FAVI

Through a process of collective discussion, FAVI’s employees determined the organization had two reasons for existence, two fundamental purposes: the first to provide meaningful work in the area of Hallencourt, a rural area in northern France where good work is rare; the second to give and receive love from clients. Yes, love, a word rarely heard in the world of business, and even more unexpected in a blue-collar manufacturing environment. At FAVI, it has taken on real meaning. Operators don’t just send products to their clients, they send products into which they have put their heart. A few years ago, around Christmas time, an operator at FAVI molded excess brass into a few small figurines of Santa and of reindeers. He added the figurines into the boxes of finished products, rather like kids put a message in a bottle they throw out to sea, imagining that someone, somewhere, would find it. Other operators have since picked up on the idea and at random times of the year add brass figurines into their shipments, as little tokens of love to their counterparts working on assembly lines at Volkswagen or Volvo, who will find the figurines when they unpack the boxes.^[1]

FAVI’s factory has more than 500 employees that are organized in 21 teams called “mini-factories” of 15 to 35 people. Most of the teams are dedicated to a specific customer or customer type (the Volkswagen team, the Audi team, the Volvo team, and so forth). There are a few upstream production teams (the foundry team, the mold repair team, maintenance), and support teams (engineering, quality, lab, administration, and sales support). Each team self-organizes; there is no middle management, and there are virtually no rules or procedures other than those that the teams decide upon themselves. The staff functions have nearly all disappeared. The former HR, planning, scheduling, engineering, production-IT and purchasing departments have all been shut down. Their tasks have been taken over by the operators in the teams, who do their own hiring, purchasing, planning, and scheduling. The sales department has been disbanded too. The sales account manager for Audi is now part of the Audi team, just as the sales account manager for Volvo is part of the Volvo team. There is no head of sales above the group of account managers. In the old structure, white-collar workers in offices with windows overlooking the shop floor planned in detail what the workers needed to do, by when, and how. Now blue-collar workers effectively wear their own white collars and no longer receive instructions from above.^[2]

At FAVI, production is organized by customer. This makes load-balancing a significant issue: because customer orders fluctuate, on any given day some teams might have too much work and others too little. Rather than employing a COO or staff planner to make decisions about allocating work across teams, FAVI chose a more organic and elegant solution. At regular intervals, a group composed of one designated person from each team comes together for a few minutes; they quickly discuss which teams are over or understaffed; back in their teams, they ask for volunteers to switch teams for a shift or two. The person from the Audi team, for example, might ask who in the team is willing to spend the day with the Volvo team. Things happen organically on a voluntary basis; nobody is being allocated to a team by a higher authority.^[3]

When Jean-Francois Zobrist, the CEO of FAVI, was faced with difficult and critical decisions at the company, he readily admitted he needed help to find a good answer. More than once, on impulse, he went around the shop floor, asked everybody to stop the machines, climbed on a soapbox and shared his problem with all employees, trying to figure out a course of action.

In time of crisis, he openly shared information with all employees about the reality of the situation, trusting them to handle it. As a result, employees did not retain a false sense of safety. Everybody, regardless of any rank, could take the opportunity to sense the impact of the information offered and resonate to it. People in the audience shouted questions and proposals. Together they found a collective course of action to overcome the crisis.

Weekly senior management meetings in Favi used to include the heads of sales, production, maintenance, finance, HR, etc. These are now held at the team level.

Teams hold short regular meetings to align and make decisions as follows:

• a short tactical discussion at the start of every shift
• a weekly meeting with the sales account manager to discuss orders
• a monthly meeting with an open agenda

Beyond that, they tend to have no regularly scheduled meetings at all. If cross-team meetings occur, it’s in response to a specific need.

This powerful practice start of the meeting at FAVI had a telling effect on meetings: it nourished moods of possibility, gratitude, celebration, and trust. Focusing on others and their accomplishments shifts focus away from the personal preoccupations members might have brought to the meeting. After a few years, this practice started feeling staid to people at FAVI, and was dropped. It might show up again, perhaps in another form. Such practices evolve. They should feel fresh and meaningful, not formal and fixed.

