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FAVI.
“Le chamallow”
                         International Center for




Page 1
                         Outperformance
quot;The world is uncertain. Life is uncertain!
            “Everything is out! Unfortunately, most            Obviously! So why do manager always want some?”
            organizational charts are a picture of a
            huge inside, with no formal entry or exit,         quot;The characteristic of our FAVI system is that we
            like a huge “stomach” which would be               voluntarily make uncertainty an adventure, a celebration.quot;
            sealed at both ends: neither mouth nor ..“
                                                                JF Zobrist, former CEO FAVI
            JF Zobrist, former CEO FAVI

                                                                           “One of the first things I did 23 years ago
           “In the “square” enterprise, a prisoner of the                  is to remove the score, the bonuses,the employee
           annual budget, the major tool of the control of                 interviews and other evaluation tools and
           the future, all actions are bordered by this                    therefore the staff.”
           budget and are planned on a YEAR! And
           anything that is not budgeted may not be!“                      JF Zobrist, former CEO FAVI

           JF Zobrist, former CEO FAVI
                                                                                quot;The only power lies with the customer,quot;,
                                                                                quot;I have no power in here. I enter a meeting,
                                                                                no one stands up. I don't have a parking
                                                                                space, and if I start pretending to expertise in a
“It's a company -- in France, remember -- where                                 meeting, my people will often cut me off.quot;
workers volunteer to work Saturdays when an
extra-large order needs to be filled by Monday,                                 JF Zobrist, former CEO FAVI
where front-line employees redesign products
to improve efficiency, and where prices
have fallen almost every year for decades.”

Brian M. Carney
                                                                                           In a quot;SQUAREquot; world
                                                                                           FAVI is quot;ROUNDquot;!”

                                                                                           JF Zobrist, former CEO FAVI


   “To return to the company quot;Yquot;, this company is
   certainly on a budget, just to mark the future, but                              “If we want to survive, we must adopt a
   we do not hesitate to modify it if the consumer                                  structure where everyone has an antenna
   happiness turns suddenly, we do not hesitate to                                  and is outward in order to adapt to market
   burn it if a September 11 like two towers go up in                               developments.”
   smoke!”
                                                                                    JF Zobrist, former CEO FAVI
   JF Zobrist, former CEO FAVI

                                                             “The greatest productivity gains we have made are
                                                             very often the result of a reflection made by chance
          “There is no happiness without performance.
                                                             by an operator of production.”
          To be happy one must be responsible, he/she
          must be free of the quot;Comment*quot; because after
          all, and this is one of the basics of Kaizen”      “In addition, we quot;go outquot;, we especially encourage
                                                             all operators to quot;come outquot; to multiply the chances
          JF Zobrist, former CEO FAVI                        to meet quot;accidentsquot;! In quot;postquot; the accident made us
                                                             discover the fabulous track electric motor's high
          *FAVI refers with “comment” to the chain of        efficiency; In quot;postquot; we discovered most elements
          command                                            of our internal culture.”
                                                                                                                 Page 2
                                                             JF Zobrist, former CEO FAVI
FAVI.
 “Le chamallow”


Table of Contents
Introduction to the Case Study.........................................................................................................................4
Short company overview...................................................................................................................................5
Assumptions held about human nature at FAVI................................................................................................5
Management practices listed by Beyond Budgeting principles.........................................................................6
   Overview: “What FAVI does not have”.........................................................................................................6
   Customers...................................................................................................................................................6
   Organization, autonomy & responsibility......................................................................................................7
   Values........................................................................................................................................................12
   Transparency.............................................................................................................................................14
   Goals & Controls........................................................................................................................................15
   Rewards....................................................................................................................................................15
   Planning.....................................................................................................................................................15
   Resources..................................................................................................................................................16
   Coordination..............................................................................................................................................16
FAVI's transformation stories..........................................................................................................................17
   Mr. Zobrist's quotes on “the break”............................................................................................................17
   Mr. Zobrist's speech on Christmas Day.....................................................................................................18
   Production increase after the Christmas holidays......................................................................................19
   The story of the parking space –
   or the importance of a strong signal to mark the transformation journey...................................................20
   Mr. Zobrist's letter to all associates............................................................................................................21
   The story of the creation of the mini-plants ...............................................................................................23
   The story of the quality at night..................................................................................................................23
   The story of the red traffic lights.................................................................................................................23
   The story of Gilles......................................................................................................................................24
   The story of Fabienne................................................................................................................................24
FAVI's own invented management terminology..............................................................................................25
   FAVI's principles.........................................................................................................................................25
   Enterprise Y vs. Enterprise X.....................................................................................................................28
   “The love of the client”...............................................................................................................................32
   Lotto / Lottery.............................................................................................................................................33
Origins of FAVI's management model and the management model sheets....................................................33
Resources.......................................................................................................................................................36
License...........................................................................................................................................................36




Version 1.1: June 2009 (Version 1.0: May 2009)


                                                                                                                                                           Page 3
Introduction to the Case Study

FAVI in Hallencourt, France, is considered since May 2009 a Beyond Budgeting Pioneer. It was both
identified and documented by us. FAVI is the first French pioneer. It is a remarkable case under the
centralized and five-year-plan French culture. FAVI's former CEO Jean Francois Zobrist under who's
leadership FAVI transformed, described France as the quot;last Soviet Republicquot;.


Despite FAVI has compared to other beyond budgeting pioneers a relatively small workforce with currently
about 800 associates, it is one of the most mature and best self-documented cases ever found since the
beginning of the Beyond Budgeting journey in 1998. Actually no primary research is necessary due to its
both excellent and on the website complete freely available documentation (in French). FAVI has
documented its own way of operating both in principles compared to the traditional command-and-control
management model, the underlying and self-invented concepts of “Enterprise Y” / “Round enterprise” in
comparison to the traditional “Enterprise X” / “Square enterprise” and also its transformation journey
beginning on Christmas Day 1983. With reference to the evolution pathway it is a transforming organization.


As the transformation started on January 1984, there was no clear model how the new management system
should look like. Moreover Mr. Zobrist stresses that by change and accident the FAVI system was developed.


The transformation to the new management model soon bear fruit since FAVI's associates multiplied by 6
times, the turnover increased over ten times, and more than 20 years later, FAVI has still a very strong
position worldwide among its competitors.


According to FAVI: “The essence of our management is humility. We therefore do not claim to be a model!”


Furthermore FAVI's opinion towards money is like many other Beyond Budgeting pioneers (e.g. dm
drogeriemarkt, Schindlerhof, Semco) in Mr. Zobrist's words: quot;Money is definitely not the aim of the company,
this is only a means, like breathing is the major way of life!quot;, “Money is the breath of the company!”. Also the
notion of “enterprise” or “company” does not suit FAVI which considers itself to be a community.




                                                                                                         Page 4
Short company overview


FAVI is based in Hallencourt, northern France, in the French region of the “Picardie”. It was founded in 1957
and has today over 800 associates (not employees!) with a turnover of about 91 million. € (30% from export).
Its product areas include the design, optimization, validation, die-casting, machining, assembly and
marketing of all components that can be made of die-cast copper alloys. In this special market niche it is the
world leader. The main customers are from the automotive industry e.g. PSA (Citroen, Peugeot), Renault,
Fiat, VW, Audi, Volvo. The main products with an European market share of over 50% are automotive gear
boxes. Sales offices do exist in France, Germany and the UK. Since January 2004 FAVI is a member of the
United Nations Global Compact. FAVI was awarded with the following quality awards:


    •   The 1st European foundry to be certified ISO 14001 in 1997

    •   The 1st French foundry to be certified OHSAS 18001 in 2000

    •   The 1st copper alloys foundry to be certified ISO/TS 16949 and ISO 9001

    •   The 1st European foundry to be certified ILO-OSH 2001 in 2008 (AFNOR Certification)


Further it is one of the first companies worldwide that adopted the 5S of Kaizen, it is not unionized, and most
of all FAVI makes money in markets in which its competitors lose money or have long since outsourced
production to Asia.

Jean Francois Zobrist served as CEO from 1983 – 2004.


Assumptions held about human nature at FAVI


Directly influenced by Douglas McGregor's landmark book “The human side of enterprise” assumptions
about human nature at FAVI represent Theory Y.


During the transformation in the 80s, Mr. Zobrist removed every management practice related to Theory X:
the individual bonus, the clocks, the evaluation interviews, scores, etc, including the complete HR
department: “because this department's main job was to put constraints on people's activity and grow its own
ranks to enforce these constraints.quot;. In line with Theory Y are FAVI's motivation levers: creativity, to be one-
self, empathy, love, absence of power, differentiation, curiosity, and intellectual freedom.



                                                                                                         Page 5
Management practices listed by Beyond Budgeting principles



Overview: “What FAVI does not have”



At FAVI there is/are no:



   Management                                 Chief Production Officer
   Middle Management                          Chief Technical Officer
   Staff                                      Chief HR Manager
   Company planning                           Chief Workshop Officer
   Production planning                        Team leader
   HR department                              Individual bonus
   Production department                      Locked door
   Purchasing department                      Time control
   Marketing department                       Fixed working place
   Pay instructions department                Fixed working time
   Methods department                         Fixed quota
   Employee evaluation                        Processes




Customers


                                       “The classical organizational chart in which the boss thrones at the top,
                                    makes to think that he pays, especially as the client does not appear on it.
                       Similarly, the beautiful word quot;employerquot; encourages this approach that the boss pays!”


                                                                                  JF Zobrist, former CEO FAVI


At FAVI each network cell is aligned to market-pull from their internal or external customer and not to
hierarchic relationships. Accordingly only reserved parking spaces do exist for customers, and not for any
associate. And who will be late has to park at the end, so that every associate can see it. In the same way
are designed the toilets: the best toilets do have the customers, all other associates have toilets of the same
quality.




                                                                                                          Page 6
Organization, autonomy & responsibility


At FAVI there is no departmentalized hierarchical structure, but 21 independent network cells. Despite FAVI
claims itself to have “no structure” there is clearly a cell structure in place, and even an organizational chart
available. The organic organizational structure at FAVI is entitled “le chamallow”: the marsh mellow.


The network cells are at FAVI called “mini-plants” and each network cell is either aligned directly to one
external customer like Fiat, VW, or PSA (Peugeot Citroen), to a special product field, or an internal customer
(internal service cells). Furthermore the 21 cells are divided into 5 internal service cells, and 16 production
cells:


The service cells include:
    •    Commercial
    •    Office study
    •    Laboratory
    •    Quality
    •    Administrative


The production cells include:
    •    General maintenance, machinery
    •    Mold maintenance
    •    Manufacture of molds and tooling
    •    Automotive foundry
    •    Casting parts miscellaneous
    •    PSA Valenciennes
    •    PSA Borny
    •    Citroën
    •    Volkswagen
    •    Audi Getrag
    •    Renault
    •    Fiat
    •    Volvo



                                                                                                           Page 7
•   Various electrical parts, locks, water, health ...
    •   Water Meter
    •   Copper rotors


Before the transformation in the 80s there were 8 hierarchy layers, whereas there are nowadays 2 levels of
hierarchy left. Within “le chamallow” there is no HR department, production department, purchasing
department, marketing department, pay instructions department, and methods department. All these
functions are totally devolved to leaders and their operators within the network cells. Usually each mini-plant
is responsible for the following tasks: production, planning, marketing, purchasing, delivery & logistics, order
management, supply management, the management of schedules and holidays, investment plans, HR
recruiting and training, the improvement of machinery, and safety.


Exceptions from the cell structure design are the following remaining tasks, which are offered as services to
the mini-plants:


    •   Research and Development
    •   Quality
    •   The merchant: Their role is to bring the outside inside
    •   The leaders of progress: they have no function or functional hierarchy, but they have the mission to
        advance and assist mini-plants and operators
    •   Administrators: they ensure the balance sheet and the operating accountings monthly, the
        procurement management, and the social assistance




The 21 network cells are each fully independent, but also work functional and operational freely in informal
networks without central coordination. Further the principle of equality without strictly hierarchical
relationships is strictly applied both within and between mini-plants.


FAVI's organizational chart is entitled “le chamallow” (the marsh mellow). The center of “le chamallow” is the
customer in the middle of the company, the merchant / productivity sponsor are interfaces between the mini-
plants (the network cells). The whole FAVI community is surrounded by a boundary which is represented by
the partners, who are the city, the shareholders, and the suppliers. The chamallow is an organic biological
structure, indeed this is a fact, but was never the goal of FAVI. The notion “le chamallow” is originated from
the values it represents as Mr. Zobrist points out: “Let us not forget that nothing sustainable exist without
values based on simple, robust and pleasure, which is why we adopted this definition of quot;organizational
marsh mellow”.”


                                                                                                          Page 8
“le chamallow”:




                        city
                                                    suppliers


                                VW
                                                                                 CEO
                                                   ISO 180001
                  Fauvet

                                                      Volvo

                                                                     Ohno
                                     $
                      Fiat




                                         PSA


                                                                    McGregor
                    Kaizen


                                               ISO 140001



                     shareholders



                                                                        Client
                                                              Merchant / Productivity Sponsor




                                                                        leader

Source: FAVI


                                                                                         Page 9
Roles within “le chamallow”:


The mini-plant:


Each mini-plant has an internal or external client or is responsible for a certain sector (water meters,
rotors ...). According to FAVI the responsibility of each operator causes happiness, which causes in return
performance.


