We have renamed our blog! The new title is, "Challenges to Continuous Improvement." The updated blog will continue to present ideas, best practices and hopefully thought provoking questions about the world of Continuous Improvement (CI).
The blog has been relocated to www.challengestoci.com.
Please visit us at our new location!
Tuesday, September 14, 2010
Monday, August 23, 2010
How Do You Grow Sales Revenue?
When we recently surveyed a diverse group of business leaders about the greatest challenge facing their organizations in the near term and long term, we heard from most that by far the biggest challenge was to grow revenue.
Many of them have accomplished great productivity improvements, but until demand increases, the additional capacity cannot be put to profitable use. In fact, throughout the world, economies are suffering from excess capacity which leads to high levels of unemployment.
When we don’t have enough sales, our tendency is to cut jobs, cut capacity and lower costs. But, as many of you may know, this approach does nothing to grow sales revenue and often results in some dire circumstances.
Clearly there are alternatives... and we plan to present additional information on this subject going forward. In the meantime, maybe you'd like to share some success stories about how your organization has grown sales revenue?
Many of them have accomplished great productivity improvements, but until demand increases, the additional capacity cannot be put to profitable use. In fact, throughout the world, economies are suffering from excess capacity which leads to high levels of unemployment.
When we don’t have enough sales, our tendency is to cut jobs, cut capacity and lower costs. But, as many of you may know, this approach does nothing to grow sales revenue and often results in some dire circumstances.
Clearly there are alternatives... and we plan to present additional information on this subject going forward. In the meantime, maybe you'd like to share some success stories about how your organization has grown sales revenue?
Friday, August 20, 2010
Motivation for Improvement
In order to make the kinds of improvements in business that we all aim for, we need to motivate people to engage their brains to the fullest, examine the current work processes critically, think deeply about root causes, and think expansively about possible solutions. We want them to consider alternatives, anticipate and minimize risks, implement planfully, and measure and evaluate results. And we usually want people to do all this while keeping up operational responsibilities as well.
So the challenge of motivating our team becomes very important.
In his recent book, Drive, the Surprising Truth About What Motivates Us, Daniel Pink explores the impact on performance of different approaches to motivation. His research might surprise you!
For more details, we highly recommend his book. You might also read more on the subject in one of our recent newsletter articles.
So the challenge of motivating our team becomes very important.
In his recent book, Drive, the Surprising Truth About What Motivates Us, Daniel Pink explores the impact on performance of different approaches to motivation. His research might surprise you!
For more details, we highly recommend his book. You might also read more on the subject in one of our recent newsletter articles.
Thursday, July 29, 2010
Partners in Improvement
Conway Management Company has recently created a “Partners in Improvement” group, which is comprised of select experts and leaders in Improvement from around North America.
We conduct periodic meetings, during which participants share fresh ideas, best practices and solutions to common problems and challenges associated with Continuous Improvement. Over time, we plan to post some of our findings in this blog and on the Conway Management Website – so please stay tuned!
We hope you find this of interest and welcome your input as well.
We conduct periodic meetings, during which participants share fresh ideas, best practices and solutions to common problems and challenges associated with Continuous Improvement. Over time, we plan to post some of our findings in this blog and on the Conway Management Website – so please stay tuned!
We hope you find this of interest and welcome your input as well.
Tuesday, July 27, 2010
Method to Madness?
Anybody might make an irrational decision now and then, right?
For example, anyone might occasionally spend more on something than it is worth, become too attached to a particular investment, make an employment decision based on gut feel when the facts are against it. But in his book, Predictably Irrational, Dan Ariely asserts that in addition to being vulnerable to an occasional random bad call, we human beings are predictably irrational. There is, it seems, some method in our madness.
Remember those supply/demand curves we learned about in Economics class that have us neatly arriving at a price where supply and demand are in perfect equilibrium? Hogwash!
Ariely cites a number of experiments that show that that the prices at which people are willing to buy or to sell are influenced by a number of factors that have absolutely nothing to do with the intrinsic value of the object or service. Decisions humans make about the price at which to buy or sell are influenced by factors that are, in fact, quite irrational – but predictably so!
