Why the Accountability Chart is First

In Gino Wickman’s book Traction on the Entrepreneur’s Operating System, toward the end of the book, the EOS tools are described in the order of recommended implementation, and they are *not* in the same order of layout in the book itself.  Specifically, before even considering the Vision Traction Organizer, Wickman advises implementing four other steps, the first of which is the Accountability Chart.

Why this order?  Why not start with the Vision Traction Organizer, which should align everyone toward the same common goals with the same common values? 

The key to that answer is hidden within the question.  Specifically “align everyone,” emphasis on the “everyone.”

If you don’t have the right people in the right seats before you start the work of alignment, what exactly are you going to accomplish?  Basically you’re setting yourself up for rework, which fellow lean thinkers would agree is not advisable.

In this case, the “rework” will be that once you do get the right people in the right seats, you’ll have to redefine the vision, values, core focus, market niche, 10-year, 3-year, 1-year plan; all the aspects of the V/TO.  So the right people have to be there first.  To quote Wickman, “The reason we start here with every client is that the chart goes to the root of most issues.  First, you need to take a big step back and determine the right structure for your organization.”

In practice, I will say, this is definitely more challenging than it sounds.  The greatest challenge that arises in many companies is whether the current personnel can or should be the ones to take the organization to the next level.  Specifically, who goes and who stays.

One company with whom AJC engaged with several quarters back knew they needed to make some drastic changes in one of their core functional groups.  They had work in progress, but it seemed to be stalling, and the leader of the group always had a ready explanation.  Unfortunately, “explanations” become less convincing the more frequently they are given; at some point work actually has to get done.  After running a “blitz” style project to identify how to get out of this rut, the organization armed the leader with specific action items and was even prepared to provide outsourced assistance to accomplish them.  Unfortunately, the leader did not quite “get it” – as in, did not fully understand why moving forward in this fashion was important, and ultimately the CEO of the company was forced to make a change.  Unfortunately, it took several months to get to this point even after the blitz project work was done, and that was time wasted toward real progress for the company.

How could this type delay be avoided?  One piece of advice that seems to work well when considering whether current personnel are in the right seats is to create the Accountability Chart *without* names at all – and consider what the roles/responsibilities need to be for the next 2-3 years of desired growth.  Once this is done, assessments of current personnel with respect to skillsets and GWC (Get it, Want It, Capacity to do it) can be created.  Finally, pair up the people to the roles and determine where these match well, where there needs to be shifts to other seats, as well as who is not going to be a fit for the organization moving forward.

All of this does take time, however, and as human beings, we seem to naturally want to “give people a chance to prove themselves.”  However, it is very difficult to move forward to the Vision/Traction Organizer if this has not yet been done because 1) the right people are not going to be involved and it will need to be redone or at least revisited, and 2) the *wrong* people may be around to adversely affect the V/TO, which could steer the company in an undesirable direction.   

The thing that Traction as a stand-alone book does not address very well is just how gut-wrenching this process can be.  While it is definitely the right thing to do, and moving forward without the right team in place does not make sense, prepare to spend some sleepless nights figuring out how to do this with team members that are good people, but just not the right people for the organization at this time.  One truly needs to believe that, in the long run, even a complete separation will be best for everyone.

Read this article and more on AJC’s blog, and sign up for our newsletter online at: http://andreajonesconsulting.com/blog.aspx

Five Lessons from the Road: L10 Weekly Meeting

Traction warned that it would take a few quarters to get the Rocks right, but I was unprepared for ambiguity in the L10 meeting.  After all, it is basically an accountability meeting which also resolves issues, and I’ve been facilitating those for the past 17+ years.  This article offers Five Lessons from the Road 5 weeks in to holding L10 meetings as part of a “DIY” EOS Implementation initiative offering learnings worth sharing for others who may also be just starting out in implementing Traction, Rocks, and L10 meetings.

