In this Episode, I discuss the one limiting insecurity that prevents action and inhibits long term durability in organizations of all sizes and industries.
We are excited to discover, with you, the key commonalities and best practices that allow both public and private organizations from capital intensive industries to become stronger at managing their assets over time.
Learn more at: www.durablecapitalindex.com.
Book: Principles by Ray Dalio
https://www.principles.com/
Survey by Vanson Bourne:
After the Fall: Costs, Causes and Consequences of Unplanned Downtime
https://www.vansonbourne.com/client-research/19061701tc
Ben Parker: Today, we are going to talk about the biggest insecurity that prevents leaders and managers from making more progress with building durability into their capital assets.
Welcome to The Durability Podcast. This is for those that are passionate about helping their organizations plan and prepare for the inevitable future. My name is Ben Parker, management consultant, chemist, creator, entrepreneur co-founder, and member of the Durable Capital Group. I'm excited for you to join me as we discover what successful organizations do to build long-term durability. We explore the tactics and strategies that allow great organizations to combine the financial wisdom of asset management, the practical street smarts of the maintenance subculture with the real-world paranoia of managing risks to ensure their organizations blast. We uncover what great leaders are doing from all types of capital-intensive industries to make good decisions, build strong management teams, and prepare to meet the future in whatever form it comes. This is The Durability Podcast.
Hello, everyone. Welcome back to The Durability Podcast. I am really excited that you're here. Today, I'm going to talk about one of the biggest insecurities that really impacts a team's ability and manager's and leader's ability to get to critical information within their organization in regard to their capital assets and how they plan and prepare for the future, not just of their assets, but also of the value of their business and what they're doing to ensure that they can protect their assets and make sure that their business is in the condition that it can be, as long as they don't make the wrong decisions at the wrong times.
So that being said, I am a big fan of Ray Dalio's stuff. His book Principles is fantastic book, and I have gleaned so much information from his processes and his teams along with many others, but he seems to be one that can call a spade, a spade. It's been my experience that when we look at team dynamics and making good long-term decisions, of course, there's a lot of uncertainty, there's a lot of risk involved, and different people place different priorities on different risks, different interpretations of data and different interpretations of risk. We know that. It's always interesting to watch different teams make decisions when they all have different perspectives and different definitions of not just words, but also of interpretations of what things mean.
So one of the things that I have found, not just with my own teams, but working with other businesses, and as we worked through a number of different projects, that one of the biggest insecurities that managers come across is, is a very emotional based and it really, when you get down to it, impacts a lot of their decisions. One of those insecurities is that managers believe that they need to protect themselves and their team or others from some of the realities that happen around them. We all do this at a human level in emotional ways, and it turns out that one of the biggest blind spots that we see in leaders and managers comes in when they emotionally don't want to deal with certain stressful situations.
Maybe it reflects on their ability as a manager. Maybe their interpretation is that it reflects on their ability to do certain things or perform the job function that they've been given or assigned. They also may impact their interpretation of themselves and their worth, but also their emotions as a human being, so interprets into how they feel about themselves. It actually creates a lot of blind spots it's because one of the key things in organizations that ... There's just been some fantastic research data that I've seen. I was reading a study, a survey study, the other day from Vanson and Bourne, where they looked at 450 different manufacturing companies and all on the industrial manufacturing side, and they were looking at downtime and some of the different dynamics that go into what causes major downtime in a manufacturing facility.
Most of the manufacturing facility experience that I have had personally has been on the food production side. One of the chemical companies that I worked for, we did a lot of food service chemistries, and we got to spend a lot of time working with customers in food processing plants. Everyone knows who's been around a manufacturing environment that when the line stops, the dollars get really big, really fast. So even in like a four-hour downtime event, you could be in the millions of dollars. A million dollars an hour is the general paradigm for a large manufacturing facility. Obviously, some are more, some are much less, but, in general, when you don't have the resources you need, you don't have the pieces you have or that you need to run your line or something breaks, it adds up really quickly. So there's a lot of stress and a lot of anxiety around being responsible for different aspects of the operations in that kind of environment.
One of the interesting facts that came out of some of these survey results that I was reading highlights that manufacturing companies, and companies in general ... this is not specific to manu- ... the data was from manufacturing, but it's my experience that it's ubiquitous across multiple different types of companies ... is that something like 70% of the companies weren't fully aware of when their equipment needed maintenance or when it was ready to be updated. That goes for software. It goes for hardware. It goes for equipment pumps, all that kind of stuff. Companies, they buy stuff, but then they don't really understand all the things that they need to do to take that stuff and make sure it lasts for the long-term.
What happens is, is when we buy something it solves a problem for us. I need a pump and so I go buy a pump. In my mind, in my emotional mind, "Ha, I've got the pump. I've relieved this need for a pump. It's solved.: Then our brains just kind of close off and we get this interpretation where we feel like we don't have to do anything after that. You look at that same kind of mechanism, the brain chemistry around how our cortisol spikes and our dopamine levels go up when we solve a problem and our cortisol spikes when we have concerns and issues, changes a lot of how we work with others. The dopamine side, when we solve problems, kind of creates blind spots. Then the cortisol spike, when we have problems and issues and we're responsible, covers up problems.
