Natan: We have with us Joachim Hensch. Welcome to the show. Great to have you. Hi, 

Joachim: Natan. Hi. Nice to 

Natan: see you. 

Yeah. I'm jealous because I'm at the office and you're in Italy on Lago di Garda. Life is not fair, but we'll persevere. 

Joachim: Next week I will be in Sri Lanka having a week of consulting and sneaking a little bit job into holidays.

Natan: Oh, good. I would love to hear what's going on in Sri Lanka. It's a country I haven't visited, but I've been reading a lot about. 

Joachim: You should. 

Natan: Yeah, I heard they have good diving there. So that, to be honest, that's the thing that was interesting to me. But I also heard there's a lot of manufacturing.

We met in 2016, and maybe we'll tell a little bit about that meeting. But really, the title we can give this episode is like a Dickens book title, from a tailor to digital manufacturing leader, yes, strange journey. So you ran Hugo Boss largest production sites in Izmir, in Turkey. But maybe like before we get into it and like our meeting and where we intersected, like how did you get to run a Hugo Boss factory with 4, 000 people? What is that all about? 

Joachim: Yeah, that is that is the desire to combine creativity with leadership. I started as a tailor by myself and I always wanted to have my own tailor shop in 1984, so quite a dinosaur, so to say. And then being in the industry, I felt like this was a good opportunity also to be creative on scale. And then later when doing this for a couple of decades, I realized that Creativity is not only in the product, but creativity is also in creating organizational setups, creating organizations to actually create something, to manufacture something.

So I started to dive deeper into leadership and into building people and organizations, went into a business school again, and then in 2015, I got the chance to become. Managing director of this factory in Izmir. I must say, in 2014, I went to see a masterclass, a three day masterclass about leading the factory of the future.

And that was my first time when I learned something about industry 4. 0. Where was that? That was at the Siemens factory in Amberg and learned back at the Fraunhofer Institute. Yeah. And that for me was like a lightning strike because I thought okay, this is exactly what the industry is missing, especially our industry, which is so full of manual.

And labor intense and undefined and unstructured jobs, millions of people globally to do doing that. And I thought, this is exactly what we need. So I ran into the office of the board, said, listen, we need to think this through. And one year later I got the chance to actually do this, so I became managing director.

I went to Turkey and I explained this to the CEO, what I was going to do, talking about industry 4.0 and such. And he said. Dear Mr. Hensch, if you have everything done in cost and in quality and in the right timing and still have time for this technology whatsoever things, I will not stop you investing into this.

And I took it as a goal, I thought okay, you know what, I'm 51, so what the hell, they will not shoot me. Maximum, they will fire me. 

Natan: Or they put you back on the sewing machine to make a few suits, right? What's the worst that can happen? 

Yes, exactly. So I thought, I'm going to do that.

And certainly people at that time said, you're crazy, because no one has done this. The machine supplier said, you're the only one asking for machine data. Software was not there. We can talk about this for long and later also, but it was a kind of crazy journey to start as a tailor, being creative in products.

And then becoming a managing director, being creative and building organizations. 

That's a great arc and also sets up my next question because, people come to the operational leadership for many walks of life, but coming to this like with this sort of visceral understanding of the art. Of what is this product all about?

And of course like when it comes to the research and development part, it's different. But like when you see that, sometimes the art and the design, like in luxury goods, you see it as well, right? You have people who are amazing jewelers. And they work in atelier and they have this studio of method and.

But they actually live in factories, because they produce these goods and comes with a lot of tradition and also comes with different elements of how you scale something like that so talk a little bit about how being so close as Can I call you an artisan or like how do you know? It's like with this type of skill in your hands and your eyes and brain.

How does that inform how you think about operations? 

Joachim: Yeah it's funny because when you, when I started as a bespoke tailor, I didn't know anything about single piece flow and lean and whatever, and what not. Kaizen and– 

Natan: What did you know? 

Joachim: What I knew was I have exactly one customer and I can please this one customer.

So I literally did a one piece flow. I knew I have one customer, I have one expectation of quality, I have one person to make happy and then my business is running. And there's a hundred percent relationship between the customer, the product and myself, my skills. So I cannot blame anyone and anything other than myself if things go south, and that was a good learning for me because when you are so clearly confronted with your ups and downs, and you are so dependent. On customer centricity, which today everyone talks about customer centricity and 24x7 services and blah, blah, I have never had a different life when I started tailoring, so that's something that I really learned.