1.       Start On Time – First, my laptop was 2 minutes fast, then we had some technical difficulty getting the one remote person online and deciding if the Facilitator or Note Taker was going to project the computer screen.  A third time I scheduled myself into work that went right up to the meeting start time. 

a.     Learning: Get to the meeting location 10 minutes early to get setup, projector working, and have Facilitator project; Note Taker do the copy/paste of Rocks to Issues List and type up Action Items in background – we use an Excel Online spreadsheet for tracking everything, though I have heard of success with Google Sheets as well.

2.       Meeting feels “choppy” – this on/off “no discussion” thing and truncating “rabbit hole” discussions – we are just getting used to this now.  In fact, I literally had to cut the CEO off this morning to stick to On/Off during Rock Review and re-bring up the topic he started to discuss at the Headlines/New Issues agenda item to ask if he wanted to add a new issue to the list for that day (he did)

a.     Learning: This seems to come with time, but amazingly our L10 meeting is only 60 minutes (instead of the 90 recommended) and we get through all of our High priority issues each week, and most of the Mediums; sometimes all.  If discussion seems redundant, I’ll try to summarize or call out for an action item and ask if there is anything else new or material to discuss, and if not; we close out the issue or punt to more information needed via Action Item and move on.  We are getting used to each other and the style of the meeting; it may take a while longer to really hit our stride here.

3.       Scoring – originally we allowed this to be completely subjective – “10 for the best meeting ever” and “1 for a complete waste of time.”  We did this for 2 meetings, then I spoke with a colleague, EOS Implementor Eric Albertson, who advised to score objectively.  I also read “What the Heckis EOS?” and found that it actually gives the same advice, including suggestions of how to score. 

a.     Learning: Develop an objective Scorecard.  We maintained 1 point for “Overall Subjective” because I want interpersonal and intuition to still have a small piece; and the “Everyone Aligned” really is subjective to each individual, but the rest should be fairly black and white.  Here is our scoring checklist:

4.     What are “Issues?” – We have had some “Issues” that really felt more like Headlines.  In other words, there was no decision to be made, but more of an update possibly with some Q&A to clarify what was going on. 

a.      Learning: We decided that these could stick with the “Headlines” portion of the Agenda, just following Rock Review and just prior to To-Dos (Action Item review).  This is the first week we are doing that, but it was well received.  We also are okay to add Issues with a partnering To Do that represent a decision making meeting offline if the topic is important for L10 Leadership Team but will be worked offline with a future decision.  Still working out the kinks with this one, but recognizing that sometimes a Status Update is still important, and recall that Headlines can be internal or external, that seemed the place to put it.

5.       Parking Lot – We put a To-Do on for something which really is not “move the needle” important in the next 2 weeks, but no one wanted to drop.  We gave it a 4 week due date, but then I re-read Traction and that To Dos should be completed in 1 week, 2 at most.  What to do with these small-ish things that aren’t Rock-worthy, but also shouldn’t be lost?

a.    Learning:  Add“Parking Lot” for this type of thing.  We are now collecting all the Issues which didn’t make it as this quarter’s Rocks, as well as possible Issues for next quarter that come up whenever, and we will put Parking Lot actions on it.  The idea is that some of the Parking Lot actions may be grouped into a single Rock if there is a theme, or that when we are “less busy” or when the time seems more appropriate, we will return to the Lot to pick up those Actions.  Since we just started that today, it’s unclear how well it will work, but it does seem logical to document those items but not necessarily spend calories on them today if there are bigger rocks to get in our jar first.

Hope these lessons help others in their journey to implement EOS!

Read this article and more on AJC’s blog, and sign up for our newsletter online at: http://andreajonesconsulting.com/blog.aspx

What is the Best Way to Maintain Accountability?

In my Vistage group meeting last Friday, someone brought up how often companies discuss a specific strategy or plan, but so rarely follow through with it.  In order for any sort of change to happen, maintaining accountability from the team involved is essential.

