Lowering the River

Certainly, there is not a lot of good that comes out of a worldwide pandemic such as Covid-19. But one bright spot of it is that it has forced every aspect of life to be rethought, reimagined and re-engineered. Many of the things we thought were so necessary to the way we work and live may, in fact, be much less important. Coronavirus has made many of us innovate, improve, become more agile. It has triggered a rapid evolution of our systems and processes, much of which will become the new normal. This highlights a major advantage that Lean organizations possess. The Lean infrastructure is designed for continuous improvement, quick response and problem solving up and down the organization. 

An example of this that I heard about on the radio recently, was the changes that college entrance committees were being required to make in their selection process of new freshman students when the last semester of high school was so disrupted and taking SATs (or other admissions tests) has been impossible for health and safety reasons. In some high schools, they went to a Pass/Fail grading system versus the usual four point system. How do these college boards deal with this? How important are college entrance tests; are they really that informative? Many universities have instituted (re-instituted) the entrance essay as a metric for admission. Will these essays become a permanent requirement for admission post Covid-19?

One of the axioms in the Lean environment is to "lower the level of water in the river." When the water level is high, systems and processes seem to sail by smoothly because rocks are covered and we go over them; flow occurs effortlessly. However, this often leads to complacency; a false sense of well being. Lean organizations will routinely introduce small changes to their Value Stream that cause a little bit of chaos. It "lowers the water" just enough to show where the rocks (waste, defects, muda) are. These rocks are problems, never before illuminated, that need to be solved in order to avoid potential, future pitfalls; to survive and to be better tomorrow than we are today. Covid-19 has "lowered the river" exposing dangerous "rocks" among many of our systems, especially healthcare. Lean teaches that systems should be in place that make problems (or potential problems) quickly identifiable and corrected quickly at the root cause level.

For example, if one of your Value Streams (e.g. annual wellness exams) has been functioning very well with five staff members involved, then try changing it to only use four (and reallocate that fifth person to new work that can, perhaps, drive growth for the practice. What problems does removing a person introduce; what rocks pop up? How would your practice deal with that change? How might you have to evolve and improve? 

Or, if your inventory is set at a certain level with a certain reorder point, what changes would be needed to avoid rocks if you decided that these levels be decreased by ten percent, saving capital and carrying costs? But be mindful that lowering the water too quickly can make us crash the boat. You might be able to start by putting 10% of inventory in a separate “emergency use only” location -- and when you can improve your processes to the point of truly not needing it, then use up that 10% without replacing it. 

Or, what would your practice need to change in order to start seeing appointments every twenty minutes rather than every thirty minutes?  How can we do so in a way where nobody feels rushed and so that care and service doesn’t suffer, not to mention the quality of worklife?

By occasionally, but routinely, "lowering the level of the river", Lean organizations start seeing new "rocks" that stimulate innovation, creativity, problem solving techniques, staff engagement and place them even farther ahead of their competition; more capable of sailing in rough times.

It will be very interesting to see what life will be like (better? or worse?) one, two or five years from now because of what Covid-19 has invoked. Though, hopefully, in the future it will not take a worldwide pandemic to teach us the necessity of "lowering the river" and continuous improvement. 

How might this be experimented with in your practice?

Thanks for reading. 

Systems Thinking: Bringing It Closer To Home

A mindmap illustration of a systems approach to many of the things that affect your take home (net) pay

When we think about all of things that we need to consider when negotiating compensation with a potential new owner/manager, most of us are probably only concerned about base pay, production percentages and benefits packages. If this is good, we're good. And, I used to be in this same group. But, experience can be a ruthless teacher.

So, let me share some of my experiences with those of you that have not racked up forty plus years in the profession, working on both side of the "boss" desk, in private and corporate environments, in practices of two to six doctors, in low cost/high volume and high cost/low volume practices. Maybe, you won't have to reinvent the wheel. Plus, I think this is a good illustration of understanding things from a systems point of view.

