Happy New Year.............

As 2011 winds down and I look back on all that's happened to me personally, I have to say that for me it was a very good year.  I had the opportunity to welcome two new granddaughters into the world, so that by itself would be a wonderful year even if nothing else took place in my life.  I now have five beautiful grandchildren and I love them all so much.

I had the opportunity to collaborate on a new book with one of my best friends, Bruce Nelson.  The new book, Epiphanized, will be published hopefully in January and both Bruce and I are excited about it.  It's my first business novel and I have to say it was much more fun to write than the two previous technical books I was fortunate enough to have published.

In 2011 I made a career change to a great consulting company, NOVACES.  My first two months with NOVACES have been wonderful and although I've worked for other companies, this company truly "gets it."  I have never worked for a company that was more focused on their employees than NOVACES is.  It's one of the best decisions I have ever made.  NOVACES thinks like I do in almost every way and rarely are most people able to say that about their company.  There are so few companies that recognize the power of integrating TOC, Lean and Six Sigma, but NOVACES clearly does.  If your company is struggling, I would encourage you to contact NOVACES for help.  The leadership is simply the best and although I haven't met everyone in the company, the people I have met are a cut above....... This is the company that I want to retire from in the future. 

Finally, my wife and I moved back to our home and friends in Kennesaw, GA and we're so happy to be back.  My wife is a wonderful woman and she supported my decision to take on this new role with NOVACES which gave us the opportunity to return to our home.  She supports everything I do and has been very patient while I sit for hours writing white papers, articles and books....so I want to thank her publically for who and what she means to me.

I want to thank all of my loyal readers and followers for a wonderful year with my blog.  Everyone has been so very supportive.  In closing I want to wish everyone a very Happy and Prosperous New Year in 2012.

Bob Sproull

Focus and Leverage Part 67

One of the most important teachings from the Theory of Constraints is the concept of constraints in general.  While many times the constraint is internal to companies in the form of a physical constraint, sometimes the constraints are in the marketplace.  That is, the company’s capacity is higher than the demand placed on the process.  This is the subject of this blog posting along with what can be done to break this type of constraint.

Marketplace constraints come about simply because the company has no competitive edge.  That is, they are unable to differentiate themselves from their competition.  So how can a company differentiate themselves?  Quite simply there are four primary factors associated with having or not having a competitive edge.

1.      Quality

            2.      On-time Delivery
            3.      Customer Service
            4.      Cost

Let’s explore each of these factors in a bit more detail.

Quality, in its most basic form, is a measure of how well a product conforms to design standards.  It’s clear that Japanese manufacturers like Toyota and Honda and yes, Ford, are the world’s recognized leaders when it comes to producing the highest quality products, but it’s also clear that this wasn’t always the case.  We all know the history here when Dr. Deming went to Japan and taught the Japanese how to become competitive.

The secret to becoming quality competitive is first, by designing quality into the products, second, the complete eradication of special cause variation, and third, developing processes that are in control and capable.  It’s not rocket science, but so few companies focus on these three success elements for creating products and services that differentiate them in the marketplace!  So if you want more orders, the first step is to distinguish yourselves from the competition from a quality perspective.

On-time delivery requires that you produce products to the rate at which customers expect to receive them.  This means that you must have product flow within your facility that is better than your competition.  We’ve discussed ways to accomplish this in previous blog postings, but the basics involve focusing on and improving the physical constraint that exists within your facility, removing wasted time within your processes (both physical and non-physical), eradicating things like down time, quality problems, variation and all of the other things that cause your processes to be inconsistent.  It also involves reducing unnecessary inventory that lengthens cycle times and hides defects.  You must create consistent, reliable processes that don’t impede your ability to produce and ship on time.

Customer service simply means that you are responsive to the needs of your customer base.  Customers must feel comfortable in the fact that if their market changes, their supply base will be able to change right along with them.  If the customer has an immediate need for more product, then the supplier that separates themselves in terms of response time will become the supplier of choice.  This means that your manufacturing lead times must be short enough to respond to the ever-changing demands of the market.  This only comes by creating processes with exceptional flow through constraint optimization and subordination of the other steps to the constraint.  It’s important to remember that the greater the amount of work-in-process inventory, the longer the lead time to produce.

Cost is perhaps the greatest differentiator of all in a down market.  But having said this, low cost without the other three factors in place will not guarantee you more orders.  Low costs are only achieved by removing waste and unecessary operating expense within the company.  In order to be the lowest cost provider in the marketplace, companies must clearly manage all parts of the business.  The quality of the products must be superior with little scrap and rework.  The quantity of raw materials must be low enough to minimize the carrying costs.  The amount of labor required to produce the product must be optimal with little or no overtime.  The cost of expedited shipments must be minimized.  All of these factors and more make up the cost of the product or service.  If the costs are less than the competition, then cost can be a differentiator, but not without the other three factors, quality, on-time delivery, and customer service.

