Fractured Planning Processes

In a report entitled Retail Merchandising: Buckling Down in a Tough Economy, authors Paula Rosenbaum and Steve Rowen of Retail Systems Research (RSR) tell us that nearly half (47% on average, but 55% of performing laggards in the survey) of respondents to their survey said that their leading business challenge was “fractured [inventory] planning processes.”

Unfortunately, in the published report to which I have access, Rosenbaum and Rowen do not elaborate on just what the respondents consider to be a “fractured planning process,” although the accompanying prose tends to suggest that this description relates to business processes tied to inventory planning that are not unified or even in good end-to-end communications across the enterprise and beyond.

A common problem

While this survey deals with retailers and inventory specifically, it does highlight a problem in small-to-mid-sized businesses (SMBs) that I have observed for nearly 30 years: that is, the lack of “planning” at all. For sure, most SMBs do develop plans for special projects. If they are going to purchase new or upgraded technologies, build a new or extend existing facilities, open a new location, or add a new product line, then they do prepare and plan in a more or less formal way.

What executives and managers do not do on a regular basis is develop a plan for making more money – both now and in the future. Most executives tend to get their business rolling and then set the “cruise control.” Then, with the vehicle barreling down the road, they spend their time fighting fires and trying to keep up the organization’s momentum with little or no thought about how the terrain (read: business environment) has changed until something big hits (like a recession or big competitor appears on the horizon).

So, what keeps executives from “planning” more frequently and more effectively for business improvement?

My experience suggests the some blend of following key components comprise the answer:

1. Many executives developed a business plan once, and now they have a business. It never occurred to them that planning for “improving” the business is required or would even help. Being entrepreneurs, they tend to manage by the seat of their pants and trust their “gut” for what will bring improvement.
2. You can’t drain the swamp when you’re up to your neck in alligators. Many executives spend the bulk of their time being reactive, rather than proactive. There time is spent taking care of things that others don’t get done or fighting fires so people can return to doing what they need to do to keep the business running.
3. Unless something big is happening, most executives don’t think time spent in “planning” – rather than “doing” – is a good investment.
4. Far too many executives do not know of – or know how to apply – a good “tool” for effective planning. In the absence of a good tool, most executives feel that time spent in planning is not going to be effective anyway.
5. Things are changing too fast. We just need to do the best we can to survive, right now. Of course, in good times, or when things were not “changing too fast,” these same executives used other excuses for not planning.

A POOGI: A Process Of On-Going Improvement

In times like these – challenging economic times – it is more important than ever for executives and managers in companies that hope to survive despite the economic upheaval to make a concerted effort at ongoing improvement. That is, to start a POOGI within their firm.

Why?

Because it is becoming increasingly difficult to compete for the consumers dollars.  If you are not improving your value proposition in a process of on-going improvement, then day-by-day your products and services are losing out. Dollars that used to come your way are now going to other businesses – and I don’t mean just businesses that you see as your competitors. I’m talking about dollars that consumers used to spend for your goods and services are now going, instead, to buy groceries, fuel, or pay off credit cards – anywhere but into your bank account. That’s why you need a plan to increase the value of your offerings in an on-going way.

How to begin

How should you begin a POOGI?

You should begin by figuring out your present situation. You need to unlock your organization’s “tribal knowledge” and understand your current reality. Naturally, the right tool for doing this is called the Current Reality Tree (CRT).

For more information on Current Reality Trees, including step-by-step information on how to begin constructing one, click here. If you would like to have help unlocking your firm’s “tribal knowledge” effectively and in constructing your CRT, then contact me directly.

Next steps

Once your CRT has given you and your management team a clearer view of what needs to change, the next step is to decide what should the change look like. In other words, if you and your team took steps to reduce or eliminate Un-Desirable Effects (UDEs – pronounced: YOU-dee-eez) revealed by your CRT, what would your organizational cause-and-effect flow look like? The Thinking Processes tool used to expose this future state is called the Future Reality Tree (FRT).

