by Max Krug, Change Management Specialist, Future State Engineering

Often when companies start working on improving their business, the process does not go very far. They may be lacking a fundamental system and a formal approach where current paradigms are challenged and various components of the organization are taken into account and are built into a logical action plan that actually works. For any person or company to engage in the process of change, the first step is to understand their ‘current reality’. To understand a current reality, we analyze entire systems or organizational problems at once by identifying root causes common to those problems. Organizational problems are often caused by misalignment of goals between departments (i.e. the actions of one department having negative effects on another department).

Identifying root causes entails a comprehensive understanding of how the company currently operates, such as determining how well employees understand their work process, their functions, and their internal customers as well as effectively measuring employee performance. The output of such understanding will be the negative effects and the corresponding root causes which define ‘what to change’ in the current reality.
With an understanding of the root causes of the organization’s issues, we move towards defining the ‘future reality’, the desirable outcomes that define what a high-performing company will look like once systemic problems are identified and addressed with injections into the current reality. The foundation of every high-performing company is having a ‘stable system’. Dr. W. Edwards Deming defined a stable system as a system that does not have any special causes (or assignable causes) of variation present, and all the variation in the system is from common cause (or inherent) variation; in which variation is defined as the difference between the expected result verses the actual results that you get from performing a process.

Having a stable system means that the time to complete all the processes in the system (the value streams), however defined, from start to finish, is highly predictable. In order to be highly predictable, the system must be free of special causes of variation. For example, special causes in variation in operations can come in many different forms, some being easy to identify and some not so easy to identify. Some of the typical easy to identify variables that I have classified as special causes would be: lack of supplies due to late deliveries from vendors or subcontractors, unplanned process downtime, and quality issues. These types of special causes can be easily addressed by the application of Lean and Six Sigma techniques to reduce or eliminate the causes. On the other hand, some of the ‘not so easy to identify’ issues that I have classified as special causes would be: processing easy jobs at the expense of the harder jobs, jamming rush jobs into the system without consideration of capacity, batching jobs together in order to be “efficient”, pulling jobs ahead to ‘save’ or reduce setups, increasing the order size ‘just-in-case’, expediting and forcing changeovers to the newest ‘hot list’, or bad multi-tasking. Dealing with these issues is much more difficult to correct because it involves behavioral changes from the people within the organization. From my experience, the behavior modification is one of the most difficult changes to make within an organization, and in addition, it is typically these behaviors that most contribute to instability in operations. In a high-performing company, it is very important to first achieve stability (eliminate the special causes of variation) before attempting to focus on improving operations.

Side Note: Max Krug will conduct Operational Excellence workshops across the region in 2020. Here is the current schedule: March 10, DuBois; April 21, Erie; and May 12, Grove City. More details at www.nwirc.org/events.