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Peter Abilla
no nic
shmula

» Law of Instinct

I love data, but not much credit is given to hunch; gut, instinct. Colin Powell, in his Laws of Leadership, shares what he calls his Law of Instinct. He claims the following:

Part I:

Use the formula P@40-to-70, in which P stands for the probability of success and the numbers indicate the percentage of information obtained.

Part II:

Once the information is in the 40 to 70 range, go with your gut. Don’t take action if you have only enough information to give you less than a 40 percent chance of being right, but don’t wait until you have enough facts to be 100 percent sure, because by then it is almost always too late.

Today, excessive delays in the name of information-gathering breeds “analysis paralysis.” Procrastination in the name of reducing risk actually increases risk.

Visually, what Colin Powell is describing is the Law of Diminishing Returns where, over time, the value of information diminishes. Perhaps that relationship might look like this:

(click image for a larger picture)

The circle represents an inflection point at which for each marginal unit of information gathered, the value starts to go down or the cost-effort-benefit tradeoff for the next marginal unit of information is less than the cost to obtain it.

Instinct in Product Development

In product development — any type of product, software, material, or otherwise — there is often a discovery process at the outset. The trap that most companies fall into is excessive market research, thinking that the more we know, the less risk we’ll face. As General Colin Powell points out, that type of thinking is flawed. The truth is that the more delays there are, the risk just increases: knowing more doesn’t translate to less risk or higher probability of success.

Big-Design-Up-Front Design is the poster child for Analysis Paralysis in product development. In product development, that typically takes the form of “Requirements Gathering Ad-Infinitum” — which is a term I use to indicate incessant requirements gathering with the aim of exhaustively gathering customer requirements, but the activity itself takes a form of its own and — often — it leads to documenting a lot of stuff, but nothing tangible has been produced that brings value to the customer.

Little’s Law is your Friend

A queueing system is a model with the following structure: customers arrive and join a queue to wait for service given by n servers. After receiving service, the customer exits the system. A fundamental result of queueing theory is little’s law.

Theorem: for a queueing system in steady state, the average length of the queue is equivalent to the average arrival rate multiplied by the average waiting time. in other words,

L = λW

Little’s Law is a fundamental principle in business, mathematics, and has applications to many real-world problems. One of those real-world problems is in product development.

First, a definition:

WIP/TIP: Work-in-process of Things-in-process. For the purposes of this article, they are synonymous. Being “in-process” means the work or things have entered a state-of-affairs but have not yet exited. The “work” can be anything: materials, components, sales orders, software code, software testing, projects, customer inquiries, checks, phone calls to return reports suppliers to qualify, repair orders, or emails waiting to be answered, etc.

For product development, we can use a transformation of Little’s Law, like the following:

[(Throughput) = (Things-in-Process) / (Average Completion Rate)]

What this equation tells us and what experience has shown time-after-time, is that the number one driver of Product Development Cycle Time are the “things-in-process”. There is no quicker way to reduce the cycle time by which your company can get a product from concept-to-delivery than through first prioritizing all the projects or products and focusing on the ones that make strategic and tactical sense, and killing the lower priority projects.

You might be thinking: “True, but couldn’t we also increase the average completion rate”? You’re right, but the impact of doing that is much lower than reducing the TIP — that is, influencing the average completion rate is rather difficult and is often a function of available resources, scope creep, market demands and changes, etc. Here’s the bottom line: the number one driver for shipping products quicker is by focusing on the important ones and killing the unimportant ones.

How Batchy Are You?

From a Lean Thinking perspective, Powell is really advocating for a less batchy approach and one that obeys the one-piece flow principle. Gathering a lot market research and a lot of data is really a batchy approach, whereas the one-piece flow approach from Lean is one for which Colin Powell is arguing.

Specifically, Powell — whether he knew it or not — is really arguing for “What is the right batch size?” In the case of information, Powell is arguing for ~40% to 70% relative to success as the batch size. Since one-piece flow is not possible in some cases, then asking the right batch size is the better approach. An approach that looked at the right batch size and also followed an iterative model — that would be an approach that is more customer-facing and will have a higher likelihood of success (or lower likelihood of failure).

Little’s Law, The Law of Diminishing Marginal Returns & Powell’s Law of Instinct

There are several principles at play: Little’s Law is true — as Work-in-Process grows and the Cycle Time to complete each unit increases, Throughput decreases. The end result is that products aren’t shipped on-time or at all and the customer loses.

