Archive for November, 2014

Deliverables: Open Book Management

Posted November 17, 2014 By Fletcher Groves

For more than 20 years, SAI has worked with homebuilding companies committed to improving operating performance and business outcomes.  We tell them the key lies in getting the job done – viewing the issue, sustaining the effort, and obtaining results – in three critical dimensions we call discipline, context, and perspective.

The discipline to focus the business model on delivering exceptional levels of distinctive value demanded by a narrow segment of homebuyers;  a perspective towards the natural, horizontal, process-centered manner in which work is performed and value is created on behalf of homebuyers and other stakeholders;  a context created by a business logic that underlies everything else, using Open Book Management.

Open Book Management flows from the work Jack Stack did in the 1980’s as CEO at Springfield Remanufacturing Corporation to rescue this former International Harvester (Navistar) division from almost certain bankruptcy.  Following a 99% leveraged employee buyout, Stack opened the company’s books and made it everyone’s business to improve performance.

Stack recounted the effort in two books (The Great Game of Business and A Stake in the Outcome);  John Case reported on open book thinking in other industries and companies (Open Book Management and The Open Book Experience);  Steve Wilson developed the basics of OBM-inspired team-based performance compensation at Mid-States Technical Staffing Services (The Bucket Bonus Plan).

We are specific in our application of the principles of Open Book Management.

We push our clients towards transparency (openness) and candor (the courage to tell and hear the truth) in the internal disclosure of operating and financial data, whether in meetings, or through dashboards and heads-up displays.

We push our clients towards imparting business literacy (understanding) to teammates, so that they understand the business of homebuilding, not just the homebuilding business;  we do it through the teaching of business and production principles.

We push our clients towards a team-based approach to performance compensation, via an all-inclusive, self-funding, progressively-weighted milestone plan based on achieving targeted performance above a baseline in a specific business outcome;  precisely the type of performance compensation plan we would expect to participate in, under a results-based approach to delivering consulting services.

As far as we are concerned, the deliverable of Open Book Management is a savvy, mutually-accountable, motivated homebuilding team.

Next:  Deliverables:  Continuous Improvement, Urgency, and Results

Want to learn more?

Email signature (capture)

Deliverables: Current Reality Assessment

Posted November 9, 2014 By Fletcher Groves

 

Q: Where are we, right now?

 

A process of continuous improvement is just what the term describes – it is a constant, never-ending quest for improvements in operating performance and business outcomes. For a homebuilding company setting out on this journey, this is the question that needs to be the first one asked, and the first one answered.

Every situation is different, and situations can change, but you always start with where you are right now; you start with an understanding of a specific current reality.  You start with an objective analysis of your specific current condition, with an objective assessment of your current performance, resources, capabilities.

To be clear, we offer two types of assessments: a Competitive Assessment® and a Current Reality Assessment®. Both types of assessments involve looking at results, checking facts, and drawing conclusions, but a Current Reality Assessment® is specifically designed as the demarcation point for a focused process of continuous improvement: a series of initiatives conducted in consecutive order with short durations, aimed at producing targeted, measurable improvements to a specific economic outcome.

It is the same type of rapid-cycle improvement program we use in Results-Based Consulting® arrangements. It is also tailor-made for use with a team-based approach to performance compensation.

Comprised of interviews, surveys, and a working group, a Current Reality Assessment® focuses and prioritizes your improvement effort, and establishes the baseline for continuously improving your operating and business performance. In doing so, it draws conclusions about the order and priority of initiatives, based on dependencies, on cause-and-effect relationships.

It is an assessment deeply-rooted in an understanding of how systems work and how they are improved.  It is root cause analysis directed at identifying core problems and identifying the limitations – the constraints – to the business outcome being sought.

Systems-thinking is about improving the performance of the system; it is not about improving the performance of its pieces or parts  – not any of the parts, not some of the parts, not even all of the parts, independent of one another.  The way you improve a system is by focusing the improvement efforts on identifying and resolving the problems that affect the performance of the entire system.

It would be a mistake to look at the facts and measures from a picture of your current reality and conclude that these are a set of equally-important-yet-independent, related-yet-isolated measures. It would be a mistake to conclude that the best way to improve your current reality is to spend time and effort improving the outcome of each and every part of it, all at once.

You cannot improve everything, everywhere, all at the same time; you cannot treat everything as the cause of the problem.  If you do, you will spend all of your time and effort treating the symptoms of the problem, without ever resolving its cause.  If you are lucky, you might succeed in improving performance in some areas, and you might relieve the symptoms and effects of some of the problems.  But – you will likely never solve the one problem that is preventing your company from achieving the outcome it seeks right now, and the unintended consequences of separate actions on different parts will likely make the situation worse.

The business environment in which you must operate does not provide you with unlimited capacity, resources, capital, and opportunities, which means that any effort to improve has to be prioritized, has to be focused.

It means that solving some problems, exploiting some opportunities, must wait until more important problems are solved, until better opportunities are exploited.

What comes out of a Current Reality Assessment® is a plan:

“This is where we are, right now. These are the problems, and this is the priority in which they will be addressed.  We will attack them in this order, and only in this order.  With the first initiative, we will eliminate all of these other issues, because we have established their cause-and-effect relationships.

“We have x-days to get this first initiative done; we will work on no other initiative until this one is finished.  We are going to throw the right people and resources into this initiative;  in the meantime, everyone else do their jobs.