What is a system? Thank you for asking! A system is the "game" with all of its "rules" that affect us, the players, and determine if and how "we win or lose." It is all of the departments, policies, procedures, cultures, ways of thinking, agendas, biases and ignorance that come to bear on a particular area or person, namely us, the employee.  Workers are at the mercy of the systems. They have no control over systems. Leadership is responsible for systems. However, in order to know how you will fare, you need to appreciate the intricacies of the "game." You need to think from a systems stand point.

Most of us veterinarians, these days, work on a production basis, i.e. we are paid a certain percentage of what we produce in medical and surgical fees less taxes and certain deductions. Many times there is a base salary in the mix, also.  So, for example, we are paid the greater of X% of our gross production or a salary, whichever is higher for the current period. And we are happy!

But this is only the tip of the iceberg. Looking at the illustration above, one can see there is much more involved than one might expect.

U.S. Tax Code

• Obviously, you have to pay your "favorite uncle" first. And, the government is a humongous system!

Employment Contract

• Percent of gross, obviously.
• Base salary. Usually, you either get your percentage of production (POP) or the base salary, whichever is higher for the period. Ideally, this is designed to give you a minimum paycheck while you are building your production. However, I have been in "systems" where the language of the contract was that POP was not based on gross production, but on gross COLLECTED production, i.e. if the client didn't pay the bill, I didn't get any POP for that invoice. So, my paycheck is dependent on the practice's accounts receivable system; an area I, as an employee, have no input or say about.
• Negative ProSal. This is my terminology for having to pay the practice back for any base salary paid but that your POP failed to cover. For example, in the first pay period of the month, I get $500.00 base salary. At the end of the month,  I get paid another periodic base salary of $500.00. I produced $4000.00 by the end of the second pay period of which I'm entitled, by contract,  to 20%, or $800.00. They already paid me $1000.00, yet my POP only amounted to $800. So, they TAKE BACK $200.00 of "overpaid wages" and my last paycheck for the period is only $300.00. It wasn't an either/or situation, at all. It amounts to straight production. The base salary language in the contract was "smoke and mirrors." 
• Play close attention to the Non-Compete clauses. It may not affect your earning potential with the present owner, but it very well could affect future earning potential with a different employer. (This also goes for relief Veterinary services. If you get asked to come to work for a practice that you worked at through a relief service, it might be a violation of the non-compete agreement you signed (Remember?) with the service.)

[A sideline note here. I contracted to work 4.5 days/ week for a set base salary. A pay period was every two weeks. So, I agreed to, and was available, to work  four days every week plus every other Saturday. During the first  two-week work period of my employment, my employer only scheduled me for three days each week and no Saturday. They weren't that busy. However, I only got paid for six days of base salary. This is not the definition of salary. That is per diem pay. I protested and received the other two days of salary. My point was that I was agrreable, available and willing to work the 4.5 days per week. It was their choice not to have me come in, not mine. Unless, it was my choice not to work, I was entitled to my base salary. Be careful, employers, especially of some smaller corporations (that may be under capitalized), may try to cut expenses any way they can dream up. Their "best interests" are sometimes in direct opposition to your best interests. Their systems are their systems!]

Policy Manual

• This is where a lot of the detail about "perks" and "comps" are listed. The point here is that the Policy Manual may take on the same power as any other contract, especially if the contract refers to items in the manual. (So, get and read the Policy Manual as if it were a contract,  because it very well may be.)
• Other items may also affect your take home pay. How much PTO do you get? How is it accumulated? How much is a "days wages"  worth if you take more PTO than allowed or take it before it has accumulated? What insurance is offered? What is the employee portion? Is there any allowance for CE? Is it enough to go to a major convention in order to cover all required hours for licensing? Who pays for uniforms? What retirement programs are available? When do they take effect? Is there employer matching? How much? When are you considered vested?

