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Backlogs aren't the security you think they are


backlogsObservation #23

Editor's Note: In the previous Observation, we discussed why it's hard to eliminate backlogs, --a task that’s often brought forth if you are trying to improve the productivity of an area that uses some kind of backlog-management system (e.g., engineering work orders). We suggested that one reason it's tough is that backlogs are a form of security for many people. Sean Brown, president of Egan Visual (manufacturer of visual communication systems and business furniture) and former Carpedia partner, offers some additional thoughts on the topic: 

A key to overcoming this objection is communicating that a large backlog is not the job security people think it is. Certainly there are operational efficiencies that you might be able to leverage when there is a backlog, but there are potentially hidden, but very real risks and costs lurking. Rather than being viewed as a "healthy amount of work ahead of us," employees should recognize that a backlog often represents two things: customer dissatisfaction and a competitive threat.

The larger the backlog, the longer your lead times are (from order to cash). Unless you are in an environment where customers nail down their orders months before they need something, this backlog reflects an unfilled need in their organization. This means they are dissatisfied on some level. Before they order, they own the dissatisfaction. Now that the order is in your backlog, your name is on it. Enter the competitive threat: many companies have won share and dominated industries by competing on lead times: "Order from us and get your stuff right away."

Identifying and communicating the source of the backlog and its burning platform will help build understanding and momentum in backlog elimination. This will in turn help generate some (one-time) cash early in the improvement initiative, directly contributing to the project's ROI.

Why it's hard to eliminate backlogs


Observation #22

the effect of backlogs on a businessIn the previous Observation, we discussed Parkinson's Law, which states that work expands to fill the time available for its completion. There is a similar phenomenon, which we call the “Backlog Effect: Work expands because there is no additional work available.” If people are aware that no work awaits them after they complete their current tasks, they will naturally start slowing the rate of completion to avoid running out of work. This is very common in project-based work environments.

A healthy and visible backlog is therefore helpful for maximizing the productivity of your people. Taking that backlog away may cause employees to be concerned about their job security. This perceived “threat” may cause (consciously or not) a slowed pace of work or assignments being stretched out in one way or another.

When we work in project-based or work-order based environments (such as software design, engineering or maintenance), we often find that people are not as productive as they could be for various reasons. The basic equation for productivity is output/input, so logically to improve these areas, you need to increase output (tasks or work orders completed) or reduce resource hours, or both. Inevitably, a request to reduce resource hours is met with: "Before we can reduce any hours, there is a large backlog of work that needs to be brought under control." This is difficult to achieve, however, because you run directly into the Backlog Effect. If people sense that eliminating backlogs will eventually lead to eliminating them, you can understand why they may be tempted to manage their pace.

How managers propagate Parkinson's Law


Observation #21

In 1958, Cyril Parkinson published Parkinson's Law arguing that "work expands to fill the time available for its completion." It's a slightly cynical observation that suggests that people will change their pace of work based on how much time they have or are given to complete it. We see this all the time across different industries and functions. If people are close to completing a task near the end of their day or shift and run the risk of having to either start or be assigned another task, they have a tendency to ease off the throttle. It's a relatively benign human reaction to a situation -- and it’s rarely a deliberate attempt to somehow short-change or undermine the organization. But it reduces or limits productivity none the less.

Parkinson's Law and productivity improvementThe fault is not the individual's responsibility, however. Stretching work to fill the time allotted has everything to do with assignment and expectations -- something a manager controls. Parkinson's Law rings true more frequently than it should because many managers do not assign work with time-based expectations. This is perhaps most common in office environments, where assignments and expectations are often mistakenly associated with the notion of "micromanagement." It is very common to observe employees choosing which project to work on, in what priority, and determining for themselves how long the task should take. Work standards that attempt to relate task to time are normal in plant production environments, but are very rare in office environments, despite the fact that many office work areas share much commonality with production environments. It's also rare to see a manager in an office environment schedule staff with anywhere near the specificity, in terms of output and timing, that a shop supervisor would.

Parkinson's Law exists and thrives in environments where expectations and deadlines are not clear.

The power of momentum


Observation #20

change management initiatives

Monday, May 13, 2013 will go down in sports folklore as one of the all-time incomprehensible chokes, if you're a Toronto Maple Leafs fan -- or as one of the all-time greatest team comebacks, if you're a Boston Bruins fan. (For non-hockey fans, the Maple Leafs blew a 4-1 lead in the final period of the seventh and deciding playoff game. After scoring halfway through the third period to make the score 4-2, the Bruins pulled their goalie with two minutes remaining and scored two more goals to tie the game. The Bruins went on to win the game in overtime.)

Pat Quinn, a former Toronto Maple Leafs coach, described it as the terrifying moment that most athletes experience at some point in their careers: when momentum shifts to the other team at such a fierce rate that the impending collapse actually becomes predictable -- the awful moment when a coach looks at his team’s bench and only sees players fearful that they’ll be selected to go onto the ice. Most people who watched this game shared this sense of impending doom (or elation, again depending on your perspective), well before the outcome of the game was actually determined.