What is the best way to maintain accountability?  Is it to tell people what you want them to do and just hope they do it?  Or for someone on the Leadership Team to send an email to the whole company and expect everyone to now keep themselves to task?  Recall the marketing adage, the “Rule of Seven,” which states that prospects need to hear the message at least seven times before they’ll take action. 

David Rock describes in Your Brain at Work that “Attention changes the brain.”  Imagine that you are told about a new product or service line that your company intends to offer.  If you hear about this only once, even if it is in the form of “Let’s make it happen!” – is that enough?  Will you suddenly spring into action and complete the goal with no further attention brought to the subject?  Probably not. 

Traction and the Entrepreneur’s Operating System understands this as well.  In following EOS, your leadership team and/or departments will set quarterly “Rocks” or goals – things that absolutely must be done in the next 90 days, and assign 3-5 of them out per individual for accountability.  But the focused attention does not stop with merely setting these Rocks, or even with writing them down.  Every week, the Leadership Team or department team re-gathers for a “Level 10” meeting where each Rock is brought up one by one, and the owner or main person accountable speaks to them.  However, unlike many “Status” meetings, in EOS, all that is said in the first go-round is “On Track” or “Off Track.”  If “Off Track,” the item is dropped to a later portion of the meeting designated for resolving “Issues.”  Once all Rocks have been addressed in this fashion, the team goes on to prioritize each Issue, then Discuss and Solve them one by one (IDS). 

Whether your company uses EOS or not, this cadence of declaring what is important, then maintaining weekly check-ins at a high level, diving deep only when needed, is a great way to maintain accountability for change.  Attention is brought to each topic on a weekly basis, and as long as owners are being honest, the frequent cadence allows for quick resolution of problems before they escalate out of control or it becomes too late.

One key component of maintaining successful L10 meetings is to have two roles met at each meeting.  First is the meeting “owner” – who facilitates the meeting and keeps it on track, and second is the meeting “scribe” – who writes down all issues and solutions, and ensures these are stored in a common location.  These roles could actually be undertaken by the same person if s/he is a fast typist and strong facilitator.

Interestingly, AJC has offered this service for many years to clients, even before having read and bought in to Traction and the Entrepreneur’s Operating System.  We call it our “Accountability Model,” and liken it to hiring a personal trainer or housekeeper.  When you know that you are meeting with your PT or that your housekeeper is coming, you get your workouts done, or pick up the clutter around your house.  Without that forced accountability, it is far too easy to let tasks which require a bit of mental discipline to fall into arrears.

If your company needs to just get something done – consider assigning or outsourcing someone to lead an “Accountability Model” for your company or group.  Stay disciplined to meet weekly and ask if things are on track / off track for each project; then discuss and solve the issues which need further attention.  Don’t fall into the trap of thinking that everyone will get things done without maintaining attention and enforcing accountability.  If you can do this, just imagine how next year you will be able to say that you actually executed on that new strategy or plan, rather than having just talked about it.

Read this article and more on AJC’s blog, and sign up for our newsletter online at: http://andreajonesconsulting.com/blog.aspx

People Are Visual; Go With It

People are visual.  In his book, “Your Brain at Work,” David Rock writes that “One way to reduce the energy required for processing information is to use visuals, to literally see something in your mind’s eye.”  It is habitual for people to consider things in a visual way.  Consider how we naturally describe examples: Picture this, to illustrate this, to paint the picture, etc. 

To that end, picture this example: You are arriving at the airport’s short-term parking lot and are worried about being on time for your flight.  You are driving through the lot looking for a place to park, and it seems that the lot is nearly full! 

Which of these two images are more helpful to you when looking for a place to park?