The Law of Diminishing Marginal Returns teaches us that there is a point at which obtaininig the next marginal unit — of any type of unit — might not be worth the cost to obtain it.

Colin Powell’s Law of Instinct teaches us how to reconcile the Little’s Law and the Law of Diminishing Marginal Returns. He advocates that we rely on hunch, gut, and instinct. Once we have enough information to be within the probability of success of 40% to 70%, then go with your gut.

Strategic Fit of Customer Service in the Supply Chain

In a supply chain network, the Strategic Fit of Customer Service is often the voice-of-the-customer post-release of the service or product. The phrase “start with the customer and work backwards” is really a misnomer. Why? Well, in most products or services, it really starts with the customer and ends with the customer — that is, the customer’s voice is heard at the level of product design and then the voice-of-the-customer is heard at the market monitoring level, post-release of the product or service.

We know — through pretty accurate anecdotal evidence — that the supply chain of the iPhone looks like the following:

From a high-level, we speculate that the following are the material suppliers of the Apple iPhone:

Samsung: The Singapore facility manufactures CPU and Video processing chips.
Infineon: The Singapore facility manufactures Baseband Communications hardware.
Primax Electronics: The Taiwan facility manufactures Digital Camera Modules.
Foxconn International: The Taiwan facility manufactures internal circuitry.
Entery Industrial: The Taiwan facility manufactures connectors.
Cambridge Silicon: The Taiwan facility manufactures bluetooth chipsets.
Umicron Technology: The Taiwan facility manufactures printed circuit boards.
Catcher Technology: The Taiwan facility manufactures stainless metal casings.
Broadcomm: The U.S. based facility builds touch screen controllers.
Marvell: The U.S. based facility builds 802.11 specific parts.
The Apple Shenzhen, China facility assembles the hardware, holds inventory, and handles the pick, pack, and ship steps of the fulfillment process.

If I am correct in any of my research and assertions above, it’s easy to see that if there is any disruption in material flow of any supplier into the Apple Shenzhen, China facility, then production either slows or halts altogether.

We also know that the Austin, Texas Apple Operation is largely where Apple Care physically sits, with another office just outside of Sacramento, California. So, for any contacts into their Call Center, then that is most likely where the contacts will enter (they also have, we understand, outsourcing partners, but Texas Apple Care is the headquarters).

So, more completely, then, the high-level iphone supply chain may represented like this:

Market Monitoring, Defect Data

When a product is released into the market, there can be many channels of market monitoring of the health of the product. In the medical device or pharmaceutical industry, where I once worked, the Market Monitoring phase of the product lifecycle represents a large portion of the product, especially in how it meets regulatory concerns, etc. Marketing and Public Relations also have an especial interest in market monitoring since the voice-of-the-customer post-release can and, usually does, help the firm improve their product or service.

Let us assume the following:

Apple Care (Apple iPhone Customer Service) has a program for collecting product health, post-release, of the product. These can be from inbound contacts to the Apple Customer Service or through blogs or through message boards.
In this program, Apple has a simple and elegant way of making that information actionable, involving collecting data, stratifying of the data, root cause analysis, then practical countermeasures to improve the iPhone through upcoming releases of the product.

iPhone Defect Data

Extending this hypothetical iPhone case, let’s say that Apple Customer Service collects inbound iPhone Defect Data using a very simple check sheet, like the following:

The first column shows very broad defects as reported by the iPhone customers. On the right column are the simple counts. This is called a check sheet. Other variants of this simple quality tool are to collect by day, time, shift, product color, version, etc.

The next step to make this data actionable is to visually render it in a way that points to an healthy area of opprotunity. Below might be a picture that can help us — an iPhone Pareto of Defects:

The above picture is a Pareto Chart, showing the check sheet data, in visual format. As a consumer of this data, the Apple Customer Service folks might want to pay closer attention to the first and second bars of the Pareto, because those two bars represent “iPhone Touch Screen” defects.

The Pareto above naturally leads the consumer of this data to ask “Why?” — “What’s going on with the Apple iPhone Touch Screen?”

The next step, then, in the lifecycle of product monitoring and improvement is to conduct a Root Cause Analysis, focused on areas where the opportunity trade-off is good. In other words, to truly get-to-the-heart of Touch Screen defects, Apple must meet with the suppliers of the iPhone Touch Screen technologies. Based on the Supply Chain network drawn above, Apple should meet with BroadComm, the supplier of the iPhone Touch Screen technologies.

