Change Management and “Moneyball” (Movie Version) December 1, 2013Posted by Tim Rodgers in baseball, Communication, Management & leadership, strategy.
Tags: baseball, change management, leadership, management, power, strategy
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The other day I watched the movie “Moneyball” again and was reminded of a few important characteristics of successful change management. Brad Pitt stars as Billy Beane, the general manager of the Oakland A’s baseball team, an organization struggling with a limited budget to develop, attract, and retain players.
At the beginning of the movie we learn that before the 2002 season the A’s have lost three of their best players who have signed more lucrative contracts elsewhere. Beane is trying to figure out how to replace these players, and more generally put together a winning team within the financial constraints imposed by ownership. After a chance encounter with a low-level analyst from a rival organization, Beane realizes that he cannot compete if he builds a team using the traditional ways of assigning value to players. Almost out of desperation, he decides on an unconventional strategy based on the emerging science of sabermetrics. He immediately faces resistance from his experienced staff, specifically the field manager and scouts who are unconvinced and in some cases actively working against the strategy.
Ultimately it’s fairly happy ending: despite public criticism of Beane’s decisions and early disappointments on the field, the A’s have a successful season. At one point they win 20 straight games, setting a new league record, and they make the playoffs, but lose in the first round. Beane is offered a significant raise to leave the A’s and join the Boston Red Sox where he would have the opportunity to apply the same principles with a much larger budget. Beane declines the offer, but the unconventional strategy has been seemingly validated.
The movie focuses Beane’s underdog status and uphill battle during the season, and I’m sure some of the real-life events have been changed for dramatic effect. Regardless of whether they actually happened or not, there are several scenes that illustrate elements of successful change management.
1. A clear explanation of the new direction. In the movie, Beane leads a meeting of his senior staff to discuss plans for acquiring players for the upcoming season. This looks like Beane’s first opportunity to apply his new strategy, but he misses an important chance to align with his team. It’s clear that he’s the boss with the final authority, and it’s not necessary for everyone in the room to agree, but Beane could have taken the time to explain the new direction and acknowledge the objections. In later scenes, Beane acknowledges this mistake to his field manager who has been undermining the strategy through his tactical decisions, and fires a senior staff member who has been especially vocal in opposition.
The lesson: the team may not agree with the change, but they should be very clear about why change is needed. Team members should have the opportunity to raise objections, but once the direction has been set, their only choices are to support the change or leave the team.
2. Removing options to force compliance. Beane is frustrated by opposition from his field manager who gives more playing time to players whose skills are not highly valued in Beane’s new system. Beane stops short of giving a direct order to the manager to be make decisions that are more consistent with the strategy, and instead Beane trades these players to other teams, effectively removing those undesirable options. This is a variation of what is sometimes called “burning the boats,” from the Spanish conquest of the Aztec empire. You can’t go back to the old way of doing things because that way is no longer an option. As Beane replaces players, his manager has fewer opportunities to not follow the strategy.
The lesson: this seems like passive-aggressive behavior from both parties, but I can see how it can be effective. My preference would be to reinforce the desired change rather than take away choices, but if the old way is very well established you need to help people move on and not be tempted to return.
3. Giving it a chance to work. The A’s get off to a slow start and pressure builds on Beane to abandon the new strategy. In one scene he meets with the team’s owner and assures the owner that the plan is sound and things will get better. It eventually does, despite all the skepticism and opposition, and the movie audience gets the underdog story they were promised.
The lesson: even the best ideas take time. It’s absolutely critical to set expectations with stakeholders to help them understand how and when they will detect whether the change is working. Impatience is one of the biggest causes of failure when it comes to change management.
Higher Value for Higher Priced Employees November 22, 2013Posted by Tim Rodgers in International management, Product design, strategy, Supply chain.
Tags: job security, management, product development, software development, supply chain
You can complain about it, but offshoring is not going away. Businesses will always look to reduce cost, and wherever there’s a significant difference in labor cost, that difference is going to attract interest. I’ve spent almost my entire career working at companies that have moved their supply chain and production factories to locations that have lower labor cost. For manufactured goods this savings must be weighed against other expenses to determine whether there’s a net gain, such as shipping costs and finished goods in-transit. For knowledge work where there’s virtually zero cost to instantly move the output from one part of the world to another (such as software), the advantage is even greater.
