Systems - Thinking Towards Innovation
To review just a little bit we uh we ran a simulation and uh we made things better through this this guys in but uh we still fell down a little bit ralph waldo emerson here's said once that our greatest glory is not a never failing but in rising up every time we feel that which doesn't kill us makes us stronger on I love quotes like this we left off the last session quote there it's in the materials from james joyce about mistakes are the portals of discovery a lot of the greatest discoveries in the world there are for mistakes what we call mistakes I love the story of thomas edison, for example, and after nine thousand attempts at the lightbulb journalist asked him how I don't get it. How can you continue and persevere after nine thousand failures? Thomas edison said I haven't failed yet I've learned nine thousand ways they don't work so it's a clever way of looking at things right and we made some more mistakes all right and round two but we we've learned from those and in this sessi...
on in round three we're goingto illustrate a point excuse me a flow kaizen, which has several points in the process, and it's uh it's a more broad scope but it's it's critical when we're faced with uh benchmark data like we had before that tells us look, we made a lot of improvement time to first order but we're up against sixty seconds up against one minute whoa that's ah that's well I don't now first reaction might be what we think the competition's bluffing there's no way they can do that so they're trying to steal our business with promises they can't keep truth is we're making promises now that we can't keep and the customers catching this for it they could get him thirty in ten minutes really running with virtually no inventory turning that very yet that quickly all right that's less than one batch size for us we have a policy that says we have to have a least five to even do anything they're running their whole business on zero four that doesn't make any sense that's outside our box but data like that wakes us up because if that's true, then maybe we have to change our box just a little bit shift are paradigms look at things that light a little bit differently the promising zero defects not that can't be right and the productivity numbers seem just out of the off out of this world. So but that's what we're up against so in this session we're going to use to make again we're going to continue to repeat and learn and play with this this tool belt called to make and other tools that we haven't introduced just yet tio not just improve our performance but actually innovate so we can improve inside a box but innovations often when the box itself is the problem so we're going to blow it up and we're going to come up with something radically different radically different we're gonna practice the flow kaizen so we're going to get you playing again little bit and we're going to use the lane sigma game uh to bring it to life all right teo kick this session off I wanna introduce a model that's had a profound change in my life and uh and then the lives of many other people around the world that I've been teaching because I've used a small amount for a couple of decades most of us served quite familiar with the top line here which is that we're managing behavior every day to get certain results for managing our time we're managing our projects were managing our lives and we're trying to get good results who doesn't want good results so we're quite familiar with this very top, almost superficial line when you look at it from a different perspective because all of a sudden we say well I'm not getting the results I want so I'm going to try harder I'm going to work faster I'm going to stay on the top line and just put more into it hope for different results but what did einstein say about doing the same thing over and over again and expecting different results, he called that insanity exactly insanity is doing the same thing over and over again and expecting different results, so we can't just continue to do things over and over again and expecting results we teach people how to fly and work faster, whatever it's not gonna work, we've got to drill down so we're going to drill down beneath the attitude of our people because we might in a bad system we might be creating bad attitudes disgruntled stressed out people see it all the time put good people in a bad system not only does a bad system win, but we end up with people who are upset stressed out because they're trying to keep up stay above water so we've gotta drill down beneath even the assumptions that the people are making toe what's driving those assumptions where's that coming from and this is where we get into what I like to call transformational change this is where great leadership presides great leadership is looking at how do we put good people in a good system? How do we put good people in a good structure? Because that's where our metamorphosis takes place that's where we see this in sports a lot where great coaches take the losing team or an average team and within a couple of years they've got him in major bowl games if its transformational how did they do that well, they didn't just up here offer carrots and sticks, superficial incentives, even pizzas, things like that. They drilled down and said, you know what? I owe it to my people to put you in the very best system possible? No, I don't necessarily know what that system is, but I'm