The intrepid, results-based consultant opened the portfolio, removed a set of game boards, leaned them against the conference room wall, and then opened her notebook carryall, removed the zippered pouches containing the poker chips and sets of six-sided dice and placed them on conference room table.
She handed the game boards to a member of each team, and said, “I need you to clear space on your tables for these boards.”
As those tasks were being completed, she explained what was about to happen.
“Change is a necessary condition to any continuous improvement effort. You can’t expect to get different results by doing the same things the same way. However, change is difficult, disruptive, time-consuming, and costly; moreover, the effort can fail to produce the intended result. We need to be able to figure production management out, without the cost, disruption, and risk of failure associated with doing it in real life.
“What we need to do, is compress the learning curve.
“The new approach that you will use to manage production – and thereby improve operating and financial performance – becomes intuitive and simple in practice, but initially there is a lot to understand.
“It is an approach that is counter to what most of you have been taught”, she said. “You will need to fight your natural tendencies, challenge your paradigms, begin to think systemically. It can be hard to initially grasp.
“In short – it must be learned.
“That kind of learning is a harsh teacher when it occurs at the cost of real operating performance and actual business outcomes.
“So – we are going to simulate the environment in which production decisions must be made, and we are going to measure the outcome of those decisions, in terms of both operating performance and economic return. It’s going to be competitive, the pace is going to be fast, the situation will change rapidly.
“There will be uncertainty, risk, and variation; you will have to learn how to reduce it, and then, how to manage it.
“The purpose is to create learning based on what you experience and do, not simply what you hear and read. The objective is to compress the learning curve. The production situations you are going to encounter in these simulations reflect the circumstances you encounter in the real world of homebuilding, but they will be simple, fast, easy to see and understand. We will modify them and run them until we learn to see, until we understand how to apply the principles.”
Addressing no one in particular, but having a particular person in mind, the intrepid, results-based consultant added, “You need to shut-up, and quit acting like you already know everything. Entiendes?”
Satisfied, she continued.
“Here, we have a homebuilding production system,” she explained, gesturing to the game board. “The board represents the resources and tasks necessary to complete each job, which are your houses. As you know, a production system manages a portfolio of jobs, not a single job; the chips represent the system’s work-in-process – the jobs/houses at various stages of completion, as they flow through the system.
“Variation is reflected by the probability in the dice rolls. The tasks in each resource phase take the same amount of effort on every job, so there isn’t any variation in the amount of work, only in the length of time required to complete it. We find comfort in the false security of achieving an ‘average duration’, and this game reflects that tendency.
“Each game represents a full year of operations and results; each round represents a one-month time period in that year. Before the game ever starts, you have to make some decisions about resources and work-in-process, which will, in turn, enable you to project operating performance – completions, work-in-process, capacity, etc. – and to budget financial performance – Revenue, Cost of Sales, Gross Margin, Operating Expense, Net Income, Return on Assets.
“All that stuff goes on the scorecard, before the game starts.
“As the game progresses, the scorecards also accept all of the data for each round – resource work rate, work-in-process, and completions; at the end of the game, you have to calculate the actual operating performance – cycle time, productivity, inventory turn; then you have to calculate the actual business outcome – Return on Invested Assets, and Net Income.”
“Put the money in the bank”, said one of the superintendents, looking toward the Vice President of Sales. “Start making it rain, Chief.”
The intrepid, results-based consultant smiled. She had heard it all before.
(modified excerpts from ‘The Game’ chapter of The Pipeline)
The Pipeline: A Picture of Homebuilding Production is available on the publisher website (virtualbookworm.com), through the author website (thepipelinebook.com), as well as amazon.com, barnesandnoble.com, and booksamillion.com.
The next Pipeline workshop will be held at the Ponte Vedra Inn and Club, Ponte Vedra Beach, Florida, on October 15-16, 2014. Cost is $795.00. Early registration, open through August 15, 2014, is $645.00.
Delivered by SAI Consulting. Sponsored by BuilderMT and Big Builder (Hanley Wood).
For more details: www.buildervelocity.com