Lessons from the Business Process Improvement Graveyard

Posted March 28, 2020 By Fletcher Groves

As a management consultant, there are times when you should go with your instinct, and walk away from consulting engagements that cannot work the way you expected and intended.  The cases when you knew better than to take an engagement with the questionable approach emerging from its preliminary discussions.  The cases when you should have realized that the client was not listening to what was clearly being said.

Precisely the situation involved with two unrelated Business Process Improvement engagements we took on within the past year, both on behalf of homebuilding companies that had approached us seeking assistance.

The first case was that of a large production builder (1,000+ homes a year, operating as a “collective” of three completely different building operations across parts of four states), a company to which we presented a spectrum of possible alternatives, a company which nevertheless insisted that its processes be mapped – be documented, improved, and published – to reflect a single, imposed business operating model on which no consensus had been created, a SHOULD-BE (future) state designed without any of the insight and understanding that would have naturally come from first mapping an AS-IS (current) state, all with a three month completion deadline.

The second case was that of another production builder, this one with a single interest regarding its processes.  It wanted to document and redesign a niche’ lot acquisition process, do it over the course of a single, combined three-day onsite meeting, and publish it in one month – a process mapping initiative typically performed on multiple processes in two, separate, three-day, onsite stages (AS-IS and SHOULD-BE) over a three to four month period.

In fact, when we wrote the engagement letters, we went so far as to characterize the requested approaches as “unorthodox” and “unprecedented”, in stating our concerns.

We should have paid more attention to the warning signs, but nothing in our 25+ years of consulting experience prepared us for what happened on these two engagements.  There had been dozens of previous process mapping engagements, all conducted successfully, over nearly three decades.  Both of the engagements described here had been thoroughly discussed, clearly defined, concerns raised with the client, in detail, before the engagements started.

In both cases, the root cause of the problem – what unwound the engagement – was the unwillingness on the part of the client to accept how business process mapping works, an unwillingness to listen or accept advice, coupled (in one case) with an insistence to take shortcuts and compromise results, in order to save time and money.

A major contributing factor on one of the engagements was the client’s abject failure to meet the known, given requirement of providing a prepared team that could manage the schedule, a matter we can prescribe, have to presume, but cannot control.

In retrospect, we did not agree with these approaches, nor recommend them, and we should not have accommodated them.  We delivered the work product, but these projects were not successful, in our view;  they did not proceed forward.  We will not repeat the mistake.  We would like other builders to hear this, to pay heed, to avoid similar mistakes if they ever choose to address their business processes.

But, first, let me say this:

Those of you who know me, know that I do not make a practice of promoting the capability or expertise of SAI Consulting on the pages of this weblog.  However, when it is advice that is being offered, it is different than offering an opinion or viewpoint, and it carries a requirement that whoever is offering the advice documents that he actually knows what he is talking about.

With that requirement in mind, when it comes to the documentation, analysis, measurement, design and redesign, improvement, and management of operating and business processes, SAI Consulting is the homebuilding industry’s leading expert.  We have done it longer, and we have done more of it, than any other consulting firm serving this industry.

It is our tour de force.

It is the area for which we are most recognized.  Virtually every consulting engagement we have ever accepted, in-or-out of homebuilding, has dealt – in some way – with how a client structures itself around its core-critical business processes.  And – we have provided this same insight and advice to others on hundreds of occasions.

Before the creation of the National Housing Quality (NHQ) Award, then-Service and Administrative Institute (SAI) was 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 interest in the homebuilding industry in 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 are a consulting partner with iGrafx, which has some of the most advanced process flowcharting and modeling software available;  we know, because we participated in a part of its development.

We are adept, or at least familiar, with every form of process documentation, including cross-functional flowcharting, value stream mapping, IDEF0 process modeling, and Business Process Modeling and Notation (BPMN).  We know the methodologies – Total Quality Management (TQM), Business Process Improvement (BPI), Process Reengineering, Lean-Six Sigma (LSS), Theory of Constraints (TOC), and Lean/TPS – that act upon those documentation methods.

I am currently writing another business novel, in the tradition of The Pipeline: A Picture of Homebuilding Production, Second Edition©, that will be titled something like “Horizontal” (and sub-titled along the lines of “the workflow perspective that underlies the fundamental business proposition of every homebuilding company”).  Guess the subject matter?  Business Process Improvement.

Processes are important.  Business Process Improvement is important.

