As a leader, I have been on a LEAN journey for a number of years. But it was only within the last 12 months that I have been exposed to the concept of LEAN accounting. As my interaction with other LEAN leaders has intensified, I have started to ask the question, “Are you doing anything with LEAN in your accounting area?” And, almost without exception, the answer is “no,” or “not yet.” However, this isn’t surprising, as had you asked me the same question just 6 months ago, the answer would have been identical.

My role at Cambridge is unique in that, as COO and CFO, I have a leadership role in both operations and finance. In the world of LEAN, the operations folks are generally the most rapid implementers. This has been true in our case, and most of my LEAN learning has been on the operations side of the business. However, once I was exposed to LEAN accounting, it became clear to me that, absent considerable leadership changes on my part, I was going to quickly become a liability, vs. an asset, in our LEAN efforts. The reality is that any LEAN journey that does not include the accounting and finance areas of an organization is bound to be severely limited in its ability to deliver on all of the wonderful promises of LEAN. The experts in this area like Brian Maskell, Jean Cunningham and Orry Fiume are all passionate in their pointing out that traditional accounting does a poor job of accurately reflecting a company’s financial performance. And that when a company decides to truly embrace LEAN principles, the financial executives are frequently not prepared for how these principles will impact their areas of responsibility. However, this lack of awareness is not the worst part. They point out that the lack of preparedness in the accounting and finance roles will actually HINDER the pace and effectiveness of any LEAN initiative within an organization. So, the obvious question is “Why?” Why do financial executives so frequently find themselves following, rather than leading, during a LEAN initiative? Has your company implemented LEAN in the finance/accounting area? If not, why not? This is intended as the first of a series of blog posts that consider the leadership characteristics that, I believe, are required for a financial executive to move from following to leading a LEAN transformation. Or, at a minimum, if not leading, then acting as a key participant in a LEAN leadership team. First up in the next post…HUMILITY.

Our organization has embarked on an employee engagement path that has literally caught fire throughout the company. Several Cambridge Engineering, Inc. production managers embraced the LEAN philosophy espoused by Paul Akers in his book, 2 Second Lean: How to grow people and build a lean culture. Our production team’s focus from the beginning has been on training people how to think differently. Many sophisticated books have been written on the LEAN topic. Paul’s book is not one of them. Paul details a path towards employee engagement that everyone can understand. As leader of the sales team, I have watched the trans-formative power of a LEAN mindset with our Ops team and have been inspired to apply this thinking to my life.

While our operations team has a head start in embracing these teachings and this thinking, there is a powerful message at the very beginning of the book that applies to all leaders that are considering the necessary strategies and tactics to grow their business, grow their market share, increase pipelines, improve closing ratios or improve processes and flow in their organizations. Growing our businesses success starts with growing people. Growing our business success starts with you and I growing. 1.) Humble Myself - Despite what we might think sometimes, we don’t know everything. There are literally thousands of people that are smarter, faster, stronger, more creative and more eloquent than we are. Don’t let my success lull me to sleep. Know that everything can be improved upon, each and every day. The first step towards growing is accepting the reality that things can be better, that you directly influence growth and that in order to grow, we must change how we think and how we act. We must humble ourselves in order to grow. 2.) Focus on Me First – if 90% of what we do every day is waste, then start to break down our own daily, weekly, monthly activities and work on those things that will help us to be more efficient, productive and positive. Kill the time wasters, use the time wasted on impact activities. Living a LEAN philosophy personally is the greatest outward example to demonstrate our commitment to it. 3.) Focus on Momentum and Activity - Quality activity drives quality results. As we reported during our AHRI year-end breakfast meeting with our Representative partners in Orlando this month, there is a direct correlation between quoting activity levels and 2015 sales performance levels. Our top quartile performers quoted our equipment 2x as often as the 2nd quartile performers and delivered four times as much revenue to their organizations. Proactive selling and proactive education activities put our sales force in more of the the project conversations. 4.) Tap into the Resources that are available to you. Are you plugged in? Are you deeply engaged with those people that could most influence your positive outcome. Are you meeting more inside your office, or outside of your office? Cancel your inside meetings and double your outside meetings and watch what happens with your network of connections, customers and influencers. Our Regional Managers travel into our Representative markets and we expect them to deliver value to our sales partners through proactive selling, educating and modeling. Our technical sales advisors and engineering applications support teams get granular with our Representative partners to create customer solutions. We welcome our partners to tap into our human genius to help them grow their business. 5.) Find a peer group that will share best practices and challenge you to be your best. This is a repeat of number 1. An admission that improvement is possible requires one to be humble. Others may have insights that could assist you on your growth path. Give and receive experiential input for improvement opportunities in your business. If you cannot find a peer group, start one. Find those successful business leaders that you respect and trust and extend a hand to get your group started. At Cambridge Engineering, Inc. we count on our Representative Advisory Board to provide candid feedback on industry, organizational and tactical direction. This eleven member board is comprised of bright people that we learn from at every engagement. What worked for us as leaders in the past, may not necessarily work for us in the future. Many things change in our industry every day. Join me and take that first step of admission that it is possible to improve what we are doing as individuals. This step will free our minds to look for great improvements that are right in front of our eyes every day. Our modeling of this continuous improvement commitment mindset will motivate additional believers. The first step in humility is best step we can take to grow ourselves, our people and our businesses.

