Business901 Book Specials from other authors on Amazon

Friday, October 29, 2010

Using the Theory of Constraints in Services

The Business901 Podcast featured John Arthur Ricketts, a distinguished engineer at IBM Corporate Headquarters. As a consulting partner and technical executive, he has dealt with many services management issues, including those faced by clients in their own services businesses. His work in applied analytics led him to become a focal point on Theory of Constraints (TOC), and then to delve deeply into its potential for services management.  Rickets Web

John is very informative with a practical approach to applying TOC to services. I believe anyone involved in continuous improvement field will benefit from this podcast. 

John is also a practitioner and innovator in the field of Theory of Constraints. His book, Reaching The Goal: How Managers Improve a Services Business Using Goldratt's Theory of Constraints , was published in 2008 by IBM Press. Reviewers on Amazon.com soon gave it a five-star rating. And Dr. Eli Goldratt, founder of the Theory of Constraints, said it’s one of the best books ever written on TOC. John is also the author of "Theory of Constraints in Professional, Scientific, and Technical Services (Chapter 29 of Theory of Constraints Handbook) ,” a chapter in the Theory of Constraints Handbook published in 2010.

Related Posts:
Your Internal Marketing Constraint is still Important
Quickest way to deal with a Marketing Constraint, Slice it!
Problem Solving – Think 3, Not 5
Improve throughput, cut your customers in half!

Wednesday, October 27, 2010

Systemizing your approach to management

My guest on the Business901 podcast was Bill Dettmer Senior Partner of Goal Systems International.Dettmer-Image

Bill is one of the most recognized expert in the Theory of Constraints field and more specifically the Logical Thinking Process. He has Eight years graduate level teaching of systems management, systems analysis, human factors, management control systems, organizational behavior and development, Theory of Constraints, Total Quality Management, and management of research, development, testing, and evaluation. More importantly, he brings a level of experience to these subjects that few in the world are able too.

His simple recommendation of one book on the practice of utilizing a systems approach to management immersed me into over 12 hours of reading, research and learning. I have not been that captivated in a particular subject for quite awhile. I hope you enjoy the podcast as much as I did hosting it..  

William (Bill) Dettmer is the author of  The Logical Thinking Process: A Systems Approach to Complex Problem Solving ) and Strategic Navigation: A Systems Approach to Business Strategy , two books around which Goal Systems International's internationally renowned Thinking Process Course is based; Brainpower Networking Using the Crawford Slip Method . Co-author (with Eli Schragenheim and Wayne Patterson) of Manufacturing at Warp Speed: Optimizing Supply Chain Financial Performance (The CRC Press Series on Constraints Management) and Supply Chain Management at Warp Speed: Integrating the System from End to End

Related Posts:
Removing Uncertainy in your Decision Making
Theory of Constraints Roundup
Starting with the TOC Thinking Process

Friday, October 22, 2010

The Missing Link to Lean Implementation

Training Within Industry

TWI may be the Missing Link for a successful Lean Implementation. Jim Huntzinger believes it was for him and explains why it was for Toyota also. It is a learn-by-doing approach that helps your team leaders create a high performance, cross functional team.


Training Within Industry with Jim Huntzinger

Related Podcast: Is Training within Industry (TWI) old hat?

TWI Summit: Training Within Industry is needed more now, in this down economy, than ever before. It was in a time of crisis that TWI proved its worth more than 60 years ago, and leading organizations are turning to TWI again. Why?

  • Get more done with less machines and manpower
  • Improve quality, reduce scrap by achieving standard work across workers and shifts
  • Reduce safety incidents
  • Decrease training time, especially for temporary workers
  • Reduce labor hours
  • Reduce grievances
  • Transfer knowledge from a skilled, retiring workforce to an unskilled, green workforce

Jim Huntzinger authored the book, Lean Cost Management: Accounting for Lean by Establishing Flow, was a contributing author to Lean Accounting: Best Practices for Sustainable Integration, and has authored many articles including the ground-breaking article, Roots of Lean – Training Within Industry: The Origin of Kaizen.

Related Posts:
Kanban Communication
Overcoming Resistance and Backsliding

Tuesday, October 19, 2010

Clarity to your Marketing Process

One purpose of Value Stream Marketing is to provide clarity to an individual or organizations marketing process. This gives you the ability to walk a prospect through the process, understanding where they are at in the process. Typically, I have a customer add the activities or in lean terms map the process he uses to gain a customer. It should mimic the path a customer makes in his decision process.  However, don’t look at this as just a simple exercise for a small organization. I use this in larger organizations by just repeating this process for each sales channel they may have. The secret to this is that it really forces you to layout your marketing process and is really the beginning of development of transferring your marketing into a process.