Each mini-plant includes about 20 to 35 operators, several teams, and it is a location that includes all the
machinery and processes attached to a client (or area). Each mini-plant has a leader, who is selected and
dismissed by the mini-plants operators on a consensus decision.


Both the single operators and each mini-plant is autonomous and responsible for their work. For example
under this autonomy without review committees and managerial approval:


    •   the associates on the factory floor have redesigned their own work spaces to improve their own
        efficiency
    •   an associate suggested a product redesign that cut in half the number of rivets the company was
        putting into a particular auto part. In this way, FAVI has reduced the cost of producing a gearbox fork
        by 40% in real terms over two decades
    •   One associate designed a cart that made the parts she was assembling more accessible, and
        designed a rake to help her pull the parts out of a large box
    •   Another associate figured out a way to drill a hole with one drill bit instead of two




The leader:


On FAVI's premise that there is no performance without happiness, and that to be happy one must be
autonomous, the mission of the leaders is in line with the devolved leadership style of Beyond Budgeting in
Mr. Zobrist's words: “To contribute to help the operators to be more independent! And not to control things, or
anyone else!“ Furthermore the leaders are equal to operators from the mini-plant and usually stay with them.
The leader is himself/herself always a former operator, who has a tested and by his peers recognized talent
of leadership. Typical tasks of the leader are: occupational safety and health at work, compliance with
internal and external environmental policies e.g. the principles of the Global Compact, organization and
meeting of deadlines and schedules, wages and salary increases, hiring and mentoring new associates,
animation of his/hers mini-plant.


                                                                                                        Page 10
The merchant / the productivity sponsor:



As the sponsor or patron of his/hers mini-factory, the merchants or productivity sponsors as they are at FAVI
called have the means to meet the commitments made with the client. The merchant's role is to bring the
outside in, by conveying the maximum information from the customer to his/hers operators, on the strategy,
new products, changes, etc. And vice versa to pass information from the mini-plants back to the client. This
is done usually formally during a monthly meeting of the mini-plant where the merchant provides all
information of the new client, and vice versa by informal tours through the mini-plants. Sometimes the
merchant calls the customer to come directly to the operators to explain a particular point. Whenever
possible the merchant puts all associates of his/hers mini-plant in a car and goes with them to the customer.


Typical tasks of the merchant are: prospecting, the animation of his or hers agents abroad, the receipt of
applications prices, the preparation of forecast ranges, the definition of the margin, the definition of the
needed investment, both for new parts to increase the productivity of his/hers mini-plant, research and
monitoring of suppliers or service providers, packaging, transport, the animation of his/hers mini-plant as a
quot;godmother or godfatherquot; of productivity, project reviews as a project manager, delivery times and product
quality of his/her client until the end of life of these products.


The merchant has neither objectives nor reward bonuses. The merchant is aligned to the market-pull from
the customer.




The CEO:


The CEO is in Mr. Zobrist's point of view to be a bit like the electron of the hydrogen atom: everywhere and
nowhere, but not offensive. The CEO is placed at the interface between the inside and the outside, listens to
weak signals internally and externally, he/she is trying to quot;feelquot; the process, and helps the operators to sense
the pitfalls and opportunities. He/she is in Mr. Zobrist's words a “guarantor of the adequacy of the evolution
of the community”, the CEO is concrete responsible for the consistency of the community. When asked who
is in charge at FAVI Mr. Zobrist responded: quot;The only power lies with the customer,quot;, quot;I have no power in
here. I enter a meeting, no one stands up. I don't have a parking space, and if I start pretending to expertise
in a meeting, my people will often cut me off.quot;


Finally Mr. Zobrist concludes with reference to FAVI's structure: “Therefore until the establishment of this
quot;lack of structure”, we have never, ever once delivered late!”


                                                                                                          Page 11
Values


Like every other Beyond Budgeting pioneer, FAVI is governed through a few and clear values, mission /
vision statements, and rules. These are in the case of FAVI:


Values:


     •    Good faith
     •    Sense
     •    Goodwill
     •    Good mood




Mission:

“Everyone should seek permanentquot; LOVE quot;of his/her clientquot;.


Creed:

“quot;The other is always considered to be good!quot;
[...]
An initial EVIDENCE:
quot;The performance comes from the operators and alone from them!quot;
[...]
A second EVIDENCE:
quot;There is no performance without happiness!quot;”

Strengthened and believed in these principles FAVI has collectively developed a very simple system:
quot;Always more and more for less for each of our client, HALLENCOURT in respect of the land of our
childrenquot;.”


MAIN:


quot;Live and grow in our village PICARDIE1quot;


MOTTO:


quot;BY AND FOR THE CLIENT”



1   The “Picardie” is a specific region within northern France, the advert/adjective is “picarde”

                                                                                                      Page 12
FAVI's rules:


“The quot;Yquot; opens up spaces of freedom for everyone, bordered spaces, limited by a limited number of simple
rules! “ (Zobrist) In the case of FAVI there are two rules:


1) THE MAN IS GOOD!
2) EVERYONE IS PERMANENTLY SEARCHING THE LOVE OF HIS/HER CLIENT!


These 2 basic rules of FAVI are broken down into the following operating principles, which are according to
FAVI so simple that both leaders and the operators can understand them:


    •   METACTION
    •   The DODO rule (No control of the activity)
        Rule of the LOTTO / LOTTERY (s. below)
    •   Nothing a priori, but entirely posteriori
    •   No over-rigid rules
    •   Search for consensus




“Performance formula”


“The performance comes from the operators!
There is no performance without happiness!
How can the operators be happy?


When all conditions are in place, and that the moral conditions are adopted, respected and experienced in
everyday life; then and only then we can consider that:
    •   To be happy one must be responsible!
    •   To be responsible we must be aware of what and for whom are his/hers actions!
    •   So be in direct contact with his/hers customer!
    •   Be Totally Free on his/hers actions!”




                                                                                                      Page 13
Transparency


Generally the annual balance sheet and the monthly financial reports are open to everyone and Mr. Zobrist
insists that only details are provided. During FAVI's transformation journey Mr Zobrist trained all employees
on cost issues.


Additional to the financials, each month since 1983 the so called “FAVI information file” is available to every
associate, nowadays available on the intranet and on specific electronic tables within the factory . The “FAVI
information file“ contains usually the following topics:


    •   Travel (dates, companies, places visited, people involved)
    •   Visits (company name, dates, time ,visitors, purpose of the visit)
    •   Meetings (dates, subject, time, persons concerned): The meeting section contains general meetings
        which concern every associate and therefore are open for everyone to participate, e.g. the monthly
        mini-plant meeting
    •   Miscellaneous: This section allows every associate to express themselves, ask questions, provide
        information, to clarify its absence or passing messages to strengthen self-preservation, or
        appreciation.
    •   HR: like an internal talent market this section offers information on available associates. Usually the
        associates move informally between teams and mini-plants
    •   Customer information: this section includes information about all news from the customers, the
        competitors, and the market
    •   Classifieds ads: this section contains an internal market for all associates to sell personal things e.g.
        cars, aquariums, etc
    •   Congratulations
    •   Case of the dragon: this section includes daily problems and is an important lever for the
        improvement program. Usually volunteer associates commit to solve these problems. The name is
        related to the original hard-copy file which was placed besides a brass dragon.




Furthermore the CEO writes each month a report about general company news, deals with customers,
expansion, quality problems, diversity studies, etc. This file is both available at the electronic information
panels in the mini-plants as also a a hard-cover letter to take home.




                                                                                                          Page 14
Goals & Controls


At FAVI there are neither fixed nor relative goals and only one KPI does exist: the cash flow. As Mr. Zobrist
points out: “Home at FAVI there are absolutely no fixed targets, we are aware that they are all the best to
prepare for the future of their operators, furthermore they have absolutely no financial bonus because their
real income for them is the number of productive jobs created.”, “We all know the examples of regular
cheating, highly prejudicial to the company, to stay within the objectives imposed!”, “The numerical figure
discourages imagination and initiative. Say to your people: we must lower the costs 3% is stupid because we
can perhaps do more, or it is perhaps impossible to achieve 1%. We prefer verbatim: quot;Always more and
more for less, to Hallencourt in respect of the land of our children, for example, because it does not block the
imagination, all is aimed with different objectives:
quot;Always more and betterquot; = quality, safety, health
quot;For less expensivequot; = productivity, competitiveness
quot;A Hallencourtquot; = instinct of long-term
quot;In respect of the land of our childrenquot; = Sustainable Development””



Rewards


At FAVI there is only a basic salary without a bonus or a profit share.



Planning


At FAVI there is no company planning, generally it is considered that “action must be taken every day to
adapt to this, but against this one should not limit his/hers thinking to the framework of the classic five-year
plan but to think much longer term to see the possible developments.”, “The strategy for us is a proposal for
actions to follow these successive over a maximum period of one year. The strategy focuses on quot;whyquot; and
quot;whoquot; of our actions. It is therefore of utmost importance that those who present the successive daily
(Operators) are fully aware of why and for whom.”


To present the strategy each year a special meeting is set up with the leaders and the productivity sponsors.
They present and comment the strategy to the operators resented and commented to operators of each mini
plant. After the meeting the strategy is then displayed in each mini-factory for the reminder of the strategic
coherence of the actions of the year.




                                                                                                         Page 15
Resources


FAVI does have a budget, but this a more like to mark the future, and it allows each month to compare the
actuals against the plan to question the current situation, but is it not an an imperative guide. This one-month
budget is prepared by each network cell's leader and sponsor and can be seen as conclusion more as a
one-month rolling forecast.




Coordination


FAVI is completely aligned to market-pull and not to its budget.




                                                                                                         Page 16
FAVI's transformation stories



Mr. Zobrist's quotes on “the break”


“The company is a form of monarchy, the only way out is to do a REVOLUTION! A revolution at the base. [...]
The revolution can only come from the top, the HEAD! So it is no longer a revolution is is a BREAK!
BREAKAGE is in my opinion the only way to move the company quot;Xquot; to the company quot;Yquot;! [...]


WHAT ARE THE CONDITIONS TO BREAK?
None!
WHAT ARE THE PREREQUISITES TO BREAK?
None!
WHAT ARE THE TOOLS OF THE BREAK?
There are no!


But incoherent break results in CHAOS!”


“Whatever the evolution, by breaking or by negotiation, we must never, never someone to be left on the
wayside.”


“One of the first things I did in the 80s was to remove the pointing, clocks, bells, bonuses which were up to
20-25% of the wages (by incorporating the average of what everyone had on the last 24 month), doors of the
factories, in short, all of which started from the principle that man is bad. To my surprise, we quickly found
that the rates increased when we had removed the timing analyzer and regularly operators remained ¼ hour,
for, of course, finish before their shift.“




                                                                                                       Page 17
Mr. Zobrist's speech on Christmas Day


On Christmas Day 1983 Mr. Zobrist hold the following transformation “speech” to start the transformation:


quot;It's been 9 months that I am among you. 9 months to a child! 9 months that I look at you, and I see brave
people, great professionals who love their job, with that ability to work! And I came to the conclusion that
people like you who have your skills do not need a carrot or stick indeed! The carrot and the stick are
unworthy of professionals like you! Therefore, when you resume work in January, the clocks will be removed!
If, by accident, because everybody can have an accident, you arrive late, we will look at all the reason for the
delay and if such a problem is a motorbike, rather than punish, which does not solve the problem, we will
help you to repair the motorbike. There will be no more scoring or timing, you are not paid for overtime
hours, but for parts and good parts! That is why the ring tones will also be deleted! There will be no more
bonus either, what everyone has earned since 2 years that will be kept! We therefore take the average of
what everyone has had on these last 2 years and we put it in the salary! There is not a thief among us, that's
why the door of the store will be dismounted. [...] There will be no longer distributors of paid drinks for, but in
each workshop, two distributors of fresh water with syrup, and hot water with sachets of coffee and sugar.
We will remove the keys to each wheel and provide a lot of machine tools, and more for everyone to equip
themselves as they wish, all employees of the company will have a check of 500 F to buy whatever they
want as long as it has to do with work.quot;


Mr. Zobrist pauses to measure the reactions that were more the domain of astonishment than satisfaction. In
an impressive silence he continued: quot;There will be no more unemployment! If one day we are forced to
resort to such measures, then I will be first senior unemployed, even me. There will never, either, meal
frameworks, we eat all together or we will not eat!quot;


Mr. Zobrist then turned to the executives who were naturally grouped and pursued: quot;How will we do to
operate in the future? Actually I do not know! I am sure you deserve that we operate differently, but I do not
have a replacement model! I propose that together we are going, with people of good faith, common sense
and goodwill.”




                                                                                                            Page 18
Production increase after the Christmas holidays


The only thing that Mr. Zobrist decided to do within Christmas Holidays was that henceforth he would never
speak to workers, but to OPERATORS!
Now everyone, including Mr. Zobrist, the CEO, would be counted as a worker that is working in the interest of
the client.


When Mr. Zobrist arrived at his office after the Christmas holidays, his manufacturing managers were already
waiting for him: quot;You do not know them! It will be a mess! It has always worked like that, how you want that
to be respected if there are more rewards! They will cut all! The rates will collapse. ... quot; Mr. Zobrist then left
them speaking for half an hour this way without saying anything.


But against all odds and the complaints from the manufacturing managers the production rates did not raise,
but increased by 20%! And only counted by the inbuilt counters of the machines...


