How to significantly improve productivity in your business

It's about time we get through the speculation about the soft and fluffy stuff and get to the hard and fast facts from science, to help save the time and money often wasted when introducing change to improve organisational performance ...

A syllogism ... (if this, and this, then that)

Major Premise: 

Imposing change and control has a negative emotional impact on those who are unable to determine the benefit of the change or increased levels of control

(this is a proven psychological principle)

Minor Premise: 

In a negative emotional state, most people don't perform at their best, mentally or physically: relationships deteriorate 

(common sense right? "A happy worker is a productive worker", "People don't leave their job, they leave their boss" "Stress is the greatest cause of days lost, costing the UK economy ￡billions per annum"... but more than that, it's another neuro-psychological fact, leading to issues such as 'learned helplessness', i.e. people are incapable of thinking of solutions, when the chemical mix in their brain shifts, in response to various triggers (stressors) in their environment, including imposed control and change)

Conclusion:

Imposing change and control detracts from healthy human relations and thus, organisational performance - in a command and control culture, we might expect productivity to remain low, despite technological advances

(Human brains are programmed to respond defensively, to anything 'new' which they have not determined to be 'safe' and selected for themselves, from within their own frame of reference. The brain treats everything as 'guilty (a potential risk) until proven innocent (safe)' - it's how we survive ... which isn't great when it comes to introducing change into complex organisations)

3 point contact provides stability

Taking lessons from simple engineering principles:

It doesn't matter if you're making a stool or blocking up a set of tool plates, if you apply the principle of 3 point contact, you'll get a stable seat and a square block, every time ...

The same principle applies to life in general and specifically, to the business of organisational change where we have to consider

1. People 2. Process and 3. Systems.

To do a good job of the people leg of that particular stool, we need to focus on Principles (Ji in Japanese Budo terms) as much as we focus on Practice (Ri) ... not to say this is Japanese wisdom, we have it built into a 100 old sayings ...

"sweat the small stuff "... "every drop makes an ocean" ... "penny wise, pound foolish" ... "take care of the edges and the middle will take care of itself" ... "take care of the detail and the big problems go away" (Who remembers the elephant eating analogy?)

The time to look at all three legs of the stool is way overdue! and now we have the language from science to do it

Significant money is invested into change programmes, by PE's, Banks, Shareholders and owners, focused on 1. process and 2. systems (incl. technology) ... with all aspects of 1 and 2 explained in intricate (often quantitative/statistical) detail ...

But this issue of 'sustainable' organisational change is a three-legged stool

It's PEOPLE, PROCESS & SYSTEMS (The PPS formula)

Not just Process and Systems ... some emotional being, full of biases and with a limited scope of knowledge, has to design the inert rational solution (process/system), so it suits other emotional beings, who, first have to be aware of the need for something new, before they can accept it emotionally (psychologically: go 'Toward' something new), and then interact with (use/apply) the inert rational solution in their day to day lives, interrupting existing wiring and firing patterns (habits) established over many years of (sensory) experience of the world ... it's an energy-intensive process

(no wonder Taiichi Ohno stressed the importance of 'Protecting our people's precious energy')

In a CI environment, the biased emotional being, expending energy to navigate and survive their environment is also expected to improve the inert rational solution on an on-going basis

That means people (adult human brains), have to have the confidence and inquisitive nature to challenge that which is technically and socially accepted, by reports, peers and leaders to overcome the "It's just the way we do things around here" mentality i.e. the thinking/assumptions/beliefs (BTFA) ...

That is a tall ask for most people culturally conditioned to be 'employees' (subservient to authority and the assumptions behind the rules). Looking through this lens, you start to see why CI is a neurological, psychological and sociological issue ... and requires us to challenge some of our fundamental assumptions about employment, society and performance

but how often have you heard that in the board room?

Q. If you launch a programme only considering two of the three legs (and they happen to be the inert legs), is it any wonder 'the solution' is not stable when you need it to continue without conscious attention from the emotional quotient (people) in the PPS formula?

Q. If you only focus on one 'inert' leg (process, or systems), is it a surprise when the 'solution' falls over completely?

What get's measured gets done!

