Monday, September 22, 2008

A Process Of On-Going Improvement (POOGI) - Part 29

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints.

How will we know if we have a good solution before we try to implement it?

As business leaders, we’re smart people and fancy ourselves as problem-solvers. So, not only do we skip the step of developing a deep understanding of the problem, we jump to our favorite direction of the solution. Usually, we propose the solution and are surprised by the resistance we encounter. If we have enough power and stamina, we impose the solution. If we require the consensus of other people, we often get stuck arguing about the pros and cons of alternative solutions. Other people are very good at seeing what is wrong with our idea!

A useful way out is to identify the few criteria that would be associated with any good solution to the problem. And then list as many alternative solutions that meet the criteria in whole or part as possible.

For each alternative, also predict the negative effects and the implementation obstacles. These are what are normally referred to as the “problems” with a proposed solution. In the example above, the recently imposed no-overtime policy was an attempt to control costs in the face of declining productivity. Could you have predicted the negative reaction to such a policy? When the incentive system was initially implemented, do you think management expected it to de-motivate the workforce at the end of every quarter in which it was not earned? Probably not, but it was a predictable negative effect that should have been thought through before the incentive plan was implemented.

In this example, criteria for a good solution might include:

  • Immediately improve the morale of the plant
  • Immediately support increased productivity
  • Be sustainable.

As for alternative solutions with our example company, one is to do nothing differently. This, in fact, is what is normally done. Remember Einstein’s definition of insanity: “doing the same thing over and over but expecting different results”. Inertia is powerful. Better to live with the devil we know…

Another direction is to address directly the conflict between the current company policies and the employees’ security and satisfaction. Notice that this does not require an employee survey. We all have enough intuition about causes of security and satisfaction. The difficulty is in removing bad policies and replacing them with better policies.

So what happened? The owner took charge, realizing that the company was lax in keeping current with employee reviews. While to every employee his or her review was very important, the company had not prioritized doing them, especially since that would require delivering bad news and having to talk about pay rates. The management had also allowed a few bad attitudes to affect everyone. The bad attitudes were addressed; there was a company meeting acknowledging the importance of employee security and satisfaction, and brief reviews were held emphasizing the importance of skills, cross-training, and attitude. The company committed to paying its most skilled people better than they could make anywhere, but needed their help with increased productivity. The feedback was positive and that “something really changed” this time.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

NEW -- Seattle Group Mafia Offer Boot Camp. October 20 (all day), October 21 (pm), October 22 (pm), and October 23 (pm). If you're interested please contact me by email.

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): September 23, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.

Sunday, September 7, 2008

A Process Of On-Going Improvement (POOGI) - Part 28

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints.

What is the problem? Is it:

  • Declining sales?
  • Unrealistic expectations for increased productivity?
  • No profit incentive payout?
  • Low morale?
  • The new no-overtime policy?
  • Ineffective supervision?

TOC has cause and effect logic tools to determine which problems are causes and which are effects. To have the greatest impact on the business system, we don’t want to treat symptoms; we want to address what we call the “core problem” that is the cause of all of the symptoms.

The company’s objectives to “make more money now as well as in the future” and “provide a secure and satisfying environment for employees now as well as in the future” are currently jeopardized. The specific objective being addressed is improved productivity as measured by sales compared to total plant payroll.

The core problem is that company policies are in apparent conflict with the goal of secure and satisfied employees. Employee resistance instead of buy-in to the objective of improved productivity is a result.

What are the possible alternative solutions to such a problem? What are the criteria for a good solution? That is, how will we know if we have a good solution before we try to implement it?

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

NEXT Group Mafia Offer Boot Camp: September 24, 25, 26 2008 in Denver. More information at http://www.mafiaoffers.com/. There are also PRIVATE and On-line Mafia Offer Boot Camps. The July boot camp SOLD OUT and there is no group boot camp in August. Don't miss September!

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): September 23, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.

Monday, September 1, 2008

A Process Of On-Going Improvement (POOGI) - Part 27

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints.

The detailed buy-in process is:
1. Agree on the problem(s)
2. Agree on the direction of the solution
3. Agree that the solution solves the problem and brings the benefits
4. Agree on predicted negative side effects and prevent them
5. Agree on implementation obstacles and objectives to overcome them
6. Agree to implement the solution.

The step most often missed in the buy-in process is step one, agreeing on the problem.

Let’s use an example from a machine shop. See if you can apply the process. First, the background story:

This machine shop has sales of about $300,000 per month. Sales and the backlog have been declining slightly over the past three months, although a new large order of about $1 million is expected at any time.

This new order is on top of normal orders, so it represents growth. Morale of the workforce has been low recently, following the end of a quarter when no profit incentive was paid out and a new no-overtime policy was announced. Pay rates for the most skilled workers have been frozen for some time.

Supervisors in the plant are trying to implement a change in the work process to cope with the increased sales without adding additional people and have been getting resistance. In fact, productivity has decreased.

What is the problem?

...to be continued.

Here's to maximizing YOUR profits!

Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

NEXT Group Mafia Offer Boot Camp: September 24, 25, 26 2008 in Denver. More information at http://www.mafiaoffers.com/. There are also PRIVATE and On-line Mafia Offer Boot Camps. The July boot camp SOLD OUT and there is no group boot camp in August. Don't miss September!

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): September 23, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.