If we can’t or won’t solve a problem in the workplace, it’s usually because 1) we believe we can’t because we have never seen it solved before or 2) the actions required to solve it go against the “management sub-culture”. What is the management sub-culture? It’s the common set of beliefs and behaviors that exist within a management team. These beliefs and behaviors impact decisions, communications, promotions, acceptance of problems, etc. They trickle down from the top and materialize in different forms, depending on the management level.

Example: Let’s say that a production problem between two departments increases. The problem is not addressed because management promotes “silo behavior” through a lack of transparency between departments and rewards it via the incentive plan. Management’s sub-culture says that they get to choose which problems to solve. This team chooses to focus on problems that exist within each department and avoids problems between departments because conflict could be involved. As a result, there is no effort to estimate the loss associated with these kinds of problems.

Now, let’s say that the BOD of this company is looking at this scenario from the outside in, maybe taking a 30,000 foot view. They see a problem that is costing the company $5,000,000 (lost margin and increased costs) and discover that people know that it is not being solved. From their perspective, they see a team of technical experts in their field that has chosen to forfeit profit to avoid conflict. They see a management system that 1) encourages conflict avoidance at the department level, 2) promotes a lack of collaboration through the back door (i.e., through low transparency and incentive rewards) and 3) sustains a culture that excludes some problems from the project report.

Does any BOD “expect” problems between departments to not be solved? Do they accept the cost of such problems as part of the cost of doing business? In the annual report or 10Q, shareholders are used to seeing explanations of earnings shortfalls like “higher equipment downtime”, “an act of God weather event”, “extended planned shutdown”, etc. Would they accept an explanation of a $5,000,000 loss that read “conflict between departments”? I am sure that you would agree that the answer to all of these hypothetical questions is “NO”!

The truth is that losses related to problems between departments do occur and do go unsolved, sometimes for years. Those losses are either reflected in a lower net production volume or are buried in variable costs. Either way they make their way to the annual report but remain invisible. We could make more money if these kinds of problems were just as important to solve as asset efficiency. What if we looked at these kinds of problems with this perspective? Would it be easier for management teams to make a different choice and solve them? I believe the answer is “yes”.