s01e02 – The Pursuit of Excellence

SUMMARY KEYWORDS
business, excellence, leadership, people, manufacturing, john, world, drive, important, teams, constructive, bhp, imperatives, improvement, grime, australia, years, role, leader, lead
SPEAKERS
Graeme Fitzgerald, John Costley

Graeme Fitzgerald 00:00
In today’s podcasts I’m joined by a friend and colleague of mine, John Costley. John and i met almost 40 years ago when we were trainees working in bhp in Newcastle still works. I think we were working the steelmaking plant at the time. we’ve crossed paths many times since then, over the last 35 plus years, john has built his knowledge, skills and experiences, working in manufacturing and many other sectors. JOHN stands out from many other manufacturing leaders, because of his understanding of both the science and the theory about how and why things happen in business. In addition to this, however, he’s also a practitioner, someone who’s actually had responsibility for delivering results using that knowledge. JOHN has held senior management positions in bhp and Alcoa. It’s completed major assignments in Australia and globally with companies such as Exxon Mobil, BP, origin energy blackmores Anglo American, AJ Lucas and Borel. today’s podcast theme is the pursuit of excellence. When I decided on this theme, john was one of the first people I thought of over many years, I’ve learned that john is passionate about two areas that are foundations to achieving excellence. First one is leadership, and the other is improvement. Now time together, I hope we can share some of that passion, and help on your journey to excellence. So welcome, john to manufacturing mastery. And now we can talk for hours about pursuit of excellence. And given our audience are busy people, I’ll try and kick some of the sense of structure by asking some questions. So john, can you tell us what’s made you so passionate about leadership and improvement, and how that’s shaped a journey to today?

John Costley 01:46
Well, I think governments come from a couple of sources. One is that I was lucky enough, particularly when I was working for bhp to attend some fairly well structured and well led leadership programs, I had a couple of good mentors at the steelworks in my early days in my early career, around how leadership has an influence on outcomes. And then I was lucky enough to be promoted into positions where I could run my own departments with reasonable size, budgets and the ability to set direction and I was able to, and you’re involved in some of these processes along the way of being able to implement and experiment to some degree, what leadership is all about, and particularly focused on what I call constructive leadership, which is about driving for excellence, through and with the engagement of the people that you work with. And also the engagement of customers and understanding what customers want. And knowing that two way leadership joints improvement is that to get better is obviously in its own right saying we’ve got to improve every day in every month. And that’s not only in the way we lead, but the way we operate, the way we identify improvement ideas, how we implement those improvement ideas, and drive them to a conclusion that will do something to improve the business, whether that’s a better product, whether that’s a lower cost, whether it’s an improvement in safety, there are so many things in manufacturing that we need to do if we’re actually going to achieve excellence.

Graeme Fitzgerald 03:40
So with that, that passion, obviously, how’s that influenced you? Now, today, sort of 35 plus years later?

John Costley 03:51
Well, I think the passion is gone. Graham, I think is the more I’ve been in a position to actually lead in a manufacturing role or help influence others and develop others through my consulting business is that most of the things we know about constructive leadership, continuous improvement and manufacturing excellence, is all pretty much known and understood. You can read it in a textbook. But what I’m passionate really about is those leaders in business and in manufacturing, who want to learn like I did, over the last 40 years to drive their businesses towards being the best and not sitting back trying to make excuses that, you know, if the government did this, so we didn’t have imports or it wasn’t my competition, we would be a great business and my passion is around, you know, accepting the fact that Yeah, there are things outside our business that influence how good we are. But in essence, if we lead constructively We identify benchmarks and we drive forward, you can become the best in your field, regardless of what’s going on around you. And I suppose the more I see of it, and the more I learn, the more passionate I become about those critical things.

Graeme Fitzgerald 05:15
So, john, I’ve heard you speak of operations excellence for our listeners, what do you mean by that description? And how do you think it applies in Australia manufacturing today?