Other of the Thinking Processes may also be applied, including:

• Evaporating Cloud
• Prerequisite Tree
• Negative Branch Reservations

However, for your “planning roadmap,” the tool that will you and your team move from where you are today (your CRT) to your planned future state (FRT), you will want to build a Transition Tree (TrT).

Again, if you’d like to have assistance in effectively applying the Thinking Processes and in creating a POOGI in your organization, then feel free to contact me directly. But, whatever you do, do not sit and do nothing and let the recession drive one more enterprise out of business.

©2010 Richard D. Cushing

Surviving the recession with breakthrough thinking - Part 2

[Continuation]
Thinking should be a process
Now that your management team is has identified a goal and they have a theory by which to consider the data they might collect, they are far better situated to determine what information might be valuable to them. If your team is focused on gathering relevant information where the goal is making more money, and the framework or theory tells us that there must be at least one bottleneck or constraint in our system (the whole enterprise), your team now knows the very first question to ask and answer. That question is: “What is our constraint or bottleneck to making more money tomorrow than we are making today?”
 
While we might find some hints in the data stored within your existing ERP database and other computer systems, it is far more likely that what is really valuable in finding the answer to this critical question is presently being held in the minds of your own firm’s managers and leaders all across the organization. We call this kind of undocumented information consciously or subconsciously filed away by the organization’s people day by day “tribal knowledge.” Tribal knowledge is what they have learned through facts and circumstances accompanied by their subjective intuition about what they have garnered objectively.
 
The relatively limited amount of information that is required to soundly answer the key question we have identified is actually better defined from probing the staffs’ intuitions – tribal knowledge – regarding the context of the organization, the uniqueness found in it and its products, and how it works or does not work in delivering value to its customers.
 
In almost every problem, the value of the factual details pales in significance when compared to the framework and setting in which the details transpire. Breakthrough thinking comes from the application of intuition that gives meaning and cohesiveness to the observations made.
 
Traditional information-gathering efforts focus on the past (historical data captured in computer systems or elsewhere) or the present failings. Unfortunately, since these cannot – by their nature – be an effective guide for the future, the real breakthroughs emerge from the intuition of those closest to the workings of the “system” – the organization taken as a whole.
 
You and your management team might begin by gathering a cross-functional team of staff whom you deem to be trustworthy and experienced in their functions within your enterprise. Then, simply commence by asking this simple question: “What small handful of things do each of you see as keeping our firm from making more money tomorrow than we are making today?”
 
 Give each of them several three-by-five cards or large stick-notes and ask them to jot down these factors for you. Before they begin writing, give them the following guidelines:

• State each thought as clearly as possible 
• Include an “actor,” as in “Our vendors provide us with too many defective components for Product Line A.”
• Do not include assumed cause-and-effect statements. For example, do not say “Competition is driving prices down, so our salespeople offer too many discounts to make sales.” Instead, make each of these comments stand on their own if you believe them to be true. Write them as separate items thus: “Our competitors are driving prices down,” and “Our salespeople offer too many discounts in order to make sales.”
• Put each statement on a separate card or stick-note.

You should refer to these as undesirable effects or UDEs (pronounced: YOU-dee-ees) as did Eli Goldratt when he first promulgated the Thinking Processes. Naturally, some of the participants will have more ideas to jot down than others. Your object in this part of the exercise is to come up with roughly 20 unique UDEs with which to begin creating your organization’s Current Reality Tree – a logical tree that will depict what is not working – what is keeping your organization from making more money tomorrow than it is making today.
 
You can learn more about Eliyahu Goldratt and the Thinking Processes, including Current Reality Trees by doing an Internet search on any or all of these terms, or review this and related Wikipedia articles. You will also find additional references and application of the Thinking Processes right here at GeeWhiz to R.O.I.
 
