It's the Process, Stupid!

So I keep telling myself, the greatest invention in the last 200 years isn't a product, but rather the scientific method, the process which has been used to create millions of products. Today, when change is exponential, a focus on process over products is even more important. Here are 5 keys to focusing on process.

In the early 1990's, I started my first professional full time job as a manufacturing engineer with the responsibility to manage the process to assemble analog gauges used for angioplasty devices. The company had just lost two of it's three major customers for this particular product line and the largest was beginning to look for another supplier. The QA for the customer was rejecting too many of the shipped gauges and this was after our internal QA was rejecting many gauges as well. We were just beginning two major company wide changes - the first was to move from traditional push manufacturing to the new pull manufacturing (demand flow/kanban) and second was to allow individuals at all levels more opportunity to lead and manage.  Fortunately for me I had no experience or allegiance to the old ways. I didn't have any experience with the new way either so I was sure it would work.

A year later we were able to get the two lost customers back and the largest customer increased their orders. Changing their minds didn't just involve sending them finished products that passed their QA. There were three major steps: 

  1. Implementing demand flow resulting WIP reduction over 90%, QA becoming a part of each step performed by the assembly worker and a reduction of assembly cycle time from weeks to a few hours.
  2. Improving employee engagement by training them to manage the process and visiting local hospitals to see the value of their work in action.
  3. Educating the customer on the new process and culture and inviting them to see the changes on the floor.

Providing both the customers and the employees confidence in the process saved the product line. 

 
Process over Product

Now I'm working in the IT Services area rather than directly for manufacturing so it would seem the value of process over product is easy to see but that's not the case. Even in the services industry there is a focus on the deliverable or the end result of the service more than the process.  Much of the sausage making is still hidden away.

The exponential growth of technology and the resulting change are ever more reasons to focus on process. In a recent Wall Street Journal article, Vinod Khosla, venture capitalist and co-founder of Sun Microsystems, talks about how difficult it is to predict the future with any certainty.  Five years ago, driverless cars were thought of as a fringe concept that wouldn't work for decades. Today every automobile company has changed it's strategy to figure out how they can be the disruptor in this technology rather than the disrupted.

"People plan around high probability. Improbables, which people don’t pay attention to, are not unimportant, we just don’t know which improbable is important. Of 1,000 improbables, I am almost certain that one of those is more likely to happen than what you predict as the path and the business environment for say insurance or healthcare or manufacturing 10 years from now. And that is an easy mistake to make. Some improbable is important but there are too many improbables to plan for. So what do you do? You don’t plan for the highest likelihood scenario. You plan for agility." - Vinod Khosla

To me planning for agility means focusing on the process more than the product to make it easier to adapt and adjust to changing environments and technology.

Amazon has reached the $ 100 billion in annual sales milestone faster than any company. What started out as selling books online with Jeff Bezos packaging them and dropping them off at the Post Office has transformed into selling everything online, building the largest and fastest growing cloud services and infrastructure offering with AWS, developing a home assistant (AI) named Alexa, and creating/distributing entertainment that has won the highest awards in the industry.  In the most recent letter to shareholders, Bezos, explains the driver for what seems like a hodgepodge of products and services.

"Many characterized AWS as a bold – and unusual – bet when we started. “What does this have to do with selling books?” We could have stuck to the knitting. I’m glad we didn’t. Or did we? Maybe the knitting has as much to do with our approach as the arena. AWS is customer obsessed, inventive and experimental, long-term oriented, and cares deeply about operational excellence." - Jeff Bezos

The knitting is the process and culture that Amazon seems to have perfected and has been able to output a variety of products and services that seem to move along with technology's momentum.

 

Breaking Free From The Flat-Rate Managed Services Model

 
 
5 Keys to Focusing on Process

A good process is more than a documented sequence of steps that someone follows. Processes are never static if they are to be effective. They have to be constantly adjusted and sometimes dramatically changed based on feedback from both external and internal resources. Like the example in my first job this focus was a combination of implementing a major process change,  and engaging and empowering employees to change and improve it and allowing for experimenting and failure.  Here's 5 keys to focusing on Process based on my experience and what I've learned from other companies experiences.

1. Employee Engagement and Empowerment

Following a process is static and can only be effective for a temporary time frame if at all. Constantly reviewing, stopping, changing and improving the process is the only way to be effective. This means the people closest to the process need to own it and feel empowered to manage it. Feeling in control of oneself  is a key to motivation as outlined in a previous blog post. In my personal example with the assembly of angioplasty device gauges, the change from a traditional management which tended to be closer to micro managing to one based on self management played a big role in allowing the process to work effectively. 

2. Innovate/Experiment/Fail

Innovation is a key ingredient to developing processes and culture. Jeff Bezos provides a great summary below of why this is so. Without the culture that permits failure it's difficult to keep improving/changing a process to keep pace with technology.

"One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten." - Jeff Bezos

3. Data and Analytics

Processes have an output and goals that usually solve a business problem. We can use feedback or data to determine if we are actually achieving the desired goal. Part of any process needs to be to capture, store and easily access this data and then use analytics to help solve the problem and improve the process. Most companies capture data but many fewer convert the data into knowledge. The key is to actively engage in using the data to solve business problems

4. Continuous Improvement

When any process, big or small, is moved from whiteboard to the real world it will be far from perfect.  The ability to gather and use data and analytics, lessons learned from failure, and feedback from customers and employees is critical. In the Toyota Production System the person directly involved in the process could stop the process at anytime and fix the issue immediately rather than just continuing to meet a production quota. It's also important to determine if a process should be improved, eliminated or disrupted. Improving an ineffective process may not be enough. 

5. Agility

The ability to make changes quickly, take risks, think longer term seem to be what separate startups from large organizations which tend to be the disruptor and the disrupted, respectively.

"So change, and predictions for the future, that are important, almost never come from anybody who knows the area. Almost anyone you talk to about the future of the auto industry will be wrong on the auto industry. So, no large change in a space has come from an incumbent. Retail came from Amazon. SpaceX came from a startup. Genentech did biotechnology. Youtube, Facebook, Twitter did media … because there is too much conventional wisdom in industry." - Vinod Khosla in WSJ

Amazon is a very large organization now with over $170 billion in revenue and 600,000+ employees.  They are concerned with losing agility that seems to come naturally with size. In his latest shareholder letter, Bezos writes,

"Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups. As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention. We’ll have to figure out how to fight that tendency." 

 
Concluding Remarks

Some evenings I help my daughters with their homework. I usually try my best to help them without giving them the answers which usually frustrate them. I tell them, to their surprise, that the answers don't really matter. After they are finished with the many years of school ahead of them it's unlikely anyone will ask them about the Louisiana Purchase, what the conflict was in Catcher in the Rye or to solve a differential equation. But the process they use to answer each one of those questions, they will use for the rest of their lives, and that is really the main purpose of the first 16 years of their education. They usually roll their eyes, and tell me again it would be easier if I just gave them the answer. 

 

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