You can complain about it, but if you want to justify a higher cost of labor in one part of the world, you have to demonstrate that this labor provides higher value. The added cost must be offset by some benefit, ideally something that can be quantified. It’s important to distinguish between sources of higher value that are fundamental and relatively stable vs. those that can be eroded over time.
Here are some examples:
1. “We know how to do it here, they don’t know how to do it there.” Your design team, and factory, and supply base may be well-established in one location, but you’re wrong if you think that can’t be replicated somewhere else. There are smart, well-educated people all over the world, and it’s easier than ever to access their skills, especially for knowledge work. There will be training, start-up, and switching costs, and those will have to be evaluated against the steady-state labor cost savings, but it’s not impossible.
2. Cost of quality. This is related to #1 above. You may be able to produce output at a different location with lower labor cost, but does the quality of that output lead to additional expenses later, such as rework, field repair, and loss of customer loyalty? These can be addressed with specific improvement plans, depending on the causes of poor quality, and are not necessarily permanent conditions. As above, the costs to improve or maintain quality at any location should be compared with the labor savings.
3. Geography. This is an example of a more fundamental difference that may justify higher labor cost. Many businesses benefit from close physical proximity to their customers, enabling them to respond quickly to changes in market demand and mix without the burden of a long finished goods pipeline from their production sites. A hybrid approach is late-point differentiation where platforms are built ahead at low cost and later customized depending on the specific order. Another benefit of geography is co-design, where frequent, real-time interaction with customers leads to a better fit to their requirements. Some companies will overcome this one by using available technology to communicate with remote teams, or performing rapid prototyping locally to verify the design before shifting volume production elsewhere.
Note that geography can also be an overriding factor when there are political or economic barriers, such as regulatory or “local content” requirements.
My point is that if you insist on doing the work in a location with higher labor cost, you can’t assume that the corresponding value will always be worth the higher cost. Your survival as a business depends on your ability to identify, develop, exploit, and maintain a source of competitive advantage. Your choices about labor cost and geographic location should support your strategy to maintain competitive advantage, and that strategy should be regularly reviewed and updated to make sure you’re getting the value your paying for.
What Does Almost Done Really Mean? November 17, 2013Posted by Tim Rodgers in Communication, Project management.
Tags: communication, management, performance measures, project management
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About a year ago I earned a Project Management Professional certificate after learning the methodologies and structured processes formalized by the Project Management Institute. Almost all of my experience in project management has been in product development, and the PMP training provided a broader perspective on other types of projects. I was particularly intrigued and somewhat amused by the use of quantitative measures of project status based on Earned Value Management (EVM).
I can see why EVM would appeal to a lot of project managers and their sponsors and stakeholders. Everybody wants to know how the project is going and whether it’s on-track, both in terms of schedule and budget. They want a simple, unambiguous answer, without having to look at all the details. The EVM metrics provide project status and a projection of the future, in terms of the value and expenses of the project’s tasks that are already completed and still remaining.
The problem for many projects is that it requires a lot of planning and discipline to use EVM. Not only do you have to generate a full Gannt chart showing all tasks and dependencies, but you also have to estimate the cost and incremental value-added for each of those tasks. That’s going to be just a guess for projects with little historical reference or leverage. Quantitative metrics are generally less valuable when they’re based on a lot of qualitative assumptions, despite the appearance of analytical precision.
Whether or not you use EVM, everybody wants to express project status in terms of a percentage. “We’re about 90% done, just a little bit more to go, and we’re looking good to meet the deadline.” This kind of oversimplification often fails to recognize that the pace of progress in the past is not necessarily the pace of the future, especially when sub-projects and their deliverables are integrated together and tested against the requirements. There’s an old saying in software development that the last 10% of any software project takes 90% of the time, which is one of the reasons why agile development techniques have become popular.
While I applaud the attempts to quantify project status, I would assess a project in terms of tasks and deliverables actually either fully-completed or not, not “90% complete.” For large projects it’s useful to report deliverable completion status at checkpoint reviews where stakeholders can confirm that previously-agreed-upon milestone criteria have been met. This binary approach (done or not-done) may seem less quantitative, but it’s also less squishy. The overall status of the project is defined by the phase you’re currently in and the most-recent milestone completed, which means that all of those tasks leading up to the milestone have been completed.
That still leaves the problem of assessing the likelihood of future success: will the project finish on-time and on-budget? At some point you’re going to have to use your best judgment as a project manager, but instead of trying to distill your status to a single number isn’t it more useful to talk about the remaining tasks, risks, and alternatives? Sometimes more information really is better.
