Create a Reality Tree & Causal Circle
This takes us into a tool called the reality tree it's a wonderful tool because of five wise like the fishbone chart limits us teo uh basically one ut of the time why were relates okay, why were we having tails things like that? What if we have ah all bunch of beauties like those top ten is there a tool we could use when we've got a really big mess on our hands that might help us where they cut to the chase and the answer is yes of course there's there's a couple I'm going to reveal uh three but one of them's called the uh the reality tree and what we do here is we might take uh a bunch of post its and we say I will one one ut we had was late deliveries so as a team we get together and we go all right, we got late deliveries so we've got late deliveries help me out. What were some of the other ones we had a customer uh unhappy way lost money we left it I won't do all ten we left revenue on the table, right? We had long cycle time we had uh, low productivity by the way some of the best ...
ways to do this type of exercise is with a team you get them up on their feet to get him in front on a wall or ah you know a whiteboard you'd want to do it with post its like a drum up here if I wanted to I like using post its for the reality treat because you might find your kind of then move him around all right um and I'll throw one more out here we had high inventory you know, we had lost revenue and things like that as well but we'll just start with a few and now what the reality tree does it says believe it or not all of these beauties are connected in a true system and systems thinking everything's connected there is no independent action so to speak that doesn't have an effect on other things so now it's more or less well if we're going to build out a reality tree how do they connect and I always like to start with something close to the customers so if I've got a customer who's unhappy all right my drawing a roll in here and say well what why's the customer unhappy think about why they're unhappy well a couple reasons why oh all right well let's look at those reasons one wass um late deliveries all right that the only reason why so we're always testing for sufficiency well no, that wasn't the only reason why um there was another reason why we have it listed as a u t I think but we uh I didn't write it down was poor quality right? Incidentally, even if it wasn't captured as a uti, we'd still write it on a post it and show it because thiss isn't just about connecting the beauties it's about getting to the actual causes yunis are effects. So now we say the customer was unhappy. Why late deliveries, that's one level why poor quality that's also one level of why were they unhappy for any other reason so low productivity the other customer doesn't even know what your productivity is, but you're productivity's causing ah, poor flo, poor long cycle times, things like that that's going to so low productivity is going to show up in the equation. There's, no question about it, but what is the customer experiencing? Right at this level? I want my product. I wanted to be right on. What the amount I wanted to be, right? There was something else that was complaining about, yeah, invisibility, communication, invisibility, so I could call it here, and it wasn't listed is a uti, so I might just put it on. Here is a different posted poor visibility. I couldn't I was in the dark, I couldn't see anything, so I could say there was another reason why, and by the way, there might have been other reasons why, but that's going to cover think backto peredo that's going to cover that eighty twenty big those three things are big so that's all considered one level of wise so the reality to kind of builds on the five y concept of drilling deep why were we late with the delivery what's let's go down to another level of why there's a couple of reasons for that probably right? Well because we uh we take a long time to do what we do very long cycle time all right, what else? Well, this could be uh could be where low productivity comes in an impact to the client and the other reasons why we relate with delivery ah okay, so uh right here in other words we didn't understand I'll put that one on a grain we didn't understand and I'll just capture it as v o c voice of customer right? So we did not understand the voice of the customer and as a result it it hurt us because but not understanding the voice of customer we had a whole lot of poor quality which caused late deliveries and really upset the customers. So now you'll start to see the reality turned into this spiderweb of arrows and complexities that system's thinking that side effects that's how everything's connected but we don't necessarily see it this way so this is a brilliant tool for seeing the cause and effect relationship in a very sophisticated uh, system this is kind of like saying well, uh you got a headache? Why do you have a headache inflamation in the neck white have information in the net because you're favoring one side while your favorite one side's down here in your hips and you're down on the fifth level of why you're like going huh doesn't make sense it first but that's the complexities that were so frequently dealing with lotte entrepreneurs and solo preneurs and business people are suddenly out of business and surprise because the they feel like they got blindsided I didn't see that coming well, they didn't see it coming because they weren't trained to think in terms of systems all right system's thinking, by the way, there's an unhappy customer cause anything that's undesirable, so I'll put that one on pink just for fun hire them exactly, you know, we could say business gone or, uh business detractors and the net promoter scoring kind of system we've got customers out there going on down to business, you know was so and so because I had the worst experience and she's so yeah, you've got on the flip side you put a smile