s contained in the bulleted items
above, it’s startling to realize that most values, vision, and mission
statements are dull, excessively wordy, uninspiring, and written as if
the real reason for the company’s existence is to “provide value for its
shareholders” (whatever that means)!
To endorse, promote, and support self-direction is a far greater cultural
statement than proclaiming openness and honesty in a values statement.
Self-directed people are faced with having to apply, be accountable to, and
work within their company’s stated values. The process of training and
mentoring Northern Pipe’s self-directed teams made clear that without
strong, relevant, and well-stated company values, vision, and mission
statements, we would have been at a decided disadvantage.
If your organization decides to implement self-direction, our experience

indicates that, along with solid top management support, meaningful
and relevant values, vision, and mission statements are a necessity.
If your values, vision, and mission statements are not truthful, inspiring,
encouraging, trusted, and believable, we strongly recommend that they
be revised before beginning any work of this nature. Our experience,
then and now, through repeated reference to our values confirms their
power and importance.
Figure 4.1 Necessity of values, vision, and mission.

Little wonder that throughout the entire two days of training, the
“filler slide” was our values, vision, and mission statements:
Values
• We place our highest value in the limitless potential of people.
Provided opportunity, we will accomplish extraordinary things.
• We are honest and fair.
• We are open about our performance and expect our people to
contribute their intellect as well as their strength toward our success.
• We believe strongly in the products we provide, and we are
passionate in our desire to make them ever better.
Vision
• Create a company whose name is the industry benchmark for the
products and services we deliver.
Mission
• Growth. Build and/or acquire pipe plants in the Western half of the
Americas to provide diversified plastics products in several markets
to better control our profits and our future.
ARISTOTLE
Issues and concepts from an excellent book by Tom Morris, If Aristotle
Ran General Motors, were floating through our conversations before and
during the initial A-Crew training. I remember quoting several sections,
the first of which challenged the group to recognize how the manner in
which we talk to each other communicates much more than the words
we use. Morris summarizes the work of Martin Buber’s book, I and
Thou, as follows:
“Buber explains that there are basically two fundamental
relationships that can exist between you and another individual
entity in this world. First, there is the I-It relation. This is a way
of relating to something as a thing, or object, whose only value
is extrinsic or instrumental. When you stand in the I-It relation
to something, you value it only insofar as it serves your
purposes. This is the relationship you have toward a cup whose
only value consists in its ability to hold the water you’re
drinking and to convey that drink in an efficient way to your
mouth. This is the relationship you have with a copy machine
whose only value is to duplicate documents, or to a computer

that is no more than what it does, or rather, allows you to do.
The second basic relationship, Buber calls the I-Thou relation.
This is the fundamental stance that one human being ought
always to take toward another person, a relationship of respect
in which the other individual is viewed as having intrinsic
value, value in and of himself or herself, regardless of whether
that individual can produce further value for you.”1
Morris’ closing remarks about I-Thou relationships once again
brought us to the topic of trust and truth as central to our values:
“The only way to enter a truly I-Thou relationship with those
around us is to seek from them, and give to them, the truth
about what we are doing together. This is the only way to treat
coworkers. And this is the way to treat both suppliers and
vendors on one side, and all our customers or potential
customers on the other.2
Of course, the traditional Northern Pipe shift meeting was dead
center in our sights as the perfect example of reducing someone to an it,
and it wasn’t hard to hit the bull’s-eye in the discussion that followed.
In retrospect, this was one of several pivotal events where, to admit
something was essentially wrong and shouldn’t continue, created real
momentum within the group. Indifference and cold authority were no
longer acceptable. With our Values as a backdrop, leading with the
words, “We believe in the unlimited potential of people,” the
opportunity to break down walls was never better, never more
appropriate. And everyone shared the drudgery of the old, safe, and
impersonal way of assigning work instead of working together to
determine the best assignments.
There’s undoubtedly a similar unwanted, outdated, or inappropriate

practice in your company or organization. We found that being prepared
with the shift change example went a long way toward relevance and
was a gateway to authentic conversation. Our celebrity disempowering
condition turned out to be what is often called low hanging fruit—easy
pickings and sweet to the taste.
If you can, identify an unacceptable activity, something that occurs
frequently and is obviously counter to your values. Having an illustration
such as this was a great enabler and, once exposed as unacceptable, gave
the group permission to start anew and build something better.
Figure 4.2 Lowest hanging fruit.

LETTING GO
The biggest gamble was, and to this day remains, the human element.
Opening up and letting go of manipulating people and information for
predetermined outcomes is the opposite of how a traditional manager
operates. If you are a traditionalist and find this to be true, then allow-
ing an entire group of people to decide the right thing to do, at their
own pace without interference, is a tremendous risk. If all this sounds
genuine and real, imagine the potential for success of a team whose
coach refuses to allow his players to develop at their own pace. Instead,
he demands that his players run, think, and react beyond their
capabilities. He sets the bar. Their success depends on his assessment of
their ability to succeed. He’s in control. It’s his game plan, his team, his
reputation, and his legacy as a coach that takes first place in the
development of a winning team. Where would they be without him?
In a real sense, they’d be right where they are—on the very same
team. But now they’d have to work together to win. No longer is a
single voice, a single opinion, or a single self-serving reputation and
desire driving them to improved performance. They no longer want or
need the approval of one individual; they want all individuals to know
that their contribution was an important addition to the team’s success.
A team coach understands that in the end it’s all about the players.
Celebrity CEOs and hot-ticket MBAs with all the answers may never
A huge concert is underway. There are thousands of screaming fans, laser

lights, a megawatt sound system, and white-hot energy onstage. Minute
after minute, one song to the next, the fever intensifies just in front of the
band as more and more people come forward to get nearer to them and
the music. It has become an event, a night no one will forget. In fact, some
will later say that it was magic how the crowd, the night, the band, and
the hall all came together as one driving force that, once having found
momentum, simply built upon itself to rise even higher.
Suddenly, a fan runs onstage and, without breaking his stride, joyfully
jumps out into the crowd! With no thought of injury or concern for safety,
he launches his body off the stage with complete trust and exhilaration.
Because, in that moment, surrounded by that amount of unbridled energy
and momentum, no one falls and no one fails. Instead, he is caught, lifted,
and held aloft by the arms of the crowd—a crowd with more arms and
more available natural energy than ever would have been possible if
people were instructed beforehand when to expect his jump and just
how to catch him.
The hardest work of all is to simply let go and permit natural development
with the level of trust, joy, and freedom of a stage jumper.
Figure 4.3 Letting go.

understand that what drives them to succeed rarely, if ever, drives a

team as effectively.
Instead, me-centered leaders work twice as hard to get half the
output achieved by a leader willing and patient enough to coach when
the players want to learn. A great coach believes in every player’s
potential for greatness, rather than focusing on his or her own greatness
if players could only reach their potential!
INITIAL TRAINING
The following agendas embody our choice of study and concentration for
the A-Crew’s initial training during the period from March 13th through
March 26th, 2002. We began with Fish!,3 a wonderful program (book and
video) about a Seattle fishmonger who turned work into play. In fact, we
used the Fish! tape several times as an energizer during these classes.
Training Agendas
Team Training__Wednesday, March 13th, 8 a.m. – 5 p.m.

Agenda
Welcome—Congratulations! Introductions! Commitment to each other!
Expectations! Challenges!
View Fish Tape

• Paul: Understanding of Traditional Organizational Structure
versus Team Concept.
• Paul: Understanding of Challenge – Team roller-coaster ride,
personal commitment, expectations, rewards, and relationships.
• Wayne: Understanding of Team Concept – Self-directed Work
Teams, why this year, and commitment of organization.
• Wayne: Understanding of Technical Competency versus Soft
Skills Competency – (Ability to manage themselves).
• Paul: Understanding of Purpose – Core values, vision, and
mission. Reflecting on your personal core values?
Break 9:45 a.m. – 10.00 a.m.

• Ken: Understanding to Believe – Statistical evidence of team
effectiveness.
• Ken: Understanding of Corporate Structure – PowerPoint
presentation: Otter Tail, Stock Holders, Subsidiaries, NPP,
and you!
• Group Ken/Paul: Boundaries – Overall list of areas team must

operate within. Operational versus strategic, budgets, safety,
federal rules, ISO, and policies.
Lunch 12 p.m. – 1 p.m. Lunch served

• Seminar – Team Concepts. (1 hr)
• Seminar – Team Building. (1 hr)
Break 3 p.m. – 3:10 p.m.

• Seminar – Team Dynamics. (2 hrs)
• Issue Fish book and read first chapter of soul – Discuss
assignment.

• Seminar – Conducting Effective Meetings. (1 hr)
• Seminar – Building Consensus. (1 hr)
• Training Exercise – Team will receive list of training seminars
identified as essential to the team’s success prior to imple-
mentation. The team will reach agreement on training dates,
meeting times, and how long these meetings will last. This will
also attain a consensus about attendance requirements for these
meetings. (2 hrs)
Chartering Process__Wednesday, March 20th, 1 p.m. – 5 p.m.

• Seminar – Developing and understanding the purpose of
values, mission, and vision. (1 hr)
• Action Item – Define and develop mission and purpose of
team. (Goals and aspirations, reason for existence.) (1 hr)
• Action Item – Define and develop charter – Set of rules that
outlines the required behaviors of its members.
• Action Item – Define and develop accountability. Member
responsibilities to team. If not, what happens?

• Seminar – Conflict Resolution. (1hr)
• Seminar – Relationship Building. (1hr)
• Seminar – Self-Management. (1 hr)
• Exercise – Role-Playing. (1 hr)
Chartering Process, continued__Wednesday, March 26th,

1 p.m. – 5 p.m.
• Action Item – Define and develop operational structure – Daily
routine – who? what? when? where?
• Action Item – Define and develop performance goals and
expectations (clearly defined).
Empowerment Training
• Seminar – Empowerment within the Team! (4 hrs.)
• Understanding – Pride, Trust, Relationships, Ownership,
Commitment! Team member or business partner.
Communication Training
• Seminar – Effective communication skills. Writing, speaking
and listening. (4 hrs.)
• New Language – Team leader versus supervisor, team member,
or associate versus employee, etc.
Vicki Stainbrook
Vicki Stainbrook was, and still is, a member of the A-Crew. Her comments
about the benefits of our training program:
“The training was awesome. So much energy. We really saw
what SDWT could be like and we were all into this new
concept. It was a chance to do something new, something
totally different. Training also forced us to look inside ourselves
and see who we were, compared to who we could be and what
we could bring to NPP if we wanted to. This was a concept
that’s totally different than most of us were used to. No one
ever asked us for that kind of input before.”
Now, there is a huge trust factor. It’s a major thing with our
crew. Granted, we still have moments with some people, but
then again, who doesn’t? I think our trust as a team and us
being together as a team is really good. We work well together.
And if there’s a problem, we bring it up, as a team, and solve
the problem, as a team.
The Fish book was really good. Definitely the Fish book!
I remember, we were talking to Ken Doggett about that section
in the Fish story about outsiders looking in. This was about the
“yogurt dudes” who came down from their office buildings to
just watch them selling fish during their lunch hour.
Well, there’s still these different rankings in Northern
Pipe—sales is up here, and production is down there, you
know. I thought, “Why not mix it up a bit?” so I told Ken that

we should go get some yogurt or ice cream or something. The
next day, I gave each of the sales guys a yogurt, just to give
them something to talk about. They just looked at me! It was
GREAT! They always just stand there and stare at us while we
work. So I thought I’d do something different for them!”
You know, in general, there’s just tons more respect
between team members now versus before. And trust. That’s
the biggest thing. You’ve got to trust these guys to show up, do
their job, and do their job right. It makes our job so much easier.
Going through training and throughout this whole thing,
I learned so much more about myself and what I’m capable of
doing. I also learned tricks and shortcuts to make my job easier,
and I can pass them along to someone else to help them out.
I even use some of the stuff I learned in training at home.”
TRAINING PARTICULARS
Any of the previous training headings can be entered into an Internet
search engine to generate answers to content and approach. That’s what
we did. When topics from books or discussions among Wayne, Ken,
Mark, and myself led us to look elsewhere for greater depth or concrete
examples, the Internet was our greatest ally. In retrospect, and given the
power of this entire effort as a home-grown exercise, this was the best
thing we might have done to develop content and confidence as
instructors.
Having developed our own training, our examples were highly
specific to the work we do and our major challenges. The first real
application of self-direction was, for example, the wholesale
restructuring of shift meetings and the process of including the team in
determining job assignments.
In another display of direct application of training concepts, one
afternoon we placed $500 in cash on one of the student tables for use by
the team in whatever manner they chose. Imagine the reaction! Talking
about mutual accountability, trust, and respect between team members
and working together to solve mutual problems is no longer an
abstraction when the group faces questions such as:
• Who picks up the cash and takes responsibility for it?
• Where is the money to be deposited?
• How do we decide what to do with this money?
Having developed our own training program, we also appreciated

and believed in its content as only instructors do. The depth of our
responses and the underlying transmission of belief in these concepts
changed us and, in turn, made a positive impression on our employees.
As trainers, we were both committed and changed, a subject mentioned
earlier in this book as essential for program success. For this reason
alone, it may be our best advice for any organization contemplating
self-direction to embrace home-grown training by leaders within your
organization.
CHOOSE A POSITIVE SETTING

While certain training details are important, we also believe that they
take on greater significance when presented off-site in a comfortable
setting. The regional Skills and Technology Center was a great asset to
us in that it offered well-lit, clean, and media-friendly facilities within
which alertness and thought became the order of the day. The added
expense of classrooms, catered lunches, and getting paid to learn, sends
a powerful message to people normally compensated only for what
they do with their hands or through the sweat of their brow. Training in
a fresh, innovative setting with amenities conveys to students that the
company is making an investment in them and their lives. And if the
training is about change in the first place, holding classes off-site is a
physical statement that change is either underway or expected.
Starting out on a new foot is best done in bright, clean shoes.
5
In Their Own Words
P
receding chapters tell this story from a leader’s perspective. I
remember one member of our group in late 2000 remarked that
one day he realized none of his children would probably seek,
nor be encouraged to apply for, employment as a production worker.
Thus far, this has been a narrative of what we worked through to
reverse such self admonitions and take charge of what we came to
understand as an ethical responsibility to throw open the windows of
cultural change. What’s been missing is the reaction from those who
listened, questioned, built, and are responsible for present conditions in
the plant—the people who must live with and constantly improve the
results of their own decisions.
In June of 2005, I asked two team leaders, Corey Perryman and
Tammy Blotsky, to talk about self-direction. Following is a summary of
their response. (The discussion was largely unstructured and rambled
from one topic to the next; subject headings have been added to enhance
readability.)
WHAT DO YOU THINK OF SELF-DIRECTION?

