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Deliverables: Business Process Improvement

Posted April 10, 2021 By Fletcher Groves

(initially published on Escape from Averageness® in October 2014 as the third in a six-part series;  republished here as part of our retrospective, Above Average: The Best of Escape from Averageness®, 2009-2021)

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.

GE Capital had the process mandate right.  There is a reason for our focus on business processes.

It is the most basic, most fundamental proposition in all of business:  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 work performed . . . in processes.

From a business standpoint, processes are critically, centrally important;  processes exist, whether enterprises are intentional about them or not.

Process mapping involves far more than simply documenting – merely gaining an understanding of – the current workflow;  mapping processes also includes redesigning those 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 the entire improvement method, 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 existing and targeted performance measures, builders can start to understand the requirements and necessary conditions that must exist in order 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 (hint: management only knows how it wants the process to work).

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

The advantage of IDEF0 lies in the ability of its hierarchical structure of graphic diagrams and supporting text diagrams to gradually reveal increasing 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 provide 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 in homebuilding than it is in industries that have high-transaction volumes and high-IT components.  Moreover, the true nature of workflow in homebuilding is not solely process management;  it is project portfolio management with embedded, surrounding, 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 an emerging standard, one 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 of BPMN (version 2.0) 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 Escape from Averageness®;  this case merits an exception.

SAI Consulting has done more work with business processes, and done it longer, than any consulting firm 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 processes, we were already recognized experts in that field.

SAI’s 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 Flowcharter w/ IDEF0);  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:  cross-functional flowcharting, value stream mapping, and IDEF0 process modeling;  all of the notation languages, and all of the methodologies (Total Quality Management, Lean-Six Sigma, Theory of Constraints, 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.

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Next:  Deliverables:  Current Reality Assessment

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Deliverables: Competitive Assessment®

Posted April 6, 2021 By Fletcher Groves

(initially published on Escape from Averageness® in October 2014 as the second in a six-part series;  republished here as part of our retrospective, Above Average: The Best of Escape from Averageness®, 2009-2021)

One of the hallmarks of SAI’s consulting work over the past fifteen or so years has been the Competitive Assessment®.  Somewhat like a balanced scorecard, this in-depth report provides an objective analysis of the capabilities and performance a builder has exhibited during its previous fiscal year, based on a predetermined set of measures the builder agrees are its key performance indicators, its so-called KPIs;  a Competitive Assessment® provides a standard comparative platform for performance measurement.

It is about results produced against expectations.

As a management tool, a Competitive Assessment® has a lot of central uses.

As an analysis of previous performance, it can be designed to relate to the predictive, real-time performance measures in a heads-up display and dashboard, and collectively constitute a builder’s performance measurement system;  it can be used to support a team-based performance compensation arrangement, one tied to targeted enterprise performance achieved above a baseline, regarding a single business outcome;  it can provide the forensics for a focused, targeted, measurable process of continuous improvement.

What a Competitive Assessment® delivers to a builder is broad, objective, unfiltered input into how well it is satisfying stakeholder requirements, while continuously improving operational capabilities and business performance.  It enables a builder to improve performance, shape its budget and operating plan, and make decisions about how it will manage the enterprise.

To give you a sense of how a Competitive Assessment® has worked in actual situations, take a look at the structure of a report we did for one of our clients over a multi-year period, a few years before the end of the Age of Homebuilder Entitlement®.

For this client, we provided a numeric rating of its capabilities and performance on a total of 25 key performance measures, classified into four sections:

  1. Measures of Success [Core Business Performance Measures]
  2. Supporting Business Performance Measures
  3. Operating Performance Measures
  4. Risk and Control Index

This builder’s actual performance was graded against its expected performance.  The numeric ratings ranged from 1.0 (lowest) to 4.0 (highest).  The rating for each measure was analogous to the grade received on a particular test, the rating for each section to the grade for a class, the overall rating to the overall grade point average.

The section indexes were a composite reading of their component measures;  there were several composite indexes within sections.

The first section (Measures of Success) was derived from the client’s foundational belief that the enterprise’s success was dependent upon meeting three basic requirements:  (1) earned loyalty from its stakeholders (including its buyers, its trade partners, and its teammates);  (2) sufficient cash generated from operations;  and, (3) a maximized return on invested capital.

