Welcome, I hope you enjoy the blog. Please leave your comments on the various posts, I really value them. All the material on this site may be posted elsewhere without further permission provided you include a link back to the post.

Friday, October 4, 2013

Nice Article on the perils of multi-tasking

I came across this article today and wanted to pass it along. I've noticed a substantial increase the number of articles, studies, and general commentary on the adverse effects of multi-tasking. Here's another one that provides some additional evidence and insight. It's a very quick read, well-worth the time, but first finish what you're doing so you don't multi-task yourself!


Tuesday, August 27, 2013

The under-appreciated importance of Execution

I came across this nice piece on Execution the other day and since I've recently been writing about the very subject I thought I'd share the link. The author makes some very interesting points about the common aversion of many executives to execution as a tactical matter that is beneath them, and shares thoughts from Larry Bossidy and Ram Charan's excellent book, Execution- The Discipline of Getting Things Done. It's a short but well worthwhile read.


Tuesday, August 20, 2013

Why Measurements Matter

I was re-reading Bill Gates' annual letter on behalf of the Bill and Melinda Gates Foundation the other day (www.billsletter.com) and reflecting on the power and importance of measurement. Bill stresses this issue in the opening part of his letter and cites numerous examples of how careful measurement has helped numerous foreign aid and humanitarian programs to be evaluate their effectiveness and make adjustments which led to even greater successes. While he is speaking about large global development issues, his comments are just as applicable to the business world and I encourage everyone to read it.

In it he refers to William Rosen's fantastic book, The Most Powerful Idea in the World, about the invention of the steam engine and in particular about the development of a new way to precisely measure energy output. The book makes a very strong case that this invention, which enabled people to evaluate quickly and effectively the impact of design modifications on performance, was the key to fostering the rapid innovation which created this enormous expansion in our quality of life. As Rosen wrote it enabled invention to become "commonplace". Rosen makes a strong case that without such tools, invention is "doomed to be rare and erratic".

I believe the same is true for business operations, and not just on the product innovation side of things. Operational improvement is essential in every business, and having measurements that provide us with fast, effective feedback is critical to success. Businesses and markets are highly complex organisms so it is rare that anyone would succeed completely in the launch of any new initiative or improvement. We need a way to get fast and accurate feedback on the actions we take, or we are destined to flail around blindly trying new things and hoping they work.

Organizations are launching new initiatives all of the time, whether it's re-structuring, or some program like Lean, Six Sigma, Balanced Scorecard, TOC, etc. Unfortunately most of these efforts go on for a while, deliver little real gain (at least less than expectations in almost all cases), and then fall by the wayside. Re-structuring is a good example. How many companies have go through re-organizations to make them flatter or more hierarchical, more centralized or less centralized, only to go in the opposite direction 5-10 years later when they are going through a down period? And how many times have you heard: "Oh we tried (fill in the blank) already, it won't work for us", even though some of the things worked and also worked in other companies. The next step of course is to abandon the initiative entirely--to throw the baby out with the bath water.

Improvement efforts often take a long time, but, why? And do they really have to? Of course they will take a long time (and deliver much less than they could) if we don't have a fast, effective feedback mechanism like Rosen talks about in his book, because it will be trial and error, with little way even to evaluate our errors. But what is it like when we do have a fast feedback loop that quickly tells us the effectiveness of our actions, and points to where and how they are falling short. Monitoring how effective are our improvement actions in business provides us the input we need to make the small corrections, additions, and changes that will get us to the next level. It's not about luck, and its not about genius, it's straightforward test and re-test. You hit a golf ball on the driving range and it slices to the right. You get immediate feedback that your clubface was open at impact and you need to make an adjustment in your swing to close it. Imagine what it would be like if you couldn't see the flight of the ball to tell you how effective your swing was?

For years I have included this as one of the five key principles of improvement that I share with my clients--take structured actions and design ways to get fast feedback on their effectiveness. "Structured actions" means implement changes consistently because if you do things a little bit different in different places/ situations, you won't know what really caused the results you got. It's not easy to design these fast feedback loops so that you can judge the effectiveness of your actions, and I think too often we skip this step in our excitement to improve things. But the price organizations pay when they skip this step will be high. The good results they do get will be slower and lower than if they were able to monitor progress over a short horizon and make the small corrections that are almost always needed.