Mr. Zobrist was so surprised, that he didn't dared at first to talk to the operators, because he feared that this
unexpected phenomenon would not continue! Only after a few weeks shy, Mr. Zobrist asked the operators
why and how they were able to do the same production? He than received two types of answers:


    •    quot;This is to help you prove the quot;headsquot; that you're right!quot;

    •    quot;There is a rhythm that helps pass the time!quot; In other words they were working at the optimum
         physiological rhythm with less energy, which proved to be significantly faster. And when Mr. Zobrist
         asked them why they did not do that before when there were bonuses? He always received the
         same answer: quot;We're not crazy. If we had done that we would never had the bonus!quot; They were
         aware that their quot;leadersquot; would have increased the quota!




                                                                                                          Page 19
The story of the parking space – or the importance of a strong signal to mark the
     transformation journey


As the transformation went not so so good in the beginning, Mr. Zobrist invited a friend of him, because as he
stated: quot;I'm tired of my staff who fall asleep, inertia that blocks any attempts to change.. Come rouse, I want
to change and transform the way we work to restore power to the productives!quot;
So Mr. Zobrist set a meeting with his friend at 9 o'clock in the morning. His friend arrived in time and there he
found FAVI with its of about 500 associates a that time in a provincial area in the Northern France. He
discovers a beautiful plant with on the right of the door flower beds and left a few parking spaces with the
name of his host in the first, nearest the door, then a dozen other names. Then he parked his car on the
visitors places in the general parking area, a hundred meters on the side of the plant.


After exchanging the traditional French greetings, he confirms his willingness to make a difference in this
organization. Then he requests to Mr. Zobrist be accompanied to the door of the factory and there, taking his
mobile phone, he said: quot;Well we will start immediately: call your maintenance department and ask them to
come immediately to remove your name and other names on this car park and immediately put on pieces of
wood or even cardboard, with the description: quot;CLIENTquot;!” Then the owner, his mouth and eyes opened,
haggard said: quot;Well yes! But you do not understand that you still need them as I speak .... I still cannot ...quot; He
interrupted: quot;Wait if you do what I say in an hour, the entire company will know that something is changing,
and so the movement will be started!quot; quot;Yes but no, I still cannot do that to my staff, they do not understand!quot;
quot;Ifquot;, he said, quot;They understand that people are the most important customers, not themselves, and especially
that allow them four times a day to cross the same parking on all staff and can be of exchange even a hello.
And then your workers will understand also that the most important people are neither you nor your staff, but
the score!quot; quot;Yes but ...quot; He insisted: quot;It takes an action, however symbolic, although it may seem a
caricature, to give credibility to your intentions, otherwise your will to change will be vanished, sterile
meetings will take place ... only action visible and irreversible does account!quot; Faced with its inability to act, he
gave him his phone in the pocket and left, saying: quot;If you are not capable of something so simple, does not
change anything, and my speech will only strengthen your leadership in its passivity, as best I will dream for
nothing, at worst I'll go for a dangerous agitator, and my testimony will only serve to give them arms to block
any change them more or less involved!quot; quot;Goodbye my friend!quot; And Mr. Zobrist's friend left FAVI.


As this friend was almost honest, a few days later Mr. Zobrist called his friend to thank him for the lesson,
and then carried it out alone, without external help at his own pace, concrete action, including changing the
parking plates. So he had unknowingly issued this strong signal that marked the transformation.




                                                                                                            Page 20
Mr. Zobrist's letter to all associates


The following letter from Mr. Zobrist was sent on 15 th April 2000 to all associates of FAVI on a Saturday
morning to the associates' private address in order that everyone can think calmly throughout the weekend,
and possibly share with their families and friends:


“SPECIAL INFORMATION ON 15th APRIL 2000
DREAMS:
The 15th April date is a bit special for me:
It was on the 15th April 1967 that I started to work.
It was on the 15th April 1983 as the Grand Patron [the owner of FAVI] told me the direction of the company.
When I arrived here, I have already been working for 16 years for the Grand Patron, and I knew he would leave me free
to run the business, as long as I grow.
When we know we have all freedoms, we can dream!
So I DREAM!
At the time, the worker was working, the adjuster settled, the controller controls, and the quot;bossquot; organized.
I dreamed of a company where the worker becomes an operator, who could organize, set up its own machine, and self
control! At the time, workers pointed, and were punished for any delay (5quot; delay = 5quot; to pay less, 10quot;= -15quot; on wages, 15
quot;= -30quot; etc ....).
I dreamed
- A business where everyone recognizes that we work for a client, and not for a clock
- A business, where rather than punishment happens, we would inquire about the reason for the delay, since no one
deliberately be late and, if necessary, shift the team with the young dad whose little girl cried at night, or troubleshoot the
service maintenance for a damaged motorbike, because of being late!
At that time there were up to 25% of salary consists of a bonus (much of which depended on the quot;moodquot; of the boss)
that was granted or not, every month.
I dreamed
- A company where the bonus would be included in the salary, so that the mother is guaranteed the same monthly
income,
I dreamed
- A system for sharing results, just and equitable. I must confess that I never dreamed that this quot;bonusquot; can be achieved
(with reference to the average wage in the metal industry) the equivalent of 17 months salary!
At the time, there was systematically unemployment by turning workshops down, to maintain a quot;healthy pressurequot; on
workers.
I dreamed
- A company where there would be no more unemployment, and where, if one day this misfortune occur, it would be
supported by all, not only by the workers!
At the time, everything was locked in stores, even the safety equipment and consumables.

                                                                                                                       Page 21
I dreamed
- A factory where everything is open, even the office, where everyone could freely have all the tools it deems useful to
have!
At that time we did that cast parts with little value added.
I dreamed
- A company that would do more for the customer, making parts optimized, tested, machined, assembled, according to
complete!
At the time, no worker requested that their job was based on his hands and his muscles.
I dreamed
- A company where people use their brains to be the author's own progress, and their heart to seek the esteem, respect,
a form of love of their client!
At the time, only the boss knew the customers.
I dreamed
- A company where everyone would see his client could visit, and meet him!
I dreamed
- A business model that we visit, which is a reference!
After 33 years of career, and 5 years of its purpose (if God and the laws allow), what is my dream?
Oh, my last dream is simple, but very difficult to achieve, simply because:
I dream that in the company, everyone behaves like at home, no more, no less!
At home, we do not throw their butts on the floor!
At home, we decline to pick up a paper or a cloth!
At home, we are washing your hands!
At home, we save water, electricity, heating!
In our garage or workshop, we range and maintains his tools!
In our garage, we does not waste or grease, or bolts, or rags!
In our garden, we respects the flowerbeds and flowers!
In our driveway, we do not empty the ashtray of his car!
In our car, we picked up and throw the useless paper, we empty the ashtray, avoid soiling the carpet with mud, or stain
the seats with grease!
In our village, young people say hello, and respect for elders!
Why each of us does not even do that at the company?
This would be so easy, so simple, and even more reasonable when we do not have the tools, cleaning, lawns, cars, we
all pay for their work (Langlet society for tools, Trancart for plantations, Sinka for cleanliness, SG guard for ...). I say we
pay, not the company, as the Company does not exist physically. The company is us, our work, our intelligence, our
courage, our sweat!
You see, my dream is simple, reasonable.
Every one of you behaves at the company like at home!
It's simple, but that I cannot do it alone!!
JFZ”




                                                                                                                         Page 22
The story of the creation of the mini-plants


Gilbert came to see Mr. Zobrist in his office, sitting nonchalantly in front of him and said to him : quot;we must
turn Dédé!quot; At the same time as Gilbert spoke, Mr. Zobrist realized he was right, he knew the unconscious,
but his emotional ties with André, Dédé, the boss of machining, could not see this so obvious.
Mr. Zobrist then said to Gilbert: quot;Unfortunately, I think you're right, but it is not possible.”


And indeed he understood that fact and that Dédé was programmed to fly a dozen people but no more, they
sought of gaining more and more new parts machined and the Dédé span of control was quickly increased
from 10 to 80 people. Reflecting with Gilbert, they said: “How can we reduce the number of people in direct
dependence on Dédé less than 10?”


And that's how the idea of autonomous groups was invented. Each “cell” was committed to an external or
internal client or a family of products, each with a leader, this way each “cell” could independently manage its
own orders and its own products. Quickly, this idea was taken by the Task Force on a Friday morning, when
it was decided to call each of the “cells” a mini-plant to show the degree of autonomy, and thus strengthen
the individualistic axis.



The story of the quality at night


One day Mr. Zobrist asked Jacques, the head of quality, to identify the percentage of quality problems,
internal as external, generated at night. To his surprise Jacques noticed that over the past two years, there
had been none! All problems have been generated only in the old days in the presence of the old power
based structure.



The story of the red traffic lights


One day Mr. Zobrist drove in his car and had to stop before a red traffic light somewhere on the countryside.
As he looked in all directions, there were no other cars or people wandering around. So he decided to ignore
the red traffic lights and to drive forward. Unfortunately this traffic light was monitored by a French police
officer who noticed that ...
From Mr. Zobrist's point of view there was in short a red light with no need to justify a police officer
monitoring it. Back at FAVI he scheduled a meeting with all the leaders and productivity sponsors by telling
the story and asking them to look into the mini-plants if there were also such stupid traffic lights with
associates monitoring them that hampered the whole system.


                                                                                                         Page 23
The story of Gilles

Gilles was a graduate of the Ecole Supérieure de Fonderie in engineering and had worked for 4 years at
FAVI in different functions like R&D or customer support. One morning after the transformation he came to
see Mr. Zobrist, CEO of FAVI, in his office sheepishly saying: quot;You know, Jean-François, I'm an engineer and
merchant / productivity sponsor is not the role of an engineer.quot; Mr. Zobrist asked him what he really wanted.
It came out the Gilles wanted to be a leader with status, with a secretary, and a reserved parking space
which actually did all not exist at FAVI any more.
Mr. Zobrist explained Gilles the FAVI system, however he noticed that it didn't impress Gilles. After a quarter
of an hour of discussion, Mr. Zobrist finally said: quot;Let's be clear Gilles, will you go away?quot; quot;For sure!quot; Gilles
said sheepishly. Visibly relieved by this statement because he had feared a reaction from the CEO
emotionally, Gilles said: quot;OK, we no agree, I will send you my resignation.quot; Then Mr. Zobrist handed a paper
and a pen to Gilles: quot;No, Gilles, if you go, you go! So you give me your resignation immediately and simply,quot;
for reasons of personal convenience, I give you my resignation request etc. .. “quot; After some hesitation, Gilles
filled the paper, and handed it to Mr. Zobrist saying: quot;OK, listen, during my 3 months notice, ...quot; Mr. Zobrist
interrupted immediately: quot;No, Gilles! I love you well but you do most for your family. You have freely chosen
to leave, you go! The community is going to pay your 3 months' notice, in accordance with the law, but it is
11 am, you have 1 hour to put your pens and your gum and at noon we drink some champagne together to
thank you for what you brought to the company during these 4 years, and you're going.quot;



The story of Fabienne


One day, during the usual visits of the factory, Mr. Zobrist stoped at Fabienne's workstation and recognized a
detail that he had never seen before: Fabienne's wrists were surrounded by a brown paper sticker which
were normally used to close cartons. Then Mr. Zobrist asks Fabienne: quot;Why do these improvised bandages
mean?quot; Fabienne replied: quot;Well Sir, it has always been that way! As this alloy is very dry, it makes little spicy
chips that fit into the sleeves which is unpleasant and embarrassing.quot; Mr. Zobrist replied: quot;But it is
unacceptable that you accept to work under such conditions. I can not understand why you never responded
Fabienne and I forbid you to continue working together. It is unworthy of you!quot; Immediately he calls the
telephone operator for the maintenance to the machine and said: quot;You have the night to do something but I
do not allow you that this machine is running.”
One the next Saturday morning when Mr. Zobrist had forgotten something at the office, he went as usual
through the factory and usually does a quick tour through workshops where he meets Fabienne who was in
the process of repainting her machine! Mr. Zobrist was very surprised by her presence, and she admits that
her machine now worked better, she also wanted it clean and nice, doing it on a spontaneous and voluntary
approach. This machine became then her machine.