With a cultural predisposition toward the tangible and demonstrable to satisfy concerns over financial risk - which is itself an emotional/confidence issue (BTFA), we focus on Process and Systems while using broad-brush statements about 'People'. We sweep anything that isn't understood (is intangible), and can't be 'proven statistically or financially', to one side, or worse, under the carpet (to defend and protect ourselves in a world that only speaks in numbers)

We 'prove' what we are doing to process and systems, is adding value, by tracking back to the P&L (if we even do that!) .. but the P&L doesn't measure morale or personal growth... (see QCD-GSM below)

... And then we marvel at the fact the conversations that pervade the coffee-cup sub-culture and the government-funded analysis, all point to those programmes, which follow this approach, missing expectations in terms of performance improvement, culture change and sustainability

The 'puzzle' (as identified in the graph above, from the Government study into low productivity in the UK) is easily understood, but in current business parlance, we don't use the language available to us (from science) that allows us to understand it.

All the time we focus on the application of tools (Lean / Six Sigma et al) on the shop floor to improve the tangible, i.e. productivity, efficiency, utilisation, quality (OEE), cost (of sales/quality), delivery (OTIF), skills gaps etc., we're doing nothing to consider the negative impact the application of the tangible is having on the 'intangible', 'PEOPLE' piece of the puzzle, which in turn, has an impact on the tangible metrics (i.e. the emotional response to circumstance and how it is affecting relations and performance)

As defined by the ONS productivity handbook, 2007, Productivity is the total output produced per input. Therefore, improved productivity means greater efficiency in the production process, i.e. more output (e.g. goods, services) can be produced with given inputs (e.g. labour, capital, resources).

In lean terms, I've always referred to this as 'Pieces per person per hour', where we have to work hard to define 'pieces').

The graph above shows there is a proportionate concentration in the economy, of organisations that generate ￡10K per worker ... and that this concentration fell sharply in 2007 (red line) ... why there was a productivity slump in those organisations populating that area of the graph in '03, '05 and '07 is uncertain ... what is also uncertain from the ONS definition is ￡10k per person of what? Goods produced (material and overhead value), goods sold (sales price), goods invoiced (ignoring returns) etc. I'm not sure .. and would love to know the detail.

What I do know, is that people's emotional state (feelings in BTFA terms), in the context of their own personality, attitude, resilience, self-concept, confidence etc., and the broader socio-economic conditions inside and outside of their organisation (culture) they are surviving, directly impacts productivity and performance.

We systematically ignore this in the absence of the language required to address it... without that language, we also fail to explore the practical things we can do as leaders, to create the conditions in which people can perform at their best (including a challenge to those beliefs, thoughts and feelings, behind our own actions, which affect others (Hansei) and how we can structure our policy and strategy deployment methods, and change management methods, to address some of the negative psychological issues (e.g. through effective change management to introduce Hoshin Kanri)...

The key, in my mind, is to introduce a broader language register to leadership teams, through which they can consider the bigger picture and the root cause of productivity and performance ... starting with BTFA - which I'll come onto shortly.

Interestingly, when I was first trained in WCM back in the early 1990s, when it was still taught as a system and heavily influenced by Crosby and Juran (TQM) and those who had worked directly with Taiichi Ohno and Shigeo Shingo, the TPS influenced approach featured in success stories like ICL Fujitsu across Europe. You don't hear stories like that any more.

But then, among the various acronyms and mantra's that featured in the approach were QCDGSM and 'Faster, Easier, Safer and Fun'... you'd be excused for overlooking these as throwaway quip's ... but they were derived from decades of deep thinking and experience, reflecting a deeper philosophy of 'respect' and a wisdom we've systematically detached ourselves from, in favour of focusing only on the numbers (that keep us 'safe' within the current judgement mechanism)

Back in the day

QCDGSM was Quality, Cost, Delivery, Growth, Safety and Morale... Today, under pressure from in-quarter ROI from discrete activities (i.e. in the absence of systems/joined-up thinking - call it what you will) that has been reduced to QCD - Quality Cost Delivery.

Sometimes with an extra 'C' for Cash.