Thanks to Bill Gates and William Rosen for reminding us of just how important effective, fast measurements are to any process.

Friday, August 16, 2013

The Strategy-Execution Gap, Part 1

Lately I have been thinking about the challenge executives face in turning strategy into effective execution. Over the years I have read numerous reports on studies and surveys of executives who routinely list "failure to execute" as the leading cause of why the company underperformed. From my experience I am inclined to think this is true and happens a lot. And I've certainly seen companies succeed brilliantly with mediocre strategies that were effectively executed.

While there are undoubtedly causes specific to a given company and why it failed to properly execute a strategy and reap the rewards, with anything that is widespread like this phenomenon, there must be some common causes at the root too. Whenever I look for such underlying causes I immediately start with basic principles of management that are of a more generic nature, things that are likely to be common in most organizations.

One of the most common practices of management is to divide to conquer. In other words in order to manage a large and/or complex business we will break it into functions, departments, business units, regions, etc. in order to more effectively manage the many pieces. And then of course we have to have some measurements in order to evaluate and control what each function, level, department, etc. does. Measurements are one of the great tools of management because not only do they help tell us how we are doing, they also drive what gets done and how it gets done. I believe the old saying is true: "tell me how you measure me, and I will tell you how I will behave."

While every company has global measures, like Net Profit and ROI, they tend to have many more measures that are used to evaluate and drive the performance of the individual parts of the business. Since individual departments can't fully control the global profit and ROI measures (e.g. manufacturing can produce great products but if sales can't sell them profitably, the company won't make money), these local measures are needed to evaluate the performance of the local area and will tend to be the more important measures for those managers and staff.

The beauty of this breakdown is obvious as it enables managers to influence, control, and direct a far bigger operation than one could supervise directly. Unfortunately the very potency of such a powerful mechanism means that it can also do great damage to if not used carefully. And this is one of the main ways I think strategy can go off the rails when it comes to execution. If the local measures are not closely tied to the strategy, and designed in a way to produce the needed collaboration between departments, functions, etc. the organization can quickly find itself working at cross-purposes with itself. In my experience this mis-alignment happens often and undermines the organization's ability to reach its goals, though often in ways that are not obvious or readily recognized by management.

Here are some examples of how some common local measures contribute to profits being lost:
  • Manufacturing is often measured according to costs using some form of efficiency measure. This drives each department and plants in general to produce goods in large batches to maximize these measures. But large batches delay the production of other items and many companies find themselves with surpluses of some items and shortages of others--increasing working capital, and lowering sales. 
  • In many companies purchasing is driven to buy items at the lowest cost using a measure like purchase-price variance. While everyone wants to buy their parts and supplies at a low cost this can lead to buying from less reliable or lower quality suppliers, or to purchasing in large batches (to get a lower unit cost), resulting in production problems or even late shipments, and elevated inventory levels or even write-offs, respectively.
  • In one of my former employers we measured manufacturing engineers on cost savings generated. So they used their powerful knowledge to come up with ways to run more parts through a given machine faster, often investing thousands in new tooling. Often though these were not bottlenecks and the neither produced more throughput, nor resulted in laying anyone off, they were just cost-savings on paper--but they sure looked good on their local measures.
  • Many consumer goods companies motivate their business units using quarterly sales targets. This creates the incentive to sell at discounts in order to achieve the goal, and the retailer to wait and stock up on goods when the end of the quarter sale rolls around, undermining full-price sales. 
  • In software design and other types of project environments, it is common to measure people on  how well they deliver on their individual work tasks within a project. This naturally causes people to provide lengthy estimates on their tasks in order to be reliable in the face of the inherent uncertainty of project work. And then, knowing that if they deliver ahead of time they will be forced to cut their estimates the next time, there is a disincentive to finish early--no wonder projects take so long!
  • Of course the same thing happens with budgets. Budgets are used almost universally in companies to try to control spending--certainly a good idea. However since how much money one needs for the year is an inherently uncertain thing, everyone will pad their estimates, inflating the budget, and then spend it because if they don't the will get less the next year.
There are many more examples one can bring, but I think the connection is clear--local objectives and their supporting measurements often result in actions that are counter-productive to the company's performance. If they are not carefully analyzed and aligned both to the strategy and to each department/function's role in supporting the strategy, can readily undermine the execution of any strategy, no matter how good it may be. I think this is a major contributor to why many companies fail to realize the promise of their strategies and underperform expectations.