Corey Perryman: “There are wonderful things about it, but also struggles
that go along with it. After three years, some people still like to be led,
rather than to be leaders…There are still a lot of people who like to talk
about issues amongst themselves, but not bring these issues up in front
of the group. That’s one of the continuing problems—trying to reach
these employees so that they realize what they say matters just as much
as what their team leader or anyone else says. A lot of people still don’t
grasp that concept of self-direction.
“I guess people don’t want to say bad things about another person,
especially to their face. Self-direction is trying to get where everybody
will speak out. If you do have a problem with somebody, you will say
49
something to the person and resolve these issues rather than blowing
them off or going to a higher-up person and asking them to take care of
the problem. I guess you could say it’s about getting people to not be
afraid. For a long time, people would complain about things, and I
would bring it up in our meeting—put it out on the table—and we
would start discussing it. But then it got to the point where I was looked
at as the bad person because I was always having to do that. So now
when people complain to me, I make notes on what the complaints are,
who said them, and when we are in a meeting I’ll call these people by
name and ask that they talk about the issue. Its helping, but we still
have a way to go.
“But even with all that, self-direction is an absolutely wonderful
thing. It truly makes people aware of their coworkers. Being self-
directed, they know they have to evaluate each other, so people are
stepping up more…you know that the guy working next to you—he
could be part of my evaluation! The old way…if the supervisor liked
you, that would weigh pretty heavy during the evaluation. But in self-
direction, if you aren’t doing your job, you have 12 or 13 people out here
who will see that right away. It’s a great opportunity for every crew and
crew member out here.”
Tammy Blotsky: “I agree. I like it…and you don’t have to go by the NPP
policy manual; you can make your own rules and everybody has a say
in making the rules and other input. I may look up to the go-to person,
the team lead, but you’ve got to do your own thing when you’re in a
meeting—you don’t just sit there. Everybody has their own input.”
TEAM CHARTERS AND COMPANY

VALUES, VISION, AND MISSION
Tammy Blotsky: “Each crew has a charter. In some ways, we still do
follow the Northern Pipe Products policy, but we have our own
guidelines that we go by, which is kind of cool, I think. We use NPP
policy as a basis for setting up our own charters. Things are always
changing. We take NPP policies and make them stricter if we need to.
We do still follow NPP policy quite a bit, but as time has gone on, we
slowly change things that we think are important to us as a crew. We are
adopting our own ideas into it, but everything goes back to it (the NPP
policy manual).
“I think that a lot of people still don’t fully understand all the values
and mission of NPP, but they understand enough of them so that it
works. To be honest with you, we don’t discuss that—being ethical—we
Chapter Five: In Their Own Words 51
never thought of having to work on that part—the values—because

NPP’s values, vision, and mission are very well done. We’ve never looked
at that part. We went strictly on policy since I’ve been here. We’ve been
trying to adopt the perfect charter that will eliminate loopholes of any-
thing. It’s an ongoing thing…it’s a complete democracy. Everybody,
whether you’ve been here a day or 12 years, you have an equal say in
everything.… ’Given opportunity’ was a big deal…we really believed
in that, which is why we started SDWT…being fair and consistent is a
big deal.
“A charter is not set in stone, even when we have something that is
working great. For example, six months from now, we might have a
charter meeting and agree that attendance has been outstanding on our
crew, so we could decide not to have an attendance policy. We’d say,
‘Let’s go for the next six months without having an attendance policy
and see how it goes. We aren’t going to write up, suspend, or fire
someone for attendance!’ We actually have the control to do that!”
Corey Perryman: “Equality. That’s what this is about. The ‘old school’
way, you were in it for yourself, set on how much you could make or
attain. Now, on a perfect SDWT team, everyone could be making, say,
$15 per hour and be able to rotate and do all the jobs. But we are
realistic. We know that not everyone can do that; but it’s possible.”
THE HIRING PROCESS

Corey Perryman: “It takes people working together, and being involved
in the hiring and firing; that’s a big step. In the past, we’d said ‘Why did
they (management) give us such bad people (on our crew)?’ Now, it has
nothing to do with management. It’s a neat thing that four of us can sit
in a room and tell an applicant what’s important to us and to see his or
her reaction. What Ken Doggett thinks is important isn’t necessarily
what we four (the interviewers) think is important.”
Tammy Blotsky: “I think it’s great because we know right away. My
number one thing is: Do you care about your job? Do you show up on
time? Do you care? I don’t want someone on our crew who doesn’t
really care.
“We are basically making our values known to them during the
interview. We are telling people what is important to us during the
interview. It had better be important to you or you aren’t going to work
here! Respect is huge. Being here, showing up every single day, and
helping fellow team members out—that’s what we want from each other!
“The old way, no wonder you got people who weren’t necessarily
of your way of thinking. Recently, I got to work with another crew.
During the hiring process, we rotated through the interviewers with
folks who were with the crew only a short time. They thought that was
neat—being involved with hiring somebody so soon after they were
hired themselves…. That’s why we stress the importance of speaking
up—because they may see an easier way of doing something. Being
vocal is very important. Sometimes you can tell if a person is going to
have that potential. Some people just want to stay at one level. Others,
you can tell if they are asking lots of questions and wanting to get
involved. I’m getting a lot better at showing people as well. Sometimes,
I’m intimidated myself, but I think it’s great.”
Termination
Tammy Blotsky: “When someone starts on the team, I explain what we
do and tell them that they have the same say as any other team member
when working with, helping, reprimanding, and even terminating
other team members. Some people think it’s neat, some are really
intimidated; especially when needing to let someone go. It was shocking
to me. I didn’t know we could actually do that. ‘I get to voice my
opinion on whether I want this person on the crew?’ It was shocking!
I remember that I had been here only 12 hours and I had to face that.”
Corey Perryman: “This all starts with the SDWT questionnaire. Every
person who comes in…the thing they mark themselves the lowest on is
their ability to fire or reprimand somebody. This form is filled out when
they fill out an application, and it is then given to the crews to help them
out during the interview process. I get a lot of ‘wow, I can’t believe you
do that here’ reactions as well.
“Every person scores themselves real low on their comfort level
with hiring and firing others. They never had to do this before in a
previous job. It’s new to them. It’s a big responsibility. It can be an
intimidating thing for people coming in here, thinking, ‘I’m a new
person, and I’m going to have an equal say to someone that’s been here
for 15 years.’ They just want to fit in, and often vote how they think the
crew would want them to vote. It takes a while for people to be able to
speak up and do what they want, instead of doing what they think the
crew wants. That’s what it was like for them at their old job. They were
expected to go with the flow. Now, when they come in here, it’s like they
don’t believe us initially.”
LIFE AS A SELF-DIRECTED EMPLOYEE

Corey Perryman: “I think a person has to develop a comfort level with all
this. The new folks need to ‘see to believe’ that it is safe to speak up.
They are still hesitant. A person needs to feel that comfort level before
they fit in and really contribute.
“I explain to a new person what self-directed is to me. I know that
Ken Doggett does that, too, during the initial screening of a new
employee. You can tell by their body language whether they think it’s
great and want to take it further. Another crew has an ex-Marine who
sees the military as the exact opposite of self-directed. He loves it. He is
working very well with his team members who are taking this idea of
the differences between the two and going with it. Others just get the
‘big eyes’ and are intimidated by it. They don’t feel okay speaking up in
a meeting. You can tell by the body language who will really adopt and
go with the SDWT idea.”
Tammy Blotsky: “I tell them that this is the best opportunity you’ll ever
have at a job, because in a real sense, they are a boss just like anyone
else. They have to appreciate the help they get from one another and
give the same courtesy of helping others out.”
EVALUATIONS
Tammy Blotsky: “Everyone is going to evaluate each other. That’s the best
motivation tool. When you are working alongside someone else and you
know that in six months, they are going to be telling the whole crew
whether they think I’m doing a good job or not; that forces people to step
up and be honest. In our evaluations, you evaluate yourself first before
the rest of the crew does. So it forces you to be very honest with yourself.
Because if you’re not, you are definitely going to get called out on it!”
RESPONSIBILITY
Corey Perryman: “The difference between the old way and self-directed
is huge! We’re all responsible for what goes on when we are working
here. We used to write our individual names on the production test
sheets for the line we were running. We don’t do that now—we write
A-Crew. If something happens on Line 1, the Line 1 operator isn’t the
only one responsible—A-Crew is! Everyone is accountable. Everyone
has raised their bar. No longer are problems just taken out on the
supervisor. The crew sees that there are now consequences to not
stepping up, and we are rewarded for stepping up.”
Tammy Blotsky: “Who is the weakest link? We’ve had that conversation
lots of times. We then work with that person so that they aren’t the
weakest link. We want everyone to be an equal participant. The old way,
if someone made regrind on Line 8 for six hours, it was, ‘Thank God
that wasn’t my line! That’s not my problem!’ Now, people start
questioning what happened—everyone from the line operator to lead
staff. ‘What is with the problems over there?’ We discuss it during our
pre-shift meeting: ‘You need to step it up; you’d better step up inspec-
tion, or output, or whatever.’
“The old way, we would have looked at management to fix things
or just blamed the operator and thought, ‘What a jerk!’ Now that
everybody has equal say for everything, everyone appreciates the issues
and takes responsibility as a team to fix things.”
IS IT WORKING?
Corey Perryman: “I think success at NPP is summed up by everyone
becoming self-directed. When we first started, people laughed about it
and said it won’t work. Now they see that it is working. Crews are
combining numbers. They are pushing each other to work that much
better. You don’t want to be responsible for not making 95/3/2.1 It
forces everyone to raise their game to another level. Peer recognition.
You recognize what a poor job on your part will do to the rest of the
organization.”
Tammy Blotsky: “If you don’t care, we will do our best to find you work
elsewhere. We want someone who wants to work and will care. Peer
pressure is a big deal—getting people to contribute. The fact that you
are being rewarded as a crew is a neat thing. Managers give out small
monetary rewards—but that’s not as big of a thing as verbal recognition
like hearing, ‘The plant is running great!’ Praises from those guys
(managers) are rewarding to us.
“I think a big thing is that everyone attends company meetings, and
managers talk to other NPP employees face to face. Night crew attends
these meetings, too, by sending representatives.”
GOING BACK TO THE OLD WAY?

Corey Perryman: “No, that won’t happen. We will never go back to not
having a say in anything. I wouldn’t like that at all. It would be like being
asked to move back to the streets after living in an apartment for years.”
TOOLS
Corey and Tammy referenced several tools in the preceding narratives
that have become staples in the design and maintenance of self-
direction at Northern Pipe Products. The most recent iterations of each
tool are included on the following pages. Each was conceived and
originally written by HR director, Ken Doggett. The old notion of
human resources as primarily a clerical and recruitment function ended
with the dawn of self-direction at Northern Pipe Products. In the
current era, Ken remains the primary mentor to each team and
maintains daily, direct contact with team members. None of the
following is considered complete. All are subject to change in the event
that the team decides to explore new territory in the name of
improvement. As such, each is therefore a “work in progress.”
A-CREW CHARTER
The following are several excerpts from the A-Crew charter. Notice that
content is relatively free-flowing, and the language is their own. Ken
Doggett and Mark Boutiette continue to work with all teams within the
company to revise and improve their charters.
Self-Directed Work Team: A-Crew Charter

Values
Each member of the self-directed work team is working with their
partners to create a high degree of collaboration and unity. As partners,
we believe that the following values are essential to this goal:
We will support each other.
We expect full participation.
We will try to manage our own problems and issues as a team.
We will encourage freedom of choice.
We will have fun and enjoy positive feedback.
We will occasionally donate our own personal time.
We will treat each other as partners.
We will actively cross-train each other.
We will practice open communication.
Mission
Our mission is to set an example. If we work together to solve our own
problems with conviction and the right attitude, it will become a
“mission possible.” Just think about it—if we work and live as a self-
directed work team, what a better life this would be!
Team Operational Guide

This guide defines issues related to the mechanics of running our team
successfully.
Attendance
Team attendance requirements will be governed by NPP’s current
absenteeism policy. (See NPP company policy manual.)
Team members are responsible for notifying a team leader by 5 a.m.
should he/she be unable to report for work.
1st = verbal warning
2nd = written warning
3rd = suspension
Three written warnings for either attendance or tardiness issues
received within one year of receiving the second written warning will
result in termination.
A member of the team will record attendance daily.
Responsibilities include:
1. Record daily attendance and related notes.
2. Complete understanding of NPP’s attendance policy.
3. Communicate to team, individual’s substandard attendance
issues, document, and turn into the HR department for filing.
4. Provide team with attendance summary at team meetings.
Tardiness
Tardiness is considered reporting for work anytime after 5:45 a.m. If a
team member is tardy, their tardiness will be handled as follows:
1st occurrence within a 30-working-day period: Verbal Warning
2nd occurrence within a 30-working-day period: Written Warning
3rd occurrence within a 30-working-day period: 1-Day Suspension
(no pay)
4th occurrence within a 30-working-day period: Termination
Shift Change Meeting