going to create a method to create it. I'm going to create a methodology, which includes education and training course material like this simulations to bring it to life, and then we're actually applied that to really things to make your lives better and easier and better for the customers. Well, and when we do that and we start to experience very different results, those results than feed on themselves, and we get this transformational change in the way people believe. All right, so play with this model, having exercise for you, I'm going to give everybody sixty seconds, including the folks online, take sixty seconds and see if you can solve this little riddle, all right? It shouldn't take that long at all, but I'll give you a chance to play with it. This is the power of paradigms so often the answer's right in front of us, and we cannot see it, we cannot see it because of the filters, the blinders that we have on right there the answer's right there it's very simple and that really frustrates you now because you go john it's not that simple john's going to give you a quick hint there's my head you haven't touched trouble solving the problem on that top line you have to challenge your assumptions to deal dig down and say, well, maybe I'm not reading it right maybe I'm not interpreting the instructions right maybe there's another way to look at this what is it really asking me to cross out there's a hint and time is up that's a minute anybody get it? I don't feel bad if you didn't because very few people d'oh it's the power of paradigm did you get it, susan? All right and it is there you go, it's banana. Now how in the world you get banana out of that? Well, the answer's right here it says in the following line of letters cross out what? Six letters? If you interpret that as six letters you're in the six paradigm you're looking for six there's another way to look at that it's asking you to cross out s I x l e t t e r s cross out s I x s I x l e r est right there and it leaves you with the word banana now very few people get that because of the box that were in the box in this case is the sixth box we're searching for six so it's a fun little illustration to demonstrate we don't even know we're in paradigms most of the time we don't even know what assumptions were making hq alligator thirty well done for other people we got bears and we got tears but only one bananas I think maybe others were just in tears a well done alligator so yes, indeed so exploited just a fund like tio activity on creative problem solving in this in this segment we're going to really talk a lot about creative problem solving and true innovation not just improvement, making things a little better but blowing the doors open and really coming up with things that that we've never seen before all right to do that we have to get out of what I refer to is the experience decide trap way live in a world where we just continue to repeat what we know and we base our decisions based on our experience we get into this trap of, uh, repetition habit all right, organizations to it you know, great organizations do it great organizations ibm, kodak, xerox a lot of these organizations got in tow just repetition general motors, ford and in many cases that got him in deep trouble motorola got him into deep trouble because they were not getting outside the box so to speak they were so focused on optimizing and improving things inside the box in many cases they lost sight of the market itself which was changing completely changing so we have to avoid this experience decide trapped by recognizing that a cycle franco and going improvement requires us taking time out of a very busy life, by the way it's easy to fall into that experienced side trap when we're working twelve hours a day and we're just busy busy, busy, busy, busy but people where it's dangerous very dangerous. We've got to get out of that in sports we call these time outs and we call these halftime breaks where we do a little after action review we look a okay so what what are we experiencing what's going on what's happening and what what adjustments do we need to make? We've got we've got a challenge our game plan, our assumptions were way have to mid game we've got to learn how to make adjustments uh because they're the things come up all right? So we've got to get out here and reflect on what just happened learn from those mistakes which are portals of discovery, so to speak and vision adjustments and changes and new things talked through those things figure out howto make it even better and base decisions on a whole picture not just past practice, alright precedent. So a quick review of kaizen we said cousins a quick hit improvement all right, it's the use of domestic at a very fast pace typically fast within a month, there's a period of prep time and then there's the event itself, which is very quick, it means good change and that are not best begins with ah focused team charter, we're clear on our problem that we're trying to solve a clearing that problem statement, we know what it is we're going after, okay, we usually do a little justin time j training, so the team knows what kaizen is. They know, by the way, the this lean sticking a simulation is used frequently, all over the world in kai's and prep, so when we're prepping a team to run a kaizen event, why don't why not run a simulated one or a couple so that they can understand better what it is? They're being tapped to dio so we do that we