Before we leave cost as a differentiator, let’s talk about how cost can be used as a differentiator from a different perspective.  In one of my blog posting I talked about Throughput Accounting and in that discussion we talked about how we can use reduced profits to enter new markets.  We defined Throughput as Revenue minus Operating Expense which is the definition of profit and as long as the result is a positive number, then there is profit.  So then, one way to use this concept, especially when trying to enter new markets, is to reduce the revenue portion of this equation by lowering the sales cost.  Some will argue that this may create a price war with the competition, but in most cases it will generate new orders to utilize the excess capacity.  Think about it, if you have excellent Quality, On-Time Delivery and Customer Service and now you have the lowest cost, then more sales will come your way.

Bob Sproull

Happy Holidays

I want to thank all of my readers for a very, very good year with many, many page views.  I also want to thank my good friend, Bruce Nelson for his contribution to my blog, but more importantly for his friendship.  Please everyone have a very Happy Holiday season and a prosperous New Year.  And at the risk of being politically incorrect, Merry Christmas.

Bob

Focus and Leverage Part 66

I’ve been reading a wonderful book entitled, Focused Operations Management For Health Service Organizations by Boaz Ronen, Joseph Pliskin and Shimeon Pass and I want to recommend it to all of my readers.  In this book the authors introduce the difference between being an Optimizer versus being a Satisficer.  If you’re like me, you may not have ever heard of these two terms, so I thought it might be a good topic to share on my blog.

Nobel laureate H. A. Simon recognized many years ago (1957) a management situation that according to Simon, caused decision-making hardship.  Simon claimed that decision makers like executives, managers, engineers, etc. were trying to become optimizers while making decisions.  Optimizers are decision makers who are always in search of the best possible decision without considering time or resource constraints.  To achieve the best possible decision, the optimizer gathers all of the information needed to build a model that will allow them to choose the best alternative.  The problem with being an optimizer is that this approach requires significant amounts of time, effort and money.  In reality there is probably no limit to the number of different alternatives that can be evaluated, so optimizers will never really have all of the needed information on hand to effectively evaluate all of the alternatives.  As I said, this approach is very time consuming and sometimes very costly.  The hard reality is that while the perfect solution might result in a better solution, it may simply come too late, rendering some products obsolete.  Optimizers are often guilty of analysis paralysis and typically demonstrate a “failure to launch” type of behavior.

Satisficers are decision makers who are satisfied with a reasonable solution resulting in significant improvement to the system rather than waiting for the perfect solution.  The satisficer sets a level of aspiration, a threshold or objective to be achieved.  The satisficer’s objective is not to maximize or minimize some performance measure but to achieve a solution that will improve the measure beyond their predefined level that they had set.  When this level has been achieved the satisficer sets a new target to surpass and the process repeats itself.  This sort of stair-step approach to improvement keeps the organization moving in a positive direction without waiting to achieve perfection.

The satisficer’s road to excellence is based upon complying with two simple principles:

1.    Set a high enough level of aspiration that is compatible with market conditions, competition, or investor expectations.

2.    Adopt an approach of continuous improvement rather than optimization.

The optimizer uses optimization tools and techniques while the satisficer uses heuristics, decision rules that result in improvement, but not necessarily optimal improvement.  In other words, when an exhaustive search for perfection is impractical, heuristic methods are used to speed up the process of finding a satisfactory solution.

Without having the label of “satisficer” I have been using this approach to process improvement for years.  One of the problems I often see with Six Sigma initiatives is this maniacal focus on data collection and analysis even when the solution is obvious.  Don’t get me wrong, I’m not advocating the elimination of statistical analysis, but what I am saying is, don’t wait for that sometimes elusive optimal solution when a simple solution is staring you in the face.  By becoming a satisficer, you will move your organization forward in a stepwise fashion.

Bob Sproull

Focus and Leverage Part 65

Yesterday Bruce and I received a draft copy of the cover of our new book Epiphanized and we thought our loyal readers might want to see what it looks like.  Bruce and I are getting very excited for this book to finally get published and we want to thank everyone for the wonderful comments we've received on it.  We also want to wish everyone a very happy holiday season and a properous new year.  We'd love to get feedback on your impressions of this cover.



Bob and Bruce

Focus and Leverage Part 65

In this final part of Chapter 1, Joe meets a very unlikely bartender named Connor Jackson and as Joe will learn throughout this book, he is so much more than just a ‘bartender.”

Bob and Bruce

CHAPTER 1 Part 5 for Epiphanized©

A book by Bob Sproull and Bruce Nelson

 – JOE’S FIRST DAY

“Yes,” Joe replied. “Just tell me where and when, and I’ll be there.”

Ten minutes before Joe was to meet the VP of Ops, Judy got a call from the VP asking if Joe could meet him for breakfast instead in his office.  Joe actually liked this idea better because he could also get to see the production layout firsthand. 

“Tell him yes, Judy,” said Joe, and then told Judy that he was leaving for lunch.  He said  he would be back in a couple of hours. 

It was clear to Joe that one of the things he had to do was to get everyone on the same page and that page was different than the one they were on.  He decided to skip lunch because he had something more pressing that he needed to do today.

