This document discusses ways to improve employee engagement and business performance. It proposes that common beliefs about the root causes of problems are often wrong. Two approaches are introduced: 1) The Cockpit Room, where top management focuses on six key performance indicators to guide strategy. 2) The Flow Room, where managers and employees collaborate visually to improve process flow, identify issues, and better understand interdependencies. Implementing these approaches can help businesses identify the real issues, improve efficiency, and increase employee motivation by giving them a sense of purpose and contribution.

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Executive Summary
It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.-
Mark Twain
We believe that we know why our companies are struggling against imports and why our workers are
disengaged.
Suppose we discovered that out that our beliefs are wrong, would that explain our limited success
despite intense efforts? Would we then be able to identify the right things and do them well?
This article proposes that the root causes of our problems are not what we think they are, and that
these root causes are experienced in businesses all over the world. Although the intensity of our
problems may be more severe than in many other countries, the root causes are the same.
It suggests that through the use of the Cockpit Room and the Flow Room managers and employees
will be able to identify the right things to do and to do them well. The inevitable result will be greater
employee engagement and profitability.
Managers have the power to make their businesses thrive.
1) The plastics manufacturing environment
1.1)Pain and despondency
According to the DTI, South African manufacturing’s share of GDP was 20% in 2003 and decreased to
11% by 2013. This was largely due to increased international competition and imports displacing
locally manufactured products.
The situation for a plastics manufacturer seems dire, we frequently read stories in the press about our
poor worker skills, militant unions, unfair imports and the problems around legislative interference and
issues around local suppliers charging too much for their polymer. Some senior economists and many
business owners are of the opinion that low worker productivity and hostile unions are at the root of
our inability to compete.
The 2013 Gallup Survey found South African and Syrian workers tied in second place as the most
actively disengaged group of workers in the world. The score for disengagement was 45%, meaning
that almost half of workers are unhappy and unproductive at work and liable to spread this negativity
to co-workers.
The Marikana and the post office strikes lasted for many months. The eventual settlements gave the
workers fractionally more than what the employers had offered originally. To economists this
behaviour seems irrational, it will take decades for workers to recover their lost wages. When we
consider the degree of worker disengagement this behaviour is quite rational.
1.2)Experiences that contradict our beliefs
And yet, we all know of examples where companies are doing well and have engaged workers
working for them. In the last 2 years of consulting I have seen in the vast majority of management led

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interventions that the apparent skill and attitudinal deficiencies of our workers disappear. What is even
more interesting is that this often happens in less than 4 months.
The following story, one of many, illustrates the misconception we as managers have of our workers,
their abilities and willingness to deliver results.
During 2014 I was involved in a Theory of Constraints implementation on a mine in Lesotho. To make
the interdependencies and variability in the system visible the production flow was captured on large
sheets. The managers and workers from all functional departments received 2 weeks of training
around the principles of operating the Flow Room. (The Flow room is a variation on the Japanese
Obeya or War Room and was developed by Arrie van Niekerk of Oiledwheels.co.za) Then we had to
stop our support due to amongst other things the political climate.
About 3 months later I visited the site again. In much of this period the well qualified South African
personnel could not enter the country. I observed what seemed to be a miracle. The red had
disappeared off the board and had been replaced by green. The Lesotho workers, who I had been
assured were not of high standard, had risen to the challenged and exceeded all expectations.
Production and profits were substantially higher, so much so that the decision was made at head
office to extend the life of the mine for another few decades.
How did this happen? The dialogue created in the flow room is actually very familiar to people from an
African culture. They were able to see their impact on the production system, the impact of their
colleagues, where the bottlenecks were developing, were able to support one another in preventing
this and keep each other accountable. As their confidence grew so did enjoyment of their work and
the effort each person was willing to put in. For many of the employees this was their first experience
of being successful and operating in a winning culture.
2) Engines of Disharmony
We cannot solve our problems with the same level of thinking we used when we created them-
Albert Einstein
Why are our workers so disengaged? Many believe that our colonial history and skewed income
distribution explains the problem. Although this may be a contributing factor I do not believe that it is a
causal variable. The rest of the world is battling with similar issues around worker engagement as we
are.
With the publication of “The Goal” Dr Eli Goldratt started the Theory of Constraints movement in the
80’s. As a qualified Physicist he began developing technical solutions to improve production, supply
chain and project management. TOC focussed almost exclusively on the hard side of the business
and paid little attention to the human side. The benefits to the human side was known but considered
at most a useful side effect of increasing production output, reliability and reducing project lead time.
This changed around 2010 when TOC started to become phenomenally successful in Japan. On
analysing the reasons for this success Dr Goldratt came to the conclusion that the soft side of
business has much more potential for creating lasting success than the hard side. The technical
interventions start the process but the real and long term benefits are from the improved human
interactions which become possible.