Practice Demographics

• Where your practice is located may affect your potential pay. Which state? Urban, suburban, rural? High percent of nearby non-residential establishments (businesses)? Neighborhoods mostly house or apartments? Are the residents young with kids (and pets!), older and on Social Security, or single, career climbers? What socioeconomic level is the majority of the residents? What is the level of discretionary income? Unfortunately, considering these types of things is important.

Inventory

• It may not be immediately evident, but inventory is another system that can affect your paycheck. If you don't have it, you can't sell it. If you can't sell it, you can't earn your POP. And if this happens too much, frustrated clients will leave to go to practices that do have what they need, when they need it. (Diminished long-term growth; less net income in the future)
• The inventory system is influenced by other sub-systems, policies and procedures. For example, the method of triggering reorders (tags, want lists, kanban bins, etc.) % of stock outs, availability of alternative drugs (variety), reorder point (is enough drug available to get through the next order/delivery cycle) to name a few.
• The Lean concept of Just-In-Time thinking is the utilization of inventory (or any resource) only when it is needed, where it is needed and in the amount needed. Seems like a good rule of thumb, but, as with most things, it is relative. In reality, the time from selling out to ordering to receiving new product is not instantaneous. Therefore, some level of safety stock is necessary to keep on hand. How much depends on many of these aforementioned systems and sub-systems are at work and is the big question (Google 'Economic Reorder Point' and/or 'Economic Reorder Quantity').

Average Client Transaction (ACT)

• One of the major drivers for net income is the the ACT.
• But, the ACT is influenced by the practice's fee structure, the portfolio of services and procedures offered and whether the there are discounts and coupons available for clients to use (and how your contract counts their value toward gross production).

Appointments

• Appointments is another one of the systems that affects your net income, especially appointment density; the number of appointments available per hour or per hour per doctor. Are appointments scheduled on the hour? Half hour? Quarter hour?
• What are the hours of operation each day? What days of the week?
• How many surgery days per week? Who gets what days?
• Can any Doctor see any client/patient who doesn't have a preference? Or, are all clients already assigned to other vets so that you will have to "build" your clientele from scratch with new clients to the practice? And, therefore...
• How quickly is the practice growing and what is the practice's marketing strategy (another system)? You can't earn from clients that don't walk in the door!
• How many other doctors are vying for clients? What is the internal competition like? (Believe me, there is ALWAYS some level of internal competition, especially as long as compensation is based on POP.)

Gender Differences 

• Does this occur in Veterinary Medicine?

This is probably not an exhaustive or complete list of influencers on your net income. However, I'll bet it encompasses more than you previously considered.

Glance back at all of the different systems; all of the different policies, agreements, understandings, aspects of the practice you work for and/or all of the "games." How many of them do you have ANY control or, even influences, over? Taxes? Inventory? Your practice's demographics? Accounts Receivable policies? Fee structure? Appointments? Marketing? You have partial influence in the contract. The Policy Manual??  Yet they determine your ability to survive, grow, enjoy life, contribute to your world?

This is why thinking in terms of all the system involved is so important. And understanding how changes in one area can have profound effects in another.

The last time I interviewed for a job that paid on POP,  I asked to see the last several periods of ACTs, and gross income. I looked at their state of inventory and asked about how they order drugs. I asked how much a rabies and distemper vaccine, plus a fecal exam, routine deworming and flea/heartworm would cost the client. This is one of my "index" invoices that I use to evaluate fees between practices (other "index" invoices include routine canine spay + pre-anesthesia blood work + IV cath/ fluids + pain injection + pain meds to go home or a dental prophy without extractions + routine labs + IV cath/fluids. It is simular to how one might use the S&P 500 Index to evaluate other investments or how the Consumer Price Index works). I had them show me the appointments over the last few months. I drove around the practice to check out the neighborhood. I "Googled" the practice to see client reviews. I checked out if they board, do grooming or have dental xrays and ultrasound. What does the staff look like? Enough to support good client flow? Trained well enough that I only have to worry about that which I am uniquely trained and licensed for? I was interviewing the practice as much, or more, as they were interviewing me.

