Article originally published in the American City Business Journals on January 30, 2018
Paul R. Staley, former president and CEO of PQ Corp., passed away on Jan. 5 at the age of 88. I dedicate this article to his memory and the profound influence he had on my thinking about challenging my paradigms and pushing technology forward.
Effective leaders teach others to think out of the box. This was Paul Staley. I look back to an article I wrote in August 2014 headlined “Breaking paradigms to achieve breakthrough results” in which I describe how Staley inspired me and my team to advance the state of the art of our manufacturing technology with the construction and operation of a new plant. What Staley taught us has influenced me from that time forward.
On this occasion, I would like to offer here several excerpts from that earlier article:
Breaking paradigms and thinking “out of the box” is crucial for achieving breakthrough results. As a business unit general manager, I was taught this lesson by the CEO of our company, Paul Staley, who challenged the design of a micro-plant my business unit was trying to economically justify. The return on investment was initially below the hurdle rate for this type of project.
Strategically, we wanted to build the plant because it would open a new geography in a growing market for the company and protect that market from the entry of a competitor, but we needed a higher return on investment to get the board’s approval. We didn’t want to justify the plant just on a strategic basis, but on an economic basis as well.
When I told Staley that the internal rate of return of the project was insufficient to present to the board, he asked that every aspect of the plant design be reviewed with the goal of building the plant at a lower capital cost and running it at a lower operating cost.
This type of plant would normally be staffed by three people on a one-shift operation, led by a plant manager. Staley asked if it would be possible to design the plant to operate with a two-shift self-managed crew without a plant manager — one person on the first shift and one on the second shift, something that had never been done before. My response was, “So, you want a more-efficient plant built at lower capital cost run by fewer people and with no management? These objectives are mutually exclusive!” Staley just smiled and said, “Break your paradigms. I know you and your team can do this.”
Working with our engineering and plant-operations team, we broke every paradigm we ever had about this type of plant. Through brainstorming, out-of-the-box thinking and open dialogue, we reoriented equipment and scaled down the capacity of the plant to lower the initial capital investment but left it expandable if and when the demand justified additional capacity. We raised the qualifications of the operators hired to run the plant, ensuring they had the capability to self-manage.
There was much skepticism within the company that the plant could run with a self-managing crew of only two people. For political reasons, I added the cost of a third person to the cash-flow projections. A third person was added a few years later after demand grew, requiring operation on the third shift.
After the plant design was revised and staffing reduced, the return on investment rose significantly, and we received board approval to build the plant. Because of its new design and the way it operated, it was the lowest cost plant of its type in the industry and became our company’s model for future plants.
A competitor chose not to enter the geography because of our plant’s low-cost operation; they couldn’t match its low costs.
A few years later, we built a replica of the plant to serve another geographic market. We operated the plant at even lower cost with one individual on the day shift and a local retiree who filled in when the individual took vacation or a sick day.
How do you create a paradigm-breaking mindset so it becomes part of the culture of your organization? I believe you need a catalyst and an initiative where existing paradigms can be challenged. For us, Staley served as that catalyst, and the initiative was the need for a new lower-cost design and staffing plan for this new plant.
You also need an organizational culture where the opinions of all employees on how to achieve break-through improvements are valued, and where the status quo can be questioned. The organization that accomplishes this will build competitive advantage.
Rest in peace, Paul. Thank you for teaching me to break paradigms.
Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.