John Costley 05:25
Well, I think it’s, it’s always been important, but it’s even more important today. But operational excellence is about getting the best outcome you can out of any part of your manufacturing process every day. And, you know, looking at your people, are you getting the best out of your people because they feel engaged, that they feel important that they want to contribute the best out of our equipment. While we are operating at a world class, I will operational we want of a better word. And measuring those things and driving those towards excellence and being able to benchmark those with some of the best manufacturers in the world. And, you know, it’s being able to do that day in and day out. So,

Graeme Fitzgerald 06:20
has that apply in Australia now? Yeah.

John Costley 06:22
Well, Australia now is that we’re a high wage country. Tariffs have come down over the years as a way to improve our competitiveness, but also allow us to compete on the global global scale. And in a global economy, if you’re not the best, you won’t survive. And, you know, we can’t rely like we may have done 30 or 40 years ago on protectionism from our government. And if we want to compete, we want to export we want to continue to grow. Our standard of living and and what our children and grandchildren can expect in the future, we have no choice, in my view to be excellent. And it’s more important now than it’s ever been.

Graeme Fitzgerald 07:12
So, you and your colleagues have developed your boss’s framework that covers the seven key imperatives in the pursuit of excellence. Can you tell us why there’s so many areas, I understood that most consultants would suggest to factor some early on the critical few.

John Costley 07:29
I think I am after many years of working in businesses consulting with other businesses, and then a lot of reading of what academics say about manufacturing and business in general. To be very good at it to be world class is not easy. And the seven areas that we came up with in the in the boss x model are the ones that when you filter it down almost seven to me is the bare minimum. When you look at it, you do need to have effective leadership in your business, create a culture that supports excellence, and build teams that can be high performance, performing teams in the workplace. And when I say that, it’s whether that’s in you know, your sales team, your commercial team, your finance team is that we’ve all got a part to play in providing effective and constructive leadership, building teams, and creating a culture that wants to drive towards excellence. Other areas in a boss x model is things like management and planning is that yes, leadership and teamwork and culture gets a lot of talk in the in the press, but you still also got to be able to manage your business and you’ve got to be able to plan you’ve got to be able to monitor you’ve got to be able to make tough decisions based on facts. And based on knowing and having some understanding about what those dis how those decisions will impact on others. You need to have people who are skilled in their roles. So understanding people’s roles and responsibilities, being able to slick good people. And then once you have good people in your business, it’s being able to develop them to the stage that they’re adding a lot of value and they’re enjoying being in your business. business acumen is something that we talk about in the boss x model as well as understanding what what’s happening inside your business from a financial point of view, whether that’s cash flow, whether that’s your margins, whether it’s your you know, did you make a profit or loss, all those sorts of things are important in running a business. And then also the continuous improvement capabilities of things like you know, being able to benchmark and find out who’s the best in your field be able to do and look at graphs and plot data to understand trends and see changes in your business or see changes in marketplace. So if you can narrow down and I’m not going to go through all seven today, but when you narrow down and if you have a look on our website, on LEED ci around the bus x model, you’ll start to get a feeling of why those seven imperatives are there. And I must say there’s a few subsets within those seven grams, that’s probably even more complicated than that.

Graeme Fitzgerald 10:28
So so you actually touched on one there, one of the key components of the model, leadership, culture and teamwork, it stands out as an area where over many years, you’ve been working, learning and seeking to gain mastery. Can you share with us why you see this is so critical in the pursuit of excellence?