here and you get promoters, you get advocates, it could be your best salespeople ever do you know, in twenty six years running my business, I've never had a sales person and I really ever make a sales call I don't go on sales calls well, how do you run a business without making sales calls are having sales people and where in the world your business come from? We're mouth if you're clever promoters how do you get people? Do you even know who you are where you are things like that? All right? And I learned this tell you what? I learned this because when I got first started and I lost my two partners and I didn't have any money and I was at that time trying to go out and sell consulting and what was that consulting leadership and change management team building type stuff and in the end it in the day it was um it wasn't something people were asking for, so I started to ask myself what I call reverse questions rather than me going after them how do we get them to come after me or that me not knocking on their door? How do we get them to knock on my door? It's a it's it's a creative problem solving technique where you learned to ask reverse questions you take the very I think that you think you want you flip it around and you play with it so this would be like at disney disney is a wonderful example of this disney's mission statements forwards it's to make people happy that's the disney mission statement to make people happy so who do you think the competition or what do you think the competition is it disney? How did they view it? And the answer is it's anything? Everything that makes people unhappy? Oh, you mean like litter? Oh, that explains why the parks are always so clean. Incidentally, on average at disney, if you ah littered somebody who works for that park will pick it up in eleven seconds actually measured don't go to disney and litter on purpose just to see. Okay, you know what, it's that important that's it's one of their six principles which is fanatical about detail. They're very fanatical about detail because it matters. So you know what disney recognizes? I may not have control over what you know some other studio music park is doing. I do have control over later. I do have control over entertaining people are they stand in line or put him in the shade? If it's a hot, sunny day, things like that let's focus on what's in our control and, uh and create a delightful experience over seventy percent of the people at disney on any given day r repeat customers they're coming back because they had a good experience so you get a smile on the customer's face and you got business growth you get a frown over here you've got business risk or business gone so this is that principle number one value in the eyes of the customer and be specific specify and it goes from there so then we take the reality too we could take it to another level. Why do we have poor visibility? Ok, what's that all about why don't we understand voice of customer why do we have low productivity? Okay, why do we have a long cycle times and this is an interesting vicious circle we sometimes call this a vicious circle one of the reasons we have long cycle times it's because we have high inventory it's clogging up the system okay? But one of the reasons we have high inventory is because we have long cycle times. Oh, and any time we see a vicious circle this is kind of like, well, I'm overweight and I'm overweight because I eat too much heat too much because they get depressed and I'm depressed because I'm overweight uh that's a vicious circle and we need to break it so any time we get into a vicious circle all right it's not going to just go away on its own it feeds on itself and we see vicious circles in business all the time all right, we might have high inventory because we got a purchasing department out there buying things by the ship load and er get a good deal on it and we just don't need it we might have it because we've got overproduction why do we have over production? Because we have incentives toe overproduce we get we're paying people to overproduce or over by you get down into policy, you get down into metrics, you get down into systems design, you get down into tooling sometimes the ruler things like that and all of that just reveals itself in a in this diagnostic in this in this reality tree and at the end of the day okay, losing money. Why did why did we lose money? Okay, because we have high costs. All right? Why do we have high cost? And I think one of our beauties not beauty was way of high overtime, right? So why do we have high over time? Well, that could be because, uh, we have long cycle times, so they all connect. The point is you cannot do a reality tree with fight without connecting all the beauties no matter what their because we're part of a system. And, well, the more we can learn about the system we're a part of we could say, you know what, for that solo preneurs out there, that one or two person operation uh it could be ah, dependency I have on a supplier it could be a dependency I have on a customer who's taken too long to get back to me on uh on things I've asked them there's a there's a disconnect with customers have some feedback from our global audience a lot of our chatters have small businesses and they're calling it micro small very small businesses ready aim fire says can you step through this with a really small business? I get how this works for larger companies thank you to some of the examples that john is giving but I'm having a really hard time wrapping my brain around scaling this down for a smaller business and we have people that are asking for maybe some more concrete examples of business stories or case studies I should just sail so people very confused about the color coding explained what the green the yellow the pain called means oh actually they don't uh the yellow were the original you tease that we have undesirable effects I just used pink to say that's a high risk