                                                                                                          Page 24
FAVI's own invented management terminology



FAVI's principles


The first part refers to the “round” enterprise, the second part refers to the “square” enterprise”:




    •   Management of uncertainty / Management of certainty
    •   Adjust to the present / control the future
    •   Act for 1 day, think of 20 years / act for one year, think for 5 years
    •   The performance comes from the workers / performance comes from the structure
    •   To be happy one must be responsible / only the elite has the right to have a project
    •   Focus on why, the who / focus on how
    •   Man is always seen as good / Man is systematically considered bad
    •   Each is the author of his/hers progress / Each player is his/hers actions
    •   Everybody knows the strategy / the strategy is reserved for the Board of Directors
    •   Search performance by the happiness of everybody / Seek performance by the structure
    •   Outcomes of the results of happiness / Outcome of goals
    •   We want to win in the progress of each / We want to save money, and control costs
    •   Complex System / Complicated System
    •   Fair or equal / fair and equal
    •   AND / OR
    •   Simple rules strictly applied / implemented without complicated rules equity
    •   No notion of risk / search for zero risks
    •   Allow random opportunities / claim random control
    •   Micro breaks / fear of change
    •   Common sense / logic
    •   Outcome / Activity
    •   Plural / singular
    •   Having an essential (noble cause) / having rules
    •   Long-term thinking preferred / short-term thinking preferred
    •   Management by intention / management by controlling
    •   Cultivating links / contact


                                                                                                       Page 25
•   Emotional visions / objectives
•   Recovery of fragilities / recovery of forces
•   Make up / wanting to foresee all the consequences of ones actions
•   Métaction / Anact
•   Enterprise Y / Enterprise X
•   Measures are not time-limited and non-perennial / measures are limited but perennial
•   Imperfect measures / perfect actions that would never exist
•   We take care of problems that exist / We are responsible for what might happen
•   Dreamy / Factual
•   The primacy of values and respect / Respect for laws and rules
•   Simple messengers that are calmly though solid values / special knowledge
•   Leveraging awards / leveraging penalties
•   Soft and fuzzy / clean and hard
•   Play on the emotional / play on the Cartesian
•   Approach consistency uncontrolled / Approach inconsistency but controlled
•   Operation in intimate networks / Operation in groups
•   Search for friendly consensus / relationship based on giving
•   The boss is recognized (or liked) / The boss is feared and respected
•   Making money without knowing how / Loosing money by knowing why
•   Lotto / Lottery
•   Finding Outcome / monitoring activity
•   Period of initiation for new / hiring process
•   The quot;Bossquot; does nothing / the quot;Bossquot; has his/hers reserved playing field
•   The Management committee wanders around / the Management committee is only informed by
    reporting
•   Power from the OUTSIDE / Power from the INSIDE
•   The outside rules / power from the inside
•   Power of the customer / power of the boss
•   It is the customer who pays us / It is the employers who pay us
•   The boss has the BALL / The boss is at the TOP
•   Very high reactivity to the environment / compliance with budgeted targets
•   All eyes look on the outside / all eyes look on the budget
•   Awareness of all that the own interest is related to the collective interest / give and take
•   Individual and systematic functions / specialized functions


                                                                                                   Page 26
•   Verbatim / numerical
•   Concrete / Abstract
•   Compliance with the deadlines at any cost / no respect for the delay in the name of cost
•   Efficiency (number of aircraft shot down) / Effective (number of impacts
    on the route of the aircraft)
•   Seek to congratulate / seek to punish
•   It works but the boss does not know how / the boss knows all the workings of his company but ...




                                                                                                 Page 27
Enterprise Y vs. Enterprise X


Both notions “Enterprise Y” and “Enterprise X” are created by FAVI upon Theory Y and Theory X from
Douglas McGregor. Correspondingly the enterprise ' X ' is defined by FAVI as an organization in which man
is considered to be systematically bad, whereas contrary the enterprise quot;Yquot; is defined by FAVI as an
organization in which the same man is regarded as decidedly quot;goodquot;.


FAVI also refers to the Enterprise Y as the “round” enterprise, and the Enterprise X as the “square”
enterprise. The notions “round” refers to FAVI's Judeo-Christian roots and the rural culture of the Picardie, a
northern French region, while the “square” contrary refers to the Anglo-Saxon “command-and-control”
management model.


The following chart and graphic summarize the characteristics of both enterprise types:



                            ENTREPRISE quot;Xquot;                                ENTREPRISE quot;Yquot;
SYSTEM                      bounded by powers                             bounded by values
SYSTEM                      complicated and mechanistic                   complex and holomorphic
MAN                         either dominant or dominated                  authority to be dependent on the
                                                                          power-dependent client
MAN                         is considered to be systematically “bad”      is regarded as decidedly quot;goodquot;
HEAD                        secure, isolated from the process             the interface between inside and
                                                                          outside
HEAD                        in a box at the top of the bed                observe button
HEAD                        pyramid isolated by his court                 has the ball
CENTER OF GRAVITY           draw bar power of shared values               shared values worn by all
CENTER OF GRAVITY           The power of chiefs or laws                   power of the client and the
                                                                          operator
LOGIC TYPE                  war powers                                    search of happiness
TYPE OF SHARES              preservation of acquired                      globals
TYPE OF RELATIONS           group work                                    work networks
RISK-TAKING                 ongoing risk                                  no risk concept




                                                                                                        Page 28
Enterprise X                                              Enterprise Y



                                                                             Client



                               CEO
         Command
                               Plant Director                                              Flow of parts
         Command
                               Technical Director
         Command
                                                                          Merchant /
                               Service Director
         Command                                                          Productivity
                                                                                               Flow of information
                                                                          Sponsor
                                                                                               and emotion
                               Production Manager
         Command
                               Workshop Manager
         Command
                               Equipment Manager                                  Leader
         Command
                               Operator                                    Mini-plant

                                                                            Operators



     •    Primacy of HOW                                        •   Primacy of WHY, FOR WHOM
     •    POWER from the BOSS                                   •   POWER of the CLIENT
     •    POWER from the INSIDE                                 •   POWER from the OUTSIDE
     •    Men: 'bad'                                            •   Men: 'good'


Source: FAVI




FAVI mentions besides Douglas McGregor the following three origins of the Enterprise Y and Enterprise X
concepts:

    •     The socio dynamic matrix from Jean Christian Fauvet
    •     The complex system and the complicated system from the General System Theory
    •     The concept of the quot;power ringsquot;

                                                                                                    Page 29
The socio dynamic matrix from Jean Christian Fauvet:


Jean Christian Fauvet classifies companies according to their positioning in relation to the inside and the
outside. The outside comprises at FAVI customers, suppliers, the laws, and the French labor department.




The tribal company                                           The holomorphic company (which we can reconstruct
                                                             from a single of its parts, each part is in everything and
Def. : solitary Japanese type                                everything is also in each part)
The head: is at the center of its pack and is permanent
Who decides: The unanimity                                   Def. : a Californian computer type
Center of gravity: the guru                                  The head: has the ball
Type me: teamwork, shared values, dedication                 Who decides: the customer represented by the holders of
Type of logic: ideal logic sense                             the ball
Type of culture: budget driven, uncritically                 Center of gravity: customer
System Type: FEDERAL (paternalism, dependency due to         Type me: empowered, independent, animated by business
base)                                                        spirit
Type of actions generated: classical = coherence by the      Type of logic: complex logic = global
shared sense                                                 Type of culture: the common good, social and institutional
Wages: Increase. Honors goodwill, fidelity                   integrated values
The computer: Replaced by the bible                          System Type: complex high voltage (organic / cell network)
Strengths: internal dedication / external trust, shared
pleasure, loyalty                                            Type of actions generated: meta dictions (life through the
Weaknesses: Lack of critical thinking, too dependent on a    organization of systems)
guru                                                         Wages: Increase. Individualized rewards.
                                                             The computer: individual but networks
                                                             Strengths: autonomy, accountability, development,
                                                             leadership, team play
                                                             Weaknesses: Can be achieved only if the authority agrees
                                                             to fade!
The mechanical company                                       The individualized company

Def. : statutory public company type                         Def. : mercenaries CNN type
The Chief: The top of the pyramid, such as                   The Chief: eveyone is a leader, no boss of bosses
interchangeable ministers                                    Who decides: the majority
Who decides: The boss                                        Center of gravity: Multiple each =
Center of gravity: The boss                                  Type I: The self calculator, personal power obtained
Type me: protected status                                    Type of logic: positive, experimental =
Type of logic: cause / effect = legal                        Type of culture: private reason
Crop type: Passive                                           System Type: Heterogeneous turbulent (gaming alliance)
System Type: geometric low voltage (dependency               Type of actions generated: = unique varied movement,
suffered)                                                    multiple, by freedoms.
Type of actions generated: naalc = order by law, inertia     Wages: Increase. individualized and negotiated bonuses.
Wages: increase. uniformly generalized / standard            negotiated merit
gratifications.                                              Computer: PC Suite not interconnected
Computer: central, of which only the head to the key!        Strengths: Responsiveness, expert, non-conformism,
Strengths: to order formal safety of its players, respect,   adaptable
standards                                                    Weaknesses: unstable system, turn over important
Weaknesses: The system is complete in itself, as also the
customers


Source: FAVI


                                                                                                                   Page 30
The concept of “power rings”:




                                                                 Enterprise Y
               Enterprise X



                                                                  the client

                       power ring
        the boss

                                 productives




                                                                               $




Source: FAVI



Enterprise quot;Xquot;:
In the Enterprise quot;Xquot; the boss is surrounded by a first ring of power called quot;Executive Committeequot;, which
includes his secretary, his directors, and the HR department. The next power circle is represented by the
Middle Management, then the next power circle is represented by the Lower Management, and so on.




Enterprise quot;Yquot;:
Within the Enterprise “Y” all of the above mentioned power circles have been removed and replaced by a
flexible cell structure consisting of 21 cells. At the center there are the shared values which are the modern
translation of the ancient notion of the common good!




                                                                                                       Page 31
“The love of the client”


During the transformation from the prevailing command-an-control management model, all FAVIans felt the
need to move away from the quot;Anglo-Saxon-industrialquot; classic command-and-control management model to
go to a more culturally quot;Jewish-Christian-rural” model. During a meeting while discussing the concept of
“love” Jeannine issued this simple idea: quot;The profit results from the love of the customerquot;.


Together, the FAVIans rediscovered the symbolic value of the tree, then after asking everyone to stop
breathing for a minute, Jeannine invented the concept that money is the breath of the company. Finally, the
FAVI associates collectively came to the conclusion that only the love of the client generates the essential
profit.


Then they came to the following conclusion:



     TREE: (duration)




     MONEY (the way of the duration)
                                                                         $

     LOVE (the way to make money)




     CUSTOMERS (who exchange money
          against products they like)




     THE MINI-PLANT (which must with their
     products to make love to their client          P                  P                       P
Source: FAVI


                                                                                                     Page 32
Lotto / Lottery



According to this principle lotto is a game where everybody wins a little bit, whereas contrary within the
lottery few people earn, but they earn very large. If any leader would propose anything based on the principle
of the lottery system, the leader would know in advance according to this principle, that his/hers proposal
would be rejected.




Origins of FAVI's management model and the management model sheets




                “If we consider man as generous with his time and we will then control the clock, not the client.
        That's why we've started since the 80s, to remove the clocks, awards, service personnel, stores, office
  procedures, planning, launching, the purchasing department, in short all the structures that hold back man
                  and take their powers under the name of the freedom of thinking and acting of the operators.
                                         Thus, little by little, together we have developed a quot;systemquot; our system.
             This is not a system that can be considered at equilibrium and governed by immutable rules! We
                                  incorporated a notion of uncertainty (which is not the absolute coincidence).”




The FAVI system's origins are diverse and summarized as follows:


    •    Mr. Zobrist's knowledge of the works of Fauvet and McGregor when he becomes CEO of FAVI in
         1983
    •    Mr. Zobrist's own personality which reflects “Enterprise Y”
    •    Management literature from the 80s, mainly Tom Peters and Ohno
    •    the Judeo-Christian culture as also the rural culture of the Picardie, a region on northern France
    •    the possibility provided by FAVI's owner to run the company as Mr. Zobrist likes if law obligations are
         met and a profit is generated




                                                                                                           Page 33
Contrary FAVI's management model sheets have been developed after a conversation with an American
professor.


In June 2004 Mr. Zobrist hold a conversation with an American Professor of a renowned American University,
who was interested to learn about the FAVI System. Mr. Zobrist explained the FAVI system on the two
following examples. But as the American professor did not understand the FAVI system from these two
examples, so the management model sheets and FAVI stories were documented both on the web page as
also in two books. The management model sheets are for information purposes only to distinguish between
the “round” enterprise and the “square” enterprise. Mr. Zobrist also questions if the they are transferable to
other companies, but states that this is not the goal of them.




quot;You were the first European company certified ISO 14001 in 1996, first French company OHSAS 18001
certified in 2000 and again first French company, just before a nuclear power plant, to be certified QSE, but
your quality manager is a former worker!quot;
- quot;Well yes! And that is why we were able to move easily and with flying these certifications, as Jacques has
evolved, but always kept a good simple and effective way!quot;
- quot;For over 20 years you haven't increased your selling price, and yet you display honest but reasonable
results financial when you have no structure in manufacturing, no Chief Service Officer, Chief Technical
Officer, Chief Manufacturing Officer, Chief Workshop Officer... ..!quot;
- quot;Well yes but it is precisely because we have no structure in manufacturing operations and our operators
are free and are progressing advance in machines and naturally!quot;
- quot;You do not have staff and you have never experienced social conflicts!
- quot;Well yes, but because we did not have staff to manage these conflicts, there are none! In addition, here is
no personnel department to cope with complicated laws and rules which ensures the correct application, and
it is generally this complexity for the complexity that is a source of conflict!quot;
- You do not have any planning or scheduling, and yet you have never delivered late for 23 years!quot;
- quot;Well yes, because a planning department is designed to manage delays, and again because we do not
have a nonfunctional management structure, there is no malfunction!quot;
- quot;Good. How can it work?quot;
Then FAVI explained their FAVI model with lots of matrices, they were talking about McGregor, the socio-
dynamic matrix from Fauvet, Ohno ... but it was not sufficient.
quot;Well we have “round “ people in a world of “square” people! We are a “round “ enterprise surrounded by a
world of “square” enterprises. Our clients are “square”. Our suppliers are “square”. Our French laws are
“square”. To which the professor replied, quot;pleasequot; and Mr. Zobrist mentioned the following two examples:

                                                                                                        Page 34
One day a quot;squarequot; car customer, is to audit FAVI's logistics. Two engineers, a man and a woman in the
forties, spend 3 days at FAVI and after the conclusion the boss of them said:
- quot;It is not at all: you have no indicator tracking delays, or indicators of breaches of flux, you have no
structure, no planning, no start, no scheduling, no delays, no management, etc.quot;
To which Mr. Zobrist replied:
- quot;From your records, how many years since we provide 100% your needs?quot;
- quot;11 years!.quot;
- quot;In 11 years, how often have we been delivering late or in advance?quot;
- quot;No!quot;.
- quot;In 11 years, how often has happened that you received not your complete order or too many parts?quot;
- quot;No!quot;.
- quot;Why do you want me to establish an indicator of something that does not exist?quot;
Answer: - quot;...quot;


Then Mr Zobrist told the second example: One day the material supplies didn't arrive and FAVI had used all
their security stock and couldn't deliver to their customer. One of the operators contacted the boss of the
supplier, which gave an interesting answer for this urgent situation: quot;I do not understand why you are down
because your service KPI is increasing!quot; Then Mr. Zobrist explains the situation: “Having followed an
indicator of level service and not delivered, is to be “square”. Do not even knowing what a service level is but
never delivering late, is to be “round”.”




