‘Chain’ beats ‘Triangle’

chain-beats-triangleFollowers of ‘Modern’ (?) management find themselves in essentially the same position: Trying to increase value1 to their investors. But, if this is their outlook, where to start?

Introducing the Triangle

Perhaps the place where ‘the triangle’ is seen most visibly is within many a traditional project management book – you will likely see a lovely little diagram within its first few foundational pages, with the words ‘quality’, ‘cost’ and ‘time’ at its points.

triangleIt will go on to suggest that the Project Manager’s job is to juggle these three variables so as to deliver ‘on time, within budget and to an acceptable quality’.

The key thing to notice is the assumption that there is an equation in which these variable are somehow related….and received wisdom goes on to suggest that there is a trade off and ‘we can’t have it all’ e.g. if we want higher quality then this would sacrifice time and/or cost.

…and the thinking behind that triangle isn’t limited to projects…it goes right across the organisation, in everything it does – basically that faster and cheaper are the opposite of higher quality.

All makes sense doesn’t it – nothing to see here. Blog post over?

Well no, as you’ve probably guessed, I’m just revving up!

And so to Dr Deming:

In his book ‘Out of the Crisis’ (1982)Dr W. Edwards Deming wrote about the “folklore…that quality and productivity are incompatible: that you can’t have both. A manager will usually tell you that it is either or. In his experience, if he pushes quality, he falls behind in production. If he pushes production, his quality suffers. This will be his experience when he knows not what quality is nor how to achieve it.”

Deming’s last line suggests that there could be value in exploring:

  • What ‘quality’ means; and
  • His thinking on how to achieve it.

What is quality?

It’s obvious isn’t it? Surely, it’s simply “how good something is!” Well, yes…but that doesn’t get us very far. It poses the rather obvious question “good for who?”

There are two levels to drill into:


Level 1 (and perhaps you’ll all be yawning reading this much-stated point) is that quality is, and can only be, defined by ‘the customer’ (or citizen or patient or….).

It follows that you can’t tell your customers what quality is, or quietly determine this for them. Instead, if you really want to deliver ‘quality’, you’d better spend time constantly understanding2 your customers and what they want/ need from your product/ service/process.


Level 2 is that there is no such thing as the average customer – no two customers are the same – and, as such, quality is defined by each unique customer…and this point has profound implications (particularly for service organisations).

For example, it would be a mistake to create a ‘customer specification’ and think that you have solved the quality conundrum. We need to understand the particular customer before us and design a system that can effectively, and efficiently, absorb their variety. This would be the opposite of trying to force them into a straight jacket.

“You’ve ‘dissed’ the triangle…but what’s your ‘Chain’ got to do with it?”

And so to Deming’s thinking on how to achieve quality. I’ll start by introducing his ‘quality chain reaction’:

Deming wrote that, in the post World War 2 period, some Japanese companies observed that “improvement of quality begets naturally and inevitably improvement of productivity.” i.e. that when quality goes up, costs actually come down. This would seem to be the opposite of our triangle!

How can this be so? Well, when the quality goes up, costs decrease due to fewer mistakes, less rework, fewer delays…reduced failure demand…and on and on. This leads to a continually improving flow.

Deming went on to write that the following “chain reaction was on the blackboard of every meeting within top management in Japan from July 1950 onwards:”

Improve quality – costs decrease – productivity improves – capture market (better quality, lower prices) – stay in business – provide jobs…and more jobs.

Notice where it ends – jobs. Contrast this with where most cost-cutting ‘initiatives’ start – jobs…but not to create them!

Deming calls out a difference in thinking3:

“Western Industry is satisfied to improve quality to a level where visible figures may shed doubt about the economic benefit of further improvement. As someone enquired, ‘how low may we go in quality without losing customers?’ This question packs a mountain of misunderstanding into a few choice words. It is typical of management’s misunderstanding in America.

In contrast, the Japanese go right ahead and improve the process without regard to figures. They thus improve productivity, decrease costs, and capture the market.” (Deming)

‘Triangle’ thinking requires a detailed business case, showing a healthy (yet imaginary) ‘return on investment’ (ROI) before anything can gain authorisation to proceed. This is, unhelpfully, labelled as ‘governance’.

‘Chain reaction’ thinking uses a clear vision, for the customer, and gets on with constantly experimenting towards it, whilst checking the results. This generates a purpose-seeking learning organisation.