Joe brought up his search engine to find the nearest bookstore and dialed the number.  “Well, how many copies do you have?” asked Joe. “Twenty-one? I’ll take all of them . . . hold them for me . . . I’ll be there in about twenty minutes,”

And so off Joe went to the bookstore to pick up twenty-one copies of The Goal.  He decided that since reading The Goal together had worked so well when he was appointed general manager of a turnaround, why reinvent the wheel?  Joe picked up his books and then decided that he was hungry after all and needed to grab a quick bite to eat.  Joe really didn’t know where to go in this new city for lunch, so he just drove around until he spotted a small, out-of-the-way bar.  He decided to take a copy of the book in with him and brush up on some of the key concepts.  He sat at the bar, laid down his copy of The Goal and put on his reading glasses.

It didn’t take long for the bartender to ask Joe what he wanted to drink.  Joe told him he was working and that he’d better just have a soft drink.  Joe asked the bartender what kind of food they served for lunch, and he told Joe that all they had were sandwiches and chips.  Joe ordered a ham sandwich and settled down to read his book.  His sandwich appeared shortly thereafter, and the bartender asked Joe what he was reading. Joe held up the book and to his surprise the bartender said, “Great book—one of my favorites.” 

“You’ve read The Goal?” Joe was stunned. 

“I sure have,” the bartender replied. 

“I’m Joe Pecci, the new continuous improvement manager at Barton,” said Joe as he shook the bartender’s hand. 

“Nice to meet you, Joe, I’m Connor Jackson.”. 

“So how do you know about The Goal, Connor?” Joe asked.  “I mean, I don’t think I’ve ever met a bartender who knew anything about the Theory of Constraints.” 

Connor replied, “It’s a long story . . . so sometime when you have more time, come back in and I’ll tell you.”

“I’ll just do that Connor . . . and by the way, this is the best ham sandwich I’ve ever tasted.”

Joe finished his lunch and drove back to the office, only to find it empty.  “Where is my team?” Joe thought.  Then he realized that it was almost five o’clock.  Joe had gotten lost in his book and read about 200 pages while he was at the bar.  “Oh well,” Joe thought to himself,” I guess I might as well go back to my hotel and call my wife to let her know how my first day on the job went.”

Bruce and I hope you have enjoyed this first chapter of our book, Epiphanized.  We both wish you luck in your quest to improve your processes, systems and your company and we believe that if you apply the principle and use the tools we present in this book, your improvement results will not only improve, they will accelerate more than you ever imagined.

Happy Holidays from both of us....

Bob and Bruce

Focus and Leverage Part 64

In this posting, Joe describes to the Finance Director an early career experience he had with a plant turn-around that changed his whole outlook on manufacturing and continuous improvement and then explains a very new type of Accounting.

Bob and Bruce

CHAPTER 1 Part 4 for Epiphanized©

A book by Bob Sproull and Bruce Nelson

 – JOE’S FIRST DAY

For the next hour Joe and Paul talked about the role of Finance on the team, and everything was going well until Joe told Paul that, in his opinion, the method they were using to capture cost saving was flawed.  Paul was clearly taken back by this statement, reacting as though it were a personal attack on him.  Joe explained that when he first started his career, he was taught the same cost-accounting methods that Barton was using, but that about twenty years ago, Joe had had a personal epiphany of sorts.  Joe explained that he had been hired as general manager of a company that was being considered for closure, and Joe’s job was either to turn the company around or oversee its closing.  Joe’s background had been all quality and engineering, so he was surprised that he was selected to lead this effort.

Since Joe had no real experience in operations management, he knew he had to rely on his two operations managers, whom he hadn’t met yet.  When he did meet them, he soon realized that they had no idea of how to effectuate a business turnaround.  Joe remembered going to a library (there was no internet back then) to read about operations management, and he stumbled upon a book called The Goal by Dr. Eliyahu Goldratt.  Joe took it home and stayed up all night reading it.  He explained to Paul that this book changed his entire approach to manufacturing.  Joe bought extra copies and had his entire staff read the book. His team had daily discussions about the content, and to make a long story short, by applying the lessons in the book, they not only saved the plant from shutting down, their plant became the model for the rest of the company.

Joe explained to Paul how within every organization, constraints existed, and that unless and until a constraint was exploited and the rest of the organization was subordinated to it, no real improvement would take place.  Joe opened his briefcase and handed Paul his very own tattered and worn copy of The Goal, and made Paul promise that he would read it.  Joe continued their discussion about how he thought Barton was misreporting cost savings.  He asked Paul why he thought it was OK to report localized labor-hour reductions as a cost savings, since they did not remove the labor from the company. 

Paul’s response floored Joe: ”Because the customers accept it as a reduction.” 

“But do you, Paul?” asked Joe. “Do you believe in your heart that these things you’re reporting are actually cost savings?” Joe asked.  “What if later on the customers come back to us and tell us that we must reduce our prices based upon the reported cost savings?” Joe added.  “What will we tell them Paul?” asked Joe. 

