Using the Theory of Constraints in Services

The Business901 Podcast featured John Arthur Ricketts, a distinguished engineer at IBM Corporate Headquarters. As a consulting partner and technical executive, he has dealt with many services management issues, including those faced by clients in their own services businesses. His work in applied analytics led him to become a focal point on Theory of Constraints (TOC), and then to delve deeply into its potential for services management. 

John is very informative with a practical approach to applying TOC to services. I believe anyone involved in continuous improvement field will benefit from this podcast. 

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John is also a practitioner and innovator in the field of Theory of Constraints. His book, Reaching The Goal: How Managers Improve a Services Business Using Goldratt's Theory of Constraints , was published in 2008 by IBM Press. Reviewers on Amazon.com soon gave it a five-star rating. And Dr. Eli Goldratt, founder of the Theory of Constraints, said it’s one of the best books ever written on TOC. John is also the author of "Theory of Constraints in Professional, Scientific, and Technical Services (Chapter 29 of Theory of Constraints Handbook) ,” a chapter in the Theory of Constraints Handbook published in 2010.

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Systemizing your approach to management

My guest on the Business901 podcast was Bill Dettmer Senior Partner of Goal Systems International.

Bill is one of the most recognized expert in the Theory of Constraints field and more specifically the Logical Thinking Process. He has Eight years graduate level teaching of systems management, systems analysis, human factors, management control systems, organizational behavior and development, Theory of Constraints, Total Quality Management, and management of research, development, testing, and evaluation. More importantly, he brings a level of experience to these subjects that few in the world are able too.

His simple recommendation of one book on the practice of utilizing a systems approach to management immersed me into over 12 hours of reading, research and learning. I have not been that captivated in a particular subject for quite awhile. I hope you enjoy the podcast as much as I did hosting it..  

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William (Bill) Dettmer is the author of  The Logical Thinking Process: A Systems Approach to Complex Problem Solving ) and Strategic Navigation: A Systems Approach to Business Strategy , two books around which Goal Systems International's internationally renowned Thinking Process Course is based; Brainpower Networking Using the Crawford Slip Method . Co-author (with Eli Schragenheim and Wayne Patterson) of Manufacturing at Warp Speed: Optimizing Supply Chain Financial Performance (The CRC Press Series on Constraints Management) and Supply Chain Management at Warp Speed: Integrating the System from End to End. 

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Marketing Creates Value - Rackham

Neil Rackham author of SPIN Selling, (what I consider one of the top books ever written on selling) discusses how marketing has to create value. As much as I write about Value Stream Marketing, it is always great to listen to the slant than an expert like Rackham puts on it.  In Rackham fashion, he breaks it down to four simple steps.

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Transforming Healthcare with Lean eBook

Transcription of my recent podcast with John Toussaint, M.D., CEO of the ThedaCare Center for Healthcare Value. The lessons Dr. Toussaint learned in healthcare are equally applicable to many other organizations. Learn about the partnership between the Lean Enterprise Institute (LEI) and the ThedaCare Center for Healthcare Value (TCHV) that brings together two of the world’s leaders in “lean thinking,”

Transforming Healthcare with Lean eBook

Related Podcast: Transforming Healthcare thru Lean

Buy the Book(Amazon): On the Mend: Revolutionizing Healthcare to Save Lives and Transform the Industry

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12 Steps to business Survival

If you want to survive, what do you need to do?

Deep Survival: Who Lives, Who Dies, and Why by Laurence Gonzales officially distilled these observations down 12  points the seemed to stand out concerning how survivors think and behave in the clutch of mortal danger. Some of the same steps for staying out of trouble. Here's what survivors do:

