Knowledge Fulcrum

Having been a CEO implementing a Continuous Improvement initiative within an organization as well as a consultant helping other organizations establish their own CI initiatives – one of the first questions to answer is, “who should be a part of our CI team?”  Unfortunately there are no simple ways to answers this question.   However the following description by Peter Senge in his newest book – The Necessary Revolution best describes the type of leaders to look look for:

“One thing we have learned from working on organizational and systematic change is that the leaders are hard to identify in advance.  Sometimes they are CEO’s or presidents, but often they do not occupy positions of obvious power in a corporate hierarchy.  They are not the flag wavers, campaigning vocally for change, but rather passionate individuals working to transform their organizations from the bottom up.  They are most often open-minded pragmatists, people who care deeply about the future but who are suspicious of quick fixes, emotional nostrums, and superficial answers to complex problems.  They have a hard-earned sense of how their organizations work, tempered by humility concerning what any one person can do alone.  They often do not think of themselves as leaders, but time proves them wrong.”

In my own experience – the best champions where the ones who were the slowest to jump on board – but once they did the impact thay had on our overall progress was incredible.  Perhaps when you are starting to implement your own CI program you can use this as part of your selection criteria. There’s nothing easy about undertaking CI programs but the feeling of achievement when it works is more than worth it.

After watching this video I’ve been fascinated by Behavioral Economics.  Is it really possible to increase your revenues by 42% by merely changing how you offer your products to your customer?  Watch the segment on the Economist Offer – if you do the math his research showed a 42% increase in revenues by adding a meaningless option to the pricing strategy.   I’d love to hear about your own experiences with this concept.

Over the years, I’ve discovered that what makes LEAN so illusive isn’t that it’s a complex idea, but that it’s a simple idea that happens to be hard to implement.

LEAN – the name commonly used to describe the Toyota Production System -  is the systematic removal of waste from any system on a constant and never ending basis.   When I first started to study the Toyota philosophy, I struggled to see where I could find the kind of improvements that would generate the kinds of results I had read about.  That’s where I went wrong.  LEAN is about creating a rhythm where everyone in the organization is trained to see the small things.  Small things, when observed alone, seem insignificant – but when compounded over time and across many people — small things add up fast.

Here’s a a perfect “real world” example:

In my last company, we operated call centers where we conducted primary research studies for organizations.  On any given shift, an agent would work on an average of 3 different projects.  Because of how the software was originally developed, in order to change to another project, an agent would need to alert a floor supervisor to be “moved” to the next program.   This required the agent to get up and walk to the end of the floor to alert the supervisor.   For 12 years this was “standard procedure.”  No one ever stopped to think about what the cumulative “cost” of having the agent get up and request a change actually was.

When we started our LEAN journey, we began to look for small things that were simple to correct.  We started to measure everything we could.  Eventually someone decided to measure the average time it took an agent to “change” projects.   It was an average of 1.2 minutes.  Not all that significant, right?  But when seen in the context of the entire organization and over the entire year, the numbers began to add up very fast.

Average # of Agents per Day – 250

Average # of Study Changes – 3

Number of Working Days per Year – 350

Average Time per Study Change – 1.2 min

Average Cost per Agent ($11.20 loaded) – $0.1867/min

Total Cost to Change Studies each Year = 250 X 3 X 350 X 1.2 X $0.1867 = $58,810.50

The solution was simple.  We made cardboard “signals” that agents would raise when ready to change studies.  These “signals” alerted the floor supervisor, who then changed them over on the system.   In 24 hours, we were able to reduce the average change over time from 1.2 minutes to just .23 minutes.   That simple solution resulted in a net savings of $47,538 a year.  It only cost us a few dollars in card stock and a 15 minute training for every employee.

LEAN is not about BIG improvements.  LEAN is about seeing the business in a different way and constantly making small changes that overtime create significant savings for the business.   Now more than ever, we all should be thinking LEAN.

Perhaps the best book I’ve read for anyone who uninspired in their work or is looking for work.  Innovative, on point, and best of all you can read it in less than an hour.  I’m buying extra copies so I can give them to people I know who are lost.

At least watch the trailer…brilliant a trailer for a book.

Now I want to walk you through the process we used to document our value stream, and what we were interested in measuring.

Generally it’s good to start your process mapping by looking at the job function level.  Depending on the complexity of your business, you may want to do this by individual department.  You will know if you need to break it down.  Map the current state first.

Use post-its to define each discrete job function in order.  You can use swimming lanes if there are concurrent processes you’d like to map.  Ideally, you’d also be gathering accurate information on the following metrics – to start you may just want to use your best estimates:

• Cycle Time – this is the average time it takes to do the task.
• Process Time – this is the average time it takes including any waiting before or after the task.
• Percent Complete & Accurate - an estimate of what % of the time the task is received complete & accurate.
• Percent Exceptions – this is a measure of how frequently there are exceptions which require special handling.
• Number of Hand-offs – how many times does the work change hands (don’t forget figuratively, if information is emailed around the company).

Now you can start to see how much time is spent on activities other than doing the necessary work.  Be sure to include documents or reports that are built into certain job functions.  For those who are more detailed oriented, you may continue to break job functions down into discrete tasks.

I would start broad until you get a feel for how this works.  If possible, remember to include people from every job function and department.

Now you can add up each type of time.  The total Cycle Time is the actual time spent doing the work to produce your product or service.  The total Process Time is how long it takes you to get the product or service out the door and into the hands of the customer.  Usually the Cycle to Process ratio is VERY low.  But now you should start to see where there’s opportunity to take waste out.