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Dr. Goldratt wrote the following in 2009 “Every Manager, especially the top manager of a large
engineering based company, is well aware of the impact of increasing motivation , initiative,
synchronisation, willingness to collaborate and communication amongst his people. All these soft
issues are actually the hardest, most important ingredients that determine the capabilities of the
company. Unfortunately, the prevailing approach to improving these issues revolves around dealing
directly with the people. Let’s take motivation as an example. As long as we think the way to
increase a person’s motivation is to talk to him, don’t we actually assume that the cause for his
lack of sufficient motivation resides with the person himself? From my experience, I am
convinced that the root cause for insufficient motivation is the existence of Engines of Disharmony.”
According to Dr Eli Goldratt our employees are performing in spite of the obstacles placed in their way
by what he called “the Engines of Disharmony”. The source of discontent lies outside of the worker,
interventions by HR to improve motivation and engagement will fail unless these are combined with
changes to the way work is structured and performed. Let us now investigate the engines of
disharmony that causes so much of our problems.
Engines of Disharmony.
1) What is my contribution?
Many employees do not fully understand the purpose of their job and how it enables the
organisation to reach its goals. Thus they are unable to see what they can do differently to
improve the contribution of their part to the overall organisation. And finally, I want my
contribution to be visible and recognised by my superiors and colleagues. If it is not I will
become negative and despondent. Ignorance also leads to supervisors and managers
focussing on what TOC calls local optima measurements. The measurements drive workers to
save costs on activities that are crucial for the overall organisation but make them look good on
the quarterly numbers. Think of an old manufacturing plant where engineering start cutting
expenditure on maintenance in order to meet their budget number.
2) What is my peer’s contribution
If I do not understand what the company strategy requires from my peers in other departments
I will focus on the fact that they make my life difficult at times and will only grudgingly
cooperate. Once I am at this stage, volunteering information to make their lives easier will not
happen often.
3) Conflicts
Many inherent and recurring conflicts exist in companies. An example would be where sales
ask production to break into orders to meet commitments to customers while finance puts
pressure on them not to do it due to scrap cost considerations. Having enough stock not to run
out versus conserving cash is another. For the company to function employees need to
compromise, but feel bad about it because it goes against what they believe is right for the
company. This ruins their motivation.
Because these conflicts are inherent to the way the process runs, they are continuous, they
tend to escalate and eventually undermine relationships between departments. TOC focusses

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on improving flow and as a result breaks these conflicts permanently. (The TOC Operations
and Supply Chain solution)
In mining and manufacturing the problems of interdependency and variation causes similar
issues. Because of interdependency the numbers does not tell us what is really going on.
Managers and workers find that immediate pain can be avoided by being economical with the
truth. Trust disappears and managers ask for more numbers, which still don’t show them what
is going on. The end result is low motivation and poor performance.
4) Inertia
Most companies have policies in place which were designed for the problems of the past,
which no longer exists. Employees often know intuitively that these policies are problematic but
battle to prove it to their superiors. Having to do something you know is counterproductive to
the interests of the company you hold dear is highly demotivating.
5) Gaps between responsibility and authority.
When one asks managers whether they are responsible for certain outcomes without having
the authority for some of the actions that are needed for these, they will almost always agree
with the statement. When one asks them whether the same is true for those reporting to them
the answer is almost always no. And yet their employees are pestering them to make decisions
all the time. The managers are drawn into firefighting and their attention reduces on the high
value tasks they were supposed to be focussing on. Again, this is demotivating for competent
workers and stops them from developing their abilities and gaining mastery.
In combination the engines of disharmony prevent workers from gaining mastery of their jobs
and feeling that they have purpose.
3) Achieving profitability and high employee engagement
Russel Ackoff said “It is better to do the right things poorly than to do the wrong thing well”. Success
requires a balance between doing the right things (strategy/effectiveness- the responsibility of
management), doing them well (efficiency- the responsibility of management and workers) and
harnessing the energy of employees (engagement). Management needs to measure and direct
progress progress towards doing the right things while the workers and management need to bring
their ideas and energy towards doing these things well.
Most companies do not run their businesses this way. Many are run in top down mode with the lower
levels mere hands to carry out detailed instructions from the top. This robs talented workers from
experiencing autonomy, mastery and purpose and makes it difficult for them to adjust the organisation
to keep pace with a rapidly changing business environment.
3.1) Top management needs to focus on the right things

