[EN] FAVI, the first Beyond Budgeting pioneer from France

As I remember from my studies of international management and my French courses at school, France is a country in which decision-making is rather centralized and in which the hightest top-mamagers have the most autocratic titles such as "le directeur president general" etc. Given that overall cultural background, FAVI from Hallencourt in Northern France seems like an antithesis to the French standard. With over 800 employees, it is the world market leader in the niche of copper forks (e.g. for automotive gear boxes), with a market share of above 50%.

FAVI does neither have a comapany planning nor a HR department. Every employee can act and think like an entrepreneur and is fully empowered. Autonomous teams at FAVI serve the customer, not bosses. Mr. Zobrist, the CEO, decribes his role as follows: "The only power lies with the customer", and "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 expertize in a meeting, my people will often cut me off." Instead of obedience, Mr. Zobrist seeks responsibility and initiative from his employees. And to get it, he gives them freedom to innovate and experiment, but also the authority to solve customers' problems in their own way. He tells them they work for the customer, and gets out of the way.

FAVI's HR departement was eliminated 20 years ago, "because this department's main job was to put constraints on people's activity and grow its own ranks to enforce these constraints." says Mr. Zobrist.

Read the full story on FAVI here:
"Workers of Europe Innovate" from BRIAN M. CARNEY:
http://online.wsj.com/article/SB112225856507394646-email.html

Link to FAVI's homepage: www.favi.com

Link to the French Case Study Books, which include the files from the homepage: "La belle histoire de Favi", Jean-François Zobrist: Book 1 (Stories): http://www.lulu.com/content/paperback-buch/la-belle-histoire-de-favi-len...
Book 2 (Management): http://www.lulu.com/content/paperback-buch/la-belle-histoire-de-favi-len...

Comments

ICO's picture

Origin of the Favi System

Niels wrote:
"I hope we will at some point learn more about where the company or Mr. Zobrist got their inspirations from.

Why don't you have a look at sheet number 8?

There Mr. Zobrist states that

- "In the 80s, as we were "free" as our "Grand Patron" - owner of the company, asking us just one thing: "make money, in accordance with the laws of our country, and in complete freedom" we collectively thought another kind of operation utilizing the particular qualities and weaknesses of our collective culture typical Judeo-Christian Picarde."

- "In a "SQUARE" world FAVI is "ROUND"! Note that the "circle" comes back to our Judeo-Christian roots and rural areas, while the "square" is a copy of the Anglo-Saxon industry."

- the origin of the sheets itself is based on a converstion with an American professor, in which Mr. Orist tries to explain on two examples how the FAVI system works. as the professor does not understand the FAVI system, the sheets were written down..

- further literature quoted throughout the sheets: Douglas McGregor, Ohno, Tom Peters and Jean Christian Fauvet

Niels wrote:
"They are even coined in the same "do this, not that"-fashion in which the Beyond Budgeting principles are written up..."

That's not completely correct. :-) The version before the "/" refers to the "round" enterprise, the version after the "/" refers to the square enterprise

ICO's picture

FAVI's management model sheets

74 It works but the boss does not know how / the boss knows all the workings of his company but ...

73 Seek to congratulate / seek to punish

72 Efficiency (number of aircraft shot down) / Effectiveness (number of impacts on the route of the aircraft)

71 Compliance with the deadlines at any cost / no respect for the delay in the name of cost

70 Concrete / Abstract

“Ironically, numerical is abstract for most people and verbatim is concrete. But the real concrete is attached to any financial result of the company: the holy monthly cash flow that best reflects the progress. All indicators are in fact abstract.”

69 Verbatim / numerical

“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:
"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:
"Always more and better" = quality, safety, health
"For less expensive" = productivity, competitiveness
"A Hallencourt" = instinct of long-term
"In respect of the land of our children" = Sustainable Development”

68 Individual and systematic functions / specialized functions

“This systemic approach concerns each individual in his/hers projects, his/hers functions must be integrated.”

“Gone are the days when one was responsible for the quality, another in productivity, another security or another of the environment or other human relations.”

67 Awareness of all that the own interest is related to the collective interest / give and take

ICO's picture

FAVI's management model sheets

66 All eyes look on the outside / all eyes look on the budget

65 Very high reactivity to the environment / inertia, but compliance with budgeted targets

“We all know the examples of regular cheating, highly prejudicial to the company, to stay within the objectives imposed!”

“The only goal we have at FAVI: "Always more and more for less for each of our customers, Hallencourt, in respect of the land of our children" allowed us to lower our prices in 20 years! No budget would ever have predicted that!”

64 The boss has the BALL / The boss is at the top

63 It is the customer who pays us / It is the employers who pay us

“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 "employer" encourages this approach that the boss pays!”

