The Abundance Hiding Within Our Scarcity

Introduction

We have an abundance hiding in plain sight, ironically causing a scarcity. A radical thought - right? We choose to notice the effect and we almost totally ignore the cause. That we have scarcity can hardly be denied, and yet if we could just redirect our focus on the abundance instead, what would that look like? What if, in financial terms, we could triple to quintuple our current profit, our prosperity in fact, all else being equal? Think that through for a second before you brush it aside. These are not hypotheticals, these are "have been there done that," and I'm going to show you exactly how to do it. I'll table those values once again towards the end, right at the very end in fact. Let's begin, however, at the beginning by sketching out the case.

This is the intent-impact matrix, a matrix of complementary opposition. Along the bottom, in the lower-right quadrant, we find the negatives of the current reality; in this case the scarcity of the whole that we experience. And along the top, in the upper-left quadrant, we have the positives of the future reality that we wish to uncover. These two quadrants form the ascending diagonal and address the process as a whole. There is also a countervailing descending diagonal from the upper-right quadrant to the lower-left quadrant, which is currently unlabelled, it is equally important, and we will get to it in due course. But right now, let's start in the lower-right quadrant with the current scarcity of the whole.

The Scarcity of the Whole - Two Types

There is a current scarcity that can hardly be denied, and you will know it well. In your firm, whether you make widgets or code, sell multi-million-dollar projects or pairs of shoes, you will have two types of scarcity. The first type is extant, it is an outcome, or indeed an insufficient outcome, concrete effects if you like, and we call these undesirable effects or UDE's for short. For instance, we will have a scarcity of the things that are selling well, we will have a scarcity of time to deliver to our customer's (unrealistic) demands, we will have a scarcity of the right raw material at the right time to initiate production, and we will have quality issues (now called quality escapes) and so on. Ultimately, this finds expression in the fact that the firm's prosperity is low.

But it is more than that too. Not only is prosperity low, but the process is also complex, people are unhappy, and work is hard. These might not be scarcities per se, but they point to our perception of a second type of scarcity - the absence of a preferred solution. Rather than stop at the concrete effects, we will always attribute causes to these effects, such as a scarcity of front-line workers, a scarcity of skills, a scarcity of management attention, a scarcity of raw materials - politely called supply chain interruptions, a scarcity of time, the list just goes on. Running a business, any business, would be vastly simpler with just a little more of any one of these; just ask your people. Don't take my word for it, go and check with your people. Can you see how pervasive and genuine the scarcity is?

The Hidden Abundance of the Whole

Looking at the hidden abundance of the whole it is a genuine and intoxicating idea that if we could simply have a just a little more staff, a just a little more up-skilling, just slightly better management, slightly better supply chain, and just a little more time, then we would have more of the right things that are selling well, and sooner, with less re-work and better quality and all of those good things. If only ..., then work would be easy, people would be happy, the process would be simple, and prosperity would be high.

Except it's not like that! You know that. I said it was intoxicating, and it is. Sure, you didn't get everything you wanted in your last budget round - in fact you never have - right? But what if you did? Would that solve your problems? Would that remove the scarcities and put in place an abundance instead? I think not, and I know you know it's not. So, let's see what is going on.

The Current Role of the Parts

You see, the thing is that we do have a current abundance at the moment, and it is hiding in plain sight. Are you busy at work? Are you busy at home? Actually, you might be doubly busy at home because you are so busy at work. Does your work look like this; the lower-left quadrant?

Everyone is busy. We know that because we even have a special group of measures called key performance indicators. If you count up all the classes of key performance indicators and multiply them by the number of individuals that they each apply to you can see just how seriously we take these matters. Regardless of how busy people are, it turns out that and work is hard, and because work is hard, we become even more busier still. There is a vicious cycle there. Let's make it clear. Let's make it clear by "double ending" the horizontal arrow for a moment.