In Image 1, you can see that the lot is full but there are no quick check indicators for where there may be a spot open.  In Image 2, there are little red lights above each parking spot indicating that the spot is full.  In the first situation, you have to drive through and actively inspect both sides of the lane for an opening which may not be readily apparent.  In the second situation, you merely have to scan down the rows of indicator lights to quickly ascertain that this particular lane is full and you will need to move to the next one.  The reality of the second situation is that at the end of the lane, there are green numbers illuminated which tell where there are open spaces in that lane.

It is so much easier for your brain, which is processing many items to quickly find a place to park and get into the airport for your flight in the second situation with the indicator lights.

Thus, in a business setting, visual images can also help to focus a situation and align the team.  Rather than discussing the image, it is helpful to create or present a visual with the stakeholders so that everyone has the same image in mind.  The other day at my client, we were discussing all the areas of responsibility for the upcoming production cycle.  In order to illustrate specifically what people were responsible for which area, and when these things would occur, not to mention quickly highlight the load each person would bear, I created a hand-written chart prior to our meeting and added names on sticky notes for each lane of responsibility.  Together we added several rows and move the names around, and at the end it looked like this (the fuzziness is intentional):

Example of a hand-made visualization tool (fuzziness intended)

After we finished this work, we discussed what needed to be done to realize this goal, including where new hires or temps were needed to keep the current staff from becoming too overloaded to successfully complete their responsibilities.  I was able to put it into Excel and capture the actions to get moving, and we are meeting again 2 weeks later to confirm that everything is on track.

The bottom line is that it is often super helpful to create visuals to help get everyone aligned. They don’t have to be super fancy or expensive.  White boards, large post-its, drawings on notepads, anything can be used to get the job done.  People just are visual, so go with it!

Read this article and more on AJC’s blog, and sign up for our newsletter online at: http://andreajonesconsulting.com/blog.aspx

Hey Leaders! Try Less Doing, More Leading

Last week I was with a client walking through a building with the Facility Manager and his boss.  We were preparing site-specific orientation in that facility, and I was along to document the pertinent items required for new hire training.

As we were walking, the boss pointed out items the Facility Manager needed to improve.  However, in the same breath as talking about how they needed to move a piece of equipment or get some material relocated, the boss kept offering to DO the work for the Facility Manager.  The first couple of times I kept my mouth shut, thinking that perhaps the Facility Manager was going to speak up and remind his boss that this was his area and he could take care of those items.  However, after the fifth time, when the Facility Manager did not speak up as the boss told him that he would take care of yet another little detail about that facility, I just couldn’t stop myself.

“You know, (Boss),” I said gently (and compassionately!), “You are super busy with all of your work already.  I think (Facility Manager) knows how to do these things, and being that this is the (Facility), it is pretty clearly in his scope.  Maybe we should let him get this stuff done instead of you taking more work on your plate.  What do you think?” 

The boss agreed with me, and later thanked me for helping him to maintain some distance, confessing that one of the hardest things for him to do is to let go of tactical work and trust his people to get things done.  The next day I spoke with the Facility Manager as well, and he was appreciative of the ability to maintain ownership over the area for which he is responsible and being held accountable. 

Granted, as a consultant, I am not always privy to the history of personnel performance, nor the track record of companies maintaining accountability for work without micromanaging it.  In fact, after having read Traction by Gino Wickman, I’m looking forward to a few upcoming opportunities to help work on EOS with clients; the L10 weekly meeting aspect seems to offer a very elegant way of maintaining focus and visibility on “Rock” level priority work without loading too much on any one individual’s plate.  However, it seems to me that if you won’t trust your employees to get work done in the area where you hired them to be responsible, you’re just going to keep piling work and worry on for yourself.  And that sounds pretty unsustainable.

Ed Batista is an Executive Coach and lecturer at the Stanford Graduate School of Business, his article “The Illusion of Effectiveness (Doing vs. Leading)” describes how while “doing” might have been how people were promoted to leadership positions, it is not often what is needed to keep one in that role.  He discusses how leading requires a lot of NOT doing, but coaching others to do better. 