of businesses gone um I probably could have used a different color down here green green is something that's a cause that's not listed as an effect so just just to clarify their yes some actual specifics was working with a startup company, this was a company that was basically taking back used books started with college text books things like that taking back used books for students and then reselling them so the idea was hey, there's, not the end of the school year kids get rid of these textbooks that are expensive books some of them just throw him in a dumpster some of them throw him and you know they're going into landfills could we create a model where we actually retrieve these books ah, warehouses and then come up with a way to sell them cheap and uh and if if we can't sell them can we keep him out of the landfills and partner with organizations like books for africa? So very entrepreneurial couple of guys started this in their dorm rooms are in their apartment actually and they, uh they built this rapidly growing company that got their funding and their funding they needed and they even won an award I got recognition is a social enterprise very conscious for the environment and green things like that. But I wanted to help him because, uh they asked for some help and it was interesting because they had, uh, this point they over million books in a warehouse and one of things they said was the books are well, they're basically they're free and I said, well, so um how'd they get here? Well, there's logistics okay, and the warehouse there's your stillman is that free that wasn't free and so the company was essentially initially it was potentially going broke because it was it was an interesting model but they were essentially taken any book even though it was completely worthless toe ware house it to potentially give it away or recycle it keep it out of a landfill um but they're the original model was was going broke so until they learn to differentiate value add from non value add which we've covered till they learn to differentiate that nothing's really free okay the businesses have to make money or they die uh this was again a small company but they they were creative and clever in there there there there an awesome business today uh the idea being that's tto take a couple of couple of people starting this business and make sure that you understand some of the fundamentals that we've talked about today and so the more specific if there's a specific example from anybody in the audience if you have something specific it's it's vegas the enemy here so when you say, well, I'm just a one or two person person business I don't see how the supplies what business are you talking about? What exactly is it you do? Because I need facts and data to be of any help at all so so share that with me and we're gonna have a hot seat section in a later session where I really wantto really want to work with you on it so I've worked with companies with the little startups one in two people I've run on one person business for twenty six years and I've worked with companies with fifty thousand hundred thousand plus employees so I'll try tio shape it teo your specific needs I just need to know specifically what you're your needs are and and and work with you on that this tool right here applies teo any size business you can take this tool home with you and working and using on your personal life what are the top five or ten beauties and your personal life and do the root cause analysis it's that simple but it's that profound simple sometimes is profound it's elegant profound so if I I lay out my beauties all right and I uh I start toe look for the instructions are right here so start was just you don't even have to have ten you could start with five or six significant you tease one proposed it put him up on a wall alright or a whiteboard something like that and start asking why so why do I have this sooty? Why is the customer madam e we covered three different contributors but we say let's go deeper than that why do we have late delivery long cycle times? Is that the only reason why now we've got low productivity as well okay. And low productivity could actually contribute to long cycle times. There could be a relationship here. Why do we have low productivity? And we could add a post that we have a lot of non value added work. Whatever color we want to use this and we have, uh hi, non value added work going on. So if we've got a lot of people doing a bunch of non value added, guess what? Our productivity is gonna look like all right, it's not gonna look good. So we got high, high not evaluated work that the only reason we have low productivity we have a lousy design. We have a poor system or process design. This gets to what demming was talking about. Put good people in a bad system bad system wins no contest. So we have a poor system design, by the way, that poor system design allows for a lot of uncontrolled inventory that poor system design allows for long cycle times. By the way, I take responsibility for that because I designed it. But I designed it purposefully to reflect the pain and suffering. And a lot of people in business have today is they've got this division of labour, they've got these batch in q systems, they've got complexities, they've got a lot of non evaluated, we're going on. They're doing the best they can but this one right here a poor system designed that could be your business model I get a lousy business model any solo primarily entrepreneur out there's got a lousy business models is doomed until they come up with something more clever so what's going to differentiate you on the market it gets right back to what we said how you going to get value to flow through that value stream it's those five principles we covered earlier you can't know clearly what you're going to get paid for in the voice of the customer this right here is huge all right? So we don't understand the voice of