Manufacturers of direct gas-fired heating equipment make different, and seemingly conflicting, claims about the efficiency of their equipment. Some claim 92%, others claim 100%; so which is accurate? Actually both numbers are accurate, if you understand the context for the claims. There are two terms used when referencing the efficiency of gas-fired equipment: combustion efficiency and thermal efficiency. Understanding the basis for those terms will help you to better understand how to apply this equipment. Combustion efficiency is a measure of how effectively the heat content of the fuel is transferred into usable heat. With direct gas-fired equipment, since there is no flue, all of the energy generated from the combustion process is transferred into the space being heated. In that sense, the direct gas-fired equipment can be considered 100% combustion efficient. However, not all of the energy from combustion produces sensible heat, or heat that can be felt as a temperature difference and is applicable for offsetting the heat losses in the building. Another byproduct of the combustion process is water. The heat required to vaporize this water is referred to as latent heat. Approximately 8% of the energy from the combustion process is used in the vaporization of water. In that sense, the direct gas-fired equipment can be considered to have a 92% thermal efficiency. While the latent heat is not considered usable for convective heating, it can be considered beneficial. The heating equipment is operating during periods when the outside air is colder. The colder outdoor air has less capacity to hold moisture, which results in lower specific humidity conditions (i.e. drier air) both outdoors and indoors. This is why many people use humidifiers indoors during the winter. The water vapor from the combustion process increases the specific humidity of the air delivered to the building through the heater. Since most buildings without other sources of moisture indoors have lower humidity levels during the winter, the additional water vapor from the combustion process can be beneficial to the indoor air quality conditions. There are currently no standards for testing nor agencies certifying the efficiency of direct gas-fired heaters. The American National Standards Institute (ANSI) specifies in standards ANSI Z83.4 and ANSI Z83.18 that the conversion from sensible to total heat for direct gas-fired heaters is 0.92 (92%). This is based solely on the chemistry of the combustion process, since there are no other losses. So is direct gas-fired equipment 92% or 100% efficient? The answer is…Yes! It just depends on how you define it. If you have any questions or need to provide documentation on the efficiency of direct gas-fired heaters please feel free to contact the Applications Engineering department here at Cambridge and we will be happy to help.

What is a net-zero building? Basically it is a building that creates as much renewable energy as compared to the Delivered Energy it uses. By this I mean the amount of electricity and natural gas that is provided by local utilities or the Delivered Energy that is tracked by some type of meter and that you don't physically create yourself. This Delivered Energy is compared to the renewable energy that you do create onsite (solar, wind, hydro, etc.) and the net difference is equal to or less than zero. Depending on where you are located throughout the U.S. this can be difficult to achieve. Northern states that require more Delivered Energy to heat their buildings in the winter months may find it difficult to achieve net-zero. The amount of sunny days and their physical structures may not provide the environment to have enough solar panels and sun to generate the needed renewable energy to offset the Delivered Energy. And don't forget...those locations that have second and third shifts are going to be consuming delivered energy without the ability to generate renewable as there is no sunlight at night.

