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Featured in Seth Godin's
Bull Market 2004

Dear Joe,

Thanks for sharing your interest in comparing the paybacks of local improvements with the paybacks of investing in the 'big' solutions. I'll offer a way of thinking about some usual cases.

Local improvement with a quick time for approval
I work in a work cell. Throughout the day I need to leave the workcell to use a drill press across the plant. It takes some time to traverse the plant. (Sometimes I have to make the trip twice because the piece needs reworking.) I discover the plant owns extra drill presses. As an individual I see the opportunity to claim one of the excess drill presses for my workcell. My workgroup leader likes the idea so we move to implementation. I spend 1 Hr arranging, moving, and setting up the drill press. The plant is now in the hole the value of 1 hour. The benefit is now the removal of the interruption -- stopping, time walking to the drill press, returning, and re-starting. The drilling is the same whether close by or distant, except that the drill press might stay in a 'ready state' for drilling when it is part of a work cell. Immediately, I have the extra time for producing more throughput and I might encounter other side benefits. When graphing this the plant makes the investment of 1 Hr. and begins getting benefits immediately. When using a time scale of a week, you might not see the money spent, let alone using the time scale of a month.

Compare this with the 'big idea' improvement
An engineer and others spend time for week after week studying, collecting data, analyzing, proposing, getting approvals, dealing with well-intended suggestions from somewhat interested others, and finally implementing. (Please don't read that as cynical. It acknowledges the usual drive for a correct solution. I'll say more later.) During that time no new value is accruing. Costs accrue through the time when the proposal is implemented and returns begin. Plotting this would show starting at zero going negative for N months then beginning the climb back to zero. Only the great solutions climb fast enough to show payback in one year. Most "investments" show returns of 15-25% thus taking anywhere from 3-7 years to payback.

In the first case let's say you are getting 3 improvements every 4 days for a group of 50 people (consistent with national averages of good companies getting 4 improvements/person/year). That is not a bad rate, but it still shows thinking attached to the conventional wisdom. What's that wisdom? People can be expected to act in their self-interest rather than for the benefit of the company. (This harkens back to Adam Smith.) However, if you can avoid the approval process, then the rate of improvement can go way up. One group of 45 people I recently worked with 'adopted' just under 500 improvements in their first 7 weeks. That is about 5 or 6 improvements/person/month! Notice I didn't say 'proposed' and 'approved'. They usually did neither. We used three rules to avoid that.

1. If the workgroup agrees it will be more value, AND
2. If it doesn't require a new cash outlay, AND
3. If it can be done on your shift without interrupting production or others, then just do it.

Everything else needs the foreman's approval. I don't recall how much went to the foreman for approval, but they were acted on promptly.

Pursuing 'correct solutions'
In usual situations managers and engineers removed from the factory floor or the operations of a workgroup are responsible for improving the performance of the process. They pursue this work as projects. Workers are just responsible for production. In these cases we often find the detachment of the engineers and managers leads to proposals about improving local productivity rather than the ideal 'objectivity' and optimal solutions we are seeking from these objective people. Anyone who has even the slightest concern for prudence will choose to take time to be sure that what is being changed will do more good than harm. Investigating that is what so often consumes the time on these projects. In the end we get what we get. Some changes are real improvements while others are write-offs.

Now don't get me wrong. I think we should be doing process engineering, making capital investments, and bringing in subject-matter experts. Here's the problem: almost any investment proposal looks good when evaluated against a poor current state. But what if the current state was on a continuing path of operator-directed improvement? What if those improvements were focussed on reducing dependence and variability? What if those improvements resulted in increased throughput? And, what if those improvements were done with little to no delay? Then...what would we be investing in? I bet they would be very different. We might even have fewer projects.

Hope this helped.

Now, for all you folks who want to look at the graphs...you'll just have to wait! It will take me time to create something that shows how profit velocity varies in the two cases.

posted by Hal at 6:05 AM | link  |   |   | Google It!  | Email This  |

The trip was great. It started very early on Sept 11. As you might imagine both Boston Logan and the Philly airports were empty. There were less than 10 people on board. Eery. The sessions were quite productive. I wish I could report that four teams got off to a great start. Scheduling kept many project team members from attending. However, 6 project leaders did attend. Among other topics, we explored making project performance improvements across projects. We settled on a practice of reviewing weekly project reliability data -- the percent of planned tasks completed (PPC) -- and analyzing the sources of variability on projects. I think this group will develop a new practice. I'll report on it later. There's a specialty contractor in Texas who I hear is doing something similar. I'll research it. BTW, look for regular postings every Mon, Wed, and Fri mornings with a few random postings in between. I'm also interested in what readers have to say about these rantings. Click on the "Sound Off" link to leave your comments for me and other readers. You'll know there is something to read when a number precedes the text "Sound Off".
posted by Hal at 10:10 PM | link  |   |   | Google It!  | Email This  |

I'm working with a defense contractor today and tomorrow to put a series of projects on the Last Planner™ System (LPS). The division has been using the LPS on numerous improvement projects for the last 8 months. They are now setting out to make the LPS the everyday way of managing projects. What's in store? We recognize three challenges:

1. People have the habits they have. This goes for team members and managers alike.
2. Business measures support the current practices. Changes to these measures may disturb otherwise fine operating conditions.
3. People need support for their learning and improving. This requires shifting how managers and leaders are spending their time.

