Category Archives: Control Systems

Controlling the Work

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“So, your team isn’t here this morning because you worked them until midnight last night. You burned all the profit in the project on overtime and expedited shipping,” I recapped.

“Yes, I think it is important to control burnout,” Roger replied. “When my team works on projects like that, I can tell they begin to grumble.”

“Why did it take such an extraordinary effort to work through that project?” I wanted to know.

“Oh, I could tell it was a tough project right from the start. The client didn’t really know what they wanted, so we had a lot of starts and stops, re-work and changes. I didn’t realize how many resources we were using until I looked at the budget.”

“You looked at the budget?” I sounded surprised.

“Well, yeah, when the project was about 90 percent complete, I wanted to see where we stood. It wasn’t pretty,” Roger explained. “The client was kind of designing the project as it went along. Unfortunately, we were on a flat fee for the contract.”

“What did you learn?” I asked.

“That it’s a lot more efficient to design things on paper, make changes on paper, re-design things on paper than it is to do it for real. I guess the project would have turned out better if there had been more planning.”
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Are Budgets Necessary?

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From the Ask Tom mailbag –

Question:
We are looking at our planning scenarios for next year, and one question we have is the value of creating a budget. Doesn’t it make more sense just to print comparative reports year over year rather than spend the time to create something new?

Response:
I always go back to purpose. What is the purpose for a budget? What are the questions we ask ourselves as we look forward to next year?

  • What is our market? Size of market? (Facts or assumptions)
  • What macroeconomic factors impact our market?
  • How much of that market can we expect to earn with our product or service?
  • Is our product or service something that can impact the market (materially) different than in the past, with a disruptive technology or delivery method? Or is it a product or service with a maintenance track that will substantially see similar volume to last year?
  • Given our assumptions about our revenue levels, what is the appropriate cost structure to deliver our promises in the marketplace?
  • Does that cost structure deliver the gross and net profit levels, appropriate to the risk, and within the return on (investment, assets) that we believe appropriate?
  • Is there a disruptive (to our market) cost that we are willing to suffer that might dramatically impact our positive ability to sell or take marketshare? Like a warranty program or alternate delivery method, like air freight for a heavy product? I know it might be heavy, but the question of air freight might spark an idea.

I see budgeting as a bit of realism for our strategic decisions. The purpose of budgeting is to help us make those decisions. As a post-mortem, budgeting helps us check our assumptions (were they wrong or confirmed) and how well did we execute on the decisions we made.

When I am working on this process with a company, a quarterly shakedown on the questions (above) help us deal with reality and adjust (our assumptions, our efforts, our cost structure, our decisions). In a stable, incremental business model, year over year may be a satisfactory approach. Where the business model is seeing dramatic disruption, by economics, technology, largess competition, regulation or other factors, a zero-base approach may be appropriate.

Budgets ARE necessary as a measurement to check our assumptions and aspirations in the market.
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Charles “Red” Scott – RIP

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If you are lucky, you will meet someone in your life that changes your life. I was lucky.

In 1995, I found myself across a breakfast table from Charles “Red” Scott. We soon learned, like in the first five seconds, that we were both children of the great state of Texas, both born in the same part of east Texas, Paris, Texas and Tyler, Texas and both attended the University of Texas. Though Red graduated before I was born.

If you are lucky, you will meet someone in your life that changes your life.

Red interviewed me for a job. Not really a job, but a life-long venture, to be a teacher, to be a learner to a very special group of people that I had not met. Yet.

He asked me if I was lucky.

That was his favorite interview question. He told me how his life was changed on the turn of a dime. From a small town in east Texas, he was the president of his high school class. Leader of his class, that automatically earned him a ride at the University of Texas. I would follow a couple of decades later.

His birthday was the same as Texas Independence Day. And Red was independent. I think Red was lucky to be born that day.

And I was lucky to have known Red.

Charles “Red” Scott left us yesterday. He left behind many friends and a loving family. Yesterday, he left me, behind. And from behind, I can only look ahead. We will miss you, Red. I will miss you. You were a great teacher.

In December, the doctors told him not to buy any green bananas. He knew and we knew that life was moving on. As much as we braced for the day, told ourselves it was inevitable, when it came, it came. That brave face, our brave face, stopped and felt the rush of sadness.

Today, I will venture to find the greenest bunch of bananas, and I vow to outlive them, if I can.

Best Position to Make the Judgment

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“I’m not being lazy, wishing my team would hold themselves accountable, instead of me, having to play the heavy role?” Gail was serious.

“Not lazy at all. We didn’t hire you to be an enforcement officer. We hired you to be a manager. We expect you to be an effective manager, not a traffic cop trying to meet a ticket quota,” I replied.

“So, what’s the shift I have to make?” Gail was curious.

“You are right. It’s a shift, but only a shift. And the shift isn’t necessarily all about you. The biggest shift is in your control system.”

“My control system?” Gail pushed back. “I still have to make sure we are meeting our standards for pace and quality.”

“And who is in the best position to make that judgment?” I asked.

Next Subject

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I just got back from a road trip to Pennsylvania, working with two groups on the research of Elliott Jaques. As part of the workshop, we spent time looking at their biggest managerial issues.