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Management teams are drowning in a sea of information. At the same time they do not have the
critical information to tell them if their business is becoming more competitive. We have all sat through
meetings every week where the issues of the past few weeks are discussed at length. The future is
usually not dealt with at all, or only in a superficial manner. If nothing changes, things stay the same.
The Cockpit Room
Patrick Georges, a former neurosurgeon and serial entrepreneur developed the Cockpit Room
concept for managers over the last 10 years. It is an adaptation of the Balanced Scorecard method,
but designed to measure much closer to the operational level. It is a bottom up approach where the
Balanced Scorecard is top down. More than 1000 European firms have implemented this technique.
As a result of this work he had insight into the KPI’s used by all these companies. He found that the
successful ones used combinations of 6 critical measurements. In my 20 years in Plastics I have
observed the same. These measurements reduce the flood of information to a level where the brain
can cope, more information usually leads to lower quality decisions.
Financial ratios and operational measurements are not part of the Cockpit Room discussion. These
measurements are needed to keep score, not to manipulate and interfere in processes for short term
gains. When these ratios and measurements are included the discussion tends to digress towards
quick fixes and discussions of affecting short term outcomes. What is needed is identification and
discussion on the long term drivers of well-functioning companies and the factors (lead indicators) that
affect these drivers.
The six measurements used are the drivers which, when pursued with vigour, will lead to great
financial results. The operational results are the responsibility of managers and employees, with the 6
figures to support and direct them operational results will be acceptable. The Flow Room (which we
discuss later) will enable them to improve these.
The Six measurements needed to guide top management
If we are able to outperform our competitors (from around the world) on these drivers we will
outperform them in the marketplace and on profitability. These measures are displayed in the Cockpit
Room and evaluated by the top team on a quarterly basis. To be effective these measurements need
to be adapted somewhat to reflect the dynamics of the company using them. At a high level they are
the following.
1) % of Sales from new sources, (measuring innovation)
No business can expect to keep all of the customers it has ever had. The customers lost have to be
replaced and extra sales have to be generated
2) % Time spent facing the customer, (indicates the necessary condition to satisfy the customer)
Time spent by sales facing the customer is important since this is where early warning of changes in
the environment comes from and we can find out when the market needs are changing or competitors
are changing strategy.
3) Gains from processes (reduction in cost and delays).

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This measurement deals with operational excellence. It is here that techniques such as TOC and Lean
can add a lot of value. Gains from improving the process flow usually far exceeds any (short term)
benefits that can be obtained by cutting costs. Competitors from around the world are implementing
more efficient techniques all the time and looking around the world for markets with higher margins. It
is important to continually drive our costs down so that we can make money at lower raw material
margins and not attract these competitors or better, be able to resist their encroachment.
4) People responsibility level (delegate to the best people)
Successful companies continuously develop their most promising employees and delegate more and
more responsibility to them. I once asked the manager of a top European company what the number
one item on their meeting agenda is. He said “What experience do our subordinates require next to
increase their value and career prospects”. In this situation HR automatically becomes relevant. This
drastically reduces the level of stress on top level management and enables them to concentrate on
strategy and the longer term picture. It also motivates and energises your achievers.
5) Return on critical resources (managers return what they receive with a profit)
Critical resources are things that cause bottlenecks in your process. It can be scarce skills, floor area
or the capacity of a particular type of machine. As we do in the Theory of Constraints we want to get
the maximum return from activities that involve this constraint.
6) Key project status (leadership, managers adapt to change)
A key project is one which is considered so important for the company profits and strategy that the
CEO often drives this project himself. Other projects he delegates to subordinates. By having this
project assigned Key project the rest of the organisation understands the importance and can prioritise
their actions around this.
3.2) Management and workers need to ensure processes run efficiently and the energy and
ideas of workers are freed up
How do we ensure that we are efficient in our organisations? We need to ensure that we improve the
way we run our processes, that we enable our best performers to bring and implement new ways of
doing things, make sure everyone understands their role and that of their peers and remove the
conflicts in our systems. The new owner of a plastics firm, which he had recently turned around, said “I
don’t know much about plastics, but I unshackled my employees so that they could do their jobs
properly”. That makes all the difference.
The Flow Room
The Flow Room was originally developed for the mining industry and has been used very effectively in
more than 50 implementations.