I have yet to meet someone who can live another person’s life in addition to his or her own.  Those who truly feel compelled to lead must be comfortable with coaching and not doing.  A sustainable alternative to doing work for employees could be to set some clear expectations about the employee’s responsibilities and accountability, then offer training, guidance, and help when needed, but basically get the heck out of the way and let people do their work for themselves.  Then use those awesome weekly L10 meetings to maintain focus and thus elevate everyone in the group to accomplish more meaningful work with less stress and worry. 

Read this article and more on AJC’s blog, and sign up for our newsletter online at: http://andreajonesconsulting.com/blog.aspx

Ah-Ha Moments in Strategic Planning with Non-Profit versus For-Profit

Recently, I had the opportunity to facilitate AJC’s Strategic Deployment / Prioritization Matrix and Implementation Plan process for a non-profit.  This process aligns Strategy and Execution for organizations using the classic Hoshin Kanri (Strategy Deployment Matrix), coupled with the AJC-specific tools: Prioritization Matrix and Implementation Plan template, and was originally published in this article.  

A Family For Every Child is a nonprofit organization focused on finding permanent and loving adoptive homes for waiting Foster children, specializing in assisting special-needs/challenging-to-place foster children in finding their own Forever Families.  It was a true privilege to help this organization, with it’s amazing focus on children, align their 3-year strategic goals with action to begin today.  There were many key learnings on my part, however, in how performing this process differs for a non-profit versus a for-profit business.  AJC is now working with another non-profit, and is seeing this pattern emerge again.  Here are three differences that I’ve seen so far, summarized as: Drive, Data, Dollars.

Drive

Many US workers suffer from lack of engagement, up to 51% in this freely available 2015 Gallup poll release.  The same release stated that only 32% of employees self-report as “engaged.”  This is actually also a problem in non-profits, but according to the statistics cited from Quantum Workforce for 2015, 58% of employees in non-profits were engaged.  While 58% is not a staggeringly high majority, it still is almost double that of “all” workers, and sets the tone for this difference seen in for-profit and non-profit Strategic Alignment work.  I often refer clients to Simon Sinek’s 2010 Ted Talk “How Great Leaders Inspire Action” before conducting the Strategy Deployment sessions, or at least start with the CEO/leader’s “Why.”  It is often helpful to the entire Leadership Team to hear why the company owner/founder/top executive wants to improve, and that sets the stage for everyone to enthusiastically embrace the goal setting and planning work to be done.

In the case of non-profit work, however, the “why” is typically quite clear – that is, after all, the mission or vision that the non-profit purports to the world in general.  The people in the leadership and managerial teams at non-profits are aligned to this sense of purpose, and feel driven by it.  While there can always be stronger alignment to a clear purpose, it does not seem quite as relevant to spend as much time motivating the team in this area as there is in a for-profit business.

Data

For all the drive in the world, however, it has so far been my experience that non-profits may suffer from the lack of clear data presented in a format that intuitively fosters understanding.  Pareto charts, funnel statistics, financial metrics, or even number of people served and some quantitative impact the non-profit is having on these people – this information is harder to tease out, and many people do not seem to have the engineering, statistical, and/or financial background to organically collect, compile, and communicate out this data and use it to drive programs, initiatives, or monitor success.  It was actually really fun to talk about how understanding “drop-off” percentages through the AFFEC workflow could help drive recruiting and retention of potential adoption families!  When explained using the simple tools of white board and pen, the team really seemed to understand what the data could show them, and expressed enthusiasm for wanting to start looking at data in that way going forward.  This is a place where analytical consultants may really be able to add value to non-profits, especially when the vision is clear and the team can agree on which metrics indicate success for the organization and its mission.