1. Perceived, Believe: Even the initial crisis, survivors perceptions and cognitive functions keep working. They notice the details and may even find some humorous or beautiful. If there's any denial, is counterbalanced by a solid belief in the clear evidence of their senses. They immediately begin to recognize, acknowledge, and even accept the reality of their situation. They may initially blamed forces outside themselves, to; but very quickly they dismiss that tactic and recognize that everything, good and bad, emanates from within.
2. Stay calm: In the initial crisis, survivors are making use of fear, not being ruled by it. They understand at a deep level about being cool and never ever on guard against the mutiny of too much emotion.
3. Think/analyze/plan: Survivors quickly organize, teams, and institute discipline. In successful group survival situations, a leader emerges often the least likely candidate. irrational voice emerges and is often actually heard , which take control of the situation. Survivors perceive that experience as been split into two people and they obey the rational one.
4. Take correct, decisive action: Survivors are able to transform thought into action. They're willing to take risk to save themselves and others. They are able breakdown very large jobs into small manageable tasks. They set attainable goals and develop short-term plans to reach them. They are meticulous about doing their task well.
5. Celebrate your successes: Survivors take great joy from even their smallest successes. That is an important step in creating ongoing feeling of motivation and preventing the descent into hopelessness.
6. Count your blessings: This is how survivors become rescuers instead of victims. There is always someone else they are helping more than themselves even if that someone is not present.
7. Play: Since the brain and its wiring appear to be the determining factor in survival, this is an argument for expanding and refining it. Just as survivors use patterns in rhythm to move forward in the survival voyage, they use the deeper activities of the intellect to stimulate, call and entertain the mind. Careful, careful, they say. But they act joyfully and decisively. Playing also leads to invention, an invention may lead to a new technique, strategy, or piece of equipment that can save you.
8. See the beauty: Survivors are attuned to the wonder of the world. The appreciation of beauty, the feeling of awe, opens the senses.
9. Believe that you will succeed: All the practices just describe lead to this point: survivors consolidate their personalities and fix their determination. Survivors admonish themselves to make no more mistakes, to be very careful, and to do their very best. They become convinced that they will prevail if they do those things.
10. Surrender: Survivors manage pain well. Resignation without giving up, it is survival by surrender.
11. Do whatever is necessary: They know their abilities and do not over or underestimate them. They believe that anything is possible and act accordingly. Survivors don't expect or even hope to be rescued. They are coldly rational values in the world, obtaining what they need, doing what they have to.
12. Never give up: There's always one more thing that they can do. They are not easily frustrated. They are not discouraged by setbacks. They accept that the environment is constantly changing. They pick themselves up and start the entire process over again, breaking it down into manageable bits. They come to embrace the world in which they find themselves and see opportunity in adversity.

If you are tough times, I recommend pinning these 12 points up and reviewing them several times a day.

P.S. Buy the book, Deep Survival: Who Lives, Who Dies, and Why

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Is Agile growing to be a larger umbrella?

Recently I had a discussion with Alan Shalloway, the founder and CEO of Net Objectives. Alan is an industry thought leader, trainer and coach in the areas of Lean software development and the Lean/Agile field. He's a popular speaker at prestigious conferences worldwide, as well as a trainer and a coach.

An excerpt from this conversation:

Joe:  Talking about Lean Agile and the evolution of it, you’re taking a more empirical view of it. It should be more of the business enterprise type. Is that the evolution, that agile is growing to be a larger umbrella, let's say?

Alan:  There are parts of agile that I say are outside of lean, if you believe in how do I create it so teams can operate from a team centered point of view. But, again, yes, I'm saying that you should have a business driven view of things.

Now I want to put a caveat in here. When I teach our lean agile courses, one of the things I always say at the very start of the course is I say, "Now, lean doesn't work everywhere. There is a caveat you've got to be very careful about. That is that your business has to be in the business of making money by adding value to your customers."

Now, not all businesses are in the business of doing that. There is the classic case of Enron, for example. But, even businesses that you would say are reputable and all of that. There are some like defense contractors that make their money on a cost plus basis. Now in a lot of ways, the last thing they'd want to do if they're really committed to cost plus is lean because it's going to lower their cost and it's going to lower their revenue.

However, fortunately ‑‑ I happen to know, I've done some work in the defense area‑‑ the government is starting to recognize what they really want is value and people are doing lean and agile and they're saying we're going to lower our cost and raise our quality, add more value, are actually starting to win contracts, which is a good thing.

Now, if that's the case, how can the business respond to external influences such as competition or new technology? Or how can they respond to internal influences such as new ideas and new people that come in that have different ideas on how to do things, new insights? Business agility is the ability to respond quickly to these internal and external changes and increase revenue and decrease risks.

Now, team agility, which is really what I would say the first‑generation of XP and Scrum are geared to, are really about team agility. They're about how a team responds quickly. Well the team is like thinking of the team as an engine. So first‑generation methods are about the engine in your car, but your car may not be going fast not because of the engine, it may be the transmission or the driver's driving the wrong way.

So I look at enterprise agility and obviously to the whole car, in business the driver, Scrum and XP or even combine at the team level they've added since combine, is kind of like still more of a team centered approach but it's got a little bit more management and integration. More importantly, in my mind, it acknowledges lean as a science or that there's a science underneath this, the theory of flow and managing your work in progress to be less in your capacity or not greater than your capacity.

So we take this bigger view. I think the agile camp or a good part of it is still focused totally on the team and they say you start an agile transition by making a team better. When in fact I've seen some times that that's absolutely the worst thing you can do. I've seen companies start agile transitions where the team pilot

This blog was Part 2 of 2, Part 1: The differences in Lean and Agile

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Measuring The Customer Experience

Even Forrester Research keeps their measurements simple.

