Archive for the ‘The ultimate metric’ Category

How to define a problem

February 3, 2014

Problems tend to be defined in terms of the pain felt by the organization. Consequently the solutions may relieve the pain or embarrassment only to increase the hidden costs of nonconformity. For example, in order to reduce production costs we must have longer production runs thereby generating expensive inventory.

But system thinking and customer focus can change this for the benefit of customers and the organization’s other stakeholders.

Customer-focused-system-thinking organizations define their problems by describing how they as systems will fail or did fail to fulfill customer needs.

Their problem definitions comprise three parts:

A. The customers’ requirements;
B. The evidence of the system not being able to fulfill customers’ timeliness, affordability and performance requirements (perhaps including the PONC*); and
C. The nature of the problem to be solved.

Example:

A. Customers’ requirements fluctuate at short notice;
B. System resists changing its processes resulting in loss of business and customer loyalty (PONC approx $100k pm); and
C. Unable to fulfill frequent changes in customer requirements due to long lead times.

Note that it is better to blame the system than a person.

And, of course, the problem may be an opportunity.

In this case the system’s problem solving, or problem dissolving, processes result in the actions necessary to change their system. The changes may include mistake-proofed short-run processes that respond fast enough to satisfy customer demand for different products while continuing to deliver quality and value.

You can also define your problems in terms of how your system fails to fulfill customer needs. Not only your customers will benefit, you’ll also create more successful stakeholders.

How do I measure the effectiveness of training?

February 19, 2013

Why do we feel a need to measure the benefits of doing the right thing? We find this in quality costing too. Most quality costing is about the cost benefits of keeping promises instead of the cost benefits of making the promises valued by customers. Likewise, we need to do enough of the right thing the right way with our organization as a system to fulfill our collective objectives of creating (and keeping) more successful customers.

People, of diverse innate abilities, benefit in different ways from education and training. Some employees benefit immediately from the formal education and training. Others benefit more from workplace experiences following the education or training. Moreover, we all benefit from a process-based management system that helps us to determine requirements and coordinate our work to fulfill requirements.

Taking the individual out of the system, one could measure the abilities, skills and knowledge of each individual before and after the training session. However, we cannot change the innate abilities of anyone and the slower learners from workplace experiences may be marked down. This is not to mention the contributions or impediments of the leaders and the rest of the system.

Diverse process and project teams comprising individuals of different strengths and weaknesses help each other to fulfill objectives. Managers wisely play to the strengths of their people and avoid exposing their weaknesses. We cannot make everyone the same like robots.

What counts is competence of the individual, the process, leadership and the system of which all three are part. Therefore, we have to optimize the system (parts that work together) so it adds value faster and prevents loss sooner. $ per millisecond may be the ultimate metric appearing on the dashboard for all to see as a smoothed moving average.

What is the value of quality?

January 4, 2013

Some organizations survive by reducing their price of nonconformity from 40% to 20% of revenue. These organizations inspect and audit to stop bad quality from reaching the customer. Reducing the price of nonconformity (PONC) is their laudable quest. If the organization served no customers or delivered no product, PONC would be zero! Quality management therefore requires another metric.

The term “value of quality” makes us think about this. Customers pay for whatever they value. They buy when they are confident that what they buy will fulfill their needs. These needs include affordability. Therefore, we manage quality to deliver value. This includes preventing loss.

Organizations prosper by ensuring they add value faster than their competitors do. They ensure their organizational management systems enable employees to add value quickly. Organizations apply this thinking (summarized as $ per millisecond) when developing, using and optimizing their management systems to deliver more value even faster. Consequently, they can earn a lot more with services and products that are highly valued by more customers.

Leading organizations design, make and deliver services and products that exactly fulfill the needs of their intended customers. They avoid waste in hitting this target. They learn of new needs and new ways to add value – faster and perpetually. They know that sorting good product from bad (aka inspection) slows the velocity of adding value. They know that falling short of customer needs wastes valuable resources. They know that exceeding customer needs, in terms of what they value, increases costs without reward. They may reach a design dilemma: features that do not fulfill customer needs are a waste but delivering more features than customers initially say they require may expose needs not fulfilled by competitors.

The product and its outcomes may include the customers’ wider perceptions of value. Customers used not to care how well their favorite company treated its suppliers or paid its taxes. Increasingly even the most loyal customers care enough about any suffering in how the product is made. Imagine destroying a valuable brand by misusing it as a tax dodge. Customers and employees care about global organizations paying taxes where they work and live. They value social responsibility enough to influence their buying decisions and their career choices.

Hence, quality includes value as perceived by our customers as well as services and products free of nonconformity. Organizations develop, use and improve their management systems to enable employees to add value faster while preventing loss sooner.

The primacy of process

November 3, 2012

Many people confuse processes with procedures. Processes are the work of cross-functional teams. Procedures are the specified way of doing the work. Procedures can be mind-numbing for competent workers especially when they specify unnecessary detail or are used instead of training.

A process may or may not add value. A procedure may or may not be effective and may or may not be documented.

Processes are the counterculture where the culture is for functions to congregate in departments to politick for promotion. Such departmental thinking has to change for the functions to coordinate their work to form a joined-up process to create more successful customers.

Indeed, processes refocus workers from keeping old-style departmental bosses happy to collaborate in satisfying customers. Processes that add value to inputs are the lifeblood of organizations that want to create more successful customers. This makes the new-style process bosses very happy.

Processes usually bring resources and controls so the work of humans can add value to a wide variety of inputs. Resources include skills, knowledge, facilities and equipment. Controls include care, coordination, methods and decisions. Get the inputs, resources and controls right and the output will be free from defects and other failures to fulfill requirements

Middle managers add value by coordinating, monitoring and improving the performance of cross-functional process teams to make sure everyone has what they need to keep their work in balance with customer demand. When customer demand reduces, middle managers or coaches help process teams improve their skills, facilities, equipment, methods or remove kinks from their processes. Or, as a last resort, they may be redeployed to under-resourced processes.

Leaders add value by establishing and living the values that impart care for customers and the requirements of other stakeholders. They ensure their organizations work effectively as systems to direct, nurture, support, redesign and remove processes as necessary to fulfill the organization’s mission. Small companies grow and become successful by providing value and continually improving their management systems, processes and products.

Process Management within well-designed systems are necessary for our work to pay our way in this world as we create more successful customers.

$ per millisecond

August 31, 2011

How fast does your organization add value?

All work should help other people. In this context all work is service. We also know that all work is process. Work should add value or enable another process to add value. When our work depends on the successful interaction of several different functions we need a management system to help us so we are all doing the right things the right way at the right time.

Besides paying customers, our communities, our families, our colleagues, ourselves and our employers – the people receiving the results of our work are stakeholders.

Management systems should inform us of the requirements critical to success. Management systems should deliver to us, on-time and defect-free, the inputs to which our work must add the value. Management systems should deliver the necessary resources and controls so we understand and can agree customer requirements. As part of the management system leaders coordinate our work and cause all of us to care passionately for each other’s requirements.

In short, the management system enables us to earn a living and our organizations to exist.

Sometimes our system slows us or stops us from adding value because its core or support processes, the inputs, resource or controls are late, ineffective or defective in some other way.

Two questions remain: “how fast does your management system enable your core processes to add value and what are doing with your management to hasten the rate it adds value?”