Three Keys to Lasting Success

What does it take to survive in the world of business? Among other things, it takes unswerving integrity, a commitment to excellence, and thoughtful innovation. Take away any one of these three elements, and the company’s days are numbered.

Integrity

Business is built on relationships, and relationships are built on trust. Destroy trust in the customer relationship and watch your customers go somewhere else. Likewise, trust is the ground for every other business relationship–employees, investors, partners–you name it. Trust is the stuff of loyal relationships and enthusiastic referrals. Your business grows when happy customers send you their friends and colleagues. The reverse is also true.

Trust flows from the core values of the organization. As an illustration, Chick-fil-A is a company grounded in the kind of strong family values that drive its strategic and tactical decisions. Can Chick-fil-A achieve the same level of success without its core values? Not likely. The company with fuzzy values will tend to quickly lose it way.

Consider the current plight of NBC in the wake of revelations that news anchor Brian Williams fabricated stories of personal heroism. The manner in which NBC handles this breach of credibility will speak volumes about the company’s commitment to journalistic integrity.

Excellence

Over the last couple of generations, the quality movement has raised the bar of expectations to the point that excellence is now a feature and not an extra. This applies in both product and service industries. As a result, if you do your job poorly, there is someone waiting to take your place.

Toyota stands out among automakers for its role in developing many of the quality methods that manufacturers take for granted today. “Lean” manufacturing methods make it possible to achieve flexible, high-volume production with high quality and low cost. Even products that are traditionally viewed as commodities can be economically tailored to meet each customer’s requirements. Consequently, we have entered the age of mass customization.

Among fast food chains, Chick-fil-A stands head and shoulders above the competition because of its commitment to good food and great service. The long serving lines are actually a sign that this company is offering something that’s worth waiting for. And companies like Chick-fil-A tend to raise the expectations for everyone else in the industry.

Innovation

If you want to keep doing what you’ve always done, roll down the window and wave at the competition as they pass you by.

Innovation of the sort we’re describing here is not necessarily technology-based. Trying to adopt the latest technology–especially in the early stages–can be debilitating if it doesn’t make sense for your business. Rather, innovation describes your ability to anticipate change and build flexibility into your business model so that you can stay on the “leading edge” where the competition is thinner and the growth potential is high. (Think “blue ocean” strategy.)

Many large companies can string out success by virtue of the inertia from past success (and the commanding market share that often goes with it), but as the technology economy increasingly shows, product life cycles are getting shorter. Even established products have to show something “new and improved” to sustain the interest of the consumer.

Walmart is the 800-pound gorilla of retail, and yet they are responding to the trend away from big box stores. “Neighborhood markets” offer many of the same products, but on a scale much less intimidating than the massive warehouse outlets.

McDonald’s is a company trying to innovate in the wrong way by doing too much of everything. In the process, McDonald’s is confusing its brand image–and the financial results are beginning to show. When was the last time you had a Big Mac with fries and a shake?

Southwest Airlines has been unconventional since it started almost 50 years ago. The major carriers have never been able to adopt Southwest’s strategy, and the small carriers which try to imitate Southwest are always playing catch-up. Innovative strategy (coupled with a customer-focused culture) have been a winning combination that continues to set Southwest apart from the competition.

A couple of additional examples include Radio Shack, which tried repeatedly to reinvent itself before finally declaring bankruptcy, and Target, which is embarking on an effort to reinvigorate its brand image in the highly competitive retail space.

Are There Any Exceptions?

Examples of success and failure abound. Can you think of any company which survived in the long run without paying careful attention to Integrity, Excellence, and Innovation?

J.R. Dickens

© 2015 Woodland Park Research Group, LLC. All Rights Reserved.

Culture Rules the Day

Anyone who has been engaged in the business of Lean Six Sigma (LSS) can tell you how difficult it is to change organizational culture. When LSS meets culture, culture wins almost every time. That is because our default business culture is actually opposed to LSS improvement at almost every point.

