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transforming-global-delivery-service

Adaptability in motion: a simple small example

How does adaptability work? How does it make a business more profitable? I get asked those and related questions almost daily.

Let me give you an answer by way of an example. I once worked with a parcel shipping company looking to find differentiation on their core business: package delivery.

Working with them, we came to realise they needed to start having different conversations with their customers.

Here’s how their business was run. Staff would typically drive to a customer who’d called for a pickup. The customer hands them a package that has been estimated in weight and cost. The courier would then bring it back to the office where it would be weighed again. If it was different – and it often was – they had to call the customer to find out how to proceed. If they couldn’t get in touch with the customer, they drove the parcel back to the customer to talk in person. About 24 hours was wasted in this process as well as a lot of the customer’s patience.

We did some research and came up with some solutions. The customer errors in calculating weights for their parcels was due to their lack of a weigh scale. So we gave the couriers scales to bring along when picking up the packages. We also had the couriers show customers how to properly pack items to get the least expensive rate. If the customer didn’t have the appropriate materials, the driver would bring in packing materials to assist.

They basically turned the driver into a customer service specialist. Pretty soon they would see other packages with the customer and ask why they weren’t shipping with their company. If the reason was shipping cost, they would source pricing for them often to find they were cheaper. They would even offer to do the complex import / export paperwork if necessary.

The courier took our recommendations, implemented them and increased their local revenue by 25 percent overnight.

Further, their proactive courier customer contact ended up growing the account.

They had underestimated their couriers. Originally hired to drive from location A to B, they more than rose to the challenge of their new customer-focussed roles.

Is that how all adaptable change processes work? No, not at all. They are as different as one business is from another.

To talk with Lloyd Parry about how to transform your business into an adaptable one and increase profitability, please get in touch.

Stephen Parry

How an organisation redesign saved a company and doubled their staff

I once worked with an organisation who for three years were one of 12 shortlisted companies providing IT Services for home users and businesses for a large US technology company. They suddenly, and without any warning, found themselves bidding to be one of the tech company’s three remaining suppliers.

Stephen ParryMy client was now forced to provide a compelling reason to be one of the final consolidated three companies  – in return the outsourcing USA tech company expected to pay less for the overall service. The US tech company assumptions were that by giving the three successful bidders more business they would have more ‘synergies’ and ‘critical-mass’ and therefore with the higher volume they would be able to operate a much reduced operating cost. The US Tech company intended to get at least their fair share of their suppliers cost reductions.

It didn’t work out that way because the company didn’t appreciate an underlying issue. While their way of measuring the end-to-end service seemed logical enough by splitting the end-to-end measure by each supplier they assumed the real delivery to the customer would be the same.. you guessed it, the reality was far from the functional company measures would have you believe.

The real end-to-end service delivery metrics were falling well short of their promised service levels to customers but they were disguised by the functional metrics which made it all look good. A case of the feasible parts making an infeasible whole. And who would know? because the US tech firm had set up their own people to monitor how each company was performing Individually without understanding how everything combined to provide the end user with a seamless service.  Microscoping management methods used when telescoping ones were needed.

So here’s what we did to help our client leverage a sticky situation into a growth opportunity.

First we spoke to company that was looking to reduce the number of suppliers and listened carefully to their plans to reduce the operational costs of running it’s end-to-end service provision    

When faced with the US tech companies selection panel our client’s COO did something most unexpected. He said “actually, we want to put the price point up.”

He quickly followed with an offer to show how his company could knock two days off overall product delivery time across North America. He also highlighted delays in the technical diagnosis centers, the inventory planning, the five logistics transportation companies and the five engineering companies who tasked engineers to problems.

Intrigued, his client asked him to explain.

Before we go any further let me explain how we got to this point. It really is odd for a supplier like my client to propose a solution that was outside of their core competency.

Indeed, when I first started working with the COO’s company, they were in a bind. They couldn’t afford to cut their margins enough to make it into the top 3 providers. They also knew that not landing the contract would throw 2,000 people out of work.