Just like playing Black Jack in Vegas, I know the odds are in the casino's favor (they set the rules; system) but, I want to get as much in my favor as I can. So, maybe I can choose to play at a casino where they use only three decks versus five, or one that reshuffles only after 75% of the boot is dealt, versus 50%. The more I understand the systems in use, the better my choices will be (hopefully!).

I worry about the young, naive vets coming up who haven't had the level of experiences that I have had.  They are at the mercy of their employer's systems, more and more of which are large, faceless corporations (or "wannabe" corporations) with much deeper pockets and, possibly, a different perspective and agenda. Who will speak up for these neophytes? Who will watch over them? The fox that is in charge of the hen house?

Maybe, it is time for the younger generation of veterinarians, vet techs, vet assistants  and receptionists to consider forming an employment union, the way workers had to during the Industrial Revolution, and for the same reasons. There is power in numbers they say! And, it is the "power" that determines the "game". The Registered Nurses had to do it.

Thanks for reading.

Status Quo Begets Status Quo

I have been listening to the book Brave New Work by Aaron Dignon. Have you read it? I find it very interesting. 

When talk we (I) think about Process Behavior Charts (PBCs), it is usually in order to filter out the “noise” and highlight any “signals" in our metrics; to determine if we are still within the Natural Process Limits (NPLs). A PBC that stays within the NPLs indicates the system which the metric is monitoring is working as it was designed. Any data outside of the NPLs is one (of three) of the signals that indicates something has changed in the system, necessitating the need for closer scrutiny.  A PBC is referred to as the “Voice of the System” (VOS).

But the corollary to this is: 

If you are not happy with where the metric is charting, then in order to improve the chart, it means changing (improving) the system; the thinking and approach. 

As Dignon points out, if we want a 10-fold increase in production, we pretty much intuit that that will require major changes in our thinking and approach; the system. But, if we are only looking for a 10% improvement, somehow, we think that that can be achieved by "status quo " thinking. He calls this the "status quo bias." Any change in the metric requires a change in the system; the thinking and approach.

Even the modest 10% change will require different thinking and approach. Status quo thinking will only lead to status quo results. So, when the Practice Manager or area director (or even the C-suite) issues a new goal or benchmark for the new year or next operating period, then our response should be, "Great!! What are you all going to change within your thinking and approach (the system) to result in any chance of hitting that new goal?” Because, without that change first, the new goal 'just ain't going to happen!' Commanding it to happen or incentivizing it to happen or threatening if it doesn't happen will not make so.

Status quo begets status quo!

Remember, operational systems are created by and are the responsibility of Management. Workers are at the mercy of systems! 

Come join Mark Graban and I at the 2020 AVMA Veterinary Leadership Conference in Chicago as we facilitate the audience participation workshop of W. Edward’s Deming’s “Red Bead Experiment” which was designed to illuminate these concepts and more. 

R-E-S-P-E-C-T

“Respect for people” is a fundamental principle of Lean and a major difference between Lean and the Western, more Taylor-esque, concept of management. The Western tradition, which is still a part of educating MBAs, is that management knows best and makes all decisions. Workers are to do as they are told.

There is a quotation by Henry Ford to the effect that the problem with workers is that, not only do they come with two hands, but also, unfortunately, a brain. Workers are not hired to think! Lean is much less of a top-down style of management, and much more of a bottom-up, inclusive, transparent style. This is not to say, however, that the asylum is completely handed over to the patients.

This core belief influences the relationship Toyota managers and supervisors have with their workers. For Toyota, management’s primary function is more of teacher and less of an organizational police officer. We now understand, more than before, that the focus for Toyota is not just on building quality automobiles, it is primarily focused on the building of problem solving, innovative, respected employees who, then, build quality, innovative automobiles.

Dealing with people from a basis of respect permeates every aspect of Lean.

Systems thinking:

Have you ever had the feeling that, at some point at work, you were damned if you do and damned if you don't? Or, that you are in the the middle of a Catch-22 situation? If so, you have probably been the victim of poor systems or systems colliding with each other. That feeling of not being in control or at the mercy of things bigger than you.