do the kaiser in training, and then we prepare for the real kaisa it's, a great way to use the game just to get people teo, to understand what it is we're trying to do, so we define and measure the current state, we analyze those causes and effects, all right, and the the major leverage points and we might map out the future state either in the event of prior to the van, to say, here's, a rough idea what we want to try and make happen that's what we're going to do in this session, we're going to actually create a future state, and we're gonna implement those actions during the kaiser in meaning we're going to make change. We're not going to sit around and talk about it, we'll get it. So we're gonna approach this with making change in mind, not just sitting around and debating and talking about it and coming up with the project management plans, dozens and dozens of steps, all right? We're going to document the results, all right? And then we're going to prepare, uh, for ongoing improvement and control, and I like to suggest that we never finish a kai's an event without planning the next one that really reinforces the idea that this doesn't end, does it? A lot of people have a feeling this is just a flavor of the month, and after this event, we can all go backto to normal. No, this is we're changing normal, changing normal, and we're not going to get it right, we're never going to get it done, so guess what we're gonna do after this kind of event, we're going to do another one. All right, I'm working with a client right now we're on our seventy plus plus kai's an event in a year seventy seven zero so these are these are not just one and done type things all right it's a it's a powerful way teo to demonstrate that we're a culture about proactive change and leadership not reactive change and management were making change not managing it so here's our benchmark dated we looked at that go really? Wow so what we're doing now is prepping for round three ah flow kaizen and around three here the here's some of the things we need to consider first is our purpose we're gonna add a little more real world complexity and round three uh for example uh real world we might have experience prices coming down there were ten dollars right now per unit we might experience the market's not willing to bear that anymore so around three we've gotto make money at nine dollars a unit you say? Well that's not very helpful, john because we're already losing money now we have to lower our price shouldn't we be raising our price? A lot of organizations out there trying to figure out how do we raise our price because we're not efficient oh maybe if we were more efficient we could reduce our price there's a paradox lower our price and make more money at the tate to raise your price to make more money but we know all way knowing there are into industries whole industries like the tech industry they're saying you know what? You could get a better phone or laptop or camera whatever today calculator at a lower price with more memory, more speed, more capability so we're getting used to this idea at least in certain industries that if we really clever in the way we run our businesses we can actually get more value for a lower price than we could in the past that's a powerful shift I know cos today there's still scratching their heads going how do we raise our prices to make more money? They're not thinking about how we run our business is a whole lot smarter all right? So we're going to use some concepts of tools in this segment we're gonna go back to domestic which we've discussed certainly in kaizen but we're going to use tact time when the world is that all about conv on what the world is that all about? And I mentioned to hijack a just a little bit earlier which means peaceful order these air words who attacked actually is german but combine and high junk along with kaiser japanese terms but they're now very global they're used all over the world and to improve balance and standardize their process and really go after that benchmark performance level all right that's what we're going to do in this session so an overview of the, uh, simulation is too, that we're a team and here's our mission, we're going to design an operation to deliver the exact amount of acceptable product the form within the designated time while maximizing profit. So is that clear? We're goingto deliver the exact amount acceptable product and make money as much as we possibly can within the designated time, which is which is ten minutes? Wow, we're going to meet or exceed all customer expectations, quality throughput, user friendliness, visibility, traceability some of these things the client wants tau experience, we'll make a healthy profit, by the way, we're going to that at a lower price, and we're actually and accurately predict performance ahead of time. By the way, the lower price isn't the only challenge we have financially, we've also discovered in round three that we were paying one dollar per labor minute in round three it's too we're going to pay people twice as much how in the world we're going to do that, john, but let's figure it out. Oh, and one other thing I work in process, which was one dollar per unit that just doubled it's two dollars per unit now, prices coming down costs are going up, we're already losing money, huh? I'd like to say welcome to automotive nineteen, eighty because that's the industry I came out of in the eighties and this is precisely what