On Being Nimble, part 2

I had a number of helpful comments on my posting about the article [link] on SUV safety. This is a topic which tends to evoke strong feelings. Much like saying the words "Bill Clinton" or "George W. Bush" in certain audiences, emotions run strong at their mere mention.

These emotiona can cause one to miss the point. And miss the connection to Lean Systems.

First, the article is a wonderful demonstration of measuring system performance, not single-point performance. The researchers measured injury to both the driver of the vehicle and drivers of other vehicles. Safety for the vehicle at the expense of others is not safety. It is system safety.

What does this mean in a lean system? One simple application is that the performance of any single machine/person/department is not as important as the performance of the entire enterprise. I illustrate.

Some while back, a potential vendor made his pitch to us, summing it with "We're the most efficient in the post-frame industry!" To back this, he had numbers about overhead cost per unit, number of units produced per hour, labor cost per unit and so on. Then I asked him about his on-time shipment figures and his time from order entry to shipment. They were mediocre and slow, respectively. His obsession with machine efficiency caused him to require long lead times to enable big batches to go through the machine together.

He didn't get our business.

The candy maker who makes Valentine chocolates efficiently, only to get them to stores on February 16 will soon be out of business.

We have to define the system correctly, measure it clearly, improve it relentlessly. And the authors of the article illustrate that wonderfully.

I hope this is helpful. Be nimble.

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Pass the salt please...

...as I eat some crow. The salt helps flavor it a bit.

On December 9, I wrote on the incredible added value to a hypothetical producer of steel by merely cutting its scrap rate. My conclusion was that the company could increase it's operating profit by 61% by merely cutting it's scrap rate from 8% to 4%.

Well. Alert Reader Gary Kuhn took those numbers as an illustration to one of his project teams and (gasp) someone else actually checked my math. Gary wrote back, with the alternate math and asked me to check it.

Gary was right. I made a crucial error in my calculations. While the text of the message suggested that one would add back the sale price of the scrap to the sale price of the product, I actually subtracted the scrap price in the example I did. Duh. Maybe I should work for Enron.

The correct calculation states that the operating profit would improve by 16.5%, or, in this example, $12.40/ton. If they ran, as stated there, 500 tons per week, this would net $6,200 per week in added profits. Still nice, but nowhere near the $13,800/week I calculated earlier.

Gary, thanks so much for writing and correcting me. This is not a trivial mistake. Please express my thanks to your team members who alerted you to it.

Anyone have a recipe for "crow flambe"?

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There's Safety in Being Nimble

My mother-in-law passed on to me a singularly fascinating article Friday by Malcom Gladwell of "Tipping Point" fame. Published in The New Yorker (not available on line, but here is a summary of the article ), Gladwell cited research by Wenzel and Ross concluding that SUV's are not as safe as most people think.

Why did this catch my eye? Two things. First, the authors defined safety as the sum of number of fatalities to the driver of the vehicle and deaths of drivers of the cars they hit in an accident. It is not just how safe the driver is...it is also what happens to the other driver. This is analogous to looking at the enterprise as a whole, not just individual machine or department efficiencies.

Second was their conclusions. While the data were a bit cumbersome, what they show is anything but.

It is safer to be in a nimble vehicle than a merely big vehicle.

In other words, the ability of the car/driver "system" to maneuver around a tough situation saves lives...in many cases more so than just surviving the impact in a big pile of steel.

Fascinatingly, the "nimble" cars were not universally small and the "cumbersome" vehicles not universally huge. Rather, it seems that the design of car, suspension, brakes, handling to make a vehicle nimble is the key. Their best? The Toyota Avalon and the Chrysler Town & Country. The worst? Pontiac Sunfire and Ford F-series pickup.

Does the theme ring a bell? Could it be that a responsive vendor is "safer" than huge inventory? Could it be that a manufacturing system that prevents errors is "safer" than a great inspection system? Could it be that a culture that lets people change and modify their own work plans is "safer" than a culture of central planning? Could it be that counting results for the whole system leads us to better actions than making each function efficient on its own?