For example, in one experiment, Ariely passes out to his class a sheet of items he intends to auction off. But first he asks the group to write down the last two digits of their social security numbers next to each item and also to note whether they would, hypothetically, be willing to pay that price for the item. Then they are allowed to bid on any of the items they would like. When asked if the silly exercise with the social security numbers had influenced their bids, the participants said “no way!” – yet those who wrote social security digits between 80 to 99 placed bids that were 2-3 times higher than those students whose last two social security digits were between 00 and 20. From this and other similar experiments, Ariely concludes that our market decisions can be greatly influenced simply by having considered whether an item was a good deal at a certain price – even if that price was obviously randomly selected.
In another experiment, he offers a group of graduate students at MIT’s Sloan School of Management a subscription to The Economist, with three options:
Option #1: Internet-only subscription for $59,
Option #2: Print-only subscription for $125, or
Option #3: Print-and-Internet subscription for $125.
When presented with these options, 16% of the students went for the Internet only and 84% students opted for the combined medium. Nobody went for the Print-only option, which was obviously inferior to option #3. Since Option 2 appealed to no one, in theory it was irrelevant, so removing it should have no influence on the relative appeal of the two other options. But when Ariely offered just the Internet-only for $59 or Print-and-Internet for $125, 68% (up from 16%) chose Internet-only and only 32% (down from 84%) chose the combination offer! Obviously the real value of the two most popular options did not change, but the perception of the value was altered substantially by the mere presence of a third, irrelevant option. How irrational!
Ariely presents a number of other experiments designed to identify the hidden forces that affect our decisions, many of which are irrational in a strictly economical sense. What are the implications for business if buying and selling decisions are so strongly influenced by irrelevant factors? Can a better understanding of your customers’ decision making process help you sell more and grow?
Pricing is not the only way that human decisions are influenced in a predictably irrational way. In several other experiments, Ariely tests the forces that affect honesty and the willingness to cheat to make a buck. In these experiments, he found that people were predictably less likely to cheat if they were reminded of an obligation for honesty (unenforceable though it was) immediately before the opportunity to cheat presented itself. Interesting.
Even without the toothless exhortation for honesty, participants refrained from wholesale cheating for cash rewards -- even when they could feel sure of getting away with it. There was some cheating to be sure, but not nearly as much as the opportunity deliberately allowed. Some scruples were in play. Good! But when the rewards were provided in the form of tokens instead of cash, the amount of cheating soared. The tokens could be exchanged for cold, hard cash at a table just a few feet away, so they were nearly the same as cash. Nonetheless, the scruples that prevented people from dishonestly acquiring actual cash lost their efficacy when those people were faced with an opportunity to dishonestly acquire a cash-equivalent!
In a strictly rational accounting, a promise of a cash-equivalent should be responded to with an equivalent level of honesty. They are essentially the same thing. But again, Ariely’s research demonstrates that people (not you or me, but most people) are predictably irrational. People who could be counted on to refrain from taking undeserved cash, are likely to be less scrupulous when their dishonesty is even one small step removed from actual cash.
If scruples lose their power and influence over people as they become removed from actual cash currency, what are the implications in our increasingly cashless economy? What are the implications for the contingency compensation packages that have become so commonplace? Could this phenomenon have led to some of the previous decade’s egregious instances of ‘cooking the books’ from Enron to Maddox?
Predictably Irrational illustrates a number of interesting facets of human decision making. Understanding the patterns of the irrational biases and influences might help us anticipate and avoid unintended consequences of the decisions we make.
What do you think? Do you see any signs of this behavior in your experience?
For example, anyone might occasionally spend more on something than it is worth, become too attached to a particular investment, make an employment decision based on gut feel when the facts are against it. But in his book, Predictably Irrational, Dan Ariely asserts that in addition to being vulnerable to an occasional random bad call, we human beings are predictably irrational. There is, it seems, some method in our madness.
Remember those supply/demand curves we learned about in Economics class that have us neatly arriving at a price where supply and demand are in perfect equilibrium? Hogwash!
