Archives for category: strategy

In the book, How to Measure Anything, it is discussed how ranges are more preferable to a target number. I have had this discussion around annual planning time and I get blank stares. What I found was a better way, at least from my organization, to sell this concept and work through it with a team.

When working with a team around annual planning, we look at what the plans were for this year and what has worked and what hasn’t. We look at the gap from plan and last year and discuss what could have been done differently. This gives us some context on what should be worked on. The goal may or may not be known but either way we are focused on misses from last year.

The next step is looking at other opportunities. These are items that have not been covered or based on next year’s products or innovation items and processes that will be changed over the budget time horizon. These are captured with the current gap for further discussion.

Now that all the items are captured, a three dimensional matrix is developed. It is easy to hard, and simple to complex. There can be complex items that are easy because the organization is behind the initiative just as there are simple and hard items because though it is a simple item to fix, the organization isn’t aligned. The image of the process is below.

 

3 Dim Matrix

 

From this exercise the team now has a range of possibilities from Do it’s to moderate projects to major initiatives. This now becomes the range of values that the plan can encompass. What becomes the discussion now, is where in the range does the target land.

Does the target land within the range of values? If not, what needs to change on the financial side to fit it into the range? This can be a creative writing exercise more that hard science but at this point the dollars are a jumping off point anyway.

Does the target in the range but on the side of major initiatives? If so, how can the team makes some of those more doable? Is it by breaking them up into smaller projects? Is there a way to increase the impact of other projects? Is the target not realistic? That is a funny one I put in.

This has been a useful way to get leadership to understand and start thinking about ranges from the historical target focus. This may also giving the team the ability to treat the annual budget process closer to what it really is, an annual guess.

 

 

“The Line always goes down at the X!”. Fill in the blank. How often do you hear this? That the piece of equipment that goes down on a line or in a process is blamed for the downtime or quality issue. This can sometimes turn into a belief or perception instead of actual information. The equipment is a piece of junk or we have a rebuild coming up or its always been this way are some comments I have heard. What I find interesting is that some organizations at one time or another think this is okay or that this response will satisfy customer demand, employees frustrations or shareholders needs for returns.

I look back at my career and wonder if I have had the reaction to things. I probably have, though I can’t think of it. I am the kind of person that focuses on a few items and then I don’t even look at anything else. I have multiple blind spots and maybe that is why I don’t have too many memories of this type of issue. My real concern is how do we get root cause and deeper thought at the level of manifestation to drive to causation and countermeasure. How do we get this type of analysis of the situation at the very level of incident?

What if we give employees the basic knowledge of their job and then 3 more actions:

  1. If your work becomes harder, notice it
  2. Look where the issue is occurring
  3. Is the problem before or during the process

With these actions, they will at least be able to find out if the issue is internal or external to the process. From that, the lead should be able to do the same 3 steps at their level.

This should at least start the conversation on causation.

Examples:

Waitress at a restaurant notices that the meals are coming out late and the customers are getting frustrated. Is their job harder? Yes. Okay, I have noticed this. Instead of going back to the cook and yelling, is there something else that I can notice? Are other people getting their food late? Yes or no or don’t know. Am I picking up my food when it is ready? Am I putting my orders in the right process? May be the ordering process is broken or someone called in sick.

You are at your piece of equipment and jams start occurring. Where are they occurring? They are at the end of the process. What is causing it?

Are there areas where continuous improvement / Lean Six Sigma do not need to be used or shouldn’t be used?

What about a known solution? Is there no risk related to this change? Is everyone aware of the changes? Even if there is a known solution, if it crosses process owners and potential unintended consequences, it is wise to at least review the process, look at an FMEA, Change Management and Control plan.

What about CapEx or buying equipment? Would that need LSS help? Let me ask you, in your experience, how many of these projects have been on-budget, on-time, and SLA’s, service level agreements, are satisfied? I have found that is not the case. Early management, Risk assessment, Widening the options for what to purchase and when are all items that continuous improvement could help with. This doesn’t even include the CapEx process that most companies struggle with.