In that meeting, both Apple and the supplier can look over the data, go to the Gemba, and conduct root cause analysis on what’s going on with the Touch Screen.

iPhone Defects Root Cause Analysis

There are several tools that can aid in the process of Root Cause Analysis. Basically, it is a simple approach of asking “why” several times until you arrive at an atomic but actionable item. To visually view the process of the “5-why’s”, a tool called an (Ishikawa Diagram) or a (Cause-and-Effect Diagram) or a (Fishbone Diagram) is often helpful — this tool is referred by either of these names.

ishikawa diagram

Main Components of an Ishikawa Diagram

At the head of the Fishbone is the defect or effect, stated in the form of a question.
The major bones are the capstones, or main groupings of causes.
The minor bones are detailed items under each capstone.
There are common capstones, but they may or may not apply to your specific problem. The common ones are:

People

Equipment

Material

Information

Methods/Procedures

Measurement

Environment

After completing your Fishbone Diagram excercise as a group, it is helpful to test your logic by working the bones: top-down OR bottom-up like:

this happens because of g; g happens because of f; f happens because of e; e happens because of d; d happens because of c; c happens because of b; b happens because of a.

The excercise above is crucially important — you must test your logic so that it makes pragmatic sense and that the atomic root cause is actionable — that is, you can do something to correct it, reduce it, or eliminate the root cause.

Once you or your team arrive at a root cause for a specific capstone, then you typically “cloud” it to identify it as a root cause. A good rule is that there is typically *NOT* 1 root cause for a problem, but potentially several. Below is a diagram of one fishbone, decomposed:

ishikawa, fishbone, shmula.com

Once the Apple folks and the Apple iPhone Touch Screen supplier arrive at the root causes of the iPhone Touch Screen defects, then the supplier needs to put-in-place countermeasures so that the next shipment of the Touch Screen — perhaps in the next version of the iPhone — won’t have this defect anymore.

In fact, there can be much Public Relations and Marketing campaigns from this effort: Apple can show the public that it has listened the concerns of the market; Apple has done this by fixing the defects that most pains that market, in relation to the iPhone product. There can be much branding from an effort like this.

Conclusion

Customer Service plays a key role in the value chain of a product or service. Some firms view and, consequently behave, as if Customer Service were simply a cost center. These firms miss the point altogether: Customer Service is a major vehicle for hearing and learning about what the market is perceiving and feeling and experiencing from our products or services. This data and information can be made actionable through the strategic and smart utilization of Customer Service.

Disclosure

The data above is only hypothetical. The process above works and, if done strategically and with an eye toward the customer, then Customer Service can be a major player in how our products and services can be improved and how we can shape the signals we send to the market and, consequently, how the market can begin to perceive the firm.

I love Apple, but I don’t own an iPhone. I would love an iPhone and would gladly accept a free iPhone from Apple and/or other free Apple products. Apple can join the other companies that have sent me free stuff here.

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Articles on Ethnography and Design:

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by psabilla at 6:08 PM under customer service , iphone , lean , operations , six sigma (Comments)

Peter Abilla
no nic
shmula

» Value and People: More with More, Less with Less, More with Less, Less with More

icahn In a very tough economic environment, it is inevitable that everyday people like you and me will be impacted. Gyrations in demand — which is often a product of our own creation (i.e., the bullwhip effect) and not a natural result of supply and demand — will lead companies to make the tough decision to do one of the following:

Add more value with more people
Add less value with less people
Add more value with less people
Add less value with more people

Lean thinkers will often follow (1) or (3), whereas most companies are often guilty of (2) and (4). It is clear that most companies hack at the branches instead of striking at the root, when it comes to corporate waste.

Carl Icahn — a person I admire — recently wrote about the state of American businesses and how most companies are full of waste. He said:

I have observed first-hand the sheer amount of waste and inefficiency at a few companies that I have taken over.

For instance, when I took over a rail freight car company called ACF during the 1980s, they had 12 floors in a Manhattan office building which was filled with workers. I couldn’t figure out what they did. I really tried to find out what these people did and even went so far as to pay $500,000 to a consultant to study the issue and get back to me. After weeks of research, even the consultant couldn’t figure it out. So I shut down the division and it had no discernable impact on the performance of the company, which I own to this day.