Updating the Quality chain

Dan Jones, in one of his YouTube videos, expands Deming’s quality chain reaction to show its wider effect on the full organisational system4. I really liked what he had done on his slide…but I wanted to make it clearer still…and so I ‘tweaked it’ (see below5)…showing that, if you start at quality, the chain reaction is kicked off and then continues to flow around and around the system:

quality-chain-reaction

Now, many a command-and-control organisation would look at the above and shout out “that’s exactly what we are doing!”…and so, to counter this riposte, I thought I’d re-do the diagram but this time start at cost.

i.e. if your starting point is to reduce costs (usually by interrogating line items on the P&L, and focusing on activities) then you are NOT on the quality chain reaction. You would be on quite a different journey:

activity-cost-spiral

In a sentence:

Customer Purpose (which, by definition, means quality) comes first…which then delivers growth and profitability, and NOT the other way around!

…and, for all you executives/ senior managers out there, many (most!) of your people already know this6.

Footnotes

1. The definition of Value: I reflect on a rather nice quote from Jeffrey Liker: “The first question…is always: ‘What does the customer want from this process?’ This defines value.

Unfortunately, the modern corporate world has somewhat twisted this definition, and has come to believe that value is defined by the providers of ‘dead money’.

2. Understanding your customer: This requires much more than simply asking them what they want/ need. They often don’t know or, even if they do, can’t (or won’t) clearly articulate this. We need to listen to, and observe, the demands that they place on the system…and then we can truly understand how they behave.

3. Deming’s ‘Western/ American vs. Japanese’ comparison reflects the age, and focus, that he was operating within. Times have changed – not all Western/ American organisations can be tarred with the same brush…and not all Japanese organisations have stayed true to this thinking.

I suggest a modern interpretation would be to compare how organisations are run, by:

  • Command-and-Control ‘financial engineers’, attempting to use remote-control management; with
  • ‘Systems thinking’ value stream managers

4. Dan Jones presentation: See his slide with the heading ‘defining value’

5. Value for investors: I’ve added employees to the ‘value to investors’ column label within the diagram, to reiterate my recommendation that the system needs ’live moneyto enable this way of thinking.

6. A common aim: The production worker in Japan, as anywhere else in the world, always knew about this chain reaction; also that defects and faults that get into the hands of customers lose the market and cost him his job.

Once management in Japan adopted the chain reaction, everyone there from 1950 onward had one common aim, namely, quality.

With no lenders nor stockbrokers to press for dividends, this effort became an undivided bond between management and production workers.” (Deming)

I know that it’s a broken record but…this last sentence returns back to “Your Money or your Life!”

Depths of ‘Transformation’

butterflyI’ve been meaning to write this post for 2 years! It feels good to finally ‘get it out of my head’ and onto the page.

It’s about that lovely ‘Transformation’ word.

Before I go on, I’ll repeat a definition from an earlier post:

Transformation: In an organisational context, a process of profound and radical change that orients an organisation in a new direction and takes it to an entirely different level of effectiveness….transformation implies a basic change of character and little or no resemblance with the past configuration or structure.” (businessdictionary.com)

To repeat the key phrase: An entirely different level of effectiveness! …and, just in case you missed it, the word is effectiveness, not efficiency.

I’m going to outline 3 levels of (supposed) transformation and I’ll do this by borrowing the bones of an idea from Mike Rother’s excellent ‘Toyota Kata’ book and extend it with a large dose of my own ‘poetic license’.

Level 1 Transformation: ‘On the surface’

iceburgSo, picture the scene: It’s the late 1970s. Your organisation desperately wants to improve and, on looking around for someone achieving brilliant results, you spot the awesome Toyota (or such like1).

You go on a Toyota factory visit. You are amazed at what you see and excitedly ask them how they do it.

You easily observe (‘on the surface’) lots of obvious methods and tools…and so you grab evidence of how these are carried out – e.g. some template forms, and the instructions that go with them. You also take lots of pictures of their (visual management) walls to show all this working in situ.

You run back home, hand out the methods and tools and mandate that, from now on, this is what we are doing.

toolboxYou helpfully provide training and (so called) ‘coaching’…and you put in place ‘governance’ to ensure it’s working. You roll it all up together and you give it a funky title…like your Quality Toolbox. Nice.

