Tag Archives: analysis

Identifying Timespan

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From the Ask Tom mailbag –

Question:
Sometimes, identifying level of work seems elusive. I try to look at the timespan of the task, but sometimes, my intuition just seems off.

Response:
The biggest mistake most companies make is underestimating the timespan associated with a role. In addition to timespan, there are other clues that can help us with level of work.

Examine the task. The first clue to level of work is the timespan of the task. Here are the two questions. When does it start? When does it end? When we imagine a task, sometimes we focus on the middle without truly defining the start and end of the task.

While a craft trade (S-I) might look at a task as a one-day project, the supervisor (S-II) may be concerned about the permit inspection in two weeks. The manager (S-III) may be concerned with the system in which the project was completed, accountable for a one-year warranty that accompanies the work product. The VP of Quality Control (S-IV) may be accountable beyond the warranty to multi-year statutes related to defects. For the role, when does the project start, when does the project end?

Examine the tools. A craft trade (S-I) generally uses real tools, machinery, equipment. The supervisor (S-II) will use schedules, checklists and meetings. The manager (S-III) will use flowcharts, sequence and planning. The VP (S-IV) will use multi-project Gant charts.

Examine the problem solving. A craft trade (S-I) may make good use of trial and error problem solving. The supervisor (S-II) may rely on documented experience like SOPs and best practices. The manager (S-III) may employ root cause analysis. The VP (S-IV) has to look at multiple systems simultaneously, systems analysis.

All of these are clues. With the work defined, the next question, is the team member effective in the work?

The Hidden System Defect

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“So, you all agree on a path forward,” Sam continued. “This is your problem to solve. We have everyone in the room. Marketing, sales, customer service, production and accounting.”

Marketing began. “We are very proud of our pay-per-click ad campaign. We are delivering more leads at a lower cost than last year and total marketing costs are under budget.”

Sales stepped up. “We have more leads, but our closing ratio is down, way down.”

Production was next. “We know that sales are sluggish. We had finished goods back up on the production floor, so we had to find room to store the excess inventory. Lucky, we found on old warehouse that the real estate group was trying, unsuccessfully, to sell. They were happy we took it off their hands, so that’s where we put the inventory.”

Accounting, always cheery, gave the next report. “Yes, putting that warehouse back in service helped our balance sheet, eliminated a non-performing asset. We saw our holding costs on the inventory were going up, but, that is to be expected if sales are sluggish.”

“There is still a problem,” Sam declared. “Individually, you all, each of you is doing a good job in your respective departments, and I am glad that I didn’t see any finger-pointing. And, we still have a problem. Sales are still sluggish.”

Customer service, Mary, who had been quiet the whole time, finally spoke up. “I was looking over our customer satisfaction surveys yesterday, in preparation for this meeting. We have been getting EXCELLENT responses, especially in our return department. The problem is, we have triple the responses, meaning we have triple the returns. So, in addition to sluggish sales, our product returns are up.”

Sam probed, “And? Why do people say they are returning?”

Mary nodded. “I know this sounds silly, but our customers are saying they found a substitute product with higher quality from another company. And, its a company I never heard of before. We have always had a problem with one of our catch levers, it’s been our biggest customer complaint. This new product doesn’t have any catch levers. It’s designed differently.”

It was Sam’s turn to nod. “So, our sluggish sales and inventory problem looks like it may be a design problem. Why isn’t anyone in here from engineering?”

Casual Opinion

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From the Ask Tom mailbag –

Question:
You appear somewhat down on SWOT analysis as a planning tool?

Response:
It’s not the analysis part, it’s the opinion part. Most SWOT exercises are not analysis, but rather opinions, not tested by reality. Chuck Bamford, in his book Strategy Mindset tells the story. He was able to teach his eight year old son the SWOT methodology and asked him to conduct an “analysis” of his third grade class in school. Shockingly, his son declared the strengths of recess and lunch.

In our companies, we make million dollar bets on strategy. That strategy has to have some relationship to reality and requires a much harder examination than casual opinion.

What Else Do I Need to Know?

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Before I make a decision, I ask this question – What else do I need to know?

  • What else do I need to know, before I make this decision?
  • What else do I need to know, that if I don’t know, may come back to destroy the decision?
  • What else do I need to know, that would cause me to make a different decision?
  • What else do I need to know, that would cause someone else to make a different decision?
  • What else do I need to know, that I don’t know I need to know?

