Monday, November 15, 2010

Tunnel Vision in Business and Government

Today on NPR's "Talk of the Nation" program, they were talking about defense spending. A former military officer/pilot/now engineer on some aircraft systems mentioned that the F-22 and F-35 could be built a lot less expensively if the Department of Defense (DoD) would let them. In my experience, I saw excessive cost in defense system components also. The reason: it was easier to use materials and assembly systems that were already qualified through DoD procedures. Unfortunately, those system components were qualified 40-50 years ago. Technology advances are being ignored because "no one" wants to go through full system qualification again. It's too expensive.

The DoD is under pressure to cut procurement costs. One of the high costs is qualification testing. To make a few dollar change on components, it might cost upward of 10 grand. Multiply by a quite a few changes in the overall aircraft system and it's big bucks. In the mean time, more costly components and construction methods are being used for the hundreds of aircraft systems. We can't afford the defense budget to qualify these advances unless it's radically a whole new type of endeavor that won't rely on any legacy sub-systems.

If you project this out, that means defense contractors will be stuck with legacy components for another 40-50 years, racking up exponentially greater increases in costs because "no one else" is using those materials and sub-systems.

Who said, "Penny wise, pound foolish"? They got that right for this situation. Likewise, the only time I yelled at anyone in my company was a director of materials who insisted on buying the cheapest steel plate he could. It was defective but we resisted shutting down the factory and tried to make it work for expediency sake. Even though I pointed out it was costing us a lot more in repaiirs and rework of welds and painting, he insisted that he was saving the company money. No, he was making his Purchase Price Variance (PPV) look good while the company lost money on the steel deal. No matter what tack, perspective shifts, and tact I used, he refused to admit that his decision was poor. It was demoralizing the production teams because we were encouraging them to do their best, but forcing them to put up with "c**p". "Yeah, right, you make us be excellent, but Jack there isn't given us jack-s**t to work with..." and they were right.

I apologized to my staff for losing my cool. And I used my leverage. I rejected all of the steel and shut down the factory till we got better stuff in. That forced him to justify buying compliant material at a higher price. We started saving money again.

Tunnel vision: the focus on one aspect, optimizing it and extrapolating that what's good in our field of vision is true for what we can't see. People who actually suffer with it have trouble navigating the world. So do businesses and governments who can't expand their field of vision.

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