This experience, in my view, is emblematic of the extent of waste in corporate America. There are few companies that you can’t come in and cut 30 percent of operating costs and no one would know the difference.

Icahn highlights several types of wastes here:

First, companies that are excessive and over-hire is wasteful.
Second, the people that were hired and do work that is unimportant to the firm — that highlights a type of waste that is harmful to the human spirit — these are humans that can add value, but not in their current situation. As a result, they collect a paycheck, but do no valuable work.
Third, Carl — $500,000 USD to a consultant who couldn’t give you any insight is waste. Without tooting my own horn too loudly, I could have helped you much better and I would’ve charged you less. Call me next time.
Fourth, the short-term solution was to terminate many people, the processes and activities that they engaged in, and also the complexity that they added. I have no argument here. But, Carl Icahn did not attempt to arrive at the root causes (ask why five times) for why those people were there in the first place. The long-term countermeasure is to put-in-place preventative measures and avoid this situation again in the future.
Fifth, waste limits growth. It must reduced or eliminated. This can only be done via rigorous root cause analysis and surgical countermeasures that eliminate or reduce the root causes for the waste. Otherwise, any quasi-solutions will be analogous to the roman city built on top of a jewish city and a greek city built on top of that, ad infinitum.

Hidden Factories is a term I’ve used in the past to highlight processes, activites, and other associated business waste that become the norm, but are truly waste when seen from the perspective of an outsider or — even more appropriate — from the perspective of the customer.

What is Value?

To explain “value”, it is often easier to explain the opposite — waste or muda.

There are 3 types of activities, 2 of which produce waste:

Steps that definitely create value.
Steps that create no value, but are necessary given the current state of the system.
Steps that create no value and can be eliminated.

(2) & (3) naturally create wastes, of which there are 7 types:

Over-Production: Producing more than is needed, faster than needed or before needed.
Wait-time: Idle time that occurs when co-dependent events are not synchronized.
Transportation: Any material movement that does not directly support immediate production.
Processing: Redundant effort (production or communication) which adds no value to a product or service.
Inventory: Any supply in excess of process or demand requirements.
Motion: Any movement of people which does not contribute added value to the product or service.
Defect: Repair or rework of a product or service to fulfill customer requirements.

It’s important to understand “Value” in terms of the customer. From the customer’s perspective, “Value” could be defined in the form of a question:

Which process steps (and associated costs) do our customers not have to bear?

The answer to that question will define the non-value added steps that ought to be eliminated or reduced in order to bring more value to the customer.

The Big Mura

A type of waste that is quite harmful to the human spirit is the waste of human potential, often called Mura. Carl Icahn describes Mura in the citation above — an entire floor of workers that really were not needed, or, could be needed if deployed in the right way. In either case, the firm probably should not have hired those workers in the first place if, in the short-term, they would not be needed after all.

Listen to Icahn and Choose

Back to what I said in the beginning — some firms will choose one of the following:

Add more value with more people
Add less value with less people
Add more value with less people
Add less value with more people

Lean thinkers will often follow (3), whereas most companies are often guilty of (4) and (2). We often are the creators of the complexity and waste that repulses us and that we complain about. What would the customer have us do? I guarantee customers — in the most generic sense of the word — will probably answer (1) or (3). Yet, companies often commit (2) and (4).

Let the customer appropriately drive our behavior — it’s the only sure way to add value.

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Articles on Ethnography and Design:

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by psabilla at 10:25 PM under carl icahn , lean , lean manufacturing , six sigma (Comments)

Peter Abilla
no nic
shmula

» Operational Excellence is not a Substitute for Effective Leadership or a Good Strategy

It’s old news that Fannie Mae (FNM) is in big financial trouble. Through some bad decisions and an overall poor strategy, they are now on the brink of collapse. What is news, however, is that they are starting an Operational Excellence program and are aggressively recruiting for a Director of Lean Six Sigma — a recruiter called me today, wanting to talk with me about the job.

Apparently, after stumbling upon shmula.com via a google search on Lean or Six Sigma keywords, the recruiter felt impressed to contact me and thought I’d be a good fit for the position. What happened next really solidified my view: Operational Excellence IS NOT a Strategy; it can enable a strategy, but Operational Excellence — in itself — is not a strategy. That is, for firms that wish to remain competitive in the marketplace, Operational Excellence is necessary, but not sufficient.