Accountability. Accountability was a big one.

  • We find out a project is behind schedule. How do we get it back on track without being a bully?
  • Some defects in finished goods make it into the hands of our customers. How can we get our team members more focused on quality when we aren’t around to check?
  • How do we make our control systems more effective, without looking like a police force?

The next Subject Area in Working Leadership Online is Accountability – Control Systems and Feedback Loops. We are opening 50 Introductory Memberships (Free) for this program. If you would like to get on the list, please let me know. This program kicks off next Tuesday, June 1, so sign up today.

Control Systems and Feedback Loops

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“So, let’s make the list. As you look at your control system, what makes it less effective?” I pressed.

“You talked about delay,” Ronnie replied. “You are right, delay makes the control system less effective. But, updating more often, is going to take up too much time for my manager.”

“But DELAY still makes the list,” I insisted.

“Okay,” Ronnie relented. “But I don’t see how my manager can do more.”

“Then, let’s have your manager do less. After all, if there is a problem with production, who is in the best position to take corrective action?”

“Well, the corrective action would be taken by the team.”

“Then, why don’t we change this control system into a feedback loop? Why don’t we have the feedback loop tell the team, and why don’t we run the feedback loop in real time? The manager just gets in the way.”

It’s Late and Unreliable

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“Let’s run this timeline, again, looking at your control system,” I nudged. “Monday, your production team shows up for work. They have daily and weekly targets. A machine breaks down and they lose 45 minutes of production before they can get going again. How does your control system capture that?”

“The control system is counting,” Ronnie replied. “And it is sophisticated enough to detect the change in throughput.”

“So, that’s Monday. And on Friday, the control system automatically compiles a report and forwards it to the manager, five days after the machine broke down.”

“Yes, I mean, the manager is busy. We could compile the report every day, but the manager is busy. Besides, it’s not a good idea to have him yelling at his team every day.”

“Why have him yell at them, at all?” I asked.

“What do you mean?” Ronnie pushed back. “It’s my manager’s job to hold his team accountable. We are very big on accountability around here.”

“But, bottom line, your production crew is double-passing finished goods under the counter, or skipping the counter, making the whole system unreliable. So, where is your control system? It’s late, it’s unreliable and puts the manager in between the feedback and the production team.”

Ronnie stopped. I could tell he was frustrated. “So, what should we do?”

“First, let’s list the problems and see how we can change the system to make it more effective.”

Teach Each Other

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“Alright, so I should have members of my team inspect their own work for accuracy. How do I know they will do the right thing?” Daniele asked. “These files are important and they have to be right. The feds could shut us down if they believe we aren’t in compliance.”

“Does your team know what the standards are?” I replied.

“Well, they should. Every one of them went through an orientation when they started to work here. And we have our quality sessions where I tell them what the auditor found that was wrong.”

I smiled. “Daniele, have you considered that when your team members went through your orientation, they were disoriented and may not remember all the details? Do you think we might go over that again. I looked at your orientation manual, it looks like there are five major sections to these files. You have five people on your team. Do you think you might divide things up?”

“You mean, have the team members teach each other?” Daniele gasped.

Too Busy Working

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“You are right,” Daniele admitted. “I have been keeping some quick stats on the mistakes we are finding in the files. Whenever I hold one of my accountability sessions, the mistakes disappear for about a week, then, boom, they are back again, and we find more.”

“So, finding the mistakes is not the problem?” I asked.

“No, and fixing the mistakes isn’t that hard either, but I want to stop the mistakes from being made in the first place.”

“So, tell me, Daniele, can the auditors stop the mistakes from happening?”

“No, they’re auditors, they don’t work on the files, they audit the files.”

“Okay, so who can stop the mistakes?” I pressed.

“Only my team can stop the mistakes.”

“What if you had your team audit the files?” I suggested.

“They can’t audit the files. They are too busy working the files. Can you imagine what would happen if they stopped production to check their work?”

Daniele stopped. A strange look emerged from her eyes as she thought about what she just said.

The System is Being Ignored

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“So, you think when I have this conversation about their mistakes, they are ignoring me because I lecture them?” Daniele asked.

“No, they are not ignoring you. They are ignoring your entire control system. Your control system is finding the mistakes, but the mistakes are continuing. Is the purpose of your control system to find mistakes or to find the causes for the mistakes and repair the cause?”

“I know. But I have to find the mistakes. And I have a great audit team. They are very thorough. I don’t know what I would do without them. They keep us in compliance,” Daniele stated flatly.

“How does your production team feel about your audit team?”

Daniele visibly changed, sat back and pulled away from her desk. “Well, they are not supposed to like the audit team. I don’t run a popularity contest around here. There is some friction, but I think it is good friction. My production team knows if they make a mistake, my audit team will find it. I think there is respect in that way.”

“Daniele, here are some things I know based on what you describe.

  • There are mistakes in your files that your audit team is NOT finding, that will put you out of compliance with the Feds.
  • Your production team has no respect for your audit team and is ignoring the results of your audits.
  • Some mistakes are being found, but the causes of the mistakes are not being identified.
  • Your situation is getting worse.