Tag Archives: working on the right things

The Best opportunities?

continuous improvement

Continuing with our previous post’s theme of identifying waste (or the best opportunities for improvement), the process of doing so is one that is often misunderstood.

Case in Point
For example, we were invited to visit a large packaging company which had been “in Continuous Improvement (CI)” mode for many years. They wanted help because their efforts were not having any impact on their profitability.

Their sector of the industry suffers from substantial over-capacity, which has created major challenges for all the major players. We began with an assessment, during which we met a broad cross-section of people so we could gain an understanding of what they had been working on, how they had gone about it and what results they have achieved.

What we found was very interesting…

Conventional wisdom in this industry dictated that the only way to make money is to keep the presses running. Consequently, anything that slows down the presses needed to be “fixed.”

With that principle in mind, the company launched a number of projects aimed at improving uptime; project teams consisting of the crews and technical people were put in place and they developed good ways of measuring performance, getting to root causes and taking corrective action. Several of these projects delivered substantial improvements in up-time.

However, in this industry, cost of raw materials is by far the largest proportion of total cost. It therefore made sense to re-focus the improvement efforts on ways of improving yield, which was defined as the percentage of inputs that end up as saleable product made correctly the first time.

This new focus revealed all kinds of problems leading to yield loss, including:

  • Lack of training
  • Inconsistent procedures
  • Errors in getting correct customer requirements
  • Inconsistent internal information
  • Standard loss factors which may lead to complacency
  • Inconsistent raw materials coming from a sister plant

This is an example of a well-intentioned company with well-intentioned people who did not ask what impact their projects would have on the bottom line. If that question had been asked, a much different direction would likely have been taken.

As Bill Conway often said, at least 50% of Continuous Improvement involves working on the right thing.

4 Ways to identify waste

As noted in our previous post, people sometimes have trouble identifying the real waste (or opportunities for improvement) that exists within their organization.

Over the years, we have found the following four approaches to identifying waste to be effective:

A goal driven search: Start with the most pressing organizational goal and drill down to find the waste that affects that goal.

Do you want to save time, money, improve quality, conserve capacity – what? The goal driven search for waste takes that goal and looks for any problem that affects it.

  • If your goal is to free up people’s time, you would then study the time to identify and prioritize every aspect that waste’s time. A work sampling study would provide you with a great deal of information about this.
  • If you want to free up production capacity, you would study and prioritize all the factors that waste your capacity – bottlenecks, set up times, producing the wrong thing (product that sits in inventory), yields – all the capacity spent producing product that cannot be sold, production capacity devoted to rework.
  • If you want to free up cash, you would search for waste in all the cash expenditures: utilities, component inventories, can you accelerate collections, can you shorten the time between order and delivery to accelerate invoicing? Can you shorten the time to collection? Can you ship more from inventory without adding to it? Are you expending cash on overtime that could be reduced if you reduced time wasters?
  • If you want to increase revenue, you would focus on identifying and quantifying the waste in all the factors that get in the way of sales. Use of sales reps time, selling methodology, lead generation and lead yield, causes of lost sales, delays in installations or shipments.

The distinctive feature of the goal driven approach is that not all waste is treated equally. Instead of looking for waste in all its forms, this approach zeros in to identify and prioritize for removal of all the waste associated with a particular important goal.

The brainstorming approach: Collect a group of people knowledgeable about the work and solicit all the ideas about what waste is where.

The brainstorming approach is perhaps the quickest and easiest way to identify an extensive list of the waste in an organization. It is also a great method for getting people involved in looking for and identifying the waste.

Because the people who know most about the work identify the waste, these people are often very committed to working on improvement projects to get rid of that waste. On the initial attempt to identify waste, people generally leave untouched the waste that is deeply embedded in operating practices and instead surface more superficial opportunities. However, some of these will bear substantial fruit and an organization’s skill at surfacing waste will generally grow as it develops more experience with studying and eliminating waste. Brainstorming areas of waste is an excellent way to start an organization on a path of systematic continuous improvement.

The work walk-through approach: Directly observe the work as it is done, searching for and capturing every bit of waste you can spot.

Staple yourself to an order! Not literally, but one way to identify waste is to get a group of people together to follow the work all the way through the process watching for all the places that waste occurs. It is a good idea to make sure your organization has a clear idea about “amnesty” and so that the people hard at work do not feel you are watching for any mistakes they make. As you know, almost all the waste in an organization is due to flaws in the system of work; management has the job of making sure the system is working well so as to minimize wasted time, materials, capital, etc. You can enlist people’s help in identifying what aspects of the system make it harder for them to do the job right with the minimum of time and effort.