62 Power of the customer / power of the boss

61 The outside rules / power from the inside

Note: this sheet shows in detail the four organizational types of Jean Christian Fauvet.

ICO's picture

Eh voila: Organigramme du Système FAVI

Actually FAVI does have an organizational chart. And somehow it does look familiar, but I am sure I haven't got seen such an org chart elsewhere...

The second chart shows a clusterization of four company types, the description of the graphs are power from the inside (vertikal) and power from the outside (horizontal). According to FAVI, "L’entreprise HOLOMORPHE" is the correct form in complex networks. FAVI aims to reach this state.

60 Power from the OUTSIDE / Power from the INSIDE

“Everything is out!
Unfortunately, most organizational charts are a picture of a huge inside, with no formal entry or exit, like a huge “estomacqui” which would be sealed at both ends: neither mouth nor ...“

“It is quite ironic that we made this organizational chart of the Favi system, placed on the boss at the interface between the outside and the inside to help prove that his role was to hear at the same time the signals from the outside and from within to better try to bring in from outside.”

“[...] at Favi the reserved parking spaces closest to the door are those of the client while the leader in principle and humility, parks like everyone else where there is room. And if he/she arrives late, everyone will see as he/she will be there, at the end of the parking lot.”

Link to both charts: http://www.favi.com/download.php?fich=management/systeme/60.pdf

ICO's picture

FAVI's management model sheets

59

“ [...] there are no KPIs in each mini-factory!”

58 The Management committee wanders around / the Management committee is only informed by reporting

“There is the balance sheet and monthly operating throughout the organization in all details, and only details.”

57 The "Boss" does nothing / the "Boss" has his/hers reserved playing field

56 Period of initiation for new / hiring process

Note: this sheet describes in detail the initiation process at FAVI

55 Finding Outcome / monitoring activity

“The good trader is one who moves back slightly but brings back the creation of
most profitable jobs. He helps people to see their own performance [...]”.

“Behind the control of the activity, there is always the concept of power. Power of those who set goals for activities. Power of those who control the activity. Power of those who punish.”

54 Lotto / Lottery

“The lotto is a game where everybody wins a little bit and nobody dreams!
The success of the lottery is that few people earn, but they earn very large and therefore the world dream of winning big.”

“This rule is one of the cornerstones of our system and any leader who propose a principle of motivation based on the lottery knows in advance the name of consistency of our values, that this proposal would be rejected in principle.“

53 Making money without knowing how / Loosing money by knowing why

52 The boss is recognized (or liked) / The boss is feared and respected

51 Search for friendly consensus / relationship based on giving

“Each mini-factory, led by its sponsor and the productivity of its leader is
therefore a working group to prepare the investment budget. “

ICO's picture

FAVI's management model sheets

49 Approach consistency uncontrolled / Approach inconsistency but controlled

48 Play on the emotional / play on the Cartesian

47 Soft and fuzzy / clean and hard

46 Leveraging awards / leveraging penalties

45 Simple messengers that are calmly though solid values / special knowledge

44 The primacy of values and respect / Respect for laws and rules

43 Dreamy / Factual

42 We take care of problems that exist / We are responsible for what might happen

41 Imperfect measures / perfect actions that would never exist

40 measures are not time-limited and non-perennial / measures are limited but perennial

ICO's picture

FAVI's management model sheets

39 (2) Enterprise Y

Note: the notion Enterprise Y refers based on Douglas McGregor to an organization based on Theory Y.

“To return to the company "Y", this company is certainly on a budget, just to mark the future, but we do not hesitate to modify it if the consumer happiness turns suddenly, we do not hesitate to burn it if a September 11 like two towers go up in smoke!”

“Enterprise "Y": In this endeavor, there is no Management Committee, there is no HR department, there is no middle management, no planning, no computer-based production planning and steering*, no purchasing department, no Technical Director, no production director or production framework, no clock and no bonuses, there are: Center: the shared values that are the modern translation of the ancient notion of the common good!”

* French: GPAO: Gestion de la production assistée par ordinateur

39 Métaction (sheet No. 76) / Anact (sheet No. 77)

38 Make up / wanting to foresee all the consequences of ones actions

“In a world where the desires of consumers are more uncertain and unpredictable that the time is, like the farmer who plows, sowing or harvesting in terms of daily time, "to go." To go is to exploit all the possibilities of ones tangible and intangible environment to adapt.”

37 Recovery of fragilities / recovery of forces

36 Emotional Visions / objectives

35 Cultivating links / contact

“We prefer to cultivate links between the operators and the commercials, which is the most vital link of the company (in fact most are addressed informally by commercial operators), but also between operators and customers of course! Outwards so it is important to develop links with suppliers, governments, policies ... .. anything else outside without which we could not live.”

