Knowledge Fulcrum

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.

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.

The news for US automakers didn’t get any better this past month.  GM reported January 2008 car sales plunged 51% compared to last year, Chrysler down 55%, and even the darling Toyota down 32%.

Yet, there was one car maker who reported an increase in sales for January.  Let me say that again.  There was a car maker who reported an increase in car sales for January.   Hyundai posted an impressive 14% increase over last year’s sales.  How did they do it?  It’s simple.  They listened to the customer and were willing to step up and deliver value to their customers.  

In a bold move, Hyundai announced their Assurance Program for new car buyers.  They are the first automaker in the U.S. to offer a return program that allows you to walk away from your loan or lease without having to worry about negative equity.  It lets you return your vehicle in case of certain life-altering circumstances.  In other words — they are simply saying “we’ve got your back, customer.”

This is an excellent example of a win-win strategy.  Gone are the days where it’s me or them.  Now, welcome the days where success will be measured differently – success will be measured by the ability of companies to develop innovative strategies that will garner market share and loyalty.  I wonder how much impact this program had on their customers’ psyches and the long-term loyalty they earned.

Of course the remaining automakers will play follow the leader — you can count on that.  But,  Hyundai gets the credit for being the one who first stepped up and delivered for the customer. 

For all entrepreneurs, this is an important lesson.  There is growth for companies who find ways to add value, and address the concerns of your customers.  Innovative thinking does get rewarded!