Category Archives: Continuous Improvement

What’s the Problem?

Problem

Few decisions have a greater impact on the likelihood of success of an improvement project than the definition of the problem.

Stephen Covey says that the way we see the problem is the problem.

Albert Einstein warns that we cannot solve problems at the same level of thinking with which we created them.

The way we define and communicate the problem the team is expected to solve will greatly influence the speed and efficiency with which a team will complete its work, the degree of satisfaction between the team and the project sponsor, and the efficacy with which an organization prioritizes and sequences the problems to devote resources to.

Consider these different approaches to defining the same problematic situation:

  • Order fulfillment is too slow and is costing us a lot of business.
  • Our lost sale rate has increased from an average of 125 per month over the previous six quarters to 190 per month this quarter.
  • Our Order-to-Delivery timeline has increased to 60 days due to a bottleneck in packaging.
  • Profits are down.
  • Sales has missed their target for the past three months.
  • Packaging is too slow due to old equipment.
  • Order-to-Delivery time from the Mid-western plant in Q3 increased by 15 days over the same quarter prior year, and was cited as the cause of 42 lost sales in Q3 impacting revenue by $270,000 in the quarter.

Some of these are statements of fact, while others are judgments. Some are very broad, and others are very specific. They may ALL be valid observations about the same situation, yet the problem-solving efforts they would guide would differ greatly in urgency, efficiency, and efficacy.

Developing a good problem statement at the start will help you define and lead an improvement project that most efficiently arrives at better results.

Four Practices That Lead to Better Results
A good problem statement is not rocket-science, but simply requires some solid pre-work, thoughtful consideration & discussion, and the restraint to avoid speculating before the analysis. If you follow the four basic guidelines for problem definition, you will greatly improve the chances the right problem will get solved for good.

  1. Write It Down. If the problem is not written, shared, and discussed, all participants will feel comfortable that everyone is on the same page about the problem they are trying to solve. Such will not be the case, and the blissful ignorance about their different expectations will eventually give way to a combination of bewilderment, conflict, frustration, disappointment, and a great deal of inefficiency.

    Organizations can avoid the problem-solving frustration and rework by surfacing right up front any different views of the problem they are trying to solve. The best way to surface and discuss any differences is to write it down and discuss it with all participants, to ensure it is well understood and agreed to. In addition to getting everyone on the same page, only a written problem-statement can be tested against the next three qualities necessary to effective problem-solving teams.
  2. Include a Quantification of the Waste the Problem is Causing. Yes, this means you have done some pre-work, because no problem statement is as effective as it should be if it does not indicate why we care.

    Quantifying the waste makes certain that the organization does not invest scarce resources on something that will not have a significant impact. Every organization has more opportunities for improvement than capacity to execute on the improvements.

    Quantifying the waste also helps elicit the urgency and support that the project merits. A problem statement that is “…costing the organization $18,000 each week in excess charges” will receive more urgency than a problem “…costing the organization $800 a week.” And problems for which no discernable and measurable impact can be found probably should not receive much urgency at all. Quantifying the waste in the problem statement helps an organization make sure that they are working on first things first.

    The statement of impact best fits at the end of the problem statement but identifying and quantifying the waste should come at the start of the problem definition process. If we cannot reasonably measure the impact a problem is having on an organization, we cannot reasonably prioritize the effort.
  3. Be specific about the metric you are using to size the problem. Malcom Forbes once observed that “It’s so much easier to suggest solutions when you don’t know too much about the problem.” The rub is that you will have a hard time determining if your solutions are effective.

    To avoid this pitfall, your problem statement should incorporate the measurement you expect to move the needle on, the current baseline for that metric, and both the time and the place that your baseline measurement was taken.
    • The metric: If order-to-delivery timeframe is our problem, the problem statement should be a factual statement of order-to-delivery times. Maybe order-to-delivery times have deteriorated or maybe they have always led to lost orders. Either way, a recent measurement of order-to-delivery times must be part of the problem statement if this is the problem you intend to solve.