Sue, thanks for the article. I hope you too find this is helpful.

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Thinking Lean about Metrics

The year ends. The rush to summarize all sorts of metrics for 2003 commences. "How'd we do?" is the cry. We want to make assessments and describe if we are OK or in trouble. This is useful.

How much more useful, though, would it be if we could make annual assessments more than once a year? Wouldn't it be nice to have a steady look at annual numbers? Not "annualized numbers" but annual numbers? And wouldn't it be way cool to do this (gasp) monthly?

We've been trying this for a while with certain metrics...and I'm really sold on it. We get a lot of mileage and it is so simple, that it is deceptive.

All we use is a 12 month rolling sum for the key metrics we want to assess on an annual basis. No new technology here...just a spreadsheet. Going down a column, we enter each month's figure for the parameter we want to assess. One column over is a formula which sums the previous 12 months. And, boom, you have an annual figure. And, you can watch the annual figure, month by month.

For example, most folks want to know how sales are doing. Will we hit our numbers?? So, go back in the financials as far as you like and put each month's sales figures. Write the formula (your first 12 month figure will occur next to the 12th month of data you insert). Drag down the formula and look at what you have. Every month, you have an annual sales figure. Look at it with a dry eye. Are you where you want to be?? If not, what can you do about it?

Say you want to have X% sales growth this year. Plot your cumulative sales figure, then add another "target line" which would increase the 12 month cumulative by X/12 % each month. Then, compare. The method works equally well with cost figures, revenue figures and non financial figures.

This simple technique takes out seasonality...a big issue for those of us in highly seasonal businesses. There is always a February and always an October in every number.

You can't fake this method either. How many of us have kidded ourselves by saying "Yeah, we're behind, but we'll make it up by the end of the year." Knowing full well we have no realistic chance to do so. Why lie to ourselves? It is a demanding taskmaster. You can have an annual assessment, every month. Why wait till the end of the year??

This method zooms smaller and bigger as well. Do you have a weekly number you pay attention to? Make a weekly assessment daily by cumulatively summing 5 days activity. Need 10 year figures? List your annual figures and sum 10 of them for an annual look at 10 year figures.

Any lean tool should allow us to see more clearly and more frequently, to make changes closer and closer to the actual action, bringing more and more people to see clearly and be involved in improvement. This method fleshes out waste-free metrics in a marvelously simple way.

My deepest thanks to Hal Macomber (read his blog) for introducing us to this 3.5 years ago...we've applied it widely and it has impact.

I hope this is helpful. Feel free to forward to a friend. Email me

Focus

In a dinner conversation tonight, four of us got going on how organizations become ineffective by trying to do too much. 

"Yeah, loss of focus.  Not planning.  Cramming too much in.  Nobody taking charge."

And it hit me that this is one of the reasons lean systems work.

Every tool we have in lean contributes to focusing on the right things.  So, when we do a 5S exercise to clean up a mechanic shop, we do so that we can find the tools we need quickly.  When we create a measurement and a scoreboard in a work area, we do so in order to focus attention on what gets done.  When we do a kaizen event to rapidly change a process, we do this with a specific, written goal in mind. 

And this focus makes accountability easier.  We can't be accountable until we have something to be accountable for. 

On the other hand, clutter makes it easier to hide.  Whether literally hiding behind large piles of inventory or backlogged paperwork.  Or concealing incompetence within a non-documented process. 

Physical and mental decluttering.  It all aids focus.  So find something today to declutter.  Even if it is your email inbox. 

I hope this is helpful. 

"Those who are both humble and tough"

Last fall, a good friend gave me a remarkable little book, a collection of essays by C.S. Lewis (good sites here and here ) from the 1930s and 40s. Lewis is best known for his five-book set about the fictional world of Narnia. He was also, though one of finest thinkers and ethicists of the mid 20th century and has long been a favorite of mine.