So what is the solution?

One key component to help reach net-zero in these types of scenarios is to use the most energy efficient products available. Products that use less delivered energy will in turn require you to create less onsite renewable energy. This is where technologies like LED lighting, High Temperature Heating and Ventilation (HTHV) heating solutions, Energy Recovery and other energy efficient products can play a critical role in the net-zero puzzle. The higher the efficiency the product the easier it will be to reach net-zero. And in buildings that consume large amounts of delivered energy the higher the efficiency they are the better. So for those organizations that are looking to achieve net-zero is will be important to look at the entire picture. It's not as simple as putting some solar panels on the roof and a few wind turbans on the property and hope you generate more than you consume. You need to take a holistic approach to the project by first reducing the amount of delivered energy consumed which will make it easier to offset it with the renewable energy that you create. To learn more about the energy efficient HTHV technology read the U.S. Department of Energy's study, "Field Demonstration of High Efficiency Gas Heaters". Let me know what your thoughts are on achieving net-zero. I look forward to your comments.

We are all consumers. We love the opportunity to get a great deal on a product that we value. Whether driven by a specific need or just a desire to improve our lives in some fashion, we want to make sure that we get the lowest price we possibly can balanced against the key value points we are trying to obtain. Without a clear definition of what is valued the most in a product purchase, cheap pricing carries little weight in evaluating our alternatives. I happen to be a sales manager and a business developer for a U.S. based HVAC manufacturing firm that serves the North American new construction and energy retrofit markets. As you might imagine, there are a wide variety of options to choose from when selecting an HVAC system. The companies that I compete with have long-standing manufacturing histories, well developed relationships and varied product lines that meet very specific customer needs. With such a wide variety of options available, it becomes important to clearly define the bases for an HVAC equipment purchase decision:
  1. Base Line Minimum Requirements
  2. Value Added Requirements that can enhance a building’s performance and your relationship with the customer
  3. Value Added transformational elements that make life better
I would suggest to our end user, engineering and contractor customers that making the right decision on a commercial or industrial HVAC system starts with a thorough detailed list of what is most important prior to comparing price. Your list will allow for an apples to apples comparison of choices. In our industry, we often hear that equipment pricing drives the decision-making process for contractors seeking a building project win. We know that equipment costs are typically one-third of the cost of a particular heating/ventilation system installation. Two-thirds of the total cost of install are typically wrapped up in installation, margin and risk assessment for a system installation. Comparing total system costs is not as easy when there are so many contributing factors. Here is a list of key questions that may be helpful in fully understanding needs:
  1. How many distinct HVAC systems must be installed to meet a customer's needs?
    1. Heating
    2. Cooling
    3. Ventilation
    4. Destratification
  2. How many different pieces of equipment will need to be installed?
  3. How many gas lines must be run to serve each unit? How far?
  4. How many electrical runs are there to serve each unit? How far?
  5. How long does it take to install/startup each system? each unit? # of labor hours assigned?
  6. How many people are required for installation/startup?
  7. How reliable/durable is the equipment based on experience?
  8. How easy it is to obtain service support in the field?
  9. What is the length of the equipment warranty, the parts warranty?
  10. How important is on-time delivery for project management?
  11. How fast do you need the equipment on site?
  12. What are the lead times to meet deadlines and key hurdle dates in conjunction with other envelope installations, e.g. new roofing?
I would propose that total system value as opposed to first cost of equipment is more important in both the short and the long run. Avoiding the unseen costs that lurk below the surface (The Priceburg) of cheapest first cost often delivers a superior result to the customer/end user as well as the contractor. Contractors that desire to compete on their total value proposition with highly engaged manufacturing partners are more likely to build long-term successful relationships with clients. The reason the statement “you get what you pay for” exists in our vernacular is because many have experienced the reality that cheapest can be the most expensive. I would love to hear from you regarding your experiences with the lure of a manufacturer's “cheapest” claim and any resulting challenges.