Thinking in terms of systems means understanding that the systems at work within an organization are management and leadership designed. Systems are the responsibility of management. Workers have no authority to control or overhaul systems. They are at the mercy of the systems. Yet, many times, staff are blamed for what is, in actuality, a system design problem.

For example, if a job is not being performed well, systems thinking would first consider such things as does the worker know that job is their responsibility, has the worker been trained adequately, does the worker have the necessary tools, and does the worker have timely and correct information?

Systems thinking is more respectful. It recognizes that systems should be investigated when problems occur before blaming people.

Value:

The Lean definition of value is that which the client wants and is willing to pay for, and that improves the health status of the pet, without defects and waste along the way. Our clients get exactly what they want, when want it and in the amount wanted. They pay for only value adding services. The concept of defining value from the client’s point of view shows respect for them.

Variance and overburdening:

Lean understands that large variances in workload can be the source of difficulties and overburden our staff. Lean suggests work loads try to be leveled as much as possible. Being watchful for the overburdening of staff comes from respect.

Just-In-Time

The Just-In-Time (JIT) concept is the procurement and delivery of resources, (whether that be drugs, supplies, access to diagnostic equipment and information, or patients, doctors and staff) just exactly where it is needed, just exactly when it is needed, and just exactly in the amount needed. Nothing more and nothing less.

With respect to staff and personnel, the Just-In-Time idea is based, in part, on recognizing and respecting the unique value of everyone's time and skills; to only use them when, where and in the amount needed.

Standardized work

Standardized work is the mutually agreed upon method to do or handle a certain process or situation that helps insure quality, timeliness and safety, and gets everyone on the same page working in the same direction. It shows respect by involving staff in its definition and formal writing, and by eliminating ambiguity and the anxiety it causes to workers that come from policy and process chaos.

Kaizen

Kaizen is a Japanese word that can be translated to mean “good change,” “change for the better,” or “continuous improvement.”

While improvements can be large, time consuming and expensive major changes, the most common are the small, daily, quick, inexpensive ideas submitted by staff that improve quality, flow, safety, value to the client and make work life just a little easier. Staff are on the frontline of our practices every minute of every day. They know, better than anyone, where and what the problems are. And, they probably know better how to remedy them than we owners and managers do.

Kaizen shows respect by recognizing what an asset our staff is, and allowing them to partner with us in improving the practice; to be engaged and be part of the solutions, rather than always being blamed for the problems.

5S

5S projects are the physical cleaning and reorganization of a particular room or area of the practice. It helps the staff to work with less clutter, frustration and confusion on a daily basis. It creates better flow within the hospital which increase value to clients; all ways of showing respect.

Go to gemba

"Genchi Genbutsu" (go and see) means that whenever there is a problem found, all relevant stakeholders (management and staff) should go to where the problem occurs (the “gemba”) and solve it together. It shows respect by recognizing that staff have valuable input to the situation.  

The Andon cord

On the Toyota production line, workers are provided with a mechanism to sound an alarm and ask for help anytime they find it necessary. The line stops if the problem is not quickly resolved. Toyota trains and trusts its employees to use the Andon cord when an issue of quality or safety is in question. It shows respect by creating a culture of safety and trust for anyone to speak up, even if they think there might possibly be an inkling of a concern.

It is my humble opinion that if veterinary staffs knew about and understood the Lean mindset and its worker-centric (and client-centric) philosophy, there would be such a grassroots revolution within the profession that owners, managers and corporation leadership would have no choice but to start thinking Lean within their practices. Maybe, we could start now and circumvent all of the "bloodshed."

Thanks for stopping by. Please share this blog with your contacts! And, let me know if you have any questions, comments or post ideas.

Management By Means

There are several reasons why some organizations have had difficulty obtaining the kind of results with Lean that Toyota has. One of the main reasons could be that they confuse the use of Lean "tools" with the incorporation of  the complete Lean philosophy and mindset deep into their DNA.

