Road to Revival

"It seems there's been a lack of attention. I think this reflects the mentality of the employees at Factory Seven, either a distrust of the company or a distrust of you. It also reflects the state of the factory's leadership team; there's probably no other explanation. Please have a seat... Besides Factory Seven, Factory Four, Factory Nine, Factory Fourteen, Factory Eighteen, as well as the Property Management Company, Marketing Department, Purchasing Department, and other units also have very low recycling rates. What does this indicate? Please think about it deeply. Of course, there are also good examples. The administrative offices go without saying; Factory One, Factory Eight, Factory Eleven, and the Quality Inspection Center all have recycling rates exceeding 95%, which deserves praise."

"What are the employees' concerns? They mainly focus on three areas: First, the issue of salary. Everyone feels the wages are too low and demands a raise. Second, the issue of company development. I'm pleased that many frontline workers answered this question very seriously, and frankly, I was very moved. Although some suggestions weren't entirely reliable, I saw their deep concern for the company's survival and development. In my opinion, this is the greatest asset and the hope for our revitalization. Third, the issue of welfare. They hope the company can improve employee welfare to the best of its ability, including housing and employment for their children. Besides these, the most frequent concern is integrity. I don't want to talk about this in detail now; I'll discuss it in detail later. Now, I want to say that these three issues represent the voice of the employees and also point the way for our..." This is the direction we're working towards. We, the two-tiered leadership team of Red Star, are striving in this direction. The order is: first, ensuring the company's survival and development; second, increasing employee salaries; and third, improving benefits so employees can live with dignity. Because development is the prerequisite for solving salary and benefit issues. These three points are the starting point and the ultimate goal of all our work. Some might say, isn't this a bit irresponsible? Has the leadership team discussed this? What did they discuss? Which leader dares to deny these three points? I wouldn't dare. Chairman Mao once said that the masses are the true heroes, while we are often naive and laughable. The survey has once again proven the wisdom of the old man's judgment; the masses have pointed out the direction of our work, which aligns with both the requirements of higher authorities and the company's reality. Don't you all agree?

Zhao Qingmin led the applause, which was followed by enthusiastic applause from the audience.

"Thirdly, I'd like to talk about management issues. This is a broad topic and not easy to explain clearly. Moreover, with only a dozen days to prepare, my understanding is certainly limited and may only scratch the surface. I take full responsibility for any inaccuracies. I welcome your corrections and criticisms."

"Generally speaking, judging the process by the results is more scientific. This is what is often referred to as 'success or failure is the measure of a hero.' A well-run company must have unique management methods. A poorly run company cannot be said to have good management. It is undeniable that Hongxing's current operations are very difficult. Hongxing has encountered problems with Yang Wenhuan and Song Yue, and there must be loopholes in its systems. No one can deny this. I have not worked for many companies, and I have only served as general manager of Shengdong. Compared to Shengdong, Hongxing has both shortcomings and strengths. But we should have this mindset: internally, we should focus on identifying shortcomings and only secondarily on publicizing achievements. Let superiors publicize achievements and let employees praise them. We should never be complacent. This is my basic attitude. In the future, I may criticize everyone more in the workplace, not because I cannot see or deny everyone's achievements, but precisely because of this."

"Over the past ten days or so, I haven't held many meetings, nor have I had much interaction with the leadership team or the middle-level managers present here. But I did take a quick tour of all the branch factories and most of the workshops, and saw almost all of our products in production. I also noticed some less-than-ideal aspects of our management. Now I'll talk about them."

"Management is an eternal theme for enterprises, and it's also the profession of everyone here. Whether you're in administration or party affairs, you're all engaged in management work. I believe everyone here has their own insights into management. In my own experience, management is the activity of achieving one's own goals through the labor of others. Extending this definition, management is essentially the work of dealing with people..."