                                                                                                             Page 35
Resources



    •   Zobrist, Jean-François: quot;La belle histoire de Favi : l'entreprise qui croit que l'homme est bon Tome 1
        Nos belles histoiresquot;, 2008
    •   Zobrist, Jean-François: “La belle histoire de Favi : l'entreprise qui croit que l'homme est bon Tome 2
        Notre management et nos outils”, 2008

    •   Favi Homepage incl. all subpages, accessed 24th May 2009: www.favi.com

    •   Carney, M. Brian: quot;Workers of Europe Innovatequot; in The Wall Street Journal, 25th July 2005
    •   Front Cover Picture (Creative Commons 2.0 BY NC ND: by TigerLillyShop:
        http://www.flickr.com/photos/tigerlillyshop/305791337/



License




This paper except all logos and the front cover picture is licensed under a Creative Commons BY-SA
License. Credit: quot;International Center for Outperformance (www.intco.org): FAVIquot; within the reference list




                                                                                                        Page 36

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[EN] Beyond Budgeting Case Study Favi (France)

  • 1. FAVI. “Le chamallow” International Center for Page 1 Outperformance
  • 2. quot;The world is uncertain. Life is uncertain! “Everything is out! Unfortunately, most Obviously! So why do manager always want some?” organizational charts are a picture of a huge inside, with no formal entry or exit, quot;The characteristic of our FAVI system is that we like a huge “stomach” which would be voluntarily make uncertainty an adventure, a celebration.quot; sealed at both ends: neither mouth nor ..“ JF Zobrist, former CEO FAVI JF Zobrist, former CEO FAVI “One of the first things I did 23 years ago “In the “square” enterprise, a prisoner of the is to remove the score, the bonuses,the employee annual budget, the major tool of the control of interviews and other evaluation tools and the future, all actions are bordered by this therefore the staff.” budget and are planned on a YEAR! And anything that is not budgeted may not be!“ JF Zobrist, former CEO FAVI JF Zobrist, former CEO FAVI quot;The only power lies with the customer,quot;, quot;I have no power in here. I enter a meeting, no one stands up. I don't have a parking space, and if I start pretending to expertise in a “It's a company -- in France, remember -- where meeting, my people will often cut me off.quot; workers volunteer to work Saturdays when an extra-large order needs to be filled by Monday, JF Zobrist, former CEO FAVI where front-line employees redesign products to improve efficiency, and where prices have fallen almost every year for decades.” Brian M. Carney In a quot;SQUAREquot; world FAVI is quot;ROUNDquot;!” JF Zobrist, former CEO FAVI “To return to the company quot;Yquot;, this company is certainly on a budget, just to mark the future, but “If we want to survive, we must adopt a we do not hesitate to modify it if the consumer structure where everyone has an antenna happiness turns suddenly, we do not hesitate to and is outward in order to adapt to market burn it if a September 11 like two towers go up in developments.” smoke!” JF Zobrist, former CEO FAVI JF Zobrist, former CEO FAVI “The greatest productivity gains we have made are very often the result of a reflection made by chance “There is no happiness without performance. by an operator of production.” To be happy one must be responsible, he/she must be free of the quot;Comment*quot; because after all, and this is one of the basics of Kaizen” “In addition, we quot;go outquot;, we especially encourage all operators to quot;come outquot; to multiply the chances JF Zobrist, former CEO FAVI to meet quot;accidentsquot;! In quot;postquot; the accident made us discover the fabulous track electric motor's high *FAVI refers with “comment” to the chain of efficiency; In quot;postquot; we discovered most elements command of our internal culture.” Page 2 JF Zobrist, former CEO FAVI
  • 3. FAVI. “Le chamallow” Table of Contents Introduction to the Case Study.........................................................................................................................4 Short company overview...................................................................................................................................5 Assumptions held about human nature at FAVI................................................................................................5 Management practices listed by Beyond Budgeting principles.........................................................................6 Overview: “What FAVI does not have”.........................................................................................................6 Customers...................................................................................................................................................6 Organization, autonomy & responsibility......................................................................................................7 Values........................................................................................................................................................12 Transparency.............................................................................................................................................14 Goals & Controls........................................................................................................................................15 Rewards....................................................................................................................................................15 Planning.....................................................................................................................................................15 Resources..................................................................................................................................................16 Coordination..............................................................................................................................................16 FAVI's transformation stories..........................................................................................................................17 Mr. Zobrist's quotes on “the break”............................................................................................................17 Mr. Zobrist's speech on Christmas Day.....................................................................................................18 Production increase after the Christmas holidays......................................................................................19 The story of the parking space – or the importance of a strong signal to mark the transformation journey...................................................20 Mr. Zobrist's letter to all associates............................................................................................................21 The story of the creation of the mini-plants ...............................................................................................23 The story of the quality at night..................................................................................................................23 The story of the red traffic lights.................................................................................................................23 The story of Gilles......................................................................................................................................24 The story of Fabienne................................................................................................................................24 FAVI's own invented management terminology..............................................................................................25 FAVI's principles.........................................................................................................................................25 Enterprise Y vs. Enterprise X.....................................................................................................................28 “The love of the client”...............................................................................................................................32 Lotto / Lottery.............................................................................................................................................33 Origins of FAVI's management model and the management model sheets....................................................33 Resources.......................................................................................................................................................36 License...........................................................................................................................................................36 Version 1.1: June 2009 (Version 1.0: May 2009) Page 3
  • 4. Introduction to the Case Study FAVI in Hallencourt, France, is considered since May 2009 a Beyond Budgeting Pioneer. It was both identified and documented by us. FAVI is the first French pioneer. It is a remarkable case under the centralized and five-year-plan French culture. FAVI's former CEO Jean Francois Zobrist under who's leadership FAVI transformed, described France as the quot;last Soviet Republicquot;. Despite FAVI has compared to other beyond budgeting pioneers a relatively small workforce with currently about 800 associates, it is one of the most mature and best self-documented cases ever found since the beginning of the Beyond Budgeting journey in 1998. Actually no primary research is necessary due to its both excellent and on the website complete freely available documentation (in French). FAVI has documented its own way of operating both in principles compared to the traditional command-and-control management model, the underlying and self-invented concepts of “Enterprise Y” / “Round enterprise” in comparison to the traditional “Enterprise X” / “Square enterprise” and also its transformation journey beginning on Christmas Day 1983. With reference to the evolution pathway it is a transforming organization. As the transformation started on January 1984, there was no clear model how the new management system should look like. Moreover Mr. Zobrist stresses that by change and accident the FAVI system was developed. The transformation to the new management model soon bear fruit since FAVI's associates multiplied by 6 times, the turnover increased over ten times, and more than 20 years later, FAVI has still a very strong position worldwide among its competitors. According to FAVI: “The essence of our management is humility. We therefore do not claim to be a model!” Furthermore FAVI's opinion towards money is like many other Beyond Budgeting pioneers (e.g. dm drogeriemarkt, Schindlerhof, Semco) in Mr. Zobrist's words: quot;Money is definitely not the aim of the company, this is only a means, like breathing is the major way of life!quot;, “Money is the breath of the company!”. Also the notion of “enterprise” or “company” does not suit FAVI which considers itself to be a community. Page 4
  • 5. Short company overview FAVI is based in Hallencourt, northern France, in the French region of the “Picardie”. It was founded in 1957 and has today over 800 associates (not employees!) with a turnover of about 91 million. € (30% from export). Its product areas include the design, optimization, validation, die-casting, machining, assembly and marketing of all components that can be made of die-cast copper alloys. In this special market niche it is the world leader. The main customers are from the automotive industry e.g. PSA (Citroen, Peugeot), Renault, Fiat, VW, Audi, Volvo. The main products with an European market share of over 50% are automotive gear boxes. Sales offices do exist in France, Germany and the UK. Since January 2004 FAVI is a member of the United Nations Global Compact. FAVI was awarded with the following quality awards: • The 1st European foundry to be certified ISO 14001 in 1997 • The 1st French foundry to be certified OHSAS 18001 in 2000 • The 1st copper alloys foundry to be certified ISO/TS 16949 and ISO 9001 • The 1st European foundry to be certified ILO-OSH 2001 in 2008 (AFNOR Certification) Further it is one of the first companies worldwide that adopted the 5S of Kaizen, it is not unionized, and most of all FAVI makes money in markets in which its competitors lose money or have long since outsourced production to Asia. Jean Francois Zobrist served as CEO from 1983 – 2004. Assumptions held about human nature at FAVI Directly influenced by Douglas McGregor's landmark book “The human side of enterprise” assumptions about human nature at FAVI represent Theory Y. During the transformation in the 80s, Mr. Zobrist removed every management practice related to Theory X: the individual bonus, the clocks, the evaluation interviews, scores, etc, including the complete HR department: “because this department's main job was to put constraints on people's activity and grow its own ranks to enforce these constraints.quot;. In line with Theory Y are FAVI's motivation levers: creativity, to be one- self, empathy, love, absence of power, differentiation, curiosity, and intellectual freedom. Page 5
  • 6. Management practices listed by Beyond Budgeting principles Overview: “What FAVI does not have” At FAVI there is/are no: Management Chief Production Officer Middle Management Chief Technical Officer Staff Chief HR Manager Company planning Chief Workshop Officer Production planning Team leader HR department Individual bonus Production department Locked door Purchasing department Time control Marketing department Fixed working place Pay instructions department Fixed working time Methods department Fixed quota Employee evaluation Processes Customers “The classical organizational chart in which the boss thrones at the top, makes to think that he pays, especially as the client does not appear on it. Similarly, the beautiful word quot;employerquot; encourages this approach that the boss pays!” JF Zobrist, former CEO FAVI At FAVI each network cell is aligned to market-pull from their internal or external customer and not to hierarchic relationships. Accordingly only reserved parking spaces do exist for customers, and not for any associate. And who will be late has to park at the end, so that every associate can see it. In the same way are designed the toilets: the best toilets do have the customers, all other associates have toilets of the same quality. Page 6
  • 7. Organization, autonomy & responsibility At FAVI there is no departmentalized hierarchical structure, but 21 independent network cells. Despite FAVI claims itself to have “no structure” there is clearly a cell structure in place, and even an organizational chart available. The organic organizational structure at FAVI is entitled “le chamallow”: the marsh mellow. The network cells are at FAVI called “mini-plants” and each network cell is either aligned directly to one external customer like Fiat, VW, or PSA (Peugeot Citroen), to a special product field, or an internal customer (internal service cells). Furthermore the 21 cells are divided into 5 internal service cells, and 16 production cells: The service cells include: • Commercial • Office study • Laboratory • Quality • Administrative The production cells include: • General maintenance, machinery • Mold maintenance • Manufacture of molds and tooling • Automotive foundry • Casting parts miscellaneous • PSA Valenciennes • PSA Borny • Citroën • Volkswagen • Audi Getrag • Renault • Fiat • Volvo Page 7