John Costley 10:51
Yeah, I think the main thing, Graham is that as a leader, really understanding that leadership is your or our ability to influence others. And if we believe truly, as a leader in a business, that you must achieve excellence to be competitive both within Australia and within the world, then that’s something you have to believe as the owner or senior manager in the business, and being able to constructively convey that message and add to that your behaviors that support the message starts to get others to start looking the same direction around, okay, the boss believes that excellence is achievable. He’s talking to us about it, he’s giving us some examples about leadership, and how it works and how we achieve excellence. And the people who start to work for you start to believe it’s true, as well, as I believe it’s true when they’re getting opportunities to input ideas, and you’re supporting that in implementing those good ideas. They start to feel as if, yep, we can achieve excellence, and I can be part of it. And this is actually quite enjoyable. And so as that starts to happen through leadership, then the culture develops based on the way we do things around here. So if the boss is constructive, and he’s wanting to engage with his people or her people, and people start to do the things that are, I suppose synonymous with with excellence, then it becomes the way we do things. And the final part of that grime, as we know is that you can’t do it all alone. And depending on the size of your business, it’s often got to be done in teams. And so if the culture is there that supports teamwork, then teams start to form teams start to develop their own goals with respect to how they can support the business, and then start drive towards excellence within their own teams as well. So it really is, I suppose, excellence in leadership, and particularly my term, constructive leadership is so important to drive towards excellence, both in the short and long term in a business. And when I talk about constructive leadership, I suppose you should introduce the other two sorts of leadership that I think can support excellence in a business and one is what I would call passive leadership, where people are avoiding issues, making good reasons as well, in their mind good reasons as to why their business can be excellent. And I see it in my consulting role that we in Australia can’t be excellent. We can’t compete with the world because of unions because of government’s because of whatever reason, to me, they’re excuses and people hiding behind the fact that they either are unable or unwilling to lead in the right way. And the other side of it, I suppose, is the aggressive side of leadership where people believe that having power over others will drive their business towards excellence. And I’ve seen businesses where managers have been successful to a point by you know, applying their their status and their power over others to drive improvement, but it can only go so far, because people who are not happy to live in that type of culture, which develops from a power or competitive driven leader will actually start good people will leave because their boss, I get the feeling at the end of the day that the boss doesn’t care about their good ideas. They only care about the boss’s good ideas. And so you start to lose people from your business who had you lead in a different way may have been quite helpful to the business but all of a sudden Because they’re not listened to, they don’t feel engaged, either just shut up, or they pack up. And so, you know, understanding leadership in the right terminology and the constructive form of leadership, I think is imperative in driving excellence. And that’s what we need in today’s manufacturing.

Graeme Fitzgerald 15:20
I was talking to a new leader earlier this morning about these manufacturing leader. And he’s been in the role three or four months. And the thing that we were talking about was storytelling. So leadership, in some respects, is telling the story of the vision is not that right. That’s how you say, I think

John Costley 15:41
telling the story about the vision is important. I think it’s all of the storytelling about, you know, the ups and downs we’ve had in our careers, you know, the things we tried, that didn’t work, as often some good stories we can tell there. And I certainly seen those with him. There’s also some really successful stories, and you know, it’s trying to tell those around, what are the outcomes in, in a business sense, but also in a, in an own personal sense of being a constructive leader. And I think in my experience, Graham has been able to, you know, paint a picture of what the future looks like, for your employees and for those stakeholders in your business is vitally important and where they fit,

Graeme Fitzgerald 16:26
and where they fit within that vision.

John Costley 16:28
Correct. And, you know, they might not stay with you forever. But over the next three years, if you’ve got a really good up and coming person in your business, painting a picture of the future for the business, but also for them, is what will motivate them to get involved. They may only stay with your business for three years. But if they put in a lot of hard work and give you a lot of great ideas, then it’s a win win outcome. My business gets some great ideas, the person who’s coming through the business, learn some skills, and if they take it somewhere else, so be it. It’s a win win. And I think that’s the world we live in, you know, most of the research says people will stay with you from three to five years, well, let’s make their experience with us enjoyable, because who knows? They might go and then they might come back. The way the world?

Graeme Fitzgerald 17:17
I couldn’t agree more with you, sir. So part of the the aim of this podcast is to actually provide our listeners with something they can take away and apply their own business. Yep. So as a practitioner, with responsibility for achieving real business results. Can you share with us one of your the greatest challenges in manufacturing you had, and how you tackled it?