the customer we've got a poorly designed system that allows, by the way, for a lot of non value added work that feeds their low predict productivity. Okay, it allows for a lot of overtime and increased costs by the way, inventory costs a lot of money. So this is, you know, this is something that any business could look at. How do you spend your money? How do you spend your time? Okay, how much of that is value added and that one or two person company can do this just as well as they can actually do it easier than a big company clarify you asked for specifics ready aim fire says the small business I'm developing as an online course course marketing lead generation and conversion are key as well as ensuring customers air using the course and getting results and their own personal lives and I tried to ask what the course content was about I haven't gotten in yet so what problem does this course off and how do you know show me the data show me your market research that says this course I'm offering is going to solve major problems in the world hears the data to support that where is just just the pine this guy dream show me the data so the idea is think very carefully but I've got a solution call the course in this case it's an online course so that it's very competitive as you know all right so what solution are you solving the great question and these gets back to some of those questions in the market segment who is your competition? How do you are? How are you different than the competition how you price differently how do you deliver it differently? Okay because there's just all kinds of noise online everybody knows it all kinds of noise online so it's it's confusing it's it's something you've got to be very careful to differentiate yourself from and I'd say back start building your course with specific customers and the students who have a problem that this course is going to help them resolve or in need that it's going to help them resolve and then get them to give you testimonials. Get them toe to say, look, I took this course and wow, I mean, it's changed my life uh, you, sir, because that builds credibility. All right, people know that you're promoting your course because your course, but when people hear other people promoting your course because they gain from it, they benefitted from it, it made them wealthy. It made them successful, made them for have made their customers successful. Now you're starting to think about that the whole system writing by the way you cook so that's a specific niche that's a problem that's being solved. People need a resume for sorts of reasons, right? Yes and no. Okay. Because in today's world resumes are not even used in a lot of cases. So is this the next floppy disk? Be careful and I'm only saying this to be brutally honest. Ok? I mean the way people search for jobs, find jobs, get searched for jobs is different today than it was before, so you might have to have a rest resumes of paradigm that's a very old one. You know the cvi whatever you want to call it the curriculum vitae but it's um be sure your current be sure you understand the nuances of today and the whole social media approach to job search and finding jobs and get people teo to benefit from your knowledge and your teachings and your in your course and then rave about it so strategically that would make a lot of sense thanks awesome. Awesome. Thank you. Thank you. Ok, but there's applications all around for this stuff so I I encourage the audience teo to speak up throughout the segments and let me know what you're thinking because that's the only way I can help in in specific okay, so you know, the reality tree challenges us to realize that we get into this again this either or thing is that a cause or that effect? Is that a lean tool or is that a six sigma tool is stop it all right uh it's showing up as something we need to analyze you can call it cause or effect cause and effect is what I mean by that okay late for work there's the undesirable effect that actually could cause me to get fired to get yelled at or you know, so that could actually be a cause as well as an effect. Well, why didn't the car start our why was I late? The car wouldn't start was that a cause and effect? We listed it as a unique because it's undesirable the battery's dead so the car won't start I wanted it to start but we could also argue it to cause tau why I'm late I could go all the way up here to left the lights on is that a cause and effect it's both it's causing the battery to die but something's causing it and this is the depth of systems thinking it's not as simple as cause or effect dualistic itt's comprehensive so we have to just be careful that we don't get fall into this trap that okay? Well um I found that the root cause I don't even like that terminology a lot of times because roots can have roots you know? So I'm looking for leverage points I'm looking for these points where I know that if I had a a top design okay and I was clear on what the customer was paying me for all right that just those two things right there could make a world of difference because if I knew that that and I provided better visibility, better quality and, uh more timely delivery maybe it's not perfect but boys it better than what I have today? Okay? And incidentally, why else do I have poor quality there's going to be other reasons why we could do a little fish bone kind of thing and say it's the tooling it's training but the idea this is to get down to let's really find out what's going on beneath the covers so to speak so we can get it we get it fixed and we'll get it fixed in a sustainable way so the headaches not just continuing to come back all right, so we continue to build and drill down and and sometimes where there's a gn and relationship will put a little circle around it here so this is, you know example of its its it's late delivery and poor quality that's really upsetting the customer it's not just one or the