  • 8. Various electrical parts, locks, water, health ... • Water Meter • Copper rotors Before the transformation in the 80s there were 8 hierarchy layers, whereas there are nowadays 2 levels of hierarchy left. Within “le chamallow” there is no HR department, production department, purchasing department, marketing department, pay instructions department, and methods department. All these functions are totally devolved to leaders and their operators within the network cells. Usually each mini-plant is responsible for the following tasks: production, planning, marketing, purchasing, delivery & logistics, order management, supply management, the management of schedules and holidays, investment plans, HR recruiting and training, the improvement of machinery, and safety. Exceptions from the cell structure design are the following remaining tasks, which are offered as services to the mini-plants: • Research and Development • Quality • The merchant: Their role is to bring the outside inside • The leaders of progress: they have no function or functional hierarchy, but they have the mission to advance and assist mini-plants and operators • Administrators: they ensure the balance sheet and the operating accountings monthly, the procurement management, and the social assistance The 21 network cells are each fully independent, but also work functional and operational freely in informal networks without central coordination. Further the principle of equality without strictly hierarchical relationships is strictly applied both within and between mini-plants. FAVI's organizational chart is entitled “le chamallow” (the marsh mellow). The center of “le chamallow” is the customer in the middle of the company, the merchant / productivity sponsor are interfaces between the mini- plants (the network cells). The whole FAVI community is surrounded by a boundary which is represented by the partners, who are the city, the shareholders, and the suppliers. The chamallow is an organic biological structure, indeed this is a fact, but was never the goal of FAVI. The notion “le chamallow” is originated from the values it represents as Mr. Zobrist points out: “Let us not forget that nothing sustainable exist without values based on simple, robust and pleasure, which is why we adopted this definition of quot;organizational marsh mellow”.” Page 8
  • 9. “le chamallow”: city suppliers VW CEO ISO 180001 Fauvet Volvo Ohno $ Fiat PSA McGregor Kaizen ISO 140001 shareholders Client Merchant / Productivity Sponsor leader Source: FAVI Page 9
  • 10. Roles within “le chamallow”: The mini-plant: Each mini-plant has an internal or external client or is responsible for a certain sector (water meters, rotors ...). According to FAVI the responsibility of each operator causes happiness, which causes in return performance. Each mini-plant includes about 20 to 35 operators, several teams, and it is a location that includes all the machinery and processes attached to a client (or area). Each mini-plant has a leader, who is selected and dismissed by the mini-plants operators on a consensus decision. Both the single operators and each mini-plant is autonomous and responsible for their work. For example under this autonomy without review committees and managerial approval: • the associates on the factory floor have redesigned their own work spaces to improve their own efficiency • an associate suggested a product redesign that cut in half the number of rivets the company was putting into a particular auto part. In this way, FAVI has reduced the cost of producing a gearbox fork by 40% in real terms over two decades • One associate designed a cart that made the parts she was assembling more accessible, and designed a rake to help her pull the parts out of a large box • Another associate figured out a way to drill a hole with one drill bit instead of two The leader: On FAVI's premise that there is no performance without happiness, and that to be happy one must be autonomous, the mission of the leaders is in line with the devolved leadership style of Beyond Budgeting in Mr. Zobrist's words: “To contribute to help the operators to be more independent! And not to control things, or anyone else!“ Furthermore the leaders are equal to operators from the mini-plant and usually stay with them. The leader is himself/herself always a former operator, who has a tested and by his peers recognized talent of leadership. Typical tasks of the leader are: occupational safety and health at work, compliance with internal and external environmental policies e.g. the principles of the Global Compact, organization and meeting of deadlines and schedules, wages and salary increases, hiring and mentoring new associates, animation of his/hers mini-plant. Page 10
  • 11. The merchant / the productivity sponsor: As the sponsor or patron of his/hers mini-factory, the merchants or productivity sponsors as they are at FAVI called have the means to meet the commitments made with the client. The merchant's role is to bring the outside in, by conveying the maximum information from the customer to his/hers operators, on the strategy, new products, changes, etc. And vice versa to pass information from the mini-plants back to the client. This is done usually formally during a monthly meeting of the mini-plant where the merchant provides all information of the new client, and vice versa by informal tours through the mini-plants. Sometimes the merchant calls the customer to come directly to the operators to explain a particular point. Whenever possible the merchant puts all associates of his/hers mini-plant in a car and goes with them to the customer. Typical tasks of the merchant are: prospecting, the animation of his or hers agents abroad, the receipt of applications prices, the preparation of forecast ranges, the definition of the margin, the definition of the needed investment, both for new parts to increase the productivity of his/hers mini-plant, research and monitoring of suppliers or service providers, packaging, transport, the animation of his/hers mini-plant as a quot;godmother or godfatherquot; of productivity, project reviews as a project manager, delivery times and product quality of his/her client until the end of life of these products. The merchant has neither objectives nor reward bonuses. The merchant is aligned to the market-pull from the customer. The CEO: The CEO is in Mr. Zobrist's point of view to be a bit like the electron of the hydrogen atom: everywhere and nowhere, but not offensive. The CEO is placed at the interface between the inside and the outside, listens to weak signals internally and externally, he/she is trying to quot;feelquot; the process, and helps the operators to sense the pitfalls and opportunities. He/she is in Mr. Zobrist's words a “guarantor of the adequacy of the evolution of the community”, the CEO is concrete responsible for the consistency of the community. When asked who is in charge at FAVI Mr. Zobrist responded: quot;The only power lies with the customer,quot;, quot;I have no power in here. I enter a meeting, no one stands up. I don't have a parking space, and if I start pretending to expertise in a meeting, my people will often cut me off.quot; Finally Mr. Zobrist concludes with reference to FAVI's structure: “Therefore until the establishment of this quot;lack of structure”, we have never, ever once delivered late!” Page 11
  • 12. Values Like every other Beyond Budgeting pioneer, FAVI is governed through a few and clear values, mission / vision statements, and rules. These are in the case of FAVI: Values: • Good faith • Sense • Goodwill • Good mood Mission: “Everyone should seek permanentquot; LOVE quot;of his/her clientquot;. Creed: “quot;The other is always considered to be good!quot; [...] An initial EVIDENCE: quot;The performance comes from the operators and alone from them!quot; [...] A second EVIDENCE: quot;There is no performance without happiness!quot;” Strengthened and believed in these principles FAVI has collectively developed a very simple system: quot;Always more and more for less for each of our client, HALLENCOURT in respect of the land of our childrenquot;.” MAIN: quot;Live and grow in our village PICARDIE1quot; MOTTO: quot;BY AND FOR THE CLIENT” 1 The “Picardie” is a specific region within northern France, the advert/adjective is “picarde” Page 12
  • 13. FAVI's rules: “The quot;Yquot; opens up spaces of freedom for everyone, bordered spaces, limited by a limited number of simple rules! “ (Zobrist) In the case of FAVI there are two rules: 1) THE MAN IS GOOD! 2) EVERYONE IS PERMANENTLY SEARCHING THE LOVE OF HIS/HER CLIENT! These 2 basic rules of FAVI are broken down into the following operating principles, which are according to FAVI so simple that both leaders and the operators can understand them: • METACTION • The DODO rule (No control of the activity) Rule of the LOTTO / LOTTERY (s. below) • Nothing a priori, but entirely posteriori • No over-rigid rules • Search for consensus “Performance formula” “The performance comes from the operators! There is no performance without happiness! How can the operators be happy? When all conditions are in place, and that the moral conditions are adopted, respected and experienced in everyday life; then and only then we can consider that: • To be happy one must be responsible! • To be responsible we must be aware of what and for whom are his/hers actions! • So be in direct contact with his/hers customer! • Be Totally Free on his/hers actions!” Page 13
  • 14. Transparency Generally the annual balance sheet and the monthly financial reports are open to everyone and Mr. Zobrist insists that only details are provided. During FAVI's transformation journey Mr Zobrist trained all employees on cost issues. Additional to the financials, each month since 1983 the so called “FAVI information file” is available to every associate, nowadays available on the intranet and on specific electronic tables within the factory . The “FAVI information file“ contains usually the following topics: • Travel (dates, companies, places visited, people involved) • Visits (company name, dates, time ,visitors, purpose of the visit) • Meetings (dates, subject, time, persons concerned): The meeting section contains general meetings which concern every associate and therefore are open for everyone to participate, e.g. the monthly mini-plant meeting • Miscellaneous: This section allows every associate to express themselves, ask questions, provide information, to clarify its absence or passing messages to strengthen self-preservation, or appreciation. • HR: like an internal talent market this section offers information on available associates. Usually the associates move informally between teams and mini-plants • Customer information: this section includes information about all news from the customers, the competitors, and the market • Classifieds ads: this section contains an internal market for all associates to sell personal things e.g. cars, aquariums, etc • Congratulations • Case of the dragon: this section includes daily problems and is an important lever for the improvement program. Usually volunteer associates commit to solve these problems. The name is related to the original hard-copy file which was placed besides a brass dragon. Furthermore the CEO writes each month a report about general company news, deals with customers, expansion, quality problems, diversity studies, etc. This file is both available at the electronic information panels in the mini-plants as also a a hard-cover letter to take home. Page 14
  • 15. Goals & Controls At FAVI there are neither fixed nor relative goals and only one KPI does exist: the cash flow. As Mr. Zobrist points out: “Home at FAVI there are absolutely no fixed targets, we are aware that they are all the best to prepare for the future of their operators, furthermore they have absolutely no financial bonus because their real income for them is the number of productive jobs created.”, “We all know the examples of regular cheating, highly prejudicial to the company, to stay within the objectives imposed!”, “The numerical figure discourages imagination and initiative. Say to your people: we must lower the costs 3% is stupid because we can perhaps do more, or it is perhaps impossible to achieve 1%. We prefer verbatim: quot;Always more and more for less, to Hallencourt in respect of the land of our children, for example, because it does not block the imagination, all is aimed with different objectives: quot;Always more and betterquot; = quality, safety, health quot;For less expensivequot; = productivity, competitiveness quot;A Hallencourtquot; = instinct of long-term quot;In respect of the land of our childrenquot; = Sustainable Development”” Rewards At FAVI there is only a basic salary without a bonus or a profit share. Planning At FAVI there is no company planning, generally it is considered that “action must be taken every day to adapt to this, but against this one should not limit his/hers thinking to the framework of the classic five-year plan but to think much longer term to see the possible developments.”, “The strategy for us is a proposal for actions to follow these successive over a maximum period of one year. The strategy focuses on quot;whyquot; and quot;whoquot; of our actions. It is therefore of utmost importance that those who present the successive daily (Operators) are fully aware of why and for whom.” To present the strategy each year a special meeting is set up with the leaders and the productivity sponsors. They present and comment the strategy to the operators resented and commented to operators of each mini plant. After the meeting the strategy is then displayed in each mini-factory for the reminder of the strategic coherence of the actions of the year. Page 15
  • 16. Resources FAVI does have a budget, but this a more like to mark the future, and it allows each month to compare the actuals against the plan to question the current situation, but is it not an an imperative guide. This one-month budget is prepared by each network cell's leader and sponsor and can be seen as conclusion more as a one-month rolling forecast. Coordination FAVI is completely aligned to market-pull and not to its budget. Page 16
  • 17. FAVI's transformation stories Mr. Zobrist's quotes on “the break” “The company is a form of monarchy, the only way out is to do a REVOLUTION! A revolution at the base. [...] The revolution can only come from the top, the HEAD! So it is no longer a revolution is is a BREAK! BREAKAGE is in my opinion the only way to move the company quot;Xquot; to the company quot;Yquot;! [...] WHAT ARE THE CONDITIONS TO BREAK? None! WHAT ARE THE PREREQUISITES TO BREAK? None! WHAT ARE THE TOOLS OF THE BREAK? There are no! But incoherent break results in CHAOS!” “Whatever the evolution, by breaking or by negotiation, we must never, never someone to be left on the wayside.” “One of the first things I did in the 80s was to remove the pointing, clocks, bells, bonuses which were up to 20-25% of the wages (by incorporating the average of what everyone had on the last 24 month), doors of the factories, in short, all of which started from the principle that man is bad. To my surprise, we quickly found that the rates increased when we had removed the timing analyzer and regularly operators remained ¼ hour, for, of course, finish before their shift.“ Page 17
  • 18. Mr. Zobrist's speech on Christmas Day On Christmas Day 1983 Mr. Zobrist hold the following transformation “speech” to start the transformation: quot;It's been 9 months that I am among you. 9 months to a child! 9 months that I look at you, and I see brave people, great professionals who love their job, with that ability to work! And I came to the conclusion that people like you who have your skills do not need a carrot or stick indeed! The carrot and the stick are unworthy of professionals like you! Therefore, when you resume work in January, the clocks will be removed! If, by accident, because everybody can have an accident, you arrive late, we will look at all the reason for the delay and if such a problem is a motorbike, rather than punish, which does not solve the problem, we will help you to repair the motorbike. There will be no more scoring or timing, you are not paid for overtime hours, but for parts and good parts! That is why the ring tones will also be deleted! There will be no more bonus either, what everyone has earned since 2 years that will be kept! We therefore take the average of what everyone has had on these last 2 years and we put it in the salary! There is not a thief among us, that's why the door of the store will be dismounted. [...] There will be no longer distributors of paid drinks for, but in each workshop, two distributors of fresh water with syrup, and hot water with sachets of coffee and sugar. We will remove the keys to each wheel and provide a lot of machine tools, and more for everyone to equip themselves as they wish, all employees of the company will have a check of 500 F to buy whatever they want as long as it has to do with work.quot; Mr. Zobrist pauses to measure the reactions that were more the domain of astonishment than satisfaction. In an impressive silence he continued: quot;There will be no more unemployment! If one day we are forced to resort to such measures, then I will be first senior unemployed, even me. There will never, either, meal frameworks, we eat all together or we will not eat!quot; Mr. Zobrist then turned to the executives who were naturally grouped and pursued: quot;How will we do to operate in the future? Actually I do not know! I am sure you deserve that we operate differently, but I do not have a replacement model! I propose that together we are going, with people of good faith, common sense and goodwill.” Page 18
