24. Aug. 2013

Extreme Open Plan Office

by Danie Vermeulen

Here is a story that truly challenges our paradigm

This great example of a successful mega open plan office with a very Lean management structure comes from a Japanese company, Saishunkan, a manufacturer and marketer of high end specialty cosmetics. The author tells about his interesting visit to their office area last week.

New Zealand companies can learn from the following key points:

  1. This company turned a massive financial threat to their survival into an improvement opportunity. Often imminent disaster can kick start the new direction that will propel a company to new heights that were not even thought off before. The same thing happened to Toyota in 1949 when serious problems caused them to lay off many of their staff. Today we know that has been the turning point and beginning of Toyota’s spectacular success. How can the current financial disaster be turned into an opportunity?
    By 1988 it achieved $100 million. By 1989 Saishunkan had become infamous for its sales calls and complaints for bad service were skyrocketing. In 1993 the chairwoman decided something needed to be done or the company would founder, therefore she asked that all returns be consolidated in one area.
    She decided to chart a new course, and eliminated all outbound sales calls for three months as well as all sales incentives. Then she wrote a letter to everyone that had been a customer, whether they had complained or not, and detailed how the company was going to change for the better. Customers responded that they loved the products, but the people were what created the complaints.
  2. They returned to basics and became very successful as a result of that the customer became king again; they invested in long term permanent employees; and they rationalised their product range to focus only on a successful range.
    That sounds simple enough. However, we know that there are still many New Zealand companies who continue to “push” their products and services to customers without really putting customers’ requirements first. They continue to treat employees as a variable cost or their product range is tired or not focused enough.
    Reviewing these complaints in detail put the voice of the customer in the middle of the business. That would form the new philosophy of the company. 50% of the employees left, unable to adapt to the changes.
    Saishunkan now records $270 million in sales with 1,000 employees, all from this one location. Profits are "at the high end of the medical device and cosmetics industry." Private, no debt. All of the employees are full time, with no contracts or temporaries, which thereby carry special status in Japan. The company continues to produce just seven cosmetic products, basically collagen-based wrinkle creams, and has no plans to increase the product line as it would decrease focus. They are in the top three of market share for each product, with prices at the mid-range of high-end Japanese cosmetics, ranging from $50 to $500 for 8 ounces. The prices have not changed in over 30 years, there are no volume discounts, the "price is the brand."
  3. Notice the demand pull or make to order in action. No inventory. Remember this is fast moving consumer goods!
    There is zero inventory, and any order received by 2:30pm will be manufactured and shipped the same day. They want complete control from the time the product is manufactured to when it reaches the hands of the customer.
  4. They are achieving real flow in the office processes with:
    - Open plan, highly configurable office lay-out and set up
    - Visual control – up to date real time performance metrics for everyone to see
    - Multi-functional process teams with very open communication and tight integration
    - Flat management structure
    - One piece flow
    - Very open and easy communication – no communication barriers 

… large plasma screens hanging everywhere showing metrics updated each second. And right smack in the middle of the floor is a large conference table. The president sits at one end with his three directors and several of the section managers along the sides. The organization is so flat that that is the entire management team for 1,000 people. 

Every piece of furniture is on wheels, and the room is constantly being reconfigured as new improved methods are developed.

There are designated improvement areas and tables dedicated just to writing letters to customers. The peripheral walls are covered with white board material, which is covered with improvement ideas.

Although over 8,000 calls are processed every day, the room is surprisingly quiet. The lack of walls is intentional to create rapid communication. A "pit boss" stands on a raised pedestal near the middle, watching the various screens and the "communicators" working the phones.

If a problem is detected, she can instantly marshal a team of communicator, HR, sales, or R&D. If a call is critical enough she will pipe it over the PA so everyone can get involved.

Communicators can go to R&D so the engineers can work directly with the customer on solutions or improvement ideas, immediately.

And every one of them (client communication log) is reviewed by a manager, director, or the president. Then 400 of them are turned into suggestions for improvement with action plans created. Every day.

How the heck do they do that? With cross-functional teams that are created for periods of a few months, then disbanded and reshuffled into new teams. This is because, even with no walls, they still feel there are barriers between people. They want everyone to be working together. The goal of the team is not to complete the action plan for the suggestions, but to create improved unity.

Once again, an extremely unique company. A large open office area with a thousand employees may scare many of you, but the improvement in communication - both speed and effectiveness - is incredible.

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