A Process Of On-Going Improvement (POOGI) - Part 44

Managing People: What are we going to do about Joe?

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}

Dr. Lisa: “That’s true. In almost all of our client companies, when we started working with them, the management team was dysfunctional. And a dysfunctional management team will inhibit or block almost every kind of improvement. It’s a problem that needs to be addressed.”

Brad: “What’s the way out? Is there a solution?”

Dr. Lisa: “Dr. Goldratt suggests that when the policies, procedures, and measures that drive behavior aren’t appropriate—and they never are when a company is managed conventionally—then people are captured in conflicts for which there is no good solution. For example, you see this with managers of different organizational silos having different goals and measures. So, production is almost always at odds with sales. The organization ends up continually renegotiating unhappy compromises.”

Brad: “Of course, TOC is holistic. One of the first steps for improvement is to change the measures. There are operational measures that help guide silos to do what is good for the company as a whole. Anyone that has read The Goal was introduced to them, but rarely has anyone implemented them. Next, we align the organization with the company’s strategy and tactics. Then the silos are not at odds with each other.”

Dr. Lisa: “TOC also has the Thinking Processes for dealing with all kinds of issues, including thorny issues between people. The ‘Management Skills’ were developed just for that. There are five Management Skills workshops dealing with different topics:
1. Day-to-Day Conflicts,
2. Half-Baked Solutions,
3. Chronic Conflicts,
4. The Lieutenant’s Dilemma (about whether to delegate or just do it yourself), and
5. Reaching an Ambitious Target.
I’d recommend these to the leader of any management team. Developing skills for dealing with these issues will go a long way to reducing conflict, and improving communication.”

...to be continued.

Here's to maximizing YOUR profits!

Dr Lisa Lang

(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.

Learn Goldratt Theory of Constraints with access to ALL the Videos for 1 Month

Some of the best self learning materials for Theory of Constraints are in video format. The problem has always been that they are expensive. The Goal video DVD (movie version of The Goal book by Eliyahu Goldratt) is $895 and the 8 CD set of the Self Learning Program is $999.

But for the month of September you can get both of those and a whole lot more of Goldratt's genius for only $499. Here what you will have access to:

Videos:

• The Goal movie on DVD (sells for $895)
• Necessary & Sufficient Series (10 CD set sells for $149)
• Goldratt Explains is a set of videos excerpts of past and/or unreleased conference presentations, where Dr. Eli Goldratt shares his analysis and developments on specific topics.
• TOCICO Conferences (sell for $249 for each conference and you get ALL of them)
• Goldratt Satellite Program (these are the 8 CDs that sell for $999)
• Realization Project Flow Conference of Critical Chain Project Management (CCPM)
• Goldratt Webcast Series on Critical Chain Project Management

Those videos cover all these topics (and more):

• Finance and Measurements
• Operations / Production
• Project Management
• Distribution
• Supply Chain
• Marketing
• Sales and Buy-In
• Managing People
• Strategy and Tactics
• Thinking Processes
• Change Management
• Buy-In
• Health Care
• Personal development

This one time opportunity provides full access to ALL videos on TOC.tv ONLY during the month of September, 2009.

HURRY! The sooner you get the access the more days you have it available. Access ends September 30th 2009.

To order and check started, click here:

Goldratt Theory of Constraints Videos

A Process Of On-Going Improvement (POOGI) - Part 43

Managing People: What are we going to do about Joe?

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}

Dr. Lisa: “Who’s Joe? You’d better tell them right away.”

Brad: “Joe is that problem personality you have in your organization. Joe’s just a nickname. It could be anyone, man or woman, exempt or non-exempt employee. People have to put up with Joe, have confrontations with Joe, avoid Joe, hope that the company leader will deal with Joe, etc.”

Dr. Lisa: “Sounds toxic. Why put up with that poison in the organization?”

Brad: “There’s generally a good reason. The person has special skills, or has built dependency in the organization around his or her silo, or has choked off information flow so no one else knows what’s going on. So, there is a risk and/or cost with taking action. We business owners can tell ourselves scary stories about what could go wrong if we try to deal with it, so we generally avoid dealing with it.”

Dr. Lisa: “Yeah, and if you don’t have a plan in place, and/or his or her replacement lined up, there is a real likelihood of things going wrong. The logic is clear. Still, it can’t be good for the morale of the organization to be tiptoeing around Joe.”

Brad: “Action is required. Occasionally, Joe has to go. But not always, it depends on the leader of the organization. Managing people is ultimately the leader’s responsibility. Most of the time, in small businesses, the leader is not good at or doesn’t know how to manage people. It’s not that they aren’t capable, they just don’t know how. They are very frustrated about it, too. They need help.”