If the current scarcity on the right cannot be denied, then we really ought to take a good look at the current abundance on the left as well. It's there, it's just that we don't see it as such (maybe we are too busy to see it), and I purposefully haven't drawn it in.

Consider your lead-time (and work-in-process if you are in production) - its months long - right? Just take the sales value of everything released to the floor and divide that by your average monthly sales. That will give you a good indication of your average lead time. If you are in projects, it's just the same, but the result will be even scarier. If you are in supply chain/retail, total sales value of your stock vs monthly average sales will give you a rough indication (you will have a skew in actuality, so it's actually much worse). In every case you will find that we have an abundance of stuff. It looks like this.

That our scarcity of output on the right could be caused by an abundance of inputs on the left might seem wrong at first blush - but it's not. That is the problem. We have too much production and not enough productivity. The harder we try the worse it gets. We keep the parts busy producing things, such that the overall productivity of the whole suffers.

Ask yourself; do you want to generate prosperity, to generate greater abundance, or do you want to generate work?

Or maybe you shouldn't answer that because you will just be lying to yourself.

So, instead ask yourself, do you want to grow, or do you wish to not (metaphorically) die?

Same issue, yep, I want to grow, yet I also don't want to (metaphorically) die.

So, ask yourself, do you desire to improve, or do you prefer your belief that you can't?

These are all very real human conditions, and we are very real humans.

Let me mock you for a moment - if I may?

Is it better the devil that you know, than the devil that you don't? I have no skin in your game. If you want to make your work hard, if you want to be unhappy, if you want your process to be complex (and let's face it who doesn't?), and if you want it to be less than prosperous, please don't let me stand in your way.

The "stuff" that builds up, either as physical work, or as its proxy of duration in digital work, is indicative of the real capacity that is possible, the real potential, the real abundance in the system. Sure, it took a while to build - it kind of snuck up on us - but weigh that against the current difficulties that its existence causes - forever moving stuff around or jumping from one task to another as examples. That is why I say it is indicative, we can't really know the true value until we start to reduce the damage that it causes. It we are then to convert some of this over-production of the parts to productive output of the whole, then we can generate additional prosperity instead. So, how do we get there? Well, we have to do something different. We have to do something paradoxical. Let's see.

The Correct Role of the Parts

If being too busy is part of the problem, then being less busy must be part of the solution. It only makes sense - right? Being busy makes things worse, so surely being less busy makes things better. We can but try - right? We have nothing to lose and potentially much to gain. So, let's put these thoughts that the parts are not always busy into the last vacant quadrant, the one in the upper-right.

It we clean up the diagram a little and simplify it out to its essence, then we can see more clearly that the ascending diagonal is about the whole and the descending diagonal is about the parts.

The crux of the matter is that we don't want the parts to always be busy - right? Instead of building stuff regardless, stuff that we can't even sell at this moment, stuff that we don't have everything we need to complete it, wouldn't it be better to build less, or do less, but actually do more of what people actually want to buy?

Let's work our way towards a solution.

Working Towards a Solution

We've already declared that personnel are scarce, that front-line staff are scarce, and yet, here we are suggesting that we want to make that scarcity scarcer! We want those already scare resources to be less busy. Come on! You know I don't live in Denver Colorado, but it already seems like I am a mile high. So, what's going on?

Let's get technical; have a look.

Fundamentally each horizontal row of the matrix, is like the arm of a cloud - and a systemic cloud at that. We have the four entities of a cloud across each row: the needs, the wants, the desirable effect's (DE's) and the undesirable effects (UDE's). But wait, there is one more thing that the cloud doesn't have - and that is the actions. We have actions here as well, and that's important.

Let's populate the lower half of this matrix for our specific case here.

We want to exploit the whole - right? And in order to exploit the whole we must exploit the individual parts. That only makes sense. And in order to exploit the individual parts we invoke local efficiency as the action, and we may measure it to hell, just to make sure. By doing so, we can ensure that the parts are always busy.

