Focus and Leverage Part 104

If you’re job is in Continuous Improvement in some form or fashion, then you know that what you really are is a change agent.  Your role is to take your company’s existing current reality and make positive change to create a new future reality.  You also know that change is not easy for many of the people you work with.  They’re comfortable with the status quo and resist moving away from it.  I know, as a consultant, that this resistance to change is very powerful and sometimes I feel like David against Goliath.  So what do you need to know to make change happen?  The fact is, you need to understand some of the change basics if you are to be successful.  You need to know when, why, where, what, and how change needs to happen, so let’s take a look at some of these basics.  And let’s not forget about “who” should make change happen.

When should we change?  Well, if you’re like many executives, you wait until the organization is underperforming before you start a change initiative, but is this the right time?  In my opinion it isn’t.  You must understand that when an organization is underperforming there are huge amounts of fear that reside within it.  Fear of being looked at as part of the problem……fear of loss of jobs…..fear of an uncertain future, and the list goes on and on.  And when fear dominates the landscape, resistance to change only intensifies.  So if you’re in an underperforming company, doesn’t it make sense that you should not introduce change now while you’re doing well?  The first lesson we must learn then is that change should be introduced when our company is doing well, not when it’s underperforming.  Unfortunately most executives don’t understand this and they initiate change at the wrong time.

The question then becomes, why change at all?  Good question.  Companies need to continually reinvent themselves simply because the world changes every day.  Look at the speed of change in the electronics industry.  The half-life for electronic gadgets is increasingly short, so if you wait until your sales are falling to initiate change, you’ve waited too long.  Why change?  It’s simply a matter of survival…plain and simple.

I’ve written about the three basic questions that we should be asking ourselves as related to change:

1.    What to change?

2.    What to change to?

3.    How to make change happen?

These three simple questions are incredibly powerful and if you take the time to think them through and truly analyze your company’s environment and marketplace position, you won’t be wasting your efforts.  So what’s a good way to answer these questions?  The TOC Thinking Tools (TP) will answer all three of these questions.  The Current Reality Tree, the Future Reality Tree, the Prerequisite Tree, etc. are all there to be developed and when you’ve completed them, you will have answered all three of these questions.  If you’re not familiar enough with these tools to be able to effectively use them, I have an alternative for you.  I know that the TOC purists and zealots will totally disagree with me, but I believe in what I’m about to tell you.

I have written many times about the Intermediate Objectives Map (IO Map) in other blog postings.  The IO Map is quite simply the easiest TP tools available today.  It’s based on necessity based logic and as many times as I’ve introduced it to organizations, it has never once been rejected.  It’s a logical hierarchy with the goal at the top, followed by critical success factors beneath it and finally necessary condition that must be in place to achieve the critical success factors.  The theory behind this tool is that if I have the necessary conditions in place, I will achieve the critical success factors.  And if the critical success factors are in place, I will achieve the goal. I’m not going into a discussion about it, but for those interested in it, here is a link to Dettmer’s now classic paper on the subject.  Now back to our discussion on change.

http://www.goalsys.com/books/documents/IOMapPaper.pdf

Let’s now turn our attention to where in the organizational hierarchy change happens?  For those of you who answered this question with an easy (but wrong) answer that change happens at the top, consider this.  The encouragement for change may well have originated at the top of the organization, but the specifics of the change certainly didn’t.  Significant change always requires reinvention and this requires an intimate knowledge of the day-to-day operation of the business.  This does not exist at the top of the organization.

If you answered the question by saying that change happens at the bottom of the organization, that’s equally wrong.  People at the bottom of the organization simply don’t have the necessary perspective to reinvent and they certainly don’t have the power or authority to do so.  So, if reinvention doesn’t come happen at the top or bottom of the organization, then the only logical place left is the middle of the organization.  Yep, middle management is where change happens and if you know this going into an initiative, you won’t waste precious time at the top and bottom of the organization.  You certainly have to involve both the top and bottom, but real change takes place in the middle of the organization.

“But Bob”, you may be thinking, “doesn’t this contradict what you’ve written about before?”  My answer is that it does not.  Reinvention is not the same as continuous improvement of existing processes, it’s about changing the future of your company.  Reinvention or organizational change is on a different level.  In my last posting I talked about the importance of having a team composed of SME’s and I stand by that.  What I’m talking about is change….real and lasting change that transforms your company.  Change that occurs while your existing company is performing well and not after it is underperforming.  So the bottom line is this, if you want the least resistance to change and you want the change to actually occur and sustain, make sure it’s initiated when things are going well and make sure it’s focused where it should be….in the middle of the organization.