Forrester Research, Inc. (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. For more than 24 years, Forrester has been making leaders successful every day through its proprietary research, consulting, events, and peer-to-peer executive programs. Learn more at www.forrester.com

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Theory of Constraints Supply Chain Thinking

This a transcription of the Business901 podcast that featured  Amir Schragenheim, President of Inherent Simplicity, a software firm specializing in TOC software for Production & Distribution environments. Inherent Simplicity is the exclusive software supplier for Production & Distribution software to Goldratt Consulting, Eli Goldratt’s consulting firm, in their Viable Vision strategic projects.

Implementing the TOC Supply Chain Solution

Related Podcast:: Implementing the TOC Supply Chain Solution

Amir’s Website: Inherent Simplicity

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Isn’t It Obvious?
Theory of Constraints Handbook

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Learning to talk their talk helps you walk your walk!

Overcoming Resistance to Change

In this blog post Story of Going Lean in Healthcare: On the Mend and in a recent podcast, Transforming Healthcare thru Lean. I was introduced to the 5 Stages of Change outlined by one of the co-authors, John Toussaint, MD. Recently, when I was reading the book Mastery: The Keys to Success and Long-Term Fulfillment and most specifically the chapter, Why Resolutions Fail. The reluctance or resistance to change were further enforced and I found myself thinking of the 5 Stage outline.

When you start a continuous improvement process such a Lean or Six Sigma many times you will get that initial surge and after some additional hard work  you might feel that you have developed a good process for continuous improvement.. You’re happy and the employees are happy and things could not be better! Then it stops, why?

Our basic instinct is that we have a tendency to keep things as they are even if they aren't very good. We resist all change. If you have been doing something for 20 years one way, a 60 day improvement is minuscule in comparison. I was always taught when training bird dogs that once a habit is created it takes at least twice as long to break it. There are exceptions if a traumatic or an extraordinary circumstance takes place but for the most part it takes time.

So if a tremendous organizational culture is to occur large resistance may be because it is a really terrible idea or a really good idea. Small incremental improvements will meet the least amount of resistance and is much easier way to gain acceptance. But can you afford to wait?

According to George Leonard, author of the Mastery it is a universal experience.

Every one of us resists significant change, no matter whether it's for the worst or for the better. Our body, brain, and behavior have ability and tendency to stay the same within rather narrow limits.

It is safe to assume that resistance to change even the beginning of a change for the better is interpreted as a threat. No need to count the ways that organizations and cultures resist change and backslide when change does occur. Just let it be said that the resistance here is proportionate to the size and speed of the change, not to whether the change is a favorable or unfavorable one.

Leonard also outlined five guidelines, which I have taken the liberty of changing slightly to fit this discussion:

1. Expect resistance and backlash: Realize that when the alarm bell starts ringing it doesn't necessarily mean you've made a bad decision on the journey for continues improvement. In fact you might take these signals as an indication that your life is deftly changing just what you wanted. Of course it might be that you have started something that's not right for you: only you can decide. But in any case don't panic and give up at the first out of trouble. Expect resistance from coworkers and managers. You might figure that they should be overjoyed if things have improved but bear in mind that an entire system has to change when any part of the changes. So don't be surprised if some of the people start covertly or overtly undermining your self-improvement.
2. Be willing to negotiate with your resistance to change: So what should you do when you run into resistance is don't back off and don't bully your way through. Negotiation is a ticket to successful long-term change in everything and in particular to transforming your organization. The change oriented manager keeps his or her eyes and ears open for signs of the dissatisfaction, then plays the edge of discontent, the inevitable escort a transformation. The fine art of playing the edge in this case involves a willingness to take one step back for every two forward, sometimes vice versa. It also demands and termination to keep pushing, but not without awareness. Simply turn off your awareness to the warnings deprives you of guidance and risk damaging the system. Simply pushing her way through despite the warning signals increase the chances for backsliding.
3. Develop a support system:. You can do it alone but it helps a great deal to have other people with whom you can share the joys and perils of the change are making. The best support system would involve people gone through or are going through a similar process, people who can tell their own story of change and listen to yours, people who breach you up when you start to backslide and encourage you when you don't.
4. Follow regular practice: People embarking on a any type of change can gain stability and comfort to practicing some worthwhile activity on a more or less regular basis not so much for the sake of achieving an external goal as simply for its own sake. A traveler in the path of continuous improvement is again fortunate for practice in this sense is the foundation of the path itself. If you already have particular practices in place use them as the method for introducing change. Provide a stable base during the instability of change can significantly help the transition.
5. Dedicate yourself to lifelong learning: To learn is to change. Education and training plays a pivotal role in any transformation process. Don’t try to institute a continuous program without the learning. I think what made Six Sigma so successful and sustainable at places like GE, Motorola and Xerox is the training programs they instituted. The levels of knowledge created by the color of belts may be chastised by many but I thought it was a great internal mechanism provided by those organizations. On a broader perspective, the book On the Mend was about change and the authors illustrated the 5 Stages of Change with a diagram that bears many similarities to the outline by George Leonard.