Their conversation continued on, and Joe explained the concepts associated with the Theory of Constraints and Throughput Accounting (TA) and how TA is much better for daily decision-making than traditional cost accounting.  When Joe left Paul’s office, he reminded him to read The Goal, and Paul promised Joe that he would, but he also made Joe promise to tell him more about how he had led the turnaround of the manufacturing facility he had described to him earlier in their conversation.

Joe left Paul’s office and headed back to his own office.  Joe knew that if Barton was going to be successful at improving on-time deliveries, there had to be a radical shift in organizational thinking on how to approach this effort.  Joe also knew that he could not do this by himself; he needed to develop his team and teach them a better way.  When Joe arrived at his office, he could see that his team was still struggling to come up with cost savings for the past quarter.  Joe asked them to come into his office so they could talk.  One by one, they came in and took a seat.  Joe’s first question to them centered around how they selected their improvement projects.  

“We generally are told by the quality director what our projects will be,” Bill explained. 

“And how does he select them? Has he ever explained that to you?” Joe asked.

“N-n-n-no . . . h-h-e-e just tells us that the VP of Operations w-wants us t-to w-work on th-th-this or th-that,” explained Manuel. 

Joe turned to Judy to ask her to contact the VP of Ops, but she was one step ahead of him.  “Can you meet him for lunch, boss?” says Judy. 

In our next posting, Joe meets one of the central characters in our book……a bartender who is so much more than your typical bartender. 

Bob and Bruce

Focus and Leverage Part 63

In these two parts of Chapter 1, Joe meets his direct reports and gets an idea of how his new boss works….or doesn’t work and how his new company calculates savings.

Bob and Bruce

CHAPTER 1 Parts 2 and 3 for Epiphanized©

A book by Bob Sproull and Bruce Nelson

 – JOE’S FIRST DAY

Joe smiled back and introduced himself.  “I’m Joe Pecci (pronounced Peecee), the new Continuous Improvement Manager . . . and you are?” 

“I’m Judy Godfrey and I had no idea we were getting a new manager! She turned toward the group. “Guys,” Judy said, "Did you know we were getting a new manager today?” 

They all said, “Nope, but that’s normal around here. No one ever tells us anything!”  One by one they all introduced themselves and shook Joe’s hand. 

“Oh boy,” thought Joe, “No one even knew that I was coming.  Is there a communications problem here?”

One man stepped forward. “I’m Bill Cody, one of the Lean Six Sigma black belts . . . pleased to meet you.”  Bill was perhaps the shortest man Joe had ever met in his life.  At best he was maybe five feet one inches tall. But he was also one of the bulkiest men Joe had ever met.  Not a whole lot of difference between Bill’s height and width, and he had a noticeable waddle when he walked. 

“Nice to meet you too, Bill,” said Joe. 

Another man introduced himself. “Manuel Gonzalez, s-sir, nice to meet you s-s-sir.  I’m also one of the b-b-black b-b-belts here,” he stuttered. Manuel was noticeably trembling as he shook Joe’s hand. 

“Calm down Manuel, I don’t bite,” Joe said.

Judy said, “Manuel is like this all of the time . . .  early stages of Parkinson’s disease.” 

“Sorry, Manuel, I didn’t know,” Joe responded in a feeble attempt at an apology. 

A third man stepped up. “Stan Wilson, Joe, good to meet you. And I’m a black belt here too, but I’m studying to become a master black belt.”  Stan appeared to be a very confident person. 

Joe asked Judy what her role in the office was, and she said jokingly, “My primary role is to keep these guys in line.”  Everyone laughed. Then she explained that her role as lean assistant was to prepare all of the graphs and charts and Power Point presentations for the quality director and to perform statistical calculations that everyone requested.  “I love my job,” said Judy, “but I just wish I’d get more advanced notice on things from the quality director. Everything I do is a last-minute adventure, and it’s frustrating to say the least.”

During his interviews Joe had met the quality director, his new boss.  The director seemed like a man in chaos and disarray, and he offered Joe a job on the spot.  The director explained that although the operator efficiencies were high, and the quality levels met the customer requirements, Barton was late on virtually every order and they had received threatening letters from their customer base.  He explained that one of Joe’s functions would be to find out why orders were late and to fix this problem. In fact, he told Joe that was to be his primary role—in addition to generating significant cost savings.  Since Joe’s background was manufacturing, and he had an excellent track record and references, the quality director told Joe that he expected rapid improvement in on-time delivery and cost savings. 

The quality director was nowhere to be found, and when Joe asked his team if anyone had seen the director today, Judy explained, “He isn’t here on Mondays . . . he’s on the golf course.”

Joe meets the Finance Director for the first time and as he will find out, he is totally into traditional cost accounting practices.  Joe discovers just how uninvolved the Finance team is in continuous improvement.

With the introductions complete, Joe asks, “What are you guys working on?”

Bill replied, “You don’t want to know.” He added, “Every quarter we have this mad scramble to come up with cost savings that we have to report to the government, and every quarter we have to dig deep into our projects to calculate how we’re doing.”