The check-out the process approach: Create a value map to identify inventory pileups, bottlenecks, and delays. Use our process evaluation tool to analyze a process and identify and quantify the waste. Or use a SIPOC tool to evaluate a high level process flow.

As you may know, a SIPOC diagram is a very high level process flow, identifying each key input and output of each process. Once you have these identified, you list the quality criteria for each input and output, select an importance factor for each criterion and select how well it is met (or “don’t know”) and the SIPOC tool will calculate the high impact areas to go after for improvement.

what should we improve?

Spring boarding off of our previous two posts on decision making, people often fall into the pitfall of missing the biggest opportunities for improvement because they ‘decide’ on a solution before evaluating the best opportunities for improvement.

In other words, instead of trying to identify waste, they come up with lists of idea driven improvements.

This happens very simply when someone comes up with an idea for an improvement (usually some new technology or equipment that will do something faster or better), puts together a proposal, and then tries to implement it.

The problem with the idea-driven approach is that there is very little correlation between the list of ideas for improvement and the biggest problems or opportunities for improvement within the organization. As noted above, the idea-driven approach to improvement depends on someone identifying a solution at the outset.

The biggest opportunities are usually buried in the tough long-term problems for which solutions are not immediately obvious to anyone! If a solution doesn’t occur to someone, the problem doesn’t make the list. If it doesn’t make the list, it is never studied sufficiently to come up with a solution.

Organizations get further faster by identifying the waste first and choosing the best opportunities from all of the areas of waste you have identified. A portion of the waste is easily spotted and addressed if you take the time to collect the information. But much of the waste is hidden — built into budgets, accepted practices, current operating procedures, and shared assumptions. It is built into processes that are compensating for problems that have not yet been solved. This waste is difficult to see without expanding the vision of what is possible.

How to identify the waste?
Over the years, we have seen several approaches to identifying the waste put into practice. Four such approaches will be the subject of our next post.

4 Ways to Increase Value-Added Work

value added work

Our previous post noted that approximately half of the work done in well-run organizations is value-added, which is defined as “the work our external customers would be willing to pay for if they know what we were doing.” Regrettably, the percentage plummets to only 20% in many businesses!

Yet in reality, a great deal of “non-value-added” work is necessary and important!

Consider that many people and functions play a vital role in helping the internal customer provide value for the external customer. These are the folks ‘on the banks’ of the value stream, some of them providing key enablers such as technology, safety, or information to those creating the value for external customers.

The key is to find the right balance. In most cases, the ultimate conclusion is that it’s to our advantage if we can increase the percentage of value-added work by identifying and eliminating the “waste” that is non-value-added.

Here are four ideas to increase the portion of resources that are directed at value adding activities:

1 — Work on The Bottlenecks
When we work on many things that have a small effect, we will have a small impact. The way to increase value most substantially is to work on the bottleneck, or constraint. All improvement effort that is off the critical path will have a lower impact on increasing the value add. If the bottleneck can be widened even just a little, it provides a pure increase in value.

2 — Increase Understanding of And Alignment With What Customers Truly Value
One of the biggest wastes is when the products or services we offer do not align perfectly with the customers’ needs and values. Errors are possible in two directions.

  1. Bundling a feature into the product or service that the customers do not really need or want. Does the technology have features that are seldom used? Does the product have any bells and whistles no one really cares about? What features have been introduced with inadequate understanding about how the products or services will actually be used? A systematic and thorough understanding of the customers is the only effective way of ensuring we are not merely adding cost instead of value when we add features to our offering.
  2. We also can err by overlooking ways we could leverage our capabilities to solve a problem that the customers may not even have articulated to themselves. We all, to a certain extent, take the world somewhat as we find it, assuming boundaries of what is possible simply by understanding what has always been. So listening to what customers would like to see is unlikely to surface needs. Innovative value creators will try to understand what the customers need before they even know they need it. Steve Jobs did this with the IPod: surfacing an unarticulated need that the resources at his disposal could brilliantly address.

3 — Get at The Root Causes
Replace the constant working on problems and symptoms with lasting solutions by drilling down to root causes. For example, the sales force of one company needed to better understand the value of additional services they could provide to customers. Rather than addressing the issue/opportunity in each proposal, they developed a calculator to make it quick and easy to help the customers (and themselves!) see the value provided by the additional services.

4 — Eliminate the Non-Value Adding Administrative Work
A great deal of time in most organizations is spent on emails, meetings, and reports that do not produce additional value for the customers or the organization. Here are a few approaches to reducing this waste:

  • Reduce clutter in the inboxes
  • Introduce and enforce meeting management protocols and best practices
  • Streamline reports


Which Half of Your Organization’s Work is Value-Added?

categories of work

Bill Conway often said, “Half of Continuous Improvement is working on the right things.”