Why We Need Quality Police November 10, 2013Posted by Tim Rodgers in Management & leadership, Organizational dynamics, Process engineering, Quality.
Tags: early stage companies, management, power, process, quality engineering
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I’ve said it myself many times: the quality department shouldn’t be the quality police. We tell ourselves that everyone is responsible for quality, and we therefore ask people to police their own behavior and make the right choices. This sounds good and noble, and it’s certainly more cost-effective than relying on a separate functional group to keep an eye on things.
And yet: it seems to be the only way. We need quality police.
When we’re left on our own, we tend to look for the fastest and easiest way to complete our assignments. We don’t spend much time thinking about the priorities or needs of other groups, or how decisions have future consequences. To eliminate chaos, businesses establish work standards and processes to enable coordinated activities and a smooth flow of information. Certainly we want our work processes to be effective, but what matters most are the consistent results that are achieved when everyone follows the process.
Somebody has to keep en eye on all this, to check for process conformance and process improvement opportunities. Managers can monitor the performance of their assigned teams, but a manager will tend to optimize within their team according to their objectives. Second-level or higher managers have a broader (and possibly cross-functional) perspective, but they probably lack the deeper understanding of the work processes.
If you have a quality team, this is their job. They’re the ones who pull together all the processes into a corporate quality management system (QMS). They’re the ones who train and audit the QMS, not just to make sure it’s being followed, but also to make sure it’s meeting the needs of the business. They’re the ones who monitor the performance of the processes to identify opportunities for improvement. And, if you care about ISO 9001 certification, they’re the ones who make sure you “document what you do, and do what you’ve documented.”
This isn’t the quality police looking for “process offenders” and punishing them. This is standardizing processes, reducing variability, and eliminating waste. Doesn’t every business want that?
Firing Customers For Profit November 7, 2013Posted by Tim Rodgers in Management & leadership, strategy, Supply chain.
Tags: business development, early stage companies, management, outsourcing, project management, strategy, supply chain
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Businesses large and small generally work diligently to satisfy customers, and they’re frequently reminded that the cost of acquiring a new customer is much greater than the cost of retaining an existing one. Unfortunately many of those businesses fail to appreciate that each customer has an incremental cost, not just to acquire, but also to manage. It’s possible that an organization can spend more money to support a customer than what they get in return, which is obviously an undesirable situation.
Early stage companies are particularly susceptible to this kind of trap. In their eagerness to turn their ideas into revenue, they will often incur hidden costs in order to customize products and services for each potential customer. Any customer who is willing to pay looks like a good customer. Geoffrey Moore writes about this in his excellent book “Crossing the Chasm” (HarperBusiness, 1991). The danger is that the company loses economies of scale, leverage and re-use efficiencies, and ultimately the focus that defined the unique profit opportunity in the first place.
Unprofitable customers or segments can be hard to detect. It’s easy to add up the direct material cost of a single product configuration, but you also need to understand how much time your sales and support staff spend with a customer. Does your purchasing team have to manage unique suppliers? Does your quality team perform special tests or inspections? Your indirect labor may be spending a disproportionate amount of time dealing with requirements and requests from customers who squeak.
Unprofitable customers are not necessarily bad for the business. Moore writes about segments with “bowling pin potential” that may be a net loss today, but enable the firm to establish foundational processes, move up the learning curve, and leverage and grow in the future. These loss-leaders have long-term strategic value, but it’s important to understand and assess the investment in order to ensure the expected return.
Actually refusing to do business with a customer is extreme and could hurt your reputation, but consider ways to reduce the cost to manage a customer that isn’t currently providing a net profit or enables future profitability. The firm that fails to understand their “cost to serve” may find itself out of business despite many happy customers.
Are Your Suppliers Really Committed to Quality? November 6, 2013Posted by Tim Rodgers in Management & leadership, Process engineering, Quality, Supply chain.