And a surprise came in the middle of the book. In a lecture at Oxford in October, 1939, Lewis sought to give students perspective as to why they should continue in their education even as Europe lurched inexorably towards war. Why stay with their studies when the call to action seemed so loud?

Lewis answered with a telling quote. Each vocation and stage of training has its dullness, its boredom. Which is useful because, Lewis said,

It weeds out the vain, windy people and keeps in those who are both humble and tough.

Who really makes it? Who are the true influencers? Who is it who really changes things? Is it not those who have humility? Who do not care where the credit goes so long as the job gets done? Is it not those who are tenacious to get results and hang in there? Those who can put up with the boredom, the petty pot-shots, the political wrangling, the difficulty with understanding correctly? And is it not those who are humble and tough who earn the trust of others?

The simplicity of Lewis' words rings true 63 years later. And is a great challenge and encouragement to all of us hoping to make a difference in our organizations.

May you practice humility and be tough today.

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Five Minds of a Manager, Part 5

I'll tie up today my comments on this fine article from the November issue of Harvard Business Review by Jonathan Gosling and Henry Mintzberg (click for a free summary or to download for $7, if you don't have the article).

The last two mindsets of the manager as described are the Collaborative Mindset (that is, managing relationships) and the Action mindset (managing change). These two perspectives jive closely with previous three.

Collaboration cannot take place unless the manager is with others, both physically and emotionally. Relationships are key. And, this acknowledges that we are not purely rational people...we have likes and dislikes, warts and gowns. In one simple way, collaboration means the manger listens more than talks. The manager chooses to shut up. Frequently. It means leadership is earned from, not thrust upon them.

Which leads to action. The authors point out that our usual view of action is a linear one...we plot a course, take steps and the expected result happens. IF you are a good leader. In reality, action is far less linear. An opportunity presents itself. It is seized (or not). The organization improves (or not). And then it happens again. When will we get out of the illusion of linear action?

I think part of the key to moving out of this illusion is to look at the interrelatedness of managerial excellence captured in this short article. Unless one reflects, one will miss the opportunity. Apart from collaboration, others don't add their input. Lousy analysis will lead to poor use of cash and people. If we miss the impact on the worlds of the those affected, it won't improve. If we don't understand change, surprise, nothing will change.

Conversely, a reflective understanding of the worlds of others, collaborating with them while breaking down the components of the action will be generally positive. And, even if it fails, it won't sink the ship. And the lean leader will learn from any failure, and continue to drive waste out.

I hope this short series was helpful for you. Thanks for reading.

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Five Minds of a Manager, Part 4

I hope I'm not boring you with my continued comments on the most excellent article from the November issue of Harvard Business Review by Jonathan Gosling and Henry Mintzberg (click for a free summary or to download for $7, if you don't have the article). But it is very helpful to me to write about it. So, hang on!

The authors third aspect of managing was refreshing to me. They call it Managing Context: The Worldly Mind-Set. What on earth is this? A suggestion that the next business seminar should be in New Orleans during Mardi Gras??

Quite simply, the worldly mindset implores managers to make decisions looking hard that the "world" in which the decisions will be implemented. The authors write extensively for the multi-national corporation, with examples of cultures, governments, ecologies in far-off places. Probably true, I just don't know much about that.

However, this "mindset" is clearly something a Lean manager should address, at either the micro or macro level. Lean managers have known for a long time to physically get to gemba, the workplace. This is why daily meetings take place in the work area. This is why blitzes or kaizens take place on the shop floor. This is why a value stream map should be drawn in the work place, not in an office. This is why visual measurements are very clear right where people work.

In a sidebar, the authors summarize this mindset:

What matters is attention paid to particular responses to specific conditions.

Here's our old friend, the concept of "attention". They set this attention to specifics against the trend of generalizations about markets, values and practices.