This means finding ways to increase the amount of “value-added” work that is done each day within our organizations, which is defined as the work our external customers would be willing to pay for if they knew what we were doing. The work must also be done right the first-time and have an impact on the products or services provided by the organization.

While we want our workforce to spend most of their time engaged in value-added work, you might be surprised at the amount of non-value-added work that is part of the day-to-day reality in most organizations.

For example, think about telephone calls you might have made over the past several months to organizations such as your bank, credit card company, cable company, or some type of customer service group. The odds-are you were first greeted by an automated system of some sort, which asked you to provide information, presumably to expedite the process. This information might have included:

  • Your account number
  • Reason for your call (i.e., tech support, billing support, etc.)
  • Personal PIN number
  • Last four digits of your social security number
  • Date of birth, and so on…

Now think back… because in a high percentage of cases, when finally connected to a person, you are asked most if not all of the same questions!

Do we enjoy this experience?

Most people say, “Heck no!”

From the perspective of being value-added, what value did the auto-attendant have for the caller (customer)?
Most people agree, none!

Possibly the auto-attendant is helpful for call-routing purposes, so it might provide value for the organization that is receiving these calls, but it really provides no value for those calling in.

What is typical?
So, you might be wondering, how much of total work is “value-added” in a typical organization?

Even in the best-performing organizations, value-added work represents 50% of the work being done at best, and in many organizations, over 80% of time and resources are not adding value.

A few examples:

  • Inspections to find errors (vs. doing it right the first time…)
  • Rework to fix errors
  • Errors or defects that are never found and make their way into a defective final product
  • Work that sits waiting in front of a bottleneck, or resources that are idled behind a bottleneck
  • Unnecessary work
  • Excess inventory
  • Lost opportunities (perhaps the biggest waste of all) due to work product that does not match customer needs or customer needs that go unmet because they have not been surfaced

But just because a process step is not value-added does not mean it is a bad thing. Processes all include steps that do not add value but are required to make the product or service happen – this is typically referred to as “non-value-added but necessary” work.

In our next post we’ll share some proven ways to increase the amount of value-added work.

5 Key Questions Leading to the Right Root Cause?

root cause
When 5 Whys Aren’t Enough?

Several previous posts focused on identifying waste or opportunities for improvement. Once this step is completed, and a specific problem is identified as the “best” opportunity, the next step often involves finding the root cause of the problem.

This is a critically-important step and, if we’re not careful, we can find ourselves working on the “wrong assumptions.” In fact, we’ve consistently found that few things are more dangerous than common knowledge – when it is wrong.

Root causes are tricky and elusive things. Brainstorming and the “Five Whys” can be effective tools, but neither approach guarantees the “right” result or conclusion. In fact, when the “wrong” root cause is selected, the most common culprit is an untested conclusion.

The best course of action is to think quite broadly when brainstorming and to consider carefully every possible way that the people, technology, information, materials, environment, or methods might be contributing to the problem.

In addition, when the brainstorming of possibilities is over, we should put on our skeptical hat and test each one – before going to the next “why” to find the root cause. Otherwise, we risk arriving at the wrong conclusion.

Here are five key questions you might consider to test a possible cause is to see if it is consistent with the data you already have.:

  • Did the proposed cause precede the effect? If not, it is probably not the real cause. If poor call response rate is being blamed on the new answering system, was the call response rate better before the system was installed? If not, the new system cannot be the culprit.
  • Does the data indicate the problem is trending or cyclical? If so, you can probably rule out ideas about causes that would produce steady effects. For example, to test the possibility that shipping errors are on the rise due to poor technology, ask whether the technology has changed. If there have been no changes in the technology, any changes in the results must be caused by something else.
  • What other effects would you see if the proposed cause were true? Are you seeing them? If not, look elsewhere for the cause. For example, to test whether ‘poor morale’ is causing a high number of defects, ask where else would signs of poor morale show up. Are you seeing them there?
  • If the proposed cause were not true, could the effect have happened? Could the product weight be dropping if a blockage had not developed in the dispensing line? If the answer is ‘no’, you know you must find the blockage.
  • If the cause had been X, would it always produce this effect? If the answer is ‘yes’, then in order to test this, you simply need to check whether the supposed cause actually occurred. For example, if my car will not start, a possible cause is that I left the lights on. (I drive one of those old fashioned cars that require operator involvement to turn off the lights.) If I check and find the lights are in the ‘on’ position, I can confirm my theory. Otherwise, I must keep looking for the cause.