“Where’s the finance member of your team,” asked Joe.  Why aren’t they helping you?”

“Finance?” said Stan.  “There’s no member of Finance on our teams!”

“Why not?” Joe asked. 

“W-we’ve just n-n-never included them,” Manuel explained.  “W-we prepare our “b-best g-guess” on s-savings and s-s-submit it to them for review.  S-s-sometimes they accept it and s-s-sometimes they don’t,” he said. 

“You mean when you write your project charter, you don’t get advance agreement from Finance on the project and how you’re going to calculate savings?” asked Joe. 

“No way,” said Stan.  “They don’t understand the nature of our business.” 

Joe reviewed one of the project charters, and sure enough there was no sign-off from Finance at all.  Joe thought, “This explains why they’re in a state of chaos every quarter trying their best to justify cost savings.”  Joe knew he had to change this right away, so he asked Judy to set up a meeting with the finance director.  “Can you meet him in an hour, boss?” Judy asked.  “Tell him I’ll be there.” Joe responded.

For the next forty-five minutes Joe’s team discussed some of their old cost saving submissions.  In each case the savings were tied to cycle-time reductions and/or efficiency improvements.  In one project, the team reduced the cycle time in one of the process steps by one hour and claimed the cycle-time reduction as an annual cost savings. 

Joe asked, “Was the headcount reduced based upon the cycle-time reduction?” 

Stan replied, “No, they just moved two operators to other production lines.” 

Joe asked, “Then how was that seen as a cost savings?” 

His question was met with blank stares.  “W-w-we’ve always done it that way s-s-s…ir,” replied Manuel.  Joe could see that he had his work cut out for himself.

When Joe arrived at the finance director’s office, the director was on the phone but motioned for Joe to come in and have a seat.  It was apparent that he was talking to someone outside of Barton, probably someone at the corporate office.  He was talking in the usual cost-accounting gibberish, using expressions like operator efficiency, purchase price variance and other cost accounting nonsense. 

Finally, after ten minutes of conversation, the finance director finished his call and introduced himself.  “I’m Paul Johnson, the director of finance at Barton.” 

Joe replied, “I’m Joe Pecci, the new manager for the Continuous Improvement office.” 

After exchanging a few pleasantries, Joe broke the proverbial ice by saying, “Paul, I want to talk to you about why Finance isn’t a part of Barton’s continuous improvement projects.” 

“We have never been asked to be a part!” exclaimed Paul.  “I would love to have my folks be a part of your teams,” Paul said. 

“They’re our teams Paul,” Joe retorted. “So let’s get together, starting today.”

“Works for me,” said Paul.

In our next posting, Joe continues his discussion with the Finance Director and begins painting a different way of approaching the business.

Bob and Bruce

Focus and Leverage Part 62

As promised, here is the first part of Chapter 1, Joe Pecci’s arrival at his new job.  What Joe finds is not atypical of so many improvement initiatives found in the world today.  This is the story of a new way….a different approach, if you will, that if followed will result in significant bottom line improvement.

Bob and Bruce

CHAPTER 1 Part 1 for Epiphanized©

A book by Bob Sproull and Bruce Nelson

 – JOE’S FIRST DAY

“I sure am glad I’m finished with my ‘check in’ through Human Resources so I can finally get to work and meet the people I’ll be working with,” thought Joe.  “I’ve been anticipating this new job for the last month, and I hope it goes better than my first half-day. 

“I mean when I checked in this morning through Human Resources,” he thought to himself, “I never imagined I would have spent most of my time just sitting and waiting to fill out my next batch of paperwork or waiting thirty minutes to have my photo taken for my badge. I certainly hope that there is a lot less waste and better flow in their manufacturing area than there is in this transactional area.”

Joe Pecci (pronounced PeeCee) had been hired as the new Manager of the Office of  Continuous Improvement (CI) at Barton Enterprises. Joe brought a wealth of experience to Barton Enterprises and, as he would soon learn, he’d need to dig deep into his experience and know-how to help turn Barton into something better than it was.

Barton Enterprises, located in Waterford, Mississippi, was a multimillion dollar producer of flexible fuel tanks for the aviation industry and had actually fared pretty well in this dreadful economy, at least compared to many other companies.  Of course any industry that was directly connected with the U. S Department of Defense had a leg up on industries that weren’t.  We all know how easily money got appropriated and distributed from the federal government, and Barton received their fare share of stimulus dollars.  Barton had been around for about fifty years, and just by driving through their manufacturing complex Joe noticed that the buildings appeared old and somewhat dilapidated.  Joe remembered from his interview that the construction of these fuel tanks was an extremely manually intensive process, and he saw very little evidence of any Lean or Six Sigma activities within the facility he toured, but he’d reserve judgment until he made more observations.

