Live from the eye of the storm (a Theory of Constraints lesson)

"Now let's go live to Suzy who is reporting live from the level 5 hurricane... Suzy, how is it out there?"

"Well Bob, I can barely stand up as I'm getting pelted with hail in 70 mile per hour winds.  I hope you can hear me because I can't see the camera man 2 feet in front of me.  Things are pretty crazy out here; the entire area has been evacuated.  I expect to be completely blown off my feet any minute, so back to you Bob." 

"Thanks Suzy, stay safe out there.  Now, in other news ..."

Have you ever noticed that every network that reports the weather also reports it "live from the eye of the storm"?  I have even seen this live reporting watching the news in China and Thailand too.  I did not understand a thing during the news, except when they were reporting "live from the eye of the storm". 

 

I said to Brad - hey look they're reporting "live from the eye of the storm" here too.  We mused over the way the warm dry newscaster interacts with the reporter that puts their life in danger.  

Well, the week before last I finally heard about a limitation to this kind of live reporting.  Evidently it's nuclear radiation.  Many stations told their reporters to stay at least 50 miles away from the troubled nuclear reactors in Japan.  I was relieved.  

But before they decided to pull back, reporters were right in the thick of things.  It seems to me that if nuclear radiation is where you draw the line, you would know that right from the start.  (NOTE:  they may have had a trigger for pulling the reporters back, I don't know.  It just didn't seem that way.)

Deciding after the fact can be problematic.  You might try to stick with the current approach, policy or plan for too long.  But, if you know what would cause a change of plan, you'll identify the need for the change and then change faster.  

Now I realize that you can't predict everything, but many things can be predicted.  For example, what will you do, how will you handle these situations in your business:

• You lose 25% of you business in 1 day.  (heaven forbid, knock on wood)
• A customer threatens not to pay $750,000 in products or services.
• You get sued.
• You way oversell your capacity.
• You work through your entire backlog (while sales remained constant) because you're using the Velocity Scheduling System or Project Velocity System.
• You're NOT going into the red zone of the buffer anymore which is slowing your ability to continuously improve.  (Remember we expect to go into the red zone of the buffer about 5% of the time so that we can collect those whys and identify our biggest disruption to flow so we can identify our one and only improvement project.)
• And, what's your trigger to go out with your mafia offer - how will you know when your operations are ready?

 What is your list?  You don't have to get crazy, the first 3 I listed above, I hope, are very unlikely to happen to you.  The remaining items, though, may be more probable since they are negatives due to success.  So what things are most likely to happen at some point?  Then starting with the highest probability one, how could you prevent or best deal with each?

 By doing this exercise, you will be improving your systems and processes to protect against any negatives from success and from stagnation.  This will make your company more viable and more able to handle growth.  

In Theory of Constraints (TOC) this is called coming up with your Negative Branch Reservations.  We like to do this NBR analysis whenever we're going to make a change/improvement.  But most of us don't take the time to do this.  In particular, I very rarely see that clients have prepared for their negative branches to SUCCESS.  So basically I'm suggesting you do this now. 

 For example , if you don't know what your trigger is for shortening your buffer, it may not get shortened (or shortened fast enough) and your continuous improvement may be stalled.  But if instead you include in your SOP that when we've had 1 month of 1% or less stuff going into the red zone we are going to shorten our buffer -- now you know, and chances are it will get done and done quickly.  (something we do in the Velocity Scheduling System Coaching Program -- scheduling for custom job shop)

 I'm just suggesting a little preparation instead of waiting until the reporter's hair is falling out and deciding that you should have pulled out sooner (not that that happened).  

 How many people do you know that did not react fast enough in the 2008-2009 down turn?  How many of those did not live to fight another day?  What are YOU doing to make your company more viable to ensure you can take market share during the next downturn?

 Remember -- hope is not a strategy.  

 Let me know what you think, by leaving a comment on this post.    

Wishing you success.,

Dr Lisa

President, Science of Business

Theory of Constraints POOGI - Part 55: Yes, but… The Value of Concerns and Objections cont.

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: Back to the process for handling a “yes, BUT”. We are saying “yes” to the solution, and the “BUT” is a negative we anticipate if we go forward with the solution. So the first step is to identify which part of the solution your concern stems from. State this explicitly. Next, indicate what your concern is, what negative could occur (called Negative Branch Reservation). Now together you can figure out that (1) either that you misunderstood the solution or (2) that you are correct that the negative could happen. If so, how could we modify the solution to eliminate completely or substantially the possibility of the negative?

Brad: That sounds a little theoretical. Do you have an example?

Dr. Lisa: Sure. When we are doing the Velocity Scheduling System with a machine shop, someone in the management team will often have the idea to do preventative maintenance. In this example, this is the “part of the solution the concern stems from”. Someone will respond that there isn’t enough capacity to do preventative maintenance without being late on orders. This is the concern, the negative that could occur.

Brad: What’s the solution to trim the negative branch?

Dr. Lisa: To do both -- to complete ALL the orders on-time AND do the necessary preventative maintenance. The Detailed Planning portion of the Velocity Scheduling System is what we use to see and plan for opportunities for preventative maintenance while maintaining 100% due date performance.

“Dealing with yes, BUT’s” is one of the bonus videos included in the Velocity Scheduling System which is based on Goldratt's Theory of Constraints and Drum Buffer Rope.

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Here's to maximizing YOUR profits!

Dr Lisa Lang

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

Theory of Constraints POOGI - Part 54: Yes, but… The Value of Concerns and Objections cont.

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.}

Brad: You’re making the case for people expressing their concerns whenever a solution is presented? That this is a good thing? Doesn’t this slow down the whole process? If I have a good idea—and as a business owner, it goes without saying that all of my ideas are great ideas—why shouldn’t I just have everyone go implement?

Dr. Lisa: We weren’t taught how to deal with the situation where someone presents an idea, and we have a concern to express about the idea. In Theory of Constraints (TOC), we call the process “Negative Branch Reservations”. It is part of theTheory of Constraints Thinking Processes. There is a straightforward logical process for doing so. And yes, it is an important part of processing each and every solution, and getting your people to buy-in once all the reservations have been raised and dealt with.

Oh, by the way, a lot of your ideas aren’t so hot before we had addressed my negative branch reservations. Don’t you remember…?

Brad: Never mind about that. Explain the process, please.

Dr. Lisa: First, let’s agree on the criteria for a good solution. The presenter should feel good about offering an idea or solution to a problem. If someone responds by saying “let me think about it”, he or she should honor that agreement and does think about it. By thinking through the concern, we get the benefit of the idea and block potential negatives, thereby becoming better managers, and getting better results.

Brad: So the old adage, “an ounce of prevention is worth a pound of cure”.

... to be continued in Part 55.

Here's to maximizing YOUR profits!

Dr Lisa Lang

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