She and I talked about the job and the state of Fannie Mae. She told me that there’s job security. She, then, went on to share that Operational Excellence is going to be a key strategy going forward for Fannie Mae. I told her thanks, but that I’m not interested right now but to keep me in mind for other opportunities.

The Art of Exclusion

Michael Porter (Porter’s Five Forces) argues — I believe correctly –, in his seminal work, What is Strategy, that Operational Excellence is necessary but not sufficient. What is needed — even still and always — is a winning strategy. In his article, he argues that the essence of strategy consist of two related propositions:

strategy is engaging in activities that are different than the competition
strategy is engaging in activities that are similar than the competition, but perform better than the competition

Regarding (1), Porter argues that, regarding (1), the firm must choose a position — one that sets the firm apart from its competitors; a position that makes the firm and its products or services uniquely and competitively different and leads to a sustainable and profitable competitive advantage. Porter then claims that an important aspect of strategy is deciding what NOT to do — the art of exclusion.

Regarding (2), a firm will undoubtedly engage in activities that are similar than the competition. For example, take a traditional internet retailer — a firm in that space will usually have a front-end store and a fulfillment back-end. To set the firm apart on similar activities from its competitors requires that the firm perform those activities better — with better quality, lower costs, with better service, and deliver quicker than the competition.

Deploying a Lean or Six Sigma culture within your firm is essentially an activity borne from (2) — but it is not a panacea; by itself, a culture of Operational Excellence will find itself lacking in a hyper-competitive world.

Necessary but Insufficient

While Fannie Mae might wish to adopt Operational Excellence, it has, over the recent years, essentially failed to engage in activities that are uniquely and competitively different than the competition.

Speaking as an outsider, it appears that Fannie Mae has continued to run an efficient business, producing products and services that had adequate demand, but the Fannie Mae leadership executed a poor strategy, rife with bad decisions leading the firm to its current state of near-collapse: No amount of Operational Excellence would have prevented failure stemming from poor decisions and a bad strategy.

The Need for Leadership

The theme, I see, with most corporate problems, overwhelmingly points to Leadership. The OPPOSITE of long-term thinking, inspiring, visionary, humane, collaborative, reflective, selfless, nurturing, interested, responsible, and mobilizing is what seems to be what most companies elevate to the Chief Executive position.

Emulating Gary Convis

Gary Convis was recently brought in to be the CEO of Dana Corporation (DAN), an $8.7 Billion manufacturer of auto parts. Convis is a 40 year veteran of the auto industry and a former executive at Toyota. Dana Corporation is a struggling giant, currently in bankruptcy. When asked what words of wisdom he has to impart to his new team members at Dana Corporation, he said this:

“manage as if you have no power”

For me, that statement elegantly summarizes the the essence of Leadership — the type of Leadership that is capable of satisfying both (1) and (2) above.

The job description if below, right above the comment section, in case anyone is interested.

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The Fannie Mae Job Description

Fannie Mae is a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. In 2008, we mark our 70th year of service to America’s housing market. Our job is to help those who house America. For more information about Fannie Mae and our career opportunities, please visit www.fanniemae.com.

The Director of Lean Six Sigma is also the Master Black Belt and is responsible leading a team to deploying and driving Lean Six Sigma across assigned divisions/functions. This position has significant leadership impact on the success of the Lean Six Sigma program and reports directly to the VP of Operational Excellence. As a senior member of the Lean Six Sigma Team, this position will drive results oriented performance improvement initiatives using the proven methodologies of Lean and Six Sigma while ensuring accountability, focus, strategic alignment and cross functional relationships with the other Fannie Mae entities through the use of metrics based goals and objectives. This position will also develop and deliver the materials and method for effectively training Champions, Sponsors, Black Belt and Green Belts on the Lean Six Sigma methodologies.

Lead the development and implementation of Lean Six Sigma for Fannie Mae and establish a sustainable model for continuous process improvement

Manage a team to drive the model of continuous process improvement through Lean Six Sigma and creating development opportunities by setting direction and driving quality results

Align Lean Six Sigma initiative and project objectives to business strategy, and prioritize projects accordingly

Train, coach and develop Black Belt and Green Belt resources assigned to projects related to Lean Six Sigma tools and methodology and offer technical expertise and guidance in project reviews

Provide technical leadership and coordination to major improvement projects within the business

Provide problem resolution point of contact for Black Belts and Green Belts to offer technical or professional expertise

Lead multiple process improvement teams towards quantifiable result in defect reduction, cost avoidance, loss reduction or revenue enhancement