We are using the blitz to accomplish in one quick step what otherwise takes weeks. Project teams will be operating in a new way with other project teams who are doing the same. Among the group we are looking to find some quick learners who can help others. We are looking to link people across the boundaries of their department and the project organization. We are expecting to encounter objections that others in the group can address instead of managers and outsiders. And we are intending to have some fun with it all. With a little luck on our side we will leave the group in a spirit of enthusiasm for learning and accomplishment. I'll write again on this to let you know what we encountered and how it all comes out.
posted by Hal at 6:05 AM | link  |   |   | Google It!  | Email This  |

A Few Thoughts On Coaching Much of my time is in coaching conversations with leaders in the midst of implementing lean project practices. Lencioni's Leadership Trilogy is just one of my supporting guides. A more all-around useful support is Coachville. I encourage anyone leading change to join Coachville -- it's free through the end of 2002. I have been coaching for over 12 years. I have benefited more from Coachville during the last year than from any other single source. Why coach? Coaching is a skill I see effective leaders use. The skill is particularly important during times of rapid change and learning. People need a leader's help mostly because as human beings we are permanently blind. What do I mean? We are not just unaware of our behaviors or of improtant distinctions, but there are some things that we cannot see if we have our attention on what we should be looking at. Take golf. If one is shifting weight inappropiately during a backswing, looking at the shift in one's body while swinging as a means of correcting the situation takes one's eyes off the ball. Do that and one is sure to miss the ball. So what can we do? Get a coach who can observe us in action. As a leader you can do the same for your team. But how do you interact? What are you looking for? How do you engage with your team? Begin by exploring the Coachville's tremendous offerings. Coachville offers training for coaches: coaching models, coaching principles, 'How to Coach Anyone' course-by-email, 'What is Coaching' by Real Audio, live conferences, certifications, an abundance of supporting resources, and the most innovative approach to learning: the telecourse -- courses by teleconference. Many of these resources and courses are free. Others have nominal fees. You've got nothing to lose. Join Coachville! And if you are looking for a coach CoachvilleReferral is the largest site for finding a coach.
posted by Hal at 8:02 AM | link  |   |   | Google It!  | Email This  |

I work with teams in the midst of challenging projects. So often these teams need guidance, not just with their team members, but also engaging their executives in supportive ways that will help the team succeed. More and more I find myself referring to the work of Patrick Lencioni for that guidance. Patrick has developed a theory set contained in a trilogy of books. He uses a parable as the setting for introducing the principles. Each story finds an executive with trouble. While working through the situation Lencioni exposes leadership principles. Readers find the approach engaging and memorable. I'll offer comments on each book, but don't cheat yourself...read the books. Better yet, use them with your team to plot your own strategy for bringing forth the leadership you need to make your lean projects successful.

The Five Temptations of a CEO
for producing exceptional results through others

  ..choosing status over results
  ..choosing popularity over accountability
  ..choosing certainty over clarity
  ..choosing harmony over healthy conflict
  ..choosing invulnerability over trust

The one thing anyone who has led knows is that the future is uncertain and unknowable. Yet, the same people are often tempted as Lencioni's CEO was tempted. All projects are risky. All customers want confidence that their project will be successful. All leaders are human. Lencioni shows us we can expect our behaviors to be unintentionally unsupportive. When we observe our behaviors with these distinctions we are prepared for taking different actions.

The Four Obsessions of an Effective Executive
for attaining organizational health

  ..build and maintain a cohesive leadership team
  ..create organizational clarity
  ..over-communicate organizational clarity
  ..reinforce organizational clarity through human systems

Think of these obsessions, or as Lencioni refers to them as disciplines, as a structure for establishing habits of leadership in your organization. By habits I mean the daily routines that you don't think about, but just do. For instance, the third discipline 'over-communicate organizational clarity,' could be manifest by routinely starting every meeting with a re-statement of why -- for the sake of what -- the group is proceeding with a lean approach to project delivery. Speaking about this once is not enough. Lencioni claims we must raise the issue throughout the life of the inititiative.

The Five Dysfunctions of a Team
building a hot group

  ..absence of trust
  ..fear of conflict
  ..lack of commitment
  ..avoidance of accountability
  ..inattention to results

Many of us have come to expect the usual stages of team performance -- forming, storming, norming, and performing -- as the usual progression of team dynamics. Yet many of us may never have reached the elusive fourth stage. Lencioni (while not using the four stages) offers a different way of viewing team dynamics and performance. These five distinctions offer any team member a 'handle' for shifting the team behavior. I see so many teams leaving the acts of leadership up to the designated leader. Using these distinctions each of us can shape and reshape team behavior becoming more functional.

One last comment on the trilogy. Lencioni offers practical advice with his short lists on leadership. Let me add some more practical advice that I got from Ken Blanchard in Leadership and the One Minute Manager. Be S.M.A.R.T. about how you proceed. Focus your actions in one area rather than 14. Set a goal that is specific, measurable, attainable, relevant, and trackable. Get your result then set a new S.M.A.R.T. goal. Notes on Developing a S.M.A.R.T. Approach.

posted by Hal at 11:22 AM | link  |   |   | Google It!  | Email This  |

 

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