Change-management projects can also be affected by shifts in positive and negative momentum. It’s the reason that most change efforts stress the need to demonstrate some "quick wins" early in the engagement. The deliberate and careful staging of prototypes serves a similar purpose. These quick wins or successful trials give people the strength to believe that things might actually get better. The magnitude of the early results is much less important than the decisiveness and clarity of the improvement. Success can become an expectation, which can be very powerful in building a broad base of support for change. Conversely, miscues and mistakes early in a change-management project (e.g., poor communication, errors, conflicts between people) can do lasting harm. Doubt and pessimism can be just as powerful forces at changing momentum as belief and optimism.

Momentum shifts can happen at all organizational levels (company, department, team, individual). The advantage of a change-management initiative over many other circumstances is that it is a fresh start. Most people are willing to enter into a project -- provided it is introduced well and seems reasonable -- with a slightly optimistic sense that it could work. From this point on, however, the process is something that needs to be carefully orchestrated and managed.

Where are all the front-line managers?


Observation #19

point of execution in a successful businessA number of years ago, we started an interesting study called the "whereabouts" study. The idea behind the study was to try to illustrate where a front-line manager spends most of his or her time during the course of the day; correlate it to what is actually happening in the business at the same time; and determine if it would be more useful for the organization to have the manager's day look differently.

What we found is that managers spend a great deal of their time behind closed doors, either in their office or in meetings of one kind or another. Generally they are the most technically skilled in their function, so their absence from the front-line raises a number of interesting questions. It also has some bearing on another observation, which is that 90% of the problems that impede someone's daily productivity have nothing to do with how hard that person works. The front-line manager has the most important role in the organization as far as managing the point of execution: the point at which things actually get accomplished.

This raises a number of questions. Should a sales manager spend more time in the field with sales reps? Should a managing engineer spend more time following up with designers or coders? Should a maintenance manager follow up more frequently with mechanics?

Hotel kitchen chefs, on the other hand, spend the bulk of their time directing, coaching and marching up and down the culinary aisles. Clearly they should be a role model, rather than the exception.

In the end, every organization and each individual function needs to tailor its own management profile, but it is often eye-opening to determine where front-line managers spend their time.



Why CEOs struggle to align their organizations


Observation #18

CEO Organizational alignmentProperly integrated management systems are the most important tool that a CEO has for aligning an organization and creating a culture of accountability and continuous improvement. Management systems help all management levels plan, execute, report and improve their area of responsibility in accordance with the CEO's strategic direction. Unfortunately, almost all management systems suffer from one or more of the following fundamental problems:

1. Planning doesn't directly integrate with execution.

Key planning tools include budgets, forecasts, production plans and work schedules. For them to be effectively integrated, you need good work-to-time planning standards and reasonable mathematical relationships between revenue dollars, functional volumes and activities. Links between these elements are often weak or nonexistent.

2. Execution tools are missing.

Execution tools are "in the day, for the day" elements that help a manager know whether the individual or department is on schedule or not. Production areas are better than office environments for this, but both areas often lack accurate schedules, which makes follow-up activity less meaningful. Manager follow-up on the plan and real-time performance feedback during the day is noticeably absent in many work areas.

3. Reports are disconnected from front-line activity.

There is never a shortage of reports, but it's often hard to find reports that are truly useful for front-line managers. Most reporting is too "after the fact" to be much good for day-to-day management.

4. There is no systematic way to improve performance.

To improve performance, managers need to be able to identify variances (off-schedule conditions), problem solve in order to figure out how to improve the process, and then make sure that the new methods and work-to-time relationships are built into future planning. Variance identification requires accurate planning parameters, which unfortunately are often inaccurate. Without a formal method and feedback loop for improvement, problem solving tends to become temporary firefighting -- and problems may simply become an accepted part of the process.

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The origin of "R2"


Carpedia Required ResultsObservation #17

"Required Results" -- or "R2", as it's more commonly called by our clients -- is the tag name we use for objectives or goals or targets. It came about as a result of an observation we made in the first few years of the company. When we studied organizations and how management reacted to off-schedule conditions or variances from their plan, we noticed that results that came relatively close to an objective were generally considered "good enough." Coming in “pretty close” to the original goal meant they did not dwell on why they didn't actually hit it.

Jim Collins, the celebrated business author, was addressing this phenomenon when he wrote, "Good is the enemy of great."

The problem with rationalizing or even accepting results that are "good enough" is that it stops problem solving dead in its tracks and, over time, gradually erodes the performance of an organization. Companies have a way of embedding last year’s results in this year's plan, so if you accept “good enough” when you are close to plan, you can end up quietly lowering the bar every year. That is why we came up with the term "Required Results": it has a different meaning. Targets and goals tend to become ideals to strive for, whereas a requirement is a requirement. Managers respond better to the term and quickly come to understand that any result below the requirement is not OK. This helps to reinforce the discipline of problem solving for any and all variances -- a critical skill needed if organizations want to manage and drive their performance levels.