There is a reason for the centrality of business processes.  When you talk about an enterprise, whether it is a homebuilding company or a company in some other industry vertical, the most basic proposition of that enterprise – the reason for its existence, the way it makes money – is through the value that it delivers to customers and other stakeholders.  That value is only delivered by the work that the enterprise performs, that work has to be performed in some manner of workflow, and the most common form of that workflow is the work performed in processes.

Processes exist, whether enterprises are intentional about them or not.  Processes are important.  They are critical.

Lessons from the BPI graveyard, advice to clients:

  1. Listen to the experts, and do what they say.
  2. Let the current (AS-IS) state provide the perspective for the future (SHOULD-BE) state.
  3. Commit to a specific business operating model before you design the process.
  4. Don’t cut corners. Invest the time, money, and effort that process mapping requires.
  5. Get agreement and buy-in – win the commitment – from stakeholders.

If you have any questions or observations, please feel free to contact me:

 

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Stockdale, Krantz, and the AKAPEPCOTU

Posted March 22, 2020 By Fletcher Groves

As you continue to confront the danger, disruption, and uncertainty associated with the COVID-19 pandemic . . . some words of wisdom and hope:

Admiral James Stockdale (1923-2005), Vice Admiral, USN, Medal of Honor recipient, longest serving prisoner of war in the Vietnam War:

“You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality.”

Gene Krantz (1933-), NASA Senior Flight Director, during the Apollo 13 lunar mission:

“Let’s work the problem, people.”

AKAPEPCOTU (the All-Knowing, All-Powerful, Ever-Present Creator of the Universe):

“You keep him in perfect peace whose mind is stayed on You, because he trusts in You.  Trust in the Lord forever, for the Lord God is an everlasting rock.”  (Isaiah 26: 3-4)

Confront the brutal facts of your current reality, without ever losing faith that you will prevail in the ultimate outcome.  Solve the root cause of the problem, don’t treat its symptoms.  Know where you stand with Who stands before you.

 

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COVID-19: Learning in the Midst of the Storm

Posted March 18, 2020 By Fletcher Groves

If you are a homebuilder, the COVID-19 pandemic is impairing – or will impair – your ability to access the consulting resources you depend upon to drive improvement efforts.

Your consulting resources cannot easily travel to you;  you cannot readily travel to your consulting resources, or to their events.  Consequently, there is now a lot of talk about holding virtual events (to wit, Lean Enterprise Institute is now planning to conduct its entire annual Lean Summit on a virtual basis).

That approach is possible for a conference that is a presentation or lecture, where information presented is essentially a one-way street.  That approach is not possible for consultants that have to help individual clients extract and process information and thought, especially when it involves cross-functional teams dealing with complex, cause-and-effect issues.

It is also impossible for certain events, like Pipeline workshops™, that are, by nature, interactive, competitive, and team-based.

We are SAI Consulting.  The vast majority of our clients are homebuilding enterprises, and we primarily work with those clients in ways that enable them to thrive on the velocity side of economic return, to thrive on the velocity side of Return on Assets.

In the midst of this challenge, we want to continue to provide knowledge and insight into our areas of expertise, like business process improvement, critical chain portfolio management, production principles and disciplines, team-based performance compensation and open-book management.

www.saiconsulting.com

The SAI website is content-rich, by design and intent.  Rather than host a vanity site to promote ourselves, we choose to share and provide real, useful information.  It is about approach, method, and thinking;  the SAI Library has downloadable files of every article we have ever published, and many of the presentations we have made.

On the website, you can order the book (The Pipeline: A Picture of Homebuilding Production Second Edition©).  You can check out the Pipeline Workshop™.  You can read the weblog (Escape from Averageness®).  You can join the BuilderVelocity discussion on LinkedIn.

You can see who we have worked for and what they have to say about it.

In the midst of the storm, you can continue to learn.

 

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Following lengthy discussions about the ramifications of the COVID-19 pandemic, we have decided to cancel the upcoming Pipeline Workshop™.  It was a decision arrived at by all of the parties concerned.  It was a picture of what we call Epic Partnering™.

In a Pipeline workshop™, we have a Velocity Accelerator®, titled Epic Partnering™, in which we unpack a process and program for progressively transforming subcontractors, suppliers, and builders into true partners, into trusted allies, joined by shared, mutual interests.

The decision to act upon the reality imposed by this global epidemic, the decision to either postpone or cancel the upcoming Pipeline Workshop™ No. 13,  was a picture of epic-level partnering based on shared, mutual interests.  Credit goes to everyone involved:

  • Builders who were registered to attend, like Visionary Homes, who made rational, informed decisions about the danger of putting their teammates on airplanes, and worked diligently at alternatives.
  • Sponsors, Specitup and Simpson Strong-Tie, that let their investments ride and sought the best outcome to a difficult situation.
  • The venue, the Ponte Vedra Inn and Club, that weighed the situation, and graciously and proactively offered to reschedule the event, without enforcing any of its rights.