Tuesday, August 13, 2013

Want a Quick way to improve productivity: Stop Multi-tasking!

Multi-tasking is so pervasive in organizations, and modern life in general, that we often don’t even think about how damaging it is to productivity. Even worse many people claim to be great multi-taskers whose productivity doesn’t suffer from switching between tasks. Unfortunately all the research now being done fully supports, what even a simple exercise in multi-tasking shows—it’s not only damaging to individual productivity its devastating to organizational productivity. This is particularly true when the work being done is only one activity in a large process or project—as most work in organizations is.
Let’s define multi-tasking as stopping one task, before it is either complete or has reached a logical stopping point to go and do something else. This seemingly benign behavior creates two significant problems. First it drains the efficiency of the individual, because every time a task is set aside to go do something else the person must spend time “getting back up to speed” when s/he returns to the task. For most of what I call “knowledge work” this time can be considerable, and in many instances this re-starting is also the source of errors or bugs as things are missed. If a resource has to re-start a task several times, the amount of time spent repeatedly preparing to do the work, can easily exceed the time spent doing the task. Additionally, because people are always busy, either working on a task or getting back up to speed on one, it appears that there is no spare capacity anywhere, no efficiency to be gained. And many organizations find themselves having to add staff, even though in reality there is substantial hidden capacity, on top of the frustration and quality problems stemming from multi-tasking.
As if this wasn’t bad enough, the larger, and less well understood, issue is what it does to organizational efficiency. When people are forced to multi-task, that task gets interrupted and set aside, unfinished. But the clock on the work doesn’t stop, it just keeps ticking; so that customer’s project, application, product, claim, or whatever is not moving, but it’s eating up time, waiting for the person to come back to finish it and move it to the next step in the process. Each interruption delays the completion of the task and extends the lead time. Since multi-tasking is likely to happen at each step of a process these delays multiply quickly. Lead times and backlogs can grow quickly this way and jeopardize the performance of the company, eroding customer satisfaction. It’s not easy to precisely quantify how much lead times are inflated, but it’s typically far more than one would think.
I typically use a simple game to illustrate just how much multi-tasking impacts organizational performance. If you like you can do it on your own in just a minute. I ask people to perform three tasks: write all the numbers 1-20 in the first column, all the letters A-T in the second, and then to draw twenty shapes in the third in the sequence circle-square-triangle. I then give people two options for how to accomplish the work. They can either complete it by working one task at a time, start to finish, (all the letters first then the numbers and finally the shapes), or they can multi-task doing one number, one letter, one shape and then repeating, as in 1, A, Circle, 2, B, square, etc. Not surprisingly everyone wants to work the tasks start to finish. At the same time they all readily agree that the second way, multi-tasking, is more like how they have to work in their organization. To play the game do the activities each way, timing each run separately. When you’re ready, turn the page to continue the discussion.
I always find it best to do the game in a group because you are assured to get a range of results, and a measure of statistical validity. Having done this with several thousand people over the years, the average times to complete the three projects is typically:
Multi-tasking:                    85 seconds
Without Multi-tasking:  45 seconds