Every problem is unique and is likely to require a unique solution
A wise man once said, “No man crosses the same river twice: for both the man and the river have changed with each crossing.” The must be said in the realm of business problem-solving.

One of the most frequently occurring and devastating errors executives and managers make in problem-solving and planning is that one problem or situation is identical to another. Fads in management come and go, but no fad or prior experience can take into account fully the differences in time, place, people involved, surrounding conditions, and the present purpose of reaching a breakthrough. The Thinking Processes, however, are able to leverage the “tribal knowledge” and intuition available within your organization to discover unique responses to unique situations even when they may appear (on the surface) to be “just like” what you faced last month or last year.
 
Furthermore, the Thinking Processes are able to decipher and disarm cultural differences and conflicting values within your organization without compromise – which is nothing more than accepting the best of the worst options and blending it with the worst of the best solutions.
 
Far too many managers and executives go out of the way to draw comparisons between their present reality and some other situation believed to be similar. These similarities may be expounded to great length even though the two situations may be separated by miles, years and even involve entirely different companies and personnel. This propensity stems from a desire to reach an “efficient” solution while feeling some satisfaction about being “objective,” as well. It also reduces or eliminates much of the requirement for actually thinking about the uniqueness of the organizations present situation. The Thinking Processes’ Current Reality Tree (CRT) simplifies that while providing management with a truly objective and rational view of what is keeping the “system” from achieving more of its goal.
 
[To be continued]
©2010 Richard D. Cushing

Surviving the recession with breakthrough thinking - Part 1

If there is one thing you need to survive and thrive during a recession, it is a competitive advantage. And if there is one thing that can help you and your organization discover and secure a sustainable competitive advantage, it is breakthrough thinking. But how do you and your management team go about conjuring up a breakthrough? After all, the very word "breakthrough" indicates that there is a barrier between you and "the other side" of the breakthrough. How will you break through?

Become an expert on "the solution," not "the problem"
Over my career of more than 25 years in consulting and senior management, I have met lots of executives and managers that believe that "data" is central to improving a company. They did not have this same thought before computers became widely available to small-to-mid-sized business enterprises (SMEs). It seems that as PC-based computing and storage became faster and cheaper, managers' and executives' hunger for data grew. If some data was helpful, then (it seems they reasoned) all the data would make them infallible in their management actions.

The data are not right
What many of these executives and managers fail to understand, however, is that it is impossible for the data they collect to be right all of the time. To paraphrase P.T. Barnum: Some of the data will be right all of the time, and all of the data will be right some of the time; but, all of the data will never be right all of the time.

You will never possess all of the data
Of course, we need to add to that the fact that no one will ever possess all of the data in any given situation, if for no other reason than that there are hundreds of data elements affecting any given situation that are not quantifiable and cannot be reduced to empirical data points in a computer.

The data are not objective or impartial
Even the data that is collected may not be objective. How the data is collected, the programming that went into the computer application that collects it, the operator who enters it, the people making the measurements, and even the staff that categorize, select and report on the data are all potential influencers of the end result. The reports, dashboards or presentations that many executives will consider as being "neutral," "objective," and "impartial" really may have none of these attributes.

You are wasting time, energy and moneyFor all of these reasons and more, executives and managers that seek to amass volumes of data in order to solve problems are wasting the three things most companies can least afford to use unwisely: time, energy and money. Not only so, but too much data is more often a hindrance than a benefit to breakthrough problem-solving. The executives seeking a solution are more often than not simply buried in the minutia - much of it being unmanageable and irrelevant to the underlying core problem. The result is "paralysis by analysis."

Data-gathering is not accomplishment
Sadly, far too many executives and managers equate information gathering with actually accomplishing something that benefits the organization even though the act cannot be linked to increasing Throughput, reducing Inventories or demand for new Investment, and/or cutting or holding the line on Operating Expenses while sustaining significant growth. This approach to problem-solving frequently reports "progress" without any real accomplishment leading to improvement - short-term or otherwise.