Dollars

This was probably my biggest tactical “ah-ha” when conducting the Strategy Deployment facilitation sessions in a non-profit, and one that I should have expected.  Other than wanting to increase their endowment in order to fund operating expenses, the non-profit world is not concerned with increasing financial revenue or dollars coming in!  Obviously, I’ve been operating in the for-profit sector so long that the basic concept of “making money” was so ingrained in my brain that I was caught a bit off guard when the 3-year and 1-year goals had nothing to do with money.  Clearly a learning for me, but possibly there could be a happy medium here.  After all, when Dan Palotta gave his Ted talk on “The Way We Think About Charity is Dead Wrong,” he discussed that there are some big gaps in financial incentive for good people to go into non-profits.  Also, money is often a good metric for accomplishment.  “Bang for the Buck” is a phrase that comes to mind.  In a non-profit more than a for-profit, it seems to me that one should consider the impact of work completed by limited resources.  A possible means to measure how much good the non-profit is doing given the expense of work done is in some kind of financial ratio.  Not sure what the right answer is, and my experience is admittedly quite limited!  However, it does seem reasonable that there is a place for Dollars to be considered, while not obsessively so, in non-profits. 

Conclusion

All in all, it was a great experience to work with A Family For Every Child, and continuing that with the new non-profit is rewarding as well.  Here’s hoping that for-profit and non-profit best practices can combine into harmonious best practices which are used effectively across the board to make this world will become a better place for all who inhabit it.

Read this article and more on AJC’s blog, and sign up for our newsletter online at: http://andreajonesconsulting.com/blog.aspx

Stop Using Lean to Cut Costs Part 2

As stated in Part 1 of this series, using Lean to cut costs, while popular, actually does not adhere with the original purpose of lean.  As described by  Jim Womack in the 1991 book “The Machine that Changed the World,” lean production described how Toyota produced products with little to no “waste” while simultaneously (and more importantly) bringing value to customers in a way that earned revenue for the company.  Another description from Kevin Meyer, Co-Founder of The Gemba Academy, states that “The goal (of lean) is not to reduce spending – since to do so means sacking valuable people – but to convert people's time and effort from wasteful activities to value adding ones – activities customers will pay for.” 

Previously, an example was given of a manufacturing firm using reduced throughput time to increase revenue.  However, one familiar critique of lean is that it is only valid in manufacturing environments.  This is not actually true, and to demonstrate, consider the following example from a web platform company.

This company was going from onboarding about 50 clients to their web platform in one month to about 350 in the next after they added a new sales channel partner.  The five steps in the onboarding process were largely manual.  When client volume scaled up this much this quickly, the employees got frustrated, felt overworked, unable to keep up, and were not getting their clients onto the platform as quickly as they needed to.
It was unclear, however, where in the Five-Step process were the real pain points.  A current state assessment including data collection and value stream mapping helped define the biggest issues.  This assessment highlighted that there was a big difference in the two training steps, the 2nd step and the 4th step.  In the 2nd step they were training clients on a five-clients to 1-trainer (5:1) ratio.  In the 4th step they were training clients on a 1:1 ratio.  It doesn’t take a rocket scientist to know that if you go from a five-lane highway down to a one-lane highway, things are going to back up.  But it was dramatic what the backlog actual was, since this had never been calculated.

WIP Backlog over 5-Step Onboarding Process

The data showed that there were 630 clients waiting at that fourth step, just waiting to go through that 1:1 training!  It would have taken approximately six years to get through the backlog at the projected pace of incoming clients.  Six years is an awfully long time to wait to be able to earn revenue from your web platform. Amazingly, though once this problem was defined, through discussions and review of the data, everyone became aligned about what to do for execution.

The easiest thing was to just increase the ratio of clients to trainer, 2:1, 3:1, 5:1.  Also to level load all the steps so there were the same number of training slots for each type of training, and cross-train all the Trainers themselves to be able to give both types of training.  They also added online self-scheduling for both initial signup, and when people cancelled at the last minute it was much easier to backfill spots.  After that, things started moving more smoothly and they were able to get through their backlog in just a few months and start earning Revenue.