FAVI made extended use of the trial period for both parties to test whether the match works out.

At FAVI, the French automotive supplier, all engineers and administrative workers have been trained to operate at least one machine on the shop floor. The training is regularly put to good use: when orders must be rushed out, it happens that all hands get called on deck. White-collar workers come down from the office space on the first floor to man the machines for a few hours. It’s a wonderful community-building practice. People in engineering and administrative roles work under the guidance of the machine operators. They witness first-hand how hard the work on the machines can be and how much skill it involves. At the end of the day, when the orders are out on time, colleagues share a sense of pride in the work accomplisheɖ.

FAVI’s onboarding process ends on a nice touch. New teammates who have gone through all the training modules of the first two months are asked to write an open letter to the group of colleagues they have joined. There are no instructions on what the letter should be about, so new hires often dig deep in their selfhood to find something worthwhile to say. The letters are, time and again, deeply touching accounts of gratitude and joy. Many blue-collar workers join FAVI scarred from past experience of mistrust and command and control. Joining an environment where they are considered trustworthy and where their voice counts is often a groundbreaking experience. For many machine operators, writing is not their preferred style of expression. Finding the right words for the letter can take a lot of effort, and the practice is akin to a ritual, a rite of passage into the community.

It’s a wonderful community-building practice. People from engineering and administration work under the guidance of the machine operators. They see first-hand how hard this work can be, and how much skill it requires. When the orders are shipped on time, colleagues share a sense of pride in the accomplishment.

FAVI also has a training program given to new members. But one session, only, may insufficient for someone to unlearn old habits and pick up new ones. The initial training modules are therefore expanded with follow-up training and workshops interwoven into daily life. The CEO, Jean- François Zobrist, used to chair a one-hour session every Friday morning, open to whoever wanted to join. The topic: An in-depth look at one of FAVI’s core organizational tools. (FAVI calls them fiches, or index cards, as they are literally available in the form of index cards to employees.) These include organization purpose, values, decision-making mechanisms, and lean manufacturing techniques.

An operator at Favi who was having a house built, brought the topic up with his team. To be on site with the builders, he wanted to switch to the night shift. He asked if a colleague would be willing to swap shifts for a four month period. An arrangement was quickly found without the need for a formal HR approval process of management approval^[4].

However, at FAVI, one person on the team holds most management roles for the team (FAVI calls them, rather unhelpfully, a “team leader”, which might imply hierarchical power over their colleagues). FAVI found it works best to have one person free to roam among the team and only operate a machine occasionally when a helping hand is needed. FAVI’s team leaders act as coaches for their colleagues, as a clearinghouse for information, and as a point person when coordination is needed with other teams. This choice nevertheless carries a risk. Our cultural baggage of hierarchy is so strong that over time, team leaders could start behaving like bosses and become the primary decision makers on their teams. At FAVI, a simple but powerful relief valve exists, should a team leader find the taste of power too sweet: workers can choose at any moment to join another team. Team leaders have no meaningful way of coercing people into desired behavior; they certainly don’t have the authority to fire people unilaterally. If they start to behave autocratically, people can simply walk away

At Favi, sales account roles are part of the product team, for example the Audi team. No one gives them sales targets. Their motivation is to serve their clients well and, in the face of Chinese competition, to maintain and when possible increase the number of jobs the factory can provide. To account managers, feeding their team with work is a motivation far stronger than any sales target from a Head of Sales could ever provide. At Favi, sales orders are always discussed in terms of employment, not in monetary terms; so there is no "we got a million order" but rather "we got an order for 10 people's work". This is in line with the organization's purpose, which is to create jobs in an area where jobs are scarce.

Incidentally, workers at Favi do not get production targets either. They are well aware of the impact China has on their market, given the feedback they receive from their sales account managers. Operators set themselves target times to machine their pieces, and they monitor their performance against that target.