When Joe finally arrived at the building he’d be calling home, he saw that all of the parking spaces were filled, so he ended up having to park and walk a considerable distance.  Joe finally found the door he was supposed to enter and walked up two flights of stairs to a very dimly lit hallway.  There were no signs to indicate which way to turn to go to the CI office, so he guessed which direction to go and, of course, he guessed wrong.  When he finally arrived there, he found four people, his apparent co-workers, huddled together in a rather heated discussion. No one noticed Joe entering the office. He paused and listened, and discovered that the discussion was centered around how they were going to calculate and report required quarterly cost savings dollars to the federal government.  Apparently because Barton received stimulus money, there was a requirement to report dollar savings each quarter.

Joe cleared his throat to get their attention, and the discussion stopped.  A rather petite and very attractive woman asked, “Can I help you?”

In our next posting, Joe discovers one of the issues facing Barton and many other companies……their approach to continuous improvement project selection and interpretation/calculation of cost savings.

Bob and Bruce

Focus and Leverage Part 61

Here is the second half of our Preface which outlines some of what is to follow in our book, Epiphanized.  As always, Bruce and I welcome your comments.

Preface Part 2 for Epiphanized©

A book by Bob Sproull and Bruce Nelson

This book is the story of Joe Pecci, a newly hired manager of the Office of Continuous Improvement (CI) for Barton Enterprises, a multimillion dollar company that produces fuel tanks for the aviation and defense industries.  When Joe walks into this new organization he finds the situation to be in chaos with some significant issues that need attention.  There are serious problems with on-time delivery performance and no clearly defined path to improve it.  Joe befriends Sam Henderson, Barton’s VP of Operations, and together they discover and forge the future path to prosperity.  They accomplish this effort with the help of a very talented bartender named Connor Jackson.  This is the narrative of a very rapid and successful organizational transformation.  It portrays an innovative approach to rapid and sustained growth and profitability using some uncommon, and yet exceptional, improvement tools and methods.  It‘s a success story with a triumphant ending.

The primary theme throughout this book has been to unify and enhance improvement tools and methods.  This is a sort of grand unification that combines improvement methods and tools to create a new level of usefulness.  Emerging situations and problems can quickly expose the need to gain access to new and different problem-solving tools.    This same spirit of unification has also been manifested within the methodologies themselves.  Sometimes tools within methods have been combined to create new tools for solving problems.  Systems and people are just not as linear as we would like them to be, and neither is life.  Things happen and things change, sometimes at an exponential rate. 

We believe that in writing this book we have laid out a pioneering pathway for significant gains in profitability and market share for any company employing the methodology presented here.  We are both convinced that the integration of the Theory of Constraints with Lean and Six Sigma, known as TLS, is the wave of the future.  We also believe that explaining it through the eyes of Joe Pecci, in a business novel format, will add relevance to its usefulness and power.  The concepts, tools and principles presented in this book may be counter intuitive to many, but if the principles are followed, the results are sure to come.  If your company has been struggling with a Lean or Six Sigma implementation and you’re not happy with the bottom line improvement you’re getting, the integrated TLS methodology can give you the improvement you are seeking.

As you read this story, please pay particular attention to the subtleties that are presented within the body of the book.  You’ll see that taking the time to recognize and truly engage the subject matter experts within your company in your improvement efforts will lead you to new levels of profitability—if you’ll just let them actively participate in your company’s success.  This is a lesson that is confirmed several times during the development of this story.  We believe that your company is poised for greatness, and if you will use the lessons presented in our book, it will happen.

In our next posting, we will start Chapter 1 and introduce you to three of the main characters in this book.  So sit back and enjoy it and please send us some comments on what you think about the book.

Bob and Bruce

Focus and Leverage Part 60

I know we’re a day earlier than we announced, but Bruce and I are anxious for everyone to see parts of our book. So, as promised, for the next couple of months Bruce and I are going to share the Preface and Chapter 1 of our new book, Epiphanized – A Business Novel About Integrating the Theory of Constraints, Lean and Six Sigma (TLS).  The title of the published book may change as the final copy moves forward, but the content will not be much different than what we share with you.  We invite your comments and look forward to the book’s release.

Preface Part 1 for Epiphanized©

A book by Bob Sproull and Bruce Nelson

How many times have you started reading a book, and you weren’t sure of what the author was actually writing about?  You read their words, but since the subject is new to you, you want to be sure you’ve grasped the intent.  So what do you do when you’re faced with this situation?  Do you put down your book and go to a familiar search engine and try to find information about the subject in question on the internet?  Or maybe you go to your own personal library of books and try to find out more on the subject?  Whatever you end up doing, it is troublesome or maybe even upsetting because it takes time away from your reading and causes an obvious break in the flow of information or the story line.  We also have experienced this situation, so when we decided to write this book, we considered this scenario and how we might be able to neutralize it or reduce the effects of the interference.  What if we were able to write a story and have the reference material contained within the same narrative?  We thought so too so we have added appendixes to make it easier. Using appendixes at the end of the book certainly won’t totally alleviate the problem of having to search for reference material, but it may save some of your valuable time and preserve the flow of new information.