John Costley 17:39
Well, I think we’ve had this conversation many times, and you were part of this process. And for those listeners out there, Graham and I first worked together in a management role back in 1995, in the steelworks in Newcastle. And we’re lucky enough, we didn’t think so at the time to be responsible for turning around one of the large departments there. 250 employees. And at that time, it was probably the most dysfunctional group of people that I’ve ever met. The business had just spent about 25 $30 million dollars in capital to upgrade the rolling mill. We made 600,000 tons a year of product. And the business really hadn’t improved anywhere since what had happened, what it’s been doing for the last 10 years. So really, what we did is we probably went back to the textbook on what we’ve learned from some of the leadership and started to paint a vision and communicate a vision of what the business could be. We went out and we listened to the people and understood because they were dysfunctional buying with threatening now angry people that were unionized. And those people say, well, the unions for grime in Ireland was it wasn’t used at all, it was the previous managers who hadn’t pretty much followed through on things that they’d agreed to do. And what Graham and I and others did in that role was to sit back and listen to what was working the people. And we slowly started to implement some low hanging fruit to change some perceptions of those people that managers could actually listen and do things. And we did, and the more we did as managers to get people engaged and take away what I might call excuses or impediments to change, people started to come on board. We had a vision, we started to bring people on board, we started to ask them for their ideas about how we could improve. And we started to implement, but also at the same time, we started to look outside the business. We started to look at what does world class look like in the sort of business that we were running at the time. And we went to Europe, we went to Japan and we identified either place in Japan, which was world class. And they were good enough to sign a technical agreement with us to help us. So we went outside and we looked, and we got the help. And we probably with the help of the, with the Japanese firm, we probably advanced in two years, what would have taken us 10 or 15 years by ourselves? So we’d engage, we had a vision, we developed a plan, we’d started to engage our own people, we knew what world class look like. And the other good thing that we were lucky enough to do is we took some operators and we took some tradesmen to Japan and showed them what world class look like. And when they came back. Interestingly, Graham, you’ll probably remember, they came back and said, well, john, we could probably do that. There’s no reason why we can’t do that, apart from some focus and, and time. And so over time, step by step we work their way through. And over the next three years, we got close to achieving world class, we, from a safety perspective, we eliminated or reduced our injuries by 90%, we improve their productivity by about 35%, we bought our costs down by 20 to 25%. And on most of the KPIs, we will within 10 to 15%. Of what will class look like and that continuation. The people who followed after I left in the late 90s, continued on that process under your guidance. Right. And interestingly, it’s the one part of bhp that still operating in Newcastle today. So from a from an integrated steelworks point of view, so I think, been a long winded answer. But that’s probably the greatest example that I’ve got. Apart from the fact the process we use there has worked in other areas as well.

Graeme Fitzgerald 22:02
Yeah, I think one of the good things is that they’ve continued to build on the platform, and really giving credence to the standing on the shoulders, shoulders of the people who have gone before is one of the things that makes that particularly successful, and a great sense of achievement. Thank you. That’s a. So it’s now more than 35 years since you started on your journey. What’s been your greatest lesson that time? And how’s it influencing you today?

John Costley 22:36
Ah, the greatest lesson? No, there’s been so many. I think the greatest lesson is that when you’re put in a position to lead, then you’ve got to decide yourself how you’re going to take on the challenge. And you can’t blame the past the past is gone. Or you can really do is understand what you have today to work with. Look forward to what world class could look like and accept the fact that it’s going to take time to make that change. So you’re if you’re the leader, you’ve got the ability to make and the responsibility and the accountability to make the change. And get on with it. And then the other thing is engaged people to help we engage the Japanese to help us from a technical perspective, we engage some outside consultants to help us understand more as as a as a large group of people what leadership and teamwork was all about. So we didn’t, we weren’t concerned that we didn’t know everything. If we didn’t know it, we went out and asked people who did and we got them to help.

Graeme Fitzgerald 23:54
And that still applies today still

John Costley 23:56
applies today. And as a consultant nowadays, I’m probably on the other side of the table where I got, I’m the one that gets asked to go in and help. And the interesting thing is still grime that there is I’ll put it in ratios, probably a third of leaders out there in manufacturing, who want to be excellent. And I understand it and now look for the help and delegates to help. There’s another third who think perhaps they’ve got it right, and they know what to do and they don’t need anyone’s help. And now make good progress and, and so on. And there are others who are just willing to accept the status quo and they’ll survive for a little while, but they won’t drive Australian manufacturing to where we want to be successful in the future.

Graeme Fitzgerald 24:44
Well, I know we could probably talk for hours on discussing leadership, continuous improvement and excellence, as it applies in Australia manufacturing, but we probably need to let people get back to To do in a little bit more manufacturing. So, thank you for your time and your insights today. You can contact john on LinkedIn or via the website at www dot LEED ci.com. So thanks, john.

John Costley 25:13
Thanks Graham. Thanks for the opportunity.