Now that the layoffs have happened – you’ve re-organized the work as best you can, you’ve cut all non-essential expenses from your business, and it’s clear that your remaining work force is working harder than ever.  Now what?

Ironically, I’ve discovered that the best time to implement a Continuous Improvement (CI) Program is during a time of crisis.  A significant amount of time and energy is usually spent demonstrating why CI Programs are important and why everyone needs to be on board.  During a time of crisis the need is already clear to everyone.

When you begin to implement your own CI Program, you will not just be developing habits that will reap benefits for years and years to come – you will provide your staff with what might be a new found sense of control and hope.  It’s already clear to everyone in your organization that what has worked before may not necessarily work in the future.

For the purposes of this blog – I am defining a CI Program as any formal performance improvement initiative that is being led by a team of people in your organization to identify and remove unneeded waste.  Think of it more as a way of thinking rather than a state you are trying to achieve.

The first step will be to start to “see” together.  By this I mean that it’s important that everyone recognizes the types of waste that exist in your organizations (don’t worry — it’s in every organization) and be able to remove the waste and re-establish the standard of work from that point on.

Now, the word waste is where it gets a little difficult.  Waste refers to any activity that does not add value to the customer.  In other words, if it’s a task that the customer is NOT willing to pay for, then it’s a possible source of waste.  This includes things like overproduction, wasted movement, transportation of information or material, repair or rejects, inventory, over processing, and missed opportunities.

A great place to start is to hold a company meeting.  Identify a group of “subject matter experts” who can clearly define the current method for doing all major parts of the job – from the beginning of the customer stream (Marketing and Sales), to Operations, through Customer Service, to Billing or cash collections.  Have the “experts” walk through each step of the process – to identify when something needs to happen, who would interact with the task, and how long it takes to complete.  All you need is a big blank wall, and some post-its.

This is a picture of the first value mapping session I was part of.  As the founder and CEO, it was a painful experience.  But, I would say that it only made visible what everyone already knew – we had some pretty screwed up processes that were causing us to be incredibly inefficient.  When you put it all down and try to measure how much time you actually spend adding value along the way, it’s a very sobering experience.  It isn’t until you can see together that you can start to improve together.

In my next installment, I will walk you through in more detail how we documented our work and what we were interested in seeing.

In a recent Nielsen study, “member communities” like Linked in are now used more (67%) than email (65%).  The social network landscape is changing quickly.

In my former survey research business, we were fighting the fact that American households were cutting off their phones in droves.  At last count, 17% of households have no land-line telephone.  Technology is re-shaping our world right in front of our eyes.

How is your organization using new tools to better connect your employees, and customers to increase collaboration — and ultimately performance?  I’ve heard a number of entrepreneurs complain that applications like Facebook are a time sink and have limited access by employees from their network.

I would propose that social networks and other cutting edge applications are merely tools that, if used in the right way, can help your organization better compete by providing your people with better access to information.

Social Networks – using applications within your company can help increase visibility among your staff around critical functions such as product expertise, specialized knowledge or special interests.  Using these applications increases collaboration and communication — particularly if your organization has locations across multiple geographic areas.  In addition, if you have virtual staff - this is the perfect application to keep everyone connected.

Wiki- using wikis is a great way to share standards and knowledge across the organization.  By building wiki platforms around problem identification and problem solving, you will increase your organization’s ability to adapt to the ever changing business environment.

Podcast – when you place training programs online, you insure that when a staffer is trained on a procedure or standard that everyone gets the same information, delivered in the same manner.  This results in more consistency.

Organizations can either resist the changes that are happening around us or embrace the new technology and find the best way to use it for every one’s benefit.  Please share your examples of how you’ve used web 2.0 technology in your business successfully.

The story goes something like this…

A couple is at home preparing a dinner of  beef roast together.  As  he starts to prepare the roast for the oven, he takes a knife and proceeds to cut both ends off.  Perplexed by his action his wife asks, “Why in the world are you wasting that meat?”  To which he replies, “This is how my father taught me to cook beef roast.”

Certain that something didn’t seem right, she calls his father to ask why.   The father’s response?  ”That’s how my mother prepared beef roast when I was young.”  They then called his grandmother.  They asked her why she  cut both ends of the roast off before putting it into the oven.   She calmly replied that it was ”…because my pan wasn’t big enough.”

This story illustrates how easy it is to take what happens in your organization as making sense.  At one time it may have, but chances are that it may not now make sense to keep doing it.  In my own experience, I estimated that 20% of what people did no longer made sense - it was just wasteful.  Reports were generated and distributed, which no one ever read, and procedures and processes were still followed diligently but no longer served a need.

The moral of this story?  Everyday – make a part of your daily rhythm an exercise where everyone stops to ask — why are we doing this? And is it adding value to our customers? I guarantee that if this hasn’t been a regular routine in your organization, then you’ll be shocked at how much “waste” just keeps happening.

I recently posted a blog discussing the difference between team work and collaboration.   I thought it would be nice to provide you with a concrete example. 

Two of my favorite blogs I read recently had posts about recruiting for your business.  Individually, either blog is an excellent resource which will improve your efforts.   But if you combine them the results can be even better. 

MINDdrift

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Re: Focus:

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Even Better!

I’ve really started to appreciate the benefit of “blending” ideas together – just another form of collaboration.  Thanks Simon and David!  If you have other ideas or examples please throw it in the blender for the rest of us!