Take production for example. On the typical shop floor, productivity is measured in terms of machine output. This is because the driving metric in a conventional manufacturing operation is the unit cost of production. The goal is to minimize unit cost of production by maximizing output. That happens when every machine is running at 100% capacity. More widgets means that we spread the fixed cost of production over more units, thereby minimizing unit cost. Think of it this way: in a conventional manufacturing environment, efficiency is measured from the viewpoint of the machinery. More is always better. Improvement efforts consequently tend to focus on those things that have the most direct impact on machine output.

The LSS approach to production has a drastically different focus—time. Efficiency is measured not in terms of how many widgets are produced, but how much time it takes to produce a widget from start-to-finish. In other words, efficiency is measured from the viewpoint of the widget as it moves through the manufacturing process. The conventional approach to manufacturing includes the high hidden costs of excess inventory and long cycle time. LSS eliminates these hidden costs by producing only what is needed. In conventional manufacturing, machine downtime is to be avoided at all costs. In the LSS manufacturing system, excess production is to be avoided at all costs. This contrast helps explain why LSS is not easily accepted in a conventional manufacturing culture. In fact, from the point-of-view of conventional manufacturing, LSS makes no sense at all. Why would you intentionally make less than what you can make—knowing full well that it will drive up the unit cost?

Notice that even conventional manufacturing is keenly interested in improvement. More machine capacity means lower unit cost. Bigger warehouses mean more space to store more stuff. By contrast, the LSS approach eliminates the hidden cost of production and focuses on flexible capacity—making only what is needed, in small batches, every day. With this kind of flexibility, Just-in-Time production and Zero Inventory are within reach. Notice that LSS is just as concerned about cost of production, but approaches it from a different standpoint by recognizing that cost is reduced by eliminating process waste.

The road to improvement starts with culture. We will continue to explore the relationship between culture and improvement by considering maintenance practices in the next article.

J.R. Dickens

© 2014 Woodland Park Research Group, LLC. All Rights Reserved.

Doing More by Doing Less

This morning I came across an article that offered some unusual and seemingly contradictory advice: how to be more productive by doing nothing. While most articles on productivity offer an assortment of suggestions on how to be more productive with your time, this article took a contrary stance in order to help us take a step back from the usual way we approach the idea of productivity.

Borrowing on this idea of achieving more by doing less, let’s consider the how and the why of doing less.

Why do less?

The first question is why we should strive to do less. In a word, the answer is burnout. Trying to do too much at any one point in time is overwhelming and impossible—which leads to fatigue and frustration (short-term burnout). When you get to this point, it’s time to slow down.

What is even worse is trying to do too much on a sustained basis. Some people have the energy to maintain this kind of pace for years—but eventually, they will hit the wall. The analogy is fitting, because when you hit the wall, you don’t slow down—you come to sudden and painful stop. This is the point of burnout where the damage may be irreversible and the only solution is to walk away and never come back.

How to do less?

The next question addresses how to do less. Perhaps like me, you’ve fallen prey to the “yes” syndrome of taking on too many things at one time. While it’s hard to say no—especially when we’re asked to help with a worthy cause—the simple fact is that we can never do everything we might be asked to do. And the tendency to say “yes” all the time—coupled with a high level of competence in your work—only tends to attract more noble causes to your door. The solution to your “yes” problem is twofold: (1) know your limits; and, (2) prioritize your time and energy. Not everything can be equally important, so make a point to order your commitments according to what’s most important—and then know your limitations so you can say “no” when you reach that point.

What does it mean to be “productive”?

Finally, consider the important question of what it means to be productive. At this point, it is important not to confuse activity with work. Sometimes your most important work involves the least amount of activity—for example, when you take time to think about the future of your business, or you work through the mental process of creating a new concept or solving a difficult problem.

When I was in the corporate world, one of the worst things you could do was have the boss walk by your office and discover that you were doing “nothing”—which is to say, nothing visible. In this kind of work environment, the emphasis is on looking busy even when doing nothing of value. By contrast, your most important value may be the time you are not busy with tasks like reading, writing, talking, or listening.