This misses the vital ingredient ... the 3rd leg on the stool! PEOPLE!

The key difference between now and then, when there were large scale success stories outside of Toyota, is that 'Growth', was presented as the development of people ... you know, 'Build people before we build cars' (Like we used to in old fashioned, on-the-job apprenticeships).

Safety highlighted the importance of putting people's wellbeing first and Morale tipped its hat to the psychological needs (the Muri and Mura - stress and cognitive dissonance from inconsistency, not just the Muda - 7 wastes).

The other key ingredient, that acknowledges the points I raise when using the BTFA model with teams, is 'Fun' ... this also has a profound effect on neurochemical balance.

When you get that bit right, i.e. the foundations of performance and productivity, the revenue and profit performance follow.

Back then, in the 70s, 80s, 90s, it was new and challenging, full of principles and purpose ... now it's old, reduced to suit a different philosophy and culture and unfortunately, very confused ...

Back then, there was a sales per capita value of ￡140K per employee associated with 'World Class' performance, i.e. for every person employed, there was at least ￡140K in sales. That figure was established by a significant global study by one of the big 4. I estimate that SPC value is closer to ￡200K per employee today, given inflation and other factors.

Sales/Revenue = ￡15,000,000. The company employs 175 people. SPC = ￡85,714 Sales/Revenue = ￡1,000,000,000. The company employs 8620 people. SPC = ￡116,009

A quick review of some turnover/employee data for organisations turning over ￡1bn-￡40bn (203 manufacturing companies), showed 69.5% (141) of them had an SPC ratio of less than ￡100k ... with 42% (86) having an SPC ratio less than ￡50k

I've used that SPC ratio as one of a few 'rough-cut' yardstick's to assess organisational performance whenever I've been asked to look at a business ... and it's proven to be a really good rule of thumb, i.e. if SPC is ￡80-￡100k, I know there is enough inefficiency, systematically ingrained in a manufacturing organisation (usually caused by a lack of deep alignment - which I now have an on-line survey to demonstrate) that will allow me to make a 30-50% improvement to that measure (i.e. double output for current costs) if the management team are open to a deeper approach over time ... and something more-like 10% if they are not. (This has typically been for companies and groups turning over ￡20m-￡80m).

Despite 40-50 years of technology and tools and techniques application around the global manufacturing market, the vast majority of the 100s of companies I've met, are still less than ￡100k Sales per capita, and the stats suggest it's not much different for the larger organisations.

We HAVE to consider all 3 legs on the stool of organizational change if we're to ever 'Find the Balance', and make our organisations efficient and effective. If we find that balance and increase what we know about people, we'll be able to do a better and faster job of reducing our environmental and social impacts ... but the language surrounding brains and minds often triggers defence mechanisms ... it's a bit of a catch 22.

But we have to start the conversation somewhere, and that's where BTFA can become very powerful indeed. If we can get senior leadership teams, Investors and management teams talking about this complex subject in simple terms, it will (and does) act as a catalyst for neurogenesis (a change to the wiring and firing patterns in the brain) ... and with a new language, we can conceive of different things.

As Wittgenstein said, "The limit of my language is the limit of my world" ... Technology applied to brains (neuroscience) has given us the capacity to start to comprehend the human condition and a new language required to describe it.

Am I saying there is no place for tools, process, policy or procedure? Of course not. Structure, discipline, order, standards, all have positive psychological aspects ... it's how we go about introducing them that makes the difference, not the tools and techniques themselves.

So what am I saying? I'm saying let's look at those things through the people lens and find out why the last 50years hasn't really moved us on very far at all ... isn't that continuous improvement? (Hansei, Kaizen and their practical application through Hoshin Kanri ... and not just Kairyo).

The good news is ... computer processing power is now getting to the point it can pull together data in meaningful ways, significantly improving decision making in infinitely complex environments the human brain cannot handle ... with this new level of processing power comes a new opportunity to give people control. Given that as an objective, I'm convinced we can, and I'm sure will, do better.

Drop me a line if you'd like to know more about BTFA, or the technical projects I'm involved with, e.g. addressing global supply chain improvements delivering results like those in the graph below. These are exciting times indeed!