They needed to change their business model.

Our solution was to give them a new way of thinking, and a new way of competing.

Instead of competing as a diagnosis centre we decided to compete as a whole value chain. Monitoring and measuring how all the downstream activities including their own met the customer’s needs.

The result? They discovered that while all the companies in the value chain were meeting their functional goals the end to end service was nowhere near where the measurement system was telling them they were.

They went further and were able to devise a system where they could predict the actual end-to-end repair service down to zip code and product type and highlight the companies that were causing the delays.

It goes without saying that this client already knew about their dissatisfied customers. They just didn’t know how to drill down to find out why this was happening. Our client’s company did know because we taught them how to do it.

And because they offered something their competitors couldn’t, they got a contract despite the higher costs. As a footnote, nothing succeeds like success: their company not only kept their 2,000 employees but also doubled that number shortly soon after.

The key to this was looking at the end-to-end business as a whole including all other companies in the value stream and making the decision to compete on a value stream basis not just an outsourced functional basis.

In order to do this they had to become more adaptable and highly inventive and make it a core competency. It was clearly time for them to not only think outside the box but work outside ot it.

If you want to learn more about how Lloyd Parry can work with your company to stay competitive, please get in touch.

Consulting-on-organisational-improvement

Making your talent valuable is the best organisational talent strategy

When working on an Adaptive-Lean transformation with an organisation, we look at their management, their leaders, their talent. What we’ve found that when it comes to recruitment, far too many look for candidates that are likely to maintain the status quo rather than infuse the organisation with new ideas.

The phrase ‘perfect fit’ is the term most of them use. But what many don’t understand is that the status quo actually means stagnation and what organisations should be looking for is reinvigoration and reinvention.

It’s this kind of thinking that often leads to companies engaging us. When the status quo isn’t good enough anymore it’s time for an Adaptive-Lean change.

People are the core of any business – whether it’s understood that way or not. But once it is  understood and integrated into the values of the organisation everything changes. If you release the potential of your people, your people will realize the potential of your organisation.

I tell organisations we’re working with to invest in their people –  make them smarter, more capable, engaged and fully aligned with objectives.  When this is done correctly, employees become worth their weight in gold.

Of course the upshot is that these employees also become more attractive to competitors. And while poaching may become a concern, it shouldn’t. That’s because when a workplace is promotes this kind of employee empowerment, the opposite happens. Candidates will flock to a workplace that shares with employees the rewards of what they bring to the organisation.

The result is you’re no longer on the watch for good people, because they’re looking for you.

To learn how LloydParry can transform your organisation into one to watch, please get in touch.

lessons-from-corporate-failure

When a policeman has to use his wife’s cell on the job, its time for a change

When I was working with a UK police force on their Lean transformation, I had an interesting opportunity to speak to their IT department about the importance of IT and how it makes the force more effective.  

What I found in some cases was terrifying and comic in equal doses.

A police officer was interviewed about his police issue mobile phone. He told us that when it broke down it had to go away for two to five weeks. He also noted that at the time of our conversation it had been out for repair four times in five months.

But that’s not the comic or terrifying part.

The officer was asked if he used backup phones. He said he would but they were all out for repair.

So what was his working solution? He used his wife’s phone which was, of course, against departmental regulations. When pressed on this apparent flaunting of protocols, he simply shrugged ‘What would you have me do?’.

So the terrifying and comic part? He was the head of the Rapid Firearms Response Unit. The head of this important part of tactical response policing could have been using his wife’s cellphone during a crisis. Comic and yes, terrifying.

How did it come to be that their communications were in such disarray? Well, the repair process was handled by three different organisations: the IT department, an outsourced repair company with a one-week turnaround service agreement and another company that supplied replacement phones.