Less work and more focus

The value of doing less is apparent when we can begin to focus more time and energy (especially the best part of our day) on doing fewer things—and doing them better. This is particularly true for creative kinds of work which are easily stifled by the effects of frustration and fatigue.

Make time for nothing

While there are times when circumstances require an intense effort, it’s important to pull back and rest on a regular basis. Taking time to do nothing will help you bring a new level of energy and creativity to your work.

J.R. Dickens

© 2014 Woodland Park Research Group, LLC. All Rights Reserved.

Lean Transformation

A few weeks ago, I received an excited call from a manufacturing client I’ve been regularly conversing with about the benefits of Lean manufacturing–specifically, one-piece flow.

To provide some background, the client’s organization has enjoyed considerable growth in previous years due to the expanding popularity of its products. Along the way, they are experiencing the challenge of meeting demand while dealing with an assortment of issues including personnel changes, material sourcing problems, and logistics. The nature of their business is inherently cyclical and highly dependent upon accurately forecasting the demand during peak season. Due to a relatively small internal manufacturing capacity, most product assembly is outsourced to one of several contract manufacturing sites in other states–further complicating logistics and production planning. The growing challenge has been to coordinate production in an environment where lead times are typically measured in weeks, and every product must pass through a central warehouse for inventory, inspection, packing, and shipping–regardless of where it is manufactured. With this in mind, my advice to the client has revolved around reducing lead time and reducing batch sizes in order to shorten cycle time and lessen the reliance on stockpiling finished inventory.

On the occasion of my client’s phone call, the source of his excitement was the recent success of an on-site training/deployment of one-piece flow for one of the company’s popular product lines. By creating a simple cellular layout on the shop floor with the corresponding work flow, the time to manufacture one item was reduced from a theoretical value of twenty minutes to less than four minutes–with no accumulation of inventory in between steps. This was nothing less than a breakthrough.

The real surprise came after the holidays when I went to visit the client and see firsthand how much had changed in just a few short weeks. The way that I described the difference to him was “revolutionary.” By the time of my visit–just a few weeks after the first attempt at one-piece flow–the client had transformed the entire manufacturing process to one-piece flow. Now the work flow was balanced, and any accumulation of work-in-process at any point in the process was a signal that the work flow needed to be adjusted. Even the warehouse was noticeably different, with an improved layout, additional packing stations, and a new attitude to complete “one order at a time” rather than having dozens of partially-packed orders in process at once–with open boxes taking up a considerable portion of the available floor space.

There was no shortage of surprises on this visit. Most impressive of all was the experience of talking to people on the shop floor. The language had changed to reflect their new understanding of lean concepts and how those concepts translate to the daily work. The people responsible for doing the work were beginning to understand how to improve the process, to take ownership for the improvement, and to take pride in their results.

Without a doubt, the progress of the last few weeks is only the tip of the iceberg for this company. By improving the manufacturing flow–as well as increasing production capacity–the client will reap rewards far beyond the shop floor. This client is learning firsthand that Lean is a transformational business strategy, and not just a clever manufacturing strategy.

J.R. Dickens

© 2014 Woodland Park Research Group, LLC. All Rights Reserved.

Do You Hire Outside the Box?

When it comes to hiring, we have a tendency to fall into patterns of conventional thinking—and by doing so, we may be missing an opportunity to gain new ideas and insights about our business.

The study of paradigms is useful for understanding where new ideas come from—and how we can look for them. Most breakthrough ideas come from someone who is not part of the prevailing paradigm—in other words, they don’t know the “rules” of the game. They are new to the business, industry, department, or job. Someone who is just starting a career will be new in just about every respect. But how can we hire someone with experience and still take advantage of the “new” factor?

Look outside your industry. Many jobs are not industry specific—especially administrative kinds of jobs like accounting, finance, sales, and marketing. But even highly specialized jobs like manufacturing rely on common principles that are transferable to the new organization.

Look outside your geographic area. If you must stay within the industry for making a hire, look for someone outside your geographic area. Just having someone come from a different location can help provide a different perspective.