The purpose in creating your Value Stream is to achieve better cooperation of the multiple phases. Each interlinking phase depends upon the other links. In each of them, you will have different capabilities, normal variation and a changing workload making it practically impossible to balance. (You will often find that the Value stream is dependent upon the cooperation of all phases and as a result it highlights the strength of your handoffs. I have often found that in many organizations the individual steps or phases of the value stream are quite good but the quality of the handoffs is where the problems occur).  

Many organizations do not look at their sales and marketing process in aPicture1 linear fashion, let alone segmenting it. When organizations first map out the process, they look at connections where people come from being all over the map such as the diagram to the right. They look at a simple linear process as an oversimplification of reality.

Not everybody goes through each step of the cycle. Some will skip from step one to step three. Someone may enter the cycle in step three. These interconnections are not trivial, it is what makes your process work and it also may be stopping it from working. So what is the purpose? The purpose of creating your Value Stream is very simple: Which is harder to manage, the above diagram or the next one?Marketing Kanban (The Post-it notes represent a tactic such as a webinar, newsletter, financing, sales calls, etc.)

Your flow system, your Value Stream will allow an organization to operate at maximum efficiency. The secret in creating such a linear flow is segmentation. Without it, you will continue to operate in less than an optimum manner.  Keep segmenting your list, till you gain a linear flow. Yes, there may be a few exceptions.

This is a simplified version of how a Value Stream would look. As you can see the natural progression of the flow (Involve, Interaction, Influence… flow to the right), the enablers or information to move the process forward is provided above each step. Taking a group of current customers, you can identify this in your current process. If this seems difficult, make a certain group that you can segment and document the process. Many companies will find huge gaps in their processes, which are supported by other departments such as sales or service or maybe by repetitive marketing.

Creating a horizontal segment/swim lane for each of your marketing channels will allow you to not only create your value stream but also serve as a basis for your Marketing Kanban and execution of your marketing process.

Related Posts:
Marketing Kanban Category
Don’t Market Without Your Kanban
Value Stream Marketing Category

Value Stream your process thru Lean Accountancy

In this eBook, we discussed how accountants need to become an integral part  of the other departments. No longer can accountants only relay past financial data. They need to participate in the Value Streams with real time numbers which will enable other departments to make quicker and more accurate decisions. Lean Accountants are simply spending more of their time on the shop floor these days.

This is a transcription of the podcast with Ross Maynard, a Senior Consultant with BMA Europe Ltd., and a Fellow of the Chartered Institute of Management Accountants.


Managing Value Streams using Lean Accounting

Related Podcast: Rapid Decision Making enabled thru Lean Accounting

Related Posts:
A Lean Accountant goes to Gemba, does yours?
Can Voice of Customer deliver?
Unclear Customer Value leads to Failure

Thursday, October 14, 2010

Unclear Customer Value leads to Failure

All of us know we must distinguish ourselves in the marketplace to be successful. However, do we go to the marketplace to find that unique dimension of matched value is? In fact, there’s been study after study showing that we don’t even get out of our own organization with an understanding of our own unique value proposition.

When organizations were dominated by one single individual your value proposition was very clear. Different views and questions were discouraged. Now in the age of collaboration, it is becoming more and more difficult to arrive at a clear understanding of the value that you provide your customer. Money-Cloud

One of the classic marketing books, The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market says that the only way to reach common ground is to find fact-based answers to 5 very fundamental questions:

  1. What are the dimensions of value that customers care about?
  2. For each dimension of value, what proportion of customers focus on it as their primary or dominate decision criterion?
  3. Which competitors provide the best value in each of these value dimensions?
  4. How do we measure up against her competition on each dimension that I?
  5. Why do we fall short of the value leaders in each dimension of value?

The authors go on to say; Value stems from the product - from unique features that deliver superior results - and from the kinds of service benefits provided . They are measured against customers expectations, so products and services really offer benefits only if they substantially exceed competitors offerings. Competitive parity, after all, creates a base level for customer expectations.”

These 5 questions are just a starting point. Your value proposition must continue to increase at a more rapid rate that your competitors. However, you cannot sustain your customer value proposition without being part of your customers business. Everyone in your company must walk in the shoes of your customer. Experience what they experience. If you do that, your head might just rise above the clouds that your organization has been in and start living the value experience. Remember, Customer Value is the best leading indicator of Future Market share!