Changing management behavior is difficult


Observation #16

changing management behaviorChange management requires looking at processes, systems and behaviors together because they significantly influence each other. Analyzing processes and systems is largely academic. If you put some smart people in a room and ask them to look closely at your processes and systems, they will figure out better ways to do things. The hardest thing for organizations to change is behavior. The way that people do things and the way they interact are the result of years of patterning. Getting anyone to change doing things that they are comfortable and familiar with is very tough. It's where we spend the bulk of our time on projects.

One of the interesting things we do is to spend a “day in the life” of managers and categorize their time into activity buckets (actively managing, training, administration, firefighting, etc). At the end of the study, we carefully discuss  each “bucket” and then we ask the managers to estimate how they thought they spent their time. Then we go a little further and ask them: If you could control your environment, how would you now spend your time? What would you do more or less of during an ideal workday?

Most managers overestimate the time they spend actively managing others. Many also say that, in an ideal world, they would reduce the time they spend actively managing and shift it to training, for example. From a change-management perspective, these are very important facts to know. If managers start out by overestimating their actual active management time, and then conclude they should be doing less of it, you have a big gap between the direction they’re headed and the direction most performance improvement projects need to go. Most improvement initiatives require managers to increase their active management, not decrease it. To help close this gap, managers first need to properly understand how and why they are spending their time the way they do. They then need to rethink how their time might be more effectively distributed and what their workday would look like. Then, they have to change what they actually do, which means consciously changing familiar patterns of behavior. So it's not surprising that organizational behavior change is difficult.



The art of seeing opportunity


Observation #15

how to find opportunity for improvementIt's hard for most people to see opportunity for improvement. Opportunity is rarely glaringly obvious. When we bring new consultants on board, they usually don’t see opportunity when we ask them to observe a functional process. We have to teach them what to look for -- and then train them how to watch the process objectively. When we work with client managers they often also struggle, at least at first, to see how a process might be improved.

Opportunity is often a subtlety, and it's frequently hidden from view. Finding opportunity is a skill and, like any skill, it takes technique and practice to become good at it. So, gleaned from over 20 years of observing processes to try to find opportunity, here are a few trade secrets to help you:

1. Know what you're looking for. Understand what "opportunity" actually means. In the simplest sense, it means doing something faster, cheaper, better. "Faster" could mean reducing the time it takes to do something. "Cheaper" might mean doing something at a lower cost by doing it using less expensive resources. "Better" could mean reducing the number of errors or cycle time. This is what you are trying to "see".

2. Mentally accept that most processes have 30% to 50% opportunity. If you can't find opportunity, it doesn't mean it isn't there. It just means you can't find it. Maybe you are watching a productive period:  think about if there are less productive times (e.g., start up, shut down, changeovers, etc.)

3. Figure out how to improve the process. If you are watching a process that requires four machines, try to figure out how you could reconfigure it with three machines. In the process you will see opportunity.

4. Don't rely on your experience. Being familiar with a process can actually make it harder to see opportunity, because familiarity often causes you to skip over the very things that you should be focusing on. It's critically important to break down tasks into time elements. A lot of opportunity is hidden. For example, if you watch the same task performed 20 times; the time to complete each task may vary substantially. Understanding why will lead you to see the opportunity.

Why better planning can sometimes hurt a good career


Observation #14

A basic objective of many improvement programs is to figure out how to improve planning. The idea is that if you can plan better, you won't end up scrambling as much when it comes to actually executing the plan. Ironically, some people are really good at scrambling -- so good, in fact, that they are recognized and praised for it.  It may even help them get promoted over the years. These are the people who can get things done when you need it.

process improvement program The trouble is that great scramblers -- or "firefighters" -- often fix an immediate problem, but their “solution” causes problems further down the line. A typical example occurs when there is a part shortage on a production line. There are always a few people who can "find" a part when there are no parts in the system. They find parts by taking them from other orders or by hoarding parts that are frequently in short supply. The part-stealing creates an obvious problem when the original order is finally processed, while the hoarding causes a problem by creating artificial inventory requirements.

At one aircraft manufacturer, we did a one-day blitz to retrieve hoarded parts and found millions of dollar's worth of non-recorded inventory stashed throughout the plant. The actions weren’t malicious -- nobody personally wanted a stock of airplane parts. In fact, the intent was quite the opposite: people were hoarding in an effort to help the process by having parts available in times of shortage.

This kind of behaviour can, and does, happen in service environments as well. Decisions about work schedules and customer priorities can be made with good intentions, but have unintended negative consequences down the road.

The important point for people trying to change the way in which work is done in an organization is to understand the negative impacts of change on what are sometimes key people in the workforce. Great scramblers often have higher social influence, because they are outgoing and action-oriented by nature. They can be powerful allies in a change program, but they can also have a strong negative influence if they don't like where the changes are leading. Improving scheduling capability inevitably requires more discipline and accountability throughout the value stream. It is directly intended to reduce the dependency of off-plan scrambling. It will, in time, have an impact on the workes' environment and individual roles, so it's worth thinking about who might be negatively impacted by what, on the surface, looks like a positive change.

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