Look for people making career transitions. Most people do not stay in the same career track anymore. Some years ago, I worked with a lady who had completed a master’s degree in meteorology, spent the first part of her career as a software engineer, and then went to medical school to become a dentist. Another fellow I know spent nearly twenty years as an electrical engineer before getting a law degree and becoming a patent attorney. Yet another fellow spent fifteen years as a manufacturing engineer and then became a state trooper (his wife worked in administration and then trained to become a crime scene investigator). These kinds of stories are not unusual, and point to the ability we have to make drastic career moves and find success in the new endeavor. Are you open to the possibility of hiring someone who is making a big career change? He could be a valuable source of ideas as he learns his new job skills.

Encourage the new guy to ask questions and make suggestions. Good ideas are useless if no one is interested. Don’t make the mistake of the manager who ignored good ideas from people who hadn’t been with the company for at least five years. He lost—and so did the company. The first few months on the job are the best time to capture new ideas.

Make use of temporary employees. Most organizations have some “transient” employees in the form of temporary labor and outside consultants. Make use of the ideas from people like this who are not “invested” in your way of doing things and may have a much broader base of ideas than someone who is an industry insider.

The key in each of these examples is that you’re looking for someone who doesn’t think the way everyone else thinks. Let them ask questions and challenge the status quo. By doing do, you may be on your way to the next breakthrough.

J.R. Dickens

© 2013 Woodland Park Research Group, LLC. All Rights Reserved.

You’re Busy—But Are You Working?

In the last article of this series on waste, we looked at the difference between value-added (VA) and non-value-added (NVA) work, and showed that most work that takes place does not add value from the customer’s point-of-view. This is due in part to the tendency for organizations to equate activity to work.

Value-added work is defined very narrowly which is partly why it represents such a small portion of the work. In order to be “value-added,” three criteria must be met:

(1) the work is something the customer is willing to pay for

(2) the work transforms the item being worked on

(3) the work is done right the first time

Any “value-added” step that has to be done over again (due to errors, defects, etc.) is automatically classified as rework. All forms of checking, inspecting, and testing are non-value-added work because they do not transform the product and would not be necessary if the work was done right the first time. From here we can discern a vicious cycle: our process creates errors (which negates part of the VA work); errors require inspection to detect (NVA work); errors that are found create a rework loop (NVA work); missed errors create unhappy customers (lost opportunity, complaints, and claims—more NVA work). This helps us understand why the emphasis in Six Sigma is on eliminating defects. Even a small percentage of defects will lead to large amounts of NVA work and consequent high costs to the company.

If we look at the definition of VA work through Lean glasses, we’ll see that the first criteria implies making the right product in the right amount at the right time. In other words, the customer isn’t paying us to make and store a product in hopes that it will someday be purchased. VA work becomes NVA work at the point where we make more than what is necessary to meet the current demand (i.e., overproduction). This adds to the cost of doing business for a number of reasons, e.g., material consumption, energy, inventory carrying cost, product damage, spoilage, and obsolescence. Building excess inventory is a common problem when we focus on maximizing machine utilization (or man hours of productivity).

Another way to look for waste is to consider cycle time—the total time required to produce and ship the finished product. For example, a manufacturer of seasonal products will start producing their winter items in the spring. Each item only requires 30 minutes to assemble, but the total time from order of raw material to shipment of finished product may easily exceed six months. In addition to bearing the carrying cost of that inventory for most of the year, the manufacturer also absorbs an additional cost of inventory that doesn’t sell by the end of the season. Which of the following options will do more to address the underlying problem—improving the sales forecast, or reducing cycle time in order to match production with demand?

J.R. Dickens

© 2013 Woodland Park Research Group, LLC. All Rights Reserved.

Demythologizing Six Sigma (Part 1)

The Six Sigma infrastructure and methodology have been around for about twenty years now. For those who are not familiar with the system, it is a problem-solving methodology which is coupled with a number of powerful statistical tools. The “basic training” of Six Sigma consists of four weeks in the classroom along with a hands-on project to apply the methodology. Having a technical background can be helpful for assimilating the tools, but it is not a prerequisite for the Six Sigma specialist.

