Utah Open Source Planet

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:

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

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

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.

Articles on Ethnography and Design:

1. Feature? What Feature?
   
2. Simplify The Product
3. Ask Aza Raskin
4. Aza Raskin on Poka-Yoke & The Humane Interface
5. Aza Raskin on Quasimodal Design and The ATM
6. Aza on Feature-Bloat and Site Clutter
7. Aza on Google Search Results Page
8. Aza on Cooperation and Team Size
9. Design Thinking in Medicine
10. On Designing a Watering Can for Little Hands
11. Queueing Theory and Visual Management
12. An Interview with the Inventor of “Clocky”
13. Bad Breath but Good Design
14. What is Ethnography

Articles on Leadership:

1. Overmanaged and Underled
2. Colin Powell on Leadership
3. Team or Staff?
4. Tipping-Point Leadership
5. Abraham Lincoln on Leadership
6. How to transform an Organization: Chime-in Before Buy-in

Articles on Queueing Theory:

• Queueing Theory: Part 1
• Queueing Theory: Part 2
• Queueing Theory: Part 3
• Queueing Theory: Part 4
• What is Waste?
• On Time-Traps and Waste
• Call Centers as Queueing Systems
• Travel Time & Waste
• Little’s Law for Product Development
• YouTube’s Queueing Properties
• Psychology of Queueing and Disneyland
• Queueing, Disneyland, and FastPass
• Multi-Tasking Leads to Lower Productivity
• Queueing Theory and Terrorism
• On Queueing Theory and Elevator Mirrors
• Psychology of Queueing, Haunted Houses, and Halloween
• The Variability Tree
• Attitude and the Psychology of Waiting - The Psychology of Queueing

Articles on Operations, lean and six sigma:

• Managing Constraints Under Peak Volumes
• Order Pipeline of Events
• On Game Theory
• Applied Regression Analysis
• 5S
• Click-to-Ship Processes
• Kanban Sizing and “Pull”
• Lean at Krispy Kreme
• Theory of Constraints and Camping
• Lean for Software Development
• Don’t Waste the Customer’s Time
• Featuritis and the Focus on the Customer

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.

1. Feature? What Feature?
   
2. Simplify The Product
3. Ask Aza Raskin
4. Aza Raskin on Poka-Yoke & The Humane Interface
5. Aza Raskin on Quasimodal Design and The ATM
6. Aza on Feature-Bloat and Site Clutter
7. Aza on Google Search Results Page
8. Aza on Cooperation and Team Size
9. Design Thinking in Medicine
10. On Designing a Watering Can for Little Hands
11. Queueing Theory and Visual Management
12. An Interview with the Inventor of “Clocky”
13. Bad Breath but Good Design
14. What is Ethnography

Articles on Leadership:

1. Overmanaged and Underled
2. Colin Powell on Leadership
3. Team or Staff?
4. Tipping-Point Leadership
5. Abraham Lincoln on Leadership
6. How to transform an Organization: Chime-in Before Buy-in

Articles on Queueing Theory:

• Queueing Theory: Part 1
• Queueing Theory: Part 2
• Queueing Theory: Part 3
• Queueing Theory: Part 4
• What is Waste?
• On Time-Traps and Waste
• Call Centers as Queueing Systems
• Travel Time & Waste
• Little’s Law for Product Development
• YouTube’s Queueing Properties
• Psychology of Queueing and Disneyland
• Queueing, Disneyland, and FastPass
• Multi-Tasking Leads to Lower Productivity
• Queueing Theory and Terrorism
• On Queueing Theory and Elevator Mirrors
• Psychology of Queueing, Haunted Houses, and Halloween
• The Variability Tree
• Attitude and the Psychology of Waiting - The Psychology of Queueing

Articles on Operations, lean and six sigma:

• Managing Constraints Under Peak Volumes
• Order Pipeline of Events
• On Game Theory
• Applied Regression Analysis
• 5S
• Click-to-Ship Processes
• Kanban Sizing and “Pull”
• Lean at Krispy Kreme
• Theory of Constraints and Camping
• Lean for Software Development
• Don’t Waste the Customer’s Time
• Featuritis and the Focus on the Customer

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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Articles on Ethnography and Design:

1. Feature? What Feature?
   
2. Simplify The Product
3. Ask Aza Raskin
4. Aza Raskin on Poka-Yoke & The Humane Interface
5. Aza Raskin on Quasimodal Design and The ATM
6. Aza on Feature-Bloat and Site Clutter
7. Aza on Google Search Results Page
8. Aza on Cooperation and Team Size
9. Design Thinking in Medicine
10. On Designing a Watering Can for Little Hands
11. Queueing Theory and Visual Management
12. An Interview with the Inventor of “Clocky”
13. Bad Breath but Good Design
14. What is Ethnography

Articles on Leadership:

1. Overmanaged and Underled
2. Colin Powell on Leadership
3. Team or Staff?
4. Tipping-Point Leadership
5. Abraham Lincoln on Leadership
6. How to transform an Organization: Chime-in Before Buy-in

Please articles on Queueing Theory below:

• Queueing Theory: Part 1
• Queueing Theory: Part 2
• Queueing Theory: Part 3
• Queueing Theory: Part 4
• What is Waste?
• On Time-Traps and Waste
• Call Centers as Queueing Systems
• Travel Time & Waste
• Little’s Law for Product Development
• YouTube’s Queueing Properties
• Psychology of Queueing and Disneyland
• Queueing, Disneyland, and FastPass
• Multi-Tasking Leads to Lower Productivity
• Queueing Theory and Terrorism
• On Queueing Theory and Elevator Mirrors
• Psychology of Queueing, Haunted Houses, and Halloween
• The Variability Tree
• Attitude and the Psychology of Waiting - The Psychology of Queueing

Articles on Operations, lean and six sigma, please visit the links below:

• Managing Constraints Under Peak Volumes
• Order Pipeline of Events
• On Game Theory
• Applied Regression Analysis
• 5S
• Click-to-Ship Processes
• Kanban Sizing and “Pull”
• Lean at Krispy Kreme
• Theory of Constraints and Camping
• Lean for Software Development
• Don’t Waste the Customer’s Time
• Featuritis and the Focus on the Customer

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I’ve spoken extensively about the unheralded — but, arguably, the most important — Pillar of The Toyota Production System: Respect for People. Today, I want to highlight an interesting company that appears to have done an amazing job at Participative Management and in eliminating fear and mediocrity in the workplace: Semco Group.

I was first made aware of Semco Group after watching this amazing video on the MIT website. I sought to learn more about Semco and found some pretty amazing case studies such as the following:

• Harvard Business Review: Managing without Managers
• Harvard Business Review: Why my former employees still work for me
• Maverick: The Success Story behind the World’s Most Unusual Workplace
• The Seven-Day Weekend: Changing the Way Work Works
• Semco on Strategy+Business

Semco appears to have operationalized a very humane workplace and has also produced some impressive results, proving that fear and intimidation and mediocrity are not necessary ingredients to do well in the corporate world:

Reforms implemented during that time led to 65% reduction in inventories, a marked reduction in product delivery times and a product defects rate that fell to less than 1%. As the business climate improved, Semco’s revenues and profitability improved dramatically. As of 2003, SEMCO had annual revenue of $212 million, from $4 million in 1982 and $35 million in 1994, with an annual growth rate of up to 40 per cent a year. It employs 3,000 workers in 2003, as opposed to 90 in 1982.

Semco publishes and collectively live by the “Semco Survival Guide”, opting for something much simpler and thinner than a big, thick manual. Here are two points that I personally appreciate:

Our People: We avoid using terms like “employees”, “staff”, “collaborator” and similar terms. We are a team and we only have “people”. This is what we call everyone who works with us. Try as hard as you can not to use terms which are so common, but which do not express equality.