While it’s a simple game, it’s a very powerful illustration of the impact of multi-tasking:
·         If you multi-task, it takes twice as long to complete the tasks
·         If you don’t multi-task, you can do almost twice as many projects in the same time
·         Everyone agrees its easier and probably produces better quality without multi-tasking—so you’re not getting more by “working harder”
In the multi-tasking iteration all three of the tasks finish at virtually the same time, about 85 seconds. But when they work each task start to finish, the projects don’t finish in a big wave, they finish one at a time staggered about every 15 seconds (15-30-45 sec. for the three projects), meaning that the first two projects finish dramatically earlier than with multi-tasking. It’s not hard to extrapolate the results further if we imagine that each of the three tasks was just one step in a larger process within an organization. If we assume there were 10 sequential steps in the project, the three projects would take 850 seconds to complete under multi-tasking mode, since each step takes 85 seconds to complete the three projects. However, working start to finish on each task the first task would be done and passed on after just 15 seconds, the second after 30 and the last one after 45 seconds. Each successive step, working the same way, would complete its stage in 15 seconds and pass it on. So for a 10 step project the first project would finish after just 150 seconds, with the second one at 165, and the third 15 seconds later and 180 seconds. Compared to 850 seconds under multi-tasking, this translates into a lead time reduction of more than 75%.
To be sure, reducing multi-tasking is difficult, and eliminating it entirely is probably impossible. It requires a shift in a number of common practices and some very common beliefs people have about how to work and what it means to provide good service to customers and colleagues. But what about the alternative? Continuing high levels of multi-tasking reduces efficiency, produces lower output, extends customer lead times, threatens quality, and makes everyone work harder for lower results. Personally I don’t know many faster, more effective ways of improving productivity, profits, and service than reducing multi-tasking.
Here’s a final thought to highlight just how much multi-tasking is impacting your business and its productivity: Do you or your colleagues ever come to work early, stay late, work from home, or work on weekends? People tell me these are some of their most productive hours…when they aren’t getting multi-tasked!  
Links to Press on Multi-tasking:
Also check NPR, they did a couple of interesting segments on the radio this year and several years ago.

Tuesday, March 29, 2011

TOC's power of perspective

One of the most liberating and powerful aspects of TOC is that it provides one with a different, more effective perspective on organizations (particularly businesses). Most people who learn about the concepts and take them in deeply enough to re-think the way they view a business find that they can never go back to their old way of seeing things. It's like the old story of the emperor's new clothes. Once you have seen that the emperor is naked, you can no longer see anything else. People who absorb TOC even a little bit find that their perspective of virtually everything is colored by it. They see the constraints in any system--in the line at McDonald's, at the doctor's office, in their children's schools, and in their own companies.

They just see things very differently than many of those around, and I would say more clearly. It's not that they are smarter than the next guy or gal, or have more experience than someone else, they simply have a very powerful set of lenses (TOC) that shapens their vision beyond that of others. I think I am personally a good illustration of this. I had the good fortune to meet and work with Eli Goldratt at a young age, and my father is Bob Fox, before I worked in the world and aquired the conventional way of looking at things which I characterize as the lens of complexity. In other words I had very little experience in looking at systems by breaking the complexity down into lots of smaller pieces in order to make sense of it. I was given the gift of being able to see them whole through TOC and the 5 steps.

I could give lots of examples of how this perspective helped me to see and understand large highly complex businesses very quickly, and to see them more clearly than almost anyone within those companies, but I won't. (If you want to read one of them check out the post on this blog called "TOC Stories #2: Blue Light".) What is important is that TOC is a game-changer. It provides an enormously powerful lens for looking at systems, organizations of any type, that enables the user to identify extremely quickly what really matters within the entire thing and what to do to immediately to improve that system.

It is not just an improvement methodology or a powerful set of techniques. It is a new perspective, it is the ability to see aqnd understand the world better and more clearly. Armed with an understanding of the 5 steps or the TOC thinking tools, any individual becomes capable of seeing through enormous amounts of noise, detail and confusion filtering out the trivial many from the very few truly important things in any system. This is an enormously empowering ability to possess. I have felt it personally and have seen it repeated hundreds of times in the companies I have worked with.

Since most people suffer greatly due to an inability to understand and control the things that go on in their world, acquiring the perspective of TOC literally changes people's lives. With the ability to understand comes a significant peace of mind, even if other factors prevent one from immediately changing things. But TOC provides the perspective and the skills to change things as well, further increasing a person's enjoyment and satisfaction in life.

We've long characterized our consulting work as "unleashing the potential of the organization" because we have always viewed what we do as an effort to provide our clients with the new perspective of TOC and enough coaching to use it to change their own organization. Once they acquire the perspective they are able to see for themselves much more clearly what to do and how to do it. The only reason they need the additional coaching and guidance we provide is because they carry a lot of baggage from the way they have always done things. In other words they have inertia and initially will readily slip back into the old perspective, take off the TOC glasses and look at things without those lenses. So it helps to have us stick around until the TOC becomes fixed and established broadly and deeply enough in the organization.