So what happens?

Well, yep, those tools and methods sure are ‘shiny new’ and easily applied. There’s an initial buzz, probably because of senior management focus…and pressure to prove the comedy ‘Return on Investment’ (ROI) calculation that had to be set out in the short-term thinking ‘will you pay for our factory trip?’ business case.

But the initial effects fall away. Anything achieved was a one-off, or of limited and low level benefit. The changes aren’t sustained – with a slide back to the old state. People start to misuse the tools and methods, and do much damage rather than good. There is a brief and ugly fight with the ‘methods and tools’ compliance police but disillusionment sets in and the early good work becomes discredited and abandoned (just like the last silver bullet…and the one before that…)

Timely reminder: “A fool with a tool is still a fool” (Grady Booch)

Note: This ‘on the surface’ transformation attempt has been likened to organisations going over to Japan in the late 1970s and early 1980s and coming home to fanatically ‘do Total Quality Management’ (TQM)…and then quietly dropping it a few years later. Sure, some organisations sustained it but most didn’t.

Level 2 Transformation: ‘Under the skin’

skinSo it’s now the 1990s. The methods and tools that came out of the initial Toyota factory visit weren’t sustained but the pressure is still on (and mounting) to transform your organisation…and your management can’t help noticing that Toyota are still doing amazing!

“Perhaps we didn’t look hard enough or close enough or long enough…perhaps we should go back and have a look ‘under the skin’.”

…and so you go for another factory visit (once you’ve been given permission following another well written story business case 🙂 ).

This time you take real care – studying ‘at the gemba’ for weeks, asking questions, watching activities, understanding the nature of changes being made to the system before you.

“Eureka! There’s something underneath those methods and tools! We can see that there’s an underlying logic that we missed last time round…oooh, we could codify them into a set of principles!

And here’s basically what you arrive at:

0. Everything should belong to, or support, a value stream (a horizontal flow from customer need, through to its satisfaction)

…and for each value stream we should:

1. Specify value, where this is through the eyes of the customer; then

2. Identify all the actions performed within the value stream, and expose and remove the obvious waste; then

3. Create flow by understanding and removing the barriers; then

4. Establish pull by producing only what is needed, when requested; and finally

5. The ‘golden nugget’: we should continually strive for perfection because this is a never-ending journey

Wow, that was profound – your factory tour team now need to give it a name!

And so, after a fun focus group, a young member of your team called John2 shouts out “It needs less of everything to create a given amount of value, so let’s call it ‘Lean’.”

Whoop, whoop, he’s only gone and cracked it!

You run back home to tell everyone about the wonders of ‘Lean’. You hand out books, provide training courses, coaching and mentoring and you slot all those wonderful tools and methods nicely into their place…neat…this is going to be great!

So what happens?

Well, everyone absolutely LOVES the principles. They make sooo much sense. They particularly liked playing with Lego in the training sessions to demo flow, pull, kanban and ‘stop the line’ thinking.

But after a while (and some short-term gains) you realise that there’s a huge tension building. No one can make those darn principles work because they continually clash with existing management practises.

Your senior management employ a gaggle of so-called Lean coaches to try to change the people at the bottom whilst they carry on at the top as before!

Your ‘Lean Office’ has become an island of coaches doing great work with the people but unable to turn the tide. Coaching conversations end with responses like:

“Yes, I can see that would be the right thing to do for the value stream…but that’s not what my objectives, performance rating and bonus is based on…or what my manager above me would support…so I’ll stick to soul-destroying fighting within my silo. Sorry about that 😦

This culminates in huge frustration; a revolving door of broken coaches; and many a good employee finding a better organisation to work for. If you ran an employee survey at this point, the results would make for ugly reading – you’ve created a complete divide between worker reality and management ‘cloud cuckoo land’.

Oh, and that lean word? Well it became capitalised! LEAN…as if it were a thing. You’ve all forgotten that it was just a label thought up by John in a focus group merely to describe what the factory visit team saw.

Pause for reflection: Taiichi Ohno is considered to be the father of the Toyota Production System (TPS) but he didn’t want it to be written down3 (codified) because he wanted it to remain dynamic.