The issue, ironically, was communication: none of these departments talked to each other. They were also measured against different targets, there was no context provided to the companies as to the purpose of the service and certainly none taken as to the impact on the customers: the police in the first instance, and most importantly, the public.

This story has a happy ending however. The tale made its way to the Police Commissioner and service for the entire process was brought back in house. Most crucially, the performance indicators were changed from repair times to the standard of no officers being without authorized communications devices.

This story had a long tail in that it set in motion a whole new service strategy from object focussed to customer focused. Things change when you understand and are committed to the customer’s purpose.

To find out how Lloyd Parry can transform your organisation to more effective service parameters, please get in touch.

The wow about the WOW! Awards

Working with Lean over the years, I’ve grown to take special delight in seeing how customer engagement changes, develops and then becomes essential in the growth of an organisation.

Given that, we at Lloyd Parry are happy to have our own Rupert Coles as a judge at this year’s WOW! Awards.

WOW! Is an independent award organisation that rewards great customer service solely through customer compliments. That’s it. No supervisor input.

Whether you’re part of the Lean universe or not, the WOW! Awards are an event every business can look to for examples of how improve the customer contact experience.

The awards are a celebration of the best in customer service and experience  – something that a lot of businesses have lost site of in the age of random cost-cutting and automation.

As an organisation, WOW! created a set of tools to easily facilitate the flow of information from customer to business and then to the employee responsible for the positive customer experience.

I see WOW! and similar organisations as crucial to Lean in that they provide a useful mechanism to not only smooth the feedback process but turn it into positive employee feedback and rewards.

And by championing the finalists for these awards they provide a status in great customer service delivery usually reserved for management success.

The Gala Awards will be held on November 28.

To learn more about the WOW! Organisation and Gala, please click here.

If you’re interested in learning about how LloydParry can put your company into the upper tier of customer-focussed business success, please get in touch.

Mass production vs. Customer Value Principles

There is a cataclysmic difference between mass production and the creation of a Customer Value Enterprise® through the application of Customer Value Principles. Customer Value Principles come from many sources – particularly from Lean Service and Systems Thinking – but the line between mass production and the Customer Value Enterprise® is not a continuum: these are completely different ways of thinking and working. You are either doing one or you are doing the other –you will not find yourself doing some elements of each.

Working to forecast vs. working on demand
Compare the activities and behaviours you would find in a mass-production environment with those found in a Customer Value Enterprise®. In the massproduction environment, the primary concern is to maximise all assets and capabilities. If there are several assets and capabilities, it is assumed that none of these should be idle: keeping them working all the time thus becomes the driver – the consideration that determines management actions (Womack and Jones, 1996).

Maximising production does seem to make logical sense – but only if there is demand for the product: if not, the business needs to reduce production. In the Customer Value Enterprise® world, however, the business aims to produce only in response to known demand – it doesn’t build up inventories. You don’t make things ‘just in case’, because if you did you might make the wrong things and waste resources, and you would certainly increase the cost of storage. Mass-production enterprises in the West are often driven by the production forecast: output is generated in the expectation that all products will be consumed.

Many production companies are now moving to ‘build to order’ – that is, ‘on demand’. The principles of operation between these two approaches are very different. In the ‘on demand’ world it is logical to keep some assets idle and to accept idle costs in exchange for the reductions in inventory, in storage costs, and in losses from discounting over-produced products. In the ‘on-demand’ world, even the idle-time cost can also be recovered if the organisation uses this time to improve and optimise the value chain and thus to reduce the cost of production still further and to increase quality.

The term ‘on demand’ is used by many today to mean simply the transfer of transactions and ordering to the internet. While in many cases this is an effective means of providing customers with access to products, it does not necessarily mean that the end-to-end organisation has been set up to respond ‘on demand’. Throughout this book extract  (from Sense and Respond – The Journey to Customer Purpose S.Parry) we will not use ‘on demand’ to refer to an electronic shop window: rather we will use the term to signify a complete change in how the organisation is designed built and operated end-to-end.