Related Program: 5Cs of Driving Market Share

Related Posts:
Linking the 4Ps to Lean Marketing
Best in Market eBook
Value Stream Marketing and the Indirect Marketing Concept
Marketing Kanban:
Marketing Kanban
Value Stream Mapping
Lean Six Sigma:

Wednesday, October 13, 2010

The differences in Lean and Agile

Recently I had a discussion with Alan Shalloway, the founder and CEO of Net Objectives. Alan is an industry thought leader, trainer and coach in the areas of Lean software development and the Lean/Agile field. He's a popular speaker at prestigious conferences worldwide, as well as a trainer and a coach.

An excerpt from this conversation:

Joe:  My audience consists of quite a few continuous improvement type people very familiar with Lean and Six Sigma. So. we have a tendency to think about Lean in the Toyota sense. Does Lean mean the same thing in software?

alan_shalloway-1 Alan:  It is definitely different. I'm glad you mentioned that because I joke that what I'm called precognitive impaired. I wish I wasn't because I happen to be in Las Vegas right now and if I was precognitive I probably wouldn't be talking to you.

A year ago I actually gave a talk at a Lean conference in Miami, where I was talking about thinking of Lean beyond Toyota. The reason is software is so different, even though the principles, which in my mind are respecting people, taking a systemic view, look to the system for problems, pay attention to time, get through cause, build quality and focus on shortening your cycle time as opposed to raising productivity. Shortening cycle time does raise productivity and it does raise quality and it does lower cost but if you go after those directly you often have an adverse effect.

You can actually think in terms of Lean as separate from Toyota. For software people, it's easy to do that. Think in term of flow and eliminating delays. Don't take the Toyota mindset of which is that of a manufacturing level.

The reason I mentioned the precognitive part is I actually came up with this talk because it always worried me that, what would happen if Toyota had a faux pas or a misstep? Would people say: "Oh, Lean's not working?" The truth is I think Toyota is a great company and I think they've had a major problem but the rules of the game, the things they've been doing for decades are there independent of themselves.

In other words, paying attention to being economically driven, doing product implementation in a way that speeds time to market, focusing on shortening delays instead of speeding up the exact work step you're doing is very relevant. In software the way it actually shows up is different, but the principles are the same.

I'll give you a quick example. In a manufacturing process where you have a line that has a very low variability of the steps, it can make sense after you've eliminated a lot of the delays to try to make every touch point to be a little faster. The big problem isn't really how it takes to say, write a test as much as the time between when you write the test and run the code or when you run the test and give the feedback.

Those delays in software are much more critical because the knowledge degrades much faster in the knowledge worker's mind than on the product manufacturing floor. Errors are harder to see in software feedback than in a physical component in an automobile.

The principles of flow, the principles of a system, and the principles of respecting people is the same. The way they manifest themselves are quite different. It's still Lean in my mind and I think it's a very powerful way to look at things.

Joe:  I have always been disappointed that Lean stayed married to Toyota for so long because I thought what I've always called "American Lean" had a lot of value to it. It really has developed as a different animal in the software field. In software, you talk about Scrum, XP and Kanban, are they all agile? Are they all Lean?

Alan:  Well, I would say yes. But I would say it's a different meaning now. I kind of view Scrum and XP as the first generation of agile methods and combine and what I'll call lean agile, which we kind of use both of those as a second‑generation or next‑generation methods. I say this for two reasons. One is XP and Scrum are very team centric. If you have a team that wants to embrace, that's good and they're very effective.

The XP, actually in particular, has some very good engineering practices. XP is known for the paired programming, continuous integration, upfront testing and things of that nature. But there are a couple things that are left out in XP and Scrum besides the team focus. Again, our experience as a team isn't really the severe problem but it's where all the drama is. So people are always looking, oh let's fix our team.

But in fact, you have other problems in an organization, such as if you're product portfolio manager isn't managing. By overloading and overwhelming the team, you create waste because you cause a lot of delay and it injects a lot of delay into the team because they're working on two or three things at once. It delays feedback and that makes it harder for developers and testers to...

It actually creates work for them to do because they have to rethink where they were, reset where they were. So more along that nature, a bigger view is necessary, and combine does that. At least combine creates visibility for product managers to what's going on in the team.

Now the other thing, though, is many agilists are very team centric and developer centric where they pretty much believe that is this craft, this is artisanship, and what you need to do is let the team figure out what's necessary. Now, I do believe teams need to figure out what's necessary. I do believe that's fundamental to any lean approach is you have to respect the team and the team's approach on how to implement their own solutions.

However, you have to also make sure that they are paying attention to what I'll call the laws of software development. Too much work in progress is not only going to slow you down but create more work. In software having tests and definitions upfront is usually extremely helpful.

