901 Blogs: April 2012

Friday, April 27, 2012

Find the Right Customer at the Right time

How do you generate a bunch of prospects that have low risk with a high earning potential. This is what most companies seek and should streamline their organizations to take advantage of these types of orders. It is not about disregarding anyone product/market group even a high risk and a low potential. It is about matching these opportunities with the Right Customer and at the Right Time. Understanding this is key. Orders designated high risk and low potential with the Wrong Customer are selectively chosen and not even considered in your peak production. Taking a high risk job – low potential may be the right call with the Right Customer in the off season.

I often discuss being Customer Centric which not only a fantastic business opportunity but a requirement going forward. Even though most of us claim to be customer centric, the majority of us still think in a product centric manner. Why change this? When you are product centric, you have a product for everyone and standard list price. It is the way you think. When you are customer centric, you find the right customer for the right product at the right price – huge difference. But don’t think in applying your product (inventory and new products), think about product/markets. Think outside–in versus inside-out. If you think in broader terms before zeroing down you can adjust offerings and pricing accordingly.

As an example, you can sell more services, bundle offerings and as a result quit selling products as a commodity. You increase potential, looking for ways to be innovative and work with customers that will allow this – “your right customer”.

This way of thinking does not mean you wing it or you do not understand your cost. If anything you need to understand them better. The risk becomes smaller, because your internal processes get better. That is the carrot to get better internally and what will sustain improvements.

You will also grow as the definition of the Right Customer broadens. A result of understanding your prospects/customers wants and desires better which happens through increased knowledge transfer. A better definition may be that you achieve a better understanding of the work to be done which spurs innovation and design.

The Irrelevancy of List Price

Rob Doctors, lead author of the book, Contextual Pricing: The Death of List Price and the New Market Reality was my guest on the Business901 Podcast. Rob believes that pricing decisions need to be driven by customer context rather than simple list prices. Pricing is more than just an issue of margin and production costs, but rather a complex set of contextually factors best defined as an outcome. In the podcast, we discussed the outcome of four contextual factors:

Situation
Objectives
Perception
Capabilities

An excerpt from the podcast:

Joe: If I need to change my pricing structure and look at contextual pricing, what would be the compelling reason for me to go that direction, right now?

Rob: Better margins in a nutshell. Because, think about it, once you've set a list price, the traditional way of doing it. It's really tough for anyone in your organization to sell above that list price. I've set a list price on, whatever, my plastic clam shells for holding food in a supermarket. The next moment a customer runs in saying "Rush order, rush order, I desperately need clam shells. I'll pay you a million dollars per clam shell!" You look in your book and you say "I'm sorry. I can only charge you $0.30 for this clamshell because that's our list price." You immediately cut off the benefits by setting a list price.

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P.S. We had a little trouble with the audio so this is not the norm. We will publish the transcription next week.

Sunday, April 22, 2012

Lean and ROWE, Friend or Foe

David Kasprzak, of the popular blog, My Flexible Pencil was interviewed in the Business901 podcast, Does Lean solve some problems for ROWE?. This is a transcription of the podcast.

ROWE stands for Results-Only Work Environment. It is a revolutionary new way of working that gives employees more responsibility and accountability for their work and the way they do it. ROWE is the core of the CultureRx philosophy. ROWE is all about results. It’s all you need to increase productivity, engagement, employee retention — AND the bottom line.

More information about Dave and Rowe can be found:
ROWE, Lean and the Shingo Model
“Results Only” means “Value Only”

Thursday, April 19, 2012

Become a Learning Organization through Relentless Reflection

Hoshin Kanri is a management system that creates a method of policy deployment in the form of both organizational and employees goals. It is a step by step implementation and review process from a systems approach perspective for change. In the simplest form, top management sets a vision and bottom line employee sets the tactics. In the middle, there is a lot of give and take and coordination through the use of a term catchball that results in:

Prioritizing activities and resources
Organizational involvement from top to bottom clarify their own target and activities
Utilizing PDCA in both the management and employee cycles of improvement

The difference in Hoshin planning is that we do not accept the current situation but seek to aspire to something greater. However, we seek solutions between the current and aspired state by bridging the gap through the process of Kanri the other part of the process. Kanri is defined as a method to efficiently achieve purposes through PDCA (Plan-Do-Check-Act).