I started thinking about this idea based on the belief that there are some items and topics that continuous improvement. I now think that there is always a better way and that CI tools can help in any situation. I have had multiple discussions in the companies that I have worked with and almost all of them have had what they perceived as “A players.” They are very capable and smart and know their business but I have rarely seen one of these teams put together a project that produces better results or less unintended consequences than a good process. Great teams have a hard time beating a great process.

I have been reading The 22 Immutable Laws of Marketing by Al Reis and Jack Trout. Some of the “Laws” are interesting and even though it is about marketing there are great lessons for the CI professional. One of the first ones I gravitated to was the Law of Singularity.

The Law of Singularity as explained by the authors is subtitled “In each situation, only one move will produce substantial results. This is focused on marketing strategies that are different than what the company has done in the past. I was taking this idea a little differently. When looking at it from the CI perspective, I was thinking about the output from a value stream mapping exercise or process mapping exercise. Everyone finds their pain points and opportunities but we are sometimes constrained by the goal, scope and metrics that drive the process. What if we looked deeper before mapping the process and really look at instead of a “better” process, a different, more strategic process? I realize this is part of the future state map exercise but rarely does the team, leadership or sponsor have the courage to truly blow-up the process and look at something totally new.

The other point to this chapter is to focus on the one element that will make the biggest impact. This means when there is a laundry list of pain points, focus on the one that makes the biggest change. There is no reason to try to fix everything since everything doesn’t matter all that much and you don’t have the resources to do it anyway. This one item can usually be the pivot point for a whole new process. This is helpful when the team is stuck on improving what is already there instead of envisioning the what could be.

Reducing waste by 30%, increase throughput by 1000 widgets an hour, improve “customer experience” by 10 basis points. Very inspiring. How about starting with, “If you opened your own business, would you even do this process?” or “If you have to do it, how would you do it, regardless of what systems and processes are in place?” Is it helpful to have this kind of conversation without the sponsor of process and leadership behind the potential changes? No. This just demoralizes the team and then the process suffers. Next thing you know you hear these types of phrases in the hallways – “The process didn’t work” or “We used to do that” or “We need a new team or new leadership.” This is the typical response. Culturally, is your business able to pull this off? If not, improve the process but understand you need to start sowing the seeds of fundamental change.

When looking at processes, let’s not just “improve” them, lets change them or destroy them for the better.

 

Nothing hurts plans and processes like change. Well, there may be another one. That is the illusion of knowing the future. Having a forecast is almost always helpful. It is when you believe that it is the future that it becomes an issue. One area that is very relevant is in sales and production organizations is mix and volume, especially when looking near the end of a product life cycle or limited time offers.

Mix can always mess up the works for a site or sales organization. When mix changes in manufacturing, it can mean that the products that were easy and high margin are now difficult and though the margin may seem higher, the conversion cost per unit or raw material costs go up as well. Can Continuous Improvement, CI, help? Maybe but it will also need engineering, CapEx, and other support to protect the facility from the next “great idea.”

Volume is another item that CI will need more support. When volume is greater than 120%, there are certainly CI projects that can help, especially related to Standard Work and basic troubleshooting skills that can ramp up new employees quicker than traditional OJT. What happens when you are 80% of plan? That is more difficult. The business needs to be flexible to the change in volume and CI projects should keep employees finishing projects and making improvements as long as possible before “right sizing” the workforce. This takes some discipline and rules for making the right choice.

Continuous Improvement can help mitigate impacts of volume and mix but the process needs a commitment to the process and help along the way when the market or the business changes. Changes come in various forms but volume and mix can make or break a site or process. CI will need all the organizations resources to move fast enough to mitigate changes and support the process when things look the worst.

One of the issues I frequently run into is when I discuss risk or future events or what impact a certain action will have, I get usually one of three answers. I am sure it will work, there is no way it’s going to make a difference or I don’t know. All of these options are weak compared to thinking probabilistically. Also, there are also other options not even discussed or considered. For the discussion here, I just want to focus on a future with only 2 mutually exclusive outcomes to make the process and concept easier. In future posts, I would like to explore this part of the process in more detail. I have put this into a pretty simple 3 step process.