we were forced to dio we've gotta figure out a way to reduce prices and doom or atm or cost uh to stay afloat to stay in business that's what we gave birth to a lot of these these these teeth of these tools and concepts the lien and the six sigma years ago all right? Sometimes we learn it the hard way and then we're going to demo the new process we're actually going toe prove it with data that we can we can actually do this so in order to do this we have to consider a number of things we certainly have to consider a voice of customer we've talked about that now repeatedly we've got to be very clear on just what the customer wants, what they do with it, how they use it let's really partner with our customers to make sure that we are aligned and we're and we're partnering, we're connected that includes the critical to quality a d d is the average daily demand what is in this case average minute demand? How are you using this? I'm using on average three a minute okay, we need to know that your delivery requirements do you need him and ate because that's our current shipping policy do you need emanates? I don't need emanates that was never my policy that was some uh I don't know it was your policy for some reason and philip truck save money on chipping but I don't I don't need emanates I don't use emanates why would I have order emanates uh process spat product specs and requirements and I hope that we might have to revisit our value proposition maybe we need to revisit what we're offering the market not the customer maybe we haven't got our value proposition right? Incidentally on that topic some organizations try to be everybody everything to everybody that's a dangerous value proposition you'll notice that the companies that are really, really, really good at whatever they do is they dio they're very clear on what they will do and what they will not do try to get a first class seat on southwest airlines doesn't exist, but I want first class well then you have to find another another airlines we don't we don't do that so cup incidentally, southwest airlines is a very successful, very profitable airline but very clear in its value proposition. All right, so we don't try to please everybody with everything. We're clear on what we will offer and what we want every entrepreneur has to has to know that to survive because when you start juggling too many balls in here, you're going to start landing on your head very quick, very important be clear on our value proposition we've got to figure out our process flow maybe their current state if we've mapped that out now and you could analyze that you know what that's a ridiculous design I don't know it just grew up over the years out of who knows where but maybe there's a better way we can get the work to flow we might have to look now certainly attacked and what does that all mean? The loading of the work, the balancing of the work, the capacity planning and capability we have to look at our inventory control and the story was going out of the out of the roof we started with zero and end up with forty five what was that all about? Okay? And uh, we so we have to figure out a way to control it we have to introduce my jungle, which is peaceful order what we should see and round three isn't an order is an organizational culture that doesn't actually look like it's working that hard. What I like to use the metaphor in this case of a great swimmer you watch the olympics, we watch a great swimmer they're moving through that water at a significant paced world class pace, but they don't actually look like they're working very hard it's graceful something with a sprinter something like that you look at somebody who doesn't know how to swim very well perhaps it all and you give me a little shove into the pool there flopping around there, gasping for air and yes, what it looks like to me when I go into a lot of businesses what's what what what's, what do you suppose I see people freaking out, gasping for air, putting out fires in some cases loving it lot of a lot of middle managers love putting out fires that's their job? I love to just come to work where's the fire pole I want to slide down that get the hose out start and so when you start in one of the cultural challenges you have when you bring in these these world class standards and you execute on them is people start wondering what to do if there aren't a whole lot of problems to solve. Problem solving is not value added, you might think so, but unless you're getting paid for problem solving, so if I'm getting paid as a consultant for problem solving than its value added work all right, but if I'm inside a company and I'm solving problems because our quality's lousy okay that's all cost of poor quality it's valuable but it's not value added that's the important difference so we know we know that if we can eliminate a lot of those errors and things like that and free of capacity um it's a valuable thing to do but it is valuable because we've eliminated the non value added activity of running around putting out fires were preventing them now that's a significant difference we've gotta look at our labor okay, we've got seven people we may have just added an eighth with a customer service rep um we could be scratching our heads thinking well maybe need we need to adm or in a couple of areas because we're still not getting through put through um so how many? How many people do we need to do this how many people are competition doing