What makes Hoshin different than just your typical continuous improvement is that we are not solving the typical workplace problem but rather the value-added problems based on top management thinking (Vision and Targets). The “Hoshin” is developed at each layer of management clarifying strategies and targets to assist in reaching the preceding layer’s targets. This results in both a macro and micro PDCA. This greatly increases the line of sight and shared responsibility to each other in achieving these goals.

The workplace mission is defined within Toyota from the question “For whom and what type of value added products and services should be provided?” In this way, measures are created from the value added problems determined in the Hoshin process. Breaking the annual strategy down to what I call “Doable Chunks” is one of the secrets to Hoshin Kanri’s success.

It is not only the task but the team size that will assist in a positive outcome. Jeff Bezo’s of Amazon fame always used what he called the two pizza rule. If you needed more than two pizzas to feed the group, the group was too big. Smaller groups promote: informal communication, better assignment of tasks, more manageable task, increase participation, reduces information needed to be processed and most importantly – A CLEAR LINE OF SIGHT.

The approaches of Hoshin Kanri and Leader Standard Work seem to have a common thread in them. It is one of shared work and responsibilities and as a result regular feedback or reflection. It makes the management process continuous over something more formal such as a review.

P.S. The Business901 podcast tomorrow features lifetime Lean Learner Anthony Manzos of Profero, Inc. and 5S Supply. Our conversation centered on Hoshin Kanri.

Wednesday, April 18, 2012

Can Lean be driven by Middle Management?

Paul Yandell: I speak to middle managers, I was a resident with them. I think most of us have been middle managers and understand those frustrations. I hit on a theme of a guerilla manager, years and years ago, and I've actually given a similar talk to a number of national and local forums. It really resonates with people, because people stuck in the middle are trying to figure, "What do I do? How do I be effective?"

Many of them are waiting for leadership. I've also done a lot of teaching, and I find my students are the same way. They're kind of like, "I'm learning Lean tools, but how do I put them to use?" I'm trying to say, "Just go right ahead. Don't wait for your CEO to say, 'We're going to go down this path.' Just start leading the company from the middle and you can be quite effective." We did that at Dimension One Spas, and we completely turned around the culture and transformed the company to a Lean company. We ended up winning a regional Shingo prize. It was kind of a validation of our efforts.

But it was really like a middle management revolt, if you will. The owner, like many small business owners, didn't take a strong interest in manufacturing. They want to make sure there's no problems in manufacturing, but they're not really sure how to build things. They're more sales people or finance people, generally. When they see someone getting traction, they generally say, "OK," as long as you're getting top management support, you don't need top management leadership. I think many people think they need leadership. There's a big difference. I think you can lead from the middle if you have support from the top.

Joe Dager: You're singing my message, Paul. I've already started the podcast because I thought what you just said here is golden.

Paul Yandell of Value Stream Focus is my podcast guest next week and we discussed one of my favorite topics – Middle Management. Paul Yandell, led a lean transformation that won the 2007 Pacific Northwest Silver Medallion Shingo Prize for Excellence in Manufacturing. Business Week called the Shingo Prize the "Nobel Prize for Manufacturing".

Tuesday, April 17, 2012

Driving Profit through People and Processes

This is a transcription of the Business901 Podcast, People & Process Drive Profit Podcast with Vivian Hairston Blade, Founder, President & CEO of Experts in Growth Leadership Consulting, LLC (EiGL Consulting, LLC) based in Louisville, KY.

Open publication

Vivian is a recognized expert, keynote speaker, trainer and executive coach in the principles of Customer Experience, Lean Six Sigma and Leadership Development. With a 20+ year career in Fortune 100 companies, General Electric and Humana, Inc., Vivian has extensive experience in successfully leading the development and execution of customer centered, quality-based, growth business strategies.

3 Tips on achieving Fast, Effective, Sustainable change

Next weeks Business901 podcast guest is Sara Lewis, the Managing Director of Appreciating Change, a psychological change consultancy focused on helping leaders and managers achieve positive change in their organizations. She is the author of Positive Psychology at Work: How Positive Leadership and Appreciative Inquiry Create Inspiring Organizations and one of my favorites, Appreciative Inquiry for Change Management: Using AI to Facilitate Organizational Development .

This is an excerpt from the podcast:

Joe: If you had three pieces of advice for leaders for achieving fast, effective, sustainable change what would they be?