Teaching Six Sigma requires considerable knowledge and skill as well. But teaching the mindset of Six Sigma need not be complicated, as we will see.

Let me begin by pointing out that every person in an organization is paid to make decisions. The higher up in the org chart, the bigger and more critical the decisions become. And the “problem” is that we never make all the right decisions. Performance can be measured in terms of how often we make the right decision (like a batting average). And some of the decisions we make can be improved by applying the Six Sigma methodology. Consequently, if Six Sigma doesn’t help us make better decisions, then it reduces to a pointless exercise.

How does Six Sigma help us make better decisions? The first way is by revealing what our data is telling us—so we know when to act, and what to do. The second way is by prioritizing and solving problems systematically—in a way that prevents reoccurrence by getting to the root causes. A third way is by helping us design products and processes for Six Sigma performance—consequently eliminating problems before they can begin.

In the next article, we’ll look in more detail at the manner in which Six Sigma helps us make better decisions with our data.

J.R. Dickens

© 2013 Woodland Park Research Group, LLC. All Rights Reserved.

Lean and Mean, Part 2: The Seven Forms of Waste

As we discussed in an earlier article, Lean is a methodology which focuses on the speed of processes. Greater speed translates to reduced cost, improved quality, less rework, and shorter lead times. In this article, we will introduce the “seven forms of waste” that Lean seeks to eliminate. In future articles, we will examine the seven forms of waste more closely.

As we begin to look at the seven forms of waste, let me first point out what is likely to be a significant change in mindset. In the typical factory, it is customary to measure efficiency and productivity in terms of each step in the process. We attempt to “maximize” productivity by running each machine as fast as it will go, without regard to the actual demand and flow of product through the plant. As a result, large quantities of work-in-process inventory (WIP) are commonplace. We may consider it a “normal” and healthy condition of the factory to have pallets of partially-completed material stacked in every corner. This reflects a tendency to “sub-optimize” a plant by attempting to maximize productivity at each step in the process, rather than balancing productivity and accepting lower machine efficiency as a necessary byproduct. In any factory, it is inevitable to have excess capacity in nearly every step of the process. Total productivity will be constrained by the process bottleneck (usually the machine with the biggest pile of material in front of it).

That leads us to the first (and worst) source of waste: Overproduction. Any time we make more than what is needed by the customer—whether WIP or finished goods—we have created waste. Lean means producing just what is needed, just in time—and not a bit more.

Inventory is the natural byproduct of overproduction. When excess inventory is produced, we have consumed unnecessary resources of time, energy, and material. Inventory is money by another name, which means we have excess capital tied up in inventory. And excess inventory requires excess space for storage and excess labor for handling. Inventory is the blanket that hides the inefficiencies in your process—scheduling, quality, equipment reliability.

Motion is another significant source of waste. This includes any motion of workers that does not directly add value to the product. Examples include: carrying material from place-to-place, picking up parts, and positioning parts.

Transport is a related form of waste. This includes any movement of material and the means to move it—lift trucks, conveyors, carts, etc. In addition to wasting the time and energy (and capital) required for movement, transport has the potential to damage the material being moved.

Waste due to motion and transport is why shop floor layout is a priority for Lean—placing the processing steps as close together as possible in sequential order so that motion of material (and workers) is minimized.

Processing waste includes inefficiencies that can be eliminated by combining steps, and sources of redundant or superfluous processing.

Defects lead to the next source of waste: Rejects and Rework. Anything not done right the first time will have to be done over—unless the defective product is completely scrapped. In either case, cost of production (and processing time) tends to multiply. Defects also create more WIP that must be moved and stored (and kept separate from good material).

Waste due to Waiting includes things like waiting for parts from another process, machine downtime, and waiting while parts are processing.