Customer Services: This is very important. Never fail to serve a customer well; do not run away from the customer, and do for the customer exactly what you would expect if you were in their position. Be honest about deadlines, prices and service conditions - never promise something you cannot deliver.

I find “never run away from your customer” an interesting thing to say — I think this point requires some reflection:

Do we — as an act of omission — run away from our customers — either in action or mentally or emotionally?

Below is their survival guide, taken directly from their website:

Leadership
We believe that organizational structure is required to ensure good business processes. However, only people who have respect for their followers can be leaders. Situational leadership will always be stimulated and respected.

Position
At the Semco Group, it makes no difference whether someone has a high ranking or a humble position. The most important thing is to always try to learn and teach new things.

Job Rotation
Whenever possible we rotate people: Some people change area and other people change business unit. This is another development opportunity offered by the company.

Freedom
There is no space at the Semco Group for formalities. The doors are always open and people should say what they really think, without worries or inhibitions.

Honesty
Everything at the Semco Group is based on trust. Whenever there is dishonesty, and there is always the possibility that there will be somebody dishonest, the company takes hard action.

Accusations
The company does not encourage people to accuse others - this should only occur when you believe you have access to concrete facts that somebody is benefiting while harming everybody else. Anonymous letters are not considered.

Gambling
No gambling of any type is permitted within the company.

Weapons and Violence
It is completely unacceptable to carry weapons inside the company. Any type of violence employed by one person against another is seen as an extremely serious event.

Unions
Unions are an important method of protecting workers. Unionization is free within the company. The Semco Group believes that constant relationships with unions are healthy for the company and the employees. The presence of union members at the company is always welcome.

You… and the Others
Based on the fact that everyone can say what they think, rumors and gossip should not be stimulated. Any attempt to harm another person is looked on very seriously. Take part and speak openly of what you are thinking in order to improve things.

Sales at the Company
The entry of salespersons to deal with personal issues is only permitted when scheduled by the interested party.

Loan Sharking
Any employee lending money to another while charging interest is considered abusive and this is dealt with by the company as a serious matter.

Discrimination
The Semco Group does not permit discrimination based on sex, colour, religion, politics etc. Everybody must have identical opportunities at the company - help to make this a reality.

Use of Authority
Many positions of the company involve the use of authority. Pressure, tactics that involve people working while afraid or any type of disrespect are considered incapable leadership and improper use of authority.

Working Hours
The Semco Group has flexible working hours where possible. This is a method of meeting the needs of each person, without harming the company.

Employee Timesheet Control
At the Semco Group, each person controls their own working hours. This is a method of transferring responsibility to each person.

Commissions
People at the Semco Group usually create commissions to deal with issues of collective interest. Take part to ensure that the commissions are active channels which effectively defend your interests, which may often not coincide with the interests of the company. Here, this conflict is seen as healthy and necessary.

Internal Promotions
At the Semco Group, people already working for the company are given preference when a new position or a promotion appears, as long as they fill the requirements for the job.

Vacations
The Semco Group does not believe that anyone cannot be replaced. Everybody must take their annual vacations, always. This is fundamental for the health of the people and the company as a whole - no excuse is good enough to justify accumulating vacations.

Recruitment
Where there is recruitment or a promotion, people in the department have the chance to interview, analyze and take part in the decision to choose the candidate.

Evaluation by Subordinates
Every six months you will fill in a questionnaire and say what you really think about your immediate superior. Be open and honest, when filling in the form and during the discussion that should take place afterwards.

Retirees
We have no restrictions on active or part-time work for retirees or people of an advanced age. Nobody is too old for us - on the contrary, we believe that experience comes with age.

Everyday Participation
The Semco Group philosophy is based on active involvement and participation. Do not sit back. Have an opinion, put yourself forward as a candidate, always say what you think - do not be just another cog in the wheel. State your opinion about everything that interests you, even if you weren’t asked for it. Be active about your feelings.