In the 1990s, Zobrist (CEO) and a few colleagues at FAVI became fascinated with the following idea: foundries always produce alloys, because pure copper cannot be molded. What if FAVI could somehow do the impossible - shape industrial products made of 100 percent pure copper? They started tinkering.

Would there be a market for such products? They had no idea, but they didn't care to commission a market study. Pure copper has some properties, like electrical conductivity, that alloys don't have; such a property must have a purpose. What really got them excited was not the market they might discover. They were excited by the beauty of the seemingly impossible: to shape pure copper.

After two years of tinkering, they succeeded. And as they had imagined, a market came knocking at their door. Pure copper rotors have interesting properties in electrical motors. This is now an important business for FAVI.^[5]

Metallurgists have long known that copper has antiseptic properties. It's a shame, people at FAVI thought, that this property isn't put to use in products. A team started tinkering with antimicrobial copper equipment for hospitals. A prototype soon gave promising results, but Zobrist (CEO) was bothered by its color. The reddish color of copper evokes the faded world of old 19th-century sanatoriums, he found.

Zobrist (CEO) asked the project team if they could make a prototype with a silver-colored alloy, to give it the shine of stainless steel we associate with modern equipment. The team scoffed: This simply made no sense. The added material for the alloy would make the copper lose its antiseptic properties. Zobrist (CEO) knew he had no ground to stand on. But he was possessed by a deep aesthetic and intuitive sense that it was worth pursuing. He managed to persuade the team into giving it a try.

To everybody's surprise, and for reasons still unclear, the silver-color alloy not only kept the copper's antiseptic properties, it enhanced them. A new market opened for FAVI.

The product development process that FAVI used to achieve this breakthrough was developed in collaboration with a Japanese professor, Shoji Shiba. It is a design process that explicitly factors in emotions, beauty and intuition^[6]

Once a year, every team at FAVI establishes the investment budget for the next year - new machines, new tooling, and so on. In most organizations, the finance department challenges these requests and ultimately the executive committee or the CEO arbitrates across departments to channel more money in one direction or another. This opens up the can of worms of politics. Everyone jockeys for a bigger part of the pie. For middle managers, the size of the budget is often the yardstick by which their status is measured. They try, as best as they can, to influence the decision makers in the executive committee through any formal and informal channels at their disposal.

At FAVI, there are no middle managers that fight for budgets, and their CEO Jean-Francois Zobrist refused to play the role of the father who would decide how to divide up the candy among his children. Teams know that no haggling will take place, so they don’t throw in inflated numbers to start with; they make realistic requests based on realistic needs. In most years, when the budgets of the teams are added up, the resulting number is reasonable, and all plans get the green light, with neither discussion nor scrutiny. Teams are trusted to do the right thing; if one team were to get itself golden-plated machines, other teams would quickly notice, and peer-pressure would self-regulate the problem away. In those years where the combined projects exceed what would be reasonable, the CEO simply asks teams to sit together and to come back to him with a revised plan. Representatives from each team come together and put all the plans on a table. They look at what is most important and what might be deferred in everyone’s plans. In one or two meetings, the problem is always sorted out.

Like other roles, the traditional purchasing and investments tasks of a manager - budgeting, planning, and controlling - are scattered among various members of a team. A worker at FAVI, might operate a number of different machines, be in charge of ordering supplies for his team, lead a number of continuous improvement actions, and be responsible for recruitment to his team^[7]

The traditional practice in organizations, says FAVI, is to look five years ahead and make plans for the next year. FAVI believes we should think like farmers; look 20 years ahead, and plan only for the next day. One must look far out to decide which fruit trees to plant or which crops to grow. But it makes no sense to plan at the beginning of the year the precise date for harvest. As hard as we try, we cannot control the weather, the crops, or the soil. They all have a life of their own beyond our control. A farmer who would stick rigidly to plan, instead of sensing and adjusting to reality, would quickly grow hungry.