“When we are done with the first initiative, this will be our second initiative.”

And so on.

Next:  Deliverables:  Team-Based Performance Compensation

Want to learn more?

Email signature (capture)

Deliverables: Business Process Improvement

Posted November 2, 2014 By Fletcher Groves

An overwhelming portion of SAI Consulting’s work, in and out of homebuilding, has been about enabling clients to structure themselves around their core-critical business processes; Business Process Improvement is the area of our practice for which we are most recognized.

There is a reason for our focus on business processes.

The most basic, most fundamental proposition in all of business is this: the reason an enterprise exists is to make money;  the way an enterprise makes money is by delivering value to its customers and other stakeholders;  that value is only delivered through the work that the enterprise performs;  that work has to be performed in some manner of workflow;  the most common form of that workflow is work performed in processes.

Make money . . . by delivering value . . . through the work you perform . . . in processes. From a business standpoint, processes are critically, centrally important; they exist, whether enterprises are intentional about them or not.

GE Capital has the process mandate right:

 

 

Process mapping involves far more than documenting the current workflow; it also includes redesigning workflows, which invariably reveals other issues.  Because it is so foundational, it is impossible to overstate the importance of understanding and improving the way work is performed, before starting down the road on other improvement initiatives.

For us, understanding workflow is the means to a more important end. It is the front-end of an improvement methodology, in which we eliminate the workflow elements that add no value and refine the remaining value-adding activities (to make the process more clear, more consistent, more connected), then find the best opportunities to productively redeploy the newly-liberated resource capacity.

The analogy from our Pipeline workshops is that we want a shorter, straighter pipe.

Understanding workflow tends to clarify the underlying problems and issues. And, when process workflows are connected to performance measures – to existing performance and targeted performance – builders can start to understand the requirements and necessary conditions that have to exist for the process to be improved.

Just what is process mapping? What does it look like? We view the current (AS-IS) state of a process through the lens of cross-functional flowcharting teams, comprised of the people who actually perform the work in the process; management only knows how a process is supposed to work.

 

Flowchart

 

In the past, we would also use cross-functional flowcharting teams to redesign the process to reflect its desired future (SHOULD-BE) state; it made comparisons between previous and redesigned states of a process more insightful;  it made the difference between AS-IS and SHOULD-BE more stark.

We like the starkness. Now, however, we get to the point more quickly, by using IDEF process modeling and notation in the design/redesign and documentation phases.  For the sake of continuity, and to take advantage of the insight gained mapping the current state, we use the same cross-functional teams for the SHOULD-BE that we used in the AS-IS;  we just use a different methodology.

 

IDEF0 Diagram

 

The advantage of IDEF0 lies in the ability of its hierarchical structure of graphic diagrams and supporting text diagrams to gradually and infinitely reveal greater levels of process detail. Where IDEF0 process modeling differs from cross-functional flowcharting, SIPOC charts, or value stream mapping, is that IDEF does not impose a single level of process detail;  the level of detail is whatever is necessary to create the understanding.

As a result, IDEF0 presents a far better learning/training outcome.

There are additional advantages in using IDEF0 to design and document the desired future state of a process. Unlike other methods, IDEF0 establishes the parameters and outcomes as part of the process design. More importantly, IDEF0 does not carry the legacy – the burden – of the current state, as other methods tend to do.

After a process has been redesigned, improved, and documented, it still has to be managed. In a homebuilding environment, process management is largely about visibility, notifications, and follow-up;  the benefit of truly automating processes is of less importance than in industries that have high-transaction volumes and high-IT components.  Moreover, the true nature of workflow in homebuilding is not pure process management;  it is project portfolio management with embedded and supporting processes.

We would prefer to have automation built into the operating system – into the management technology system – that supports the process workflow, not the other way around.

Business Process Modeling and Notation (BPMN) is the emerging standard that extends process design, improvement, and documentation into process management and automation. It automates and manages process steps through execution language, which involves code writing.  The current version (2.0) BPMN is more open source and supported by OMG;  the common execution languages that it uses are BPEL, XPDL, and XML.  Like IDEF, BPMN uses a hierarchical, parent-child structure of processes and embedded sub-processes.

I rarely plug SAI on the pages of this weblog; I will make an exception.

SAI has done more work with processes, and done it longer, than anyone in the homebuilding industry. Before the creation of the National Housing Quality (NHQ) Award, we were already assisting Malcolm Baldrige National Quality Award winners in their efforts to refocus, restructure, and redesign their business operations around their processes.  Before there was any serious interest in the homebuilding industry on the documentation and management of business and operating processes, we were already recognized experts in that field.

Our process toolbox is the best in the industry. We pioneered the development of many of the tools and techniques we use in this area.  We use one of the most advanced process flowcharting and modeling software applications on the market (iGrafx Process);  we participated in a portion of its development;  we are an iGrafx North American consulting partner.

We are adept at every form of process documentation, including cross-functional flowcharting, value stream mapping, and IDEF0 process modeling, all of the notation languages, as well as the methodologies – Total Quality Management, Lean-Six Sigma, Theory of Constraints, and Lean/TPS – that act upon them.

We come from the homebuilding industry; we are process experts;  we speak process in a language homebuilders understand.

We know what we are talking about.

Next:  Deliverables:  Current Reality Assessment

For additional information:

Email signature (capture)