Step 1 – Determine what you know about the subject and put a % towards what you think you know. You want to take some time with this to consider all the factors you know. If you don’t know anything or very little, use 50%. If you are very confident and have a lot of knowledge of the issue, may be you are close to 100% or 0% depending on what you think. This step should entail someone slowing down, stay away from the knee-jerk reaction and think about what you know, the circumstances of the issues at hand and the people at the table.

Step 2 – As information becomes available, modify your assumptions and potentially change the %. This means as time goes on, items related to the event or issues are changing, be aware of these changes and quantify them as best you can.

Step 3 – After the event occurs, review what you have learned. Would you have put the % initially knowing what you know now? This is not the statement; I would be 100% solid on this because I know who wins. It is more like what other information should I review before setting my starting point? What part of the process did I follow and what I didn’t.

I will be using the 2016 NBA Finals as an exercise using me as the protagonist. I will be the first one to tell you I don’t watch much NBA basketball but being from Cleveland and watching how they were beat by the Golden State Warriors in 2015, I wanted to see how well they would do and use my limited knowledge of the game to work this process out.

I want to make sure

Step 1 – Come up with an initial percentage. Let’s look at the Cav’s winning the NBA Finals. Some ground rules

If you know nothing about the subject, use 50%. This means that a flip of a coin is just as accurate as your guess.

Stay away from 0 and 100% unless you are absolutely certain of the outcome

For the Cavs vs. Golden State finals, before they started, I figured the Cavs had about a 35% chance of winning. Here was my thought process for this:

I worked from a 50%, flip of a coin, process because I recognized I don’t know much about basketball

From 50%, I knew the following items though the percentages are pretty arbitrary.

Golden state had home court advantage – about 10%

Golden State had the best record – about 10%

Golden State had just come back from a 3-1 deficit to win the west – about 5%. That gives the Cavs about 25% chance.

Cavs were rested and everyone was healthy – about 10%. That moves it back to 35% chance.

The Golden State Warriors win the first 2 games – That moved me to 10% from 35%. I just couldn’t see them winning it all though I believed they could win at least one game

Cavs win a game at home – big. Move up to 20%. This was an improvement over the 10% not so much that they won because I thought they could win one, it was more around how many points they beat them by.

Cavs lose at home – Less than 5%. At this point, the Cavs were down 3-1, the team had to win in Golden State twice and there had only been 2 other teams in history to get to a game seven and no one had ever won the Finals when they were down by 3-1.

Cavs win in Golden State – Move to 25%. This 20% move was due to the point spread in the win in Golden State, and the motivation and momentum for the Cavs. Also, the Cavs were coming home and I thought they could win game six as well.

Cavs win big in Cleveland Game 6 – Move to 35%. I only moved 10% because the Cavs still had to go back to Golden State and the starters played the whole game 6. The Cavs won big in this game but I figured that they didn’t leave anything in the tank for game 7.

Cavs at the start of the second half.  35% they were down by 8 at this point and though they looked pretty good in the second quarter, they were still losing.

Cavs end of 3rd quarter – 40% – The Cavs played great during the third quarter but they were still down by one. I could not help thinking that they had given everything they could and were still coming up short.

7 minutes left – 50%. It was a very tough quarter. Each team would have a lead and then they would be even up. This happened several times in the fourth quarter. Now someone may say that this means I didn’t know anything like I stated at the beginning of the discussion. This one is a little different because of the way I arrived at the number. I was now adding and subtracting percentages based on what I was sing. The fact that it came up to 50% was a coincidence.

5 minutes left – 50%. This was the hardest call. Both teams looked exhausted. Each team would drag down the court, wait until there was less than 10 seconds on the clock and then try to get the ball in the basket. There were errors and fouls on both sides and I didn’t make any changes. At this point, I thought either team could win.

50 seconds left – 70%. This jumped 20 points because of the Kyrie Irving 3 pointer with 50.6 s left. Not only were the Cavs up by 3, Kyrie still looked fresh where everyone else on the court looked punch drunk.