Have you ever received a request to include an HVAC smoke detector with Cambridge heaters? Typically, engineers or building inspectors will make this request, interpreting building codes to require an HVAC smoke detector be installed on any air handling system with a capacity greater than 2,000 cubic feet per minute (CFM).

Why Cambridge Systems Do Not Require an HVAC Smoke Detector

The requirements for needing an HVAC smoke detector are clearly addressed in Section 606 of the International Mechanical Code (IMC), This section covers the requirements for utilizing an HVAC smoke detector for air handling equipment, and states: 606.1 Controls required. Air distribution systems shall be equipped with smoke detectors listed and labeled for installation in air distribution systems 606.2 Where required. Smoke detectors shall be installed where indicated in Sections 606.2.1 through 606.2.3. Exception: Smoke detectors shall not be required where air distribution systems are incapable of spreading smoke beyond the enclosing walls, floors and ceilings of the room or space in which the smoke is generated. Cambridge units fall under this exception, as our systems use only 100% outdoor air to heat and ventilate, making them incapable of spreading smoke beyond these parameters. The IMC Commentary provides further explanation on the intent of the code: It is not the intent of Section 606 to require duct smoke detectors in systems that function only as exhaust systems or only as makeup air systems. A makeup air supply system that discharges 100-percent outdoor air into a building does not withdraw air from the building and, therefore, cannot contribute to the movement of smoke. It is more important to keep in mind the intended application of Section 606, which is to address the potential hazard caused by ducted air distribution systems that link together rooms and spaces within a building, thereby providing the means to distribute smoke to such rooms and spaces. Air-handling systems of any type that cannot transport smoke beyond the area of fire origin are exempt from the provisions of this section.

Since Cambridge heaters are only used as 100% outdoor air systems smoke detectors are not required.

Question: Have you ever been required to include a smoke detector on a Cambridge unit?

If you've ever worked for a company where employees are truly embraced, you've most likely felt the significant difference this can make. A culture that thrives on positive relationships not only helps staff through hard times, but it also allows them to soar wherever opportunities arise. The recipe for success is by no means simple, but company activities play a key role in holding the team together, and in building a great company culture.

Over the past seven years, I’ve been convinced that the Activities Planning Committee is one of the coolest teams here at Cambridge. They plan everything from Chocolate Covered Strawberries at Valentine's Day to the Christmas Brunch in December, and everything in between (including, just recently, the Fall Festival). While my personal strengths are not in this area, I have come to appreciate the significant impact this team has on the overall Cambridge culture. Some of the reasons I believe company activities are impactful:

Company Activities Encourage Relationships

Everything is accomplished through people, and more specifically, relationships. The stronger the relationships are internally, the stronger our external relationships with clients and partners. The bonding that occurs outside the corporate setting plays a major role in getting to know one another on a personal level. And as it allows employees to see one another as more than just coworkers, it helps resolve conflict as well. Whether it's by playing basketball, throwing washers, or going on a hayride, taking time outside the confines of the standard workday can strengthen relationships.

Company Activity Planning Encourages Teamwork

Not only do company activities benefit the employees and families who participate, but they are also a great way to build teamwork. When the group plans and executes the event, each individual has the chance to take on a leadership role, and to contribute to the team.

What the Family Thinks Matters

Activities that include employees’ families have proven a great addition to the Cambridge culture. The core belief that we are strengthening the family, and not just the individual, is a central part of this involvement. When things get tough, the family functions as part of the team, and consequently supports the employee through the challenge.

Company Culture

Activities are material ways in which to reinforce that the company cares. Saying you care is not enough; you have to demonstrate your dedication. Cambridge has incorporated Care into its core values, supporting activities both with both time and money is a way to promote this core value. When employees share how they feel about their work with their friends, they can point to these demonstrations of care, and feel proud to be a part of the organization. Company Activities are a major part of solid company cultures in that they help build relationships, encourage teamwork, strengthen families, and demonstrate that the company cares for its people. These activities are well worth the investment. Question: What is your favorite company activity?