Take, for example, the difference between Management By Means (MBM) and Management By Results (MBR), also known as Management By Objective (MBO).

With MBR/MBO, management sets the goals (usually financial) for the metrics. The objective of the organization is to reach the goal, without much attention to the processes or methods involved. Leaders might say things like, "I don't care how you get the results, just get it done, no matter what." Pay incentives or threats of dismissal often can, at different times, be part of the conversations and scenarios. 

Look at the Process Behavior Chart below, which shows only the last data point (for a metric where higher is better). 

This is typical top-down management, which is common in the West. Workers do whatever they feel necessary in order to arrive at the goal by the deadline set by the forces that be. The method or means of getting there is a distant second concern. The focus is the end result.

One of the problems with this approach, as seen below, is that the systems and processes, if they were exposed, may be riddled with errors, defects and/or fraud (ala Wells Fargo). There is a lot of variation which implies the systems and processes are not as tight as they could be. In addition, notice there is a recurring pattern to the data-- three weeks of down data followed a an up data. This very well could indicate that, for three week every month, the employees not hitting there number until the week before monthly reports come out. If the reports only show the ending point for the current month, leadership is happy (and leaves the staff alone!) 

MBR is similar to trying drive by looking in the rearview mirror. 

Workers have no control over systems. They are at the mercy of systems, good or bad. It is management or leadership that is responsible for the system in place. As such, if results are not predicted to be good, then the only pragmatic way they can affect the result, and not be disciplined, is to "fudge" the system somehow. 

In a bad system, no amount of motivational rhetoric, monetary prizes or threats is going to change the system. The system gets changed by the "uppity ups" changing the system. An object in motion tends to stay in motion in the same direction unless some external force is applied to the system. That isn't part of the job description (or domain) of workers.

MBR is managing the results

By contrast, MBM is focused on the processes and systems ("the means") that lead to the results ("the ends"). The metrics of MBM monitor the systems involved. The idea is that if all of the processes are stable and positive, then the results are a foregone conclusion. It is much more of a bottom-up style of management since the staff is much more involved in choosing the metrics and monitoring the day to day functioning of the organization. The journey is as important as the destination.

In the graphic above, we really don't need to see the final result (below) to have a reliable expectation that it will be where it needs to be. In addition, we know that our systems and processes are probably functioning properly and free of waste. While there is some variation, they appear to be under control. 

(Notice that three out of the last four data points are closer to the upper limit,  which indicates that the system has changed for the better; improved. If we do know why this has occurred, we need to investigate in order to understand how to continue this trend.)

MBM is managing the processes; the operations

This is the management style of Toyota and promoted by Lean. People often say, "The right process brings the right results." We care about results... but you manage a process, not the results.

Lean is all about objective systems thinking!

I will continue with the next idea in this theme in my next blog "The Practice Scoreboard."

To Order, Click Here

 Thanks for stopping by. Please tell your friends and follow the blog.

Process Behavior Charts: A Better Way to Evaluate Your KPIs

Have you ever learned something new and thought, ”Gosh! If I had had only known this years ago, my life would have been so much easier!”? We all have, I suspect. What I'm writing about in this post falls into that category.

I remember owning my practice. I dutifully kept stats on everything I could think of:

• Gross income, 
• number of new clients, 
• average invoice total, 
• number of dentals or spays or neuters, etc. 

I would even plot them on charts and tape them to wall of my office like a war room, constantly watching the numbers and bouncing emotionally between feelings of “we made it through another period in good shape” and “oh sh*t, we’re down, and this must be the beginning of the end.”

The same sort of thing happened when I worked for a corporate practice. Every week, the practice manager (PM) and I were on a conference call with our area managers to discuss “the numbers” -- our KPIs (key performance indicators) -- whether we were achieving our benchmarks, by comparing them to last month, last quarter or last year, and why or, more importantly, why not. Same emotional rollercoaster.