It was nothing new. Li Luo, sitting to Zhao Qingmin's right, had already heard about the "internal strife" in the finance department. He guessed that Tao Tang would bring up the Donghu pricing issue, so he pricked up his ears when Tao Tang talked about management. Li Luo prided himself on having unique insights into managing people, and he thought Tao Tang's definition of management was too mediocre.

Tao Tang took out his phone, glanced at it, replied to a text message, and continued, "Management must have a focus, whether it's phased or consistent. Every company may be different, whether it's cost-centric or quality-centric, they're essentially the same thing, different paths leading to the same goal. Improving quality will certainly impact costs. I looked at the company's administrative work summary last year, and it seems the company focused on improving quality, especially the quality of physical products. Last year's report showed the company's quality losses were 4300 million yuan, of which external losses—mainly from warranty losses on auto parts—accounted for 3300 million yuan. This is a 32% decrease year-on-year, saving over 1000 million yuan. When quality improves, waste naturally decreases, and costs improve accordingly. Conversely, the opposite is also true. They say a new leader brings new orders, a new emperor brings new officials. You might be wondering, what new strategies will Tao Tang have as general manager? Here, I really want to announce the focus of our future management work, which is lean management as the core..."

As expected, he unleashed his secret weapon… Shengdong was a pilot unit for Feng Shizhao's lean management initiative, and Taotang likely gained Feng Shizhao's favor through this very tactic. Li Luo had read several booklets on lean management; the group had elevated it to a strategic level, but he wasn't interested. Always liking to be unconventional, he'd rather focus on quality or cost control…

"Lean management has been elevated to a strategic level by the group headquarters. It wasn't my invention; the invention right lies with Japan, with Toyota. They've adhered to it for decades, achieving tremendous results, and it's been admired and learned by many renowned companies. We're also part of the automotive industry, and some data says that globally, Toyota cars have the highest quality. Their evaluation method is statistical, counting the defects found in every 100 new cars; Toyota has the fewest. A famous American company spent a lot of money hiring Toyota experts to help them implement lean management. After a period of time, they announced they had mastered it, a result that the Japanese ridiculed. Because the essence of lean management lies in continuous improvement; it's a management activity without an end..."

Lü Qi took careful notes. Her shorthand skills were quite good, and she could record almost every word of Tao Tang's speech. She was eager to hear Tao Tang's explanation of lean management, because Shengdong was the benchmark set by the group, and the core of Shengdong's experience was lean management.

"We're also implementing lean management within our system, and Shengdong has taken the lead, receiving recognition from headquarters. Let me share some figures with you: over the past three years, Shengdong's quality losses and management expenses have decreased by double digits annually, while the cost-to-revenue ratio has decreased by one percentage point each year. You can do the math: given Hongxing's current scale, what does a one-percentage-point reduction in the cost-to-revenue ratio mean? It roughly saves 100 million yuan. One hundred million yuan, comrades! If used for salary increases, that would roughly increase income by 10%. And you should note that this calculation is based on the premise of not increasing scale. Now that Shengdong has tasted the benefits, they increasingly believe that lean management has real potential..."

"Bullshit!" Han Zhiyong thought. Shengdong was doing a good job, but it couldn't possibly have achieved such great results.

"Recently, at the invitation of Donghu Industry, General Manager Li, General Manager Jiang, and I went there..."

He still came. Li Luo thought, let's see what he has to say; this isn't the marketing department's responsibility...