Those requirements were considered the ultimate expressions – the ultimate measures – of success in their system, and this is how they appeared on the Competitive Assessment Scorecard®:

  • Measures of Success (‘Success Index’)
  • Cash Generation
  • Return on Invested Assets
  • Net Income
  • Invested Asset Turnover
  • Stakeholder Loyalty
  • Customer Satisfaction
  • Warranty Satisfaction
  • Teammate Satisfaction
  • Building Partner Satisfaction
  • Market Partner Satisfaction

The second section (Supporting Business Performance Measures) wrapped up the “outcomes” portion of the Competitive Assessment®, and included the following two measures on the scorecard:

  • Gross Margin
  • Operating Expense

Unlike the first two sections, the third section (Operating Performance Measures) contained operational measures that were considered “drivers” of business performance.  A lengthier section, the scorecard included the following measures:

  • Forward Land Position
  • Unsold Late-Stage (Stage 8-10) Inventory
  • Sales (sufficiency)
  • Start Buffer
  • Starts (sufficiency)
  • Closings (sufficiency)
  • Work-in-Process (necessary v. actual)
  • Cycle Time
  • Job Budget (Variance Purchase Orders)
  • Job Budget (slippage)
  • Top-grading
  • Warranty Service

The fourth section was a Risk and Control Index.  Unlike the earlier sections of the assessment, responsibility for this index belonged to the business partners (owners and investors), who were required to adopt and maintain a conservative and disciplined approach to investment and financial management, to make business and operating decisions within the controls established to manage risk, and to productively utilize a planned, finite, and controlled amount of capital resources.

  • Cash Balance
  • Debt-to-Equity Ratio

We advised this client not to regard the components of the assessment as a set of equally-important-but-independent, related-but-isolated measures, and not to conclude that the best way to improve the overall outcome was to spend an equal amount of time and effort improving the outcome of each and every measure.

Our point:  these 25 measures did not reflect a loose collection of independent and unrelated parts – a set of processes, departments, systems, resources, policies, and other isolated pieces of a whole.

It reflected a system.

The description of what goes into every measure is too involved to explain in this space, but these are image captures of the scorecard showing three years of assessment in all four sections for one of their operating companies, with points of concern highlighted in red:

Want to learn more?

 

Next:  Deliverables:  Business Process Improvement

 

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“Risen”

Posted April 4, 2021 By Fletcher Groves

(updated and reposted on Escape from Averageness® every year, on Easter morning)

The intrepid, results-based consultant reclined into the natural seat, at the back edge of one of the dry-eddy pools, where the beach resumed its slope more steeply, toward the upper dunes.

Easter 2021, Ponte Vedra Beach, Florida

She dug the soles of her topsiders into the sand, still damp from the last high tide.  It always felt good, unfailingly restorative, she thought.  Resting her arms on her knees, she gazed eastward, where the sun was just beginning to rise into a brightening sky with only a few clouds, on what was an unseasonably cool early-April morning in northeast Florida.

She was totally in her element.  A seventh-generation Floridian, she loved the waters and land of her native state.  She wished she could have seen for herself, more of the Florida her father loves to talk about – the mid-twentieth century Florida of his youth, the Florida he loved, the Florida before air conditioning, interstate highways, and theme parks.

This was her routine, every year, on Easter morning.

She reached over and removed her 35mm SLR from its backpack;  vintage digital, she mused, recalling how she learned photography old-school, at her father’s insistence, with a manual 35mm and Kodak film.  She waited until the time was right, and then switched the mode to manual, adjusted the aperture and exposure, partially depressed the shutter and studied the image in her viewfinder.

She released the shutter and confirmed the image.  She took several more photos as the sun rose a bit higher, and then set the camera aside.

The intrepid, results-based consultant turned her thoughts back, more than two thousand years, to the pre-dawn darkness of the first Easter morning, as she tried to reconstruct what the now disillusioned and despairing friends and followers of Jesus of Nazareth must have been thinking and feeling for the better part of their past two days.

Prophecies notwithstanding, when they went to the grave site on the morning of the third day, what did they really expect to find?  By every rational explanation and every shred of evidence, this man of so much promise, in whom they had placed so much hope, was dead.

They had been eyewitnesses to His death, and the effects of the torture and humiliation that preceded it;  the term excruciating, she reminded herself, came from the Latin ex crucis, meaning literally, “out of the cross”;  Roman crucifixions left nothing to the imagination.

They had been witnesses to his burial, as well, and the unusually intense security of his tomb.

For the friends and followers of Jesus, this was certainly more than the physical death of one man;  for them, it was the death of all Hope.

Her thoughts moved to another time not far removed from the darkness following the death of Jesus, as Peter, and others, asserted, for everyone to hear, that not only had they witnessed His torture, crucifixion, and burial, but they had also been the eye-witnesses to His resurrection three days later.

Rather than abandoning their faith and succumbing to hopelessness, Peter and the other apostles were now stating, publicly, authoritatively, for everyone to hear, that they were willing to live their lives – to give their lives – for the lives of others, and for the Faith and the Hope that Jesus’ crucifixion, death and resurrection gave all of them.

In the words of the apostle Paul, penned later to the churches of Galatia, they were all saying, in essence, “I have been crucified with Christ.  It is no longer I who live, but Christ who lives in me.  And, the life I now live in the flesh, I live by faith in the Son of God, who loved me and gave Himself for me.”

