What is the summary of the Oz Principle Chapter 6?

This chapter discussed the Scarecrow Principle, which means obtaining the necessary wisdom to solve problems within a business.

First discussed is Toyota. Although described as one of the most efficient companies in the world already, Toyota continues to reorganize, placing future efficiency before current profit. Similarly, Ann Taylor, the clothing company, has been exponentially increasing profit by making cuts to designs and fabrics used, thanks to executive Joseph Brooks and designer Frame Kasaks.

Robert Frey,...

This chapter discussed the Scarecrow Principle, which means obtaining the necessary wisdom to solve problems within a business.

First discussed is Toyota. Although described as one of the most efficient companies in the world already, Toyota continues to reorganize, placing future efficiency before current profit. Similarly, Ann Taylor, the clothing company, has been exponentially increasing profit by making cuts to designs and fabrics used, thanks to executive Joseph Brooks and designer Frame Kasaks.

Robert Frey, president of a company called Cin-Made, realized he needed to change the hearts of his workers to make his company successful. He increased personal accountability for improving production and efficiency in each sector for all employees.

Michael Eagle, president of IVAC, was behind on production of a medical instrument shipment. He asked his employees to help him brainstorm the best way to get things done on time. They completed production ahead of schedule but then could not if the products to the hospital in time because of the holiday rush. When a worker made a joke about renting a Learjet, the president agreed and did just that. When they were loading the jet, they discovered that the product would not fit and immediately had the workers re package each of these shipments. The shipment arrived at the hospital on time, but the employees who were to train the new users at the hospital had become stuck in a snowstorm and had to drive all night to make it there in time. In the end, everything worked out for the best because the president knew how to deal with crises. 

People tend to be discouraged by crises and not try to figure out how to solve these problems. Michael Gilbert, the store operations vice president for a department store, discovered that changing attitudes is a start but not enough. Managers needed to stay above the line consistently to solve problems. 

Other examples include recent textbook companies having to make changes to online and computer sources, rather than printed material.

A final example is General Electric's exploding coffee makers. After the company suffered from continual issues with their fuses, they had unwittingly started many house fires which destroyed the homes of their customers. General Electric sold their coffee maker brand to Black and Decker, which simply added a fuse and solved the problems. 

The book describes the skills used to react to a crisis:

1. stay engaged 

2. be persistent 

3. use a new paradigm 

4. create new linkages 

5. take the initiative 

6. stay conscious. 

The benefits to the Scarecrow Principle are that businesses can stay above the line to solve problems using wisdom that they already have.