So it's just this really interesting dynamic, and to see that in multiple organizations across a wide variety of capital-intensive industries has been really fascinating to me. So that's where I want to talk about today is one of the main issues that I see and the main insecurities that managers and leaders of capital assets, those making these decisions, have to be aware of and have to be able to come to a good working consensus with is around how they manage their emotional concerns when they don't feel adequate, when they have to address fear. It's related to fear. I don't know that it's necessarily fear, but it's related to fear where we're afraid of looking in the corner for fear of what it might say about us as managers. We're afraid to find issues in our production plans because we don't want one more headache and one more issue that we haven't been able to resolve because we have a whole pile of issues we haven't been able to resolve or haven't gotten to yet. It just may be a bandwidth thing. There's a whole set of reasons why, but you can boil it all down to fear at some level.
When managers, they have to sort through all sorts of different emotions, but you can see in every organization we work with how those fears perpetuate. They kind of escalate in different ways. So sometimes that's fear of not being able to get everything done that we need to, or a fear of acknowledging that there won't be enough resources to go around and so we're afraid to make some of those really hard prioritization decisions because we don't want to bind ourselves down. We don't want to put ourselves in a corner and make the wrong decision.
So a lot of times that leads to indecision, and indecision leads to inaction, and then inaction leads to issues, which creates blind spots. Then we don't take the action we need at the right time, which then creates waste long-term because we didn't do things that we could have done that we should have done, that we were emotionally not aware of and we couldn't initially work through the problem when we could have. So I think, not to be saying that we're all afraid, but it's like one of the common insecurities that leaders of capital assets, and people in general, have to face is that fear and uncertainty. So it's a natural human response. It's very common, but it also can be counterproductive. That's why if you look at some of Ray Dalio's principles, he really talks about being clear on the data, putting those things in practice that will allow us to be very clear about what we need and how we need it, and take the emotional aspect out of it.
One of the things that psychologists and a lot of ... I'm not a psychologist, I'm not prescribing anything here. I'm just talking from my personal experience. It's very helpful to be able to name your fears and call it like it is. So many managers in different areas, in different ages are better at calling out their fears so they can look at them and face them for what they are. Those that can be objective, ask the hard questions, and truly look at where they're at are the ones that can lay a strong foundation for their business long-term, because they can see things for what they are, they're not creating issues where they're not issues, but they can interpret the emotional aspects of their humanity in a way that they can leverage in their business to protect themselves and their assets long-term.
It goes hand in hand with another common issue that we see when people are looking for different issues in their business, or with their long-term capital management or asset management, is that some people are just gamblers. They take on a lot more risk because they don't necessarily want to see the end result. They would rather take that end result if it comes than really working through some of the possible details of options and making decisions around what they need to do to move forward. So it's another symptom, I guess, of the same thing of not wanting to emotionally look at the things that are upfront and necessities at the moment. But, anyway, I think, spending a few hours talking, looking at how our businesses are structured, how we make decisions around our long-term capital asset management practices, and really looking for those blind spots really requires us to take an emotional backseat, if you will, to the things that our business needs, the options that we have, and the things that we can do going forward.
So just to close this out, getting a little long-winded here, but I really appreciate those leaders and I respect those managers who despite of their own personal career ambitions, their own needs, can recognize the fears that they have, talk openly with their team about those fears and work through the very real strategic options that they have. Those that are efficient in that process, because many times people want to get so discussion-oriented and bring all the different issues at once, that it's hard to make decisions. So a lot of people slow down when there's emotional things they're afraid of. It creates indecision as well, but I have respect for tremendous amount of leaders. Ray Dalio is one for sure, who have been able to be objective, stay focused, move the ball continually forward. There's always that pressure to keep moving forward in humility, meekness, whatever words you want to call it. There's an ambition there to do better, all the while being able to fully acknowledge our own fears and our own emotions and be able to take those insecurities, turn them into strengths, not just for ourselves, but for with our teams. The ones that can do that are tremendously valuable to their organizations as well as to themselves.
It's been my experience that only the bad companies and only the bad managers are the ones that fire those kinds of people. The ones that can have those clear, compelling discussions in productive, positive ways ... you don't want to be the jerk that's yelling and screaming at people about it, but the people can communicate those things effectively can create tremendous amounts of value for their teams, for their organizations and for themselves as well. So that's all I have for today. Thank you so much for hanging out with me and we will catch you again soon. Bye now.
Hey, everybody. I just want to share with you something that has been super effective at helping organizations to really kick-start the conversation around how they're going to build long-term durability into their management practices. If you stop what you're doing right now, and go to www.durablecapitalindex.com, that's durablecapitalindex.com, you can sign up to take a very special assessment. This is the Durable Capital index assessment. It's a baseline assessment, and it'll show you exactly where you're at currently with fundamental best practices for building durability. It will give you a very detailed feedback report that you can take and share with your team. So if you go to www.durablecapitalindex.com, sign up, take the assessment, and share with your team and really start that conversation around building long-term durability into your organization.