Processing all demand vs. removing unwanted demand
Whereas mass-production systems tend to process all demand and services irrespective of the nature of work, the Customer Value Enterprise® aims to remove certain types of demand – the demand that adds cost without adding value. The driver here is not just to do work as fast as possible, but actually to reduce work by removing non-value added activities. The thinking is very different.

Batch-and-queue vs. continuous flow
The way that work flows through an organisation is usually what is called batch-and-queue. Because of functional specialisation, the work gets fragmented. A given piece of work stops and starts each time it is put it into someone else’s inbox or passed to another department: while waiting for someone else to get round to it, the work stays idle. The customer may also experience the effects of this when trying to track progress as the work is passed around departments – this too adds more work, creates no value, and increases frustration.

Customers may feel as if they are being ‘timeshared’ by various people and departments. In a Customer Value Enterprise®, the aim is to create continuous flow and to make sure that this flow is as short as possible. When you get any sort of service demand, you act upon it now, this moment. And you see the work through to completion – you don’t half do it, put it in a queue and come back to it later (Womack and Jones, 1996).

Prioritising and expediting vs. on-demand capability
In the mass-production world, limited capability means that the business must choose to prioritise or expedite some  things, and other things therefore have to wait. But waiting causes waste. In mass production, managers think that they must prioritise and expedite because they don’t have enough resources: yet the systematic prioritisation of work actually creates more work. – Prioritisation is a symptom of the disease it purports to cure.

When instead you create continuous flow and work on demand, you remove this need to prioritise and expedite.

Continuous improvement vs. continuous value creation
In the mass-production world ‘continuous improvement’ is a familiar mantra. This aspiration has been around since the Industrial Revolution, and has been the biggest message in the quality movement. And it is an effective aspiration – as long as the products or services remain fairly constant and predictable, without variety being demanded.

Continuous improvement towards perfection is not enough, however – what is needed also is continuous value creation. There is little point in producing something that has no defects if it doesn’t completely meet the customer’s needs. At the heart of a responsive business strategy, therefore, is understanding what value looks like to the customer, and then using the pursuit of continuous value creation as the driver for the business.

Root-cause analysis vs. root-cost analysis
In the mass-production world, attention is often focused on analysing the root cause of any problems that arise. Despite this analysis, however, action to cure the problem does not always follow. Why not? To make change happen, the business needs also to focus on the costs of not correcting problems – the cost to the organisation, the cost to the customer (especially crucial), and the cost to society. Taken together, these costs provide the business case for change.

In the Customer Value Enterprise®, therefore, change occurs when customer intelligence data has allowed the true origins of cost to be determined and quantified. In other words, root-cause analysis is superseded by root-cost analysis.

Working to standard vs. working beyond standards
In a mass-production world, the drive is to obtain standardisation. This makes sense provided that there is little complexity and variety in the nature of the demand, and that the adoption of ‘standards’ does not prevent improvement.

Having standard processes and standard products can help to ensure high quality, for example in manufacturing, but it can also lead to a work ethic in which ‘working to a standard’ is accompanied by the abdication of any improvement responsibility to the owners of that standard. This mindset, we believe, is the biggest constraint on creativity, innovation and workplace ownership. We are advocating instead a world in which employees work beyond standards, breaking through to higher performance and continually raising the bar.

Measuring output vs. measuring capability of means
In the mass-production world, the performance of individuals and departments can be measured by determining their output – how many items they have produced, how many they have sold, or how many they have shipped. Much more important to know, however, is what those individuals and departments are capable of doing: do they have the means of production overall, and what is the capability of the operation?

It is actually much more productive for managers to spend time in developing the capability of their organisation than in trying to push the organisation to meet production targets. Whereas in the mass-production world you measure the performance of people and departments in terms of their output, in the Customer Value Enterprise® you measure performance in terms of the capability of means.