Suggestions
We want everybody to participate; opinions will always be welcome and should be spontaneous. The Semco Group does not use and is not wish to implement suggestion box programs. Whenever there is a need or interest, we can institute campaigners that encourage specific suggestions.

Dynamism
The Semco Group is normally a company that implements major changes from time to time. Don’t be scared - we think this is positive. Look at the changes without fear - these are typical characteristics of the Group.

Salary Policy
The Semco Group seeks to involve people in discussions regarding what is a fair salary for each employee. Of course, there are times when people think their salaries should be higher and the company believes it cannot pay more. What is important is to always provide an opportunity for discussions regarding this type of issue.

Strikes
The decision to take part or not in this type of event is an individual one. This is part of democracy and is respected by the company.

Personal Life
Each person’s life belongs to themselves and the personal life of each person at the Semco Group is sacred. Providing it does not interfere with the work of the environment, the company is not interested in what each person does with their own life. The human resources area is available to provide support in any area, but the company will never get involved in people’s private lives.

Former Semco Employees
Whenever anybody leaves the company, they are always welcome back - we have nothing against former Semco employees. On the contrary.

Severance
Whenever there are dismissals the company spends hours and days carefully considering the case (or cases). The company avoids dismissals as much as it can and is extremely involved in protecting justice - we must all take this line - dismissals are very serious and must be dealt with carefully by everybody.

Occupational Safety
This is not only a company responsibility. Keep your eyes open, always avoid accidents, use safety equipment even when it is bothersome - we cannot take risks with our health. Make a special effort along these lines, demand that the company do its part and do not let CIPA become a pro forma commission.

Statement of Results
On a periodic basis you’ll find out the results for your unit and for the company, and will be able to discuss them. Watch the results closely and ask any questions you want - there are no issues that cannot be discussed. Very few companies offer this - take advantage!

Profit Sharing Program
The Profit Sharing Program at the Semco Group is for real. This is a participation in which each unit wins. Each company and the Group have its own program, according to the characteristics of each business.

Relations
In order to avoid injustice or embarrassment, close relations do not work at the same unit, workplace or with the same leader, except in special cases. In completely different and unrelated locations, there are no formal restrictions.

Hourly/Monthly Workers
At the Semco Group there is no discrimination - Here everybody is a salaried worker and everybody is treated the same.

Our Personnel
We avoid using terms like “employees”, “staff”, “collaborator” and similar terms. We are a team and we only have “people”. This is what we call everyone who works with us. Try as hard as you can not to use terms which are so common, but which do not express equality.

Use of Company Resources
Do not mix company work and resources with personal services. During working hours, nobody should provide services to other people only for personal benefit, which does not stop people using a colleague’s services outside business hours, agreeing the conditions between themselves, without involving the company.

Customer Services
This is very important. Never fail to serve a customer well; do not run away from the customer, and do for the customer exactly what you would expect if you were in their position. Be honest about deadlines, prices and service conditions - never promise something you cannot deliver.

Communication
The Semco Group and its people must communicate openly and honestly. You must be tranquil and believe what is said in company notices – demand transparency when you are in doubt.

Pregnancy
Pregnancy is considered a time of great importance and happiness by the company. Never allow an injustice to be committed with one of our pregnant women – they deserve our respect and care.

Informality
Having a birthday party at the end of the working day or using nicknames is part of the company culture – don’t feel intimidated, and don’t stick to formalities.

Pride
It’s only worth working for someone you are proud of. Create this pride in the quality in what you do. Never deliver a product or service that fails to meet customer expectations, do not write a letter or communiqué that is not honest, and do not let the company’s stature fall – always fight for your pride.

Respect to Visitors
Give our visitors all of your attention and respect. Never let anyone wait more than 5 or 10 minutes. Meet everyone with courtesy, be they a supplier, customer or anyone else.

From the little I’ve seen, I’m quite impressed with Semco. If there are any that would care to chime-in on what they know of Semco — I’d love to hear about it in the comment section. Below is an interview with Ricardo Semler, the CEO of Semco.