34 Management by intention / management by controlling

33 Long-term thinking preferred / short-term thinking preferred

32 having an essential (noble cause) / having rules

“Our essential to us for over 20 years is "Hallencourt. Always more and more for less for each of our customers in respect of the land of our children in Hallencourt." That is our credo.”

31 Plural / singular

The "round" company is systemic, therefore manage both the safety, health, comfort, quality, environment, productivity and so on. The "square" company increased the powers for each of the sectors and as a result following is a unique blend, because they want power superior to the others.”

ICO's picture

FAVI's management model sheets

30 Outcome / Activity

“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.”

29 Common sense / logic

“Common sense is one of our core values, surely the most important value in terms of quality and productivity.“

28 Micro breaks / fear of change

“In an uncertain world where everything, even in the staff, is linked to whimsical needs of the consumer, you must continuously monitor and adapt to these developments out of our bed habits by micro ruptures.”

27 Allow random opportunities / claim random control

“If we want to survive, we must adopt a structure where everyone has an antenna and is outward in order to adapt to market developments.”

“The greatest productivity gains we have made are very often the result of a reflection made by chance by an operator of production.”

“In addition, we "go out", we especially encourage all operators to "come out" to multiply the chances to meet "accidents"!
In "post" the accident made us discover the fabulous track electric motor's high efficiency; In "post" we discovered most elements of our internal culture.”

26 No notion of risk / search for zero risks

25 simple rules strictly applied / implemented without complicated rules equity

"The sense of fairness is not born of the rigorous laws, but the rigor of their application," said Seneca. We say that this is true and can not apply a rule fairly complicated, which is why we only have simple rules.”

24 AND / OR

23 Fair or equal / fair and equal

“It is egalitarian that we all have the same incentive, but it's not fair! However, nothing prevents each of us to help his partner who is less productive than average, so that really deserves its incentive. This rule seems simple and yet it is one that is most responsible for the consequences. If you put your finger in a supposedly fair and equal, one is inevitably led to a Sovietization of the system, and we pass imperceptibly complex reactive system still complicated system.”

ICO's picture

FAVI's management model sheets

22 Complex System / Complicated System

21 We want to win in the progress of each / We want to save money, control costs

20 Outcomes of the results of happiness / Outcome of goals

“The result can not be a goal!
It is necessarily the result of something else. And inevitably the result of something else within the realm of fun, happiness, why not, a form of altruism or self-interest.”

19 Search performance by the happiness of everybody / Seek performance by the structure

“There is no performance without happiness.”

“Then before attempting to play Happiness requires that leaders are aware of what already makes us unhappy, to know that generally are either past problems, or the fear of the future, but rarely present. This requires that their leaders have the intelligence to exploit the past and secure future.”

18 Everybody knows the strategy / the strategy is reserved for the Board of Directors

“The strategy for us is a proposal for actions to follow these successive over a maximum period of one year. The strategy focuses on "why" and "who" 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.”

“[...] we use this presentation, which is set each year collectively with the leaders and sponsors productivity, then presented and commented to operators of each mini plant during a special meeting hosted by the trader and the leader, and displayed in each mini-factory for the reminder of the strategic coherence of the actions of the year.”

17 Each is the author of its progress / Each player is his/hers actions

“It is difficult to be an actor in a play written by others.
We all wanted to hear Mozart directed by Mozart, Beethoven directed by Beethoven, Vivaldi, and primarily led by the Red Priest! The only way to make the author's daily operator for its actions is to the freedom of How, in the framework of values both strict but that saves space for freedom.”

“Let us beware of the authors who write pieces for others. Almost always this comes with a taste of power for power, or the sake of personal interest at the expense of the collective interest, even at the expense of the interests of the client!”

16 Man is always seen as good / Man is systematically considered bad

“One of the first things I did in 80 years 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.“

Note: in this sheet is Theory Y from Douglas McGregor explained and it is refered that FAVI is based on Theory Y / McGregor's works.

ICO's picture

Et viola: l'entreprise ronde

Hi Niels, I also think that FAVI is one of most mature and significant cases that I found. I just came upon FAVI's version of the graphic comparision between the "command-and-control" model and the FAVI-way. I acually thought of making my own graphic but I think any foreign version will loose the original French charm :-)

15 Focus on why, the who / focus on how

the square enterprise

- Primacy of HOW
- The head authority
- POWER from the INSIDE
- Men: 'bad'

the round enterprise

- Primacy of WHY, FOR WHOM
- authority of the CLIENT
- POWER from the OUTSIDE
- Men: 'good'

English translations of the round enterprise notations top to down:

CUSTOMERS
Flow of parts
Trader
Sponsor
Productivity
Leader
Flow of information and the affective
MINI PLANT
OPERATORS

"We had up to 8 hierarchical levels in the plants on
they "who derive their power to control how". Nobody knows why or even where you are going and who becomes generic the client. While that is true for his/her client, each client. That's why we broke the plant into 22 mini-mills, to date, with each is attached directly to the client, and receives directly from his client without interim orders on a daily basis and who, knowing full well what they work, are free to organize their production.
Each mini-factory is autonomous and decides to leave its leader, the RTT of number of teams, working at night etc.. and thus is directly responsible vis-à-vis his client. It is through this system that we have never been late for 22 years."