Capability of means is more important than output. For example, if you were asked to drive 50 miles when your car had only one gallon of fuel and a capability of 30 miles to the gallon, it would be silly to set out on the journey. The ability to measure capability can thus be more important than the ability to measure output. In their book Profit Beyond Measure (2001), H. Thomas Johnson and Anders Bröms write encouragingly about companies that have moved away from ‘managing by results’ and towards ‘managing by means’. They call upon managers to move from targets to pathways.

Delivering to specification vs. delivering to purpose
In the mass-production world, the business delivers to a contract or to specification, and endeavours not to deviate from that. In the Customer Value Enterprise®, continuous value creation accepts that customer purpose is constantly changing and that contracts can’t keep up: instead of delivering what was specified, you need to deliver what matters. Construct your whole proposition to the marketplace around continuous value creation, and continually change your products and services to meet that proposition.

Traditional contracts and specifications can never keep up with changing customer needs. Although specifications may still be helpful in manufacturing, they will tend to constrain the delivery of services. Instead of working to a specification or contract, and defining itself by the products or services it delivers, it is better for a service organisation to define itself in terms of the value it creates. This basis leaves the organisation free to experiment and to innovate with new products and services.

Flexible specialisation in a mass-production world is just a more sophisticated means of controlling customers. It is not about being flexible by offering variety, as in mass-customisation and personalisation: it is about responding quickly to customer purpose. In the mass-customisation world, the organisationis still in control; in the Customer Value Enterprise®, the customer is in control.

Lean business consultants in Europe

People performance vs. system performance
When things go wrong in an organisation, managers in the mass-production arena usually start to criticise their staff: ‘You didn’t make your quotas’ or ‘You didn’t make your output numbers’. Yet performance problems can have other causes, such as when demand exceeds the end-to-end capability; when an unknown and inappropriate demand enters the system; or when someone along the value chain improves performance locally and inadvertently creates a knock-on effect downstream.

Factors such as these account for over 90 per cent of the variation in service performance (Edwards Deming, 1982).

Most of this variation is outside the power of the individual – individual performance can only contribute as much as the constraints of the current system will allow. Performance is created by the system, not by individuals, so systemic changes are needed if there are to be breakthrough improvements. In the Customer Value Enterprise® model, changing the system is the responsibility of those who work in that system.

As has been said above, the mass-production paradigm contrasts significantly with the Customer Value Enterprise® paradigm, and there is no continuum from one to the other. Yet in practice most organisations currently work using mass production. How can one flip from one paradigm to the other? To make this shift takes strong leadership which allows staff to work in both ways for a short space of time while transitioning from one to the other. With a lot of courage, tenacity, honesty and clarity of purpose, staff and managers can drivethe organisation from one paradigm to the other. This allows staff to experience both paradigms – and the flip, when it happens, is very quick.

Three major components are necessary. First, you need to collect data about how your organisation responds to the real needs – as opposed to the perceived needs – of your customers. Second, you need to assess how your organisation performs end-to-end in achieving the customer purpose. Once staff have collected the data, they can discuss it with their manager and talk more easily about change. Third, as well as gathering data, staff also need to understand what the reality is like. As they grasp this reality, they become better able to collect the data. This process thus becomes an iterative one with these three elements.

The type of change that we are advocating depends on learning the principles of all three and bringing all three together. Because they are so interdependent, change will occur only when all three are addressed at the same time.

Copyright Extract from Sense and Respond: The Journey to Customer Purpose (MacMillan) Stephen Parry

 

Re-post Sense and Respond Linkedin Discussion

Stephen Parry • Hope you all had a good Christmas and New Year, or a Happy Holiday which ever suits.

Thank you to all who outlined the proof your company looks for when trying to create a Sense and Respond Lean Enterprise.

I think the problem faced by most companies is they have usually already decided which KPIs they need to hit and want Lean to help them hit their existing targets.