Missing the goal and a frameworkIn management's misplaced attempt to become an expert on "the problem" through data-collection, they have already taken a wrong turn. Management should not be in the business of becoming expert on "the problem." They should be seeking to become expert on "the solution." However, their mistaken belief is that the data will lead them to a solution. This, however, is highly unlikely.

Data is nothing more than documented experience - the organization's history having been captured as data. However, as W. Edwards Deming told us so clearly:

• "Information is not knowledge. Knowledge comes from theory." 
• "You should not ask questions without knowledge."
• "There is no knowledge without theory."
• "Experience teaches nothing without theory."
• "If you do not know how to ask the right question, you discover nothing."

Managers busy amassing and combing through data frequently have neither a goal nor a theory in mind. They are, as Deming would say, "Asking questions without knowledge." They are seeking to be "taught" by the firm's experience (as captured in the data) without a theory about what the data should be showing them.

Begin with a goal
It is the awareness of a goal or purpose that will enable managers to determine what data might really be relevant to achieving a breakthrough.

Firefighting does not qualify as a goal
Firefighting might be a requirement, but it cannot qualify as "a goal." I say this because - like real, honest-to-goodness firefighting - the most it can do is minimize damage and restore the "normal condition" of "no fire." It cannot bring progress, let alone lead to breakthrough thinking and competitive advantage for your company.
 
If your executive team is going to achieve breakthrough thinking, then the breakthrough better be about something more important to your organization's success than how to put out - or even prevent - the next fire in department X. Your thinking had better be focused on the critical matters of achieving more of your goal - and, in a for-profit enterprise, that goal should be how to make more money tomorrow than you are making today. Any other goal is short-sighted: improving quality, improving customer service, and even making happier, more satisfied employees are require making money if they are to be done well and for very long.
 
So, if the goal is making more money tomorrow than you are making today, what are the right questions to ask and what is the theory (or framework) in which to ask those questions in order that you and your management team might come away with real and practical knowledge leading to breakthrough improvements?

The theory and the goal
Let us begin with this hypothesis: Every for-profit organization has at least one constraint to making more money. Of course, the evidence supporting this hypothesis is that if at least one for-profit organization existed with no constraint, its profits would be approaching infinity. The resulting theory - set forth by Eliyahu Goldratt more than 25 years ago - is called the theory of constraints, or TOC.

There are many nuances to understanding all of the implications of this theory and it is beyond the scope of this present writing to discuss them all. However, it seems simple enough as a concept: the organization - the "system" - is, in a for-profit situation, nothing more than a "money-making" or "profit-making" machine. Therefore, the following two statements should be considered:

1. The "system" - the entire organization - should be considered as a whole and not managed piecemeal by department and function. It is the "system" that produces profit, not the individual products, processes, departments or functions. The constraint is - or constraints are - related to the "system" and should be addressed in the context of the "system." 
2. In order for the "system" to make more money tomorrow than it is making today, it is important that the following occur:
1. IDENTIFY the constraint(s)
2. EXPLOIT the constraint(s) - i.e., take steps to get the most Throughput available under the current constraint(s)
3. SUBORDINATE to the constraint(s) - i.e., subordinate all other decision-making across the organization to the governing factors surrounding the constraint(s)
4. ELEVATE the constraint(s) - i.e., take steps to expand the capacity(ies) of capacity-constrained resources (CCRs)
5. CHECK to see if the constraint has moved - i.e., see if you now have a different constraint or set of constraint(s)
6. GO BACK to the first step - do not let inertia set in; enter into a POOGI (process of ongoing improvement)

Now you can start thinking - wisely
Now, with a theory in-hand (the theory of constraints) and a goal in mind (making more money tomorrow than you are making today), you and your management team are actually ready to begin "thinking" toward a breakthrough.

[To be continued]
 
©2010 Richard D. Cushing

The New ERP – Part 30

Show me the R.O.I.