For my money nothing else out their in the improvement universe holds a candle to TOC. TOC has given us the perspective and the skills to understand cause and effect in complex systems. A good analogy in my mind is that TOC is akin to the skills and abilities a doctor gets in his medical school and residency training, giving one the ability to select and utilize the specific tools around us, as a doctor uses scalpels, X-rays, and MRI's. 

The value of the perspective of TOC is hard for me to overstate. Over the last 25 years since I was first exposed to it, I have watched repeatedly as individuals and organizations have been transformed by it. The measurable gains that we all read about in terms of the performance of organizations are astounding, but what is less well publicized and less easily measured is the impact that it has had on people like me and our ability to understand, manage and improve our worlds. Everyone is aware of the power of a fresh perspective on things, TOC has created processes tools and techniques whereby anyone can acquire and consistently apply such a perspective. This is indeed a powerful thing.

Friday, March 25, 2011

The Simplicity Paradox

I have been banging my head against a long-standing paradox within TOC--the paradox that while the concepts of TOC are simple to grasp and understand intellectually, they have not been simple at all for people and organizations to implement. Or said more plainly: "How can something so easy, be so darn hard to implement?"

I think that the essence of the correct answer is generally well known to people in the TOC world and is even captured in the 5 steps. The underlying reason TOC is so hard to implement, even though it is simple to understand, is inertia. The methodology, in all its simplicity, actually demands that so many aspects of how we run and manage our organizations be re-thought. Things like the metrics we use, cost-accounting, scheduling, logistics, sales, inventory management, etc. all are altered by the core principles of TOC. Each of these areas, and more, should be re-thought and re-worked in light of the TOC principles.

In other words, while grasping intellectually the 5 steps and the essence of TOC is truly simple, the implications it has for nearly everything in an organization are extremely far-reaching. The principles impact things that people have done a certain way in organizations for a long time. They encounter many points where people have inertia built from years of past practice. So while the principles can be grasped simply, we immediately bump into the need to change a significant number of things people have always done differently--if you will we activate a lot of inertia.

Since people are not generally in the habit of re-thinking everything just because they have been exposed to a new concept like TOC, there is little actual recognition that so many things are affected by the new insight of TOC. So people don't even realize in most cases many of the things that should be changed. As people we simply carry on as we always have until something causes us to see the need to change it.

I think this is exactly what we encounter when we try to bring TOC into an organization. People get the principles quickly, on an intellectual level, and because they are so simple conceptually, they have the mistaken perception that implementation will also be simple. "Yeah, we get it, find the weakest link, exploit it, etc. What's the big deal?" But the things they don't are the implications of the concepts.

I suspect that people like myself who are working to help companies really capitalize on TOC may have fallen into the same trap. We understand TOC so well and have made such a profound shift in our own thinking, that we have forgotten the magnitude of the inertia that TOC bumps into in organizations when we try to implement it. And as a result of this I think we haven't done all we can or should do to address the real barrier to implementing TOC, which is how to overcome the organizational inertia (not the intellectual inertia of understanding TOC). I don't think we have focused enough of our efforts on strategies, tools, processes, techniques, models, roadmaps, etc. to help expose the impact of TOC on existing organizational behaviors, and how to shift those behaviors.

I have a lot more to say on the subject, but I really need to know what you think about it, and whether you think my observations are sound.

Wednesday, March 23, 2011

We have to change?!! Oh no!

I get asked all of the time why TOC isn't more widespread, why it isn't at least as big as movements like Lean and Six Sigma. There are lots of theories about this from many quarters and I certainly don't have the definitive answer. I do have a couple of observations I think are worth sharing.
The TOC concepts are not complex or difficult to understand. In fact by comparison, Lean and Six Sigma are far more complex and demand much technical knowledge of statistics, variation and the like. What makes the change to TOC more difficult is not learning the concepts, but it's coming to grips with all the ramifications those concepts have for how we run our organization. 