Ariely cites a number of experiments that show that that the prices at which people are willing to buy or to sell are influenced by a number of factors that have absolutely nothing to do with the intrinsic value of the object or service. Decisions humans make about the price at which to buy or sell are influenced by factors that are, in fact, quite irrational – but predictably so!
For example, in one experiment, Ariely passes out to his class a sheet of items he intends to auction off. But first he asks the group to write down the last two digits of their social security numbers next to each item and also to note whether they would, hypothetically, be willing to pay that price for the item. Then they are allowed to bid on any of the items they would like. When asked if the silly exercise with the social security numbers had influenced their bids, the participants said “no way!” – yet those who wrote social security digits between 80 to 99 placed bids that were 2-3 times higher than those students whose last two social security digits were between 00 and 20. From this and other similar experiments, Ariely concludes that our market decisions can be greatly influenced simply by having considered whether an item was a good deal at a certain price – even if that price was obviously randomly selected.
In another experiment, he offers a group of graduate students at MIT’s Sloan School of Management a subscription to The Economist, with three options:
Option #1: Internet-only subscription for $59,
Option #2: Print-only subscription for $125, or
Option #3: Print-and-Internet subscription for $125.
When presented with these options, 16% of the students went for the Internet only and 84% students opted for the combined medium. Nobody went for the Print-only option, which was obviously inferior to option #3. Since Option 2 appealed to no one, in theory it was irrelevant, so removing it should have no influence on the relative appeal of the two other options. But when Ariely offered just the Internet-only for $59 or Print-and-Internet for $125, 68% (up from 16%) chose Internet-only and only 32% (down from 84%) chose the combination offer! Obviously the real value of the two most popular options did not change, but the perception of the value was altered substantially by the mere presence of a third, irrelevant option. How irrational!
Ariely presents a number of other experiments designed to identify the hidden forces that affect our decisions, many of which are irrational in a strictly economical sense. What are the implications for business if buying and selling decisions are so strongly influenced by irrelevant factors? Can a better understanding of your customers’ decision making process help you sell more and grow?
Pricing is not the only way that human decisions are influenced in a predictably irrational way. In several other experiments, Ariely tests the forces that affect honesty and the willingness to cheat to make a buck. In these experiments, he found that people were predictably less likely to cheat if they were reminded of an obligation for honesty (unenforceable though it was) immediately before the opportunity to cheat presented itself. Interesting.
Even without the toothless exhortation for honesty, participants refrained from wholesale cheating for cash rewards -- even when they could feel sure of getting away with it. There was some cheating to be sure, but not nearly as much as the opportunity deliberately allowed. Some scruples were in play. Good! But when the rewards were provided in the form of tokens instead of cash, the amount of cheating soared. The tokens could be exchanged for cold, hard cash at a table just a few feet away, so they were nearly the same as cash. Nonetheless, the scruples that prevented people from dishonestly acquiring actual cash lost their efficacy when those people were faced with an opportunity to dishonestly acquire a cash-equivalent!
In a strictly rational accounting, a promise of a cash-equivalent should be responded to with an equivalent level of honesty. They are essentially the same thing. But again, Ariely’s research demonstrates that people (not you or me, but most people) are predictably irrational. People who could be counted on to refrain from taking undeserved cash, are likely to be less scrupulous when their dishonesty is even one small step removed from actual cash.
If scruples lose their power and influence over people as they become removed from actual cash currency, what are the implications in our increasingly cashless economy? What are the implications for the contingency compensation packages that have become so commonplace? Could this phenomenon have led to some of the previous decade’s egregious instances of ‘cooking the books’ from Enron to Maddox?
Predictably Irrational illustrates a number of interesting facets of human decision making. Understanding the patterns of the irrational biases and influences might help us anticipate and avoid unintended consequences of the decisions we make.
What do you think? Do you see any signs of this behavior in your experience?
Saturday, June 12, 2010
Quantification... Are We Working on the Right Things?
When engaged in an improvement initiative, two key questions must be answered:
(1) Are we working on the right things?
(2) Are we going about it the right way?
The second question is usually the easier of the two. Are we … involving the right people, gathering all the facts and data about the current situation, looking deep for root causes, and thinking broadly about possible solutions, etc.?