Deliver significant operational improvement and financial benefit across assigned divisions/functions

Act as change agent to instill Lean Six Sigma culture throughout the organization

Serve as internal expert on process improvement tools and techniques focusing on Lean Six Sigma and coach process owners, black belts, and deployment leaders

Expand the education and develop training curriculum for Fannie Mae leaders, managers and process improvement teams regarding Lean Six Sigma

Facilitate quality and change management processes; identify customer needs and key drivers to reach customer satisfaction goals with financial benefit

Lead the identification, prioritization and selection of process improvement opportunities

Develop a more formalized approach to organizing and pursuing projects, including development of project management skills and techniques

Monitor service delivery to ensure customer satisfaction and project delivery to ensure benefits are realized

Advise and support Senior Management regarding culture change needed to successfully accomplish and maintain improvements

KEY QUALIFICATIONS

Technical competency in Lean Six Sigma skills: Lean, DMAIC, DFSS, Kaizen/Work-out, process management, change management and advanced statistical techniques

Subject matter expert in process improvement with a focus on Lean Six Sigma tools and techniques

Significant experience in application of Lean Six Sigma in the mortgage or finance services industry

Strong leadership abilities and experience including situations involving organizational culture change

Ability and demonstrated experience in providing education and training related to process improvement including Lean Six Sigma

Strong written and verbal communication skills with emphasis on oral presentation skills and class room training techniques

Project management expertise and experience

Facilitation of groups, especially as it relates to identifying opportunities for improvement

Significant experience in use of metrics and benchmarks to drive process improvement

Strong analytical skills including the ability to assess complex situations and data, and reduce important and actionable tactics

Experience in complex organizations and matrix reporting relationship

Ability to interact with multiple layers of the organization with demonstrated success initiating change and ability to influence at all levels

Minimum of 8 years professional level experience

KNOWLEDGE/SKILLS REQUIREMENTS

Bachelor’s Degree (MBA preferred)

Formal Lean or Lean Six Sigma training and Master Black Belt certification

5+ years of Lean and/or Six Sigma performance improvement and change management experience, with a minimum of 2 years of experience as a Master Black Belt

Completion of 3 transactional-related projects with demonstrated success and financial results (preferably in the mortgage or finance services industry)

Extensive Lean and/or Six Sigma Performance Improvement experience 5+ years consulting or management experience in the mortgage or finance services industry preferred.

Extensive training, coaching and mentoring experience (strongly preferred)

Proficiency in Windows, Minitab, Excel, Word, PowerPoint and both simulation and project management software

COMPENSATION

Fannie Mae’s compensation and benefits package is very competitive. It is designed to help employees meet varying needs throughout their careers and to reward employee’s skills, experience, and potential. Fannie Mae is an equal employment opportunity employer and considers qualified applicants for employment without regard to race, gender, age, color, religion, national origin, marital status, disability, sexual orientation, or any other protected factor. As a condition of employment with Fannie Mae, any successful job applicant will be required to pass a pre-employment drug screen and to successfully complete a background investigation, which may also include a credit check if the position is sensitive in nature.

by psabilla at 5:38 AM under business , lean , six sigma , strategy (Comments)

Peter Abilla
no nic
shmula

» Not Accountable, Not Responsible

Team size can make a big difference in the success of your service or product. What is counterintuitive for most people is that the larger the team size, the lower the likelihood of success for your service or product. Why? Entropy can set in and large teams are inherently bad vehicles for communication. More insipid, however, is that the larger the team, there is a higher likelihood of accountability and responsibility being diffused across the team.

When accountability and responsibility is massively diffused, then the mantra holds: if everyone is charge, then nobody is in charge. In this article, I quantitatively show the inverse relationship between team size and productivity & how team size does impact the effectiveness of communication and accountability & the eventual success of the service or product.

I’ve written about efficient teams before here and here. When I was at Amazon, teams were organized into small, delta teams called “2-pizza teams”: no team should be larger than 2 pizzas can feed. It’s a great approach to team size. In my short career, I’ve learned how true that rule is. Here’s another thing I’ve learned –

2 people are smarter than one
3, 4, 5, 6, 7, 8 people are smarter than 2
a team larger than 9 people is just a big dumb gelatinous blob (acronym: BDGB)

Okay, that’s not true at a wholesale level, but it sure feels like it. A small team with highly smart and capable team members can do much more than 10 mediocre team members. The Wisdom of Crowds mentality doesn’t work that well when it comes to efficiency in teams.

