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GET SMART: A CONVERSATION WITH DAN MADISON (PART 4)

Posted by on November 1st, 2012 with 0 Comments

Dan Madison is founder of Value Creation Partners, an organizational consulting and training firm. He’s also author of the best-selling Process Mapping, Process Improvement, and Process Management. He focuses on helping clients increase value through operational improvement, organizational redesign, cost reduction, and strategic planning.

Earlier this summer, I attended Dan’s intensive one-day seminar on process reengineering and lean techniques. After seeing what his methods did for my team, I had to interview him. Over the next four weeks, Dan and I will discuss how process mapping can make you, your team, and your organization SMART as Hell.

PART FOUR: Re-engineering

Glenn: One of the biggest ‘takeaways’ from your workshop is the list of 30+ design principles. I’d like you to elaborate on 5 of these design principles that I found particularly interesting, starting with #1: Design around value–adding activities. This is the key isn’t it?

Dan: Yes. If there is a golden-rule design principle, that’s it. It applies to all processes, all the time. As I described earlier, a value-added activity is a transformation of material or information that the customer wants, it’s a service feature for the customer, or it’s a step the customer would pay for.

That’s the gold in the process and as a miner we want to get as much gold and as little gravel as possible. So, how can we design a process that gives us the maximum amount of gold with the minimum amount of gravel? What’s really nice about this ‘value-added’ lens is that you can focus on the things that are of value to the customer. By doing that, you get rid of the non-value added activities.

Now, there is a school of thought that you should identify the non-value added activities and figure out ways to shrink them or eliminate them. In one of my early facilitation efforts I thought I would try that. Here’s what happens: the people in the room that do those non-value added activities start arguing with you about why the activities are necessary.

Glenn: Wow. I’m shocked. [laughing]

Dan: It’s actually kind of insulting to them that you’re telling them that the work that they do is non-value added. It creates an atmosphere that’s pretty toxic. This professional facilitator is saying to you, “Oh, you do stuff that’s of no value”. Imagine how it feels to be the lucky person doing that non-value added activity!

After I had a horrible experience with it, I thought, I’m not going to do that. I’m going to focus on the value-add and optimize it. And, by doing that, I’ve never had anybody be offended. It didn’t create any backlash around why the non-value added work was necessary.

I once was at a table with a process improvement guru who said, “I look at the non-value added activities and get rid of them”. I asked, “What about the folks who are doing those activities?” He said he tries to justify it by pointing out that some of the stuff that he does is non-value added and tells them that they shouldn’t take it so badly, because we all do non-value-add stuff. I wonder why we would even go down that path? I think he was stuck in his methodology… I’m a firm believer that focusing on the value-add is the way to go.

Glenn: I agree. Water flows downhill. It’s a facilitator’s job to create a smooth flow of energy in the room and that’s difficult to do if you’re creating anxiety in the participants.

Dan: There is an important addendum to that design principle – We do not design the process around personalities. We do not design the process around skill sets. We do not design around departments. We do not design around location. We take all of this garbage out of there – which is how, sometimes, processes are designed.

For example, when someone won’t do a certain kind of work, “Well, we’ll design a process that accommodates them”.

No, no, no, no, no, no.

Glenn: [laughing]

Dan: …that’s not the way we go!

Glenn: I just read a book that I really enjoyed. It’s called, “The Best Service is No Service”. One of the companies they highlight is Amazon. Amazon’s service is highly regarded by most customers, even though it’s rare that you engage with anyone, because they’ve done such a good job of eliminating steps though one-button-ordering, personal recommendations, order tracking, and other value-added activities.

It would seem that – if you were to use a scorecard – there’s very little that happens in the customer interface with Amazon that isn’t value-add.

Dan: Exactly.

Glenn: Your second principle is that work is performed where it makes the most sense.

Dan: Let’s say, for instance, that you’ve got some people who are really turf-protective. They’re arguing, as you’re doing the analysis, “That should be done by Marketing”. Another group says, “No. That should be done by Sales”. Already, you’re getting into the turf thing.

What we do… is we go back to Design Principle #1.

I say, “Let’s just ditch this ‘who does what’ thing right now and create the most elegant flow that we can”. Let’s say they’ve done that. Now you can put on your boxing gloves, but this is the criteria on who does each of these steps: it’s done where it makes the most sense. Don’t allow a turf war to derail an elegant flow. Where the work should be done is based on common sense, using the time or cost lenses, for example.

Glenn: We’ve discussed some of the components of Principle #6, which is “Reduce waiting, moving, and rework time”. I want to point another ‘a-ha’ moment for me in the workshop. During our session, one of my colleagues wanted to draw a ‘loop’ in the flow to indicate, “sometimes we have to come back in time and redo these steps”.

You stopped him from drawing the loop and asked him to add in the rework steps. For example, if you typically need to do it three times, draw three iterations of the steps so we can see how much time you really spend.

Dan: Certain conventions in process mapping hide the severity of what’s truly happening. And ‘rework loops’ are one offender. You see two or three steps of work being done and then there’s a review step asking ‘is it okay?’, and if not the loop goes back to the first of the three steps. That seems straightforward, but it doesn’t show you that those three steps are now repeated in reality. You need to show how many times those steps are repeated.

I have some rules that I think are useful in process mapping, and one of the rules – it’s rule number two – is that the problems in the process should be easily visible. You hide those problems when you show rework as a loop. But if you copy all those steps again and people see that all that work was done again and again it really drives home the point that it’s all pure waste.