But the first question is critical and potentially more challenging… Are we working on the right things? Certainly going about improvements the right way — methodically, data-driven, with the right people, etc. — is important to your success. But far more important — and often more difficult — is identifying the right things to work on.
Quantifying the waste is an essential tool for separating the vital few from the trivial many opportunities. To make the best possible use of this tool, you might ask yourself these questions:
• Am I creating real gains or merely shifting the shape of the waste?
• Am I missing the rest of the iceberg?
• Where does the problem fit into the overall process?
• Am I correctly valuing the cost of lost time?
• Am I so focused on the snags in the day to day work that I miss the game-changing opportunities in front of me?
For additional examples and ideas on how to best quantify waste, click here
(1) Are we working on the right things?
(2) Are we going about it the right way?
The second question is usually the easier of the two. Are we … involving the right people, gathering all the facts and data about the current situation, looking deep for root causes, and thinking broadly about possible solutions, etc.?
But the first question is critical and potentially more challenging… Are we working on the right things? Certainly going about improvements the right way — methodically, data-driven, with the right people, etc. — is important to your success. But far more important — and often more difficult — is identifying the right things to work on.
Quantifying the waste is an essential tool for separating the vital few from the trivial many opportunities. To make the best possible use of this tool, you might ask yourself these questions:
• Am I creating real gains or merely shifting the shape of the waste?
• Am I missing the rest of the iceberg?
• Where does the problem fit into the overall process?
• Am I correctly valuing the cost of lost time?
• Am I so focused on the snags in the day to day work that I miss the game-changing opportunities in front of me?
For additional examples and ideas on how to best quantify waste, click here
Thursday, May 20, 2010
Productivity Gains - How They Really Impact the Bottom Line
Increasing productivity or reducing the amount of “people time” associated with various processes usually sounds like a good idea. In a few instances, the impact of increasing process productivity on the bottom line is clear and simple. It may reduce the expenditures on overtime or contract workers.
However, beyond those few cases, productivity improvements for employees do not directly reduce expenditures, but instead increase capacity; and the extent to which these improvements benefit the bottom line depends on how that capacity is put to use.
The impacts can be extremely profitable or can amount to nothing — or worse!
Click here to read more…
However, beyond those few cases, productivity improvements for employees do not directly reduce expenditures, but instead increase capacity; and the extent to which these improvements benefit the bottom line depends on how that capacity is put to use.
The impacts can be extremely profitable or can amount to nothing — or worse!
Click here to read more…
Thursday, April 29, 2010
Are We Learning?
The history of commerce is littered with organizations that have erred in big and varied ways. There were Wang’s strategic errors, GM’s stifling bureaucracy and short-sightedness, Digital’s burdensome overhead, Enron’s dishonesty, AIG’s recklessness, and… more recently, there are Toyota’s troubles, which many believe are troubling in an entirely new way (see related article).
But there has been more than enough said and written about all of these situations and miscues - so, the question is, what lessons have we learned? We look forward to your thoughts!
But there has been more than enough said and written about all of these situations and miscues - so, the question is, what lessons have we learned? We look forward to your thoughts!
Friday, April 16, 2010
Sources of Good Ideas
Where will your organization find its next series of best ideas?
Many organizations find good ideas by studying their own work - when a team goes after an area of waste, they are careful to document their findings about additional areas of waste, as it's a good idea to make a habit of capturing the improvement opportunities that become visible. (Check out our handy 8 Step Methodology Project Guide, where teams can capture these ideas as they arise).
But in addition to collecting these insights, step back and do some Imagineering: what would the business look like if everything were right? When people start to answer this question in detail, some major areas of waste are bound to surface.