      For example: “order-to-delivery times have grown to 6 weeks and was cited as the reason for 25 lost orders last month.” A description such as “too long” is too general, but teams may be tempted to substitute this judgment instead of a metric because a recent measurement is hard to get.

      Bear in mind that if the problem is too hard to measure up front, chances are it will be too hard to measure later on when the team needs to evaluate the efficacy of the solution. Even if the team can gather measurements later, they will have no baseline with which to compare the new results.
    • Timeframe: When have you observed the problem? Is your metric from last week, last month, last quarter, or last year?
    • Scope: Where are you seeing the problem? Does the metric describe what is happening at one plant or all plants? Is it one product, a product family, or all products? By making the problem statement factual and specific about what observable phenomenon we saw when and where, we create for the team a clear and effective baseline against which to measure improvements.
  4. Omit Judgments and Opinions about Underlying Causes. Maslow observes that “If the only tool you have is a hammer, you tend to see every problem as a nail.” We all have biases, and when we make assumptions about the underlying cause, we bias the process to overlook other possible causes.

    In theory, this could be a time-saver — if you hit upon the correct root cause. However, in our experience this rarely happens. Making assumptions about the causes almost always makes a problem more difficult to solve instead of easier to solve. This is because if one or more important underlying causes are overlooked by the bias introduced in the problem-statement, the problem will not be solved before the project goes through quite a lot of rework.

    Most people have some sort of bias or hunch, slight or strong, about possible underlying causes of most problems and they will consider these first.

    For example, some people easily incline toward thinking that the technology is not what it could or should be and theorize that this is the cause of most of the problems they encounter. Others are quick to suspect that the incentives are misaligned. And still others may speculate first that processes are not sufficiently defined and adhered to. These hunches are developed based on experience and people with diverse experience and biases tend to serve a project well.

    However, no matter how confident in the theory about the root cause, inclusion of an assumption about the cause or the solution in the problem statement is more likely to impede results than accelerate them. A hunch makes an excellent servant (in the problem analysis phase of the project) but a poor master. Leave any comment about possible underlying causes out of the problem statement.

    If you follow these four guidelines, your project will have a much better chance of arriving at, implementing, and validating an effective solution that produces lasting results.

Why Quantify

quantify

When engaged in Continuous Improvement (CI), a key objective is to identify, quantify, and eliminate waste.

People often ask why it is so important to quantify the waste – and the answer is straightforward: quantifying the waste does three things for you.

  1. First, it helps you distinguish between the “big‐hitters” and the nice‐to‐have improvements so you focus on the most important opportunities first.
  2. Second, it makes the organization aware of the cost of a delay in tackling a ‘big‐hitter’. If a problem is wasting $5 million a year, every week of delay is wasting nearly $100,000, so the organization wants to make sure nothing slows this improvement effort.
  3. And third, quantifying the waste enables you to have more meaningful discussions with other parts of the organization whose support you need to change the processes that cause the waste.

If you’re wondering about how to go about the process of quantification, here are three simple guidelines:

  1. Identify if and how the problem affects the four forms of waste: lost sales, material costs, time, and capital costs. If the problem causes delays, think through and estimate the form of waste that the delay results in. Does it increase capital such as inventory or receivables? Does it delay sales and revenue? Does it cost you customers and future business? Does it require additional people time? Many problems will affect more than one of the four forms — lost sales, material, time, and/or capital. For example, excess inventory not only ties up capital, but may increase the number of people who need to manage it, the warehouse costs to store it, and the probability of scrapping it. All these factors can be reasonably estimated with some historical data and getting close enough to the work.
  2. Quantify the impact, recognizing that assumptions and estimates will probably have to be made. If you have or can gather data, use the data and document where you got it. If you must use assumptions or estimates, document how you came up with that — who did you talk to? Perhaps document a range that you are pretty confident about.
  3. Do the math to roll it up into annual dollars.

Look for the “No!”

look for the no

As the saying goes, “With experience comes wisdom… and confirmation bias!”

As you may know, confirmation bias is the tendency to pursue and embrace information that matches our existing beliefs. Human nature encourages us to seek out and enjoy people who write or say exactly what we think, and we often gravitate toward these sources not for information but for confirmation.