So you need to have explicit policies. Now, you can change them and you should change them. In other words, as the team learns more, they should be changing their policies all the time. Basically the workflow should be defined, but defined as the best way the team knows how.

This is something that is embedded in Kanban and Lean Thinking. It basically says, look there's a system we can understand, we can talk about it, we can try things, and then we can make adjustments to it. Many in the agile community don't believe this. So when we talk about is it agile or not agile, you have to say, well what do I really mean by what agility is.

This is Part One of Two. 2nd part will post this Wednesday.

Related Posts:
Agile, Scrum, Kanban, or is it just a Marketing Funnel?
Pull:
The Pull in Lean Marketing
Value Stream Marketing and the Indirect Marketing Concept
Marketing Kanban:
Marketing Kanban

Linking the 4Ps to Lean Marketing

This week I was challenged that I had spent little time creating the linkage between Lean Marketing or the Value Steam Marketing concepts and the classic 4 P’s. The reason why is that I believe marketing has changed from the 4 P’s to a demand driven or pull type of marketing that is fundamentally based on value. Or even more specifically Customer Value (Price).

In discussions during the development of the 5Cs of Driving Market Share Program, I asked Dr. Reidenbach similar questions to what you raised and he said,

“Another point is that the 4Ps is a functionalist approach and value is delivered through people, products and processes. We live in a process world and not a function world and the organizations that understand this are the ones that are going to dominate. The old world is a functionalist world - the new world is one that is ruled by processes. The latter is not accommodated by the 4Ps. The 5cs puts value at the heart of the issue and subsequent Cs talk about how to use value to accomplish what marketing is all about - to grow the business.”

A copy of the program content of the 5Cs for your reference.

This program is a great companion to my Lean Marketing efforts. Dr. Reidenbach extension of the 5Cs program was built into a modified DMAIC approach that enables us to approach Six Sigma driven organizations. The truth is that the tools could be used just as well in a PDCA structure as they can a DMAIC structure. The Value Stream Marketing concepts in conjunction with the Marketing Kanban come into play for segmentation and managing the content and delivery (Promotion) of it for the client. Provided when and how they want it.

4 Ps response The Product is an interesting animal. Several years ago, I would have said the Product or Service could be associated with customers need for a solution. Provide the solution, you have the job. However, savvy buyers have found that many times solutions are provided at a relatively low price or already known internally. The days of the manufacturer having the only solution or the best solution because of the other 3 Ps are non-existent. A customer can practically find the product for their price and their terms. The only determination left for most companies to differentiate themselves is value and not the value from their point of view but the viewpoint of the customer. That identifies the markets to participate in, how you go about acquiring and retaining customers and how you will monitor your Value Streams (Channels).

Another word about Product is since a customer can obtain it the way they want and on their terms, you can hardly afford to build inventory. Companies are extending themselves into being part of the solution such as Xerox’s takeoff on freeing customers to do their real business. So in essence, we have evolved from product to solution to “being part of determining the solution(Collaboration).

Lean Marketing is about Pull and when a prospect enters your “Value” Stream Flow you provide him the content he needs. Being a recognized thought leader within your Marketplace (Community) or being thought as Best in Market. I am not sure you have read the VSM Guiding Principles but that may help.

Related Information:
Agile, Scrum, Kanban, or is it just a Marketing Funnel?
Pull: The Pull in Lean Marketing
Value Stream Marketing and the Indirect Marketing Concept
Marketing Kanban:
Marketing Kanban
Value Stream Mapping
Expert Status
5 Cs of Driving Market Share

Do you know the Value of your Product?

I have been working with Dr. Eric Reidenbach of the Six Sigma Marketing Institute in the development of the 5Cs of Driving Market Share program. 5C Skyscraper 125460 In the process, he has developed a Customer Value Assessment Program. You will receive five surveys based 5Cs of Driving Market Share: Customer Identification, Customer Value, Customer Acquisition, Customer Retention and Customer Monitoring.These 5 surveys will expose your weaknesses and strengths in each of the 5 Cs of Driving Market Share. Before receiving, the next survey, you will receive evaluation/assessments sheets that will allow you to evaluate your scores and some actionable steps to improve in this area.

This Assessment program serves as an introduction to the 5Cs of Driving Market Share Program, a comprehensive program that has been deployed in a number of Fortune 100 and Fortune 500 companies and has produced positive market share growth.It is not a project-by-project approach for reducing the costs of marketing activities, but rather an approach that seeks to enhance marketing’s effectiveness and efficiency.

