Business Improvement Primer

Basic Business Cents

A critique often used of business people is that they do not have time to do things right, but they always have time to do them over. People, managers and workers alike, want to do things right but are so busy they believe they don’t have time to work on improving their work. A small investment in time now can save a lot of time long term. Everyone knows that but not all know how to start.

Think of the workplace as a system made up of individual processes. Dr. Deming defined a system as a network of interdependent components that work together to accomplish the aim of the system. This aim must be clearly defined by management so that all may work together moving in the same direction. The interdependent components or processes can be reviewed for ways to improve, as no process is perfect.

An easy way to start is the Plan-Do-Study-Act cycle.

Start by identifying a process that may be an irritation or a suspect of a problem. List all the steps involved and look for opportunities to improve. Always keep in mind the system aim and Plan a change that will help to achieve it. It need not be a big change, just an improvement in the right direction.

Then Do it, make the change on a pilot basis if possible. This can be done on an individual basis or in conjunction with other workers in the process and a supervisor. Document what you have done and list all of your assumptions. Often at a later time we wonder why we took some action so it is good to be able to look back and refresh our memory.

Study the results, does the change improve the outcome or make it worse. Collect data when possible to be able to support your Plan or disprove it. Share if desired or needed. Study the impact, not only on this process, but ramifications in other parts of the organization. Our studies in physics taught us, for every action, there is an equal and opposite reaction somewhere else.

If the Action works, document it so the change is permanent and knowledge gained can be used elsewhere in the system. If it doesn’t obtain desired results, go back to the plan step and find another improvement to try. By the same token, if it works, also plan another change. PDSA is a cycle, not a linear path with a finite end to go around on a continual basis.

As always, communication is important. Ensure you know why things are done in a certain way before you change them. Share your knowledge learned with fellow workers and management.

Finding ways to improve the organization is very satisfying. The quality of the processes defines the quality of the work. Everyone wants to be proud of his or her work and continual improvement of the work processes provides that satisfaction.

“Small Ball” Performance Improvement

Basic Business Cents

Small Ball is a term used by baseball teams who compensate for lack of power hitters by focusing on the fundamentals of the game and using team speed to win games.

Some years ago, Billy Martin, a major league player and manager with six different teams including the Minnesota Twins and five different stints with the New York Yankees used the same concept which was called Billy Ball .  He was a fiery competitor who won several championships with his relentless focus on speed and fundamentals.

Does this attention to the basics apply to business? Dr. W. Edwards Deming developed the following chain reaction theory based on the work of Walter Shewhart and various Japanese engineers:

1.     Improve the quality of work processes. Results have shown that productivity does indeed improve as variation is reduced.

2.     Quality Increases and Costs Decrease. With variation reduced in the individual work processes, less waste is produced, time is saved by less rework, and a more consistent product is produced.

3.     Higher Customer Satisfaction. With higher quality products, more timely delivery, and lower cost the customer will by better satisfied.

4.     Increased Revenue and Profit. With higher productivity and lower costs, financial rewards will be realized.

5.     Business Prospers. With higher customer satisfaction, better product, better productivity, and more profit, the company excels.

Putting this plan into action requires a focus on the fundamentals, an application of “small ball”. A plan without action is useless so we want to get all employees involved in improving their own work processes. It is not rocket science. Every employee, including managers, should write down all steps in each of their key activities and then study their list to examine for a better and simpler way. If they do something because it is the way it has always been done, it is probably wrong. They should look for reducing variation in how it is done from time to time, distance either the material or the worker moves, time involved in each step including wait time, rework, redundancy, and wasted time and material. It is surprising how much is learned by looking at the steps on the paper staring back. Discuss surprises, ideas to improve, and recommendations to supervisors and fellow employees to get approval to change. Document the new way to prevent slipping back into the old way.

It is amazing how much improvement can be made in the organization with these simple steps. As time goes on, training can be obtained to enable the workers to make even further improvements to improve the work and therefore the business. The key is to get everyone involved and focus on the fundamentals of the work processes.

Lorne Ames, the President of INCO (International Nickel Corporation) Manitoba once said he now realized that what is important in performance improvement is not giant strides but baby steps—little by little, better and better.

Dynamic Apathy

Basic Business Cents

One of my fellow employees once said, “The trouble with our company is we have too much dynamic apathy.” He was speaking of the comfortable feeling shared in the company about where we were and how we were doing. It was preventing us from getting better. A popular saying in Japan is, “The good is the enemy of the better.” We need to constantly strive to improve. 

There never was a company that could not improve. There never was a process that was perfect. We need to overcome the culture of good enough. If someone tells you the reason they are doing something in a certain way because that is the way it has always been done, you know it is wrong. It could be better. The reason for status quo is sometimes fear of failure, fear of criticism for deviating from old ways, or fear to try new methods. Sometimes employees do not understand the aim of the organization or the culture of the organization is not aligned with the top-level aim. Possibly the pay is low, working conditions are terrible, good work is not appreciated, or higher level people take credit for successes or place blame for failures. Those types of conditions will lead to a shrug of the shoulders and a who cares attitude.