It's worthwhile pulling back a quote from Goldratt here that really can't be surpassed: "How long can we continue to reward stupidity and punish the right actions? How much money, time, and effort is devoted today to gather data for local performance measurements, just so that the end result will distort the behavior of the people we are measuring?" Enough said.

With the best of intents, we generate a negative impact, the scarcity of the whole. In fact, we generate a vicious cycle where negative impact produces more of the same intent produces more negative impact and so on. We are more and more busy, making things harder and harder for ourselves, and the outcomes become worse and worse. Time to wake up from the nightmare.

We have to do the opposite.

Making things harder doesn't work - just ask your people. Making people busier doesn't work, we have to make people less busy. Let me show you. Let's look at the upper part of the matrix, the future that we want.

In this case, in order to exploit the whole, we must subordinate the parts rather than exploit them. This idea is organic, or systemic, and it is certainly thoughtful; it is no longer mechanistic and instinctful. We are dealing with solutions now, not the original problem. You may wear a "smart" watch (there's oxymoron if ever I saw it) but I bet you haven't ever admonished yourself for the underutilisation of your lung capacity any time recently. Back to the story. In order to subordinate the parts, we must invoke roadrunner. Roadrunner means working either fully on or fully off, but never in-between. It does not mean running around at break-neck speed. It means working at our normal consistent rate, (or stopped). Fully-on or fully-off is, in fact, the desirable effect we get from roadrunner. There are two outcomes.

Fully-Off, Roadrunner and Overproduction

We have a scarcity of personnel, and we make them stop! Surely, we make the scarcity worse. But in fact, we don't. Roadrunner is an important and incredibly underrecognized part of production. It is also central to project management; I wonder if you can tell me where? I can think of at least three instances without effort. Goldratt framed it in slightly different ways, but it is there, nonetheless.

The more recognised part of roadrunner is to limit overproduction. In this sense it performs the same role as the information kanban in the Ohno/Shingo Toyota Production System and the physical line or chain in the Ford/Sorenson Production system. In the absence of roadrunner people will produce stuff until they are physically limited by space or the time and effort moving and rearranging things, or by exceeding the tolerance time of the customers. When the output is digital and takes no space, then the tolerance time of the customers is paramount.

Lack of roadrunner is how we over-produce. Producing more of things that we don't need, producing bookkeeping "profit" by burying "costs" in our unsold inventory, and so on.

The effect of roadrunner, fully-off, on prosperity, is positive.

Fully-On, Roadrunner and Underproduction

The lesser-known part of roadrunner is that it limits underproduction. When people slow down, when people pace the step before or the step after themselves, they increase the dependency in the system, they increase variability in the system, and they both directly and indirectly reduce the unit capacity in the system. In effect they underproduce and destroy prosperity.

The effect of roadrunner, fully-on, on prosperity, is positive.

Overcoming the Insecurity

How then do we overcome an individual's perceived insecurity and change that to the necessary security instead? How do we overcome the belief that we can't improve? It's not unfounded, we've all tried so many times before and the experience is that things stay the same at best or get worse.

There are three steps.

(1) The first is leadership. The leaders - and indeed many others right down to the manufacturing floor or the computer keyboard or the sales desk - know that providing more front-line workers, more skill, more management, more time, might at the very least increase production pro-rata, but experience also says that it is almost always diminishing returns - and steeply so. And most of it just gets trapped within the system in any case. Kind-of like a water balloon affixed to a hose! Too scared to let go, too scared to turn the tap off. Productivity and prosperity do not improve; work-in-process and lead-times grow rather than decrease. These people are frustrated. It should not be this difficult and yet experience says that it is, it always has been, and therefore apparently always will be. The leadership sees the big picture - the whole of the bottom row of the matrix, but they can't for the life of themselves see how to get a ladder-hold up to the next level, but it is there.