Tags: factory quality, leadership, management, outsourcing, performance measures, process, quality engineering, six-sigma, supply chain, test & inspection, training
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Suppliers always declare their commitment to the highest standards of quality as a core value, but many have trouble living up to that promise. I can’t tell you how many times I’ve visited suppliers who proudly display their framed ISO certificates in the lobby yet suffer from persistent quality problems that lead to higher cost and schedule delays. Here’s how you can tell if they’re really serious:
1. Do they have an on-going program of quality improvement, or do they wait until you complain? Do they have an understanding of the sources of variability in their value stream, and can they explain what they’re doing to reduce variability without being asked to do so? Look for any testing and measurements that occur before outgoing inspection. Award extra credit if the supplier can show process capability studies and control charts. Ask what they’re doing to analyze and reduce the internal cost of quality (scrap and rework).
2. Do they accept responsibility for misunderstandings regarding specifications and requirements? Or, do they make a guess at what you want, and later insist they just did what they were told? Quality means meeting or exceeding customer expectations, and a supplier who is truly committed to quality will ensure those expectations are clear before they start production.
3. Do you find defects when you inspect their first articles, or samples from their first shipment? If the supplier can’t get these right when there’s no schedule pressure, you should have serious concerns about their ability to ramp up to your production levels. By the way, if you’re not inspecting a small sample of first articles, you’ll have to accept at least half of the blame for any subsequent quality problems.
4. Has the supplier ever warned you of a potential quality problem discovered on their side, or do they just hope that you won’t notice? I realize this is a sign of a more mature relationship between supplier and customer, but a true commitment to quality means that the supplier understands their role in your value stream, and upholds your quality standards without being asked.
Ultimately, you will get the level of quality you deserve, depending on what suppliers you select and the messages you give them. You may be willing to trade quality for lower unit cost, shorter lead time, or assurance of supply. The real question is: What level of quality do you need? What level of poor quality can you tolerate?
Why Can’t You Figure Out What I Want? July 29, 2013Posted by Tim Rodgers in Management & leadership, Organizational dynamics.
Tags: communication, leadership, management, manager, power
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Earlier this year I started working at a new company where, except for the brief job interviews, I was entirely unfamiliar and unknown to everyone. I’ve been through this many times in my career, changing jobs and relocating more often than most, I suspect. It takes a little while for your new co-workers and subordinates to figure out who you are, what you care about, and what you expect. Your style and preferences will not be immediately obvious, and it’s unlikely that others will be able to read your mind. You’re bound to have some miscommunication, misunderstandings, and missed deliverables until you get on the same wavelength, and until then you have to spend a lot of time explaining what you really want.
You can make this easier for everyone by being explicit, being consistent, and giving feedback.
It starts by determining your priorities as a manager. What are the key performance indicators (KPIs) for the team relative to the larger business? What does success look like? How will you measure the performance of each team member? The answers to those questions should enable you to figure out what decisions you need to make, what decisions require your input, and what decisions can be made by your subordinates independently. That will help your team understand what information you need and when you need it.
You can also help your team by consistently communicating strategic messages that are simple, unambiguous, and (ideally) quantifiable. Cost reduction, revenue growth, on-time production ramp, fewer defects, greater efficiency, and improved customer satisfaction are all examples of strategic messages that are easy to grasp, but if the priorities are always changing you can’t expect people to know what’s important on any given day.
Finally, each person on the team should have individual performance objectives that can guide their decisions and their choices about how they spend their day. The feedback and reinforcement you provide during your routine encounters should reinforce those objectives. You shouldn’t make it hard for folks to figure out what you expect from them.
Why We Need Processes (and Recipes) July 7, 2013Posted by Tim Rodgers in Management & leadership, Process engineering.
Tags: change management, innovation, management, process
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I enjoy cooking, it’s one of my few creative outlets. I used to tell people that there’s some deep connection between cooking and my early interest in laboratory chemistry, and maybe there’s something to that. At least with cooking you can eat your mistakes, most of the time. I’ve learned a few kitchen techniques, and I enjoy trying new recipes, particularly if the ingredients are accessible and it doesn’t take too much time to prepare.
I typically follow the recipe exactly the first time I try a new dish or dessert. That’s because I assume the creator of the recipe has done some trials and determined that this is the right sequence of steps and the right balance and ratio of ingredients that will yield the best result. As I’ve gained more experience I’ve become more confident in my ability to adjust the recipe to match my taste. However I make a point of writing down my changes and the results of those experiments so I can reproduce the outcome instead of relying on my memory of something I prepared weeks or months ago.
Last week I was trying to explain to someone why we need documented processes at work, and why it’s important to edit processes. If it’s important to get a consistent, predictable result, you should find a process that delivers that result and write it down so you don’t have to rely on institutional memory or the work habits of an individual employee.