However what we know from Sense and Respond Lean is that the company’s measurement system is usually the second problem which needs to be addressed – come to the first in moment- After all the measurement system reflects what the business thinks is important but the vast majority of company measures are usually based on mass-production thinking.

So we come to the first thing to be addressed and that is changing the company thinking from Mass-production theories to Lean Theories where the design of the measurement system (and ultimately the design of the whole company) is centred on Customers and Liberating Employee creativity and ingenuity to better serve them.

Most of you who have been involved in Sense and Respond know instantly when seeing a set of company KPIs the basic underlying theory and thinking behind the design and behaviour of the organisation, it’s from this point we must start thinking about the re-education entry points.

The Measures matrix on page 78 of the Sense and Respond book is a good place to start. Most people fill this matrix out thinking their measures are important to the customer and indeed work end to end.

Having done that the trick is to then walk the value stream together asking questions from both the customer’s and employee’s perspectives. Once completed ask them to do the same Measures matrix exercise again.

Implementing lean

Usually the second time around most of the measures are placed in the ‘functional’ and ‘does not matter the customer’ – lower left quadrant.

There is usually a sharp intake of breath at this point, the point at which they realise they are measuring the wrong things, feeling pain about the wrong things i.e. waste pain. Its only from this point (new thinking) can we now have a discussion about what sort of measures need to have in the top quadrant i.e. ‘Matters to the customer’ and ‘ work end-to-end’

Some of you reading this will have had this experience, perhaps you can tell your own story on this subject.

Warm Regards Stephen.

Delivering to specification vs. delivering to purpose

Extract from Sense and Respond: The Journey to Customer Purpose (MacMillan 2005) Stephen Parry.

Customer Value Principles Continued:

Comparing the activities and behaviours you would find in a mass-production environment with those found in a Customer Value Enterprise® (Lean Enterprise)

Delivering to specification vs. delivering to purpose
In the mass-production world, the business delivers to a contract or to specification, and endeavours not to deviate from that. In the Customer Value Enterprise® (Lean Enterprise), continuous value creation accepts that customer purpose is constantly changing and that contracts can’t keep up: instead of delivering what was specified, you need to deliver what matters. Construct your whole proposition to the marketplace around continuous value creation, and continually change your products and services to meet that proposition.

Traditional contracts and specifications can never keep up with changing customer needs. Although specifications may still be helpful in manufacturing, they will tend to constrain the delivery of services. Instead of working to a specification or contract, and defining itself by the products or services it delivers, it is better for a service organisation to define itself in terms of the value it creates. This basis leaves the organisation free to experiment and to innovate with new products and services.

Implementing lean

Increasing Variety is not the same as on-demandThis should not be confused with Mass-customisation which is an assemble to order or Flexible specialisation in a mass-production world, nothing much changes its just a more sophisticated means of controlling customers.

It is not about being flexible by offering variety as in mass-customisation it is about responding quickly to customer purpose. In the mass-customisation world, the organisationis still in control; in the Customer Value Enterprise®, the customer is in control.

More Customer Value Principles to follow soon.

©Stephen Parry 2010 All rights reserved.

Working to forecast vs. working on demand

Extract from Sense and Respond: The Journey to Customer Purpose (MacMillan 2005) Stephen Parry.

Customer Value Principles Continued:

Comparing the activities and behaviours you would find in a mass-production environment with those found in a Customer Value Enterprise® (Lean Enterprise)

Working to forecast

Working to Forecast

Working to forecast vs. working on demand
In the mass-production environment in order to keep unit costs down, the primary concern is to maximise all assets and capabilities, to keep them working at maximum output. It is assumed that none of these assets or capabilities should be idle: keeping them working all the time thus becomes the driver – ‘this is the main consideration that determines management actions’ (Womack and Jones, 1996).

Maximising production does seem to make logical sense – but only if there is demand for the product: if not, the business needs to reduce production. In the Customer Value Enterprise® world, however, the business aims to produce only in response to known demand – it doesn’t build up inventories. You don’t make things ‘just in case’, because if you did you might waste resources, and you would certainly increase the cost of storage. Much better to introduce ‘Just-in-time’ but this this a completely different production approach with different measures of success with a different management focus.