Like I am what I produce in the minds or in the feeling of the customer and he will give me a second order if he's happy with the product. Period. So there's no, nothing to hide or shy away from this. So having customer feedback, learning to, to react fast, understanding the customer's wants and wishes and being precise, consistently precise over the course of 60 hours to produce a suit.

Because again, you have only this one piece that you can deliver. That is something that I learned and that helped me today as well. For example, when I'm now in Sri Lanka and helping a quite analog underwear company digitizing and becoming smarter. It is still that feeling that I have when I see this woman on sitting on a sewing machine that I know how this feels.

Natan: Yeah. 

Joachim: How it feels. If your needle is broken and you have no one helping you if you had not the right work instructions. People are blaming you for right first time, but you don't know how. . So all of this is something that I have felt by myself and that helps me a lot today converting something of this like historical analog, intrinsic know how into something that is available in digital form.

Natan: Yeah, I think they're very interesting, almost cognitive dissonances that you find in the apparel industry. On one hand, and you touched on it, it's on one hand, very manual, takes a lot of human touch and work and understanding the machine and the cuts and that part. And on the other hand, you have massive, large scale weaving machines and printing machines and cutting machines and, because let's face it, apparel– at least a huge proportion of it– we can argue that it's like mass production, as it comes. 

Joachim: Of course it is. Yes. 99%. 

Natan: Yeah, 99 percent mass production. So that's one spectrum of this so called cognitive dissonance. Another one is mass production, yet we all want our clothes and special, and for me, And, e commerce comes into play and customize it and get it to me yesterday and so on.

All those are impacting supply and demand, right? And how people are thinking about the fashion cycle. Let's talk about that for a second and go back to how that informs designing a certain manufacturing operation. But over, say, the past decade, how did this sort of two trends impact the industry?

That's an interesting question and observation and things happening somewhat in parallel. Not only in a parallel, but also in other industries. So we come from a time, if you think about the first and second industrial revolution, then we come from a time when basically we had a one on one connection.

So 250 years ago, you would need a trouser. You go to a tailor, you buy a trouser, you need a pot for cooking. You go to a pottery and you buy a pot. Then comes the first and second industrial revolution and starts to create things en masse. All of a sudden you can, people have not 50 pieces or owning 50 pieces, all of a sudden they own 500 pieces.

So we start to see products focusing on the use of the product. Then comes another step, which is and I'm fast forward looking into the nineties, like last century, the advent of brands. People want to buy something from Adidas, from Nike, from Hugo Boss and whatnot. And people are just anonymous consumers.

And then comes along social media and all of a sudden everyone has a Facebook account, a Twitter account, it's called x. com now or whatsoever account, WhatsApp account. So everyone, no matter a producer, like a speed operator, machine operator on a sewing machine, and an end consumer has a voice. And that brings us back in time.

When a consumer, a brand consumer all of a sudden has a face and that is what people call hyper personalization because now we have the combination of personalized wants and demands with mass production globally to fulfill this demand. So we talk about, look at Shein and Temu and others, we talk about singular items that someone wants, and we talk about an endless supply of products that is available.

That's very interesting and that's changing the landscape completely. And it's also, to be fair, ruining a lot of margins for companies who are only capable of doing mass production, like a hundred thousand white t shirts. If you then all of a sudden have to do a thousand times a hundred t shirts in a hundred colors, the margin is immediately gone for these organizations. 

So I worked in, I'd say adjacent, like sneaker manufacturing and, you walk into those environments and you actually see this, you see like these crazy cutting machines that handle, rolled goods with leather and stamping and heat treatments and pseudo, it's not exactly 3D printing, it's like all sorts of printing technologies.

And at the end of the day, you see people feeding a lot of ovens and clampers and stampers that kind of weld shoes together and testing that, people hold up the shoes and they like look very carefully for every little thing and they have these little, tweezers and mini scissors attached to their tip of their fingers to cut ever so gently.

And it's all about quality and at the end of the day, so human. So now I think we're getting to the meat of it. So I want to guess. It's not necessarily very different, like when you land in Izmir and basically had the conversation that, if I have to reclassify how you describe your conversation with that CEO, it literally it's like a mini chapter from The Goal , from the book.