Naturally, this can be dangerous when engaged in CI or other problem solving efforts!

When we find ourselves feeling overly-good about an opinion or conclusion, a better course of action, and one that aligns with ‘critical thinking’ best practices, is to make every effort to “prove ourselves wrong!”

In other words, consider alternatives. Or, as philosopher and journalist Emile Chartier Alain put it, “Nothing is more dangerous than an idea when it’s the only one you have.”

Here are five suggestions for avoiding the “confirmation bias” pitfall:

  1. Don’t Believe Everything You’re Told; the 1st step is to consider more than one point of view – “prove yourself wrong!”
  2. Don’t Believe Everything You Think
  3. Ask Questions
  4. Research Deeper
  5. Evaluate Your Work

Ten Key Questions for Optimizing Our Continuous Improvement Effort

One of Bill Conway’s favorite sayings is, “The most important business decision people make every day, is deciding what to work on….”

While at first glance this might seem a simple questions, upon reflection most of us will realize it is not necessarily an easy one to answer.

Possibly the following ten questions can help us move forward in a fashion that enables us to get the most out of our improvement efforts:

  1. What should we work on?
  2. What process should we use to decide what to work on?
  3. How should we prioritize?
  4. What is our “readiness to change?”
  5. What do we do now?
  6. What do we do next?
  7. How do we go about it?
  8. Which tools will best enable us to achieve goals?
  9. Which methods will best enable us to achieve goals?
  10. How can we increase alignment?

The Pros and Cons of Conventional Wisdom

challenge fish

Our previous post shared an example of how what “seemed” to be a sure way of increasing the bottom line turned out to do quite the opposite! It was also a classic example of the perils that are often attached to “conventional wisdom.”

Conventional wisdom is typically considered to be an asset, and in many situations it can be. It speeds up consensus and increases our confidence in our decision making, leaving us to focus our attention on challenges for which there is no conventional wisdom to guide us. And conventional wisdom has much truth within it — having been developed over decades of observations.

But in a dynamic world when the underlying assumptions shift, we follow conventional wisdom at our peril as it can easily lead your organization to make some big mistakes.

For example, conventional wisdom holds that specialization is good. A person can get very fast and reliable doing the same thing the same way again and again, as was done in Henry Ford’s assembly line which broke the complex craft of auto assembly into a sequence of very specialized jobs that could be easily taught to the relatively unskilled workforce. Assembly line efficiencies put automobile ownership in reach of a much larger portion of the country and made the benefits of specialization a part of our national business psyche.

But to achieve the benefits of specialization, you need something increasingly uncommon in today’s world: high volume/low variation work.

A service organization learned this lesson the hard way when they implemented a plan they “thought” would speed up throughput and reduce overtime costs for processing new account applications . They organized their processers into different groups to handle different clients. This enabled each processer to complete an account set-up faster because they could easily memorize the steps and forms for their small group of clients. Nonetheless, the efficiency of the operation as a whole declined substantially. Variation in the incoming volume resulted in one group being swamped one day and working overtime, while another group was very slow.

For work that is low volume/high variation, as in the service organization example, specialization tends to reduce throughput. In such an environment, multi-skilled generalists are far more valuable. Specialization may maximize the speed of the individual, but sub-optimize the process as a whole.

Possibly Mark Twain summed it up best when he said, “”It ain’t what you don’t know that gets you into trouble; it’s what you know for sure that just ain’t so.”

Increasing Customer Satisfaction

customer satisfaction

There are a variety of approaches to hearing the Voice of the Customer and using the information we gather to, hopefully, increase customer satisfaction.

While simply gathering this data guarantees nothing, it’s vitally important because we can know all there is to know about our internal processes and still not know enough about them to increase client satisfaction.

For this sort of challenge we need additional tools and methods, a few of which include:

Customer Surveys are a staple for measuring and possibly surfacing areas for improvement. A popular tool for measuring customer satisfaction is the Net Promoter Score (NPS), which typically takes the form of a single survey question asking respondents to rate the likelihood that they would recommend a company, product, or a service to a friend or colleague on a scale of 0-10. “Promoters” are defined as those giving a 9 or 10 answer, and “Detractors” are those giving an answer of 6 or below. The NPS score is determined by subtracting the percentage of detractors from the percentage of promoters.