"We solved a specific problem: a long-standing contract issue worth several hundred million. We needed orders, but these were constrained by costs, which are essentially prices. The marketing department found it difficult to accept the other party's quotes, even though the marketing department's prices were approved by finance. I made the decision on-site at Donghu: all contracts with a price difference within 10% were signed. This was somewhat arbitrary, but necessary. Time was of the essence, and the customers couldn't afford to wait. However, we can't say that finance was causing trouble; finance was also there to ensure quality. I believe that the 10% discrepancy can be eliminated through improved management. That's how the market economy works; you can't say that the customers are being difficult. If we don't do this job, someone else will; the customers are never wrong. But pricing is a science; we can't always make decisions on a whim. After I get back, I'll ask General Manager Han to give the finance department..." I assigned a task: to recalculate the prices of Donghu products. This morning, the finance department's calculations came back, and they were better than I expected. The prices of most products were affordable, which made me happy. Why didn't it work before but it does now? The finance department explained it simply: strengthen cost control, especially waste control. Absolutely correct! That's lean management! Going forward, the finance department needs to keep a close eye on costs and waste, turn plans into reality, and continuously improve to keep costs down! That's how Shengdong did it. I just mentioned some data from Shengdong; behind those data lies the hard work of Shengdong's employees. I believe Hongxing can surpass Shengdong. There's nothing mysterious about it; what they can do, we can do too.

Li Luo couldn't help but glance at Han Zhiyong, though he couldn't see Han Zhiyong's expression as he kept his head down taking notes. He felt a surge of pleasure; Tao Tang's paddle had landed on Han Zhiyong and Ma Guangming's buttocks—serves them right!

"But Shengdong has taken a detour. When I first arrived at Shengdong, General Manager Feng—who was then the group's general manager—came to inspect Shengdong and reviewed Shengdong's lean practices. He said a few words to me. He used Columbus as an analogy. Everyone knows that Columbus was the first European to discover the Americas. Now, some historians question this conclusion, but that's not our research topic, so we won't go into detail. We're not involved in Western history research. Let's get back to the point. General Manager Feng said, 'Tao Tang, I think your approach to lean can be summarized in these three sentences: When you set out, you don't know where you're going; when you arrive, you don't know where you are; when you return, you don't know where you've been...'"

A soft chuckle rippled through the room; Lü Qi was laughing heartily. She immediately covered her mouth, finding Feng Shizhao utterly amusing… and wondered if Tao Tang was just making it up…

"I told this joke to say that Shengdong took a detour, but later tasted the sweetness and achieved results... These days I've seen the situation at the grassroots level, and it's somewhat similar to Shengdong's early days, still stuck at the most superficial level, which is the on-site management stage. On-site management is the starting point of lean management, that's true. Have we done a good job on-site? No. Many workshops are in a mess. Some people might think that we've improved a lot compared to the past, but that's not enough. The gap between us and the group's requirements, and the users' requirements, is too big. On-site management is not just a matter of cleaning. On-site management is 5S: sweeping, cleaning, sorting, setting in order, and sustaining. Everyone is familiar with these five elements, but they are doing them very poorly. We're not even qualified for sweeping, we can't even do sorting well, so there's no point in talking about the others. Don't underestimate the on-site management; it exposes almost all our management problems, safety, quality, processes, costs... all of which are hidden there. What is the current situation?" "And what about the leaks? They're everywhere. Let me give you a few examples: There's a constant steam leak on the south side of the pickling workshop in Factory Nine. I've passed by three times, and nobody's done anything about it. I don't believe the managers of Factory Nine can't see it. Why don't they do anything? They probably think it's the power company's problem. The power company doesn't care either; I don't know if they can't see it or they don't want to. Steam costs money; it all goes into Factory Nine's costs. What does that say? Factory Two does forging and pressing, and the workers don't wear safety helmets or work clothes; some even wear vests to work… The factory leaders and workshop leaders turn a blind eye. I want to ask the leaders of Factory Two: doesn't safety affect costs? If there's a work injury, not only do the workers suffer, but doesn't the company have to pay for it? Outside Workshop One of Factory Twelve, there's a huge pile of scrap iron, like discarded molds, left to the elements, exposed to the elements for who knows how long, and nobody cares… As for running water and lights left on all the time, that's even more common; I won't list them all."

Ma Guangming, who was in charge of lean management, had a sudden thought, recalling the pricing issue from earlier: Was this a warning to me? Or a warning to Lao Han?