The pre-shift meeting is from 5:45 a.m. – 6 a.m. Its purpose is to record
attendance, discuss prior shift problems, issue members current line
overweight reports, discuss work load (which includes scheduled line
changes and times, material or silo changes, rebelling projects, company
meetings and/or any other pertinent e-mail information that the team
should be aware of). Note: See Line Assignment Program.
The team leaders are responsible for obtaining this information and
clearly communicating such information on a daily basis. They will also
be responsible for securing additional labor should the team request it.
Team leaders will rotate this responsibility every other Friday. By
doing so, the team will not be affected by scheduled vacations, etc.
Shift Change: Line Assignments

The team mentor/trainer (1), also described as an extra, will be
responsible for assuring adequate packaging supplies, breaks, training,
and line changes. This individual will be assigned to open line should
absenteeism occur.
Forklift operator (1) will be assigned and perform these duties
exclusively. A backup will also be selected and trained to accommodate
vacations, etc.
Specialist in training (1) also considered an extra, will assist with all
line startups and shutdowns. The extrusion coordinator will oversee
this hands-on training to assure this individual becomes competent in
all aspects of extrusion operation, downstream equipment, and related
support equipment. This position will rotate every three months. A
competency report will be completed by extrusion coordinator.
Team leaders (2) will perform according to overall production
schedule and workload.
Shift Change: Beginning, Team Member Responsibilities

Team members assigned to a line will perform the following prior to the
other shift leaving:
1. Check product-wall thickness to assure it meets specifications.
2. Communicate with current line specialist to understand any
product issues or concerns. Wall thickness fluctuating? Inside
appearance of pipe? Saw problems? Rebells? Wax lines? Beller
problems? Etc.?
3. Review the shift change checklist.
4. Relay any issues or concerns to the team leader.
Shift Change: End, Team Member Responsibilities

Team members assigned to a line will perform the following prior to the
other shift leaving:
1. Access Report brought up for next crew. Assure all pallet
weights after 5:30 p.m. are entered.
2. Communicate with operator how line was running and any
problems that occurred through the shift.
3. Line is cleaned up and supplies available according to the shift
change checklist.
4. Micrometers, OD tapes, and tape measure is turned in.
5. EVERYONE WILL CHECK IN AT END OF SHIFT TO MAKE
SURE PAPERWORK MATCHES UP.
6. EVERYONE WILL CHANGE HIS OR HER OWN PRINT AT
END OF EVERY SHIFT.
Team Meetings
Team meetings will be held once a month. The purpose is to allow the
team an opportunity to discuss and resolve team issues. Note: Failure to
attend will be considered an absence under the team’s attendance
guidelines, unless given prior notice.
The team will appoint a member who will be responsible for
assuring an agenda is prepared, based on issues and concerns of the
team, for each two-week meeting.
The team will appoint a note taker who will be responsible for
assuring accurate notes are taken and distributed to team members.
We will also do some training during our monthly meetings.
Pay Periods: Time Review and Approval Process

The team has assigned this task to the member who is also responsible
for maintaining the team’s attendance records.
It is their responsibility at the end of each pay cycle to review and
approve each member’s entered hours and forward them to the front
office for payment.
Questions and/or discrepancies with the team’s hours will be
directed to this individual.
Production Scheduling Meetings

The team will have a member attending the weekly scheduling
meetings held on Thursday morning at 9 a.m. (when we work). It is
their responsibility to listen and communicate operational, packaging,
and/or staffing issues and concerns that may result in excessive burden
on the team to the scheduling committee.
In addition, this individual will be responsible for communicating

upcoming run schedules to the team.
The rotating team trainer/mentor will attend these meetings for the
two-week period.
Team Staffing/Interviewing
The team will requisition, interview, check references, and hire team
replacements.
This will consist of a four-member team who will be appointed by
the team.
These individuals will assume these responsibilities for a period of
six months and then rotate throughout all members.
This team will also be responsible for communicating the team’s:
1. Values and mission statement
2. Team charter and agreement
3. Safety/risk management program
4. Scheduling orientation with NPP trainer
5. Introductions to rest of team
6. Other pertinent information as required
Team Member Commitment/Contract Statement

We will hold ourselves mutually accountable for attainment of our goals.
All issues, mechanical or human, that negatively impact attainment
of our goals will be reviewed and resolved by the team. It is therefore
the personal responsibility of each member to perform his/her duties
according to process, actively participate, and contribute their intellect
in order to aggressively identify and resolve those issues impacting the
attainment of our goals.
A-Crew Employee Conduct Guidelines

A team member must support the team and any decisions that the team
makes.
A team member will fully participate with operation of the team
and any ideas the team develops.
Team members will treat each other as equals without excessive
negative feedback.
Team members are required to come to work well rested and have
a positive attitude toward other team members and the team in general.
(New Hire) SDWT Questionnaire

SDWT – Interview Selection Questionnaire
Name: ______________________________________ Date:____________
Purpose: Each of us brings a unique blend of attitudes, convictions,

beliefs, skills, strengths, and weaknesses to the table. Some of these are
known, others unknowable in advance, perhaps even to the individual.
This worksheet will help us to further identify individual behaviors that
would complement and benefit our team!
Instructions: Read each question carefully and answer accordingly.
There are no right or wrong answers!
The chart below will assist in identifying your "soft-skill" contribution to
team discussions and interactions. For example, when a team meets to
resolve a team problem, each team member contributes a different type
of perspective to the discussion, and tries to achieve a different effect.
Everyone can and does perform each team role, to some degree.
However, there are often one or two team roles that you perform more
than any other.
Team Role2 Summary of Products

Coach Build harmony/agreement in the team, try to create a
positive team atmosphere and reach a consensus.
Crusader Produce a sense of priority, stressing those issues that
have most importance so that discussions are focused
on the most valuable topics.
Explorer Uncover new potential in situations and people, explore
new areas and the possibilities they present.
Innovator Produce a sense of imagination, and contribute new
and alternative ideas.
Sculptor Bring things to fruition, produce action to address
the most urgent matters, and use tools or techniques
they know will work.
Curator Produce a better knowledge and clearer picture of ideas
and information. Clarify information and ideas.
Conductor Produce structure and introduce a logical organization
into the way things are done
Scientist Produce explanation of how things work and the cause
of problems, and generate models to demonstrate how
things work.
1. Based on the chart, identify which two team roles best describe how
you see yourself contributing to the team.
1. __________________________________________________________
Explain ____________________________________________________
2. __________________________________________________________
Explain ____________________________________________________
2. List the role that least describes your ability to contribute.

1. __________________________________________________________
Explain ____________________________________________________
3. Read each ability, and circle the answer which best describes your
level of comfort in doing so.
(1 = very difficult and 5 = very comfortable)
1 2 3 4 5 Speak your mind in front of a team.
1 2 3 4 5 Confront team member about substandard performance.
1 2 3 4 5 Dismiss a member of the team.
1 2 3 4 5 Committed to the long-term success of team.
1 2 3 4 5 Actively participate in team issues and concerns.
1 2 3 4 5 Sharing your knowledge and area of expertise with
everyone.
4. Read each activity and circle the number which best describes your
level of contribution to a team.
(1 = little contribution and 5 = huge contribution.)
1 2 3 4 5 Generates lots of ideas.
1 2 3 4 5 Natural ability with interpreting data.
1 2 3 4 5 Skilled in organizing activities.
1 2 3 4 5 Diligent in monitoring performance and scheduling
deadlines.
1 2 3 4 5 Immediate action in event of serious accident or injury.
1 2 3 4 5 Communicates team vision and purpose regularly.
5. Summarize a situation where you successfully persuaded others to
do something or to see your point of view.
6. Share with us what you consider to be your greatest strength.

Explain how this “strength” has contributed to your success in
past jobs.
7. Share with us what you consider to be your greatest weakness.

Are you working to improve this weakness? If so, how?
8. Name four things that you do in your job today, or have done in
past jobs, that would greatly benefit our organization.
1.
2.
3.
4.
9. What are your long-term goals? Briefly describe how this

opportunity would fit in to these goals:
10. Everyone has had a job they look back on and say “it was the best
job I ever had!” Share with us what that job was and what made it
the best job you ever had.
11. How have you demonstrated initiative?
12. Pretend you own a business. You need to hire some people, but you
can ask candidates only three questions. What would they be, and why?
1.
2.
3.
13. What are your core values?
Thank you!
Evaluations
Employee Review of Team Member Performance

The employee is to complete this evaluation for each member of his
or her team. This provides the opportunity to help the person being
evaluated improve his or her job skills, which, in turn, will help them
grow in their job performance. Assess their performance by checking
one of the ratings as defined by the following scale:
5 = Exceptional Performance – Exceeds all job objectives, standards
and job competencies.
4 = Exceeds Performance Expectations – Performance is notably better
than satisfactory and beyond expectations.
3 = Meets Performance Expectations – Consistently attains job
objectives; competent in majority of job areas.
2 = Approaching Performance Expectations – Does not meet job
requirements in certain instances; below standard.
1 = Conditional Performance – Marginal performance and in need of
considerable improvement. Serious.
5 (highest)
to 1 (lowest)
Interpersonal Skills
Maintains objectivity and emotional control in stressful
situations.
Contributes to preventing or solving interpersonal conflict.
Performs all duties in a safe, efficient manner and observes
all appropriate company safety regulations.
Production Task Skills

Efficiently packages, records, and inspects product
according to written requirements on ALL extrusion lines.
Regularly inspects product to assure conformance to
requirements.
Utilizes, monitors, and adjusts various performance
instruments (micrometer, OD tape, calipers, tape measure)
that indicate compliance with industry and company
quality-assurance standards.
Reviews the print sequence to ensure accuracy, legibility,
and overall appearance conforms to marking requirements.
5 (highest)
to 1 (lowest)
Production Task Skills – continued
Performs minor maintenance tasks to include routine
equipment cleaning.
Teamwork Skills
Takes initiative to assist other personnel in plant
functions as required.
Promotes and maintains positive, cooperative
working relationships with all plant employees.
Executes the production schedule in which jobs are
performed in sequence, according to schedule.
Takes breaks in a timely manner while considering
the workload of fellow team members and ongoing
production-floor responsibilities.
Communication and Continuous Improvement Skills

Constantly works to maintain a high degree of morale
and pride in the department.
Participates in self-development training on and off the
plant site.
Communicates employee concerns to management or
to appropriate supervisors.
Please feel free to write any comments or concerns on the back of this page.
A SPECIAL EXAMPLE OF SELF-DIRECTION

Otter Tail Corporation is a group of companies with a combined
employee group of over 3500 people. As Otter Tail’s President and CEO,
John Erickson faces a daunting task in coordinating internal and
external demands of his time and concentration. High on his professed
list of values-driven obligations is direct contact with each of the
subsidiaries, and it was therefore no surprise that one day he asked to
visit the plant. What transpired during his four-hour visit in the spring
of 2005 reinforces Corey and Tammy’s opinions and observations as
well as the aspirations of Northern Pipe Products’ leadership to build a
profitable and enduring culture of mutual trust and respect.
“John Erickson is really a regular guy, and he’s coming here

expecting to be put to work in the plant, just as if he were a new
employee!” That’s what I told Tammy Blotsky and Kristin Munro, my
mentee and “partner in quality.” It had all been worked out beforehand
that John would arrive in jeans and a work shirt, ready to actually get
his hands dirty making pipe, but the day’s activities were ours to direct.
I asked that they meet him in the lobby at 10 a.m. and just take it from
there. Kristin and Tammy were hesitant, but willing to give it a try—
after all, this was someone they both called “the head guy!,” and they
wanted to do a good job of representing the organization. In as many
words, they said that “putting the head guy to work” was an
overwhelming blend of opportunity and possible pitfalls. They
eventually decided that he was destined to run Line 2.
He did. Upon his arrival, Tammy and Kristin greeted John, and
Kristin briefly described the typical employee competence training that
a new employee would receive prior to actually running an extrusion
line. I’m told that Tammy took him through every major department,
introduced him to just about everyone on the floor, and eventually
settled him into making small-diameter pipe.
Those two hours of introductions, conversations, instructions, and
actual work alongside Northern Pipe Products’ people was a solid
statement of trust and mutual respect. No scripts were prepared
beforehand, and no one was told what not to say. It was never even
discussed. In fact, after what Kristin describes as the usual starting out
jitters, the entire event was natural, open, and freewheeling.
No one from management greeted him at the door. (To this day, I
don’t know if he was offered coffee!) Instead, most of the leadership
group was working on final touches to the open-book management
meeting scheduled for noon that day.
Management’s Turn
When midday arrived and the conference room began to fill as it
normally does for these monthly meetings, the leadership group intro-
duced ourselves to our newest employee. John was accompanied by
several members of his new “crew,” and we learned that while he did
well on Line 2, it was still uncertain whether pipe making would turn
out to be his true calling in life.
It was then time for leaders to summarize the financial results of the
prior month and year to date for our employees. In turn, Northern Pipe
Products employees are expected to ask questions about financial
results, company programs, and strategic decisions. All this occurred as
usual, but in the presence of our newest employee, our probationary

Line 2 operator.
Not only did we celebrate exceptional trust in each other through
our actions that morning, we also confirmed the final passing of an
autocratic and mechanistic culture. In its place, we simply gave each
other the gift of our better selves and passed that along as naturally as
taking a breath.
Transparency and communication are required of self-direction on
and between every operational level of an organization. In turn, this
openness breeds trust and respect, gives it substance and depth, and
unites the culture in its desire to improve within its circle of influence.
The power of ordinary people to do extraordinary things grows over
time from success within this realm of influence. And the more things
improve, the larger the scope, as those within the circle gradually realize
their greatest limitation was in not trusting each other.
The next several chapters challenge autocratic leaders to fully
recognize that authoritarian control is a distant motivator in com-
parison to an open, organic approach.
Part III
A New Commitment
120 96.0
Part III:
A New
Commitment
95.66
104.6
100 95.5
96.2 95.32
M I L L I O N S O F P O U N DS O F P I P E P RO DU C E D
90.3
80 3 4 95.0
P E R C E N T E FFI C I E NC Y
77.2
75.6
72.8
94.53 94.55
60 94.5
94.44 1 2
40 94.04 94.0
20 93.5
0 93.0
1999 2000 2001 2002 2003 2004
2005