other. So if there's an end in there okay, uh let's call that out that just teaches us about dependencies. I talked a little bit about vicious circles you know where there's these continuous loops that feed on each other. The idea here this isn't pretty by the end of the day you could have a wall with one hundred post its on it and people walk in and go. What in the world is that? Because when you walk in and see the finished product it's it's almost mind blowing but the team that built it gets it because they've been sitting there for an hour to drilling down and debating and trying to trying to figure it out and when they get aligned their like you know what? If I had to pick two or three things up off of this crazy design that would be game changing the brightness cation br design it could be our uh we really don't understand our customer and it could be our our diamond department constraint something like that so let's let's fix those will it be perfect no, we'll be better better be show me the day to prove it but let's get past this it's got to be perfect as it certainly isn't now all right the systems we work in the workplace is we work in now aren't quote perfect so let's just make him better and do it fast and make a difference the causal circle another one of my favorite tools this one essentially allows us to take a circle let's start list are you tease like they are on the clock okay, so here's the customers unhappy here's a late delivery there's poor quality put one more on here weaken ah years high inventory okay with this tool we could say all right we started out with ten you tease could we narrow it down to two or three? They're really causing the other eight and the answer is yes so let's you know, let's play with that. The idea here is to arrange a beauty's in a large circular pattern around the circle you can number each one or actually label it like I've done here start with that first uti and sorry does this shooting the customers unhappy does that cause us to deliver late and the answer's no it doesn't it's the other way around perhaps but the unhappy customer doesn't cause us to deliver late does the unhappy customer cause us to have poor quality? Well we could blame it on the customer for rejecting our quality but that probably isn't gonna fly does the customer cause us to have I ended? Hi inventory all right and if the answer is not no okay then let's move on to the next one does the late delivery cause an unhappy customer and go yeah, that happens does late delivery cause poor quality? Maybe not. Does late delivery cause high inventory? It certainly can we can have things piling up all right and we continue around the circle just like you see over here does poor quality cause unhappy customer indeed does poor quality cause late delivery his poor quality cause high inventory you bet. And so what? We might find a cz we go around the uh the circle is that this right here? Look at all the outgoing arrows. No, I just gave you a little slice of it but look at all the outgoing arrows when we found a uti that's got a lot of hell going arrows what's that tell us that's a that's a that's a big hitter that's not just a a uti in effect that's a driver that could even be a root cause or major leverage point so when we look at we look over here and we say well they got a whole lot of beauties come in and you know, arrows coming into ut number five which might be something like unhappy customers a lot of things causing a customer to be unhappy but that doesn't look like it's causing anything else so that's truly kind of at the end of the line so to speak that's an effect but where do we see a lot of outgoing arrows wow one two three four coming out of u t number six whatever that is okay um that's interesting we got three coming out of u t number one three coming out of u t number nine so we start to look at incoming and outgoing arrows we can even color code these and and count him up but the idea is let's find where we see a lot of outgoing arrows and I'll tell you this is this is true a lot of times with a circle with ten or twelve beauties we might find to you tease they cover every cover every ut other words two of the two of the twelve or two of the ten actually touch all the other ones wouldn't you like to know those? Wouldn't you like to know in your own personal life as well as your professional life? What are those two or three leverage points if I worked on my whole world could open up that smart business that's very smart business and this tool right here the cause and effect matrix allows us to simply take those beauties we've got and we were just playing with these beauties we have a little fun with it let's list the udi's across the top of this matrix there's our undesirable effects okay we got eight in this case now let's start to brainstorm causes let's start with you t number one customers unhappy why's customer unhappy well we might say late delivery that the only reason why now there's another cause cosby poor quality anything else? Yeah poor visibility we've got enough covered let's move on to the next one beauty number two whatever that is alright it's uh hi inventory pick pick your choice so why is it why is that happening and what we start a cz we brainstorm and these things can go all the way down to the floor we've got not justcause abc but x y z because right down on the floor but now what we start looking at is which of the causes actually impact the most you tease because we said well cause a for for the for the customer was late delivery does late delivery cause anything else so it's similar to the logic over here late delivery cause is not just the customer to be unhappy but it also causes us to have high inventory so we'd put a number you know we'd put a number wherever that one wass now the one three nine that you see listed here is just a simple way to await this matrix it's often called the weighted matrix so what we're saying is we're way