Now, for the stuff I wish I’d known back then. I recently read a book called Understanding Variation: The Key to Managing Chaos 2nd Ed., by Donald J. Wheeler, at the recommendation of my co-blogger Mark Graban. It is a fun little book about some statistics (there is that ‘S’ word) and creating Process Behavior Charts (PBC).

You know that in any process or system there is going to be some amount of variation from period to period. When this is plotted on a chart, it shows up as “ups” and “downs.” Most of this is normal, it is just “noise.” But, sometimes it can mean something significant -- a “signal.” So, how do you tell the difference? By turning your data into PBCs. This way of plotting your data will “filter” out the noise and highlight any “signals.”

I encourage you to read the book as there is more than I can briefly blog about, but, having said that, let me share some points before we get into the charts.

1. Tables with lists of numbers are difficult to understand. There is no context, and the data is difficult to visualize in this format.
2. Line graphs, over a longer period of time, are easier to understand and put the data in some form of continuity and context with prior periods.
3. Comparing two data points, such as the current period data with the same data last month or last year, doesn't offer any context. Who says the data from last period was normal? Maybe, it was a really bad period due to extraneous influences, e.g. inflation or a natural disaster that occurred at that time.
4. Averages tend to be pretty much in the middle of a range of data. Comparing to averages tends to create “binary output.” You are either above average (“good”), or you are below average (“bad”).
5. The setting of arbitrary goals, such as a 10% increase over last period, becomes more objective and rational. It is well and good to set the goal, but if the system cannot produce to that degree, it is simply a futile “wish.” No manner of cajoling, incentivizing or threatening employees is going to help. If the goal is outside the limits, then the system is going to have to be changed from what it is right now, and employees have no control over the systems under which they operate. That is management’s domain.
6. PBCs are the voice of the system. They show how the system is functioning, and the extents to which the system can function, as it is now designed and operating. One can also assume that, without any change, the system will continue into the future as it is currently; it is predictable. If it is not where it should be, then the system has to be changed somehow. It also shows when a data is outside the limits of the system and, therefore, is a signal that something unusual has happened, and it needs to be investigated.

The following data represents the number of new clients seen per month over the last 18 months.

18, 16, 14, 19, 15, 17, 16, 18, 15, 14, 19, 18, 15, 18, 18, 17, 19, 11

Total = 297  Average = 16.5

When just looking at a list of numbers, it is difficult to really appreciate what is going on with the data. In this form, one might easily miss the value of the last data point.

Converting the raw data into a graph is more visually helpful.

You can see that this running graph (or X-chart) is easier to understand and gives better context to the table of numbers.

This appears to be a rather stable system (or process) until, possibly we get to the 18th and last data point. Is this part of the normal “noise” or do we need to investigatte? It is lower than any prior period we have recorded. I can tell you that, for me, this would have been good for at least a week of sleepless nights and two stupid, stress related arguments with my wife!

Continuing with the chart methodology, we next determine the Moving Range (mR), between each two successive data points. This distance is always a positive number, regardless of whether the first number is larger or smaller than the first. For example, the distance between -3 and 2 is 5, or the distance between 8 and 4 (or 4 and 8) is 4.

By comparing the first data to the second, the second data to the third, the third data to fourth, etc., we get the following table:

2, 2, 5, 4, 2, 1, 2, 3,1, 5, 1, 3, 3, 0, 1, 2, 8

Total = 45  Average MR = 2.53

Graphically:

To see if the variation in the X chart is all routine or if there's something exceptional going on in that last data, we then complete the X-chart by calculating and drawing the average, an Upper Control Limit (UCL) and a Lower Control Limit(LCL).  These are calculated as follows:

          Avgx= Totalx/#x

          UCL= Avgx+(2.66×AvgmR)  = 16.5+(2.66×2.53) = 23.54

        LCL= Avgx-(2.66×AvgmR)  = 16.5-(2.66×2.53) = 9.46

Note: The 2.66 is a conversion factor that approximates three standard deviations (but we don't calculate a standard deviation in this methodology).