Studying variation in the NPS by area, customer type, and over time can help pinpoint trouble spots that are impacting customer satisfaction.

Analyzing customer Complaint Logs can help identify and address the problems that customers have identified and shared, but this is a bare minimum in the effort to increase customer satisfaction. The Complaint Log is a place to seek information about where we are falling short on what is often called “Must-Be Quality.”

The absence of the quality dissatisfies even though the presence in itself will not please the customers because it is assumed. Addressing gaps in the Must-Be Quality can lift one out of the hole, but will never lift customer satisfaction any further. To effectively increase customer satisfaction, we need to create and deliver work that will delight the customers.

One client described his method as the Ambassador Visit: “I go to meet with the customer, I say thank you for your business, and then I shut up. And listen.” Providing a good forum and opportunity for the customer to express what they like and don’t like is very useful.

What’s more, the Ambassador Visit provides a forum to discuss what the customers see coming down the road, so we can proactively anticipate and address their needs.

Another client finds tremendous value in visiting clients as they work with the product — meeting them in the field to watch, listen, and study the customer’s challenges and how the product currently helps them — and how it could help them if something were to be changed. This approach, sometimes called Contextual Inquiry, provides value in understanding what is truly working as expected for the customers and how we can solve problems for the customers that they did not even think to mention.

Whichever method one might use, the key is to keep communication flowing and to be proactive in continually improving processes and measuring the degree to which customers are delighted!

Leaders for Today & Tomorrow

leadership
A conceptual look at leadership and associated concepts.

Gallup recently reported a decline in employee engagement across the U.S., and given current times this might not be a big surprise.

However, they also reported that, during times of turmoil, managers are responsible for implementing leadership decisions while motivating their team to get work done, and that a high percentage of these managers are in need of help!

“Manager engagement is on the decline, and burnout is on the rise,” the article said. “Clarity of expectations and opportunities to develop are specifically vulnerable. Like your employees, your front-line managers and supervisors need to feel that they are continually developing in their work and overall life.”

This need has clearly been recognized in the marketplace as, according to data shared by Northeastern University, 58% of U.S. companies say their number one strategic priority is closing their current leadership skill gaps. The study also indicated that many more plan to increase their total spending on leadership development initiatives in the next few years— “now treating professional development as an important component of their business strategy.”

Leadership provides the energy for change and continuous improvement, as well as the commitment to sustain it. Today’s leaders must continually work to hone and refine a range of skills if they are to lead people to higher levels of performance and engagement.

These skills include:

  • Communication and active listening
  • Method of sharing optimism, energy and enthusiasm
  • Empathy
  • Consistency
  • Dependability
  • Motivation
  • Risk assessment
  • Delegation
  • Empowerment

Leaders Without Teams?
Finally, it’s important to note that you don’t need to be in a C-level role to be considered a leader. Strong leaders exist—and are highly valued—at every level of business. These “leaders without teams” often inspire, engage, and influence their colleagues and stakeholders; and they must also be given skill development opportunities, as many will likely become the “official” leaders of tomorrow.

A ‘must have’ for today’s successful business

must_have

There was a time when engaged employees were a ‘nice to have’ asset, but there were no formal processes for achieving engagement and the prevailing approaches yielded few, if any, measurable results.

Fortunately, as summarized in an article by Engagement Strategies Media, things have changed and engagement is now recognized as a competitive edge.

“With sales growth slowing and competition continuing to grow in many industries, market share goes to those organizations that “wow” not only their customers but all of the people involved with their businesses,” the article said.

“Research consistently confirms that talented “wowed” employees help create “wow” experiences for customers.”

Another fact that has changed the playing field for achieving higher levels of employee engagement is that there are formalized, proven methods for doing so.