I recall reading in the early 80s a business magazine marveling at how Canon had taken over such a huge market share in cameras at the time. The authors described, with apparent horror, Canon's technique. They would send an experienced manager or engineer to spend five days in a real camera store, behind the counter, talking to real customers. They found that a small handful to people spending a small amount of time in real contact with real customers gave them more market insight than processed data from focus groups. Is this "worldly"? Is this understanding context? Is this paying attention? I think so.

I'm asking myself (and thus encourage you to do the same) "OK, Joe, how do you get closer to the target of the impact of decisions?" Often, it is no more complicated than physically getting to the scene of the action. But that is usually preceded by an intention. I challenge myself to make that intention practical, more often.

I hope this is helpful.

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Thoughts on Christmas Eve

This day is always a quiet, reflective one for me. Looking back at my blog a year ago today , I see that some of the same things are on my mind, yet modified by current events.

• What to say about the economy? The glass has water up to the mid point. Is that good or bad? Depends on who you want to believe. Some metrics are encouraging. Other measures depress us all. In our area, several factories are re-hiring. Another one was shut down last week. This morning, we learn that mad cow disease is found in the US. Looks to me like we'll keep lurching sideways.

• Change is difficult. Combating such inertia, even on a local level, is tough. The inertia to maintain the status quo is huge. The need for a combination of focus and perseverence has hit me more deeply than ever. And indifference to focus and persevernce bugs me more than ever.

• My sons seem to be in better spots than they were a year ago. David, age 25, is loving being a medic in the US Army, despite the fact it means he spends this Christmas in barracks 12 miles from the North Korean border. He and his wife are expecting twin boys in early March. Nathan, now 23, is more settled and finding a career job opportunity at last. The maturation process continues, positively. Matt, age 15, has straight A's, good friends and a Learner's Permit. Look out, local drivers. Being a Dad, example and counselor to three very different kids remains a joy and a mind-blowing challenge.

• My own Dad remains a huge example to me. It's hard to believe that he died ten years ago today, Christmas Eve, 1993. I am so grateful for a man from whom I could learn everything from soybean futures to serving on a school board to nurturing a long marriage. With my own son soon becoming a Dad himself, his example means more than ever.

• Hope is central, and without it we have little to hang on. My own hope flows from my faith in Christ, which continues to be very real to me.

My very best to you this Christmas. Thank you for your gift to me, allowing and encouraging me to write and learn in the public space. It means more than you can imagine.

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Five Minds of a Manager, Part 3

Continuing to comment on the most excellent article from the November issue of Harvard Business Review by Jonathan Gosling and Henry Mintzberg (click for a free summary or to download for $7, if you don't have the article).

The second of the five mindsets of the manager is the analytical mind-set, the management of organizations. This is breaking down a complex phenomenon into it's component parts.

The authors suggest that conventional analysis is inadequate; rather it is crucial that managers dig up deeper.

That said, they don't offer ways to do this deeper analysis, other than to say to appreciate the "soft data" and to examine "biases and assumptions." Let me offer a way to do analysis, based on the well-known factors of the Balanced Scorecard.

• Financial Factors. No amount of "soft data" can overwhelm an inadequate or nonsensical financial analysis. And financial analysis begins with a hard look at cash. Any lean initiative MUST lead to improved cash flow. Cash will usually lead us in the right direction. So, look at the cash flow first.
• Customer Factors. How will the change affect the folks who pay for this? Will it get product or service to them sooner? Better? In a way that they want and will pay for? Has anyone actually asked the customer about it?? Does it make sense from the customer's point of view?
• Process Factors. So how will it affect our own processes? Will it lower our operational cost? Will is shorten our cycle time? Will it lower our work-in-process inventory? How about our raw materials inventory? Will it make it easier to deliver and assess quality?
• Development Factors. Will this help the training of our key people? Will it trigger more learning? Will we encourage or discourage our people?

This is a basis for analysis for a lean decision making process. It is not difficult nor is it complicated. Neither is it simplistic.

I hope this is helpful.

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