10.6 seconds left – 75% – This is when LeBron got fouled going to the basket. I only jumped it by 5% because LeBron was down on the court grabbing his wrist / elbow and was not getting up. Also, he may be unable to make the two free throws needed to put the game away. He missed the first one and then made the second. 4 point game but that is just a 3 and a foul away.

4 second left – 80%. I know, I know, there wasn’t much time left at this point but Curry had the ball and Kevin Love was guarding him. Kevin had done a great job earlier in this game as well as the regular season and some of the other play-off series but in this series, other than game 7, he has had limited impact. I was concerned he was going to foul Curry as he went up for a 3 pointer.

Buzzer – 90%. This is a joke, sort of. I still couldn’t believe that the Cavs had won. This is my point about personal bias. My bias based on all the history that I had been through with the teams of Cleveland; I was still struggling to take it all in.

After review, would I have done something different than the 35%? I saw at least a couple of predictions that stated the Cavs had a 25% chance of winning when I thought 35%. I don’t think I would have changed my percentage but I would do more independent research as well as reflect and discount my biases a little more but I think I would have posted a 35%.

Now think about this process and how you could use it as well as think about those around you. When you come up with an idea for something that is novel or unique and have to get people behind it, whether they know it or not, they will have to go through this process. It is an epistemological question. What does the individual need to convince him that this is the way to go? Sometimes they may not be able to tell you. Remember they are coming from a vested interest, naming themselves and it is hard to move away from you to improve your opinions, options and questions.

3 rules:

Review what you know and pick a percentage

As information becomes available modify your percentage

Once the event passes, review what you did and how you thought. What would you do differently and what did you leave out?

I have been in many situations where leadership of a business or process want to understand what their goal should be. It is not stated like that. It is more a discussion on how they want or need to better, more “efficient”, faster. This can lead the team down the path of benchmarking. While I understand some of the reasoning and find that the research is usually lacking in at least a couple of respects.

Benchmarking, from my perspective, is done when you don’t internally know what you are capable of and/or what you should expect. This is because terms like better and cheaper are not quantifiable and sometimes are a cover for not understanding the process. So, if someone is doing “better” than the firm you are with, we need to study them! I find that error shows up in at least one of the three major areas:

Not picking a goal that makes sense

Picking the wrong business / process to benchmark

Benchmarking the wrong behavior

Not picking a goal that makes sense. The goal needs to be well thought out and measurable. Not just dollars but what are the input and output metrics that you will be using to understand the process and if you are winning or losing. This also means you know the scope, resources and time required to hit this goal. If you benchmark, do you know how long it took the process or business to get to this point? Do you know who helped them? Do you know how much money it took or their internal ROI? Probably not. What about the external metrics that drive trigger points and countermeasures? You usually won’t even have visibility to internal measurements.

Picking the wrong business / process to benchmark. Hey, I am in the recycling business, so I should look at how other recycling businesses do accounts payable? Don’t limit yourself. Go to the best business that performs this work. Usually, this is hard to duplicate but there are almost always items that you can learn from or adapt to your process. “But I don’t know who is the best, I just know who my competitors are.” Spend about 30 minutes perusing the internet or check at the National Chamber of Commerce and you will find where the best processes are. One of the arguments that I hear is that they have proprietary software. Could be, but they will also have the right information and knowledge that can help you find your solution. After you find the best of the best and glean whatever you can, go back and look at your competitors. Also, when looking at the best, they will usually give you more information than you could ever receive from your competitor or someone with an ancillary or similar product.

Benchmarking the wrong behavior. “I want to watch people receiving my product and my competitor and see what works.” This is a great idea but too late in the process. This is related to the first point in that you don’t know how the company or process got where they are now. You are just looking at the outcome, you may not have any insight into how they did it which, though you can reengineer it, it will probably pale in comparison to what they are already doing. A way around this would be to look at the attributes of the process as well as ask the consumer or customer of the process on why this works or doesn’t. From this you can then back out what you can from your existing process.

This was a little long winded but in the end I want to make sure you look internally for your goals and limit yourself to your competitor as well as understand how you can modify your process to be the best not just better than the next guy.