And as for that name:“Ohno did not call his innovation ‘lean’ – he didn’t want to call it anything. He could, perhaps foresee the folly of a label.” (John Seddon)

Caution: …and if you did this ‘under the skin’ (supposed) transformation within a service organisation, you may find (if you properly stood back to look at it!) that you’d totally f@ck$d it up!

Credit: The ‘Level 2’ principles jotted down above are the core of the 1996 book ‘Lean Thinking’ by Womack and Jones….which they wrote following their research in Japan. They explicitly set out 5 principles, with a foundational one implied (hence why I’ve labelled it as ‘principle nought’).

Level 3 Transformation: ‘In the DNA’

dna…and so to the 2000s. The pressure to change your organisation is relentless – the corporate world is ‘suffering’ from seemingly constant technological disruption…but Toyota continues to be somehow different.

You pluck up the courage and ask for a sabbatical for 6 months – you want to find the meaning of life…well, perhaps not that deep…but you sure as hell want to know what Toyota have got that you don’t…and to work this out, you are going to have to go in deep – to their DNA.

Toyota are happy to see you again. But, rather than repeating what you did on the last two trips, you come straight out with it:

“Okay, you’ve shown me your tools and methods…you’ve let me uncover your principles…and I know that these aren’t the answer! What are you hiding from me?! Come on, I get it, it’s a competitive world out there but PLEASE let me in on your secret.”

The Toyota managers are perplexed. They don’t know what else they can do. They are adamant that they aren’t hiding anything from you.

…and so, rather than go straight back home empty handed, you ask if you can work with Toyota to experience what day-to-day work is actually like. They humbly agree to your request.

And six months later your mind has been totally blown!

You really get it….no, REALLY GET IT!

You couldn’t see the wood for the trees but now it’s as obvious as can be.

It’s all about the environment created by management’s actions, which come from their beliefs and behaviours about human beings: about society, about customers…and, most profoundly, about employees.

This is invisible on a factory visit! But it’s still there. It’s simply ‘in the DNA’.

Sure, you could provide a list of attributes as to what this looks like…but management can’t just do them, they have to believe in them – in fact, ‘be’ them!

Further, there’s nothing to be ‘implemented’ because it can’t be!

Everything flows from management’s beliefs and behaviours: It’s from these that Toyota creates new principles, methods and tools all the time…and throws out old ones that are no longer appropriate. Their systems thinking and human thinking is solid and profound, whilst their method is dynamic and agile.

…and the realisation sinks in: No wonder Toyota are happy to open their door to anyone. The thing that makes them great can’t be copied. It has to be lived and breathed…and nurtured from the shop floor all the way up. Oh sh1t!

…and so to your new headache: you totally ‘get it’ but how on earth do you change your organisational system – now that is THE nut to crack. That would be transformational!

Reflection time:

So ‘On the surface’, ‘Under the skin’ or ‘In the DNA’: What level of transformation are you playing at?

…if you are at level 1 or 2 then it’s not actually transformation.

…if you are truly at level 3, then here’s the final mind blowing bit – it is self-sustaining.


To close: I have been asking myself a HUGE question for a fair while now: Can management’s beliefs and behaviours change within a large floating (i.e. short-term thinking) shareholder owned organisation.  I’m nearly there with writing down my thoughts. Watch this space…

Footnotes:

1. Just Toyota? I use Toyota in this story since everyone knows who they are…and visits to their factories is precisely what happened regularly over the last several decades. But it isn’t just Toyota.

Your own ‘Toyota’ factory visit could be to another great organisation…and it needn’t be a factory making products – it could be a service organisation. Handelsbanken would be a great financial services example.

Though beware, there aren’t that many ‘true Toyotas’ out there. And perhaps none that have sustained it for so long.

2. ‘John’: He’s even called John in the true story – John Krafcik, a young researcher on Womack’s MIT research team…and those were his words back in 1987 (as recalled by Womack) to give birth to the Lean label.

3. Writing it down: Ohno finally relented when he retired in 1978 and wrote a book on TPS.

4. Clarification: I think a great deal of Lean Thinking, but not a lot about ‘LEAN’ – the implementation movement. I respect Womack and Jones, and their writings…but I note that my favourite Womack book is ‘Gemba Walks’ written about a decade after ‘Lean Thinking’ in which he humbly reflects that it was about far more than the tools and the principles. It was really about the management system (or, in my words, the DNA).