A more quantitative explanation is as follows:

One of the root causes of failure in projects is communication — either a lack thereof, miscommunication, or hand-off’s. Large teams are inherently vehicles for bad communication. This is basic combinatorics — for a given project, suppose there are persons A and B. In this scenario there is only 1 communication link. Add person C, now we have 3 communication links, A-B, B-C, C-A. Add person D, then we have 6; Add person E, then we have 10 communication links. Inductively, as team size grows, the raw combinatoric communication link counts grows geometrically, not linearly. To demonstrate this, we use basic statistics of the form n-choose-r, where !, such as n!, is equivalent to n factorial, to arrive at the formula for how many pairs we can choose from n items:

shmula.com, combinatorics

For the number of pairs, we can reduce the above formula to the following:

shmula.com, combinatorics

Visually, as team size grows, the communication links grows non-linearly, but exponentially:

shmula.com, combinatorics

A Rejoinder

Do not let the above dissuade you from large teams; if the product requires a large team, then that is what is needed. Caution, is what I am arguing here. The facts are that the larger the team, the more communication channels there are and the entire process then becomes more error-prone. If the product requires a large team, then expect the above challenge and manage it.

A Conclusion

There is wisdom in Bezos’ notion of the 2-Pizza Team. Small teams — provided you have the right people — work incredibly well. Also, there is wisdom in Toyota’s usage of Obeya or “The Big Room” as a way to mitigate defects caused by large teams. A combining of the two will most likely make for a great team and a successful product.

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by psabilla at 4:56 PM under 2-pizza teams , agile , amazon , complexity , design thinking , drum-buffer-rope , dynamic systems , gemba , heijunka , ishikawa , it at toyota , just-in-time , kanban , lean , lean consumption maps , muda , obeya , operations , regression analysis , root cause analysis , simplicity principle , six sigma , software , supply chain , takt time , team size , theory of constraints , the visual factory , toyota , variation , visual management , waste (Comments)

Peter Abilla
no nic
shmula

» Maintain Forward Tension

One principle in Wing Chun is the maintaining of forward tension. To explain, I’ll draw the distinction between Tension and Energy and show how this principle in Wing Chun can be applied to Change Management.

Tension is a type of Energy

A Wing Chun maxim goes as follows:

soft and relaxed strength will put your opponent in jeopardy

That maxim means that forward tension is not necessarily using force, or forcing through a barrier or “pushing through”. But, there is soft force, or tension, such that when a gap presents itself, then the hand or arm shoots forward like a spring. The “shooting forward” is not done with force, but is an unleashing of potential energy.

Using that definition, then, Forward Tension is much different than the overly-used business term “Breakthrough.” In the context of Forward Tension, the notion of “breakthrough” is ridiculous, because it connotes a forcing of oneself or of one’s ideas. Forcing anything only invites resistance and rebellion, not conversion.

So, in sum, tension is really potential energy and when a gap presents itself, that potential energy becomes kinetic energy. Forward Tension works with the current context in such a way that does not invite rebellion or resistance or eventual back-biting. It is open, but straightforward.

Application to Change Management

Don’t force things on people. The most humane approach to change management is to treat those involved in the change as human beings; this means having a dialogue — listen, speak, listen some more, argue a little, and steadily deposit goodwill.

As much as I like love data, I also fully understand that data does not soften hearts or change people’s minds: true change happens when people feel heard, have given their opinion, are willing to try something new, and are part of the change. The challenge in change management is largely an emotional one; a psychological one; a relational one.

Hold The Tension

Without forcing or pushing of people, maintaining the tension encourages discussion, debate, and invites people to inquire and become curious about the topic of change. That is the key: behave in such a way that it invites people to learn, argue, debate, and eventually try it out.

Tension in Wing Chun

The video below shows Sifu Grados in Chi Sao (Sticky Hands). This sensitivity exercise demonstrates the principle of holding the tension and visually explains the principle of transformation of potential energy to kinetic energy very well.

NOTE: none of the movements are rehearsed. What is taught and practiced are the principles and how those principles are applied during Chi Sao depends on the situation.