Bob Sproull

Focus and Leverage Part 103

I get asked questions all the time that center around why my engagements seem to always bear good fruit.  From my perspective, that's actually a pretty easy question for me to answer.  It certainly isn't because I'm the brightest lighbulb on the block and it isn't because I have superior facilitation skills because if you knew me, you would say, "Gee, Bob's a pretty normal guy."  No, the reason isn't what you might expect it to be.  The reason is actually pretty basic.

When I go into a new consulting engagement, it's normally because the organization is under-performing in some fashion and typically it's because their bottom line is woefully short of where it's supposed to be......or at least where someone in a higher level thinks it should be.  I do meet with the leadership team primarily to get their pulse on why they think they're underperforming, but also to find out how I can get to the supporting data.  Many times after I have done a quick analysis of the data, I discover that what the leadership team told me isn't necessarily true.  So what do I do?

After I have a better understanding of the performance metrics, I head to the shop floor to talk to the true subject matter experts (SME's) of the organization....the folks who make the products or deliver the service.  I learned a long time ago that if you truly want to know what's going on in a company, spend as much time as possible talking to the shop floor folks.  Out in the real world (the shop floor) things are much different that the office world and it won't take you long to discover just how stark the differences are.

So once I have a good understanding of the real issues facing a company, I go back into the office world and have a heart-to-heart with the leadership team.  Believe it or not, many times there is a look of surprise all over everyone's face when I explain to them what I believe their problems are because they are usually 180 degrees away from what they had originally explained to me.  But their look of surprise becomes even greater when I tell them that I want to form an improvement team based almost exclusively of the SME's from the shop floor.  That's because historically they've never really involved these folks on a team.  Yes, they've had their token members, but never really considered having a team of SME's dictate changes that need to be made out there in the real world.  That's a real shocker for many leadership teams and quite frankly, some of them can't or won't accept this approach.  The purpose of this SME core team is to identify and fix the issues on the shop floor and the tool I have found to be most effective is something I've written about before....the Interference Diagram (ID).  You'll recall that the ID's structure is a stated goal in the center of the ID with the interferences preventing you from achieving the goal surrounding it with arrows connecting the interferences to the goal.  The prmise is that if you can eliminate or significantly reduce the interferences, goal achievement becomes much easier.

The other thing I always do is lead the leadership team through a strategy session using the Intermediate Objectives Map (IO Map).  I have found that the IO Map is very well received by most leadership teams primarily because of its necessity based logic approach.  You will recall from previous postings that the IO Map has three primary entities....the Goal, Critical Success Factors (CSF's) needed to achieve the Goal and Necessary Conditions (NC's) required to achieve each of the CSF's.  The IO Map uses the syntax, In order to achieve (x).....I must have (y).  Because the IO Map is a logical approach to strategy development it is very easy for everyone involved to understand.  And because it's so easy to understand, usually everyone involved with its creation contributes something to it.  And when that happens, everyone owns the final version.  Same thing with the SME team owning the ID.

So on a typical engagement I spend much of my time developing these two tools and voila, we have a plan for improvement that's simple to follow and owned by the perspective members.  One delivering the overall organizational strategy and one fixing what's wrong on the shop floor.  Before you ask........yes, I do use other tools, but they are situation dependent.  In fact, I use a variety of Lean and Six Sigma tools on every engagement, but the two constants for every engagement are the Interference Diagram and the Intermediate Objectives Map.  I have written extensively about both of these in Epiphanized, but the real key is to turn the shop floor improvement effort over to the SME's and if you will do this, you truly get the ownership that is required in any improvement initiative.

Bob Sproull

Focus and Leverage Part 102

A few years ago I had a client ask me what the essence of the Theory of Constraints was and I’d like to share my response to him with you.  This client had gone through my basic TOC training and I thought he had a good grasp of TOC, so his question sort of surprised me.  We decided to go to lunch so that we could have a lengthy discussion about his question.  The following is how I answered his question.

Organizations are made up of systems and all systems are really subsystems of larger systems.  Systems are not the same as processes, but there is an interrelationship between the two.  For example, several processes that are linked together to produce a product or deliver a service make up a system, but the system created is part of a larger system.  It’s one thing to produce a product or deliver a service, but it doesn’t end there.  We have other systems such as accounts receivable that must also exist if we are to get paid for our products or services.  This collection of interrelated subsystems, make up the larger system.

The Theory of Constraints teaches us that within a system there will always be a subsystem or process that limits our ability to move closer to our goal….it’s undeniable.  This limiting factor is referred to as the system constraint in TOC jargon.  This constraint can be internal or external, physical or it can be a policy or procedure, but for sure, it must be our focal point for improvement because unless and until we identify the constraint and exploit it, we simply will not move closer to our established goal.  Our goal can be at the system or the subsystem level.  For example, if our goal is to make money (i.e. system level goal), then the only way we will achieve this goal is to first, identify the leverage point and second decide the best way to exploit it.