67
6
There Is No Plan B
C
ortez burned his ships as a statement to his men that there was
no turning back—that the mission of conquering Mexico was an
all-or-nothing proposition. A modern-day business analyst would
question the logic of destroying perfectly good assets just to make a
point about commitment and focus. But that only indicates that
business logic doesn’t normally address the occasional need to strip
away all vestiges of comfort and safety to achieve big things.
I’m not addressing risk in the classic sense, where an organization’s
risk appetite might otherwise demand care and safety in moving
forward with a new program. In that context, business leaders are to be
commended for burning down the ships of resistance to change and
other classic disincentives thrown in the way of new ideas by those
whose first response is driven by a personal fear of losing comforts and
perks. However, classic risk management, where carefully developed
reports precede carefully implemented projects, doesn’t often carry
direct connectivity to personal risk. All those carefully written reports
are also developed in part to insulate leaders from potential program
failure. This is the risk that Cortez addressed head on by burning the
ships and thereby making it impossible to blame the original data or lay
claim to having been misled by the work of an underling. If modern day
managers were to model Cortez’s behavior, they would launch any new
project by ceremonially setting fire to all their analysis reports, market
surveys, and meeting summaries, and proclaim that from this point
onward there is only a common future that will require everyone’s
complete attention.
The whole subject of management involvement relative to
successful culture change is clearly one that emphasizes both as the
universal perquisite for success. Jack Welch, legendary CEO of General
Electric, once wrote the following to his shareholders:
69
70 Part III: A New Commitment
“In the old culture, managers got their power from secret
knowledge: profit margins, market share, and all that... In the
new culture, the role of the leader is to express a vision, get buy-
in, and implement it. That calls for open, caring relations with
every employee, and face-to-face communication. People who
can’t convincingly articulate a vision won’t be successful. But
those who can will become even more open—because success
breeds self-confidence.”1
To actually function as Welch describes, true corporate leaders must
be in the game not to get, but to give power to others through direct
leadership. Now, combine Welch’s thoughts about leadership with the
following from Bruce A. Pasternack and Albert J. Viscio. They make a
strong case for factoring chaos and change into the modern business
world, where competitors come in increasingly more shapes and sizes,
and at a rate that has never been faster.
They see this new world as one of “…far-reaching technological
advances, and a consumer who has adjusted to this quicker
pace and whose fickle preferences are revised with the speed of
a television commercial.”2
In the hands of a leader, as described by Welch, this speed of change
cannot be managed from the harbor, in the relative comfort of the
captain’s stateroom. Leaders have to get off the boat to manage in
Pasternack and Viscio’s world; and to remain competitive, they would
be well advised to flip a lighted match to the drapes on their way out.
Culture change at Northern Pipe Products required key leaders to
carry torches that were used first to burn down impediments to direct
involvement and accountability, and to then set fire to the suppressed
potential of our employees. In the process, we did all we could to pass
those torches to the team members themselves. Interestingly, a few had
to contend with their own, in some cases plush, conditions relative to
others and were reluctant to burn their own ships. Some didn’t make it;
others struggled with the strangeness of it all, mostly because there was
simply no prior model. In my work with other companies, I’ve often
had occasion to discuss our transformation from autocratic to largely
democratic operations with leaders attempting self-management.
Almost without exception, I find challenges from leaders who claim
that opposition would be greatest from the rank and file and not from
the management group in their companies. True, no one comes through
this without struggle, but when I hear these claims, it impresses me that
such statements are designed to keep their ships safely anchored in
calm corporate harbors.
Chapter Six: There Is No Plan B 71
If it’s true that employees, not management, are more resistant to a

participative work environment, then management is to be held
accountable for their lack of leadership. When top managers lay claim
to the unwillingness of those they lead to follow their vision, it’s time to
examine leadership carefully to understand why it’s justifiable to main-
tain the status quo.
US VERSES THEM
In the new world of speed, high risk, and opportunity, blaming the
masses from positions of power or, in fact, blaming anyone for anything
within the organization regardless of position, exposes the greatest risk
of all: Us verses Them. When Cortez burned his ships, he became as
much a refugee as any of his crew members. Demonstrably living
permanently on dry land with the rank and file, talking face to face with
those who, like himself, had no remaining reasons for criticizing
performance under sail, Cortez positioned himself as a leader of first
order. To those sailors who recognized that their hammocks were just as
cooked as Cortez’ blankets, he was suddenly not one of them but one of us.
Contemporary business needs both us and them working together
as never before to succeed in the current marketplace. Why is it that this
simple statement is so readily agreed upon by leadership and yet so
hard to achieve? Friction and ill-will between people is counter-
productive. Teamwork is undoubtedly preferable to other project-
management models. Yet, one after another, companies embark on Plan
A to bridge the gap between us and them, only to find the connection
elusive, risky, and unproductive. Our experience indicates that we
almost made the same mistake and would’ve come to the same
outcome if we hadn’t found our ships on fire hours before training was
to begin.
The trouble with Plan A is that an entire alphabet of other options
still awaits a failed attempt to change. This is exactly what they believe
about those of us in positions of leadership when the “flavor of the
month” is unveiled. Without the smell of smoke, who can blame them
for this perception? Without the smell of smoke, they can hold back
acceptance, since their current condition is relatively unchanged—just
as ours is largely unchanged when we walk back to our offices. Us and
them reinforce their respective positions on a constant basis. Given the
opportunity to cross arms and close ranks around a well-developed set
of beliefs, it’s natural to insist that tomorrow’s performance will be
more or less as it was today. And as long as each side remains true to its
prejudices, an appeal to improve (such as the introduction of self-
direction) is destined for eventual extinction by the time Plan G or H

arrives to breathe life into whatever remains of the program. Our
experience was that when there is only Plan A, it must be clear and
unambiguous—so much so that in terms of all past efforts, it exhibits
several unique characteristics:
• Top management is in charge and takes full responsibility.
• Top management freely admits to occasional lapses in judgment:
– We’re not perfect.
– We’re learning just as much as our employees.
If you prefer, we discovered that not having all the answers was one of
our greatest strengths because it gave us the opportunity to work with
our employees to arrive at a best solution. Us and them never became
just us, nor were we expecting anything along these lines. However,
the process of learning and teaching, listening, laughing, questioning,
and simply spending time together went a long way toward bringing
us together.
TIME CLOCKS? WE DON’T NEED

NO STINKING TIME CLOCKS!
Northern Pipe Products’ president, Wayne Voorhees is fond of his cigars.
Until the recent state-wide ban on smoking in the workplace, you could
expect to find Wayne’s cigar carried dotingly through the plant
sometime between 10:30 a.m. and noon on any given day. Living the
adage of leadership by walking around, Wayne is therefore highly
accessible during his cigar breaks, and one day an employee approached
him with a question about our values. Those of us within the leadership
group had recently been quite vocal about the importance of living our
values for one reason or another, and this employee was either testing us,
sincerely confused, or perhaps a little of both.
His question to Wayne was about time cards— specifically, whether
time cards were appropriate in a company that made strong claims
about values such as honesty and trust. This person reasoned that if we
really trusted each other, time cards could be eliminated in favor of
trusting employees to report their daily hours on a simple spreadsheet.
Why would we still use a system that in many ways symbolized the
worst of the industrial revolution when simple trust could accomplish
the objective in a much more respectful manner?
When Wayne returned from his walk and described the time card
discussion with this employee, several of us were skeptical. Was this a
Chapter Six: There Is No Plan B 73
genuine concern or just a clever way to engineer cheating on a person’s

hours; might the motivation for asking that we eliminate time cards
simply be to mock us with our own words? Of course, Wayne pointed
out that, instead of looking for whatever angle this individual might be
trying to exploit, we might need to rethink our stated values.
After all, we either do or do not trust our employees! And if we say
that we do, any venture into whatever distrustful motivation we care to
imagine is simply an indication that what we really believe is far less
than what we say. We were forced to look deeply into a mirror over the
issue of discontinuing time clocks, and the exercise was as good as any
to turn a corner and leave old ships behind. Had we been fully aware of
our surroundings, we might have discontinued their use on the first day
we unveiled our values, vision, and mission statements. Doing so
would’ve been the equivalent of burning some ships that have been
moored in the harbor for far too long. And, as said earlier, making it
clear that there’s no turning back at the point of introduction carries a
powerful message to the masses. In our case, “We don’t need no stinking
time cards!” would have meant far more as a concrete example of values
in practice than all the claims of trust we’ve issued before or after.
Once time cards were eliminated, a rush of efficiencies followed.
Our office manager, Sandy Olson, no longer had to painstakingly
review each time card every week to ensure that employees punched in
or out correctly. Employees were very attentive to faithfully reporting
their time accurately. Time cards were easy to use, but with a lapse of
concentration, could just as easily cause someone to lose half a day’s
pay if, for example, they forgot to punch back in after lunch. Without
time cards, payroll could now simply link to production-labor
spreadsheets, and eliminate hours of key punching and review of
employee hours.
In short, eliminating time clocks was a highly cost-effective thing to
do. It affirmed our values, and lessened issues of control and power
between us and them. And while it’s true that the plastic and metal of
the machines themselves couldn’t be expected to hold a flame, the cards
might have served us well had we the foresight to burn them all the day
we proudly made our values statement public.
SMOKE SIGNALS
From time to time, little opportunities presented themselves to indicate
that we were operating differently. For example, employee lounge
issues gradually became less and less a result of disrespectful behavior.
People began to see the lounge as a place that was more welcoming if
kept clean, and in time more trash ended up in the trash can than on the
floor. The volume of e-mails about cleaning up and stolen food

decreased as teams built respect for themselves and the plant.
The average age of cars in the parking lot is less than it was in 2000,
and most are better maintained. The production staff is simply not the
same as it was. As a group, they operate under a higher standard than
the people described in the preface to this book. They were selected by
their peers, not management, and the result is a different population.
They work according to new standards that they have developed. Eye
and hearing protection were not required in 2000, but are standard
apparel in 2005 as a combined team decision.
Perhaps most revealing is the new drug policy that teams
developed recently in response to several substance-related incidents
on the floor. With an eye to safety, the majority came to the decision that
mandatory drug testing was the best insurance against those who
worked “under the influence,” and a program was started in the
summer of 2005. As of this writing, just one individual was found to be
an offender and has undergone counseling, as is the policy for a first-
time incident. One is a remarkably small number and a very strong
statement in a population of over 100 people. With national averages
anywhere between 10 and 20 percent of the population involved in
recreational drugs, one in 100 is a survey result most employers would
only dream of achieving.
PLAN A
Deciding to invest in cultural upheaval is a high-risk proposition. From
any vantage point, the odds of predicting outcomes with any real
certainty are slim. As this work is largely a matter of faith in a well-
intended effort, rapid and strong consensus is a first order priority. To
do that effectively requires everyone’s undivided attention. That was
Cortez’s reasoning when he decided to light up the harbor of Vera
Cruse, and it was ours when we decided to end 20 years of
authoritarian practices. If the goal is to move everyone forward, leave
nothing behind that allows for retreat and yesterday’s comforts.
Plan A is all there is when there is no plan B.
7
Servant-Leaders
T
raditional managers occupy a higher position—one detached
from the workers, primarily because they are responsible for
maintaining order and control. They often have individual offices,
in part to provide privacy for decision-making and meeting with
individual workers to discuss personal matters. In other words,
management has its perks, and the trappings of traditional manage-
ment have evolved to the point where traditional workers simply accept
them. In 2000 and 2001, we modeled this approach in executive offices
at the front of the building for managerial and executive staff. Pipe
production was an activity that took place on the other side of a well-
designed, almost soundproof 18-inch concrete wall. Our corridors are
carpeted; the plant floor is concrete. We have windows and climate
control; they have neither.
Today, we still have the same layout, but the degree and types of
interaction between managers and workers is much different. Mark
Boutiette and Ken Doggett’s office space may be on the other side of the
wall, but the amount of time spent there is far less than it was several
years ago. And if either Mark or Ken are working at their desks, it’s not
at all uncommon for literally anyone to drop in and begin a
conversation. What’s the primary difference between today and
yesterday? The concept of servant-leaders.
WHAT IS SERVANT-LEADERSHIP?
Robert Greenleaf, the man who coined the phrase, described servant-
leadership in this way:
“The servant-leader is servant first… It begins with the natural
feeling that one wants to serve, to serve first. Then conscious
choice brings one to aspire to lead. He or she is sharply different
from the person who is leader first, perhaps because of the need
75
to assuage an unusual power drive or to acquire material