TOC suggests a complete "re-modeling" of the organization, it's measures, the roles each function play, how levels work together, what information is important, etc. I don't think any of this will be news to most followers of TOC. I like the analogy of re-modeling the organization though, I think it offers an insight into one of the reasons TOC is not as widespread as it could or should be by now.

Think about what you would do if you were going to remodel something, say your house. What would be some of the steps you would take? Certainly you would sketch out some plans of what you want the house to look like when you are done. If it was a large enough remodel you would have a builder or an architect create detailed plans of the new layout. You would make sure that these plans then got in the hands of the builders so that they purchased the right materials, dug holes in the proper places, erected the correct structures, and executed everything you wanted properly. Without the picture (the drawing, blueprint, design) and the specifications it's hard to imagine the remodel turning out the way we want it to.

I don't think it's any different with remodeling an organization using TOC. Yet when I look at the ways TOC has traditionally been brought into organizations, I don't see many examples of blueprints for how the organization should look AFTER TOC has been rolled out. For the most part what we have given organizations is the generic process (the 5 steps) and a number of applications (DBR, Critical Chain, Throughput Accounting, etc.) to functional needs. To use the analogy of remodeling a house, these are akin to the generic process of building a house (first you dig the foundation, then you pour it, then you frame the structure, etc.) and the technical skills needed to do the various components of the remodel (the wiring, plumbing, drywall, etc.). While each of these is necessary to being successful, we still need to apply them to each organization's unique situation, and individual objectives. In other words we need the blueprint laying out how TOC is going to be applied in each specific organization.

Without a specific design for a given organization, we have no way of telling the builders (the managers and staff of the organization) what they should be doing, how they should be applying the skills and knowledge they have. Imagine hiring the best builder in the world, with the best process, skills and resources and then asking him to build you a great house without any plan, design or model. It's not likely the house would be well suited to your specific needs or desires.

I believe we have done much the same in TOC. We have great processes, and generic applications like DBR and Critical Chain, but for the most part we have not provided organizations with the picture of how to apply these capabilities in their environment. We haven't given them a very clear picture of what their organization looks like on TOC. And without a clear and visible destination it's hard to keep people focused, to keep them aligned and to keep them on-task.  I believe this inability to see what my organization looks like on TOC is a part of the problem with TOC becoming more widespread.

This is not to say that there aren't some out there who have recognized and are addressing this shortcoming. Eli's Strategy and Tactic teams provide some of the missing specifications. Realization, the providers of Concerto for critical chain, typically does a first-class job of mapping out how each client's organization will look, including definitions of the roles and responsibilities, before launching into the change process. My organization, Viable Vision, utilizes a simple visual blueprint we call the Throughput Operating Strategy in every TOC implementation we are involved in. In simple terms its a picture of the organization's workflow, and how they want to apply the 5 steps to managing their business. It documents the metrics, roles and focus of each department and level of the organization as we want them to function.I can't imagine embarking on a change the magnitude of TOC without having this blueprint of how the organization should look when it is working in the new way.

Change is hard enough, especially when it requires us to challenge so many fundamental assumptions and long-held beliefs as TOC does. I think we (the TOC community) have made it even more challenging by not giving people a clear picture of the target, the destination, the end state. What do you think?

Wednesday, March 16, 2011

TOC in a word: Focus

Many others, including Goldratt, have already suggested that if you had to summarize TOC in a single word, the best word is "focus." The essence of the core principles of TOC (5 steps, thinking processes, etc.) is that they provide a way to separate the important few from the trivial many. I agree this is at the essence of TOC, and in and of itself is extremely powerful.

Following the principles one is able to look at a large, highly complex organization, no matter what it does, and define where the key points are to improve it. Without a similar insight, one is almost forced into the historical solution for dealing with complex systems--breaking them down into some smaller subsystems that we feel we can get our hands around. We know that this creates distortion, usually large distortions, because the individual components of an organization are not usually smaller versions of the whole, they are "pieces" of the whole. And as soon as we try to optimize the little parts we have divided the organization into, we lose touch with how they are supposed to work together.

The fact that TOC provides a process and a logic to effectively see where to focus without distorting the picture is enormously powerful. If we know where are the weakest links, the constraints, in our system we know which actions will lead to improving the organization, and which will not. It gives us a methodology for brushing aside those things which will not improve the whole, those many things that occupy most of people's time.