FAVI finds it needs a basic budget to help make certain decisions. Once a year, every operating team (FAVI is organized by client teams, e.g., the Volkswagen team, the Volvo team, etc, and by support teams, e.g., the foundry team, the maintenance team, etc.) makes a monthly forecast for the year to come of sales and costs. The numbers are added up, and whatever the result, it is considered the budget for FAVI overall. That budget can then be used to inform decision making, for instance, to determine the expected tonnage of metal that will be bought for which a supply contract must be secured.

The budget is not used to track mostly performance: there is no monthly comparison of actuals vs budget. Teams simply track their monthly numbers and if the numbers are unsatisfactory (as compared to the previous month or year, or to some ratio) they discuss corrective action. In its management manifesto, FAVI captures the thinking about budgets in a provocative statement; “In the new way of thinking, we aim to make money without knowing how we do it, as opposed to the old way of losing money knowing exactly how we lose it.” FAVI is privately owned and doesn’t need to report to outside shareholders.

It was a common occurrence, that when faced with difficult and critical decisions at FAVI, Zobrist would readily admit he needed help to find a good answer. On impulse, he would go around the shop floor and ask everyone to stop machines, and he would climb on a soapbox and share the problem with all the employees, trying to figure the course of action. The first major crisis under his leadership occurred in 1990 when car orders plummeted in the wake of the first Gulf War. Stocks were piling up, and there simply wasn't enough work to keep workers busy. Capacity and costs needed to be reduced.

There was one obvious solution: fire the temp workers. But at FAVI, no one was really considered a temp worker. For reasons related to labor laws in France, new recruits were hired as temp workers for 18 months before they were offered a full contract. Most of them were already considered full members of their teams. By firing the temps, FAVI would rescind its moral commitment to them, and it would lose talent it had invested in, with a recovery perhaps only a few months away. With many questions and no clear answers, Zobrist found himself on the soapbox and shared his dilemma with all employees in that shift (including the temp workers whose fate was being discussed). People in the audience shouted questions and proposals. One worker said, "This month, why don't we all work only three weeks and get three weeks' pay, and we keep the temp workers? If we need to we will do the same thing next month as well." Heads nodded, and the proposal was put to a vote.

To Zobrist's surprise, there was unanimous agreement. Workers had just agreed to a temporary 25 percent salary cut. In less than an hour, the problem was solved and machine noise reverberated around the factory again. Zobrist’s ability to keep his fear in check paved the way for a radically more productive and empowering approach and showed that it is possible to confront employees with a harsh problem and let them self-organize their way out of it.

At FAVI in the 1980's, regarding the organizational practices, men and women were considered to be :

• Thieves, because everything was locked up in storage rooms.
• Lazy, as their working time was controlled and every late showing punished by somebody (who didn't care to inquire about the reasons for being late).
• Not dependable, because all their production was controlled by somebody else – who must not have been very dependable either because general control mechanisms had been put in place.
• Not intelligent, as a "manufacturing engineering" department did the thinking for them.

Here are the new assumptions :

• People are systematically considered to be good (reliable, self-motivated, trustworthy, intelligent).

• There is no performance without happiness. To be happy, we need to be responsible. To be responsible, we must understand why and for whom we work, and be free to decide how.

• Value is created on the shop floor. Shop floor operators craft the products, the CEO and staff at best serve to support them. At worst, they are costly distractions.

FAVI’s factory has more than 500 employees that are organized in 21 teams called “mini-factories” of 15 to 35 people. Most of the teams are dedicated to a specific customer or customer type (the Volkswagen team, the Audi team, the Volvo team, the water meter team, and so forth). There are a few upstream production teams (the foundry team, the mold repair team, maintenance), and support teams (engineering, quality, lab, administration, and sales support). Each team self-organizes; there is no middle management, and there are virtually no rules or procedures other than those that the teams decide upon themselves.^[8]

Early on in his tenure as CEO, Jean-François Zobrist invited all the factory employees to a meeting to figure out the organization’s raison d’être. The soul searching was prompted by a proposed order that came out of the blue from a French car manufacturer. Could they, within a year, supply not only a gear fork, but a full gearbox? This single order would be larger than all of FAVI’s existing business. Many people thought it was too risky. Zobrist felt the decision could not be made without inquiring into the purpose of the organization. In keeping with his style, he involved the whole company, in meetings with subgroups of 15 people at a time on Friday afternoons. He showed up at the meeting with no agenda and no process; he trusted that his colleagues would somehow self-organize in these meetings, reconvening every Friday if needed, until they had answered this most fundamental question: what is our purpose?