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Articles on Ethnography and Design:

1. Feature? What Feature?
   
2. Simplify The Product
3. Ask Aza Raskin
4. Aza Raskin on Poka-Yoke & The Humane Interface
5. Aza Raskin on Quasimodal Design and The ATM
6. Aza on Feature-Bloat and Site Clutter
7. Aza on Google Search Results Page
8. Aza on Cooperation and Team Size
9. Design Thinking in Medicine
10. On Designing a Watering Can for Little Hands
11. Queueing Theory and Visual Management
12. An Interview with the Inventor of “Clocky”
13. Bad Breath but Good Design
14. What is Ethnography

Articles on Leadership:

1. Overmanaged and Underled
2. Colin Powell on Leadership
3. Team or Staff?
4. Tipping-Point Leadership
5. Abraham Lincoln on Leadership
6. How to transform an Organization: Chime-in Before Buy-in

Please articles on Queueing Theory below:

• Queueing Theory: Part 1
• Queueing Theory: Part 2
• Queueing Theory: Part 3
• Queueing Theory: Part 4
• What is Waste?
• On Time-Traps and Waste
• Call Centers as Queueing Systems
• Travel Time & Waste
• Little’s Law for Product Development
• YouTube’s Queueing Properties
• Psychology of Queueing and Disneyland
• Queueing, Disneyland, and FastPass
• Multi-Tasking Leads to Lower Productivity
• Queueing Theory and Terrorism
• On Queueing Theory and Elevator Mirrors
• Psychology of Queueing, Haunted Houses, and Halloween
• The Variability Tree
• Attitude and the Psychology of Waiting - The Psychology of Queueing

Articles on Operations, lean and six sigma, please visit the links below:

• Managing Constraints Under Peak Volumes
• Order Pipeline of Events
• On Game Theory
• Applied Regression Analysis
• 5S
• Click-to-Ship Processes
• Kanban Sizing and “Pull”
• Lean at Krispy Kreme
• Theory of Constraints and Camping
• Lean for Software Development
• Don’t Waste the Customer’s Time
• Featuritis and the Focus on the Customer

Mandi Walls from AOL is talking about creating actionable logs. Actionable logs are logs that provide data that can be used to fix problems. There are a few rules to start with:

• No nonsense logging
• Concise, easy to understand
• Express symptoms of productions issues
• Any that makes the log needs to be somethings that can be fixed (better signal to noise ratio)

Everytime you write to a log file, you're expending resources. The point of logging in production is diagnosing issues. You need to be able to understand the logs at 4am in the morning.

The primary goal is diagnosis and recovery of problems. Secondary goals include statistics and monitoring, insight into application behavior, and indicating potential problems. Note that these are different than the goals of development and QA logs.

Logs come in different flavors: access logs, server logs (e.g. Catalina), application logs, and special use logs for groups of activities.

Some hints:

• Log locations should be predictable and obvious. You may want logs on different disk partitions (this stops full file systems from crashing the server). Keep old log files in an obvious place as well.
• Rolls logs into files with timestamps in the names.
• Logs should be human readable and easy to parse. Use real dates and times. Unix timestamps don't pass the 4am test. Good timestamps give you the ability to link server activities to external events (like network outages).
• Create a common format for multiple applications where possible.
• Use one line per logs message where ever possible.
• Avoid the use of only numerical error codes in them.
• Put URLs to external info in log messages where appropriate
• Be consistent about severity. Saying something's "fatal" without more data isn't helpful.
• Log at the first point the error is encountered. If a server is processing 100,000 requests per minute, waiting a minute to log something means there's lots of data in between the problem and the log entry.
• Actively manage and prune logs to make new errors obvious.
• Don't include usernames, logins, passwords, etc. These are development logging issues, not production.
• An application log should have 10-25% the number of entries of the access log. Too much data hides problems.