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The Flow Room is the place where the heads of departments, middle managers and selected
employees get up to date visual information on what is happening to the business as a whole. Colour
codes identify where attention should be focussed and where help from support functions such as HR
and Maintenance is required. In the Flow Room HR becomes aware of what the business really needs
and becomes empowered to deliver. The Flow Room provides a forward view and highlights patterns
of interaction needing more attention. It moves the company out of firefighting by highlighting problems
before they occur and putting in shock absorbers (buffers) to handle variation and interdependence.
The system is managed holistically with departments asked to support the overall flow through the
company. Setting up a flow room means that teamwork will occur, across layers and functions.
In the Flow Room we move away from the worst aspects of burocracy and debate towards dialogue
and allow everyone a say. Given the nature of the problems we face and the limitations of our brains it
is unlikely that managers will ever have a full understanding of the reality they are facing. Since many
people have pieces of the answer and important bits of knowledge lie with front-line personnel, it is
critical that we ensure that these pieces can be put together. Effective Dialogue is a powerful
technique to overcome interpersonal barriers to achieving this goal.
The Flow Room provide visual feedback on the processes workers are responsible for and shows
them how their actions affect the overall system and the outcomes. It highlights problem areas in these
processes and allows for dialogue around these processes. Management and workers simultaneously
become aware of problems in the system and restrictive policies and bottlenecks can be addressed on
the spot. It is not possible to hide anymore; those not doing their part are visible to all. Peer pressure
ensures that they rise to the challenge and start to support their colleagues. When a department or
group needs support it is clear to see and colleagues support them. These changes from the status
quo come as a great relief to workers and enable them to increase their engagement. As workers start
to experience success, sometimes for the first time in their careers, they become accountable and
begin to volunteer their energy and talents. This reduces the load on management, which can now
start to work at the level they were employed for.
Other benefits of the flow room
The previous section showed why the Flow Room addresses the Engines of Disharmony. But it also
addresses employee engagement. Gallup uses a questionnaire called the Gallup Q12 meta-analysis
to determine employee engagement. A recent study conducted in the US showed that similar
companies, grouped in the top and bottom quartile according to employee engagement, showed
significant differences in performance. Those in the top quartile outperformed by 12% on customer
loyalty, plus 12% in profit and plus 18% in productivity. At the same time they had 62% fewer safety
incidents and 51% lower theft rates.
The Gallup questions ask a number of crucial questions around issues which are under the control of
management. The main questions relate to whether employees know what is expected of them,
whether they have the tools to do the job, whether their contribution is visible and recognised, whether
they can see how their work contributes to the success of the whole and whether they are working to
their strengths in a supportive environment. The Flow Room has been designed so that management
and workers have the same visibility of problems and opportunities and can work together to deal with
these. As a result of this the employees can answer the Gallup questions in the affirmative.
The Flow Room has now been used in TOC interventions in mining for the last 15 years. Experience
shows that interventions with a Flow Room included are highly successful. Those without still deliver

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value, but not nearly as much and these interventions are not sustainable. The Flow Room is truly the
silver bullet that liberates human potential and generates substantial business improvement.
4) Conclusion
Henry Ford said “Whether you think you can or can’t, you are right”. Many of the problems we are
experiencing in manufacturing and mining are within our control, but we cannot become profitable until
we accept this.
Russell Ackoff said” It is better to do the right things poorly than to do the wrong things well” We have
to make sure that we have identified the right things and then focus most of our energy on these.
The Cockpit Room reduces the flood of information to the minimum which is still sufficient to run a
great company. These 6 measurements represent the most critical levers which will, with a time lag,
result in superior performance. Since businesses operate in different environments some adjustment
of the levers may be required.
The Flow Room enables managers and workers to look at production and other processes holistically.
It becomes clear to managers and employees how their work impacts the system as well as the
impact their peers in other departments have. The visual nature of the feedback enables management
and workers to simultaneously become aware of problems in the system and restrictive policies and
bottlenecks/conflicts can be addressed on the spot. The Flow Room liberates human potential,
enables effective communication and teamwork and ensures that teams deliver more than the sum of
their parts.
Many managers will be able to use these ideas to turn their businesses around. If you believe you
need support, please visit www.stratflow.com for further information.
Written By
Hendrik Lourens
Stratflow Facilitators