I am amazed how closely the description of change that Dr. Toussaint outlines in On the Mend and in our podcast resembles the path that Leonard describes in Mastery.  A good example is the partnership between the Lean Enterprise Institute (LEI) and the ThedaCare Center for Healthcare Value (TCHV). It brings together two of the world’s leaders in “lean thinking,” with a combined 20 years of experience in lean implementation and education. Working in partnership allows LEI and the TCHV to leverage Leonard’s 5 step process for overcoming the resistance of change.

If you would like to learn more join John Toussaint, MD, and Roger Gerard, PhD, on Monday, September 13, 2010, at 2:00 p.m. (Eastern) for a free webinar on how to engage people and put culture change at the center of your lean management conversion.

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Do you know the Value of your Product?

I have been working with Dr. Eric Reidenbach of the Six Sigma Marketing Institute in the development of the 5Cs of Driving Market Share program. In the process, he has developed a Customer Value Assessment Program. You will receive five surveys based 5Cs of Driving Market Share: Customer Identification, Customer Value, Customer Acquisition, Customer Retention and Customer Monitoring.These 5 surveys will expose your weaknesses and strengths in each of the 5 Cs of Driving Market Share. Before receiving, the next survey, you will receive evaluation/assessments sheets that will allow you to evaluate your scores and some actionable steps to improve in this area.

This Assessment program serves as an introduction to the 5Cs of Driving Market Share Program, a comprehensive program that has been deployed in a number of Fortune 100 and Fortune 500 companies and has produced positive market share growth.It is not a project-by-project approach for reducing the costs of marketing activities, but rather an approach that seeks to enhance marketing’s effectiveness and efficiency.

What I like about this program is that it provides a real science to the marketing process. However, there is one premise that you have to accept as a truth(Six Sigma Marketing Institute has data to substantiate it): Value has been shown to be the best leading indicator of market share and top line revenue growth.

Most of us are product focused nor the ability and know-how to access the market for this knowledge. Value is typically limited to the value in the product or product features. Practically every company claims to offer value. But do you really know what value means to your customers? The assessment makes an effort to figure out what value looks like to your customer—the insight may surprise you. The biggest surprise that I had was most companies do not even define value the same within the organization. If that is true, how focused could you be in defining your market?

A good read on this subject is the Best in Market eBook. The eBook was written in response to what the author has experienced working with manufacturers, and is aimed at Quality personnel including Lean and Six Sigma practitioners as well as Marketing professionals.

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Can you Master Continuous Improvement?

What is Mastery?

1. Comprehensive knowledge or skill in a subject or accomplishment.
2. The action or process of mastering a subject or accomplishment

Mastery, why don’t we spend more time learning about it? I have always been convinces that it is not how many tools you have in your bag but how many tools you use well. The old saying is that if all you have is a hammer then everything looks like a nail is not always a bad thing. If you are a wizard with a hammer, it may be amazing how creative you may be in fixing problems outside of a nail because of your ability to adapt and modify. In the long run you may have arrived at a solution while others are still contemplating HOW!

Michael Gerber states in the E-Myth Mastery: The Seven Essential Disciplines for Building a World Class Company that "knowing how to do the work of a business has nothing to do with building a business that works"; that entrepreneurs learn their skills through practice, practice, practice; and that anyone willing to adopt that same kind of discipline can be successful too.

Malcolm Gladwell in Outliers: The Story of Success discusses the need to have 10,000 hours of practice before they become a master of their art, profession, etc. That amounts to  3 hours a day for 10 years.

My point being when companies are looking at implementing Continuous Improvement efforts such as Lean or Six Sigma or even a Marketing System are they really considering the commitment that are making. In today’s world most improvement efforts have to show short term results, less than a year to be continued.  Management is usually blamed for lack of commitment for most failures. I believe that the expectations of a quick fix may be the number reason for failure. Let’s face it, is anyone telling a company that it will take 10 years to master Lean or Six Sigma? You can probably accelerate this process by  proper coaching or having you own Sensei, we know they have 10,000 hours and it  is the best way to improve your chances. You have to have talent and experience on your side. However, it does take a little luck to be successful as described in this light-hearted look at Talent. Now, there are a couple of fowl words in the video, so you have been forewarned.