You might also peruse Bill Conway’s list of likely opportunities from his best selling book Winning the War on Waste (Pages 73-74). Some of these are:
- Identify reasons for back orders and begin to eliminate them
- Reduce average wait times at check-out counters, on telephones
- Reduce aveage response time to customer inquiries
- Reduce make-ready time for a critical process
- Reduce invoice pricing errors
- Reduce time between shipment and invoicing
- Reduce time between customer payment and application of cash
- Identify reasons for late delivery and begin to eliminate them
- Reduce volume of hazardous waste
- Reduce time for sales people spent on travel, meetings, reports
- Reduce the amount of time spent in meetings and increase the value
Many organizations find good ideas by studying their own work - when a team goes after an area of waste, they are careful to document their findings about additional areas of waste, as it's a good idea to make a habit of capturing the improvement opportunities that become visible. (Check out our handy 8 Step Methodology Project Guide, where teams can capture these ideas as they arise).
But in addition to collecting these insights, step back and do some Imagineering: what would the business look like if everything were right? When people start to answer this question in detail, some major areas of waste are bound to surface.
You might also peruse Bill Conway’s list of likely opportunities from his best selling book Winning the War on Waste (Pages 73-74). Some of these are:
- Identify reasons for back orders and begin to eliminate them
- Reduce average wait times at check-out counters, on telephones
- Reduce aveage response time to customer inquiries
- Reduce make-ready time for a critical process
- Reduce invoice pricing errors
- Reduce time between shipment and invoicing
- Reduce time between customer payment and application of cash
- Identify reasons for late delivery and begin to eliminate them
- Reduce volume of hazardous waste
- Reduce time for sales people spent on travel, meetings, reports
- Reduce the amount of time spent in meetings and increase the value
Friday, March 12, 2010
The Cost of Time?
Time waste differs from material waste in that there can be no salvage.
"The easiest of all wastes, and the hardest to correct, is this waste of time, because wasted time does not litter the floor like wasted material." ~Henry Ford
Henry Ford was talking about the waste of people's time, something we see plenty of in business: people waiting for the last part they need or the last piece of information required or the last person to arrive at the meeting. People's time is wasted in excess motion, and virtual mountains of time is wasted in rework. All of these are fairly easy to quantify.
But I think the costliest time-waste comes from delay in solving problems. Yes, ‘things take time.’ But how much time? And how much is the delay costing us?
The cost of each elapsed week it takes to solve a significant problem is:
If you have a problem worth solving (and who doesn’t?) why not ask yourself and the people around you “How much more is the problem costing us every week it goes unsolved?” For the vital few, put your best effort not just to solve it – but to solve it fast.
What is causing delays in your improvement projects?
"The easiest of all wastes, and the hardest to correct, is this waste of time, because wasted time does not litter the floor like wasted material." ~Henry Ford
Henry Ford was talking about the waste of people's time, something we see plenty of in business: people waiting for the last part they need or the last piece of information required or the last person to arrive at the meeting. People's time is wasted in excess motion, and virtual mountains of time is wasted in rework. All of these are fairly easy to quantify.
But I think the costliest time-waste comes from delay in solving problems. Yes, ‘things take time.’ But how much time? And how much is the delay costing us?
The cost of each elapsed week it takes to solve a significant problem is:
- often quite substantial (sometimes equivalent to the annual cost of other problems your organization may also be working on)
- nearly invisible, because the costs are already buried in your baseline
- utterly irretrievable... there is no salvage. Every week that passes without the solution is another week of waste coming out of your bottom line. It is gone, sunk, kaput.
If you have a problem worth solving (and who doesn’t?) why not ask yourself and the people around you “How much more is the problem costing us every week it goes unsolved?” For the vital few, put your best effort not just to solve it – but to solve it fast.
What is causing delays in your improvement projects?
Monday, February 22, 2010
Achieving Perfection Two...
In a previous post we recommended the book Outliers: The Story of Success, by Malcolm Gladwell. The book provides some truly fascinating insight into the unique behavior of high-achievers.
In the book, Gladwell shares research data that indicates it takes 10,000 hours of practice to achieve perfect execution. The people he describes -- people such as Bill Gates, the Beatles, etc. -- make me think of the Olympic champions we are watching in the evenings, who have found their passion and have proceeded with enough focus and discipline to achieve excellence.
Of course this statement also holds true for successful business leaders. Gladwell's data about "10,000 hours" is really all about the two most important things in business: identifying the right thing to work on and then working on it with a great deal of focus.
While watching the Olympics recently, I found myself wondering about the number of hours each of the competing athletes must have put in to achieve their skill level... What do you think?