The seven forms of waste are illustrative of the many types of waste that occur in a value-adding process, and in some cases we see overlap (e.g., waste due to transport of materials and waste due to motion of the workers who are moving the material). With the seven forms of waste in mind, we can begin to look at our processes differently and recognize waste that was there all along.

J.R. Dickens

For further reading: Gemba Kaizen

© 2013 Woodland Park Research Group, LLC. All Rights Reserved.

How to Waste Time and Look Busy, Part 2

Reports are a lot like meetings: they consume significant company resources and are a common source of “waste hidden in plain sight.” Like other forms of waste, reports tend to accumulate over time until no one can remember why they are needed. In accordance with the Second Law of thermodynamics (the law of entropy), reports will tend to get bigger and more confusing as time passes.

The purpose of a report is simple: to provide the decision-maker with information he needs to make the decision he has to make. With that in mind, the report should be concise and presented in a format that helps make sense out of the data. If the data is presented in a way that is difficult to understand, the odds of making a bad decision go up. And don’t buy the lie that “you can never have too much data.”

We can apply many of the same principles to reports as we did to meetings:

1. Eliminate reports that are no longer useful for making business decisions.
2.  Stop sending the report to people who don’t need it.
3.  Simplify the report by purging data that doesn’t support the decision at hand.
4.  Prioritize the data so the most important information flows from the top down.
5.  Distribute the report only as often as needed.
6.  Automate the report and deliver it in an electronic format.

Here are a few more ways to improve the quality of your reports:

• Use trend charts to show how each variable behaves over a period of time.

• Make sure the data is “fresh.” Old data may be useful for longer-term decisions, but day-to-day management requires up-to-date information.

• Check your measurement system to ensure accurate data (i.e., the measured value is close to the true value).

• Find out how much “noise” you have in the data so that you don’t over-react and make unnecessary changes. Every measurement system has noise. If the amount of noise is greater than the amount of the signal, your measurements are worse than useless.

• Differentiate between data that describes process inputs and outputs. You need both types of data, but beware the danger of trying to steer the business by controlling the outputs rather than the inputs.

Three parting thoughts:

• Remember that we can only focus on a few things at a time. Keep your reports simple and use them in a way that drives your business priorities at every level.

• Measurements can tell us what happened, but they can’t tell us why. The key to improvement is discovering the cause-effect relationships behind your data.

• Reports tend to spawn meetings. By reducing and simplifying reports, meetings will be fewer and more focused.

J.R. Dickens

© 2012 Woodland Park Research Group. All Rights Reserved.

How to Waste Time and Look Busy, Part 1

Meetings can be one of our biggest time-wasters. Today we’ll discuss some guidelines for getting the most out of your routine meetings.

1. The first step is to eliminate the meeting if at all possible. Make sure there is a legitimate reason for the meeting and that it’s not a carry-over that no longer meets a pressing business need. Remember to look at your activities through the eyes of the customer to discern whether they truly add value.
2. If the meeting cannot be eliminated, reduce the frequency of the meeting. Try cutting it in half.
3. Shorten the meeting time and don’t allow it to run over. Cut the length of the meeting in half. Force yourself to stay focused on the topic. You will find that you really can accomplish more in less time.
4. Make use of an agenda that spells out specific action items and decisions that must be made.
5. Reduce the meeting size so that only the people who need to be there are invited.
6. Communicate the purpose of the meeting ahead of time, along with the contribution that each participant will make.
7. Be disciplined about starting and ending on time.

Now let’s apply these ideas with a thought experiment. Suppose you have a weekly meeting that includes 12 people and lasts an hour. If you use the rule of halves, by reducing the frequency of the meeting, shortening the meeting time, and eliminating unnecessary team members, you’d end up with one meeting every other week with six people that lasts 30 minutes. The result?

You have freed 6 people of an hour of wasted time each week. The other six people have been freed of 45 minutes of wasted time each week. And the real bonus? You actually get more done with fewer people and shorter meetings.

In the next article, we’ll consider how to make the best use of reports.

J.R. Dickens

© 2012 Woodland Park Research Group. All Rights Reserved.