  • 19. Production increase after the Christmas holidays The only thing that Mr. Zobrist decided to do within Christmas Holidays was that henceforth he would never speak to workers, but to OPERATORS! Now everyone, including Mr. Zobrist, the CEO, would be counted as a worker that is working in the interest of the client. When Mr. Zobrist arrived at his office after the Christmas holidays, his manufacturing managers were already waiting for him: quot;You do not know them! It will be a mess! It has always worked like that, how you want that to be respected if there are more rewards! They will cut all! The rates will collapse. ... quot; Mr. Zobrist then left them speaking for half an hour this way without saying anything. But against all odds and the complaints from the manufacturing managers the production rates did not raise, but increased by 20%! And only counted by the inbuilt counters of the machines... Mr. Zobrist was so surprised, that he didn't dared at first to talk to the operators, because he feared that this unexpected phenomenon would not continue! Only after a few weeks shy, Mr. Zobrist asked the operators why and how they were able to do the same production? He than received two types of answers: • quot;This is to help you prove the quot;headsquot; that you're right!quot; • quot;There is a rhythm that helps pass the time!quot; In other words they were working at the optimum physiological rhythm with less energy, which proved to be significantly faster. And when Mr. Zobrist asked them why they did not do that before when there were bonuses? He always received the same answer: quot;We're not crazy. If we had done that we would never had the bonus!quot; They were aware that their quot;leadersquot; would have increased the quota! Page 19
  • 20. The story of the parking space – or the importance of a strong signal to mark the transformation journey As the transformation went not so so good in the beginning, Mr. Zobrist invited a friend of him, because as he stated: quot;I'm tired of my staff who fall asleep, inertia that blocks any attempts to change.. Come rouse, I want to change and transform the way we work to restore power to the productives!quot; So Mr. Zobrist set a meeting with his friend at 9 o'clock in the morning. His friend arrived in time and there he found FAVI with its of about 500 associates a that time in a provincial area in the Northern France. He discovers a beautiful plant with on the right of the door flower beds and left a few parking spaces with the name of his host in the first, nearest the door, then a dozen other names. Then he parked his car on the visitors places in the general parking area, a hundred meters on the side of the plant. After exchanging the traditional French greetings, he confirms his willingness to make a difference in this organization. Then he requests to Mr. Zobrist be accompanied to the door of the factory and there, taking his mobile phone, he said: quot;Well we will start immediately: call your maintenance department and ask them to come immediately to remove your name and other names on this car park and immediately put on pieces of wood or even cardboard, with the description: quot;CLIENTquot;!” Then the owner, his mouth and eyes opened, haggard said: quot;Well yes! But you do not understand that you still need them as I speak .... I still cannot ...quot; He interrupted: quot;Wait if you do what I say in an hour, the entire company will know that something is changing, and so the movement will be started!quot; quot;Yes but no, I still cannot do that to my staff, they do not understand!quot; quot;Ifquot;, he said, quot;They understand that people are the most important customers, not themselves, and especially that allow them four times a day to cross the same parking on all staff and can be of exchange even a hello. And then your workers will understand also that the most important people are neither you nor your staff, but the score!quot; quot;Yes but ...quot; He insisted: quot;It takes an action, however symbolic, although it may seem a caricature, to give credibility to your intentions, otherwise your will to change will be vanished, sterile meetings will take place ... only action visible and irreversible does account!quot; Faced with its inability to act, he gave him his phone in the pocket and left, saying: quot;If you are not capable of something so simple, does not change anything, and my speech will only strengthen your leadership in its passivity, as best I will dream for nothing, at worst I'll go for a dangerous agitator, and my testimony will only serve to give them arms to block any change them more or less involved!quot; quot;Goodbye my friend!quot; And Mr. Zobrist's friend left FAVI. As this friend was almost honest, a few days later Mr. Zobrist called his friend to thank him for the lesson, and then carried it out alone, without external help at his own pace, concrete action, including changing the parking plates. So he had unknowingly issued this strong signal that marked the transformation. Page 20
  • 21. Mr. Zobrist's letter to all associates The following letter from Mr. Zobrist was sent on 15 th April 2000 to all associates of FAVI on a Saturday morning to the associates' private address in order that everyone can think calmly throughout the weekend, and possibly share with their families and friends: “SPECIAL INFORMATION ON 15th APRIL 2000 DREAMS: The 15th April date is a bit special for me: It was on the 15th April 1967 that I started to work. It was on the 15th April 1983 as the Grand Patron [the owner of FAVI] told me the direction of the company. When I arrived here, I have already been working for 16 years for the Grand Patron, and I knew he would leave me free to run the business, as long as I grow. When we know we have all freedoms, we can dream! So I DREAM! At the time, the worker was working, the adjuster settled, the controller controls, and the quot;bossquot; organized. I dreamed of a company where the worker becomes an operator, who could organize, set up its own machine, and self control! At the time, workers pointed, and were punished for any delay (5quot; delay = 5quot; to pay less, 10quot;= -15quot; on wages, 15 quot;= -30quot; etc ....). I dreamed - A business where everyone recognizes that we work for a client, and not for a clock - A business, where rather than punishment happens, we would inquire about the reason for the delay, since no one deliberately be late and, if necessary, shift the team with the young dad whose little girl cried at night, or troubleshoot the service maintenance for a damaged motorbike, because of being late! At that time there were up to 25% of salary consists of a bonus (much of which depended on the quot;moodquot; of the boss) that was granted or not, every month. I dreamed - A company where the bonus would be included in the salary, so that the mother is guaranteed the same monthly income, I dreamed - A system for sharing results, just and equitable. I must confess that I never dreamed that this quot;bonusquot; can be achieved (with reference to the average wage in the metal industry) the equivalent of 17 months salary! At the time, there was systematically unemployment by turning workshops down, to maintain a quot;healthy pressurequot; on workers. I dreamed - A company where there would be no more unemployment, and where, if one day this misfortune occur, it would be supported by all, not only by the workers! At the time, everything was locked in stores, even the safety equipment and consumables. Page 21
  • 22. I dreamed - A factory where everything is open, even the office, where everyone could freely have all the tools it deems useful to have! At that time we did that cast parts with little value added. I dreamed - A company that would do more for the customer, making parts optimized, tested, machined, assembled, according to complete! At the time, no worker requested that their job was based on his hands and his muscles. I dreamed - A company where people use their brains to be the author's own progress, and their heart to seek the esteem, respect, a form of love of their client! At the time, only the boss knew the customers. I dreamed - A company where everyone would see his client could visit, and meet him! I dreamed - A business model that we visit, which is a reference! After 33 years of career, and 5 years of its purpose (if God and the laws allow), what is my dream? Oh, my last dream is simple, but very difficult to achieve, simply because: I dream that in the company, everyone behaves like at home, no more, no less! At home, we do not throw their butts on the floor! At home, we decline to pick up a paper or a cloth! At home, we are washing your hands! At home, we save water, electricity, heating! In our garage or workshop, we range and maintains his tools! In our garage, we does not waste or grease, or bolts, or rags! In our garden, we respects the flowerbeds and flowers! In our driveway, we do not empty the ashtray of his car! In our car, we picked up and throw the useless paper, we empty the ashtray, avoid soiling the carpet with mud, or stain the seats with grease! In our village, young people say hello, and respect for elders! Why each of us does not even do that at the company? This would be so easy, so simple, and even more reasonable when we do not have the tools, cleaning, lawns, cars, we all pay for their work (Langlet society for tools, Trancart for plantations, Sinka for cleanliness, SG guard for ...). I say we pay, not the company, as the Company does not exist physically. The company is us, our work, our intelligence, our courage, our sweat! You see, my dream is simple, reasonable. Every one of you behaves at the company like at home! It's simple, but that I cannot do it alone!! JFZ” Page 22
  • 23. The story of the creation of the mini-plants Gilbert came to see Mr. Zobrist in his office, sitting nonchalantly in front of him and said to him : quot;we must turn Dédé!quot; At the same time as Gilbert spoke, Mr. Zobrist realized he was right, he knew the unconscious, but his emotional ties with André, Dédé, the boss of machining, could not see this so obvious. Mr. Zobrist then said to Gilbert: quot;Unfortunately, I think you're right, but it is not possible.” And indeed he understood that fact and that Dédé was programmed to fly a dozen people but no more, they sought of gaining more and more new parts machined and the Dédé span of control was quickly increased from 10 to 80 people. Reflecting with Gilbert, they said: “How can we reduce the number of people in direct dependence on Dédé less than 10?” And that's how the idea of autonomous groups was invented. Each “cell” was committed to an external or internal client or a family of products, each with a leader, this way each “cell” could independently manage its own orders and its own products. Quickly, this idea was taken by the Task Force on a Friday morning, when it was decided to call each of the “cells” a mini-plant to show the degree of autonomy, and thus strengthen the individualistic axis. The story of the quality at night One day Mr. Zobrist asked Jacques, the head of quality, to identify the percentage of quality problems, internal as external, generated at night. To his surprise Jacques noticed that over the past two years, there had been none! All problems have been generated only in the old days in the presence of the old power based structure. The story of the red traffic lights One day Mr. Zobrist drove in his car and had to stop before a red traffic light somewhere on the countryside. As he looked in all directions, there were no other cars or people wandering around. So he decided to ignore the red traffic lights and to drive forward. Unfortunately this traffic light was monitored by a French police officer who noticed that ... From Mr. Zobrist's point of view there was in short a red light with no need to justify a police officer monitoring it. Back at FAVI he scheduled a meeting with all the leaders and productivity sponsors by telling the story and asking them to look into the mini-plants if there were also such stupid traffic lights with associates monitoring them that hampered the whole system. Page 23
  • 24. The story of Gilles Gilles was a graduate of the Ecole Supérieure de Fonderie in engineering and had worked for 4 years at FAVI in different functions like R&D or customer support. One morning after the transformation he came to see Mr. Zobrist, CEO of FAVI, in his office sheepishly saying: quot;You know, Jean-François, I'm an engineer and merchant / productivity sponsor is not the role of an engineer.quot; Mr. Zobrist asked him what he really wanted. It came out the Gilles wanted to be a leader with status, with a secretary, and a reserved parking space which actually did all not exist at FAVI any more. Mr. Zobrist explained Gilles the FAVI system, however he noticed that it didn't impress Gilles. After a quarter of an hour of discussion, Mr. Zobrist finally said: quot;Let's be clear Gilles, will you go away?quot; quot;For sure!quot; Gilles said sheepishly. Visibly relieved by this statement because he had feared a reaction from the CEO emotionally, Gilles said: quot;OK, we no agree, I will send you my resignation.quot; Then Mr. Zobrist handed a paper and a pen to Gilles: quot;No, Gilles, if you go, you go! So you give me your resignation immediately and simply,quot; for reasons of personal convenience, I give you my resignation request etc. .. “quot; After some hesitation, Gilles filled the paper, and handed it to Mr. Zobrist saying: quot;OK, listen, during my 3 months notice, ...quot; Mr. Zobrist interrupted immediately: quot;No, Gilles! I love you well but you do most for your family. You have freely chosen to leave, you go! The community is going to pay your 3 months' notice, in accordance with the law, but it is 11 am, you have 1 hour to put your pens and your gum and at noon we drink some champagne together to thank you for what you brought to the company during these 4 years, and you're going.quot; The story of Fabienne One day, during the usual visits of the factory, Mr. Zobrist stoped at Fabienne's workstation and recognized a detail that he had never seen before: Fabienne's wrists were surrounded by a brown paper sticker which were normally used to close cartons. Then Mr. Zobrist asks Fabienne: quot;Why do these improvised bandages mean?quot; Fabienne replied: quot;Well Sir, it has always been that way! As this alloy is very dry, it makes little spicy chips that fit into the sleeves which is unpleasant and embarrassing.quot; Mr. Zobrist replied: quot;But it is unacceptable that you accept to work under such conditions. I can not understand why you never responded Fabienne and I forbid you to continue working together. It is unworthy of you!quot; Immediately he calls the telephone operator for the maintenance to the machine and said: quot;You have the night to do something but I do not allow you that this machine is running.” One the next Saturday morning when Mr. Zobrist had forgotten something at the office, he went as usual through the factory and usually does a quick tour through workshops where he meets Fabienne who was in the process of repainting her machine! Mr. Zobrist was very surprised by her presence, and she admits that her machine now worked better, she also wanted it clean and nice, doing it on a spontaneous and voluntary approach. This machine became then her machine. Page 24
  • 25. FAVI's own invented management terminology FAVI's principles The first part refers to the “round” enterprise, the second part refers to the “square” enterprise”: • Management of uncertainty / Management of certainty • Adjust to the present / control the future • Act for 1 day, think of 20 years / act for one year, think for 5 years • The performance comes from the workers / performance comes from the structure • To be happy one must be responsible / only the elite has the right to have a project • Focus on why, the who / focus on how • Man is always seen as good / Man is systematically considered bad • Each is the author of his/hers progress / Each player is his/hers actions • Everybody knows the strategy / the strategy is reserved for the Board of Directors • Search performance by the happiness of everybody / Seek performance by the structure • Outcomes of the results of happiness / Outcome of goals • We want to win in the progress of each / We want to save money, and control costs • Complex System / Complicated System • Fair or equal / fair and equal • AND / OR • Simple rules strictly applied / implemented without complicated rules equity • No notion of risk / search for zero risks • Allow random opportunities / claim random control • Micro breaks / fear of change • Common sense / logic • Outcome / Activity • Plural / singular • Having an essential (noble cause) / having rules • Long-term thinking preferred / short-term thinking preferred • Management by intention / management by controlling • Cultivating links / contact Page 25