Gripers, complainers, self-proclaimed prophets, and armchair quarterbacks abound. People who rise above this and think positively and take action are rare and to be treasured. It is easy to analyze, scrutinize, and talk but is more important to improve the performance of each individual work process. We need people who will not just discuss a situation but do something about it. We tend to get what we expect from people; we frequently underestimate people. One woman was asked how to improve her work and she came up with some great ideas.  When asked why she didn’t come forth earlier, she said, “No one ever asked me before.”

Another time, a division vice president was explaining a dilemma to Dr. W. Edwards Deming about how a corporate decision had negatively impacted her division.  She said, “It came down from corporate, what can I do?”  Deming responded, “You have more power than you think you have, you only need to exercise it.”

Care must be taken to ensure the culture of the organization allows and encourages employees to present ideas to improve the performance of the organization. This not only improves the odds of success of the organization but also provides more job satisfaction for the employees.

Statistical methods for process improvement are useful where data can be collected. The seven management tools developed in Japan can be used where data cannot be collected. Workers and managers alike can read about them in books and technical papers, or take training.

Higher-level managers can use similar approaches to systems, but probably more important is to address the culture of the organization. People should not have a fear of failure if they are working to improve. Communication must be open, and free up down, and across the organization so improvement attempts, successes, and failures are shared in mutual learning. The overall aim and strategy must be shared, understood, and committed by all. 

No organization can stand still for long; it must constantly, forever improve. When in doubt, do something!

Job Description for Vise President of Culture

Basic Business Cents
Job Description for Vice President of Culture

• A.K.A. Director of Human Resources for large organizations
  
• A.K.A. Personnel Manager for medium organizations
  
• A.K.A. Owner for small organizations
  The typical job description for the office of personnel management reads something like, Maintains the organizations human resources by planning and evaluating employee performance systems. Not very exciting so far but it goes on,
  

• Maintains the work structure by developing job descriptions
  
• Counseling managers on candidate selection
  
• Maintains employee benefits
  
• Ensures legal compliance
  
• Manages the system of employee reviews.
  People work to get a feeling of satisfaction of performing worthwhile activities and the above descriptions do not appear very rewarding. Perhaps the most satisfying feelings of accomplishments typically come from short term projects handed down from the CEO.
  Employee annual reviews tend to be a downer in most organizations. Employees are filled with apprehension as the review can impact their chances of salary increase or promotion. Managers detest it more; it is not enjoyable to point out people’s shortcomings. It normally takes ten positive comments to balance one negative one. What should have been done is to provide feedback in real time so both parties know why and how to improve.
  That’s the old school description; now let’s look at the role of the future.
  A client once said, “Culture eats strategy for lunch every day.” Every organization has it’s own unique culture. If it is aligned with leadership, the aim of the organization and the strategy to reach it, the organization can move mountains. On the other hand, if culture is not in sync with the aim, not much will happen. So, developing, nurturing, and expanding this positive culture is one of the most important roles in the organization. The new job description has three major components.
  

1. Coordinate Staffing. Working with the managers, determine needs for new or replacement talent. As work processes are improved, the amount and kind of talent changes. If someone no longer fits in the position, termination is the last straw. The organization placed them in that position, has an investment in them, and has an obligation to find them a position that fits their shills, either within or without of the organization. Hiring and finding a new

© Louis E. Schultz

position should always be a win-win scenario. Encourage two-way feedback between the manager and employee in real time in a spirit of improving the work. Assure legal compliance with federal and state requirements.

2. Achieve Alignment of All Employees with the Aim of the Organization. True unity cannot be forced. People need to understand the reason for achieving the aim, what it means for them, the customers, the organization, and the community. Communication has two equal halves, sending and receiving. People need to understand why and true dialogue must take place in communication.
   
3. Responsible for the Pride and Work Satisfaction of the Workforce. People need to have a sense of accomplishment with their work. They need to achieve happiness in what they are doing, know that their work is important, that they are performing well, and are a part of a proud, dynamic team. The Marines call it esprit de corps, a feeling of pride, fellowship, and common loyalty shared by members of a particular group.
   

The leader of culture may be the second most important position in the organization. Culture and leadership are the two most important drivers of the success. CEOs of American corporations have tended to come from the finance department; in Japan from engineering. Could it be that the path to the top in the future is through culture management?