At the subsystem level, our goal might be to increase throughput, so again we ask the question at this level…what is preventing us from moving closer to our goal (i.e. increased throughput).  Once again, we are looking for a subsystem constraint or leverage point and until we find it and exploit it, our subsystem goal will remain elusive.  Suppose now that we have studied this subsystem and discovered that one of the steps in the process is the leverage point for this process…..the step with the least amount of capacity.  At this still lower level subsystem, we find that there is another constraint or leverage point that is limiting our ability to realize our throughput and subsequently our system goal of making money.

This hierarchy of interconnected systems and subsystems, each with its own separate goal and leverage points is the starting point for understanding the true essence of the message of TOC.  If we don’t understand our system and how it is interconnected, we will end up making improvements that will do nothing for the system.  Yes, there may be local improvements for sure, but unless the system improves, true improvement is not happening.  Unless we learn how to recognize our interrelated leverage points, the bottom line will simply not change.  This is the major problem with most improvement initiatives around the world!  Isolated Lean or Six Sigma projects that improve parts of the process without improving the system as a whole are typically a waste of human resources.  Oh sure, they make us feel good, but if they aren’t improving the total system, then they won’t impact the bottom line.  This then is the essence of the Theory of Constraints…..systems improvements rather than improvements made in isolation.

When we were finished with lunch my client thanked me and said for the first time in his career, he can see and understand the bigger picture.  He also told me he now understood why his company’s continuous improvement initiative had stalled and leadership had become impatient because they weren’t seeing the positive gains in the bottom line that they had been told would occur.  From that day forward, this General Manager applied the lessons from our lunch and there was almost immediate and significant bottom line improvement.  He now knew and understood that defining the leverage point and focusing improvements on it was the only way to go.  It’s a simple, but compelling message from TOC, so if you want to jump start your improvement initiative, remember our lunch time discussion.

Bob Sproull

An update....

For those of you that follow my blog on a regular basis, you've no doubt recognized a significant drop in the rate in which I have posted new blogs.  I have been reviewing the Epiphanized manuscript for errors so that my publisher can correct them before its next printing and before it soon becomes an ebook.  I'm about finished and I'll get back to my regular Focus and Leverage postings soon.

Until then, I want to share an interview I did recently about Epiphanized with Clarke Ching....I hope you enjoy it and thanks for your patience.  Here's the link: 

http://www.tocthinkers.com/2012/03/bob-sproull-epiphanized-integrating-theory-of-constraints-lean-and-six-sigma.html

Bob Sproull

Focus and Leverage Part 101

One of the things I enjoy so much about consulting is the opportunity to teach people new things....new ways of looking at processes and systems.  One of the most important teachings I try to have people learn up front is the importance of engaging the "money makers" in their company.  The money makers are the people on the front lines building your company's products or delivering your company's services.  It's these people that are the true subject matter experts and the people who truly understand how your processes really work.  But if you're like many companies, you don't recognize them the way you should.  While it's true that many companies involve their money makers, they don't "engage" them and let them design the path forward.

So is there a clear difference between involving money makers and engaging them?  You bet there is!  Many companies just let their money makers be part of a team, but that's not enough.  Engaging money makers means giving them responsibility to design the new path forward.  How many of your companies put together improvement teams comprised of at least 80% hourly workers or the people that generate your revenue?  If not, why not?  These money makers are the true subject matter experts.  These money makers know how processes work and what needs to be done to improve throughput and/or quality, so why wouldn't you let them design the new way?

In all of my engagements I always help the leadership team understand the value of truly engaging the subject matter experts.  It's difficult for leadership teams that are used to move away from what I call the command and control mentality to a management style that is engaging.  In fact, many times parts of the leadership team is unable to let go of their command and control mentality and management style.  But for those that can and will, the rewards are simply amazing.  An anaolgy that I sometimes use is dealing with your auto mechanic.  Do you listen to what your mechanic tells you needs to be done to get your car running in optimal condition or do you tell him what to do?  Most of us have never repaired a car, so we usually go with what our mechanic tells us.  The same is true in your business.  The people building your product or delivering your service know what needs to be done to improve your business if you'll just listen to them, trust what they have to say and let them lead the way.  I have seen this work many, many times.  Why is it that when many of us reach a management or leadership position that we believe that our way is the only way?  It's like we're expected to make all of the decisions on our direction without input from anyone.

If you'll take the time to listen to your subject matter experts and allow them to design a new future for you, the rewards will come.  And something else happens when you engage them....you suddenly have a team that is loyal to you and your company.  People want their opinions not only heard, but respected and acted upon.  The decision is yours, but I promise you that your company's bottom line can and will grow at a much faster rate if you engage rather than just involve....

Bob Sproull