This topic reminds me of my first job in industry, with a large multi-national conglomerate. At my facility we had a team of engineers who each year were assigned ambitious cost reduction targets. Each year these people worked diligently to devise creative solutions to reduce costs in every area of the business. And year after year they successfully achieved their targets, saving 2 minutes of labor here, 6 minutes of re-work there, and of course all of the overheads associated with that labor. Yet year after year, in spite of these millions of annual cost savings our division's bottom line remained largely unchanged. Why? because almost none of their efforts were targeted at the organization's constraint.

What would the power of focus have meant to them and to the company? I can only imagine if they had had the ability first to pinpoint the constraints in the business what kinds of real gains they would have been able to make. So much effort was spent optimizing non-constraints, reducing times at steps with extra capacity that did not limit Throughput, and which produced only paper cost-savings because we couldn't lay-off 2/17's of a person. (In any event we had a policy of not laying off staff due to productivity improvements, we would just transfer them somewhere else!)

Without increasing any of the skills, training or tools of those engineers, but simply by providing them with a means of focusing their efforts using TOC they could have had a profound, and almost immediate, impact on the company's bottom line. In my mind that's the definition of a powerful solution--change one little thing and the results increase dramatically.

Another illustration of the potential of focus is management time. Ask nearly every manager what s/he is focusing on and you will get a list of half a dozen or more items--by definition the opposite of "focus". I have even gone so far as to ask managers, if they had "two full days a week, uninterrupted, to focus on solving one problem in their organization (no matter what that problem is) would they be able to make meaningful, significant improvement in that area?" Universally the answer I get is "yes, absolutely". So why don't they do it? Because they don't have "the luxury" of being able to focus like that, they must manage all of the other things as well.

It's interesting because managers immediately get the fact that this lack of focus means that problems rarely get solved, they get at best "band-aids" which will require further time from them in the future to re-patch. They recognize that intuitively not all things are equally important and that focusing on a few would produce lasting and significant improvements, but our habits, and the mode of operation that drives our organizations undermines their ability to do it. In my experience this is prevalent even in companies where there is widespread awareness and appreciation of Theory of Constraints.

I find this paradox interesting and worth exploring further. I would very much like your thoughts on the subject of focus and the gap between the "focus" suggested by TOC as a set of core principles and the focus, or lack thereof, we see in reality. If you're interested I have a few more thoughts I might share on the subject.

Thursday, November 29, 2007

Project Lessons: Focus on Completing Projects On-time, Not Completing Tasks On-time

It may seem counterintuitive, to say we shouldn’t focus on completing tasks on-time, in order to deliver our projects on-time. After all isn’t it obvious that if we complete each task in a project on-time, that the project will finish on-time? This statement is of course true, but within it hides another trap for people managing projects.

Since this method of driving timely task completions is probably the most widely used strategy for trying to bring projects in on-time, we can look at public data on project performance to evaluate its effectiveness. Various public studies (Forrester, Gartner, World Bank) illustrate the widespread problem of bringing projects in on time. Depending on the source the studies show 40% to 67% of projects miss their planned delivery date. While there are many factors at work here it’s pretty clear from the data that this method is not very effective at overcoming the challenges of bringing projects in on-time. But why?

The trap in this methodology comes from two elements of managing projects. The first element is that uncertainty on projects is very high, making it very rare and almost impossible to finish every task on-time. Unplanned events, changes, disruptions, resources not being available, etc. wreak havoc with even the best plans, resulting in many tasks sliding beyond their planned completion date. The result being that the project as a whole is delayed and misses its completion date.

The second element is the human dynamic that results from any attempts to focus on task completion dates. If an organization makes completing each task on-time important, how will people respond? We all know the validity of the statement “tell me how you measure me and I will tell you how I am going to behave.” Even if there is not a formal measurement, but just a management focus, expectation, or even the belief that management judges something to be important, it will impact how people behave. So how does making timely task completion impact people’s behavior in project environments?