in the relationship a nine is I sunk the battleship it's a direct hit that's a major cause three is a moderate sort of in between cause of one is a minimal cause and if it's blank there's no cause and effect relationship it all so by wayne we can gain more understanding into uh where that potentially the rial leverage points so if you looked at this example against very simple on generic uh if you could only pick one cause to start working on as a project or is a a business strategy of some sort which of the three causes would you pick and why the answer should be obvious? I'm gonna pick c because if I pick c it outweighs the other two combined so I'm going to pick this cause whatever this might be maybe it's that blasted ruler maybe it's my process design maybe it's the fact that I really don't know what the customer wants so I'm gonna have to figure that out okay? And it's not to say I can't work on more than one thing at a time but it's a way to prioritize our efforts so I got to figure out if I'm teaching people how to write resumes and I'm teaching him howto, you know, doing online and a fast, efficient, cost effective way, okay, what are my top two or three priorities to get my business toe really sustain itself and grow all right? And maybe I better really know my audience and maybe I better have a process that's lean and robust and efficient because I haven't got time or money to waste, okay? And I better make darn sure that what I'm teaching is current and that that it's it's truly needed in the world today or better yet in the world tomorrow because it's going to be tomorrow in twenty four hours or less. All right, so those are some of the basic cause and effect tools we drill down to the major causes way so, you know, poor system design, we don't understand our customer, we've got a constraint, the diamond department and here just some common causes of waste in the world today. Take note of these easier in your books and your materials, but location layouts the way we lay out locate our people can be a serious problem, process, design, huge process capability, we have a good design, but our capabilities lousy. We're making a lot of mistakes it's not the process itself it's our it's our ability to execute we don't have good standard practices we don't adhere to standard practices, we have them but we don't follow him we don't have effective training, we've got supplier issues we've got material problems you know we get the thailand but it's cracked or it's it's not the right color, whatever it could be we've got this big batch thinking so we batch and cue everything and we got big clogs in our system we don't have good data or visual control so we're operating in the dark our customers are operating in the dark these are very common causes of waste we wantto look at thes as it was more or less a checklist if we're building our businesses, we've got misunderstanding around voice of customer everything's between departments we don't know what what's really going on, so we jumped to conclusions we've make assumptions we've got ineffective maintenance or equipment problems blasted ruler we've got long set up times or lots of adjustments things like that going on we've got a measures that aren't aligned, we got the wrong incentives potentially workplace disorganization is a big problem, so we're not organized well, well, you don't have good accurate forecasting, so we've got this real problem understanding what we need to make and when and prioritising we get scheduling issues control problems, control systems, problems inventory control would be an example of that government's things like that we've got over complexity built into our system and we've got policy challenges so we always look to policy was there very common causes of waste major leverage points of all of those these are the top five I see over and over and over again so it's aware of caution, process design we saw it earlier process capability tails on the diamonds that's a process capability problem control systems inventory coming out of the out of the roof overproduction and requisition things like that policy batch ing and shipping and eights and things that could we saw that earlier and beneath all of that is ignorance in other words, we don't know what we don't know and if you get down to that fifth level of why you're often in ignorance and that's not an insult it's just a reality we don't know and when we don't know we assume and that takes us into a world of risk unnecessary in many cases risk very constraints we're going to cover maurine the next segment but that's simply a bottleneck in the bottleneck is, uh governs the speed of the whole system so we have to find the bottlenecks and then we have to resolve for the bottlenecks so you might think about that uh over break and then our next uh segment, we're going to take a look very closely at bottlenecks, but where where do we see inventory piling up? For example, where we see traffic jams? Where do we see constraints in the system? Set those air, heart attacks waiting to happen or strokes waiting to happen? We've got clots. We've got to get trouble on the horizon. So we got to know our constraints and and managed to our constraints, all right, and balance our system to those constraints. So, you know, tio there's wrap up this session a little bit? Uh, I love this line from walt kelly pogo, you know, we have met the enemy and he is us. What was that? The time stein said earlier, we cannot solve the problems we face today at the same level of thinking we were at. So this is about using our analysis to really take a good look in the mirror, find out what we can change what's within our control. Whether we're teaching people how to write resumes put in thailand, you know, building if a photo lab photo business for what? You know, whatever it might be building a consulting practice and, uh s so often we're that we're the ones where they were the leverage points.