Building Urgency Towards Results: Part II: Developing the Plan Forward

From time to time on Escape from Averageness®, we share high-level outcomes from selected consulting engagements, in order to provide insight into how a focused process of continuous improvement should really work.

Building Urgency Towards Results

This two-part series is a summary of the initiatives that emerged from a recent engagement with one of our clients, all based on an upfront assessment of the client’s current situation – on what we call a Current Reality Assessment®.  Part I is about assessing the existing (current) reality;  Part II is about determining the best way forward from that reality.  It is a summary of the process, itself.  It is also a picture of the candor and directness that must exist to make the process work.

From the UDEs and the IO Map, the team developed a Plan Forward, a roadmap to get them from where they were, to where they wanted to be.  As such, it represents a planned, purposeful commitment to a measurable outcome.  It is a series of initiatives with short durations, conducted in consecutive order, aimed at producing rapid, targeted, measurable improvements in areas of operational performance that drive improvements to a specific business outcome.

Fully-defined in terms of order, relationship, responsibility, completion dates, requirements, and outcomes, the Plan Forward is a focused course of action that addresses the cause-and-effect relationships between problems and symptoms of problems, tailor-made for use with an open-book, team-based approach to performance compensation.

All of the so-called P-initiatives in the Plan Forward flowed from the assessment of current reality, the UDEs, the IO Map.

There are eight of them:

P-1:  Strategic Direction:  Confirm the specific direction the company is committed to take, in terms of its value proposition, value discipline, target market, product type, architectural style and design, revenue and closings, and production size and capacity.

Purpose:  Provide strategic clarity.

Prerequisites:  None

Duration:  15 business days

 

P-2:  Team-Based Performance Compensation Plan:  Based on the strategic direction, design and implement a Gross Income Milestone Plan.

Purpose:  Become a company of business-people;  provide teammates a stake in the outcome.

Prerequisites:  P-1 complete

Duration:  5 business days

 

P-3:  Business Process Improvement:  Part I:  Document and analyze the current state of every critical business process.  Part II:  Redesign all of the critical business processes and document them as IDEF0 process models (a hierarchical series of graphic and text diagrams) specifying the workflow.

Purpose:  Implement elegant workflow solutions:  get horizontal;  clear the fog;  simplify workflow;  attack variation, waste, and non-value-adding work;  take the freed-up internal resource capacity and deliver higher value work.

Prerequisites:  P-1 complete

Duration:  35 business days

 

P-4:  “Pull” Mechanism for Releasing Starts:  Implement the Start Release process that is designed to sequence the rate of job starts to (1) the completion of jobs already in the production system, and (2) the number of previously-released jobs in front of the most constrained resource.

Purpose:  Increase velocity:  manage capacity, reduce/control work-in-process;  synchronize starts and closings.

Prerequisites:  P-1, P-3 complete

Duration:  9 business days

 

P-5:  Identify-Exploit-Elevate the constraint:  Identify the external resource that has a combination of the least capacity and/or the highest demand;  partner with that resource to optimize its capacity, insure that it is never idle, and then – as a final resort – arrange for more of it.

Purpose:  Increase velocity:  manage capacity, control work-in-process.

Prerequisites:  P-1, P-3, P-4 complete

Duration:  5 business days

 

P-6:  Job Schedules:  Reduce current calculated cycle time (see Little’s Law) from 206 days to under 150 days, by removing all of the task duration safety and adding a project buffer to protect the job completion date (see Critical Chain)

Purpose:  Increase velocity:  reduce cycle time by shortening the job schedule.

Prerequisites:  P-5 complete

Duration:  10 business days

 

P-7:  Plan Portfolio:  Expand and enhance the existing/current portfolio of floorplans and elevations, using the Plan Review process.

Purpose:  Increase margins:  increase the value delivered, by increasing the benefit and reducing the cost;  insure that the plan portfolio is a compelling differentiator in the company’s housing market;  floorplans/elevations that are desirable-yet-buildable, buildable-yet-desirable.

Prerequisites:  P-1, P-3, P-6 complete

Duration:  90 business days

 

P-8:  Job Budgets and Job Costs:  Apply the new Job Budgeting/Costing process to every floorplan and elevation in the expanded/enhanced plan portfolio to produce accurate and complete job budgets.

Purpose:  Increase margins:  produce accurate and complete job budgets;  use better specifications;  obtain better pricing.

Prerequisites:  P-3, P-7 complete

Duration:  41 business days

 

Eight projects, to be completed in nine months.  Focused.  Prioritized.  Manageable.  Measurable.  Results-driven.

Expected Results:  Strategic clarity.  Better processes.  Stake in the outcome.  Cycle Time reduced from 209 days to 150 days.  Inventory Turns increased from 1.7x to 2.4x.  Gross Margin increased from 17% to 22% (albeit on a useless absorption costing, NAHB-comparative basis).

I told our client it was a good start, but it is too modest.  I told them not to stop there.

Based on the UDEs and the IO Map (and we suspect the Current Reality Tree had it been developed), and in the midst of developing the Plan Forward, I warned them that there remained a lack of clarity, boldness, and urgency, and advised them to address the deficiencies.

I told them that they understand the current situation, and they have a plan, but that is all they have.  It is up to them.  I told them that the hard work lies ahead, and it has to start now.

If it was a different client, in a different situation, under different economic circumstances, it would have no doubt required a different plan.  But – whatever the situation – this is the type of urgency that continuous improvement needs to foster.