That has been the experience of every Christian, ever since, she among them.

She smiled, and whispered, “He is Risen.”

 

“God’s Kingdom had come, not at the end of time, but within time – and that had changed the texture of both time and history.  History continued, but those shaped by the Easter Effect became the people who knew how history was going to turn out.  Because of that, they could live differently.  The Easter Effect impelled them to bring a new standard of equality into the world and to embrace death – as martyrs, if necessary – because they knew, now, that death did not have the final word in the human story.”  (“The Easter Effect and How It Changed the World”, The Wall Street Journal, March 31, 2018)

Everything – past, present, future – points toward, or proceeds from, the fact of the death and resurrection of Jesus Christ.

And, it is the event in which we rejoice, and for which we celebrate, every Easter.

 

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Desert Communion

Posted April 4, 2021 By Fletcher Groves

The intrepid, results-based consultant and her companions had built their fire at the beach just before midnight, and had spent the hours before the Easter dawn in fellowship, discourse, and prayer, practices reminiscent of the Desert Fathers of the third century, the practices that John Eldredge and Brent Curtis refer to as “desert communion”.

As dawn slowly greater approached, she moved away from the fire to spend the remaining time in more solitude.

She reflected further on the words Eldredge and Curtis had penned in The Sacred Romance©, describing the silence, solitude, meditation, and simplicity of that practice:  “We have come to the shores of heaven together, to the border of the region where our Christianity begins to move from a focus on doing, to one of communion with Christ.”

Communion.  She thought about the meaning of the word.  While the term is most commonly applied as a proper noun associated with actions and elements of the eucharist, communion can also be either a verb or an adjective, referring to fellowship.  In that sense, communion is the sharing of thoughts, the sharing of matters held in common, sometimes with profound intensity.

Although she did not seek their asceticism, she did admire the willingness of men like Anthony and Athanasius, who were willing, as Jim Elliot expressed it under different circumstances, “to give up what [they] cannot keep, in order to gain what [they] cannot lose.”

“The earliest Christian monks inhabited [the Scetes desert of Egypt] starting at the end of the second century AD.  Known as the ‘Desert Fathers’, they left everything in search of knowing Jesus Christ by making the Gospels absolutely integral to their daily lives.  They wanted to commit themselves totally (body, soul, mind, and will) to being a disciple of the Lord Jesus with a profound holy zeal moving them to become ever more like Christ.  These monks practiced integrity of character with an unrelenting courage that required their whole being to remain in the state of constant humility that comes from knowing that they were loved by God.  Paradoxically, their extraordinarily harsh penances often resulted in gentleness and patience towards others, especially other monks but also visitors who came seeking an understanding of the essence of spiritual life.  These monks sought most of all to experience union with God in the quiet of the desert and in the silence of their hearts.”

– The Monastery of Christ in the Desert (christdesert.org)

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Deliverables: “What are you good at?”

Posted March 28, 2021 By Fletcher Groves

(initially published on Escape from Averageness® in October 2014 as the first in a six-part series;  republished here as part of our retrospective, Above Average: The Best of Escape from Averageness®, 2009-2021)

“What do you consult on?”

A natural, if somewhat ungrammatical question, which we frequently hear.  Consultants have lists and descriptions of their areas of expertise, what are termed deliverables;  from the standpoint of informing clients about what their consulting work involves and how that work unfolds, those descriptions can be useful.

But, those descriptions shouldn’t be why consultants are engaged.

As consultants, we would better serve our clients if we defined our services by the results we deliver, not define our results by the services we deliver;  what we ought to be delivering are targeted, measurable, meaningful results defined by the improvements in operating performance and business outcomes a client realizes as a result of having engaged us.

Under our preferred approach to delivering consulting services – under what we call Results-Based Consulting® – our short answer is, “We do what it takes to get results.”

And, not just any results.

We resolve to do whatever is required to gain the insight and understanding into operating and business performance required to create a sustainable, focused capability and capacity for implementing the things that improve that performance;  there is a search for a starting point to continuous improvement formed from current reality – formed from a cause-and-effect understanding of our clients’ core problems and constraints, as well as their opportunities.

We are determined to improve our clients’ means for understanding and managing workflow and production, so that our clients deliver more value – deliver more benefit, more consistently, with less waste, less cost.

We are committed to building urgency towards results, and to instilling business logic in a savvy, accountable, and motivated homebuilding team that has a financial stake in the outcome;  we foster a willingness and capacity for change, for innovation and learning, and a determination to make our clients less dependent on us for all of it.

Still, the question persists, regardless of the approach;  there is still that interest in “what kind of consulting” we do.

In other words, “What are you good at?”

Next:  Deliverables:  Competitive Assessment®