Glenn: That really is the value of this visual process. Tell us about Principle #18: Capture information once, at the source.

Dan: That’s a plug for ERP, SAP, and Oracle… folks like that.

When we go back to how IT systems are traditionally put into organizations, the folks in the IT department go to the folks in the functional silos and ask, “What do you want?” The functional silos tell IT what they want, and then it’s cobbled together and we have to share information. But we can’t without reconciliation and a whole redundancy of steps, such as putting the data into another system. That’s waste.

What this principle illustrates is, by independently optimizing the pieces of a process without looking at the whole, you will sub-optimize the whole.

It’s another nail in the coffin of functional thinking, because processes span functions. And if you’re not looking at the totality of them as you’re doing improvements, you’ll get sub-optimization. What you’re seeing is that data redundancy is just a symptom of our functional thinking.

Glenn: Principle #21: Redesign the process first, and then automate it

Dan: That’s for both the customers of IT and for IT. I’ve written some blog posts on the IT/Business divide. It’s kind of a dysfunctional relationship, and both parties play their role in the dysfunction. One of the problems that the IT folks have is that they believe that the business knows the process. That’s the first flaw right there. I’ve seen it happen over and over where we do an ‘as-is’ process and the manager and supervisor will slap their forehead and say, “I had no idea that we did that”…

Glenn: [laughing]

Dan: The managers remember it from when they did it 15 years earlier. And it’s not like that anymore. Also, the IT folks – by asking groups individually what they want – get the sub-optimization of the whole that we just talked about.

Another faulty assumption is that the ‘as-is’ is okay and we just need to tweak it with some IT. Now, I could be suffering from the same problem that my college professor suffered from, which is: if you ask a psychologist, everybody’s crazy, because that’s all they see. I’m a process doctor, so all I see are bad processes. I’ve come to the conclusion that every ‘as-is’ is busted in some fashion and so far, that hasn’t been refuted! [laughing]

Glenn: [laughing]

Dan: The issue here is that neither IT nor the business knows how to do a good ‘as-is’ map and analysis. They skip that step. They just come in and slap hardware on top of whatever it is you do. And then you have to conform to it; there’s no flexibility in it whatsoever.

We have two parties, each adding to the dysfunction. There are a lot of powerful tools in software and on the IT side for mapping processes. And you would expect and hope that the business would really have that nailed, but they don’t. There’s a great quote from Bill Gates, “If you apply automation to an efficient process, you magnify the efficiency. If you apply automation to an inefficient process, you magnify the inefficiency”.

Ask anyone who’s been through these IT projects how well their needs were met and almost overwhelmingly, you get horror stories. It’s amazing. In fact, one of the things that I keep being amazed at is how some of these software companies are able to sell their software.

I’ll have a room of 20 people from different organizations and I’ll ask, “How many of you are doing an ERP system?” Five hands will come up.

And I’ll ask, “How many have had a smooth implementation?” For years, all the hands would drop. And the horror stories would come out.

Once in a while I’ll have a hand up come up now. It went smooth. When I ask the ones that went well how thoroughly they knew their process, they reply, “inside out”. But I need to change that question and ask “What do you think accounted for your smooth implementation?” I’ll probably learn some new things.

Glenn: Well Dan, I’ve learned a lot of new things today. I always like to give readers a project or homework that they can do based on our discussion, so they can turn learning into application.

One of the first steps you ask participants to do is create a ‘macro-flow’: a visual that documents 2 to 7 steps at the highest level of a process. The participants can then pick one step and do a deep dive. Is there one thing that our readers can create a macro-flow for?

Dan: Sure. My advice is to map something that is frustrating for you. Pick some chunk of work that is bothering you or map your filing system at home – how you open your mail, sort it, throw stuff away. I personally start making piles on my floor, of things that I think are interesting but I haven’t filed. So, in essence, my filing process is creating piles of things on the floor.

That would be my frustration – one that could be drawn in a 2 to 7 step macro-process.

Glenn: That’s perfect! Here’s our ‘reader challenge’:

  • Pick one of the following: Filing, paying bills, morning hygiene, evening hygiene, automobile maintenance, or something else.
  • Print out the ‘macro-flow’ template (template).
  • With a pen – or better yet, sticky notes – capture your process in 2 to 7 steps.
  • Here’s an example of my morning hygiene ritual (example).
  • For extra points, pick the most frustrating step in your ‘macro-flow’ and map it.

Glenn: Dan, do you have any final words on process mapping?

Dan: In terms of an organizational setting, the act of doing a map of how work and information currently flows, analyzing it, and improving it, is a phenomenal diagnostic of what’s working or not working.

I consider it a core skill set, particularly for anybody in management. But anybody will benefit from it. Everything we do each day, whether we’re at work or not, is some aspect of a process. So what we’re doing is just basically making it visible and identifying where the issues are. And then, hopefully, with a group of people – because more is better – we are coming up with counter-measures to deal with the issues that surface.

And, as I mentioned earlier, as you come up with these ideas, you test them. We don’t necessarily go from counter-measure to implementation without the intermediate step of testing it. When you do that it opens up a whole area of improvement because 1) you’re getting to where the root cause is, 2) you’re using people’s creativity, 3) you’re testing your ideas as an experiment, so there’s no risk, and 4) once you find something that works well and you implement it you’ve improved your life and the life of others.

It’s a competency that I think all of us should have.

Glenn: Thanks for your time, Dan. This was a great learning experience for me.

Learn more about Dan’s work and other resources in this interview below:

 

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