Joachim: The very true. I know. 

Natan: You know what I mean? So you go to that guy, and that's what the CEO said. It's as long as you give my da-da-da-da, you can go ahead and do it. And you're like the protagonist, you're the hero, and you're like, okay, I'm gonna, I'm gonna do this. So you walk into that plant day one, what do you see?

Joachim: Yeah, in 2015 what I saw was a lean factory. It was a factory that could do perfectly well what they were taught in enough time to prepare. And I said, listen guys, I just had this conversation about leading the factory of the future and I saw a factory from Siemens and I saw so many others and I went to Lego and I saw Volkswagen and Porsche and whatnot.

And what we do here is very well. And unfortunately, there's always a cheaper country, there's always a cheaper manufacturer. So if you think that you can survive with doing what you do just three, five percent better every year, that's not going to work. 

Natan: Did you tell that to the CEO? 

Joachim: I told this to the top management there and I told before to the CEO, exactly that. And he said, that's why they said, you're crazy. 

Natan: Did you tell it to the team leaders? Did you tell it to the operators? 

Joachim: No, not yet. No, that's what, that was different. Yeah. No, I started with the top management because the top management was the first, there were 15 people and they were so proud about what they have achieved and I had to make them vulnerable.

Some people say, my wife is a couple's therapist and she sometimes says like when people start. Crying, then this is the first moment of movement because we lose our rigidity, so to say. I had to make these top managers a little bit uncertain and uncomfortable so that they would even listen to me because there was so much in Six Sigma and Lean and doing what they do that they would not listen to digital transformation and sensors and digitizing people, shop floor operators.

Natan: Let's hold on that point because one of my favorite topics is like How do we think about the evolution of lean and all that kind of stuff? Did you feel rejection to the new ways of digital? You are coming from the traditional way of Lean, so is that a different way to characterize the phenomena you encountered?

Joachim: First up, before answering your question, I want to say that the blue collars, the thousands of blue collars sitting on sewing machines, they were the ones who loved the digitization process the most. Yeah. We can talk about that in a minute. They loved it the most. Because their life changed dramatically for the better. Now, for the top managers, I think something that Lean does is it makes you comfortable in the thought of being in control. 

Natan: Yeah, that the process protects you. 

Joachim: Exactly. You have the feeling like, okay, if only I master everything every year a little bit better, then this is my goal, but some people say it's better to be inconsistently right than to be consistent. And Lean can drive you into this trap of consistently improving something that is not needed anymore maybe. All that is going to the wrong direction. You question not enough. It's not chaotic enough, so to say, so sometimes you feel comfortable and not seeing that that the storm has come.

And that's what I had to do with first with these really brilliant managers. And I'd love to continue working with them, but I had to make them wake up from this, improve what they have to actually see that there is a storm coming and that means not just cost improvement, it means complexity improvement like 10 times.

Natan: Yeah. And it's the irony, of course, here. And then let's talk about those managers and the people and like how you changed their life and what you actually did. We talked about being protected by the process, right? So it's Lean says in many other system dynamic type of frameworks, like you can't improve what you can't measure.

But I guess if like you're only willing to measure a certain way and certain things, you're by definition like blind to some stuff. And the problem like when, fast forward and staying really buzzword free from the industry point on all that kind of stuff. It's like there's just so much data Like are you okay with being blind?

It's like a different way to think about it And that's a phenomenon. I've saw with like many lean folks that because of the lean ways It dictates a certain rate in which you can collect data, analyze it, and process it. It creates certain mindsets of what is the value of the data if it was collected in this way or that way, which kind of is opposed to digital, and very much about the organization as opposed to people themselves.

And that's just a weird anomaly. Yeah, that's actually the change management that like you go to these managers and you had to wake them up how do you wake them up? And why were the operators so excited? What did you give them that made them lean in into this, pun intended to this new digital ways?

Joachim: So I invited every one of the top managers for an upside meeting as a preparation for the budget meeting 2016, which would happen in September. So I started in July and I gave every one of them a challenge and I gave an introduction presentation about how complexity in other industries is rising. And also McKinsey at that time already said by 2025, we will have at minimum double the complexity.