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by psabilla at 7:36 AM under 5s , a3 report , bullwhip effect , business , change management , click-to-ship , complexity , customer obsession , customer service , design thinking , drum-buffer-rope , dynamic systems , efficiency , ethnography , featuritis , gemba , genchi genbutsu , general , heijunka , ishikawa , it at toyota , kanban , leadership , lean , lean consumption maps , metrics , muda , obeya , operations , pareto principle , poka-yoke , process measures , productivity , quality , root cause analysis , six sigma , statistical process control , strategy , supply chain , takt time , the beer distribution game , theory of constraints , the profit tree , the visual factory , toyota , variation , visual management , waste , wing chun , zero defects (Comments)

Peter Abilla
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shmula

» Fast Food Congestion

Every system has constraints — sometimes several — minor bottlenecks and major bottlenecks. What makes managing constraints even more challenging is that bottlenecks move: up-and-down the process paths.

I saw this phenomenon recently during a visit to a fast food restaurant, which I discuss in this post — but, my application of the Theory of Constraints, Lean Manufacturing, and Six Sigma as applied to a Restaurant can be applied to any Dynamic System.

One of the key lessons in The Theory of Constraints is that the contraint or the bottleneck determines the throughput for the entire system. This means, then, that if we optimize and improve a non-bottleneck, then those efforts have almost zero impact on the overall throughput of the system. It is only when we improve and optimize the contraint that we will see improvement in the throughput of the entire system.

Every system has a constraint — that is neither good nor bad — but just a fact of dynamic systems. Once you’ve identified the constraints in your system, then the next step is to manage it.

I was able to obtain some empirical volume data for a Burger King. The data below is taken from one Burger King restaurant. I imagine the numbers would be significantly different if we were to average the volume by geography, restaurant size, or by other factors. Now, consider the following process map for a typical Burger King:

Click on the image for a larger view.

For this restaurant, over the course of an average month, Burger King produces 34227 sandwiches. This means, then, that for an average hour, Burger King produces 198 sandwiches per hour during normal hours.

But, on Friday and at 12:00PM, Burger King experiences higher-than-normal volume and so we add a “Peak Multiplier” of 18% and 17.9% to arrive at 256 sandwiches during Peak Hours. The “Peak Multiplier” is not completely arbitrary, but a quasi-educated guess at the volume increase during those hours. In both cases of Fridays and Lunch Hours, we add a ~20% multiplier.

Now, let’s take a look at the process map above. We see the Assembly Step producing 200 sandwiches an hour. We consider the Assembly to be the constraint in the system. The upstream processes produces more than 200, but when we arrive at the Assembly, the capacity of that step is lower than its upstream processes. So, the maximum throughput of the entire system above is 200 sandwiches per hour.

Under normal hours, the constraint functions reasonably well. Since normal hour demand is 198 sandwiches per normal hour, the Assembly Step can produce at least at that amount — but, it’s cutting it close. Under peak volume, the constraint is not able to fulfill demand.

How To Manage a Constraint

Under normal hours, it appears that the Assembly Step can produce at expected demand. But, there are several things that could put burden on the constraint and cause it to producing less than capacity. Here are some of those items:

Rework: Having to Re-Assemble sandwiches adds undue burden on the system and exaggerates the effects of the constraint, leading to a potentially higher-than normal work-in-process, or build-up.
Set-up & Changeover: If all the parts aren’t immediately available in the Assembly step, then it could lead the operator to slow down which could lead to build-up and higher-than-normal work-in-process.

It’s easy enough to see that the Assembly Step needs some help. Here are several things Burger King — or any system with constraints — can do to better manage the natural constraints that are in every system:

Eliminate Defects at the Constraint: This means that all waste is eliminated or reduced at the constraint.
Have the Quality Steps in Front of Constraint: In support of the first bullet, make sure that the parts entering the Assembly step are free of defects.
Support the Constraint: Add labor to the constraint or more lines, if that is prudent.
Appropriately use Buffers: Systems with Constraints exhibit a feast/famine phenomena. To avoid having too much coming into the constraint or too little coming into the constraint, have a buffer of parts large enough that the constraint stays appropriately busy. Put another way, reduce the variation in front of the constraint as much as is possible. A Drum-Buffer-Rope system might be appropriate for some systems.
Evaluate the overall system: How much of the steps in the system are really value-add to the customer? What is the process-cycle effeciency of the process?

Conclusion

All systems have constraints. Identify what they are, quantify the effects, then manage it. The above Burger King example shows how this can — with some effort — be done. What are the constraints in your systems? What can you do to better manage those constraints?

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