"Round in the company there are two streams:
- The flow of parts which is managed directly by the operators without any intermediate (start planning ...) so that we have
never late for 23 years
- The flow of information and the emotional which is managed by the beginning or which is also the sponsor (godmother) productivity. Of course all the traditional functions exist but are fully managed and directly in connection with each client by:
- The leader who acts as the staff (management of increased regulations and schedules, holidays, teams ..), responsible GPAO (seizure daily work orders, entering what he wants and the operator indicators it wishes in the panel offered by the system based TPM on a house), responsible for purchase of consumables,
manager of its investment budget ... etc.
- The merchant or (e) prospected, is seeking the ranges
component suppliers or subcontractors, chooses packaging,
carriers, is project manager at the end of the standards and, on a daily basis, is "enter the inside out" by putting the operator as much as possible in contact."

View the picture here on the second page: http://www.favi.com/download.php?fich=management/systeme/15.pdf

ICO's picture

FAVI's management model sheets

Find here great quote's from FAVI's management model sheets:

14 To be happy one must be responsible / only the elite has the right to have a project

“There is no happiness without performance to be happy one must be responsible to be responsible, it must be free of the "Comment*" because after all, and this is one of the basics of Kaizen”

“Why only the elite has the right to have a project?
Why everyone in the company, whatever his/hers function, has this right?”

*FAVI refers with “comment” to the chain of command

13 The performance comes from the workers / performance comes from the structure

“What is the major player in the management of uncertainty?
Obviously the person who is in tune with the market, which is "to face "with the client: the lady at the counter or on a machine operator which has to adapt its production to instantly what the customer wants! The structure is detrimental to this face to face because it slows the transmission of information
the desire of the client to the operator.“

Note: in this sheet FAVI sees the worker as the most important success factor.

12 Act for 1 day, think of 20 year / act for one year, think for 5 years

“In the “square”* business, a prisoner of the annual budget, major tool of the control of future, all actions are bordered by this budget and are planned on a YEAR! And anything that is not budgeted may not be!“

“We believe that action must be taken every day to adapt to this, but against by one should not limit his thinking to the framework of the classic five-year plan but to think much longer term to see the possible developments.”

*In FAVI's word's the “square” business represents the command-and-control management model

11 Adjust to the present / control the future

“Remains that the essence of Anglo-Saxon management is to try to master a future is unknown. We FAVIENS we are more simple. We believe that there is no future without this, this may shape the future and should therefore be observed, to adapt continuously to the present to effectively prepare for the future. We find the same phenomenon: the power of the oracle on worker. We believe that the power of the worker is much higher than that of the oracle because it is the worker who feeds the oracle and not the reverse.”

“Adapting to this does not mean do not worry about the future, but it must be make a pragmatic acting as the mouse (see History of the small bonhomme attached) and not by morfondant reflections sterile forecast.”

10 Management of uncertainity / Management of certainity

"The world is uncertain. Life is uncertain!
Obviously! So why the manager always want some?”

"Yet some still claim a sudden five-year plans, of
business plans, annual budgets, anticipate the future and want a manager in the sure."

"The characteristic of our system "FAVIENS is that we voluntarily make uncertainty an adventure, a celebration."

"We have a budget that allows us each month by comparing our
results to those provided to ask ourselves some questions, but not is this budget is an imperative guide."

"It is important that any company has its branches outward to anticipate particularly the opportunities and analyze the earliest possible developments to detect external affairs, to do, but also those that do must not do. In the management of some people clinging to the forecasts so that it arrives
lecture to be when the results are superior to those provided! In this context management of uncertainty, it is essential that the leader does nothing. He has no background noise to hear the weak signals field that will boost inward so that we can analyze and exploit them.”

Niels Pflaeging's picture

FAVI case

Hi Sandra, great you found that case. It is truly remarkable. I hope we will at some point learn more about where the company or Mr. Obrist got their inspirations from. The website indicates that they have a very good understanding of the underlying human nature assumptions, for example: They cite McGregor, explicitly... and the whole model they have is neatly written up in a collection of "sheets". It´s thus one of the few companies we have found that has described its own principles, in detail. In fact, if you look at their management model "sheets", you will recognize many of the Beyond Budgeting principles rightaway. They are even coined in the same "do this, not that"-fashion in which the Beyond Budgeting principles are written up...
Anyway, the addition of FAVI to our pioneer case list is quite significant, I think.