In summary, make production logs about helping operations staff solve problems. Good logs can help solve problems. Poor logs can hinder problem solution.

Tags: operations logging velocity08

Bill Coleman (the "B" in BEA) is giving the opening keynote titled Green Data Centers, but it's really about sustainable operations. He begins by saying that the current way we operate data centers is unsustainable. Operations costs are growing at twice the rate of IT in general. This is the unintended consequence of the success of networked operations. Scale and complexity have grown dramatically. Bill claims 5 orders of magnitude.

In some organizations it can take 6 months to get a new server into the data center. If you do it faster than that, good for you. Virtualization is a band-aid. It adds to complexity while helping with scale. IT automation helps deal with complexity.

We're nearing a huge inflection points: it's theoretically possible to connect anything to anything. Soon that will be the norm.

What's the answer? The cloud. Today we have Cloud 1.0. I use proprietary tools to build a web application on proprietary platform. Soon those tools will be more sophisticated, but still be proprietary. Cloud 3.0 will make all that a commodity. We will take it for granted.

Power savings comes from actively managing servers--turning them on and off as needed. Real-time, dynamic capacity management is the key, but the real point is that policy-based server management provides for scalability and pooling of resources.

Bill talks about a major corporation with 15,000 virtual machines and they still only get 20% utilization. You can get to 80% on a mainframe because they mix and match jobs--mission critical or not--on the same hardware. Policy-based data center management allows that to happen by tacking up and tearing down VLANs, servers, and storage to meet current demands.

Tags: velocity08 operations data+center it+automation

Several months ago my wife mentioned, in a subtle way, that she misses Giordano’s Pizza. Giordano’s is our favorite pizza joint and we used to eat there daily while I was a graduate student at The University of Chicago. I’d say most of my graduate student loan debt went to Giordano’s in exchange for their delicious and famous stuffed pizza.

To appease my wife’s appetite (and mine), I decided to purchase some Giordano’s for overnight delivery. In this post, I’ll discuss good pizza and the supply chain it takes to deliver it, including the strategic role of The Warehouse.

I ordered 2 Cheese pizzas and they arrived the next day in a box containing an internal dry-ice box. We let the pizza’s thaw in room temperature and cooked them and enjoyed eating them. It felt as if we were living in Chicago again. Absolutely convenient.

There is a network of 48 Giordano’s restaurants and they are all in Illinois; they have been featured on NBC (GE), Fox (NWS), New York Times (NYT), and the Chicago Tribune (TXA), which has brought much popularity to the Giordano’s Pizza brand and now they now ship nationwide and, I’m guessing, the online sales channel is probably capturing a good chunk of the revenue.

The Pizza Supply Chain

In reverse order, starting with an Illinois-based customer, the Giordano’s Pizza Supply chain looks like the following (hint: diagramming a supply chain works best when you start with the customer and work backwards):

Customer => 48 Restaurants => 1 Distribution Center => Individual and Local Raw Material Suppliers

Because Giordano’s operates only in Illinois, it only needs 1 distribution center to house the raw material and take advantage of price-quantity discounts. Because of the close Illinois proximity, it can also do more frequent deliveries to individual stores of less product, ensuring freshness. This follows the Toyota model of smaller batches, but more frequency in material delivery.

For non-Illinois residents (like me), there is an added few steps to the supply chain:

Customer => 3PL Freight Partner (FedEx) => 48 Restaurants => 1 Distribution Center => Individual Raw Material Suppliers

The Role of a Warehouse

Why have a warehouse at all? It takes labor, capital, space, equipment, and information systems. Unfortunately, most firms cannot avoid this expense all-together; reduce, yes, but the Warehouse actually plays a really important role in the supply chain. Namely, The Warehouse is a strategic response to Supply & Demand, Transportation Costs, and Value-Added Processing.

Supply & Demand

A major challenge in managing supply chains is that demand can change very quickly, but supply is takes longer to change — that is, supply is not as responsive because there is usually some transformation that needs to happen, such as raw materials to finished goods, which takes time. But, demand is not very forgiving or patient and can change almost instantly. Supply is more “sticky”.