One of the things that amazes me, in my more than 25 years in working with PC-based technology solutions for small-to-mid-sized business enterprises and my review of literally hundreds of articles covering traditional ERP – Everything Replacement Projects in trade publications and on the Web, is the near total absence of any substantive discussions regarding return-on-investment (ROI). Sure, there are some articles and some vendors that give lip-service to ROI. Generally, whenever they do, however, they do so sometimes by simply implying that the buyer, indeed, should be concerned about ROI and they, as the seller, will somehow mystically deliver "ROI," if you buy and implement their software. In some cases, they go a step further. They offer ROI calculations based on averages and factors built into formulas that, generally, will calculate an ROI no matter what numbers you plug into their spreadsheets or Web forms.

Unfortunately, business enterprises are systems that do not necessarily respond in ways that will make the averages and predetermined factors applicable. While an "average" ROI may be calculated, the fact is, no matching "average" company exists to achieve the ROI.

Some R.O.I. is intuitive

No, I am the first one to admit that some actual ROI cannot be reduced to hard numbers. For example: Let us say (as we have seen in earlier posts – see Part 12 of this series) we calculate our planned ROI based on the saving of 0.5 FTE (full-time equivalents) through the deployment of integrated barcode printing, 1.2 FTEs by adding integrated ASN processing, and another 1.7 FTEs through paperless picking, packing and shipping while growing the Throughput 18% over twelve months. These "savings" are based on actions the company will not have to take – namely, at some point following deployment, the company will not have to hire some new employees.

It is impossible to determine the date at which the firm did not have to hire an employee. It is impossible to determine exactly how much the firm would have paid the employees it did not have to hire. So, while it is possible to determine that the firm did (or did not) successfully grow Throughput by the planned 18%, it is not possible to determine exactly how much money was saved through not hiring additional employees.

At least two aspects, however, are likely proof-positive that the planned ROI was reasonably accurate:

1. Bottom-line profits should reflect values that would approximate the net effect of the increased Throughput and the reduced Operating Expenses
   
2. Executives and managers can probably intuit that, had the changes not been made, additional employees would have been necessary to support the activity resulting from the increase in Throughput
   

A business initiative

Eric Kimberling, president and founder of Panorama Consulting Group, an independent ERP consulting firm, in his blog post entitled 7 Steps to Choosing the Right ERP Software, points out that "ERP is first and foremost a business initiative…." (Kimberling 2008) Kimberling goes on to say that ERP buyers should "[u]nderstand the total cost of ownership," and they should "[t]rack the potential business benefits of the new system." Nevertheless, although Kimberling shows some keen insight, he does not suggest that in looking for "the right ERP software," that the business enterprise should a) actually determine in advance what specific changes in the firm's current reality will lead to measurable improvements, or b) actually calculate an ROI based on reaching specifically measurable outcomes in terms of increases in Throughput, reductions in Inventory or demand for other Investment, or cutting or holding the line on Operating Expenses while sustaining significant growth.

Kimberling is right. IT decisions should be, "first and foremost a business initiative." While the IT department should be keenly aware of new technologies appearing on the horizon, their mental processes should be entirely synchronized with the organization's primary goal of making more money tomorrow than they are today (in for-profit enterprises). When they bring forward to executive management concepts for applying new or different technologies in the enterprise, these ideas should be thoroughly subjected to review in light of managements "framework" as defined in their Current Reality Tree (CRT), Future Reality Tree (FRT), and Transition Tree (TrT) as part of the firm's POOGI (process of ongoing improvement). (See prior posts, especially Part 5 in this series.)

Whenever anyone – even the CEO – in the organization wants to spend money for the "improvement" of this process or that one, the expenditure should be considered in light of the basic formula we have used previously and reiterate here:

Where T = Throughput (Revenue less Truly Variable Costs only),
OE = Operating Expenses, and I = Investment

If this is not done routinely, there is a great likelihood that precious time, energy and money will be spent with no benefit being reflected on the bottom line of the company's financial reports. This is nothing but waste.