Mass-production enterprises in the West are often driven by the production forecast: output is generated in the expectation that all products will be consumed. Many production companies are now moving to ‘build to order’ using Just-in-time production methods that is, creating an ‘on-demand’ business.

The principles of operation between these two approaches are very different. In the ‘on-demand’ world it is logical to keep some assets idle and to accept idle costs in exchange for the reductions in inventory, in storage costs, and in losses from discounting over-produced products.

In the ‘on-demand’ world, even the idle-time cost can also be recovered if the organisation uses this time to improve and optimise the value chain and thus to reduce the cost of production still further and to increase quality or introduce variety by going for economies of scope instead of economies of scale.

Lean business consultants in Europe

One word or caution: the term ‘on-demand’ is used by many today to mean simply the transfer of transactions and ordering to the internet. While in many cases this is an effective means of providing customers with access to products, it does not necessarily mean that the end-to-end organisation has been set up to respond ‘on-demand’. Throughout this book we will not use ‘on-demand’ to refer to an electronic shop window: rather we will use the term to signify a complete change in how the organisation is designed built and operated end-to-end.

The last ‘On-demand’ principle is very closly linked to our next Mass-Production vs. Customer Value Principle:

Prioritising and expediting vs. on-demand capability
In the mass-production world, limited capability means that the business must choose to prioritise or expedite some  things, and other things therefore have to wait. But waiting causes waste. In mass production, managers think that they
must prioritise and expedite because they don’t have enough resources: yet the systematic prioritisation of work actually creates more work.

When instead you create continuous flow and work on demand, you remove this need to prioritise and expedite.

More Customer Value Principles to follow soon.

©Stephen Parry 2010 All rights reserved.

People performance vs. system performance

Extract from Sense and Respond: The Journey to Customer Purpose (MacMillan 2005) Stephen Parry.

People are the problem according to Mass-Production

People performance vs. system performance
When things go wrong in an organisation, managers in the mass-production arena usually start to criticise their staff: ‘You didn’t make your quotas’ or ‘You didn’t make your output numbers’. Yet performance problems can have other causes, such as when demand exceeds the end-to-end capability of your value stream; when an unknown and inappropriate demand enters the system; or when someone along the value chain improves performance locally and inadvertently creates a knock-on effect downstream.

Factors such as these account for over 90 per cent of the variation in service performance (Edwards Deming, 1982).

Most of this variation is outside the power of the individual – individual performance can only contribute as much as the constraints of the current system will allow. Performance is created by the system, not by individuals, so if there are to be breakthrough improvements then systemic changes are needed.

In the Customer Value Enterprise® model (Lean Enterprise), changing the system is the responsibility of those who work in that system.

As has been said above, the mass-production paradigm contrasts significantly with the Customer Value Enterprise® paradigm, and there is no continuum from one to the other.

Most organisations currently work using mass production-thinking so how can one flip from one paradigm to the other?

To make this shift takes strong leadership which allows staff to work in both ways for a short period while transitioning from one to the other.

PostCTA1

Lean teaches us that the system is the problem, but what needs to change?

Three major components are necessary.

First, you need to collect data about how your organisation responds to the real needs – as opposed to the perceived needs – of your customers.

Second, you need to assess how your organisation performs end-to-end in achieving the customer purpose. Once staff have collected the data, they can discuss it with their manager and talk more easily about change.

Third, as well as gathering data, staff also need to understand what the reality is like. As they grasp this reality, they become better able to collect the data. This process thus becomes an iterative one with these three elements.

The type of change we are advocating depends on learning the principles of all three and bringing all three together. Because they are so interdependent, change will occur only when all three are addressed at the same time.

More Customer Value Principles to come.

©Stephen Parry 2010 All rights reserved.