(2) The second is simple tacit instruction. That is the ladder-hold up. You can't tell (most) people how to do this. Rather, people must experience it as metaphor and then tell you how to do it. They are one up and you are one down and that is the way it should be. Leaders, managers, and everyone else, deny themselves the very tools that they are seeking because it is simple.

(3) The third is we run a short trial with limited scope AND we stop measuring local inputs - we totally ignore them in fact, and instead we only report global output - frequently, once a day is not too much. When we measure and report local inputs, we always assume a default denominator value, and when we do that, we set our expectations at that (old) level. You can't have more than 100% of 100% - except you can. We kill-off any potential emergence with our measurements. So, how can we have more than 100%? Easy - doing the opposite of what we are doing now.

Consider for a moment; are we doing the management of change, or are we doing the management of learning? You be the judge of that. Bear in mind that the people on the floor, or at the keyboard, or behind the sales counter, often have a much broader and more systemic outlook than they are ever given credit for - especially if those measurements are more correctly aligned.

And one more thing, experience shows that people will wonder why they weren't allowed to do this years ago. Work becomes easier and output goes up.

The Few Key Injunctions

I want to repeat the diagram from above. I want to impress upon you how important it is; a simple paradox, wrapped up in a cloud, contained within a matrix.

This is a very powerful expression contained within a very simple diagram. Powerful because it is stunningly effective, powerful because it is paradoxical and hard to "guess," and powerful because others will not be able to follow you. If people really were constantly exposing erroneous assumptions, in fact if people were capable of constantly exposing erroneous assumptions, then people would be constantly re-discovering and renaming roadrunner - as an example - all the time; and yet clearly, they are not.

There are four of these injunctions.

(1) There are four of these injunctions for production

(2) There are four of these injunctions for projects

(3) There are four of these injunctions for supply chain/retail.

How could it be otherwise? Each is just variations on a theme. One deals with passage through space, one deals with passage through time, and one deals with passage through space and time. I hate to continually say think about it; but think about it.

These injunctions all have the same basic form. We could take the matrix above as pro-forma and simply adjust it for each of these cases. We saw another example for production in the articles that are immediately prior to this one; one where the solution was for more process batches not less, one that results in flow rates that are double or quadruple the initial rate and new lead-times that are half to a quarter of the prior, one that is clearly paradoxical. You won't see that injunction in the literature.

Roadrunner as advocated here is clearly paradoxical too; you must stop more often not less. Find that in the literature for me. Apart from Goldratt I know of only of one other brief mention. And Goldratt only got half the rationale - stopping overproduction. There are two more injunctions; neither of which have ever been clearly articulated. These are things that practitioners do.

You could say that these are fundamental rules of flow - that nobody knows.

That these issues are hardly ever discussed at all, other than in Goldratt's earliest material, ought to be a pointer and a considerable competitive advantage. What if each of these injunctions is worth say 6%? Four times six percent is 24%. What if each of these injunctions is worth 10%? Four times 12 percent is 48%. I didn't pluck those number out of thin air. Imprint the matrix above in your head.

Regardless of whether you have a physical constraint at first or not, and regardless of whether you are dealing with production or projects or supply chain/retail, there will be only 4 or so key paradoxical injunctions that will bring about very significant increases in productivity. Much, much, more than you can imagine from exploiting a physical constraint alone. Things that you will not even know at this point.

A Different Mental Model

So, how come everyone says a chain is as strong as its weakest link? Well, it's a useful metaphor. I happen to know from experience that the bolt securing the hook on a snig chain is designed to be weaker than the chain - I've broken them. Or the hook on a bulldozer chain is softer than the links in the chain itself - I've seen them bent. There are reasons for this.

Another common analogy is a flow with a constriction. There is an example of this immediately below.

