“All of us are smarter than any of us” – Seth Godin
April 15, 2015 - Boca Raton, Florida -- Many executives struggle to move their organization to a higher level of performance in a reasonable period of time. Carpedia International believes that they can help organizations achieve measurable and sustainable growth.
When we look for opportunity, we categorize time into green and red components. Green time is the current productive part of a process, while red time is the non-productive waste. Green time typically takes up 50-60% of a process, which means red time usually takes up between 40-50%. It surprises most managers to learn how much time falls into this red component. This is in part because people often equate productive time with effort, but the two aren't necessarily related. Non-productive time can take as much or more effort than productive time. It's also a little misleading because this somehow implies that a process could or should be 100% green. But some red (or non-productive) time, is actually required to allow some flexibility of operations. Other factors can also have an impact, such as machine versus people-driven processes or union verses non-union environments. Even so-called world-class processes generally have 10 to 15% red time due to real-life variability.
"Opportunity" is one of those euphemisms we use instead of "problems." It's arguably a better word, because most operating problems are, in fact opportunities for an organization to improve. Before we take on a project for a client, we do what we call an "opportunity analysis," which is like a financial and operational due-diligence. A key purpose of the analysis is to identify opportunities that exist in the current process and, more generally, the magnitude of the total opportunity. But given the complex nature of many organizations, where do we look for opportunity?
Opportunities exist everywhere in organizations, because businesses are constantly changing in both subtle and not-so-subtle ways. We spend a lot of time observing organizations of all shapes and sizes, and it is truly fascinating to see how they operate. Hospitals, wineries, hotels, transportation firms, production plants: they are all remarkably complex. So while opportunities may exist, they are often not obvious. Unfortunately, competitive reality demands that companies never stop improving their performance and, in turn, that managers never stop looking for opportunity. But where and how do you look for these opportunities?
In the previous Observation, we discussed how everyone agrees that management behavior is a critical issue in organizations. However, the meaning of the term itself is often a little fuzzy. What behaviors are we actually talking about? If we look at the specific behaviors that most organizations would like their managers to possess, we can group them into four broad categories, which aptly reflect Deming's PDCA model: plan, do, check, act.
We often say it's tough to change management behavior. Universally, executives nod their heads in agreement. But when we all say it, what do we actually mean? What specific behaviors are we all talking about? What does changing management behavior really mean?
In the relatively early days of our company, a few partners took a high-speed driving course on an old Formula 1 race track just outside Montreal. The conversation over dinner on the first night was not about how interesting or exciting it was to drive open-wheel race cars -- it was about how good the actual training approach was. In a nutshell, the instructors broke down racing into two things: driving in a straight line and driving around corners. To be a good driver, we had to master these two skills.
When we work for a company, we always do our due diligence upfront to pinpoint a specific improvement target for the project. Well, almost always. Sometimes we estimate the potential improvement based on our experience, and to be extra cautious we use a range, rather than a specific number. We peg the expected target number in the middle of the range. This is usually a mistake.
Sometimes we do a study that we call the "Span of Control" analysis, where we look at how many subordinates report directly to each manager in an organization. It's a more difficult study than it sounds, because the way organizational charts are drawn is not always how they really are. Reporting lines are sometimes blurry and titles can be misleading (e.g., some managers aren't really managers). The numbers alone don’t reveal the full story, but the study does help one learn a lot about the organization.
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