possessions. For such it will be a later choice to serve—after
leadership is established. The leader-first and the servant-first
are two extreme types. Between them there are shadings and
blends that are part of the infinite variety of human nature.
The difference manifests itself in the care taken by the servant-
first to make sure that other people’s highest priority needs are
being served. The best test, and difficult to administer, is: do
those served grow as persons; do they, while being served,
become healthier, wiser, freer, more autonomous, more likely
themselves to become servants? And, what is the effect on the
least privileged in society; will they benefit, or, at least, will they
not be further deprived?”
(Taken from Servant As Leader published by Robert Greenleaf
in 1970.1 )
The Greenleaf Foundation is dedicated to the advancement of
servant-leadership.2 A trip to their Web site is highly recommended as they
offer a large array of articles, books, and links to other servant-leadership
sites. Among them is a reference to TDIndustries of Dallas, Texas, multiple
winner of the annual Fortune magazine poll, 100 Best Companies To Work
For. In fact, TDIndustries ranked No. 7 in 2004 and shares the honor with
the likes of Adobe, Edward Jones, the Container Store, American Cast Iron
Pipe, JM Smucker, and Wegman’s Supermarkets.
Every one of these companies has a similar message. For example,
an Adobe press release of January 10, 2005 contained the following
paragraph, one that would just as easily apply to most of the other top
companies on Fortune’s list:
Adobe's core values include commitment to conducting
business on the highest ethical basis, providing a dynamic and
team-oriented work environment, fostering innovation and
creativity, giving back to the community, providing exceptional
value to customers and stockholders, operating with excellence,
and inspiring and empowering employees to become leaders.3
Research indicates that each company in its own way is clearly
people-centered, highly principled, values driven, and successful. Each
shares a common theme that can be loosely expressed as “regardless of
the product, do right by your people and success will follow.”
The traditional CEO enjoys the largest office and prime window
space. The CEO of TDIndustries works out of a standard office cubicle.
Northern Pipe Product’s president, Wayne Voorhees, took several years
to buy a new desk, and, instead used two standard folding tables in
Chapter Seven: Servant-Leaders 77
what he probably will always call “Mick’s old office.” Jim Collins’s book
Good to Great makes a convincing case for what he calls a Level-5 leader,
an individual who leads gently and with reserve in order to allow for
employee growth and expression.4 At one point in the book, he
characterizes the Level-5 leader as one who leads in crisis by looking in
a mirror, compared to the self-absorbed, celebrity CEO who looks
instead through a window at his employees.5 The involved leader is
concerned with his place in the incident; the self-centered leader looks
through the window for a scapegoat. In each of the companies within
the Fortune poll, it would be expected their success be traceable to an
enlightened Level-5 leader.
With the luxury of 20/20 hindsight, we’ve come to believe that self-
direction is a Level-5 activity and requires three primary qualities of its
servant-leaders:
• An unwavering belief in the potential of others
• An innate ability to listen
• Lifetime commitment to coaching and training
Our experience differed from what we read or heard from other sources
because it was implied that, at some point, we managers would quietly
return to our offices as employees took up the banner of self-
determination and self-management. Not so. Ken Doggett is actually
more engaged today than he was during initial training. Mark Boutiette
is similarly taxed with generating reports, conferring with engineering,
and, most important, getting out to the floor and answering workers’
questions. All three of the above qualities are central to servant-
leadership, but in the long run, time to relate to and work with others is
most important.
INVOLVEMENT, NOT ABANDONMENT

This observation opens up another of the self-direction myths: once
trained, workers can essentially run the show. Traditional leaders
expend resources and expect return in a mechanistic, cause-and-effect
manner: Train the employees, give them the resources they need, and let
them take it from there. Traditional managers come out from time to
time to look for progress and then return to their offices. This is not
servant-leadership. Behavior such as this is merely resource allocation
and monitoring. Training people simply to use a new press, marketing
program, or software application is mechanistic. While skills training
does have its place, training designed for a specific one-to-one
application is not about people as much as it’s about a person’s proper
use of an asset.
Teaching people to trust and respect each other has no connection

to tangible objects, and is therefore inherently organic. You can’t say
beforehand what will be the outcome—except that it will hopefully be
a better one than if the training hadn’t taken place. And because organic
things require constant care and feeding, managers can no longer expect
to retreat to their offices “once their job is done.”
In other words, a servant-leader’s job is never complete and the
outcome never assured! No wonder the traditionalist recoils at the concept.
But our experiences and those of the highest ranking in the Fortune Top 100
make clear that mechanistic, cause-and-effect management simply doesn’t
have the power and return of an empowered workforce.
Still, the traditional science of management largely avoids the
whole notion of chaos and variation in favor of planning and training
for an expected control. But chaos and variation are essential to the
human experience. (“What we imagine is order is merely the prevailing
form of chaos,”6 says Kerry Thornley.) If the old adage, “the best laid
plans often go astray,” means anything, it’s that variation is always
expected and often disabling. Yet traditional management still
stubbornly acts as if a reasonable amount of resources, spent within a
predefined timeframe, will provide them with the required controls.
Once again, this is mechanistic in that the same might just as easily have
been said in regard to preventing engine problems through regular oil
changes. And, of course, we are all aware that changing the oil (a “best
laid plan”) carries no ironclad guarantee of engine performance (“gone
astray”). Any parent knows that children require constant attention.
Any mechanic knows that machinery can rarely be expected to last or
perform at its best without frequent monitoring and adjustments of one
type or another. Any scientist knows that the experimental process has
the potential for unknown variation and therefore requires close and
continued study and analysis.
And none of these states of affairs produce excellence through partial
or conditional commitment. Organic development is uncertain and
unstable, and anyone in charge of an organic process has to be involved
to the extent that variation remains within acceptable limits. The correct
degree of involvement is rarely predictable, just as a gardener cannot be
certain how much watering any one plant will require. Organic
management is the business of supplying nourishment, not simply
resources or traditional training, to people within an organization.
Watering a plant, feeding a pet, and attending church are nourishing
activities, but none carries a guarantee of life or spiritual health. Each,
however, requires a concerned and actively involved sponsor to tend the
garden, care for the pet, and minister to the congregation.
Watering a plant according to a strict process can kill it. Each plant is
different, and each day will contribute differing amounts of light and
heat. If the process requires watering twice a week, but the plant begins
to die, the sane gardener will cut back the watering frequency and
watch carefully for a positive reaction. They will use all their senses in
real time to actually coax the plant back to health. But in a mechanized
system that knows only what the process is programmed to administer,
over or under watering is not only possible, but also probable.
Figure 7.1 The process of watering a plant.
Servant-leaders coax and coach their players. They are a source of

wisdom, experience, and nurturing much the same as a great coach in
any sport:
• They are on the sidelines, not in their offices, during the game.
• They’ve planned and trained extensively for game day.
• They know some players as well as some family members.
• They love the game.
• They take a loss or a win personally and do whatever they can
for the team to learn from their mistakes and quickly turn their
attention to the next game.
• They enjoy practice and time spent with their players.
• They know to take time for individual players and work one-on-
one at their level, because to strengthen one is to strengthen all.
• As they come off the field, they listen closely to key players to
understand difficulties from their perspective in order to make
the best adjustments.
• They rarely take credit for a win, but direct praise to their players.
• They always take credit for a loss and direct criticism to themselves.
• They never wear a player’s uniform and enter the game. Their
place is on the sidelines.
TEAM LEADERS
Self-directed work teams also have their own servant-leaders. At
Northern Pipe, the team chooses their own leaders to help them manage
and facilitate their activities. Things simply work best when someone is
in charge, even if leadership rotates from one team member to another
throughout the year. Of course, this is invaluable experiential training,
a natural proving ground for present and future leaders of the company.
Our experience has been that no one team develops in similar fashion,
and that the same is true for the leadership structure and duties that
evolve within the team. The maintenance department uses its two most
senior members to facilitate meetings, write meeting minutes, and work
within the team to develop upcoming agendas. The team veteran,
within team-defined staff specialties, assigns daily and emergency work
projects as they arise. The entire team wrote their team charter booklet
and decides who will work on long-term or major projects.
A-Crew rotates its team leader from one month to the next. The
team decides who the next leader will be during a team meeting.
C-Crew is now doing the same, and one member commented that it’s the
smartest thing they’ve done in some time. In both teams, individuals are
chosen when the team decides they are ready to tackle the job; integral
to the decision is the degree of successful training they’ve amassed.
Successful training at Northern Pipe Products means that the employee
received one-on-one training and then passed a written and
demonstrated skills test to become certified at one of five levels of
defined competence.
Two members of C-Crew commented recently that once a team
member goes through that first month as team leader, they’re “changed
employees.” They gain a new and powerful respect for the difficulties
of scheduling, coaching, testing, arranging the break schedule,
managing absences, and learning how to best approach each team
member during the shift. Remember the Adobe core values press
release mentioned earlier? The last phrase of that release is precisely
what our self-directed teams are now doing: “inspiring and
empowering employees to become leaders.” Servant-leaders.
CAPITAL – REAL AND HUMAN

Real capital is easily understood as what an organization can sell. When
a company states its assets on a balance sheet, it does so by listing all its
man-made resources, such as machines, factories, offices, inventory, and
cash on hand. In other words, capital is one of the factors of production:
“(Capital is) the existing stock of goods which are to be used in
the production of other goods or services and which have them-
selves been produced by previous human activities. Capital is
conventionally subdivided into "fixed capital" and "circulating
capital," although the distinction is mainly a matter of degree of
durability rather than a clear-cut difference in kind. Fixed capital
refers to durable producers' goods such as buildings, plant, and
machinery, while circulating capital refers to stockpiles of
materials, semi-finished goods, and components that are
normally used up very rapidly in production. Notice that

"capital" in the strictest economic sense refers only to real,
physical means of production already in being, not to the sums
of money put aside through savings to purchase real capital with
in the future (although the total amount of capital in a particular
firm may for convenience be described or summarized in
monetary terms by the potential resale values of all the separate
items of capital added together in one grand sum).7
This definition, one that so clearly links things and not people with
real capital, has special significance because human capital is what
makes the entire enterprise function. Put another way, human capital is
in charge of protecting, maintaining, and maximizing real capital. Real
capital is prominently represented in the financials; human capital is
less directly represented within general ledger categories such as street
value or the value of good will of the organization. The point is that hard
property such as buildings, tools, and machinery are traditionally and
functionally first in the minds and language of top management, while
the people that manage them are footnotes.
To quantify human capital gets tricky simply because an invest-
ment in people can literally walk out the door at any moment. Training
someone to work more effectively is only an investment if that person
remains employed long enough to recoup the company’s cost to train
them in the first place. Interestingly, if employees were slaves, it would
then be possible to refer to them as capital assets, but even past
advocates of slavery made clear that they struggled every step of the
way to force production from their “property.” Human capital is chaotic
and prone to all sorts of physical and psychological variation—so much
so that traditional management naturally claims that it has little choice
but to implement controls to ensure order and continuity.
The process approach has rightly gained prominence as an ideal
methodology in modern quality management because it manages an
organization’s resources through controls that can be measured.
Furthermore, most organizations continue to address resources in terms
of real, not human, capital. Process design is about maximizing, or at the
very least not squandering, the potential for a company’s real assets to
perform at optimum levels; they represent a known investment with an
expected return. Controls and performance measurements of these hard
assets are mechanistic in nature and intent, as they seek answers that
essentially confirm an expected result. For example, a high-speed
printer, acquired to improve the print output of a particular department,
is purchased based on its pages-per-minute claims. Therefore, in a matter
of hours, it may be possible to asses the decision to buy the printer based
on the higher volume of paper that now leaves that department.
But no such gauge is as readily available to assess improved quality

of information per page, and if one were available, it would require
much more than a few hours to measure effectively. Instead, higher-
content quality is a product of far more interpersonal contact between
those who send and receive information. And it requires greater effort
to define why and how this information is important to both parties.
The classic process approach is about hard assets; the organic
process approach is about human capital. We’ve stumbled on an
elegantly simple truth through implementation of self-direction:
manage each separately; measure both equally.
MANAGE, MENTOR AND MEASURE

Manage people as a mentor to help them reach their true potential.
Manage assets as a tool to mentor people. Measure both in terms of
improved output. When an organization’s soft assets are devoted to
maximizing its hard assets as an opportunity for personal success and
expression, hard assets become tools to achieve positive results. For too
many decades the mantra, “Take care of the people and good results
will follow” has required an act of faith on the part of top management
simply because there was little to offer in regard to a workable process
for managing an organization’s human capital. Self-direction is that
process because, while its focus is on personal advancement and
opportunity, its controls and measurements are designed to protect and
improve the tools of its success.
Taking care of people so that they can better care for themselves is
not only noble, but liberating and pragmatic. The cleanest tools are the
product of pride and deep appreciation for the proven good they can do
for their owners to ensure success. Top management no longer needs to
remind a self-directed team of the value of clean floors, sharp tools, and
attentive work practices. Because management and employees are
bound up in a symbiotic system, measurement of success is most
directly and appropriately determined through changes in output of the
entire system of investment, both in people and their tools.
Mentor people to achieve their potential through use of the
organization’s tools and measure both through the final output of the
system. Or, as every coach knows, work with the team to play at their
very best and to master the tools of their sport. In the end, regardless of
the opponent, accept the final score as a measure of success and/or
opportunity for future improvement. The next chapter closes our
discussion of self-direction, as we call your attention to our scoreboard.
8
Return on Investment
W
e’ve come to the point where numbers are required to support
the bottom line, measurable benefits of self-direction at
Northern Pipe. Northern Pipe’s Cost of (poor) Quality program
(CO(p)Q) and our open-book management meetings have, if nothing else,
laid a foundation for appreciation of financial performance as a prime
indicator of program success. Starting in late 1999, we developed several
detailed and specific families of costs that are tracked on a monthly
basis. Scrap rates and efficiency calculations were relatively easy
targets. In the case of self-direction, however, human asset investments
were a bit harder to define and calculate. For example, self-direction
incurs additional meeting costs. We capture these hours by recording
attendance on a laptop in the conference room. Much the same is done
electronically for other meetings and training sessions, and the total
number of hours is eventually factored into monthly CO(p)Q reports.
The financial impact of X number of staff and management people
involved in various meetings, while consistently calculated each month,
was at first based largely on informed estimates. Over the first several
years, and with improvements in both reporting accuracy and
calculations of true investment amounts, we came to believe in the
importance of regularly monitoring CO(p)Q to see if the numbers were
going in the right direction.
CO(p)Q
Cost of (poor) Quality is a measure of four classic expense types: pre-
vention, appraisal, internal failure, and external failure. Often, the latter
two are combined into a single category loosely called process failure.
Northern Pipe Products has been tracking CO(p)Q since 1999 with a
goal of less than 5 percent total waste in these categories as a percentage
of the price of a pound of resin during the reporting period. We measure
everything against the price of resin and have done so since our earliest
83
days. So it is a natural thing for us to distill down and track costs such
as shipping, blending, maintenance, and administration relative to the
price of our most basic commodity, the resin we purchase to make pipe.
As a crude example, adding together the number of hours in
meetings and training (a prevention cost), product testing (an appraisal
cost), dollars lost in regrind (an internal failure), and customer claims (an
external failure), we not only compute total waste in dollars, but can also
depict percentage of waste by type. We examine these reports monthly
and create a master report annually for what we call our annual quality
review. In 2000 (Figure 8.1), our CO(p)Q “profile” for the entire year
reflected failed product testing, resulting in internal and external failure.
Not surprisingly, effective appraisal is strongly allied with employee
competence, commitment, and training, all essential to team success.
External Failure
Costs 6.75%
Prevention
Costs 23.89%
Internal Failure
Costs 62.44%
Appraisal Costs
6.92%
Figure 8.1 2000 Cost of (poor) Quality percentage breakdown.
In 2004, (Figure 8.2) our annual review depicted a different

organization:
Increased appraisal—far more than simple inspection prior to
shipping generated by team accountability and leadership—
appreciably reduced external failure and continues to whittle away at
internal failure costs. The investment in appraisal continues to make
financial sense, even as teams concentrate on prevention in the form of
improvements in training to further reduce the need to inspect and test
to ensure product quality.
But the goal has always been to drive the total CO(p)Q to below
5 percent in a given year. In order to accomplish this, plant operations—
both hard and soft assets—must be performing at exceptional levels.
Chapter Eight: Return on Investment 85
External Failure
Costs .31% Prevention
Costs 22.55%
Internal Failure
Costs 60.44% Appraisal Costs
16.70%
Figure 8.2 2004 Cost of (poor) Quality percentage breakdown.
This overriding goal differs from those outlined in Figures 8.1 and 8.2.
They represent a categorical breakdown of where we spent money in
non-value-added activities in a given period, whereas the goal of less than
5 percent total waste combines all these categories into one number.
Figure 8.3 indicates that we finally achieved our goal in 2004:
Cost of (poor) Quality

