Category Archives: Systems

Multi-system Integration

From the Ask Tom mailbag –

Question:
When you talk about the COO role, you use the words multi-system integration to describe its purpose. I understand silos, and you said we put the silos there for a reason. You said not to get rid of your silos, but to integrate them together. What does that mean?

Response:
Yes, as companies move from Adolescence to Prime, the silos will kill them without system integration. The COO role will necessarily focus on operations confronting two main system integration issues.

  1. What is the performance standard of the work output from each function (department, system, silo) as work moves to the next function? Each function has marching orders (from us) to be efficient, internally profitable. This necessitates an internal focus to the function. Many critical handoffs occur as work moves from sales through project management into operations. When there is a defect in the handoff, we may not discover the problem until we have poured concrete around steel. It is much easier to unwind in the handoff stage than the jackhammer stage.
  2. The other system issue relates to each function’s capacity for output. Without someone paying attention, easy for one system to outstrip the capacity of its neighboring system. This may manifest as a breakdown in communication, when the underlying cause is two internally focused systems, heads down not paying attention to the other functions around. Discussions of single system capacity rarely emerge below S-IV, much less the impact of one system onto another system.

One of the critical functions for the COO is to calculate the company’s operational (ops) capacity as operations is most likely to be the constraint in the midst of the other systems.

Alligators Take Over

From the Ask Tom Mailbag –

Question:
I would love to get more information on how to beat back those Alligators! What happens when the Alligators are taking over?

Response:
This is where the role of the Manager becomes truly important. The people who do production work (Strata I) can only work harder. The people who make sure production gets done (Supervisor, Strata II) can only organize the chaos (also known as straightening the deck chairs on the Titanic).

The role of the Manager (Strata III) is to analyze what is causing things to be overwhelming and out of control. This is system work.

Stop and think. What is the cause?

The most useful tool I know of is a long roll of butcher paper (available at any restaurant supply store). Roll it out and tape it on the wall. Create a flow chart of the essential steps necessary to do the work that is required. We are talking circles, boxes and triangles connected by arrows, cause and effect. Step One, Two, Three and Four. Then, for each step, ask why we are doing that? Is that in line with our senior purpose?

This exercise will expose unnecessary steps or activities that simply do not add value to the process. Get back to the fundamentals, do only those things that are truly essential.

Draw flames around the hotspots, the burning platforms. Are instructions clear, is there a hand-off missed? This is system work.

Don’t Fix the Defect

“But, it’s like pulling teeth to get them to change the way they have been working. They get started, but after a couple of days, things are right back to the way they were before.” Matt sighed one of those Manager’s sighs. “I just wish my team was more disciplined.”

“Matt, discipline is nothing more than routine. Discipline isn’t harder than any other way of getting things done; it’s just not what you are used to.”

I spied a workroom on my way in. It was a small room with some simple tools and a work bench, good lighting. It was where people took things that needed fixing. Not broken things, but rather, product defects. The seam on the unit didn’t line up quite right; there was a burr on an edge. Rather than documenting the defect and looking for a solution, the team had, over time, assembled this little “fixing” room.

“Tell you what, Matt. Hide the tools and put a padlock on the room.” I could see his eyes grow wide. “Then, have a meeting and tell everyone that the fixing room is off-limits for 21 days. During that time, have meetings twice a week to talk about the new defect-documentation process. After 21 working days, you should have a new routine. Discipline is just a different way of getting things done.”

Matt was nodding, “So, after 21 days I can take the padlock off the fixing room?”

“No.”

Pulling Bad Product

“We have a problem with consistency,” Donna said. “I think everything is going okay and then boom, we get hit with a warranty event that uncovers a whole batch of bad product. I have two people doing random inspections prior to shipping. Still, mistakes get through. I might have to add more inspectors, check everything, just to keep bad product off the shelves.”

“What do you do with the bad product?” I asked.

“Well, we can’t sell it and we can’t melt it down, so we throw it away,” replied Donna.

“Do you use bad product to isolate the problem production area?”

“Oh, we know the three areas where we have problems, but rather than pull bad product in three places, I thought it best to inspect just before shipping, so we can pull all the bad product at the same time, no matter where the problem occurred.”

I winced. “Donna, is the purpose of Quality Control to pull bad product, or to identify the problem and fix it? Consistency doesn’t come from pulling 3 percent of your production. Consistency comes from fixing your system.”

What Changes About the Work?

What will be the nature of work?

As we adopt technology into the enterprise, what will change about the work? Those who sit in my workshops know that I define work as – decision making and problem solving? What will be the nature of decision making and problem solving as we embed technology into our internal production systems?

Production Work (S-I)
Physical robotics are already creeping in to production work (S-I). Robots are most often adopted into physical work that is repetitive, requiring precision cuts, punctures, bends, dipping, pouring, lifting. Robots are also useful in production environments where human involvement is uncomfortable (cold, heat) or dangerous (hazardous exposure). As companies adopt robotics and other technology, what changes about production work? What decisions are left for humans?

