Policy Waste

Policy Waste

Ran into a friend of mine this weekend and I asked him how his company was doing. "Business is good," he said with a sheepish smile on his face, "in fact, better than it really should be."

An odd response.

My friend owns a company in the repair business. As such, they are often paid not by the individual consumer but by an insurance adjustor from the individual's carrier. It seems that these adjustors are not concerned with the best price for the repair. My friend discovered that the adjustors are really concerned that the invoice proposal for the repair work line up with their expected format.

So how does make your profits better than they should be? I asked.

"It is absolutely nuts," my friend continued. It seems that in order to make the format of the proposal line up typically adds about 20-30% to what the customer actually requires. "And when I propose a good deal to the adjustor, they give me all sorts of hassles. When I give them the proposal that fits their format, I have no hassle and they pay promptly."

Adding cost. Adding expense. Adding to the ultimate premium consumers pay. And this from nationally known insurance companies.

My friend is right. It is absolutely nuts. And it is very believable.

This is an example of policy waste. Rules, either written or implied, that reinforce waste. Rules that increase the cost of delivering service, cost that adds no value whatsoever.

And here's the point...when we see these policy wastes, we can very often remove them at NO capital cost. Unlike eliminating some physical wastes (which can require machine work or new equipment), eliminating policy wastes are often just a matter of changing rules. No cost. Very rapid gains.

Made me want to see what policy wastes I deal with. I hope it does the same for you.

I hope this is helpful.

Feel free to forward to a friend. Email me

Pull Systems.even in sales

Pull Systems...even in sales

 

In Lean systems, we always want to Pull material through, not Push it. 

 

This works in marketing as well, if you pay attention to it.  Seth Godin writes today about making something others WANT to buy as the key to marketing.

 

Yeah, pull, not push. 

 

I hope you find this helpful.

 

 

Plan vs Actual, part 3

Times on Palm for 10km Race, originally uploaded by joeelylean.

Plan vs. Actual, part 3

A distinctive of Lean is a deeply held conviction that we can understand both the steps in a process and the time it should take to do each process. Steve Spear of Harvard Business School articulated this most clearly in his two seminal articles on Lean (email me if you don't have these). And it is this understanding of time that many people miss.

Understanding the steps in a process is commonly understood. But articulating, then measuring, is less well know. Even less understood than that is involving the associates who do the work in the understanding of the time involved and giving them the tools to measure, real time, how they are doing with this time standard. All too often time standards are buried in hard-to-understood time studies that are neither current, visual nor relevant.

Which brings me to the rather unusual image above, which illustrates my entire point. This is my very own left hand and I took the photo before the start of a recent 10km road race I ran. The numbers are simply the cumulative times I wanted to hit at each of the six mile markers along the course and the bottom number was my proposed finishing time over the full 6.2 miles. (Those of you who are runners are welcome to chuckle at the glacial pace these splits represent...not to worry, I'm a pretty friendly glacier) I also added the work "UNINJURED" to the top, to remind myself not to strain a pulled left calf muscle I had tweaked a week earlier. Operatively, this meant I thought through my conditioning and my goals and broke them down to specific measures, which I could assess not at the END of the race, but six distinct times during the race. At a time when I could (at least theoretically :-) ) effect the final outcome.

And, thus, with only the technology of a ball point pen on skin and a $5 digital wristwatch, I had a full understanding of the Plan vs Actual. It does not have to be expensive or difficult.

We can give our people a way to know, by themselves, multiple times each work day, just how they are doing. They can make their own assessments of whether they are ahead or behind. It need not be complicated or expensive...in fact it is usually best to be simple and cheap. But we MUST share the information openly and visually and involve our people in its development, measurement and improvement.

I hope this is helpful.

(If you want to know how my "actual" compared to my "plan", click here and scroll down to #141)

Christmas Eve, 2004

Christmas Eve, 2004

While I normally try to stay on topic in this blog, I allow myself one day a year to reflect a bit, personally, here in public on Christmas Eve, as I did two years ago and last year. Not only is the day a useful point for self-examination generally, but it is also the day that my Dad died in 1993. So, since then, the day has taken on a new, more sober, meaning.

It is hard to believe that it has been 11 years since Dad lost his year-long battle with cancer. His influence on me is immense. He and I were blessed with a wonderful friendship that avoided many of the periodic estrangements typical between a father and son. His lived out before me and spoke explicitly with me about business, entrepreneurship, risk-taking, risk-avoidance, dealing with colleagues and competitors, handling finances and embracing change. His 78 years were a marvelous gift to me and I am deeply grateful and humbled by it. And his influence remains very real and current, which is why it is hard to fathom he's been gone 11 years. If you are interested, feel free to look at some web pages my sister Karen Eichstadt put together about Dad's early years and college days at Notre Dame where he played football and learned much. You might get a small sense of who he was.

Thoughts of my Dad naturally trigger reflection on my own role as a father to my sons. My oldest, David, is much on our minds. He's an Army Medic serving in Iraq, staffing an Army hospital in Ramadi, 70 miles west of Baghdad and 30 miles from Fallujah. (here he is and here he is with his unit). His wife Susan and twin sons are living nearby us while he's deployed. It has been quite a mental adventure to have a son in harm's way, daily, which isn't explainable in any short piece of text. Suffice it to say, we've come to grips with it and are quite proud of him. Our local newspaper ran a story this morning on him and a peer of his who are both in Iraq.

My middle son Nathan (on the right, with his cousin Andrew and the twins last summer) has landed well in Portland, Oregon, finding a solid job in Human Resources in the past year. My youngest, Matt, is a sophomore in High School and got his driver's license last week. They are both marvelous guys, deep thinkers and building significant strengths of skill and character.

Each one is different...each one is alike. I think of my Dad a lot, hoping to emulate his ability to teach and mentor each of them uniquely, just as he lived out a principled life for his wife and four kids.

Now, let's see...if my son has sons, would that make Gretchen and me (gasp) grandparents? Yeah, I guess so. And it leaves me laughing and in a sense of awe, all at the same time. Because, you see, now there are two more sons to teach and mentor. Dad's laughing with me. And his example continues to the next generation.

Thanks for listening. My best to all my readers for a most Blessed Christmas and a very Happy 2005.

Feel free to forward to a friend. Email me