(Total waste as a percentage of the price of a pound of resin)
2000 2001 2002 2003 2004

5.69% 6.08% 6.34% 5.12% 4.96%
Figure 8.3 Cost of (poor) Quality as a percentage of pound of resin.
Consider that these figures can be expressed in very simple and

direct terms as the number of pennies it takes to transform a dollar’s
worth of resin into industry-leading pipe products. “Top quality for a
nickel or less” has been a goal worth achieving in an industry where we
calculate costs in fractions of pennies and the fluctuation of materials
costs can bring either huge gains or losses.
But other factors, also tracked and measured each month, were
required to publicize how we might achieve 5 percent or less CO(p)Q.
We’ve learned that big goals are reached through small steps and
careful monitoring of manageable components. In our case, we
concentrated on conversion efficiency and pounds of resin processed

per work hour.
CONVERSION EFFICIENCY
Figure 8.4 is particularly interesting in that ISO implementation in late
1999 appears to have produced a positive effect; however, the chain of
events that launched self-direction created far more improvement
within the system. Kevin Berlin’s appointment to master setup
associate—to train and help the teams—was the starting point:
96.0
95.66
95.5 95.32
B-Crew SDWT
April 2003 C- and D-Crew SDWT
95.0 May 2003
PERCEN T
94.53 94.55
94.44 A-Crew SDWT
94.5
May 2002
94.04 Kevin Berlin –
Extrusion Coordinator
94.0 April 1, 2002
93.5
93.0
1999 2000 2001 2002 2003 2004
Figure 8.4 Conversion efficiency.
Steady improvement followed in reaching the overall goal of 95 percent

or better efficiency, defined as the ability to produce pipe as close as
possible to all established targets. Teams are currently working to break
through the 96 percent barrier as an annual average efficiency, a
remarkable statement in that back in 2000 no one believed it possible to
achieve what we’ve seen in the last several years. As far as dollars are
concerned, efficiency savings per year are depicted in Figure 8.5:
Annual Efficiency Savings
2000 2001 2002 2003 2004

$73,905 $13,995 $3,626 $160,082 $89,170
Figure 8.5 Annual efficiency savings.

Chapter Eight: Return on Investment 87
POUNDS PER WORK HOUR

During the same period from 1999 through 2004, we also looked closely
at another component of effective production especially important to
pipers. More pounds of quality products in the same space of time
usually equates to greater profitability. The annual average pounds per
work hour displayed in Figure 8.6 are not, however, a switch to more
heavy walled products during this timeframe. It would also be much
easier to post and maintain impressive production output by reducing
the type and number of pipe products we offer the market; at present
over 350 are listed in our PVC catalog. This in turn averages out to
between 30- and 35-line changes per month, another “numbers killer”
when considering how much more efficient a series of dedicated
extrusion lines making heavy walled pipe would be during the same
time period. Regardless, the annual increase in average output, from
600 to slightly over 1000 pounds per work hour, reflects impressive
control, fully in keeping with all other noted improvements:
1,200
1,051
Kevin Berlin – B-Crew SDWT
1,000 Extrusion Coordinator April 2003
April 1, 2002 852 865
C- and D-Crew
800 756 SDWT
A-Crew SDWT
POU N D S
May 2003
617 May 2002
594
600
400
200
0
1999 2000 2001 2002 2003 2004
Figure 8.6 Pounds per work hour.
SUMMARY
The return on investment for self-direction is obviously more than the
financials or these charts might indicate, especially regarding morale,
retention, safety, and customer satisfaction. As is often the case with
improvement in human resources and working conditions, most of these
returns lie below the radar. Other than as an expense, the new lounge,
cleanliness projects, training costs, and rewards programs are typically
not considered capable of demonstrating a return. Of course, they often

do add to the bottom line, but exactly where is tough to identify.
Further clouding the issue of quantifying an investment in people
is the concept that a healthy work environment ships its culture along
with its products. The reasoning is that a dissatisfied worker, angry with
top management and bitter about general working conditions, is more
apt to be insensitive to providing the best possible product to the
customer. Northern Pipe Products, just as Ben and Jerry’s Ice Cream,
Apple Computer, and Saturn automobiles, claim our products to be an
extension of our culture. Woven throughout each of their promotional
materials are pictures and testimonials of satisfied customers and the
inventive, fun-loving and/or focused workers that produced the
products the consumer is being asked to consider. But smiling faces
aside, measuring the success of this approach is all about the bottom line:
“If sales and revenues are up, it must be working!” But who’s to say
what percentage of influence is attributable to design, tooling, or
supply-chain management compared to a smile on the face of the
people who actually make iPods, ice cream, or C-900 water pipe? Yes,
we ship our culture in each bale of pipe we produce, but today as never
before that culture is a focused combination of capital assets managed
by teams of self-managed people.
We never stand still. Self-direction at Northern Pipe Products took
hold and gained momentum during a time when process controls and
machinery upgrades continued at their normal rate. Our quality policy
is simply continuous improvement and remains a basic fact of our
operational life. In retrospect, our intent as servant-leaders was to
transfer power from machinery to teamwork, knowing all along that
these teams would face the added challenges of learning to integrate
equipment upgrades and work practices while simultaneously
undergoing transformation to self-management. However, the subject
of the conflicting needs of people and machines never actually arose for
one simple reason: it’s always been this way. We’ve always looked for
better outputs, better methods, or improved procedures, but until the
era of self-direction, the machinery came first. Improvement statistics
over the last several years were not the product of the addition of any
one significant tool, formula, or process upgrade. We continued to
operate eight extrusion lines during this timeframe. We did not
completely retrofit the blending facility, add brilliant new lighting, or
break ground for a state-of-the-art chilling system. Self-direction was
the significant “celebrity” project during the timeframe from 2001
through December of 2005.
9
The Climb to the Top
T
hroughout this process, we found that the “right time to act” came
to us intuitively, not through advanced planning and discussion.
With the benefit of hindsight, it appears that we advanced much
as a mountaineering team climbs to the summit:
• We progressed slowly, one hand-hold, one tentative step
at a time.
• At a highly personal level, we knew that failure was not
an option.
• We took frequent rests and planned for the next phase as we
caught our breath.
• The original plan was naively simple: “Go up!”
• Our primary guide was a vision of life at the summit.
Even with all the uncertainty within the process, the return on
investment continues to be huge. No one manager could’ve accomplished
the degree of improvement and actual, bottom-line profitability that
self-management brought to Northern Pipe. We are quite confident that
self-management—and not some other mechanical influence—was the
primary catalyst for improvement; interviews with several team members
and production manager, Mark Boutiette confirmed this to be the case.
According to them, the primary change occurred when failures became a
team responsibility. Instead of privately giving thanks that someone else
made a mistake, team members became publicly responsible for each
other’s work, and improvements on all levels followed.
You may remember from the first chapter that the culture of
Northern Pipe is strongly in favor of “sharp tools.” The years preceding
self-direction relied on preventive maintenance and top-of-the-line
machinery—well oiled, clean, and attended to by experts. The
89
maintenance department relied on itself and a few others to maintain a

sharp edge at all times, especially in light of the constant threat of
employee indifference, poor training, and high turnover. Sharp tools
and dull people may have produced an acceptable product, but with the
rise of sharp tools and sharp people came advances that machinery
alone could not achieve.
Expanding the mountaineering metaphor, we did not convert to
new ropes, pitons, or hiking boots in mid-climb. It wasn’t improve-
ments to hardware that got us this far. Instead, team members realized
that maintaining a tighter rope between them, taking small steps, and
meeting more frequently to talk about the climb created significant
improvements.
In the end, the climbers’ use and appreciation of their gear did
change as they took on new responsibilities and improved performance
targets. The landscape changed, confidence increased—and as results
became tangible, more became possible than was first imagined.
2005 AND BEYOND

After five years of consistently improved production numbers, it became clear
that our quality management system was measuring a successful program.
Throughout 2004, Mark Boutiette sent at least a half dozen e-mails to
everyone in the company praising one thing or another. Here’s an example:
From: Mark Boutiette
Sent: Friday, December 10, 2004 9:50 AM
To: 'Aaron Kindelspire'; 'Alan Kindcade'; 'Alan Kruszka';

'Andrew Harlan'; 'Becky Barry'; 'Bernie Cole'; 'Brenda Clausen';
'Brian Krous'; 'Bruce Piechowski'; 'Bryan Fern'; 'Calvin Samek';
'Casey Anderson'; 'Casey Twedt'; 'Chad Bjerke'; 'Chris Shirk';
'Christopher Allmaras'; 'Clay Miller'; 'Corey Perryman'; 'Craig
Thompson'; 'Curt Brewer'; 'Daniel Colbert'; 'Danum Hofland';
'David Cerna'; 'Derek England'; 'Don Melting'; 'Don Pflugrath';
'Doug Benning'; 'Duane Schmitcke'; 'Dustin Mohagen';
'Elizabeth McPherson'; 'Gustavus Marine'; 'Isuf Bahtiraj'; 'James
Halvorson'; 'Jamie Seefried'; 'Jason Cummings'; 'Jason Ulmer';
'Jeff Martens'; 'Jeffrey Walterman'; 'Jerry Griggs'; 'Jill Walden';
'Jim Motis'; 'Joe Elledge'; 'Joel Schumacher'; 'John Meyer'; 'John
Rozall'; 'John Walrod'; 'Jose Rios'; 'Josh Johnson'; 'Josh Nelson';
Chapter Nine: The Climb to the Top 91
'Juan Espinoza'; 'Keith Lindsay'; 'Kelsey Brocka'; 'Ken Doggett';

'Kenneth Greywind'; 'Kevin Berlin'; 'Kevin Bjornson'; 'Kevin
Ehrenstrom'; 'Kevis Haas'; 'Kristin Munro'; 'Lance Logan';
'Lance Savageau'; 'Lyle Ganyo'; 'Mark Boutiette'; 'Mark Maine';
'Mark Thompson'; 'Matthew Trangsrud'; 'Mona Leeby'; 'Myron
Knodel'; 'Paul Palmes'; 'Paul Tupa'; 'Paula Eskelson'; 'Quang
Son'; 'Quinten Kruszka'; 'Randy Kennedy'; 'Randy Peterson';
'Rob Bjerke'; 'Robert Jones'; 'Robin Evans'; 'Robin Hruska';
'Rocky Platt'; 'Roger Fjeldahl'; 'Roger Hastings'; 'Roger Wagg';
'Rozario Muse'; 'Ryan Schulz'; 'Sandy Olson'; 'Scott Bond'; 'Scott
Brewer'; 'Shane Kluth'; 'Shawn Miller'; 'Steve Burger'; 'Steve
Renner'; 'Tamara Blotsky'; 'Terry Otto'; 'Todd Metcalf'; 'Todd
Shreckengost'; 'Todd Stetz'; 'Tom Dahl'; 'Travis Flatt'; 'Trevor
Flannigan'; 'Ty Son'; 'Vic Weigel'; 'Vicki Stainbrook'; 'Vicky
LeMier'; 'Warren Etches'; 'Wayne McFarland'; 'Wayne
Voorhees'; Judy Boutiette (E-mail)
Subject: Record Production Throughput
On Wednesday evening we hit a throughput milestone of 100
million pounds of book product produced for the year 2004.
Our previous high was just over 96 million in 2002.
Congratulations to everyone and thanks for your effort.
Mark
Record output, shortest setup time, best overweight on Line 1, and

a host of other praiseworthy efforts served as a backdrop to our
traditional annual quality review (AQR), a December ritual that has
become our primary business planning event. We’ve been using ISO
9001:2000’s management review requirement (ISO 9001:2000, Section
5.6) as a yearly opportunity to come together and examine the
preceding year’s Cost of (poor) Quality data, lessons learned from
audits and non-conformance, and the status of our annual objectives.
It’s from collecting all this information and then working among the
leadership group that Kristin Munro and I assemble the final review
document and prepare a PowerPoint presentation to assist in staging
the meeting. The following is copied from the introduction of the 2004
AQR and summarizes the state of affairs that led to all those
praiseworthy e-mails from Mark Boutiette:
2004: STRATEGIC QUALITY OVERVIEW