it with and a clue there is this productivity number because a clue there says if they're even close to that that basically means they're getting thirty units out in thirty labor minutes thirty labor minutes how many people is that in ten minutes it's three there doing this with three people and we're thinking about adding more to eight so something's not something's not right that's very insightful information isn't it incidentally if they're making money that's a green positive positive number wow um and they're doing it at nine dollars not ten how in the world are we gonna make money all right at nine dollars because that nine times thirty all right, well, all right let's let's do the math all right, let's say nine times sa one hundred two hundred seventy dollars all right, well, we have two hundred seventy dollars, in the top line, we take out our labor, we take out our overhead and we take what's left that might help us balance the equation. What can we afford in terms of labor? All right, so a lot of times, these organizations and I encourage any entrepreneur out there any solo premiere to be thinking about this, you can start with the end in mind the market and ask, what will the what price will the market bear? All right? And what timing will the market expect from us in terms of delivery and work backwards from there to design a system to fill that need to surpass it? Even that's? Not a way a lot of us think we think front to back, not back to front, so we think what we got engineer and design and figure out a way to t get all these things done, and we're going to use division of labor, and we're going to put people in special groups, and we're going to organize their business this way, and then we're gonna add up all the costs, and then we're gonna price it got a bit of build a profit into that, and then we go out to the market and the market says, I'm not paying that. You're way over price by in the world, would I buy from you guys when you can't even get me my deliveries when I got competitors up first and I'll sell it to you for less and get it to you sooner, and there won't be any problems with it that's a that's a pretty simple business decision, so as much as I love you guys and I'm loyal to you guys, everything else in terms of our history and our business, I can't survive going on like this changes changes gotta happen. We look at our cost of poor quality c o p q we still got all these defects what's that all about incidentally, part of cost of poor quality is inspection. We got two people full time inspecting stuff that's considered part of cost of poor quality it's not value added, why do we have people inspecting anything? Because the quality's not good, but the quality's good wood we need so many people inspecting. Incidentally, it was still getting to me with with flaws, and this is something demming taught when, uh, years ago, he said, you know you're you're looking at the wrong end of the equation on the aipo diagram your inner, inspecting the outputs to see if they're any good or not. But you're not doing is controlling the inputs so that you can't get bad outputs the wisdom and the geniuses over on this side of the equation it's not in the outputs so, um productivity we gotta look at that must certainly have to look at the money piece the budget lost the profit loss, the budget these are some considerations. And with these considerations here, some of the questions we've gotto ask and answer so what is absolutely critical to the customer? Let's? Make sure we're clear on those solution specs if you will not see teak use what's the product demand what is tak time? We calculate tak time from product demand. Tak time is simply going to give us the pace that we have to work at and I'll explain that more detail just a little bit what's the cycle time rejected how long does it actually take to put those yellow dots down in the diamonds? We're going to relate cycle time to tak time okay? Does does it fit? Is this even possible? And if not, then we have to figure out a way to re balance it that's where things like I just come in what's the optimal flow what's that look like what's the optimal labor content who's going to do what so way of innovators to think we gotta let go of our old ways which we've proven don't really work optimally we've gotta let that go we've got to come up with something radically different so this is where l style challenge teams to say let's just take that current state map and leave it over there let's go over here on the other side of the room or the other wall let's come up with a radically different if you were starting this business from scratch, how would you design it now? It's interesting is even though we're trying to design it from scratch into something new, there are these paradigms that are still around the other wall that start coming over to the new well would carry them with us so it's not as new as we think until we have somebody who helps break us free of all of that and that's what a good facilitators gonna help do are a creative problem solver. All right? So we've got to figure out, you know, balance and smooth the work we've got to figure out how to standardize and control it so that, you know, our inventory is not going out of control. For example, we gotta figure out a way to assure quality and pokey poke the process as best we can figure out what our budget is, we know what it is top line a customer doesn't want any more than thirty, so um we