Sarah: “I think one would be you don't have to do it all alone. Draw on the collective intelligence of your organization. They want to survive as much as you do, they want to help. There may be some issues in the way they've been treated in the past but it's as important to them as it is to you that this organization continues to do well. One would be don't feel you have to do it all alone. The second would be, humans have evolved in such a way that they need more carrot than stick to be at their best. Because we over‑weigh negative things and under‑weigh positive things, we actually need three times as many good experiences as negative experiences to start to enter the enchanted place of creativity, connectivity, generativity, synchronicity and all the good things that help organizations to move much faster and much more efficiently.

Yes, you need to obviously keep a minimum line on things. But what most organizations need a lot more of is the good stuff pumped into them, so that positivity thing.

I think the third piece of advice, which is a much more generic one, is it's becoming increasingly clear that the leaders who are able to have the most positive impact in their organizations, whatever their style may be, the key thing is this thing about authentic leadership. Part of authentic leadership is being open and transparent in ‑‑ that's the other thing ‑‑ a managed way.

I remember some of the London Business School people said that after all their analysis, the art of leadership boiled downed to five words, which was, "Be yourself more with skill." All of those words are important.

So things like doing difficult things and asking for forgiveness, being humble about the fact that this is not doing it on your own. Everybody here has contributed to what we've achieved this year. Those old‑fashioned in a way is being grateful.

Everybody who comes to your organization helps to create it, does something that moves it forward. There's something about allowing that side of yourself to come through to people, because people do respond and emotions are very contagious, virtuous circles.

If we see people being heroic, we're more inclined to be a little bit more heroic ourselves the next time the opportunity arises. If someone is helpful, we see someone being helpful or someone is helpful to us, we're more likely to do it to somebody else.

You can set off these virtuous circles of very positive interactions, which just have not escalating, but the virtuous circle gets bigger and bigger benefits in terms of performance and productivity in the end.”

Wednesday, April 11, 2012

Finding your Vision, It may be as simple as Tapping your Shoes

There are several purposes to the Balance Scorecard. One of the most important is to create measures that are forward looking and proactive. This way the Balanced Scorecard can be an effective agent of organizational change. However, we can never start any forward thinking without a vision.

I use to think that Vision and Mission Statements were a consultant/academic type exercise. I did them but I have to honestly admit, it may have been more of an exercise than a real vision. In recent years, working with such a variety of companies, I have shifted my thinking. Without vision, you seldom provide a unifying theme of purpose. All of your objectives, all the measures, all the targets, etc. become disjointed. In a recent interview for a future Business901 Podcast, Ari Weinzweig, CEO and co-founding partner of Zingerman’s in Ann Arbor, MI said, “Vision comes from the heart”. That statement sums it up perfectly.

Recently, I have participated with organizations using Hoshin Kanri and the Balanced Scorecard. These approaches have a remarkable similarity and both are driven by the vision and strategic goals of the organization. These approaches will highlight a lack of vision. You will find great difficulty in completing the process without a crystal clear view of where you want to go. It’s that Why, Simon Sinek explains in his book, Start with Why.

Whether you call it Why or Vision, there is not anything else more instrumental to your success. Do you believe your organization has a heart? Does that mission pulsate throughout the entire organization? It’s not an iterative process. It is not anything that is cloudy or mysterious to your organization. It is Why you get up in the morning and go to work. With Vision, With Why, a unifying theme of purpose exists. All of your objectives, all the measures, all the targets, etc. become aligned.

It’s very similar to Dorothy from the Wizard of Oz! She was running away from home for a better life. They did not understand her. She lacked a vision. Linda, the good witch came back and told Dorothy, “You have had the power all along; you just had to find it.” I encourage you as a business to find your vision and identify with it. Tap those shoes together: Find the Vision, the Why of your organization.

P.S. How long should you plan for? I think vision is something that will extend many years out and would venture to say for even young companies that 5 years is a minimum period. Most mature companies should paint a vision and strategic direction for at least a 10 year period.

Thursday, April 5, 2012

Lean Sales and Marketing Summit is Quickly Approaching

In preparation for this Duane Butcher of the hosting organization, Lean Frontiers wrote this in a recent newsletter:

Marketing activities such as developing promotion programs, branding, developing ads and writing copy are seen as creative processes that don’t lend themselves to systematization without losing the ability to think outside the box.