In the book, Gladwell shares research data that indicates it takes 10,000 hours of practice to achieve perfect execution. The people he describes -- people such as Bill Gates, the Beatles, etc. -- make me think of the Olympic champions we are watching in the evenings, who have found their passion and have proceeded with enough focus and discipline to achieve excellence.
Of course this statement also holds true for successful business leaders. Gladwell's data about "10,000 hours" is really all about the two most important things in business: identifying the right thing to work on and then working on it with a great deal of focus.
While watching the Olympics recently, I found myself wondering about the number of hours each of the competing athletes must have put in to achieve their skill level... What do you think?
Monday, February 1, 2010
How Are You Tracking?
Most people will readily agree that tracking is a necessary component of managing and improving any process.
But what should you track? How should you use the data?
Here's a list of data elements you might consider tracking at the start of the project, during the project and at the project's conclusion:
At the start:
- Names of leader & participants
- Department, function, area or scope
- Problem statement
- Objective
- Start date
- Type of benefit(s) expected
- Dollar value of benefit(s)
- Time-frame for results
During the project:
- Project status
- Revised benefit(s)
- Revised time-tables
- Comments from the leader
At the project's end:
- Completion date
- Final estimates of benefit(s) achieved
- Learings
- Most significant obstacles or problems encountered
- Additional opportunities for improvement
You don't necessarily need to use all of these. Choose from this list and keep it short and simple so that the project leaders are not overwhelmed with requests. It is not the quantity of data elements you gather that matters, but rather how effectively you study and act on the data.
For more details and suggestions on how to best make use of these elements, please visit us online at: www.conwaymgmt.com
But what should you track? How should you use the data?
Here's a list of data elements you might consider tracking at the start of the project, during the project and at the project's conclusion:
At the start:
- Names of leader & participants
- Department, function, area or scope
- Problem statement
- Objective
- Start date
- Type of benefit(s) expected
- Dollar value of benefit(s)
- Time-frame for results
During the project:
- Project status
- Revised benefit(s)
- Revised time-tables
- Comments from the leader
At the project's end:
- Completion date
- Final estimates of benefit(s) achieved
- Learings
- Most significant obstacles or problems encountered
- Additional opportunities for improvement
You don't necessarily need to use all of these. Choose from this list and keep it short and simple so that the project leaders are not overwhelmed with requests. It is not the quantity of data elements you gather that matters, but rather how effectively you study and act on the data.
For more details and suggestions on how to best make use of these elements, please visit us online at: www.conwaymgmt.com
Friday, January 8, 2010
Outliers: The Story of Success
Here's a great read...
In the book, Outliers: The Story of Success, Malcolm Gladwell asks the question, “What makes high achievers different?” He answers that question through a series of vignettes about successful people. He studies where they are from, when they were born, their culture, their family, their upbringing, their generation and the special experiences they have which help lead them to success.
Through the individual stories, we see why some geniuses succeed and others fail to achieve; we identify the cultural issues that made Korean Air Lines pilots much more likely to crash; we understand the cultural issues that lead Asians to be good at math; we can imagine the cultural, generational and timing issues which allowed Jewish lawyers born in the early 1930” to be the most successful merger and acquisition lawyers in the country.
These stories and more are entertaining, perplexing and ultimately, satisfying. Hope you enjoy it as much as I did!
In the book, Outliers: The Story of Success, Malcolm Gladwell asks the question, “What makes high achievers different?” He answers that question through a series of vignettes about successful people. He studies where they are from, when they were born, their culture, their family, their upbringing, their generation and the special experiences they have which help lead them to success.
Through the individual stories, we see why some geniuses succeed and others fail to achieve; we identify the cultural issues that made Korean Air Lines pilots much more likely to crash; we understand the cultural issues that lead Asians to be good at math; we can imagine the cultural, generational and timing issues which allowed Jewish lawyers born in the early 1930” to be the most successful merger and acquisition lawyers in the country.
These stories and more are entertaining, perplexing and ultimately, satisfying. Hope you enjoy it as much as I did!
Subscribe to:
Comments (Atom)