The State of Quality at Northern Pipe Products
The initial propose of Northern Pipe’s ISO 9001 quality manage-
ment system (QMS) was to convert production quality control to
reliable quality assurance through process design, implemen-
tation, and revision. In the past five years, both planning and
subsequent results have been open and available for all to see
within the organization.
This report summarizes these efforts and concludes with
recommendations for new applications of the same resources
and methods that have proven themselves over the years since
the inception of the QMS. Namely:
• Open communication
• Regular progress reports
• Management involvement
• Team-centeredness
• Continuous improvement
• Mutual accountability
Over the past five years, production controls were most often
the result of major changes arising from new investments.
(Inoex feed systems, C4 controllers, ISO 9000, self-directed
work teams, training design, development and testing, railcar
TiO2 offloading, improved screw geometry, possible automatic
wall monitoring, side-loading forklifts, inkjet print technology,
etc.) The result has been an overall control of variation to a
degree that now indicates a new era of fine adjustments with
current assets.
Investment (1999 – 2004) Return on Investment (2005)

Major Adjustments Minor Adjustments
New Assets Current Assets
The degree of stability represented in 2004 data reflects
unprecedented quality control, and therefore assurance in the
processes and products we manufacture. Input from customers,
audits, non-conformance, and review of 2004 production targets
(many to follow in this report) confirms that the original base
objective of the QMS, production quality assurance, has been

realized.
The challenge we now face can be summarized in two words:
capture and return. We must now capture and incorporate these
advances to realize the returns they were intended to provide.
At the same time, resources and methods used to create control
in production must now be applied to the reduction of
variation throughout the organization for our long-term
survival and success.
The overall message of 2004’s AQR was that we’d won the battle,
but perhaps not the war. The preceding overview essentially marries
two forces—working together and sharp tools—to create excellence
and, as phrased in the report, stability within the organization. From
1999 to 2004, we invested in people and plant, the human and hard
assets; the result was clearly in our favor. Cost of (poor) Quality finally
found its way south of 5 percent in 2004, along with other record
efficiencies that often connected to those congratulatory e-mails
throughout the year. But that last paragraph was a teaser of sorts in that
all this effort and good work was not reflected in the selling price. In
fact, both our margins and volumes were lackluster in 2004. Certainly,
all the internal savings helped to keep the bottom line black throughout
the year, but we faced Christmas without a bonus and little hope for one
in 2005. Remember, we’re not only in a commodity-priced business, but
we’re the smallest PVC pipe production plant in the United States. With
competitors’ volumes at hundreds of times our size, we have virtually
no impact on selling price, even with the best product on the market.
Thank goodness for our internal efficiencies! But after five years of
internal improvements, we needed to apply the same people and tools
to improved sales and profitability, as summarized in the conclusion of
2004’s AQR:
1999–2004: CONTINUOUS IMPROVEMENT

Maximizing profits in 2005 will depend on improvements
made over the past several years in human, technical, and
mechanical resources to continue uninterrupted. We can and
must expect excellence in areas we control. Data from all areas
of the QMS indicates that the company currently enjoys a solid
base of processes, people, and resources that can be relied on to
produce excellent results, regardless of traditional challenges.
A great deal of time, attention, and money has been invested in

order to create this level of excellence. Machinery upgrades,
alterations, and replacement for use by self-directed work teams
in an open culture required considerable financial support. But
the outcome clearly has been worth the investment.
• The north side is practically free of regrind material, an
excellent indication of production control.
• Monthly self-directed work team reports clearly
indicate strategic alignment of goals, budgets, general
concerns, and overall vision between staff and
management.
• Weekly (and monthly) financial reports consistently
indicate that record levels of quality control and
resource management are in effect and working.
• We produce quality products through training, planning
and process control, not by chance or through oversight
by a select few.
• There were no lost-time accidents in 2004. Coupled with
record annual output of 100 million pounds of product,
this is a powerful reflection of a positive working culture.
These advancements became some of our most important
assets when they proved, through solid performance, that we
could count on them long term. For example, when we first
heard that monthly efficiencies were at or above 95 percent, no
one really knew if we could sustain this performance. The year
2004 will be remembered as the turning point: We surpassed
many limitations and went on to turn goals into standard
operating procedures.
As improvements continue to support us, we must capture
these gains and use what we’ve learned to achieve operational
excellence. That means our focus must shift to achieving
increased sales and profitability. The management system has
succeeded in managing people and resources as it was directed
to do in the original Annual Quality Review of 1999/2000. In
2005, the same tools must be applied to achieving increased
financial and economic return.
There it was. Increased sales and profitability. We had to celebrate more
than positive performance relative to Cost of (poor) Quality. Instead, we set
out to unite those numbers with more customers buying our pipe at the
best possible price. The celebrity issue in 2005 has been making money.
And the QMS was restructured to accommodate these two new quality
objectives, expressed in a single phrase: “increased sales and profitability.”
SELF-DIRECTION’S CHALLENGES
Of course, this was a major shift in attention away from production
teams to issues surrounding sales and marketing. While we all knew it
was the right thing to do, we also knew it could have a negative effect
on teams, as meetings took on the look and feel of sales and shipping
discussions. Balanced against those misgivings were five years of open
communication, and a mutual trust that if things became tense, we’d
recalibrate our efforts to meet whatever challenges came our way.
They did. Employee turnover rose throughout the year. By mid
year, in fact, most teams were operating with a core of seasoned leaders,
with mostly new employees surrounding them. Of course, throughout
the process, teams were either celebrating those who moved on for one
positive reason or another, or proud to have the authority to ask non-
performers to find employment elsewhere. The gains of self-direction
remained in that teams continued to do many of the things that
“managers” once did. Regardless of the self-determination that comes
from, say, the authority to hire and fire, a sense of frustration regarding
our overall financial status took the air out of everyone’s sails.
Every spring, we assemble a team of volunteers to decide how to
distribute any bonus money, should there be profits that warrant a
company-wide distribution. There was none in either 2003 or 2004, even
with remarkable improvements internally. It’s generally accepted
within the company that our inability to see external reward in keeping
with those improvements dampened the resolve of several who found
better paying jobs elsewhere in the Fargo area. Year-end bonus plans
leave a lot to be desired, and we’re currently exploring options for an
incentive program. But during the first five years of the new millen-
nium, we’ve been tied to an old model—one that, when times are good,
has been highly rewarding.
But that’s the problem with annual bonus plans, especially bonus
plans that are based on profitability alone. If we’d split the financial
gains of each rise in productivity, each one-tenth of a percent of
improved CO(p)Q and all the other advances seen during the same
period, our people might have connected more than praise to their
efforts during those “bonus-less” years.
More to the point, it’s hard to believe in gold at the end of rainbows
when there’s no rain in the forecast. As we assembled in January 2005
to listen to Wayne Voorhees’ annual report, it was clear that even with
our new twin objectives there was no guarantee of exceptional
profitability. Instead, we were facing a series of daunting challenges, not
the least of which was rising oil prices and the potential for scarcity of
raw materials. (Little did we know how true the latter would become in
the wake of two major hurricanes and a refinery fire at one of our
primary feed stock producers).
SELF-DIRECTION BECOMES WORK

By midyear it became clear that A-Crew was struggling with one or
more members who were playing the system—doing the minimum to
get by and still remain employed. The team responded by working on
closing loopholes in their charter, but of course, the offenders found
new cracks to exploit. One of the night teams found its leader incapable
of governing as one of the group and was voted off. A wave of tough
hiring, training, and retention experiences followed and, as of this
writing, is still an ongoing concern within the team. In conversations
with several seasoned team leads, we’re apparently coming out of a
rough year overall—one that saw fewer actual team meetings and a raft
of “storming” issues within each group. Self-direction is work, too. This
new understanding has taken hold within the company during the year,
one that speaks to any new movement sooner or later.
Beneath it all, however, is a basic set of truths that guides recovery
in times such as these. Because we have not formally trained the new
population of workers to appreciate these truths as we did in 2002 and
2003, we believe the time is right to initiate a new round of training. But
we can’t train them in these truths unless they request it. We can and
often do offer advice, but respectfully so, often as a gentle affirmation of
each team’s right to govern itself. Giving of personal time to hear a
message about such things requires real effort, and the belief that to do
so will really create a better environment within which to work through
their problems. Being willing to reinvest in these truths, however, is
taking on new importance throughout the company as failures to
improve charters and other functional response difficulties seem to look
more like the old way of doing things than what the seasoned SDWTs
remember of the program in its earlier days.
THE POWER OF OUR VALUES

I just finished presenting to members of A-Crew the same session I
hosted with D-Crew two weeks ago. In the process, we have come full
circle in our SDWT journey at Northern Pipe Products because it was

with A-Crew that we first presented these truths as the most excellent
guide to retaining our best people. It was A-Crew that first heard Ken
Doggett, Mark Boutiette, and me speak to the power of these truths as
transcending any set of rules or process controls, and that because of
those truths, we were totally committed to a new way of conducting our
business. Of course, these truths are our values. And within them is the
answer to any infraction or personal slight between team members.
But the message is somewhat changed. This time we’ve added that it
takes courage to live by these values—that they are more than enough to
guide us, but to do so requires everyone to keep them centermost in
discussions and everyday considerations. Like any power tool, they must
be plugged in! When we say that we believe in the unlimited potential of
people, we also expect that team members will be looking to each other
to see greatness and growth. If instead, they find apathy and too many
unspoken words, they owe it to their own potential to work harder with
each other to change the landscape or find others willing to share their
dreams. Also, many of our new employees are living aboard their old
ships and haven’t yet faced the challenge of setting fire to them. These are
ships with a lifetime’s cargo of meaningless grudges and false assump-
tions about the nature of work, and prejudices toward coworkers
developed for survival at other companies. They have yet to burn those
disabling hulks and join us here on solid ground.
What we’ve learned in 2005, however, is that they need to hear it
from the leadership team, and to hear it often. In the process, we hope
to pass each new employee his or her own dry match, ready to start a
new fire capable of lighting the way to a better future. But they’re not
going to get there by remaining silent as they did in their past job. We’ve
heard throughout the latter part of 2005 that people aren’t speaking up
at meetings and that some of the basic courtesies between teams are
starting to erode. We’ve also been there to hear these concerns, to make
suggestions, and to ask questions as each team struggles with its new
responsibilities in the face of increased turnover. Finally, in October,
several e-mails were circulated by a few members from each team
asking for a new commitment to each other, the quality of our products,
and to the company itself. From those e-mails and several months of
concerned discussions came the recent reintroduction of our values,
vision, and mission statement as our best hope to once again reclaim
our pride in who we are and the incredible opportunity we have to
become the best at what we do.
Oh, and whatever happened to those two new quality objectives,
increased sales and profitability? Though coming as they did in a year
of unprecedented challenges, 2005 will mark the largest individual

bonus payout in the 27-year history of Northern Pipe Products!
CLOSING COMMENT
The challenge for top management within industry, government, and
service alike is to recognize that this model is universal. To prove the
point, ask yourself if you agree with the statement, “No one really
wants to come to work to do a poor job!” If your answer is yes, consider
how powerful a motivator it can be to simply act on what you already
know to be true.
Finally, consider this: Every morning, we do our best to give away
our traditional managerial advantages, preferring instead to listen,
coach, and mentor. And, to our knowledge, not once have we been
taken advantage of by our employees. After all, how can our employees
take advantage of us when we do our best each day to give it away?
H1270_Palmes_Back.qxd 1/24/06 1:44 PM Page 99
Appendix
Quality Council Charter
October 1998
Northern Pipe Products Inc.