Works Cited

Kimberling, Eric. 7 Steps to Choosing the Right ERP Software. May 30, 2008. http://blogs.techrepublic.com.com/tech-manager/?p=517 (accessed December 15, 2009).

The New ERP - Part 1

Unfortunately, the trade press has been rife with horror stories describing ERP (enterprise resource planning) projects that have gone off-track or failed entirely. The stories have gone on for well more than a decade and, although the number seems to be decreasing, in part that decrease is due to the smaller number of companies actually making their first leap in ERP solutions.

In a KPMG Canada survey from 1997, more than 61% of the respondents deemed their ERP implementation as less than a success. Four years later (2001), a Robbins-Gioia survey found that 51% reported their ERP implementations were not successful. And, Bob Lewis, writing in InfoWorld has suggested that only about 30% of ERP implementations are actually considered "successful" by some measures.

It appears that traditional approaches to ERP software selection, planning and deployment have, by almost any measure, proven to be capable of delivering any sustainable business advantage in fewer than half the reported cases.

In the following series of posts I will begin introducing what I believe to be a radical new approach to ERP, an approach I call Extended Readiness for Profit -- The New ERP. The results of this approach on the working relationship between business (financial) goals, measurable business objectives, and new technologies include:

1. A holistic view of the enterprise that encompasses its people, its processes, its products and services, its trading partners, and its technologies
   
   
2. Clarity and focus on finding and making the changes in the organization and supplying technologies when and where they will deliver a sustainable business advantage
   
   
3. Concepts that help executives and management in the organization establish sound budgets for each key component of any technology initiative based on calculated and measurable benefits expected to flow from the implementation
   
   
4. Sound techniques that will help executives and managers unlock the enterprise's "tribal knowledge" in order to leverage what the organization already knows in a process of ongoing improvement (POOGI)
   
   

SOME DEFINITIONS

• Revenues (R) - We will employ the standard accounting definition of revenues or sales where this term is employed.
  
  
• Truly Variable Costs (TVC) - Here we include only the costs involved in producing a unit of Revenue that truly variable with the unit of Revenue. Typically, TVCs include direct materials, subcontract or piece-rate labor, commissions, royalties, other outside services, and so forth. However, since normal employee labor is not directly variable with a unit of production, production labor is not included in TVC calculations.
  
  
• Throughput (T) - Throughput is equal to Revenues less Truly Variable Costs, as in the formula: T = R - TVC.
  
  
• Inventory or Investment (I) - In most inventory-based enterprises, the most volatile form of investment is inventory. However, since a key component in the calculation of ROI (Return on Investment) is the value invested, we will not limit discussions of "I" to only inventory.
  
  
• Operating Expenses (OE) - Operating Expenses is all the money the organization pays out day-after-day, month-after-month to support the production of Revenues. Since most employees -- even so-called "direct labor" employees -- are paid on this basis (i.e., they are not sent home early if work is slow; they are seldom laid off; they get paid the same whether their work unit produced 100 widgets or 1,000 widgets in a given period of time). If Revenues are down in a given month, for example, chances are the payroll amount was the same (within a few percentage points, anyway).
  
  
• Return On Investment (ROI) - As with Revenue, the traditional calculation method may be used. However, for clarity and for improved accountability, we will link specific initiatives to specific measurable results. Therefore, when considering any specific POOGI initiative, we calculate ROI for that initiative using the following formula:
  
  If no change in Investment (I) is required, then a simpler formula may be applied:
  
• Net Profit Before Taxes (NPBT) - Our definition will be equivalent to the general accounting definition, but calculated using the following formula:
  
  NPBT = R - TVC - OE
  
  Or, since T = R - TVC, we may substitute and shorten the formula to read:
  
  NPBT = T - OE

[Next time: What's wrong with traditional ERP approaches?]

Contact me!

...