An old book, Mastery: The Keys to Success and Long-Term Fulfillment ( a list in the review section of questions is outstanding) describes 5 keys to long-term success and fulfillment as:

1. Instruction
2. Practice
3. Surrender
4. Intentionality
5. The Edge - Push the envelop

Michael Gerber made a point in his book cited above that left an ever lasting impression on me. Laying in bed one morning my wife asked me what I was thinking about it and I replied: Gerber made this comment if I really did not feel like going to work today, do you think anyone else does ( meaning my employees). That morning I decided to sale that business and pursue what I enjoy, what I really love because if you do not, seldom will you ever have the patience to develop those skills.

As an organization, are you willing to take a path of continuous improvement? Can you develop the mastery of your profession or product without it?

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Could a CMO increase their tenure by using Six Sigma?

Todd Wasserman at Brand Week reported:

A down economy has meant more stability for chief marketing officers, according to an annual report from Spencer Stuart. The survey found the average tenure for a CMO at a major firm was 34.7 months in 2009, a jump of 6.3 months over the previous year and the longest since the executive search firm began tracking the statistic in 2004.

In a statement, Tom Seclow, who leads Spencer Stuart's marketing officer practice, credited the expanding skills of CMOs. "Since publishing our original CMO tenure study back in 2004, we have continually counseled CMOs to think and act like general managers who just happen to be great marketers," said Seclow. "Today, we're seeing more and more examples of sophisticated and savvy CMOs who truly have influence among their peers in the C-suite. This is undoubtedly contributing to longer CMO tenures in many cases."

The firm also attributed the longer tenure to macroeconomic trends, like reduced spending on marketing initiatives, consolidation in some industries and a lagging job market.
When Spencer Stuart launched the study in 2004, the average tenure was 23.6 months and hit a low of 23.2 months in 2006.

Good news that it has increased, Bad News is 34.7 months Good!
          - CEO’s range from 7 to 10 years.

The demand for accountability and performance is becoming  more important to marketing. However, we are beginning to see the introduction improvement of new systems to meet these objectives. Six Sigma and other initiatives are framing how performance should be reported to recognize key intangibles and drive improvement. New technologies are emerging to present this information in dynamic and accessible fashion. These things can be described as dashboards, scorecards, or key performance indicators; Visual Windows on performance trends and expectations.

As companies seek real-time agility and action they need decision enablement and decision automation capabilities to drive intelligent interaction on the frontline. In researching background information for Six Sigma Marketing Institute’s upcoming 5 Cs of Driving Market Share program, I discovered a 7-step process recommended in the book, High Performance Marketing: Bringing Method to the Madness of Marketing. He recommends these activities be built within the everyday workflow.

1. Acquire: Companies must have processes and systems in place to capture the data that will be used to develop greater understanding of markets and customers.
   
2. Integrate: In the most raw form, customer and market data are rarely very useful. It may lie in various data silos and operational systems. Companies must integrate the data to make it accessible and applicable gaining a more complete picture and understanding of the trend, segment or customer that must be analyzed.
   
3. Analyze: Once information is aggregated and made accessible it then becomes possible to analyze. This is stage which value is added to the information by putting it into a useable context. The key to step is to close analysis gap that lies between the rapidly accumulating base of data and the company's ability to interpret that data in raw ways.
   
4. Decide: Based on the analysis that emerges, marketers and other professionals can make decisions on what markets to target, what customers to assign highest priority, what campaigns to conduct, which offers a generate, and what promising activities in which to invest. Models of analysis will not make decisions for us, but they can in able us to make more intelligent, disciplined, and fact-based decisions.
   
5. Act: Companies too often manage information in a vacuum far removed from the context in which it will be use. As a result of this approach the value of the information is never truly realized. Key aspects of support, such as incentives, training, and resources may be necessary to ensure a valued information is leveraged in the field on the front lines.
   
6. Learn: Analysis must precede and follow action. It is vital to conduct a type of after action review to determine how information has influence real-world performance.
   
7. Adjust: Based on findings in relation to the outcomes the organization must improve and adapt. The process then becomes full circle as it becomes clear what new types of information must be acquired in order to gauge the market and increasingly successful ones.

I guess if I ever became a Chief Marketing Officer, I would want to have an expectation greater than 2 to 3 years on the job. However, if I did not have the data to support the decision who could blame the CEO?

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Listen to Eric's Description of the 5 Cs of Driving Market Share
Role of Managing Data in Marketing