aren't going to get any more than two hundred seventy dollars on the top line we spend more than that we're gonna lose money, write a simple math so how we gonna control costs and where are we going toe organize ourselves to do that and then course that leads into how do we maximize profit? So we ah kuk review of the benchmark dayton the metrics samos before alright, so around three we're going to capture that data right here all right so we can compare apples and apples incidentally, we're not going to allow technology so to speak yet it's a wonderful idea that we heard for example, online about why don't you get a color printer and just boom hit the hit the print button automate the whole thing in real world that's a it's a it's a great idea alright, why do we? But this this form isn't really business this is a simulation and just to keep it fair, so to speak apples to apples were still going to do the work ourselves we're not going to put in automated systems okay, that may be a future kaizen but not not today. All right um and there we've been through those numbers again and capture all that this is where the financial results get a little bit more challenging off suddenly revenues gone from ten dollars a unit tonight overheads the same two dollars a minute that's just to pay the least keep the lights on and things like that are labor is now two dollars per labour men instead of one that's an interesting shift because really clever cos they're thinking about howto I paid my people mohr but put them in good smart systems and actually make more grow the business about how do I keep keep costs down and keep labor keep labor really low our offshore even tow to get it to get cheaper labor things like that? But how do I I could actually pay people more because the systems that smart one clue is I'm goingto maybe I'm gonna pay fewer people more than more people less because I'm going to find a way to optimize and balance the workload, which a lot of organizations haven't figured out yet reworking scrap same as before five dollars per unit that will chew us up if we can't get our heads around that and then our total inventory is double it's gone from dollar unit two two dollars unit around three. All right, we're back to demand if there's one mantra if you will through this hole courses that's that's uh whether it's at home or at work with whatever we're doing let's make sure we've got american mind as we approach these these life lifetime problems we all we all face all right so let's start with defining those five key principles again this is just a little bit of review but we said okay, this all starts with value in the eyes of the customers so I'm playing the customer here what I really want how doe I really use it? We've been through that the value stream how do we know are we going to go about, uh, green fielding or white boarding from scratch a new design not get trapped in the old one? Uh not try to figure out who what we've got okay, we got eight people now what are we gonna have all these eight people do if we were starting from scratch I'd say uh we're starting from scratch all right then we gotta figure out how to get from current state to future state okay to get through all of this all right? So we've got to figure out how to get that flow in the poll a line and get everybody engaged involved continuously pursuing this perfections quick review here alright, starting with that customer asking what are we getting paid for? We're getting nine dollars now instead of ten I need thirty we've got all that data okay and there's that they're the numbers so three forms one day simulates a minute so I want three forms a day or three forms a minute thirty forms in ten each forms got to be accurate, precise six sigma so to speak let's think that and I'll take delivery as soon as possible all right so you've we've had these discussions and I'll take delivery as soon as possible okay, I'm looking for I'm looking for flow here this means that we really have to emphasize ah whole different way of looking at our business which is across not just vertically alright way saw before how we were organized in this very functional way susan was being incented okay to just feel that pipeline don't worry about everyone else and by the way in a typical business and this simulation you can see the rest of the business in the real world you can't necessarily see what's in the pipeline you send off an e mail you don't know if it's going in tow kurt's box of one hundred fifty or it's going into an empty box but you can't see how full of work lotus okay and in a manufacturing business you might finish your work and somebody else comes over with a forklift or something like that picks it up takes it off to a warehouse or somewhere you never know so if you're being incented on whatever it is you're doing without visibility across the system you won't governate quite like it did yesterday or in the earlier session you'll you'll just keep working because that's what you're getting paid for so these imbalances air going on all the time and it's administratively as well as physically. So, administrative examples would be emails. Everybody's trying to do the best they can and meet their numbers and be efficient. But the question you gotta ask yourself, is it possible to be efficient, efficient, efficient, efficient, efficient, efficient, efficient, and totally inefficient? And we've already proven that, okay, we've already proven that, really.