The danger of "We know!" - Part 3

In this portion of our series, we're going to talk about how to put a "framework" or "theory" around what you already know about your business enterprise. This is not an exercise in "business theory." This is a real and practical approach to gaining effective control of your enterprise after (perhaps) years of "muddling through" with more or less mediocre results.

One of the reasons executives and managers are not able to really "understand" what they "know" about their own organizations is that, since they are unaware of a "tool set" to aid them, they never actually put what management "knows" (we call it "tribal knowledge") about how their organization works -- or doesn't work -- on paper. Therefore, in the absence of such a written document, the managers themselves cannot read and re-read their own logic about cause-and-effect relationships that flow throughout their enterprise.

Our mind makes thousands of assumptions about what we think we know. Our mind processes these assumptions and incoming information so rapidly, we are unable to filter out our incorrect thinking or invalid assumptions adequately. Putting our thoughts down on paper helps us step through the logic that is leading us to certain conclusions.

Equally important, however, is that fact that, if we never get our reasoning down on paper, it is nearly impossible for us to invite others to truly analyze our logic -- to critically review our logic -- in an effort to help us bring about lasting improvement. As a result, not only do we not realize that we have flaws in our thinking about what's happening in our organization, others who might bring beneficial insights to our aid cannot do so because they, too, cannot help us find the flaws in our rationale. This inevitably leads to the fact that these undiscovered flaws in our thinking about how our organization really works -- or does not work -- remain embedded in our decision-making processes.

The good news is that there is an outstanding set of tools that are readily accessible, easily understood, and relatively simple to apply that will help executives and managers lay hold of "tribal knowledge" and reduce it to an understandable framework (or "theory") about how their organizations function in a real and practical way. Others that have applied that tool set have said things like:

• "I have never seen my business so clearly before."
  
  
• "We truly understand our business for the first time."
  
  
• "This process has helped us regain a sense of control over our enterprise."
  
  
• "For the first time in a long time, we are empowered to move proactively toward real, lasting improvement."
  
  
• "We now have a consistent framework for diagnosing problems and planning for improvement."
  

What is this simple, yet amazing, tool set for executives and managers?

It is simply the TOC (Theory of Constraints) Thinking Processes as developed by Eliyahu Goldratt, a suite of logic trees that provide a simple, yet effective, road map for diagnosis and change.

So, continue to say, "We know!" and miss out on the opportunity for real, practical and sustainable improvements to your enterprise, or discover a whole new, easy-to-use and effective tool set for starting down the road to ongoing improvement.

************
Contact me!
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The danger of "We know!" - Part 2

In Part 1 of this series, I discussed how many executives and managers fail to reap benefits from new methods and ideas -- especially if these new methods and ideas arrive in the form of a "consultant" -- simply because these executives and managers believe that the already know what can be known about their organizations and their industries. This prevents many organizations from growing to their full potential.

W. Edwards Deming put it bluntly: "Information is not knowledge. Knowledge comes from theory."

Unfortunately, what far to many executives and managers have is a lot of information about their businesses and their industries. What they desperately lack is "theory" by which to interpret and understand the information at their disposal.

G. K. Chesterton put it this way in Tremendous Trifles (Beaconsfield, Britain: Darwen Finlayson, 1968): "One of the four or five paradoxes which should be taught to every infant prattling on his mother's knee is the following: that the more a man looks at a thing the less he can see it, and the more a man learns a thing the less he knows it. The Fabian argument of the expert, that the man who is trained should be the man who is trusted would be absolutely unanswerable if it were really true that the man who studied a thing and practised it every day went on seeing more and more of its significance. But he does not. He goes on seeing less and less of its significance."

Think of Sir Isaac Newton and the story of his having begun his development of the theory of gravity because he had seen an apple falling from a tree. Surely there had been tens of thousands of individuals that had witnessed objects falling to the ground under the influence of gravity for several millennia prior to Sir Newton's experience. Yet, no one understood "gravity."