Our book is written primarily in a novel format that tells a business story, weaving in an assortment of well-known and not-so-well-known tools and techniques.  Some of these tools and techniques may be new to some of you, depending upon your experience and frame of reference.  The book is primarily focused on an improvement methodology known as the “Theory of Constraints (TOC).”  In writing this book, it is our hope that we will have demonstrated to the reader that TOC, by itself, is not the only improvement methodology to drive significant bottom line improvement.  In fact, the best results can be achieved by the integration of TOC with two other popular methodologies known as “Lean” and “Six Sigma.” If done correctly, using all three methods should result in significant financial returns.  So as we tell our story, we use several appendixes to provide more detail and rigor on the subjects presented.

As an example, one of the subjects presented in our book is the TOC Replenishment Model.  In the business novel portion of our book, we demonstrate how this concept was used to eliminate stock-outs of parts while significantly reducing the dollar value of the parts inventory.  In the appendix for this subject, we provide additional detail on how this model can be implemented and used within your own organization.

Our next posting will describe in a bit more detail what this book is about and then we’ll present Chapter 1 and introduce some of the characters.  We hope you enjoy our book and that you’ll leave us comments about your experience.

Bob and Bruce

Beginning Monday, November 28, 2011

Beginning Monday, November 28th Bruce and I will be sharing two sections of our book (Preface & Chapter 1) which will be released in mid to late January by North River Press.  We hope you enjoy the read.
Bob & Bruce

A message to our loyal readers....

Many of you have asked us questions about the publishing date for our new book, Epiphanized.  It is scheduled to be released mid to late January, but beginning next week you'll be able to read part of it here on my blog.  Our publisher, North River Press, has agreed to let us publish the Preface and Chapter 1 so next week you'll see parts of it here.  We hope that you'll send us comments as we move through the story line.  The book is written as a business novel with a very novel appendix.  We hope you enjoy your read.

Bob Sproull and Bruce Nelson

New Blog Site and New Company

Hi everyone.  I wanted to let everyone know that I have joined a fantastic new company called NOVACES.  NOVACES is a perfect fit for me because of their guiding principles, their beliefs and their focus on the integration of TOC, Lean and Six Sigma.  I want to recomment that everyone visit the NOVACES Blog site at: http://novaces.com/blog

In addition to my own blog, I will be contributing to the NOVACES blog as well.  I encourage all of my readers and followers to visit the NOVACES website and see some of the fantastic work they have done for many organizations.  You will also be able to see the wide range of industry types that NOVACES has been involved with.  I am very proud to be a part of the NOVACES family!

Bob Sproull

Focus and Leverage Part 59

Intermediate Objectives (IO) Map

The Intermediate Objectives (IO) map was developed by H. William (Bill) Dettmer³, and in the spirit of combining methods (Unification) within a methodology this tool fits the criteria.  The IO map has been refined over the years to become a very practical and useful organizational and thinking tool.  Instead of using the full spectrum of the Thinking Process tools to conduct an analysis, the IO map combines the Prerequisite Tree (PRT) and the Conflict Diagram (CD) into a single tool.  In his paper about Intermediate Objective mapping, Dettmer defined the IO Map as a Prerequisite Tree (PRT) without any obstacles defined.  Dettmer’s primary intent for this tool was to simplify the construction and accuracy of the CRT – to focus the attention on a better defined objective, rather than a core problem.   In this context the IO map can be used to surface the undesirable effects (UDE’s). In most cases, the UDE’s can be discovered by verbalizing the exact opposite of the desired intermediate objectives that are listed.   These UDE’s then become the building blocks for a Current Reality Tree (CRT).  It makes sense that UDE’s can come from the IO’s.  UDE’s are what currently exist and the IO’s are what you want to exist.  In essence, the IO’s are what “you want” and the opposite wording of the IO’s would embrace the UDE list.

Dettmer also defines an expanded function for the IO map, indicating that it serves well the purpose of strategy development, and as such, it does provide a robust tool to do that.  The IO map used a standalone technique can provide the necessary clarity and direction to accomplish a needed strategy.

The IO Map is a very concise organizational thinking tool based on necessity logic.  The IO map allows the user to define the IO’s and then the intrinsic order of  the IO task completion by using necessity logic.  In other words, it is read with necessity as the outcome.  In order to have… (Entity Statement at the tip of the arrow), I must have…(Entity Statement at the base of the arrow).  Necessity logic states, in essence, that entity B must exist before you can have entity A.  The entity cannot be there just sometimes, or most of the time, but, instead necessity states it MUST be there.  The existence of entity B is not a causal existence. Necessity requires that the “B entity” exist before the “A entity” can be achieved.

The structure of the IO map is really very simple. There are three primary levels, or thinking levels required to construct the IO map. The first level is defining the GOAL.  The second level identifies the Critical Success Factors (CSF) or, those intermediate objectives that must exist prior to achieving the Goal. The third level is populated with the remaining necessary conditions required to achieve the Critical Success Factors (CSF).  Figure 6 provides an example of the basic structure of an IO map.

Figure 6

Figure 7 shows an example of the IO map that was created using our IO list example.