We tend to draw flow as in the first model above - and I am no innocent party in that respect. Common experience tells us that the output is lower because of the constriction. This is a simple rendition of a physical constraint, a mental model, one that we can all hold. But look at the second one. What if we remove the constriction and replace it with a section of more viscous liquid? Say crude fuel oil, or molasses, or maybe honey as an example. Crude fuel oil has to be heated and sometimes even the piping that conveys it needs to be heated in order to maintain sufficient flow. But what happens when it cools down? Then everything upstream of it slows down as well.

What is a behavioural or policy constraint if it isn't added viscosity in our system? Not just in one isolated area, but everywhere. Think about it. No don't think about it, let's draw it.

The upper example is simply the earlier one repeated, a bottleneck if you like without the constriction. It's the lower one I want you to entertain. Do you see how it is uniform everywhere - like the air that we breathe? So uniform, so grindingly regular, that we take it for granted. There is no constraint, except that there is - and it is everywhere, and especially within our heads.

Now, think about trying to remove a physical constraint when your whole flow is like treacle everywhere instead. Never been there - right? I bet you have. That is why you want to improve but believe that you can't. And look, you won't find these policies in your policy manuals, exactly because they are like the air that we breathe. The solution should be in our policy manuals; except we write rules for the parts in isolation and never within the context of the whole.

There is No Physical Constraint Here

Let me stress something. Whether you have a physical constraint or whether you don't, it doesn't matter. Roadrunner is one of four critical injunctions in production that address overall behavioural or policy constraints that impinge upon flow. The thing that we lack, the thing that constrains us, is a lack of systemic or global thinking. We can overcome this, we can exploit it, by subordinating our own thinking, our own global awareness, to the system as a whole. We move away from our focus on the parts to a focus on the whole.

We can bring about this awareness through a short series of dice simulations or indeed play them through as games - although I find the leadership usually has sufficient global understanding that they only need the simulations. These are not the simulations that you know of; these are the simulations that I know of.

The Bottom Line at the Bottom of All This.

In the introduction I said: how about triple to quintuple your current profit all else being equal? Except all else being equal was not quite correct - and not in the direction that you are thinking. No, it's better than that. It's unequal in that work is easier, people are happier, and the process is simpler, but put that to one side.

Here is a table for our three distinct types of process: production, project, and supply chain/retail.

The starting point on the left-most column is a current net profit of 6%. Don't fixate on that. If you are doing twice or more than that, good on you. If you are doing a half or less, you are far from alone. There is also column for projects, which have a raw material component of 0% so they must be software projects. There is a column for production with a raw material cost of 33%. There is a column for retail with a raw material cost of 50%.

If we want to double our net profit from 6% to 12% then we must increase each of those types of operation by 6%, 9%, 12% respectively. If we want to quintuple it from 6% to 30% then we must increase each of these types of operations by 24%, 36%, 48% respectively. We started out with the assertion that you can triple to quintuple your profitability - prosperity actually. I hope now that you can see how that can be so.

Lastly, the entry with a red background. A 45% increase in productivity in a manufacturing process. I have done that; I wouldn't have started to tell you this is I hadn't. And I did that employing the four injunctions that I have just alluded to here. It is the productivity of your output not the production of your inputs that matters. It is the viscosity of your flow that makes all the difference.

Summary

There is an abundance hiding in plain sight. It is all the stuff and all the time that we have produced and trapped within our existing system, rather than processed as output from our system. We continue to concentrate on these inputs rather than the outputs. We do more of the same and things just get worse; up until some spatial or temporal limit such that our customers walk away.

By doing the opposite of what we do now, we can reduce the production of the parts and increase the productivity of the whole. Small changes in productivity have profound and positive effects upon our prosperity.

We can move from making work hard, people are unhappy, the process is complex, and prosperity is low, to making work easy, people are happy, the process is simple, and prosperity is high. There are four simple injunctions that thoughtfully overcome instinctful behavioural or policy constraints; injunctions that allow us to obtain the improvements that we desire and overcome the belief that we can't.