Tao Tang continued, "If the on-site management isn't done well, lean management can't be truly implemented. The purpose of lean management is to eliminate waste, and the direct result is continuous improvement in efficiency and effectiveness, continuous improvement in product quality, and continuous reduction in costs. Going a step further, it's about fundamentally improving the relationship between management and employees, and enhancing employees' sense of ownership. But the starting point is on-site; lean management starts from the on-site and returns to the on-site. Therefore, we still need to focus heavily on on-site management. When focusing on on-site management, we must abandon the habit of putting on a show. On-site management isn't for show, nor is it for aesthetic purposes; it's for quality, cost, and efficiency. I might be being a bit presumptuous, but I think our on-site management has a performance aspect." "By dividing it into sections, we can't go into depth. I visited a branch factory, the sixth branch, and to be honest, it was quite poor. I didn't criticize their work that day, but the branch factory leaders seemed to realize it. When I went back the next day, the situation had clearly improved. Improvements should be praised and acknowledged, but we need to ask: is this improvement continuous, or just a one-off? Is it for the sake of lean manufacturing or to make the leaders feel comfortable? I hope it's the former. If it's the latter, then it's meaningless... Here's a rule: from now on, whether it's a system-wide or local inspection, we won't notify the grassroots level. We'll show the leaders exactly what it's like, the raw, unfiltered stuff!"

This wasn't always the case... Ma Guangming thought, "This puts even more pressure on me, since I'm in charge of the site..."

"How do we manage on-site operations? My experience boils down to two words: clarity and strictness. Clarity means understanding, and having knowledgeable people. First and foremost, leaders, especially middle-level administrative heads, must be knowledgeable about on-site management and know how to effectively manage it. How? There's no shortcut but learning. I suggest organizing a training course in May to learn the essentials of on-site management theoretically, and then sending staff out, for example, to Shengdong to observe. We also need to train specific on-site personnel to train and guide our own units' on-site management. Leaders can't be indifferent, but they can't be involved in everything. Strictness means being rigorous, taking real action, and not just going through the motions. We need to issue or reiterate on-site management reward and punishment regulations. Violations must be punished, and whoever violates them must be punished. Initially, education should be the primary focus, then rewards and punishments should take precedence until the rules are deeply ingrained… forming a habit—that's the meaning of competence. Speaking of habits, on-site management must be a decisive battle, not a guerrilla war. What does that mean?" Annihilation campaign? It means completely eradicating similar problems so they never happen again! For example, tidying up tools before leaving get off work, wiping down machine tools – these must become habits; we can't allow the same problem to persist. At Shengdong, I've dealt with things strictly: dismissals, pay cuts, job transfers, layoffs… Strictness is love, care for the majority; we can't be swayed by personal relationships, we can't be soft-hearted. The company has established a Lean Management Office in the Production Department. We can ask the Lean Office to establish rules for tiered inspections and assessments. The Lean Office only oversees the branch factories, not the lower levels – workshops, sections, and teams – that's the branch factory's responsibility. We need to completely change the company's on-site management within three months. This task is now assigned to the Production Department. I and General Manager Ma are only responsible for the Lean Office. If you don't perform well and don't meet my requirements, I'll replace you. Please note, I'm not changing your position, I'm dismissing you! I'm making this clear from the beginning; this is called setting rules in advance. With hundreds of people in front of me, I dare not go back on my word!

"On-site management isn't just a matter for the grassroots. Shouldn't the headquarters also be involved? The answer is definitely yes! Lean management is a company-wide activity; how can the headquarters be an exception? We require workshop workers to have nothing unrelated to their work; how can the headquarters be an exception? Headquarters staff, go back and take stock of your positions, and remove everything unrelated to your work! No novels or magazines are allowed in the offices, and no games are allowed on the computers. Learn from this and thoroughly clean up. The Discipline Inspection Commission and the Supervision Department will conduct an inspection of the headquarters after the holiday; those who violate this rule will be sent down to work! Government departments are rectifying their work style; we must also rectify our work style. This is the most basic requirement; there will be new requirements later. If you think lean management is only a matter for the grassroots, you're mistaken. You must proactively keep up; being passive will lead to being punished. My approach to management in Tao Tang is ruthless. No matter who it is, if they can't keep up with the company's pace, I will eliminate them!"