© Louis E. Schultz 

The Interactive Organization Chart

Basic Business Cents
The Interactive Organization Chart
The organization chart is a diagram of the reporting relationships of employees and defines the chain of command. The typical org chart shows the top executive at the top of the diagram with direct reports in a row below, followed by the next layer of reporting relationship and so forth with the first line of employees at the bottom layer. This is referred to as a vertical or top down organization. It implies that decisions are made above and no matter where you are in the chart you do as you are told by the person above. Communication is hampered by layers of management who buffer communication by passing on what they deem necessary or what is to their advantage.
Many organizations today prefer a horizontal or systems view org chart. This chart also starts with the top executive at the top but horizontal lines of key processes of the organization. An example might be product A portrayed across the chart from suppliers to design, assembly, inspection, distribution and marketing. Products B, C. etc. would be in lines under product A. The reporting relationship would then be the product managers to the top executive.
As more is learned, thoughts on the proper org chart change. A more complete chart is the Interactive Organization Chart that depicts key functions as shown below. The Top Executive title is replaced by Leadership, recognition is given to the office of Strategy, Process includes the horizontal layers of the horizontal structure listed above, Marketing is recognized as a key process, and the importance of organizational culture is portrayed as an equal department.
LEADERSHIP
STRATEGY PROCESS MARKETING
CULTURE
Leadership means defining the aim or vision of the view of the organization at some point in the future and then modeling the way to achieve it.

© Louis E. Schultz

Strategy embodies responsibility for strategy planning, acceptance by the entire organization, deployment throughout the organization, and completion.
Culture may be the most important element and is overlooked by most organizations. Today’s Human Resources Manager or Personnel Manager is saddled with a thankless task, driving the periodic employee reviews. Employees don’t like them and managers really don’t like giving them. They are thought necessary because many managers do not provide performance feedback to employees in real- time as they should so this process was created to force feedback, at least once a year. Now this office has something meaningful and challenging. Leadership might provide direction but Culture drives the organization. Elements of this position include communication, understand and acceptance of direction, explanation of “why”, listening, working conditions, happiness, and satisfaction of the workforce. A job performed well by this office will be reflected in employees who are self- motivated, enthusiastic, inspired, and compelled to achieve the aim of Leadership.
As you can see, none of the functions can stand alone. Silos with moats around them will not be acceptable or useful, each function must interact with other functions yet each has a definite area of responsibility. By working together as a team in this model, success is more likely to be achieved.

© Louis E. Schultz 

Setting the Direction for Our Lives

Basic Business Cents
There are two similar models to find your proper niche, one for your business and one for your personal life. The “Hedgehog Concept” developed by Jim Collins and described in detail in his book, Good to Great, is a useful tool to use to make sure you stay focused on what is important in your business.
Three questions the organization must research deeply as depicted in this chart. If the employees are not deeply passionate about what they are doing, the quality and quantity of their work will not be very good. The next question is what can you be the best in the world at means that “pretty good” is not good enough. You need to find a niche at which you are very good, even the best in the world. This talent needs to be defined and discovered; if not in the organization it must be obtained. The third question is what drives your economic engine. If you cannot make enough money from this pursuit to fund costs and a reasonable profit, then the niche needs to be further refined. The spot in the middle is ideal position to satisfy these three needs. This concept is often used as a check and balance on the organization’s strategic plan to see if the three questions are satisfied.

The Japanese have a concept for personal guidance, which they call “Ikigai”. The term ikigai is composed of two Chinese characters, iki which means life and gai which means what one hopes for in life. Everyone, according to the Japanese has an ikigai but it takes a deep self-examination to discover it in order to bring satisfaction and meaning to life.

That Which You Love

That Which The World Needs
Vocation
That Which You Can Get Paid for

Mission

Ikigai Passion

That Which You Are Good At

Profession

The overlap area which you love and that which you are good at is defined as your passion in life. The overlap of what you love and what the world needs is your mission in life. The overlap of what the world needs and what you can get paid for is your vocation. And, the area of overlap between that which you are good at and that which you can get paid for is your profession.
The area in which all four circles overlap, Ikigai, is the secret to enjoy life. A lot of soul searching, thought, education, training, and maneuvering may be necessary to find your niche in life but the rewards of happiness and self-satisfaction make it very worthwhile.

The two models are very similar; maybe repetition will drive the point home. It is a tragedy in life if we don’t find the right direction in which we find a need in the world that matches what we are good at, we love doing it, and we get paid a reasonable income for doing it. 

Basic Business Book

The new book, Basis Business, by Green Ivy Publishing contains more than 150 of the Basic Business Cents articles for your reference.  It is not a novel to be read from cover to cover but a collections of lessons learned that can be read one at a time to give time to reflect on how it relates to your business and what you can do to improve.
All organizations need to continually improve performance. Large businesses hire consultants and send employees to training sessions for that purpose. Small businesses have trouble with this because of time and cost investments. Basic Business consists of short articles on performance improvement that can be read at the pace and convenience available of the small business people.