It has only been since Isaac Newton put a "theory" around gravity that men could take what they had experienced with gravity and put it into a framework -- a theoretical context -- that made the experience understandable to them. Furthermore, the framework (the "theory") gave men the opportunity to predict outcomes of certain actions relative to the gravitational affects. This meant that men could plan and execute with some real certainty as to the results they would obtain under "gravity."

Precisely the same is true of business.

Executives and managers have all manner of data in their hands relative to the performance of their enterprises. What they lack is a "theory" by which that data may be abstracted and understood for the purposes of effective management. A framework that will help them bring simplicity out of the complexity before them.

In all too many cases, the missing "data" for beginning the process of ongoing improvement is to be found within the organization at all. The missing component for executives and managers is quite often this simple point: there is a simple method available to help organizational leadership logically analyze what they already know internally.

In the absence of a "tool set" that helps management bring forth "knowledge" from their "information," executives and managers tend to continue "tinkering" with their businesses. They make changes here or there to see if the change helps.

Sometimes such change seems to help, other times the change actually makes things go worse than before. Still other times, the change is made and their is no perceptible affect on the organization at all.

This is no way to run a business -- or any other kind of organization!

Executives and managers are yearning -- sometimes without even recognizing what is lacking -- for a simple, effective tool to help them gain control of their enterprises once again.

[Next time: Gaining Control]

Contact me!

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Getting more of what you want - Part 7

So, let's suppose that you've decided that applying the TOC Thinking Processes might really help your organization bridge the chasm -- successfully make the leap from entrepreneurial to enterprise. What kind of results might your firm expect from a sound and diligent application of TOC-based continuous improvement?

Here's a summary from an independent study as the results were published in a white paper available from AGI - Goldratt Institute:

• Mean reduction in lead times = 70%
• Mean improvement in on-time deliveries = 44%
• Mean reduction in cycle times = 65%
• Mean increase in combined financial variables performance = 63%
• Mean reduction in inventory levels = 49%
• Mean increase in revenue/throughput = 73%

If you'd like to get started on a path to improvements like these, contact me today at rcushing(at)ceoexpress(dot)com.

Thank you.

Contact me!

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Getting more of what you want - Part 6

So, what is this "tool set" that can help the entrepreneur and his management team decode the complexity of the growing enterprise in order to extract simplicity out of its seemingly endless layers of complexity?

The answer is: The TOC (Theory of Constraints) Thinking Processes.

As Victoria Mabin of the School of Business and Public Management of the Victoria University of Wellington states: "[T]he TOC Thinking Processes... are a suite of logical trees that provide a roadmap for change, by addressing the three basic questions of What to change, What to change to, and How to cause the change. They guide the user through the decision making process of problem structuring, problem identification, solution building, identification of barriers to be overcome, and implementation of the solution." [Emphasis added.]

This tool set is not new, as Mabin makes clear: "The TOC has evolved over [more than] 20 years.... [and] is now used worldwide by companies of all sizes.... [M]any managers who routinely use TOC believe they understand their businesses for the first time.... [T]hey gain a sense of control and of being able to act proactively.... TOC empowers managers by providing a consistent framework for diagnosing problems." [Emphasis added.]

Now, even though I'm a consultant and I get paid for helping companies make effective decisions by applying the TOC Thinking Processes, let me say up front: You don't need me to apply the TOC Thinking Processes. You could attend a workshop or do self-study in order to learn how to apply these tools in your business.

The workshops will likely cost you $5,000 to upwards of $10,000. Self-study and trial-and-error might take you some months -- or even years. There are, however, a good number of books available to guide you through this process.

So, while you don't need me to leverage these tools, connecting with me might be the fastest and lowest-cost method of getting to solutions you need in the very near future. If you'd like to connect with me, email me at rcushing(at)ceoexpress(dot)com.

In our next post, we'll talk about what kinds of results are typical with the application of TOC principles.

[To be continued...]

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