Most efforts to improve Sales and Marketing so far have come from Six Sigma or Lean Office programs that largely derive their practices from the production environment. The personality style of a star salesperson or an innovative marketer clashes with the type of person who is going to embrace standardized processes and continuous, incremental improvement.

If these arguments sound familiar, they are the same ones used ten years ago to keep lean out of Research & Development: breakthrough innovation cannot be standardized, lean manufacturing practices don’t work and star technologists don’t appreciate process excellence. The solution is to recognize that like R & D, sales and marketing functions are knowledge creation processes.

Product developers add value when they deepen their knowledge about the product design and then convert that knowledge into a product that a customer can buy. Similarly, marketing and sales functions add value when they deepen the company’s knowledge about customers and market needs, and then support R & D as they make decisions that lead to products to meet those needs. They also add customer value when they deepen the customer’s knowledge about the product. In fact, the best sales people are those who take the time to deeply understand an individual customer’s needs so that they can recommend the products and services that will best meet those needs.

We will be able to conquer the final frontier for the lean enterprise when we recognize that when the value a process creates is knowledge, it must be managed as a Knowledge Creation Value Stream to maximize the value we get from the knowledge created, and minimize the wastes of knowledge loss, ineffective decision-making.

P.S. You want a fresh approach to marketing that is something other than just a new set of tools. Consider attending the Lean Sales and Marketing Summit. I have a limited amount of tickets left; please contact me to check availability.

The Lean Sales and Marketing Summit is quickly approaching. It is a two day workshop.

Bill Waddell. On April 17th, Bill will be presenting Aligning the Entire Organization to Achieve the Sales Strategy. He will show you how to devise a sales and marketing strategy built around creating the most value for your customers; how to set prices strategically, rather than on the basis of standard costs, assuring that prices will not cause you to lose a sale.

The next day, I will be presenting Using Lean to Create Repeatable and Scalable Sales and Marketing Systems: A Customer Centric Approach Through Lean. The workshop will be two-thirds presentation and one-third interactive exercises.

Please consider joining us.
Related Information:
Lean Sales & Marketing Summit Announced
The Other Half of the Lean and Sales Marketing Summit
Traditional vs. Emerging Thoughts on Pricing

Monday, April 2, 2012

Does ROWE solve some Lean problems?

In next weeks podcast, I have David Kasprzak, of the popular blog, My Flexible Pencil discussing ROWE a concept developed by Jody Thompson and published in her book, Why Work Sucks and How to Fix It: The Results-Only Revolution.

An excerpt from the podcast:

Joe: That's a very interesting point, because that's what always frustrates me is that when people get into Lean, they just say "Oh, it's a cultural change." They create this atmosphere that you have to have, that you're supposed to have blind faith going there. That it's going to happen. Does ROWE solve some of those problems?

David: I think it does. I think it does it in a very interesting way. I think ROWE is very much aware, and having talked with Jody directly, those folks are very much aware that businesses have a higher purpose. We can talk mission and values, but above that is a higher purpose. I think a lot of us are familiar with the example of the gentleman sweeping the floor at NASA, and they ask, what is his job? He said, oh, I helped to launch the space shuttle. So there is NASA's mission. Their higher purpose is to put a man on the moon or win the space race, or one of those things. There's a higher purpose involved.

We're looking to get people to that higher purpose, gives them a greater ability to focus on just what they need to do to accomplish that purpose, and that's where the culture change begins. Wait a minute, if I'm at home today right now and not doing what I would otherwise be doing if I was in the office ‑‑ which might be nothing more than hanging out at the water cooler ‑‑ am I detracting from the purpose of the organization?

Or they may have worked in a daycare as well, and they believe their higher purpose is to create a greater society, and the way they create that greater society is through proper education of young children.

If I decide to go and get my hair done today, and I don't have someone to cover for me, am I helping to achieve that higher purpose? No, clearly you're not. However, if you're given the responsibility for making sure someone covers your time and it does not detract from the higher purpose, then you are free to do what you feel you need to do that day.

That's why I say the responsibility only aspect of ROWE... I think there are sort of three Rs in ROWE. There's Results Only, Responsibility Only, and Respect Only. I think if you accomplish those things, people intrinsically start to see the need for efficiency, because not only does it benefit the business, but let's face it, people want to benefit themselves, too.