I am not looking for analysis paralysis, but I am looking for a gut-check on my intuition.

Cash Ain’t Cash Unless It’s Cash

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“Where’s the money?” I asked.

Luis squinted. “What do you mean, where’s the money?”

“Look, you asked me to help you straighten out this mess. Where’s the money?” I repeated.

“We have a cash-flow problem, there isn’t any money,” Luis replied.

“Yes, there is a cash-flow problem, there is always a cash-flow problem. Luis, the first resource a manager has to manage is cash. But before you can manage it, you have to find out where it is. Sometimes you think you know where it should be, but if that’s not where it is, you can’t manage it.

Sometimes your cash is tied up in a machine. Sometimes your cash is tied up in unbilled work-in-process. Sometimes your cash is tied up in Accounts Receivable. Once you find out where your cash is, only then can you manage it. So, where’s the money?”

A raw nerve was struck. Luis shuffled some papers on his desk. “It’s here,” he said, pointing to the third column in his A/R aging report. “It’s over 60.”

“Well, now we know where it is, we can manage it.”
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Registration for our online program Hiring Talent – 2016 is CLOSED out. No worries. We will offer another class the first part of March.
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Today’s post was inspired by a quote from the late Red Scott, “Cash ain’t cash unless it’s cash.”

Where’s the Problem?

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“I don’t understand,” Abby lamented. “I have been working with the sales team for the past six months. We had an increase in sales volume almost immediately. But, after three months, sales began to trail off. I have all the data, here in front of me. The team is making the calls, following the process, but we aren’t getting the orders we expected.”

“What feedback do you get from the sales team? What are their reasons?” I asked.

“That’s the worst part, they just want to blame someone else,” Abby was mildly irritated. “They are blaming the shipping department, of all things.”

“What about the shipping department?” I pressed.

“The sales team says the shipping department isn’t doing their job according to the delivery schedules.”

“And what does the shipping department say?”

“Seems like everyone is in blame-mode. The shipping department says they can’t get orders out of the production department. And the production department is blaming everything on a machine,” Abby replied.

“Tell me about the machine.”

“It’s old and only goes so fast. Work stacks up in front of it, but we can only get so-much output, and it’s running three (8) hour shifts. We would buy another machine, but we have no place to put one and it costs $250,000.”

“Let’s look at the sales orders placed in the first couple of months of your program. What is this list of back-orders?”

“That’s what the sales people are talking about. Their sales orders turned into back orders and their back orders turned into cancelled orders. Now they can’t seem to get new orders.”

“Tell me Abby, how might you be able to connect a slow machine to orders, back-orders and cancelled orders over a six month period? Think about how one system impacts another system.”

Get to the Root Cause of the Problem

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Emily was nervous as she entered the classroom. She knew that I would not allow her to be a passive observer, but front and center in the crucible. I turned to greet the other folks who were now streaming in.

“I would like everyone to meet Emily. She has an interesting problem at work. With our help, she is going to walk us through some solutions.” Emily looked at me sideways. It would take her a bit to trust this group.

Up at the front, Emily stood. “I really don’t know what kind of problem I have,” she started. “Our manufacturing line is not meeting its daily quota and the reject rate is at 11 percent.” Emily continued to describe the circumstances, considering morale, motivation and working conditions. Then the questions started from the group.

“Who decides the daily quota?”
“How is the daily target communicated to the line?”
“Who tracks the number of completed units?”
“How does the line know if they are falling short or getting ahead of the target?”

Emily responded crisply, “The daily quota is determined by the sales forecast and what we need in stock, but the people on the line don’t need to know that. They just need to build the units faster. When the QC people pick up the units for inspection at the end of the day, they count them and it’s on my report the next day.”

Ernesto raised his hand. “So, the line doesn’t know how far they missed Tuesday’s quota until Wednesday?”

“Not exactly,” Emily replied. “I don’t want to discourage them, so I just tell them they were a little short, that they are doing good job and to try harder. I am worried about morale getting any lower.”

Ernesto tilted his head to directly engage Emily. “You are treating this issue as a morale problem. Morale is only a symptom. You have to treat the root cause of the problem, not the symptom.”

Randy dragged a chair up front for Emily to sit. We were going to be there a while.