As a response to unknown or seasonal demand, the Warehouse plays a strategic role in assuring that there is product available, so that customers don’t find themselves wanting and firm doesn’t find itself unable to meet demand and face loss of sales, goodwill, and morale for the employees.

The Warehouse allows the firm to respond quicker when demand changes. The Warehouse acts as a buffer to changing demand, unreliable transportation, congestion in any part of the supply chain. As an added part of the complexity of supply chain management, the points of congestion in the system must also be managed.

Some questions to consider:

1. Given the approximate location of 80% of the customers and considering costs, response time, political climate of the country, and transportation reliability, what is the ideal geographical location of material sourcing, manufacturing, assembly, and warehousing?
2. What inventory buffer stock levels are appropriate for The Warehouse to hold? Replenishment levels? Use-to-Exhaust policies?

Consolidate Product Reduces Transportation Costs

There is a fixed cost everytime product is transported. Given the price of fuel currently and the instability of the US Dollar to other currencies, this is especially true. To amortize or reduce the pain of this fixed cost, it’s necessary to fill the carrier to capacity. In the industry, this is typically called “Truck-Load” and the opposite is “Less-Than-Truckload (LTL)”, regardless if transportation is achieved by truck, plane, or boat.

The pizza example above takes advantage of product consolidation well. Imagine if tomatoes, mushrooms, pepperoni, ham, pineapples, etc., were shipped directly from the material supplier to the 48 stores? The transportation costs alone would eat away any margins, not to mention the over-labor and over-effort that might be involved in that type of operation.

Provide Value-Added Processing

The final assembly could be done at The Warehouse. For example, if you produce a product that is private-labeled for your customer, then the product differentiation could be done at The Warehouse. Generic parts can be shipped to The Warehouse and then labeled to the customer specifications to achieve differentiation.

Back To The Pizza

The pizza was super good. This real-world example also gave me an added appreciation for good bootstrapping small business that gets things done to serve the needs of the customer.

+++++

Articles on Ethnography and Design:

1. Feature? What Feature?
   
2. Simplify The Product
3. Ask Aza Raskin
4. Aza Raskin on Poka-Yoke & The Humane Interface
5. Aza Raskin on Quasimodal Design and The ATM
6. Aza on Feature-Bloat and Site Clutter
7. Aza on Google Search Results Page
8. Aza on Cooperation and Team Size
9. Design Thinking in Medicine
10. On Designing a Watering Can for Little Hands
11. Queueing Theory and Visual Management
12. An Interview with the Inventor of “Clocky”
13. Bad Breath but Good Design
14. What is Ethnography

Articles on Leadership:

1. Overmanaged and Underled
2. Colin Powell on Leadership
3. Team or Staff?
4. Tipping-Point Leadership
5. Abraham Lincoln on Leadership
6. How to transform an Organization: Chime-in Before Buy-in

Please articles on Queueing Theory below:

• Queueing Theory: Part 1
• Queueing Theory: Part 2
• Queueing Theory: Part 3
• Queueing Theory: Part 4
• What is Waste?
• On Time-Traps and Waste
• Call Centers as Queueing Systems
• Travel Time & Waste
• Little’s Law for Product Development
• YouTube’s Queueing Properties
• Psychology of Queueing and Disneyland
• Queueing, Disneyland, and FastPass
• Multi-Tasking Leads to Lower Productivity
• Queueing Theory and Terrorism
• On Queueing Theory and Elevator Mirrors
• Psychology of Queueing, Haunted Houses, and Halloween
• The Variability Tree
• Attitude and the Psychology of Waiting - The Psychology of Queueing

Articles on Operations, lean and six sigma, please visit the links below:

• Managing Constraints Under Peak Volumes
• Order Pipeline of Events
• On Game Theory
• Applied Regression Analysis
• 5S
• Click-to-Ship Processes
• Kanban Sizing and “Pull”
• Lean at Krispy Kreme
• Theory of Constraints and Camping
• Lean for Software Development
• Don’t Waste the Customer’s Time
• Featuritis and the Focus on the Customer

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Motorola (MOT), the inventor of Six Sigma, is in big trouble. Even though it invented Six Sigma, this is a clear example that shows how Lean or Six Sigma are not a cure-all for corporate woes, but that good leadership and a winning strategy are key in a competitive world — Lean or Six Sigma is necessary, but not sufficient.