Both this and the previous example from the manufacturing company followed a straightforward model which can help all companies use Lean to increase revenue.  AJC calls this the “DAER” model.

DAER Model; Copyright Andrea Jones Consulting, LLC 2017

First, Define the problem using data when possible.  Then, Align everyone to that problem and to the plan to execute.  Third, Execute the work – which is often straightforward if you’ve taken time to do the Define and Align steps well.  And finally – remember this is all about earning Revenue for your company. 

If your company is constantly using Lean to cut costs, you might not be all that popular with your employees.  However, if you can message Lean in the way it was originally intended – to increase value to your customers and Revenue for your company, this is a much more compelling purpose around which your employees can rally.

Read this article and more on AJC’s blog, and sign up for our newsletter online at: http://andreajonesconsulting.com/blog.aspx

Stop Using Lean to Cut Costs Part 1

Just last April, CNBC ran the headline that “Coke goes 'lean,' to cut 1,200 jobs as part of $800 million cost-savings plan.”  So many companies use “Lean” to cut costs, that lean has become a “four-letter-word” or “flavor of the month” in many businesses.

Interestingly, when Jim Womack coined the term “lean” in the book “The Machine that Changed the World” in 1991, he was describing how there was little to no “waste” in how Toyota produced products while simultaneously (and more importantly) bringing value to customers in a way that earned revenue for the company. 

This takes careful thought and preparation, and ultimately is inspired by the goal of earning revenue, not cutting costs.  When lean is done well, some costs may be brought down, but that is not the ultimate purpose. 

One great explanation is by Kevin Meyer, Co-Founder of The Gemba Academy who blogged, “The goal is not to reduce spending – since to do so means sacking valuable people – but to convert people's time and effort from wasteful activities to value adding ones – activities customers will pay for.”  Kevin describes how one method to increase the top line is to have additional capacity with the same cost base; to sell more product with what you have.  This can happen by reducing throughput time.

For example, Company X quoted a 6-week lead time to customers, and was not making this happen.  When asked about their actual average lead times, they did not have data to provide an answer.  Thus, data was collected for 30 products over the course of two and a half months.  It turned out that they had an average of a 7-week lead time, but interestingly, most of the time that each product spent in their production system was in waste.  This is not the waste of scheduling, motion, inspection, rework, or other non-value-add tasks that didn’t change the form, fit, or function of the product.  This was actually just the waste of “wait time.”  As in, 75% of that 7-week average duration, the product sat idle. 

Company X Value Add versus Wait Time

Again, in this chart every time the product was “touched” in some way, even just for scheduling, programming, staging, inspection, or rework, the time was considered “Value Add” and is shown in green bar.  Every time the product sat and did nothing, it is shown in a red bar.  With 75% of the time just WAITING, the company was able to implement a Pull System at the largest green bar – the bottleneck of machining the product.  They ensured that only when a small buffer, called a kanban, produced a “hole” for product staged in front of a particular piece of equipment, that was when upstream work would be done, or “pulled” to the equipment.  In this way, they were able to reduce almost 70% of the time spent on production. 

Production Durations Before and After Lean Process Implementation

Collectively, the shorter throughput time spent in production translated to improved cash flow due to sooner invoicing, improved inventory turns, improved equipment utilization, and overall increased equipment capacity which could then be spent producing more customer-requested products.  The other thing that Company X can do is offer better terms to customers as a competitive advantage, further increasing sales!  

All of these things increased revenue WITHOUT cutting jobs, reducing materials on hand, or even cutting out other traditionally “non-lean” steps like inspection.  Not a lot of “cuts” per se, but definitely a great result!

Many other companies have a similar story, but one critique is that lean can only work well in this way for manufacturing companies.  This, however, is not true.  Next time, I’ll give an example of how considering use of Lean (or Process Improvement) for a web platform company worked in much the same way.

Until then, read this article and more on AJC’s blog, and sign up for our newsletter online at: http://andreajonesconsulting.com/blog.aspx