The first way is pretty obvious, people will provide and negotiate for task durations that are conservative, for task durations they are confident that they can achieve. No one wants to do a bad job, and when management drives timely task completions people will respond by increasing their estimates of how long a task will take. This is not bad behavior on their part, after all the reality of projects is uncertainty. No one really knows how long a task is going to take this time, what challenges we will encounter, whether the specifications will have changed, what other work they may be required to do at the same time, etc. So in order to provide a reliable task duration people will naturally provide estimate that they believe is achievable, even if things go wrong.

This behavior is magnified if management routinely uses the practice of trimming the durations of people’s estimates to insure that project timelines meet the organization’s business needs. If people know their estimates will be trimmed anyway, they will add additional padding in their estimates. It is identical to the dynamics organizations experience with budgeting. Every manager knows that if he needs a million dollars to run his department next year, that he better ask for much more initially, in order to end up with the million he needs. The same “game” is played with task durations. And again it’s not bad behavior, it’s people trying to do the best job they can within the rules of the system.

So, one result of focusing on completing tasks on-time is that the task estimates (and therefore the project plans as a whole) get inflated. This however creates for us an apparent paradox. How can it be that our task estimates are so inflated and still we cannot meet them reliably?

Again basic human behavior is at work, but this time it is the behavior during project execution, not in the planning stage. Imagine the reality: we have a task estimate that provides us with what looks like ample safety time, because we have buffered it for uncertainty and other factors in order to be able to deliver it reliably. So when the work actually arrives, there is a clear sense that there is ample time to complete the task. In other words there is very little sense of urgency to start the task immediately, and in any event most project resources are overloaded with other things already so it might even be that there is not the ability to start the task right away. We know this dynamic from our school days. We know the test is out there, but when there is the perception that “we have plenty of time” there is really no need to start studying. Often we end up beginning only the night before, or at most a few days ahead of time.

On projects this translates to the reality that some, often most, of the safety time gets wasted at the front end of the task because of lack of urgency. Now if there is any unforeseen delay, change, or hiccup of any sort on the work, the task date will in all likelihood be missed. So even though we have put safety time into the task estimate, common human behavior will in most cases cause it to be wasted.

While this is not hard to picture in reality, a sharp mind will point out that it will not happen in all cases, and even when it does, sometimes a task will go smoothly and could be finished ahead of the planned time. This is in fact true. Unfortunately when an organization places importance on finishing tasks on-time, it is at the same time creating a strong dis-incentive for people to finish earlier than expected. Again picture the reality: what is likely to happen if someone reports finishing a task a week ahead of schedule? What will be the expectation for a similar task on the next project? Of course, finishing early will result in the task duration being cut the next time, again just as not spending all of your budget in a given year will result in your getting less the next year. It’s obvious that you padded the estimate so you can expect it to be cut even more the next time.

Similarly if a task is ready ahead of time the committed employee is also likely to spend the remaining time “improving” the work, making it even better than it was. As long as there is still time available people are likely to fill it with efforts to make the work as good as possible. We all know this behavior to the degree that it has a common name, Parkinson’s Law: the work expands to fill the time available. The result is that task rarely finish (much) ahead of their planned times, so the potential gains are typically lost in the process.

In total some tasks finishing late, while others finish on-time, and almost no tasks finish early. The sum of this is that projects will finish late in many cases, exactly what the studies and most people’s experience shows. Of course if finishing a project on-time is a mandate there are alternatives that will mask the reality with apparently good on-time performance. Organizations can turn to a reduction in the scope of a project or to increasing their spending to compensate for the delays. But while the project may finish on-time in our metrics, it often does so only at the expense of the original scope or the original budget. In reality then, even organizations with “better” than average on-time performance are being directly impacted by the methodology of focusing on completing tasks on-time.

Unfortunately a common reaction to the poor project performance is to sharpen the focus on timely task completion. It is not uncommon to see managers get more and more involved in the details of managing individual tasks in the effort to “get control” of the situation and help insure that more tasks finish on-time. Not surprisingly this only heightens the behavioral response described above. The more important it becomes for people to hit task dates, the stronger the above behaviors will be. So in their efforts to address the problem, most organizations only serve to solidify the underlying causes of it.

It may be possible to change these underlying human behaviors, but it seems to me that the better and faster way is to change the system of managing projects. For more on this see other postings in this blog on Critical Chain project management, or send you specific information request to info@tocc.com.