In the business, which means you cannot have the double of people in your offices handling order intakes and whatsoever. This is just not possible. So I gave them a couple of insights from other industries, also from the automotive industry, from other brands like fast fashion brands and such. And then I gave them a task to actually dive into this topic, Industry 4.0, and then we had this two days off site meeting, and in this off site meeting, every one of them had to present one case of Industry 4.0, and they had four weeks to dive into this topic. And in these four weeks, actually they started to see something in it, which they would not have seen because no one would.

Put them to this topic. No one would push them into that direction. So when this offset meeting happened, we had 15 stories about Industry 4.0 cases from other industries and they started to present them and they enlightened themselves. So it started to self burn. There's one Linda Gratton from London Business School.

She says, we have to make people glow. There's a famous book from her. I love this. So I think I started to make these people glow a little bit for this new topic. And then we I decided, I said, okay, now we have 25 or 30 ideas about how we can leverage these technology and these movements, so to say, to make more profit while at the same time increasing the complexity, handling more complexity and increasing our profit.

And then we concentrated on five initiatives. One of them was digitizing the blue collars, the shop floor, and started working around this and built the budget for 2016. Now, tell me about the blue collars, fast forward. Yeah. The blue collars had no idea about the strategy. And even six months, I was six months in the job and I had Gemba walks and I talked about the digital transformation and they looked at me like what is he talking about?

So I realized it didn't trickle down from the top management to the middle management to the lower management. And I said, okay, we have to build an app here. So I went into the, to the head of IT and we built an app. Like a kind of Twitter app so that I could talk directly to all the blue collars every day, every week as I want.

I felt like I have to talk to these people in a more direct way because I can, you cannot reach as a top manager, you cannot reach 4, 000 people other than as in a direct contact and I didn't want to have like endless town hall meetings. So I thought every one of them has a phone and if they have this app on their phone, then it's like a Twitter channel for Hugo Boss.

That was a way to get in touch with them and to promote this idea. But something happened very special. Every one of these operators got a device, a tablet. Because we knew we have to track people data and the machine data and there was nothing available on the market. So we bought 1600 tablets and installed them on the machines where the people would operate into shifts.

And for these people, this was heaven. They were tracking their bundles with the so called DTC data collection system and they had to type in whatever 16 numbers and blah, blah. And with this device, like their smartphone, they just touch, okay, this bundle number 711, you touch 711 and off you go. But not only that.

All of a sudden they got birthday wishes and congratulations. All of a sudden they got invitations. They got invitations for trainings. They got information about what kind of color thread they would need to do when the machine would break. They had a button to push and then the mechanic would come in five minutes.

There was so much convenience for these people to be added to their life that, and this here comes the point, they started to love this device because they were more efficient. That increased their personal bonus and by the end of the month, they could see their money going up. Their wages went up.

Natan: Because they were gold on efficiency. 

Joachim: Exactly, exactly. So that is something that I really learned and I'm always telling everyone. When working with my clients now, if your blue collar workers cannot see the difference, cannot tell the difference, and you're just in implementing technology, they will not stretch themselves for having the boss having another bigger car, no one is interested in the wealth of the CEO.

Natan: Yeah. 

Joachim: Sorry to say, if you're a blue collar worker on the shop floor, it's... If there's nothing in it for you, you can just stop doing this. It's just, it will not come. People are not changing their life if it is not easier or if it increases their wages. It's hard, but it's like this. 

Natan: Joachim, this is an amazing cliffhanger because I think we need to promise the audience we'll do a part two.

Because we're running quickly out of time and this was an amazing story. The part two that we need to do is also how you have transitioned. From being on the front line of this type of work, to helping other companies accomplish that. And I want to suggest that in part two, we will talk about, what have you learned that applies across companies to drive better business outcomes?

What are the strategies, framework, principles, and things like that? And I think this is, going full circle from your story of coming up as a tailor, developing this empathy and respect to the people doing the work, and that informs an organizational strategy that create tools and eventually leads to business results.

So really Joachim, great story and thanks so much for coming on the show and I'll put the links for your new consultancy–

Joachim: Joachim Hensch Consulting. Easy. 

Natan: Okay. That's easy. Okay. And we'll share some of your content there, but I appreciate coming on the show. We'll talk again soon. 

Joachim: Absolutely. Thanks for having me.