Figure 7

You’ll notice the shaded IO’s in the diagram.  These are the IO’s that were surfaced when building the IO map.  These IO’s did not appear on the original IO list, but instead surfaced after construction began on the IO map.

The ID/IO Simplified Strategy

Now that you have an understanding of both the Interference Diagram (ID) and the Intermediate Objective (IO) map and how they can be used as standalone techniques to generate some impressive improvement results, let’s talk about how they can be combined.  The Simplified Strategy is a way to combine these two tools, depending on the situation being analyzed and the desired outcome required.  It is possible that when using the ID to define the interferences, they are actually obstacles that are not necessarily time driven, but rather event driven.  The ID allows you to define the obstacle/interference, if they are not already well know.  Sometimes, the obstacles do not provide the means to implement a simple solution in isolation, but rather are collectively connected by necessity.   In other words, when you develop the list of obstacles using the ID, the IO list becomes the verbalization opposite of the obstacle rather than just an injection.  You are looking for the IO’s that must exist in reality to make the obstacle/interference not a problem anymore.

What happens next is the listing of IO’s becomes just that - a list of IO’s.  Now, with the IO mapping tool you can establish the logical necessity between single IO events (entities) that requires another predecessor event (entity) before the event can happen.  In other words, there is a logical dependency and intrinsic order in the sequence.  Just randomly selecting and completing of IO’s will not satisfactorily achieve the goal.  When you analyze the IO list you realize that ALL of the IO’s need to be completed, but which one do you start with first?  When this is the case, the IO map can be used to determine the sequence and order of completion.  From the IO list you can determine which events are Critical Success Factors (CSF’s) and which ones are the Necessary Conditions (NC’s.) By using the IO to map to determine the necessity between the events, it becomes exactly clear which IO you need to start with to implement your strategy.  Each level of the IO becomes logically connected to formally outline the “strategy” and “tactics.”  In other words, the goal is the strategy and the Critical Success Factors are the tactics to accomplish the goal.  At the next level the Critical Success Factors become the strategy and the Necessary Conditions become the tactics.  The same thinking applies down through the next levels of Necessary Conditions.  When you reach the bottom of an IO chain, then you know what action you need to take first to start the process moving up through the IO’s.  By using the IO map as a problem solving supplement to the ID it provides the needed organization to logically align the IO’s.  The ID map will provide the well-defined obstacles/interferences to better focus the creation of the correct IO’s to negate the obstacles.  Consider also, that sometimes it is very difficult to generate a good solution without first understanding what exactly the problem is.

Even though these tools can be used in combination it might not always be necessary to do so.  In fact the power of these tools allows them to be used in reverse order if so desired.  If you already understand what you need to do, then the IO map can be your beginning tool.  If, however, you are not so sure why you cannot achieve a particular goal, then the ID helps identify the obstacles/ interferences. Even if you begin with the IO map and you discover a particular IO that is necessary, but you’re just not sure how to make it happen, then you can use the ID as a subset of the IO map to discover the interferences for achieving that IO.  If you remove the interferences for the IO, then you can achieve the IO.  When you achieve that particular IO you can move on to the next one.  If you already know how to accomplish that IO, then fine.  If not, then use the ID again to surface the interferences.

Figure 8 shows a possible template for the combined approach.

Figure 8

With the ID/IO Simplified Strategy complete you now have the outline necessary to prepare an effective and accurate Implementation Plan.  The intent of the IO map is not to provide implementation detail at a low level, but rather to provide milestones or markers to make sure you are walking the right path.  For each IO listed you can provide the required detail about how it will be completed.

Conclusions

In a world that requires “Better, faster, cheaper”, the Simplified Strategy approach of the Interference Diagram (ID) and Intermediate Objective (IO) Map (ID/IO) can provide exceptional results in a shorter period of time.  By combining the power of these thinking tools the user will benefit from an effective and complete analyzes that is completed in significantly reduced time.  These tools, used in either a standalone environment or a combined approach, will provide the thinking necessary to develop good results.  The speed with which these tools can be used is an enormous benefit over the original System Thinking tools to allow the ability to answer the three questions:

                What do I change?

What do I change to?

How do I cause the change to happen?

The structure and concept behind these tools makes them easily adaptable and well understood and accepted in a group situation to allow for faster collection of data and analysis of issues.

Bruce H. Nelson,

Jonah, Jonah’s Jonah
TOCICO Board Certified
Lean

ENDNOTES:

1.       Eliyahu Goldratt and Jeff Cox, The Goal – A process for ongoing improvement, North River Press, Barrington, MA. 1992

2.       Robert Fox, TOC Center, New Haven, CT., discussions, circa 1995.

3.       H. Wlliam Dettmer, “The Intermediate Objectives Map”, http://goalsys.com/books/documents/IOMapPaper.pdf, November, 2008.

4.       Bruce H. Nelson, “ID/IO Simplified Strategy” (CS²), Original works,  March 2011
Copyright © 2011 by Bruce H. Nelson.  All rights reserved