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:

1. strategy is engaging in activities that are different than the competition
2. 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 Motorola might remain one of the hallmarks of Operational Excellence, it has, over the years, essentially failed to engage in activities that are uniquely and competitively different than the competition. Speaking as an outsider, it appears that Motorola has continued to run an efficient business, producing products and services with few defects and delivering on-time, but products and services in a market that has changed to demand less and less of Motorola products, in favor of competitors products, such as the Apple (AAPL) iPhone.

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.

+++++

Articles on Leadership:

1. Overmanaged and Underled
2. Colin Power on Leadership
3. Team or Staff?
4. Tipping-Point Leadership
5. Abraham Lincoln on Leadership
6. How to transform an Organization: Chime-in Before Buy-in

Please articles on Queueing Theory below:

• Queueing Theory: Part 1
• Queueing Theory: Part 2
• Queueing Theory: Part 3
• Queueing Theory: Part 4
• What is Waste?
• On Time-Traps and Waste
• Call Centers as Queueing Systems
• Travel Time & Waste
• Little’s Law for Product Development
• YouTube’s Queueing Properties
• Psychology of Queueing and Disneyland
• Queueing, Disneyland, and FastPass
• Multi-Tasking Leads to Lower Productivity
• Queueing Theory and Terrorism
• On Queueing Theory and Elevator Mirrors
• Psychology of Queueing, Haunted Houses, and Halloween
• The Variability Tree
• Attitude and the Psychology of Waiting - The Psychology of Queueing

Articles on Operations, lean and six sigma, please visit the links below:

• Managing Constraints Under Peak Volumes
• Order Pipeline of Events
• On Game Theory
• Applied Regression Analysis
• 5S
• Click-to-Ship Processes
• Kanban Sizing and “Pull”
• Lean at Krispy Kreme
• Theory of Constraints and Camping
• Lean for Software Development
• Don’t Waste the Customer’s Time
• Featuritis and the Focus on the Customer

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In some organizations, the Customer Service function is largely viewed as a cost center, draining resources of the firm. I maintain that this perspective is what less mature companies support. More mature companies and, subsequently the more successful ones, understand the strategic fit of Customer Service in the overall value chain and it’s functional role in the supply chain.

In what follows, I’ll take a hypothetical iPhone defect case and show how customer service in this example plays a pivotal role in the overall iPhone supply chain — a key player in the overall product value chain.

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:

1. Samsung: The Singapore facility manufactures CPU and Video processing chips.
2. Infineon: The Singapore facility manufactures Baseband Communications hardware.
3. Primax Electronics: The Taiwan facility manufactures Digital Camera Modules.
4. Foxconn International: The Taiwan facility manufactures internal circuitry.
5. Entery Industrial: The Taiwan facility manufactures connectors.
6. Cambridge Silicon: The Taiwan facility manufactures bluetooth chipsets.
7. Umicron Technology: The Taiwan facility manufactures printed circuit boards.
8. Catcher Technology: The Taiwan facility manufactures stainless metal casings.
9. Broadcomm: The U.S. based facility builds touch screen controllers.
10. Marvell: The U.S. based facility builds 802.11 specific parts.
11. 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:

1. 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.
2. 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.

Main Components of an Ishikawa Diagram

1. At the head of the Fishbone is the defect or effect, stated in the form of a question.
2. The major bones are the capstones, or main groupings of causes.
3. The minor bones are detailed items under each capstone.
4. 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:

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