Trouble is brewing. Lü Qi thought it was time to move all those books she kept in her office back to their place…

"Lean management isn't some mysterious thing. Its core can be summed up in eight words: continuous improvement and waste elimination. Note the word 'continuous'—it's an activity without an end. It involves constantly identifying areas for improvement; there's always room for improvement. The goal is to eliminate waste. Waste is broadly defined, encompassing not only material savings but also manpower savings, and most importantly, time savings. Another characteristic of lean management is its company-wide impact; it's not just a leadership matter. Initially, it may be top-down, but as it deepens, it becomes bottom-up, involving all employees… Our rationalization proposals and small improvements are all components of lean management. The effectiveness of lean management isn't measured by how much cost is reduced, how much waste is decreased, or how much efficiency is increased, but by employee participation. Like the questionnaire I mentioned earlier, in companies where lean management is effectively implemented, you'll never see a return rate of only 50-60%. This is because employees will closely integrate the company with themselves, treating the company as their own home, cherishing it as they would their own home, and deeply regretting any form of waste…"

"We must acknowledge that there are many unsatisfactory aspects in management. What do these phenomena reflect? Yes, they reflect management problems. Management isn't as mysterious as it seems. We, including Secretary Zhao, Chairman Guo, and myself, are all involved in management; managing technology is also management. So what do these management problems reflect? They reflect a problem of work style. I believe the root cause of Hongxing's operational difficulties lies in this. The issue of work style is a recurring theme. The central government is addressing it, the group is addressing it, and the company's Party committee and administration are also addressing it, but the actual situation is not ideal, or rather, it's quite poor. You must understand that we are all doing concrete work. Don't get carried away with lofty goals when talking about management, talking about strategies and policies. Management is about concrete things, about specific tasks. What constitutes the quality of cadres? My feeling is summed up in six words: reliable." "Able to get things done. 'Reliable' refers to political reliability. As a first-level cadre of Hongxing, you must understand the mission you bear, fulfill your responsibilities without fail, and not harbor any disloyalty or treat company decisions lightly. 'Able to get things done' refers to competence. The company needs cadres who can actually solve problems, not mouthpieces or messengers. I don't care about the past; from now on, I will hold you and myself to this standard. We must have this confidence and courage; we can change the face of Hongxing in a relatively short time! We can achieve the expectations of our employees, which are the three points mentioned at the beginning: continuously increasing employee income, healthy company development, and continuous improvement of the company's environment and welfare. I will do what I ask of you, and I welcome your supervision. That's all for today, thank you."

A voice recorder sat on Xu Deyu's desk. She was in the third row, recording Tao Tang's speech. She was responsible for editing it for publication. Because of the recorder, she didn't transcribe a single word, but listened intently. Of course, she was also watching Tao Tang speaking eloquently on stage. She noticed that Tao Tang had no notes; he spoke entirely extemporaneously, readily citing data and examples without hesitation. In terms of eloquence, Tao Tang was no less than Song Yue, but their styles were completely different… Tao Tang wasn't without his boasts and platitudes, but he gave her a different feeling. He wanted to improve Hongxing, and he seemed to have enough confidence… She didn't believe that lean management had the power and effect he claimed. Every leader has their own methods; the results are ultimately judged by the employees. If, as he said, employee income and benefits were constantly increasing, wouldn't that be wonderful? Could he really do it? Until the hall erupted in enthusiastic applause, Xu Deyu unconsciously shook her head and turned off the recorder.