4 Guidelines for Defining Problems

definition
Problem Statements

Our previous post shared perspective on the importance of accurately defining problems when seeking to make improvements. A good problem statement requires some solid pre-work, thoughtful consideration and discussion, and the restraint to avoid speculating before the analysis.

If you’d like to optimize your efforts to effectively define problems and to ultimately solve the “right” problems, you might consider these four guidelines:

  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.
  2. Include a Quantification of the Waste the Problem is Causing. This step will require 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.
  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.
  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.

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.

It’s All About the Work: 10 Questions

Continuous Improvement is all about the Work

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

In fact, we’ve found that half of Continuous Improvement involves working on the right things!

Once people know what to work on, there are ten critical questions to consider, the answers to which will lead the way toward building a high-performance culture of continuous improvement:

  1. What processes should we use to identify the best opportunities for improvement?
  2. How will we prioritize the opportunities?
  3. How can we ensure or increase alignment?
  4. How will we identify what ‘could or should be’ if everything were right?
  5. What specific improvement goals shall we set?
  6. How can we involve the people closest to the work?
  7. What tools will we use to find fundamental solutions?
  8. How will we measure progress?
  9. How will we recognize and communicate progress and achievement?
  10. What is our follow-up system to assure that the processes, once fixed, stay fixed?

Will My Project Succeed?

crystal ball

Every organization has more processes with opportunity to improve than they have organizational capacity and management attention units to execute. That’s why it is so important to identify the best opportunities and to work on the right things.

Over the years we’ve compiled a list of eleven factors that can predict, with a fair degree of accuracy, if a project will be successful. A successful project certainly does not need to score 10’s in all of these, and some of these eleven are more important than others and carry more weight in the prediction:

  1. The potential benefit of the project to the organization is clear, substantial and quantifiable. (10 = very clear, quantifiable, substantial)
  2. The problem to be solved is clearly defined and quantifiable, and the project scope is focused and well-defined. (10 = very clear, focused, and well-defined)
  3. The project has top management’s commitment and support (resources, sponsorship and follow-up); no influential person is actively opposed to the project. (10 = very strong support)
  4. The sponsor and team leader are clear about each one’s role and partner effectively to ensure the success of the project. (10 = very clear)
  5. The team leader and key resources are devoting enough of their time to the project to complete it very quickly. (10= full time)
  6. The team is staffed and led by the right people for the job, and they are determined and capable to quickly achieve results. (10 = very determined and capable)
  7. Meaningful and accurate facts and data about the process are available. (10 = very available)
  8. H. The process to be improved is repeated frequently enough to efficiently study variation in the current process and to and test and measure improvements. Hourly? Monthly? Annually? (10 = very frequently).
  9. The processes to be improved are within the team’s span of control. (10 = under control).
  10. J. The expected time frame for completion of the project or for achieving concrete and measurable milestones. (10 = 4-8 weeks to completion or measurable milestone)
  11. The processes are stable, that is not undergoing very recent or imminent major change (10 = very stable).

Careful consideration of each of these eleven factors will help you focus your capacity on those improvements with the best chance of long term success, moving your organization further faster down that never-ending road of Continuous Improvement.

Identifying Waste v. Solutions

get further faster

Surviving and coming out ahead in these turbulent times demands that we all think carefully and choose well what to study and improve.

As Bill Conway frequently said, “At least 50% of improvement is working on the right things.”

Organizations that are able to engage people in making good, fact-based decisions about what to work on and then execute with laser focus reap huge gains.

An opportunity search is key. That means that we must identify and act upon the opportunities for improvement that will potentially yield the greatest results.

In many cases, organizations do not focus on identifying waste, but instead come up with lists of idea driven improvements. That is, someone comes up with an idea for an improvement, puts together a proposal, and then tries to implement it.

The problem with the idea-driven approach is that there is very little correlation between the list of ideas for improvement and the biggest problems or opportunities for improvement within the organization. The idea-driven approach to improvement depends on someone identifying a solution at the outset. But the biggest opportunities are usually buried in the tough long-term problems for which solutions are not immediately obvious to anyone! If a solution doesn’t occur to someone, the problem doesn’t make the list. If it doesn’t make the list, it is never studied sufficiently to come up with a solution.

Organizations get further faster by identifying the waste first and choosing the best opportunities from all of the areas of waste you have identified. A portion of the waste is easily spotted and addressed if you take the time to collect the information. But much of the waste is hidden — built into budgets, accepted practices, current operating procedures, and shared assumptions. It is built into processes that are compensating for problems that have not yet been solved. This waste is difficult to see without expanding the vision of what is possible.

Our next post will focus on best practices for seeing “what is possible” and for identifying the best opportunities for improvement.