Everything now moves, intact and preserved, to either the next open, sponsored workshop, Pipeline Workshop™ No. 14, already scheduled for October 21-22, 2020, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida, or to private channel Pipeline Workshops™.

Thanks to everyone involved.  The most intense, demanding, interactive, and challenging homebuilding production management learning experience on the planet moves forward.

Join us.

 

Delivered by SAI Consulting.  Sponsored by Specitup and Simpson Strong-Tie.  Stay tuned for upcoming details:  www.buildervelocity.com

 

      

Pipeline Workshops™: Improvements to the Pipeline Game™

Posted March 9, 2020 By Fletcher Groves

“Pipeline games™ were a brilliant way to demonstrate and drive home the significance of cycle time improvements and improving trade partner efficiencies on ROA and Net Income.”  (Keith Porterfield, COO, Goodall Homes, Gallatin, TN)

“Pipeline games™ are a very innovative way to demonstrate the critical nature and relationship between cycle time, inventory turn, margin, and return on assets.”  (Vishaal Gupta, President, Park Square Homes, Orlando, FL)

Simulating production principles is a big part of every Pipeline workshop™.  We hear, over-and-over, that the opportunity to simulate production in a progressive series of scenarios is what enables builders to actually “see” production, to see production principles in action.  Because it is both a production simulator and a business game, the Pipeline game™ is what makes Pipeline workshops™ so intense, so interactive, and so competitive.

The Pipeline game™ has always been a tremendous tool for teaching both production and business principles, but we are never content.  We constantly improve it, introducing significant changes over the past five years that make it even more effective.

One of the earlier changes was to shorten the game, so that we could run more production scenarios in the same amount of time, and so that each operating decision became more consequential.  Another change, designed to make the game more realistic, was to have it depict the outsourced nature of homebuilding production as it is universally and currently performed.

That later change begs a deeper dive.

In the earliest version of the game, the resources that did the work reflected both capacity and the cost of that capacity;  the problem was, that arrangement more reflected a manufacturing operation than a homebuilding operation.  In order to realistically depict the current, outsourced nature of homebuilding production, capacity has to be separated from cost.

Why?  Because, the external resources that determine production capacity are a part of Cost of Sales (making them a direct, variable cost);  Cost of Sales is a measure of product cost, not capacity cost;  Operating Expense (the indirect, non-variable cost of internal resources) is what determines capacity cost.

Using the resources to reflect both capacity and cost required us to essentially disregard Revenue and Cost of Sales, and treat Throughput  (i.e., Gross Income) as Revenue.  In the improved version of the Pipeline game™, we restored Revenue and Cost of Sales to the picture, making Throughput (i.e., Gross Income) the residual;  in effect, we now account for the margin side of Return on Assets.

Because they do the work (not simply manage it), the external resources in a Pipeline game™ now define the production system’s capacity, and the cost of those resources is reflected in Cost of Sales, stipulated as a percentage of Revenue;  as it relates to Revenue, they are a direct, variable cost associated with the construction of a home.  Operating Expense is now an imposed cost, reflecting the budgeted cost of the internal capacity required to manage work-in-process;  that makes Operating Expense an indirect, non-variable cost, as it relates to Revenue, and the completions and closings that produce it.

This represents a significant stride in reconciling Revenue, Cost of Sales, Throughput, and Gross Income, making operating decisions easier to connect to financial outcomes.  The result is a production simulator and business game that is vastly more reflective of a homebuilding operation, with lessons that are now much easier for builders to understand.

This change continues to pay-off.  But – we don’t ever stop trying to improve the learning result;  we keep making the Pipeline game™ better and better.

Example?  At a recent Pipeline workshop™, we introduced a scenario that contrasts the currently accepted growth and operations strategy (a completely outsourced building model) with a radically different growth and operations strategy (a completely integrated building model), in order to explore the difference between a strategy based on a broader, shallower footprint and one based on a narrower, deeper footprint.

Come.  Participate.  Learn.

 

The next Pipeline workshop™ will be held March 25-26, 2020 at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.  Cost is $895.00;  for team pricing, inquire here:  flgroves@saiconsulting.com).

Delivered by SAI Consulting.

Sponsored by Specitup and Simpson Strong-Tie.

Details:  www.buildervelocity.com