One such approach is Engagement Around the Work, which is based on engagement with a purpose. With a clear objective of building and sustaining a high-performing culture in a measurable way, Engagement Around the Work involves specific steps for achieving a culture of engagement that is inextricably linked with team productivity, performance and job satisfaction. It incorporates a clear objective of engaging people around the one thing they all have in common—and the one thing that can bring about increased profitability and a sustainable competitive edge—the work.

You can read our free white paper about this approach here.

4 key questions for better thinking & avoiding bias

four_questions

A recent post shared insights into the pitfall of confirmation bias, which is the tendency to pursue and embrace information that matches our existing beliefs. 

Here are four questions that might help you surface biases or preconceptions that could impact the quality of the thinking processes that convert the information you have gathered into a lasting breakthrough solution:

  1. Did you have this idea as you began your analysis of the current situation? If so, maybe your thinking process was affected by theory-blindness, which is similar to confirmation bias. Theory-blindness is the tendency we all have to give disproportionate weight to evidence and testimony supporting our preconception and an unconscious inclination to discount or miss entirely evidence that refutes the theory.
  2. Are you under the influence of the experience trap? This occurs when we think, “I’ve seen this before and here’s the solution that worked before, so that’s what we should do now.” Often a solution that succeeded in one place at one time produces very different results when the circumstances have changed. We can work to overcome this bias to arrive at an even better solution by noticing this is at the heart of our thinking process.
  3. Could our judgment be influenced by the availability bias? The term describes a tendency to base judgments on how quickly and easily something comes to mind. If an event happened recently, or if we were personally affected by a type of event, we are likely to over-estimate its frequency or importance. If we have never experienced a type of event, our bias is to underestimate its occurrence. If we are aware of this bias, and are careful to compensate for it with data, we improve our thinking process and the likelihood of arriving at a good outcome.
  4. Have we fallen in love with our first idea? We tend to have a powerful urge to stick with the first idea that comes to us, focusing on what’s right about it rather than its flaws. Our attachment to our first idea can keep us from surfacing better alternatives. Or, as French philosopher Émile Chartier (Alain) said, “Nothing is more dangerous than an idea, when it’s the only one we have!”

As we work through the improvement process, we will be most successful if we carefully and objectively evaluate and continually improve the thinking processes we use to convert the facts and data into the best solution.

An uncommon solution to a common business problem

SMIT goals

As noted in our previous post, to pull significantly ahead of competitors an organization must make process innovations in addition to standard improvements.

Continuing with that theme, it is important to recognize that in order to achieve a breakthrough process innovation, a leader must make a powerful case that the breakthrough goal is truly necessary; and then the leader must follow that up with performance targets that are impossible to reach by conventional methods.

People almost always stop looking for an idea once they already have one. Even a flawed or inadequate idea can look good when it is the only one you’ve come up with.

But as French philosopher and journalist Émile Chartier (Alain) said, “Nothing is more dangerous than an idea, when it’s the only one we have!”

When we “fall in love with our first idea,” rationalizations as to why it is still ‘better than the alternative’ come easily. Furthermore, all the natural incentives in most organizations work against making a big innovative change. Big ideas are harder to think of; they are harder to sell, and they are risky or scary to implement. Process innovations simply do not happen unless the situation or an influential leader demands an innovation that is significantly and measurably better.

The Common Problem: SMART v. SMIT
Unfortunately, most of us don’t like to set our teams or ourselves a goal that could lead to failure, so we ask for goals we think can be met.

In fact, managers are taught to develop SMART goals, and ‘achievable’ and ‘realistic’ are at the heart of SMART goals. Yet, achievable and realistic goals never lead to innovation.

If the target is less than 20% improvement, most of the time people will tend to try to get there by doing the same things faster and harder or skipping steps without completely eliminating the need for those steps. These ‘stretch goals’ lead to disappointment or unintended consequences far more often than true innovation.

To inspire innovation, the goal must be out of reach via conventional thinking. Goals must be “SMIT” (specific, measurable, impossible, and timely) to spur innovation.

The Uncommon Solution
Innovation follows the necessity to invent, so a critical ingredient to process innovation is a leader with the courage, conviction, insight, and imagination to persuasively communicate the necessity for a game changing breakthrough process innovation.