Supervisory Work (S-II)
And, what of supervisory work (S-II)? Typical (S-II) tools are schedules and checklists, the role is accountable for making sure production gets done, on pace and at standard spec. If we can sense most critical items in a production environment, with precision, in real time, what decisions are left for humans? As companies adopt technology, what changes about supervisory and coordinating work?

Managerial Work (S-III)
And, what of managerial work (S-III)? Typical (S-III) tools are work flow charts, time and motion, sequence and planning. The role is to create the system that houses the production environment. Most sub-enterprise software (as opposed to full enterprise software) is simply a transaction system that records transaction activity through a series of defined steps. Most computer software contains embedded rules that enforce a specific sequence of task activity. If most systems are designed around software systems, what decisions are left for humans? What changes about system work?

Executive Management Work (S-IV)
With a concentration in Ops (COO), Finance (CFO), Technology (CTO), the essence of executive management is functional integration. Most enterprise (full enterprise) software is designed to integrate end to end functionality across the organization. It contains hooks that communicate from one function to the next, with a plethora of configurations possible depending on the desired integration. If functional integration is controlled by enterprise software, what decisions are left for humans? What changes about functional integration work?

These are not idle questions.

Check Your System

Gerard was puzzled. By chance, the night before, he ran into Nancy, a former employee, at a local restaurant. The conversation was cordial, but surprising to Gerard. At her new company, Nancy was responsible for a competitive product that was kicking butt in the marketplace. When Gerard terminated Nancy for not reaching her goals, he felt she was a marginal contributor with a big “L” on her forehead. Now, she was in charge of a development team at another company that was eating Gerard’s lunch.

Gerard explained to me that after Nancy’s termination, he had two more managers fail in the same position. His complaint was that he just couldn’t find good people. Now, he was puzzled.

Success is determined, not only by the person in the role, but also by the circumstances and systems that surround that role. Before you terminate someone, be sure to check your system. If your system is broken, the next hire will not fare any better than the person you are currently pushing out the door.

Reactive vs Proactive Sales Management

From the Ask Tom mailbag –

Question:
We have 15 sales managers and 100 sales reps. We’ve taken top performing sales reps and made them managers. Now as managers they are finding it hard to find time to manage the behaviors of their rep team members. They don’t argue that the more time they spend directing their reps the more productive the reps become. But these dedicated managers are spending nights and weekends catching up with directing (through our CRM) the actions of the reps. The managers are still our best closers. No one on the team is better. How do I coach the manager?

Response:
As the sales manager (of reps), what do you want me to do? What is the level of work?

If your dedicated managers are spending nights and weekends directing their reps, what do they do in the daytime? This description is classic S-II behavior. It appears there is no system, no systematic coaching, no systematic sales planning. It appears things are ad-hoc, reactive and improvised. It is possible to be effective with this strategy, but at what cost? You will burn out your sales managers and begin to experience turnover.

This ad-hoc behavior is your fault. You have not created an effective system (S-III) for your sales managers to work in. Your coaching with your sales managers needs to focus on sales planning, pipeline evaluation and rep evaluation. What are the proactive moves (rather than reactive moves)?

As long as your sales managers remain reactive, your company will experience no better sales performance than it has in the past. Only when you create a system approach to your market, will you experience deeper penetration. And, your system should be operated as a day job, not nights and weekends.
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The Danger of Missing Stratum IV

Registration continues this week for Hiring Talent in the Heat of the Summer. Find out more – Hiring Talent.
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From the Ask Tom mailbag –

Question:
We have silos. Everybody is in a power struggle. We used to have a great reputation, but I think we outgrew it. The company seems lopsided. Sometimes sales outstrips our ability to fill orders, so some of our sales orders turn into back orders, some of our back orders turn into canceled orders and some of our best customers defect to the competition. Other times, production outstrips our ability to sell, so our finished goods don’t get sold, they stack up in the warehouse. The warehouse gets full, so we rent another warehouse. We carry inventory so long it turns obsolete and costs to hold, eat up our profit. We are like a monster machine. Just read a book by Ken Blanchard Be a Silo Buster. Do we really have to bust up the company and start over?

Response:
With all due respect to Ken Blanchard, you created those silos for a reason. Do NOT bust them up. You need efficient, profitable internal systems. It is not a matter of busting up silos, it is a matter of integrating them together. This is a classic example of a company growing into Stratum IV. This is similar to the chaos we see in Stratum II companies, but on steroids. This is not a few individuals stepping over each other. This is whole departments, internally focused, head down, nose to the grind stone without care or consideration for the other functions in the company.

But, the fix is not to tear them down. The fix is integration and requires capability at S-IV. This is not finding the constraint in a single serial system (S-III), but understanding the impact of one system on another system (S-IV). This is not root-cause analysis, but systems analysis. We have reinforcing systems and balancing systems. This requires, not serial thinking, but parallel thinking.