What I like about this program is that it provides a real science to the marketing process. However, there is one premise that you have to accept as a truth(Six Sigma Marketing Institute has data to substantiate it): Value has been shown to be the best leading indicator of market share and top line revenue growth.

Most of us are product focused nor the ability and know-how to access the market for this knowledge. Value is typically limited to the value in the product or product features. Practically every company claims to offer value. But do you really know what value means to your customers? The assessment makes an effort to figure out what value looks like to your customer—the insight may surprise you. The biggest surprise that I had was most companies do not even define value the same within the organization. If that is true, how focused could you be in defining your market?

A good read on this subject is the Best in Market eBook. The eBook was written in response to what the author has experienced working with manufacturers, and is aimed at Quality personnel including Lean and Six Sigma practitioners as well as Marketing professionals.

Related Information:
Value Stream Mapping
Six Sigma Modified DMAIC
Value stream Marketing

Monday, October 11, 2010

Bringing Six Sigma to Marketing

As I mentioned in a previous post, Six Sigma Discipline is Good for a Creative Process, accountants are seeing the value in getting Six Sigma and Marketing together. They see the use of the Six Sigma data collection and prioritization methods as a means to create predictable streams of revenue growth. This comes from developing a company’s value proposition and identifying the Critical to Quality (CTQ) associated with it. Let’s take a quick look at the Customer Value viewpoint of an accountant:

  1. Customer needs and wants: If you can identify the CTQ's, and determine what the most important CTQ is, you will know how much more important that CTQ is than the next CTQ.
  2. Value placed on needs and wants: That enables you to know what impact that CTQ is going to have on your value proposition. That comes from the ability to measure things. Your decision making becomes a lot more focused because it is right in front of you. It is fact?based. It is data?driven.
  3. Competitors Products: When you compare and measure yourself against the competition using value and CTQ’s, you will see the Value Gap that exist between your organization and your competition. This is an important function especially for monitoring your marketing. Increasing and decreasing value gaps may be the most efficient, effective and useful way of measuring marketing.
  4. Marketplace Perceptions: This perception can only be measured through the value proposition and by the inclusion of real customers through the use of surveys, focus groups and sometimes just picking up the phone and calling a few.

In most successful companies the customer value activity is a premier importance. Determining the customer value proposition for specific product/markets needs to be continuous and understood throughout the organization. As Marketing and Six Sigma come together they have the innate ability to drive revenue growth through the company. Numbers and creativity are not contradictory. They can be highly consistent. If you can identify what the most important CTQ is, how much more important than anything else and then, how you address that CTQ and how you use that CTQ to leverage your value proposition, can then be a creative process. Understanding and controlling these four key points can determine the overall success and profitability of a company. However, you must also understand that customer value is an input to your company and not an output. It is something that has to be measured, monitored and earned! Related Posts: Six Sigma a great companion to marketing Use Intuition or Six Sigma for your Marketing Data? Developing Predictive Measures with Throughput Accounting

Thursday, October 7, 2010

Rodney Dangerfield’s interpretation of the Lean Startup!

I happened upon this video the other day and could not help but think about the popular Lean Startup and Eric Ries. Eric is ever mindful of getting your product/service into the real world as quickly as possible. He laughs at the notion of creating this full fledge business model and structure that are institutions teach. Listen to Rodney discuss real world economics in this class… I think he has about 4 Pivots during the video.

If you would like to learn more about the Lean Startup watch this short video from an earlier blog post, Dealing with uncertainty in the Lean Startup.

Related Posts:
Measuring The Customer Experience
Six Sigma Marketing Institute releases Customer Id Program
Stanford Entrepreneurship Center: Evangelizing for the Lean Startup
Why a Lean Startup is hot and Lean/Six Sigma is not!!
Key Marketing Concepts from the Korean War

Friday, October 1, 2010

Your Customer never experiences averages

W.  Edwards Deming estimated that a lack of an understanding of variation resulted in situations where 95% of management actions result in no improvement. People struggle with variation but as Dr. Deming said if you fail to understand this concept you fail to improve. Understanding variation could be the strongest asset that Six Sigma brings to the marketing process. Variation is the enemy of Six Sigma, removing variation is practically what the methodology was built on.

One of the first things that I learned in Six Sigma is that when applying metrics you must measure variation from a standard. It is not about averages. If you want to improve you must establish a standard and then stabilize the process. Even if it is just placing upper and lower control limes for example. If you operate within this range, you have a standard and you can begin to improve. 

Here is a short 4 minute video explaining variation

Your Customer never experiences averages, they experience all your variations.

Related Posts:
Variation
If you are going to Improve, you have to know your math
Creating your VSM