After much discussion, when the obvious but superficial ideas had been discarded, the answer emerged with clarity. FAVI has two reasons for existence, two fundamental purposes: the first is to provide meaningful work in the area of Hallencourt, a rural area in northern France where good work is rare; the second is to give and receive love from clients.

At FAVI, love, a word rarely heard in the world of business, has taken on real meaning. Operators don’t just send products to their clients, they send products into which they have put their heart. A few years ago, around Christmas time, an operator at FAVI molded excess brass into a few small figurines of Santa and of reindeers. He added the figurines into the boxes of finished products, rather like kids put a message in a bottle they throw out to sea, imagining that someone, somewhere, would find it. Other operators have since picked up on the idea and at random times of the year add brass figurines into their shipments, as little tokens of love to their counterparts working on assembly lines at Volkswagen or Volvo, who will find the figurines when they unpack the boxes. ^[9].

When CEO Jean-François Zobrist was faced with critical decisions, he readily looked to the workforce for help. More than once, on impulse, he went around the shop floor, asked everybody to stop the machines, climbed on a soapbox and shared his problem.

His first major crisis happened in 1990 when orders plummeted in the wake of the First Gulf War. there simply wasn’t enough work to keep workers busy. Capacity and costs needed to be reduced. There was one obvious solution: fire the temp workers.

But at FAVI, no one was really considered a temp worker. For reasons related to labor laws in France, new recruits were hired as temp workers for 18 months before being offered a full contract. Most were already considered full members of their teams. By firing them, FAVI would rescind its moral commitment to them, and it would lose talent it had invested in, with a recovery perhaps only a few months away.

With no clear answers, Zobrist found himself on the soapbox and shared his dilemma with all employees (including the temp workers whose fate was being discussed). People shouted questions and proposals. One said, “This month, why don’t we all work only three weeks and get three weeks’ pay, and we keep the temp workers? If we need to, we will do the same thing next month as well.”

Heads nodded, the proposal was put to a vote, and unanimously agreed. Workers just agreed to a temporary 25 percent salary cut. In less than an hour, the problem was solved and machine noise reverberated around the factory again.

Today, FAVI has more than 500 employees who are organized into 21 teams called “mini-factories” of 15 to 35 people. Most of the teams are dedicated to a specific customer or customer type (the Volkswagen team, the Audi team, the Volvo team, the water meter team, and so forth). There are a few upstream production teams (the foundry team, the mold repair team, maintenance), and support teams (engineering, quality, lab, administration, and sales support). Each team self-organizes; there is no middle management, and there are virtually no rules or procedures other than those that the teams decide upon themselves.

The staff functions have nearly all disappeared. The former HR, planning, scheduling, engineering, production, IT and purchasing departments have all been shut down. Their tasks have been taken over by the operators in the teams, who do their own hiring, purchasing, planning, and scheduling.

When opportunities arise that span the boundaries of several teams, FAVI workers self-nominate to create a temporary project team. Sometimes a person is appointed for a staff role to coordinate across teams, but that person receives no authority to impose decisions on the teams. For example, at FAVI there is Denis, an engineer, whose role is to help teams exchange insights and best practices. He spends his days encouraging machine operators to go and see what other teams have come up with. He can’t coerce a team into adopting another team’s ideas. He must get them interested and excited. If he fails to do so, if teams stop seeing added value in his work, then his role will naturally disappear, and Denis will need to find himself another role to fill. In the true sense of the word, he has a support function. This is highly unusual for manufacturing environments - an engineer who is in service to and not in command of less-educated (but highly skilled) blue-collar workers..^[10]