Quality Council
MISSION STATEMENT
The mission of the Quality Council is to rapidly and successfully report
and manage opportunities and threats to Northern Pipe Products Inc.
through open and honest communication between its members.
CHARTER
The Quality Council, through regularly scheduled weekly meetings,
reviews the overall state of current operations and future business
planning for Northern Pipe Products Inc. Its membership is composed
of at least one representative from Sales, Manufacturing, Engineering,
Shipping, Quality, Purchasing, and Executive Management. Attendance
is recorded, and minutes are maintained and distributed electronically
throughout the company.
The Quality Council is responsible for insuring the effective
operation of NPP’s quality prevention and non-conformance
management process, reviews internal audits and requests for change to
controlled QMS documentation.
Each week, the chairperson reviews action items from the previous
meeting followed by individual reports from the attendees. Attendance
at quality council meetings is open to anyone currently employed at
Northern Pipe Products Inc.
99
Notes
PREFACE
1 Internet site: http://www.answers.com.
2 Ibid.
CHAPTER 1
1 Treacy, Michael and Wiersema, Fred, The Discipline of Market Leaders:
Choose your Customers, Narrow your Focus, Dominate your Market
(Reading, MA: Addison-Wesley, 1995).
CHAPTER 3
1 Peter R. Scholtes, Brian L. Joiner, Barbara Streibel; The Team
Handbook (Madison, WI: Oiel, 2003).
2 Steven Covey, 7 Habits of Highly Successful People (New York: Simon
and Schuster, 1989).
CHAPTER 4
1 Tom Morris, If Aristotle Ran General Motors, (New York, NY: Henry
Holt and Company, 1997).
2 Ibid, 29.
3 Fish! – Catch the Energy, Release the Potential (Charthouse
International Learning Corp., 2000).
101
102 Notes
CHAPTER 5
1 Critical target numbers in production: 95 percent or more machine
efficiency, 3 percent or less overweight, and 2 percent or less regrind.
2 Ideal Team Profile Questionnaire, © Steve Myers & Profiles-r-us.com,
2003.
CHAPTER 6
1 Jeffrey A. Krames, The Welch Way, 2002.
2 Bruce A. Pasternack and Albert. J. Viscio, The Centerless Corporation
(Simon and Schuster, 1999).
CHAPTER 7
1 Robert K Greenleaf, Servant As Leader (Indianapolis, IN: Greenleaf
Center for Servant-Leadership, 1970).
2 The Robert K. Greenleaf Center for Servant-Leadership.
921 East 86th Street, Suite 200, Indianapolis, IN 46240.
Phone: (317) 259-1241, Fax: (317) 259-0560.
3 Adobe Named to FORTUNE's List of “100 Best Companies to Work
For” SAN JOSE, Calif. — Jan. 10, 2005.
4 Collins, Jim C., Good to Great (Harper Collins Publishers, 2001).
5 Ibid.
6 Kerry Thornley, Principia Discordia, 5th edition (IllumiNet Press, 1991).
7 Paul M. Johnson, Department of Political Science, 7080 Haley
Center, Auburn University, Auburn, AL 36849.
Bibliography
Adizes, Ichak, Corporate Lifecycles: How and Why Corporations Grow and
Die And What To Do About It. Englewood Cliffs, NJ: Prentice Hall, 1988.
Bothe, Kiki R., World Class Quality: Using Design of Experiments to Make
it Happen. New York, NY: Amacon, 1991.
Brant, David, Sacred Cows Make the Best Burgers. New York, NY: Warner
Books, 1996.
Case, John, Open-Book Management. New York, NY: HarperCollins, 1995.
Covey, Stephen R., Principle-Centered Leadership. New York, NY: Fireside
Simon & Schuster, 1992.
Covey, Stephen R., 7 Habits of Highly Effective People. New York, NY:
Simon & Schuster, 1989.
Crosby, Philip B., Quality is Free: The Art of Making Quality Certain. New
York, NY: McGraw Hill, 1980.
Crosby, Philip B., Running Things: The Art of Making Things Happen.
New York, NY: McGraw Hill, 1989.
Fournies, Ferdinand F., Why Employees Don't Do What They're Supposed
To Do, New York, NY: McGraw Hill, 1988.
Goldratt, Eliyahu, The Goal, A Process of Ongoing Improvement. Great
Barrington, MA: North River Press, 1992 (3rd Edition).
Goleman, Daniel, Emotional Intelligence. New York, NY: Bantam
Doubleday Dell Publishing Group, 1997.
Harvey, Jerry B., The Abilene Paradox and Other Meditations on
Management. San Francisco, CA: Jossey-Bass Publishers, 1988.
Ishikawa, Kaoru, What Is Total Quality Control?: The Japanese Way.
Enlewood Cliffs, NJ: Prentice Hall, 1985.
103
104 Bibliography
Johnson, Spencer, M.D., Who Moved My Cheese? New York, NY: G.P.
Putnam’s Sons Penguin Putnam, 1998.
Morris, Tom, If Aristotle Ran General Motors. New York, NY: Henry Holt
and Company, 1997.
Pfeffer, Jeffrey, Competitive Advantage Through People. Boston, MA:
Harvard Business School Press, 1994.
Quick, Thomas L., Successful Team Building. New York, NY: Amacom, 1992.
Senge, Peter M., The Fifth Discipline: The Art and Practice of the Learning
Organization. New York, NY: Doubleday, 1990.
Stack, Jack, The Great Game of Business. New York, NY: Bantam
Doubleday Dell Publishing Group, 1994.
Treacy, Michael and Wiersema, Fred, The Discipline of Market Leaders:
Choose your Customers, Narrow your Focus, Dominate your Market.
Reading, MA: Addison-Wesley, 1995.
Vavra, Terry G., Improving Your Measurement of Customer Satisfaction: A
Guide to Creating, Conducting, Analyzing, and Reporting Customer
Satisfaction Measurement Programs. Milwaukee, WI: ASQ Quality
Press, 1997.
Index
A Center for Ethical Leadership

A-Crew, xv, 34, 37, 40, 43, 45, 53, 55, (Concordia College), x
59, 80, 96, 97 Change
The A-Team (television show), 37 change managers, 16
Accountability, 16, 32, 39, 44, 46, 53, commitment to, 17
59, 71, 84, 92 cultural, 70
Adobe, 76, 80 delegating, 30
American Cast Iron Pipe, 76 difficulty of, 27
Annual Quality Review (AQR), 84, management must change first,
91, 93, 14, 17
Apollo, xvi management practices, 18
Apple Computer, 88 resistance to, 69-71
Attendance, xiii, xiv, xviii, 51, 56-58, shift assignments, 29
83, 99 typical initiatives, 14-15
Charter
see Team charter
B Collins, Jim, 77
Commitment, 14, 15, 17, 26, 32, 38, 45,
Ben and Jerry’s Ice Cream, 88
47, 59, 77, 97
Berlin, Kevin (NPP senior supervisor),
Communication, xix, 17-18, 20-21,
29, 86
26-27, 31, 40, 45, 55, 57-59, 66,
Blotsky, Tammy, (A-Crew member),
70, 92, 95, 99
49-54, 65
The Container Store, 76
Bonus, 18, 93, 95, 98
Cooperation, xvii, 13, 21-22, 31
Book club, 18
Cost of (poor) Quality, 19, 83-85, 91,
Boutiette, Mark (NPP production
93-95
manager), xvii, xix, 13, 27, 55,
Cortez, burning ships, 69-70, 74
75, 77, 89-91, 97
Cross-training, 31, 55
Business types
Culture, 20, 26, 28, 39, 49, 66, 70, 88, 94
Customer intimate, 11
Customer expectations, xix, 4, 6, 11, 21
Operationally efficient, 11
Technologically advanced, 11
D
C D-Crew, 96
Daily Dose (e-mail messages), 17, 21
C-Crew, 80
Design of Experiments (DOE), 21
Capital, real and human, 80-82
105
106 Index
Discipline of Market Leaders (Michael L

Treacy and Fred Wiersema), 11 Life-support system, xvi
Doggett, Ken (NPP HR director), x, xv,
xvii, xix, 13, 27, 31, 45, 51, 53,
55, 75, 77, 97 M
Drug policy, 74
Machine downtime, 4-6, 27
Man vs. machine, 9-11, 29
E Management
adversarial relationship with
Edward Jones company, 76 employees, 71-72
Empowerment, 30, 45, 76, 78, 80 autocratic style, xviii, 13, 28, 29,
Erickson, John (Otter Tail CEO), 64-65 38, 66, 70, 78
Evaluations of employees, 50, 53, belief in potential of people, 37
63-64 involvement in self-direction, xv
letting go, 15-17, 42-43
providing direction, 22
F serving as coaches, 11, 28, 31
Failure Mode Effect Analysis (FMEA), traditional paradigms, 78
21 Mir, xvi
Feedback, 17-18 Mistakes, xi, 11, 28, 71, 79, 89
Fish! (training program), 43 Morale, 87
Five Pillars committee, 19-20, 37 Morris, Tom, 40-41
Firing employees, 51-52, 56 Munro, Kristin (NPP education
Fortune magazine 100 Best Companies coordinator), xix, 65, 91
to Work For, 76, 78 Mr. T, 37
Four-Tier System, 10-11
N
G Northern Pipe Products
Good to Great (Jim Collins), 77 automation, 3
Greenleaf, Robert (coined “servant business description, 3
leader”), 75 competitive advantage, 6
Greenleaf Foundation, 75 competitors, 11
engineering department, 18, 77, 99
ethics luncheon, x
H human resources department, 10,
Hiring employees, 31, 51-52, 59-62, 96 54, 56
maintenance department, xvi, 3-6,
29, 80, 90, 99
I manufacturing department, 99
If Aristotle Ran General Motors (Tom operational improvements, 3
Morris), 40-41 organization chart, xxi
ISO 9001 quality management system, policy manual, xvii-xviii, 15, 50, 56
17, 19-20, 26, 37, 44, 91-93, 95, 99 product quality, 3, 6, 27, 84, 94, 97
International Space Station, xvi product testing, 7, 19, 20, 84, 92
production department, xvii, 10,
14, 29, 31, 32, 45, 58, 74, 93, 95
J-K purchasing department, 99
Japan, 21
Index 107
quality assurance department, 18, 99 S

sales department, 18, 20, 99 Saturn, 88
shipping department, xvii, 95, 99 Self-direction
transition, 14 challenges, 95-96
turnaround, xiv, 16 employee responsibility, 53-54
financial benefits of, 83, 87-89
first application of, 46
O gained momentum, 88
Olson, Sandy (NPP office manager), idea stage, 14
73 introduction of, 71-72
Otter Tail Corporation, xviii, xix, 19, literature on, 30
27, 28, 64 management adjustments
Overtime, 4 required, 13
Overweight, 3-4, 57, 91 management involvement, xv
myth, 77
peer pressure, 54
P personal impact of, 49-50, 53
Paradigm shift, 13, 30 reason for success, 54
Pasternack, Bruce, 70 support of, 39
Perks, 75 tool to manage capital, 82
Perryman, Corey (A-Crew member), tools to use, 55
49-54 training by in-house staff, 47
Potential of employees, x-xi, xiv, xix, transition to, xix, 37, 38
30, 32, 34, 40-41, 77, 82, 97 trust and respect, 66
Production roundtable, 19 Self-Directed Work Teams (SDWT)
Process approach, 81-82 equal opportunity for all, 51
Process control, 94 introducing concept to employees,
31-33, 53
mission, 55
Q ongoing training, 96-97
Quality assurance, 92-93 production controls, 92
Quality control, 7, 92, 94 questionnaire, 52
Quality Control (QC) inspectors, 5, reports, 94
7-8, 19 science of, xv
Quality Council, 18, 99 team charter, xvii
Quality Management System (QMS) team leaders, 79-80
see ISO 9001 quality management training, 45
system Servant-leaders, 75-82, 88
Quality specialist, 19 7 Habits of Highly Effective People
(Steven Covey), 27
Shareholders, xix, 39, 76
R Skills Training Manual, 18
Regulators/audits, 7, 19, 91-92 Skylab, xvi
Respect, xviii, 46, 66, 73, 78, 80 JM Smucker company, 76
Responsibility, 44, 54, 59, 72, 89 Space biology, xvi
Retaining employees, xi, 23, 32 Space medicine, xvi
Space science, xvi
Space shuttle, xvi
Stainbrook, Vicki (A-Crew member), 45
Statistical Process Control (SPC), 21
108 Index
T-U Treacy, Michael, 11

The Team Handbook, 27 Trust, xv, xix, 17, 21-24, 34, 45-46,
T-shirts, xv, xvi 65-66, 72-73, 78, 95
TDIndustries, 76 Turnover, 8-10, 32, 95, 97
Time cards, 72-73
Team charter, xvii, xviii, 32, 44-45, 49,
51, 55, 59, 80, 96
V
Three-Tier System, 5, 8 Values, vision, and mission
Training statements, 27-29, 32, 39-41,
accomplishments of, 18 44, 49-50, 55, 59, 73, 96-97
commitment to, 77 Viscio, Albert, 70
computer skills, 17 Voorhees, Wayne (NPP president),
continuous training, 26 xvii, xix, 11, 13, 37-38, 72, 76,
Fish!, 43 96
for supervisors, 20, 27, 28, 30
gain trust, 33
impact on cost of quality, 84 W-X-Y-Z
impact on quality products, 94 Wegman's Supermarkets, 76
initial training, 43-47 Welch, Jack, 69-70
ISO training, 18 Wiersema, Fred, 11
mixed messages, 30
new round of, 96
not the same as education, xvii
NPP president addresses class, 38
recover investment in, 10, 81
self-direction myth, 77
servant-leaders, 79
shift change, 57
Skills Training Manual, 18
successful training defined, 80

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Library of Congress Cataloging-in-Publication Data

Palmes, Paul C., 1948-

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Printed on acid-free paper

Figure 1.1 The Three-Tier System . . . . . . . . . . . . . . . . . . . . . . . 5

Figure 2.1 Commitment and Change over Time . . . . . . . . . . 14

Figure 3.1 Changing the Future . . . . . . . . . . . . . . . . . . . . . . . . 28

Figure 4.1 Necessity of Values, Vision, and Mission . . . . . . . 39

Figure 7.1 The Process of Watering a Plant. . . . . . . . . . . . . . . 79

Figure 8.1 2000 Cost of (poor) Quality

Tom Heuerman, Ph.D.

IT’S ALWAYS THE SAME

created unity, commonality, color, interest, working uniforms, and, by the

departments such as design, management, and purchasing,

Wayne’s favorite stories is about the original policy manual (employee

formatting figures and graphics. As I worked through reviewer’s

Northern Pipe Products

Mark Boutiette Ken Doggett Paul Palmes

The Northern Pipe Products leadership

1 Kevin Berlin – 2 A-Crew 3 B-Crew 4 C- & D-Crews

4 Part I: The Old Culture

manufacturer to run just a little above the minimum to avoid

Chapter One: Welcome to Northern Pipe 5

overseer of the production process, aided by the supervisor and his QC

Figure 1.1 The three-tier system.

Of course, this model is not uncommon in any operation where the

Northern Pipe’s current president, vice president of purchasing, and the

Figure 1.2 The critical path.

Northern Pipe Products supervisors were keenly aware that

6 Part I: The Old Culture

Chapter One: Welcome to Northern Pipe 7

8 Part I: The Old Culture

THE THIRD TIER

Figure 1.3 Worker free time.

Chapter One: Welcome to Northern Pipe 9

leaving for one reason or another as a patterned behavior. At first, new

10 Part I: The Old Culture

Tier 1 – Manufacturing Machinery

Figure 1.4 The four-tier system.

Chapter One: Welcome to Northern Pipe 11

14 Part I: The Old Culture

surface, the problem was considered impossible to resolve or required

COMMITMENT AND CHANGE

Management Workers Management and Workers

High Are Committed Need to Change Are Changed and Committed

Low Need to Change Are Committed

Program Start Program Success