...to be continued.

Here's to maximizing YOUR profits!

Dr Lisa Lang

(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.

Theory of Constraints Tips

Follow Dr Lisa on Twitter and get daily Goldratt Theory of Constraints (TOC) Tips.

http://twitter.com/TOCExpert

A Process Of On-Going Improvement (POOGI) - Part 42

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}

Maximizing Profits in Uncertain Times with Goldratt Theory of Constraints

Dr. Lisa Lang presented “Maximizing Profits in Uncertain Times” at the recently completed NTMA (National Tool and Machining Association) annual conference in California. (To review the presentation slides and/or view the complete presentation, check the link mentioned below at the end of this article).

Using the famous Theory of Constraints (TOC) analogy of a chain, “Dr. Lisa” described how the weakest link of a chain determined its ability to achieve its goal of holding weight. Any increase in the strength of any link—except the weakest—had no effect on the overall goal.

Similarly, the goal of a company is to make more money now and in the future. The weakest link in our company process—the constraint—determines the performance of the company: how much money it can make. So, we must focus on and leverage the constraint.

In this economy, the constraint your company is dealing with may have shifted. For many companies, the constraint has been in operations. You have been busy, trying to get out as much as possible, and were probably dealing with long quoted lead-times and poor due date performance because of the internal constraint.

Now, in these uncertain times, many companies are faced with not enough sales. In companies used to dealing with an internal constraint, the management team frequently lacks processes and intuition for dealing with lack of sales.

Dr. Lisa presented how to address lack of sales with a “Mafia Offer”, an offer so good your customers can’t refuse it, and your competitors can’t or won’t offer the same.

A Mafia Offer typically requires that you do something different (make operational improvements) to actually deliver something un-refusable to your customers and something that your competition can't or won't do because they are not willing to or don't know how to make the same improvements.

Most companies offer solutions that solve their customers various problems or symptoms. With a Mafia Offer we are addressing our customer’s core problem.

When you have a good Mafia Offer and you deliver it correctly, your close rate can increase to above 80%. If you close 80% or more of your prospects -- you have control over your sales. This control makes it easier grow and invest in your business while maintaining the ability to deliver the offer.

Mafia Offers are developed by analyzing 3 things:
1. What are (or could be) your internal capabilities compared to your competition,
2. How does your industry, you and your competitors sell what you sell, and
3. Understanding how your clients are impacted by your current capabilities (which are usually the same as your competitors) and how you sell.

To protect the confidentiality of machine shops that have already developed their own Mafia Offer, she used an example from the printing industry. Using the TOC scheduling methodology, this printer had reduced their lead-time to two days, relative to two weeks for competition. The printer worked with clients that reordered products infrequently, in order to minimize purchase price, due to the price-quantity curve used by all printers. Because they had to forecast future usage in order to determine the quantities to order, customers invariably had too much inventory of some SKUs while they stocked out of others.

With the caveat that no company that is in the tooling and machining industry should think this Mafia Offer work for them, she told the audience the printer’s Mafia Offer:

“Mister customer, don’t give me orders. Your orders are based on your best guess of what you might need. Instead tell us every day what you used. We will guarantee on the one hand that you will not need to hold more than 2 weeks of inventory so you have more marketing flexibility and less risk for obsolescence, and at the same time we will also guarantee that you will never run out. If we ever stock you out, we will pay you $500 per day per SKU.”

That’s a Mafia Offer – best of all worlds for your customer and the printer will not pay a penalty because it only takes 2 days to replenish. The competition can not offer the same thing because they can not consistently deliver in less than 2 weeks and they could not risk paying the penalty.

The remainder of the presentation was devoted to describing the operational and mind-set changes required to have such a powerful Mafia Offer. Dr. Lisa described how Drum-Buffer-Rope scheduling works, and how “Buffer Statistics” guides ongoing improvement by pointing process weaknesses that Lean and Six Sigma tools can quickly fix.

She also described how the Mafia Offer challenged prevailing assumptions about “set-up cost”. The offer would require many more set-ups, but the printer had significant excess capacity. So, in reality, there was no additional set-up cost. Yes, there was additional set-up time, but all the people were already paid for in that period. And by knowing the importance of set-ups to delivering their Mafia Offer, the printer used Lean tools to dramatically reduce set-up time.

To view Dr. Lisa’s presentation, go to the Velocity Scheduling System page and get on the waiting list -- you'll have instant access. .



...to be continued.



Here's to maximizing YOUR profits!



Brad Stillahn



(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.