This is not multi-tasking (because humans cannot multi-task), but truly seeing the dependency, inter-dependency, contingency, and bottle-necks that exist among out multiple systems and sub-systems. This requires a parallel state of thinking. Two specific things to look at –

  • Balance of each system output, optimized to its surrounding systems output.
  • Handoff of work product from one system to the next system as work output flows through the organization.

Optimization
Sales has to be optimized to production. There is no sense selling inventory that cannot be produced timely to the sales order. There is no sense producing finished goods that cannot profitably be sold timely to the market. The output of both systems has to be optimized so they work in sync. Reinforcing systems and balancing systems.

Handoff
A department, head down, will work to their own internal efficiency. The state of their work product may be incomplete or carry a defect for the next stage in the work flow. Work does not flow up and down in a department. Work flows horizontally through the organization, output handed off from one department to the next.

  • Marketing hands off to sales.
  • Sales hands off to estimating
  • Estimating hands off to contracting
  • Contracting hands off to project management
  • Project management hands off to operations
  • Operations hands off to QA/QC
  • QA/QC hands off to warranty
  • Warranty hands off to research and development
  • Research and development hands off to marketing, and so the cycle goes

Each handoff must be inspected and improved. This is the role at S-IV.
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To read more on system constraints, theory of system constraints, The Goal by Eli Goldratt.
To read more about reinforcing and balancing systems, The Fifth Discipline by Peter Senge.

The Danger of Missing Stratum II

The Danger of Missing Stratum III
The Danger of Missing Stratum IV

Impact of HR at S-III (System) Level of Work

From the Ask Tom mailbag –

Question:
I read your post yesterday about HR at different levels of work. I am stuck at S-II. How can I make an impact at S-III? How do I get the company to understand why this is so necessary?

Response:
Most companies see the HR role at S-I and S-II as necessary only because they are mandated by law to keep track of that stuff (compliance). By definition, administrative processes do not directly add value to the product or service experienced by the customer.

But, there is a silent switch at S-III where Human Resource systems begin to add value. It is not that most companies don’t see it as necessary, most companies don’t see it at all. They are blind to it. The only time they respond to it is when they find themselves suddenly short-handed.

Here is the prescription to have HR impact at S-III (system) level of work. Get out of your office and meet individually with each functional manager. Here is a list –

  • Sales manager
  • Marketing manager
  • Contracting manager
  • Project manager
  • Operations manager
  • QC manager
  • Warranty manager
  • R&D manager

Ask them these three questions –

  1. What is the output created by your (function) department?
  2. What roles and how many people do you need to do that work?
  3. What will change in a month, six months, a year related to your work output and the people you need?

Go back to your office and write up your notes, one page per function. Put these is a tabbed 3-ring binder.

Have another meeting with each manager, show them the one page and ask three more questions –

  1. Describe each role on your team, what problems do they have to solve and what decisions do they have to make?
  2. What does each of those roles cost you in compensation?
  3. How long does it take (lead time) to find candidates and train someone to be productive on your team?

Go back to your office and write up your notes, one page per function. Put these in the tabbed 3-ring binder.

By now, you should see the pattern of these questions and the construction of this human resource system. As the HR manager, you are making this system visible to each functional manager, so they can see it. You have also established a series of meetings that will continue (forever) where you will ask questions and begin the execution of this system. Your next meetings will consider these questions –

  • If you expect work volume to increase (or decrease), given the lead time for training, when do we need to begin a recruiting effort?
  • How will we describe the role in a job posting?
  • How will we include the necessary elements in a role description?
  • What are the key areas in each role, critical role requirements and output in each key area?
  • What questions will we need to create to use in candidate interviews?
  • Who would be valuable members on the hiring team?
  • What will the onboarding process (orientation, training) look like?
  • Which manager will be accountable for the output of this new hire?

Write up your notes, organize them into the 3-ring binder (your HR system) and EXECUTE. What you have created is a system called workforce planning. There is no magic fairy dust to this process, just a little (hard) work. -Tom

Whose System Is It?

“You were right,” Byron admitted. “I took a look at the system. The ten percent reject rate was caused by a small burr on a threaded plastic part. The part didn’t seal right and the cylinder wouldn’t hold the pressure.”

“So, your team could have worked harder, stayed longer, given it all their might and the reject rate would have stayed at ten percent?” I floated.

Byron nodded. “I was sure it was the team. I am actually sorry I yelled at them. They just seemed down in the dumps, lackadaisical, you know, unmotivated.”

“Why do you think they were down in the dumps?” I pressed.

“Probably my fault. They were, in fact, doing their best. I thought their best wasn’t good enough. I was too quick to lay blame. In the end, it was my fault. I ordered some surplus parts from another vendor. Our original supplier was so good, we only sampled one in a hundred parts in receiving, they were always good. The new vendor parts had a 50 percent failure rate, but the samples we pulled, one in a hundred, didn’t pick up they were out of spec half the time. It was the system that allowed the failure rate.”

“And, whose system was that?”

Byron almost choked, but managed to get it out. “Mine.”