  • 26. Emotional visions / objectives • Recovery of fragilities / recovery of forces • Make up / wanting to foresee all the consequences of ones actions • Métaction / Anact • Enterprise Y / Enterprise X • Measures are not time-limited and non-perennial / measures are limited but perennial • Imperfect measures / perfect actions that would never exist • We take care of problems that exist / We are responsible for what might happen • Dreamy / Factual • The primacy of values and respect / Respect for laws and rules • Simple messengers that are calmly though solid values / special knowledge • Leveraging awards / leveraging penalties • Soft and fuzzy / clean and hard • Play on the emotional / play on the Cartesian • Approach consistency uncontrolled / Approach inconsistency but controlled • Operation in intimate networks / Operation in groups • Search for friendly consensus / relationship based on giving • The boss is recognized (or liked) / The boss is feared and respected • Making money without knowing how / Loosing money by knowing why • Lotto / Lottery • Finding Outcome / monitoring activity • Period of initiation for new / hiring process • The quot;Bossquot; does nothing / the quot;Bossquot; has his/hers reserved playing field • The Management committee wanders around / the Management committee is only informed by reporting • Power from the OUTSIDE / Power from the INSIDE • The outside rules / power from the inside • Power of the customer / power of the boss • It is the customer who pays us / It is the employers who pay us • The boss has the BALL / The boss is at the TOP • Very high reactivity to the environment / compliance with budgeted targets • All eyes look on the outside / all eyes look on the budget • Awareness of all that the own interest is related to the collective interest / give and take • Individual and systematic functions / specialized functions Page 26
  • 27. Verbatim / numerical • Concrete / Abstract • Compliance with the deadlines at any cost / no respect for the delay in the name of cost • Efficiency (number of aircraft shot down) / Effective (number of impacts on the route of the aircraft) • Seek to congratulate / seek to punish • It works but the boss does not know how / the boss knows all the workings of his company but ... Page 27
  • 28. Enterprise Y vs. Enterprise X Both notions “Enterprise Y” and “Enterprise X” are created by FAVI upon Theory Y and Theory X from Douglas McGregor. Correspondingly the enterprise ' X ' is defined by FAVI as an organization in which man is considered to be systematically bad, whereas contrary the enterprise quot;Yquot; is defined by FAVI as an organization in which the same man is regarded as decidedly quot;goodquot;. FAVI also refers to the Enterprise Y as the “round” enterprise, and the Enterprise X as the “square” enterprise. The notions “round” refers to FAVI's Judeo-Christian roots and the rural culture of the Picardie, a northern French region, while the “square” contrary refers to the Anglo-Saxon “command-and-control” management model. The following chart and graphic summarize the characteristics of both enterprise types: ENTREPRISE quot;Xquot; ENTREPRISE quot;Yquot; SYSTEM bounded by powers bounded by values SYSTEM complicated and mechanistic complex and holomorphic MAN either dominant or dominated authority to be dependent on the power-dependent client MAN is considered to be systematically “bad” is regarded as decidedly quot;goodquot; HEAD secure, isolated from the process the interface between inside and outside HEAD in a box at the top of the bed observe button HEAD pyramid isolated by his court has the ball CENTER OF GRAVITY draw bar power of shared values shared values worn by all CENTER OF GRAVITY The power of chiefs or laws power of the client and the operator LOGIC TYPE war powers search of happiness TYPE OF SHARES preservation of acquired globals TYPE OF RELATIONS group work work networks RISK-TAKING ongoing risk no risk concept Page 28
  • 29. Enterprise X Enterprise Y Client CEO Command Plant Director Flow of parts Command Technical Director Command Merchant / Service Director Command Productivity Flow of information Sponsor and emotion Production Manager Command Workshop Manager Command Equipment Manager Leader Command Operator Mini-plant Operators • Primacy of HOW • Primacy of WHY, FOR WHOM • POWER from the BOSS • POWER of the CLIENT • POWER from the INSIDE • POWER from the OUTSIDE • Men: 'bad' • Men: 'good' Source: FAVI FAVI mentions besides Douglas McGregor the following three origins of the Enterprise Y and Enterprise X concepts: • The socio dynamic matrix from Jean Christian Fauvet • The complex system and the complicated system from the General System Theory • The concept of the quot;power ringsquot; Page 29
  • 30. The socio dynamic matrix from Jean Christian Fauvet: Jean Christian Fauvet classifies companies according to their positioning in relation to the inside and the outside. The outside comprises at FAVI customers, suppliers, the laws, and the French labor department. The tribal company The holomorphic company (which we can reconstruct from a single of its parts, each part is in everything and Def. : solitary Japanese type everything is also in each part) The head: is at the center of its pack and is permanent Who decides: The unanimity Def. : a Californian computer type Center of gravity: the guru The head: has the ball Type me: teamwork, shared values, dedication Who decides: the customer represented by the holders of Type of logic: ideal logic sense the ball Type of culture: budget driven, uncritically Center of gravity: customer System Type: FEDERAL (paternalism, dependency due to Type me: empowered, independent, animated by business base) spirit Type of actions generated: classical = coherence by the Type of logic: complex logic = global shared sense Type of culture: the common good, social and institutional Wages: Increase. Honors goodwill, fidelity integrated values The computer: Replaced by the bible System Type: complex high voltage (organic / cell network) Strengths: internal dedication / external trust, shared pleasure, loyalty Type of actions generated: meta dictions (life through the Weaknesses: Lack of critical thinking, too dependent on a organization of systems) guru Wages: Increase. Individualized rewards. The computer: individual but networks Strengths: autonomy, accountability, development, leadership, team play Weaknesses: Can be achieved only if the authority agrees to fade! The mechanical company The individualized company Def. : statutory public company type Def. : mercenaries CNN type The Chief: The top of the pyramid, such as The Chief: eveyone is a leader, no boss of bosses interchangeable ministers Who decides: the majority Who decides: The boss Center of gravity: Multiple each = Center of gravity: The boss Type I: The self calculator, personal power obtained Type me: protected status Type of logic: positive, experimental = Type of logic: cause / effect = legal Type of culture: private reason Crop type: Passive System Type: Heterogeneous turbulent (gaming alliance) System Type: geometric low voltage (dependency Type of actions generated: = unique varied movement, suffered) multiple, by freedoms. Type of actions generated: naalc = order by law, inertia Wages: Increase. individualized and negotiated bonuses. Wages: increase. uniformly generalized / standard negotiated merit gratifications. Computer: PC Suite not interconnected Computer: central, of which only the head to the key! Strengths: Responsiveness, expert, non-conformism, Strengths: to order formal safety of its players, respect, adaptable standards Weaknesses: unstable system, turn over important Weaknesses: The system is complete in itself, as also the customers Source: FAVI Page 30
  • 31. The concept of “power rings”: Enterprise Y Enterprise X the client power ring the boss productives $ Source: FAVI Enterprise quot;Xquot;: In the Enterprise quot;Xquot; the boss is surrounded by a first ring of power called quot;Executive Committeequot;, which includes his secretary, his directors, and the HR department. The next power circle is represented by the Middle Management, then the next power circle is represented by the Lower Management, and so on. Enterprise quot;Yquot;: Within the Enterprise “Y” all of the above mentioned power circles have been removed and replaced by a flexible cell structure consisting of 21 cells. At the center there are the shared values which are the modern translation of the ancient notion of the common good! Page 31
  • 32. “The love of the client” During the transformation from the prevailing command-an-control management model, all FAVIans felt the need to move away from the quot;Anglo-Saxon-industrialquot; classic command-and-control management model to go to a more culturally quot;Jewish-Christian-rural” model. During a meeting while discussing the concept of “love” Jeannine issued this simple idea: quot;The profit results from the love of the customerquot;. Together, the FAVIans rediscovered the symbolic value of the tree, then after asking everyone to stop breathing for a minute, Jeannine invented the concept that money is the breath of the company. Finally, the FAVI associates collectively came to the conclusion that only the love of the client generates the essential profit. Then they came to the following conclusion: TREE: (duration) MONEY (the way of the duration) $ LOVE (the way to make money) CUSTOMERS (who exchange money against products they like) THE MINI-PLANT (which must with their products to make love to their client P P P Source: FAVI Page 32
  • 33. Lotto / Lottery According to this principle lotto is a game where everybody wins a little bit, whereas contrary within the lottery few people earn, but they earn very large. If any leader would propose anything based on the principle of the lottery system, the leader would know in advance according to this principle, that his/hers proposal would be rejected. Origins of FAVI's management model and the management model sheets “If we consider man as generous with his time and we will then control the clock, not the client. That's why we've started since the 80s, to remove the clocks, awards, service personnel, stores, office procedures, planning, launching, the purchasing department, in short all the structures that hold back man and take their powers under the name of the freedom of thinking and acting of the operators. Thus, little by little, together we have developed a quot;systemquot; our system. This is not a system that can be considered at equilibrium and governed by immutable rules! We incorporated a notion of uncertainty (which is not the absolute coincidence).” The FAVI system's origins are diverse and summarized as follows: • Mr. Zobrist's knowledge of the works of Fauvet and McGregor when he becomes CEO of FAVI in 1983 • Mr. Zobrist's own personality which reflects “Enterprise Y” • Management literature from the 80s, mainly Tom Peters and Ohno • the Judeo-Christian culture as also the rural culture of the Picardie, a region on northern France • the possibility provided by FAVI's owner to run the company as Mr. Zobrist likes if law obligations are met and a profit is generated Page 33
  • 34. Contrary FAVI's management model sheets have been developed after a conversation with an American professor. In June 2004 Mr. Zobrist hold a conversation with an American Professor of a renowned American University, who was interested to learn about the FAVI System. Mr. Zobrist explained the FAVI system on the two following examples. But as the American professor did not understand the FAVI system from these two examples, so the management model sheets and FAVI stories were documented both on the web page as also in two books. The management model sheets are for information purposes only to distinguish between the “round” enterprise and the “square” enterprise. Mr. Zobrist also questions if the they are transferable to other companies, but states that this is not the goal of them. quot;You were the first European company certified ISO 14001 in 1996, first French company OHSAS 18001 certified in 2000 and again first French company, just before a nuclear power plant, to be certified QSE, but your quality manager is a former worker!quot; - quot;Well yes! And that is why we were able to move easily and with flying these certifications, as Jacques has evolved, but always kept a good simple and effective way!quot; - quot;For over 20 years you haven't increased your selling price, and yet you display honest but reasonable results financial when you have no structure in manufacturing, no Chief Service Officer, Chief Technical Officer, Chief Manufacturing Officer, Chief Workshop Officer... ..!quot; - quot;Well yes but it is precisely because we have no structure in manufacturing operations and our operators are free and are progressing advance in machines and naturally!quot; - quot;You do not have staff and you have never experienced social conflicts! - quot;Well yes, but because we did not have staff to manage these conflicts, there are none! In addition, here is no personnel department to cope with complicated laws and rules which ensures the correct application, and it is generally this complexity for the complexity that is a source of conflict!quot; - You do not have any planning or scheduling, and yet you have never delivered late for 23 years!quot; - quot;Well yes, because a planning department is designed to manage delays, and again because we do not have a nonfunctional management structure, there is no malfunction!quot; - quot;Good. How can it work?quot; Then FAVI explained their FAVI model with lots of matrices, they were talking about McGregor, the socio- dynamic matrix from Fauvet, Ohno ... but it was not sufficient. quot;Well we have “round “ people in a world of “square” people! We are a “round “ enterprise surrounded by a world of “square” enterprises. Our clients are “square”. Our suppliers are “square”. Our French laws are “square”. To which the professor replied, quot;pleasequot; and Mr. Zobrist mentioned the following two examples: Page 34
  • 35. One day a quot;squarequot; car customer, is to audit FAVI's logistics. Two engineers, a man and a woman in the forties, spend 3 days at FAVI and after the conclusion the boss of them said: - quot;It is not at all: you have no indicator tracking delays, or indicators of breaches of flux, you have no structure, no planning, no start, no scheduling, no delays, no management, etc.quot; To which Mr. Zobrist replied: - quot;From your records, how many years since we provide 100% your needs?quot; - quot;11 years!.quot; - quot;In 11 years, how often have we been delivering late or in advance?quot; - quot;No!quot;. - quot;In 11 years, how often has happened that you received not your complete order or too many parts?quot; - quot;No!quot;. - quot;Why do you want me to establish an indicator of something that does not exist?quot; Answer: - quot;...quot; Then Mr Zobrist told the second example: One day the material supplies didn't arrive and FAVI had used all their security stock and couldn't deliver to their customer. One of the operators contacted the boss of the supplier, which gave an interesting answer for this urgent situation: quot;I do not understand why you are down because your service KPI is increasing!quot; Then Mr. Zobrist explains the situation: “Having followed an indicator of level service and not delivered, is to be “square”. Do not even knowing what a service level is but never delivering late, is to be “round”.” Page 35
  • 36. Resources • Zobrist, Jean-François: quot;La belle histoire de Favi : l'entreprise qui croit que l'homme est bon Tome 1 Nos belles histoiresquot;, 2008 • Zobrist, Jean-François: “La belle histoire de Favi : l'entreprise qui croit que l'homme est bon Tome 2 Notre management et nos outils”, 2008 • Favi Homepage incl. all subpages, accessed 24th May 2009: www.favi.com • Carney, M. Brian: quot;Workers of Europe Innovatequot; in The Wall Street Journal, 25th July 2005 • Front Cover Picture (Creative Commons 2.0 BY NC ND: by TigerLillyShop: http://www.flickr.com/photos/tigerlillyshop/305791337/ License This paper except all logos and the front cover picture is licensed under a Creative Commons BY-SA License. Credit: quot;International Center for Outperformance (www.intco.org): FAVIquot; within the reference list Page 36