If it turns out that you’re not getting the results you desire, or it costs too much, or there’s collateral damage, then you should definitely stop using that process. That doesn’t mean ignoring the process and giving up on the benefits of consistency and predictability. It means editing the process, or possibly creating a completely new one that meets your needs. Either way, those edits should be based on an understanding of what isn’t working. It may require several iterations to find a better process, but as one of my favorite TV chefs likes to say: “Your patience will be rewarded.” The alternative is chaos.
The Weakest Link In Any Quality System June 29, 2013Posted by Tim Rodgers in Management & leadership, Quality.
Tags: China, factory quality, management, outsourcing, quality engineering, test & inspection, training
It’s time to start writing again. I officially re-joined the workforce in mid-March and I’ve been very busy with starting a new job and relocating to Colorado. While I’ve had a lot of time for reflection, there’s been little time for composition. Now I want to get back into a blogging rhythm, for my own benefit if for no other reason.
I’m managing a quality department again, and it’s another opportunity to establish a quality system of processes and metrics that can enable the business to “meet or exceed customer expectations” at a reasonable cost. In that role I’ve been spending a lot of time understanding how the company measures quality, both externally (field failures, service calls), and internally (factory yield, defective parts received). These measures must provide an accurate picture of the current state of quality because any set of improvement plans will be based on the perceived status and trends over time. If the measures are wrong we will dedicate ourselves to fixing the wrong things, which means either lower priority targets (missed opportunity), or trying to fix something that isn’t broken (process tampering).
Unfortunately almost all of the current quality measures are compromised because of a fundamental weakness: the human element. We’re counting on individual service reps, factory assemblers, inspectors, and others to log their findings correctly, or even log their findings at all. I’m not sure which is more damaging to our quality planning: no data or invalid data. Either way we’re in danger of running off in the wrong direction and possibly wasting a lot of time and energy on the wrong quality improvement projects.
So, how can can get our people to provide better input? Sure, we can impose harsh directives from above to compel people to follow the process for logging defects (not our management style). Or, we could offer incentives to reward those who find the most defects (a disaster, I’ve seen this fail spectacularly). I think the answer is to educate our teams about the cost of quality, and how all these external and internal failures add up to real money spent, and potentially saved by focusing our improvement efforts on the right targets. Some percentage of that money saved could be directed back to the teams that helped identify the improvement opportunities.
My plan is to hit the road, going out to our service reps and our design centers and our factories and our suppliers to help them understand the importance of complete and accurate reporting of quality. I need everyone’s commitment, or else we will continue to wander around in the dark.
Innovative Design vs. Lean Product Development April 17, 2013Posted by Tim Rodgers in Management & leadership, Product design, Project management, Quality.
Tags: innovation, management, process, product development, six-sigma, strategy
I’ve been very busy focusing on my job search and some self-improvement projects, and unfortunately it’s been harder to find some time to address my accumulated backlog of topics. I regularly follow several group discussions on LinkedIn related to product development and quality, and lately a popular discussion topic is how to inspire innovation in product design.
See for example Wayne Simmons and Keary Crawford “Innovation versus Product Development” (http://www.innovationexcellence.com/blog/2013/04/12/innovation-versus-product-development/), and Rachel Corn’s blog “Is Process Killing Your Innovation?” (http://blog.cmbinfo.com/bid/87795/South-Street-Strategy-Guest-Blog-Is-Process-Killing-Your-Innovation?goback=%2Egde_2098273_member_229196205). The latter post quotes a former 3M vice president who says that Six Sigma killed innovation at 3M, apparently because 3M’s implementation of Six Sigma required “a full blown business case and even a 5-year business plan to get a new idea off the ground and into production.” The VP wonders: how do you institutionalize innovation without stifling it?
The conventional wisdom seems to be that product design is inherently a creative, right-brain activity that will fail or at least fall short if constrained by process. You can’t make art on a schedule.
I think this is a false conflict. I don’t see any reason why teams shouldn’t be able to conceive new designs within a structured and disciplined product development environment. Obviously the ultimate objective is to get a product to market, so at some point the experimentation must end, doesn’t it?
Six Sigma is about reducing variation. The lean movement is about eliminating waste. I understand that the early stages of product development may be wildly unpredictable and seemingly inefficient. Shouldn’t the latter stages focus on predictable outcomes, standardized processes, fast time-to-market, defect prevention, and efficient production?