Updating the X-chart:

To complete the mR chart we need to calculate the Upper Range Limit, as follows:

         Upper Range Limit = AvgmR×3.27  = 2.53×3.27 = 8.66

  
Note: The Lower Range Limit is always zero, since the variances can never be a negative number.

Updating the mR chart:

Together, these two graphs make up an XmR chart or Process Behavior Chart.

Looking at the XmR charts, we can see that the last data point is still within our calculated limits. This indicates that the data is just “noise.” It is just part of the normal variation for this system or process, as it is currently designed.

That said, if we're uphappy with the average level of performance, we could try to improve the system in a systematic way. There's nothing worth investigating in terms of a reactive question like "what went wrong that month?"

The first hint of a "signal" would be any single data point above the upper limit or below the lower limit.

Wheeler’s book gives much more information about the meaning of the charts and some other types of “signals” to be aware of such as: 3 out of 3 or 3 out of 4 data points being closer to one of the limits,

or

a run of eight or more consecutive data points being on one side or the other of the central line are interpreted as being a “signal.”

Mark Graban is currently writing a book on this material. It should be completed by June, but you can buy the first three chapters now through his use of the "Lean Publishing" approach. All of Mark’s books are “Top Class.”

Heads up! I will be the guest on a webinar hosted by Mark Graban and KaiNexus on May 7th at 12:00 noon Central time. We will be discussing the new emergence of Lean management in veterinary medicine.  Use this link. Hope you will join us!

Update 4/4/18: Watch Mark Graban talk about this material here.

Thanks for reading. Tell your friends and colleagues and, as always, comments welcomed.

Sayings of the Lean Fathers

Within the body of Jewish literature,  there is a book called "Pirke Avot", which means 'Sayings of the Fathers'. It is a collection of wisdom and quotes handed down from the ancient rabbis and the Jewish tradition. Taking that reference as a model, I decided to produce this "Sayings of the Lean Fathers." Enjoy!

Taiichi Ohno

(February 29, 1912 – May 28, 1990) was a Japanese industrial engineer and businessman. He is considered to be the father of the Toyota Production System, which became Lean Manufacturing in the U.S. He devised the seven wastes (or muda in Japanese) as part of this system. He wrote several books about the system, including Toyota Production System: Beyond Large-Scale Production.   https://es.wikipedia.org/wiki/Taiichi_Ohno 

We are doomed to failure without a daily destruction of our various preconceptions.

Progress cannot be generated when we are satisfied with existing situations.

Start from need.

Having no problems is the biggest problem of all.

If you assume that things are all right the way they are, you can’t do Kaizen. So change something!

Ask 'why' five times about every matter.

Why not make work easier and more interesting, so people do not have to sweat? The Toyota style is not to create results by working hard. It is a system that says there is no limit to people’s creativity. People don’t go to Toyota to ‘work’, they go there to ‘think’.

Without standards, there can be no improvement.

Where there is no Standard there can be no Kaizen.

Standards should not be forced down from above but rather set by the production workers themselves.

Make your workplace into showcase that can be understood by everyone at a glance. In terms of quality, it means to make the defects immediately apparent. In terms of quantity, it means that progress or delay, measured against the plan, is made immediately apparent. When this is done, problems can be discovered immediately, and everyone can initiate improvement plans.

The slower but consistent tortoise causes less waste and is more desirable than the speedy hare that races ahead and then stops occasionally to doze. The Toyota Production System can be realized only when all the workers become tortoises.

All we are doing is looking at the time line, from the moment a customer gives us an order to the point we collect the cash. And, we are reducing the time line by reducing the non-value-added wastes.

Something is wrong if workers do not look around each day, find things that are tedious or boring, and then rewrite the procedures. Even last month's manual should be out of date.

The more inventory a company has, the less likely they will have what they need.
We are doomed to failure without a daily destruction of our various preconceptions.

The key to the Toyota Way and what makes Toyota stand out is not any of the individual elements…But what is important is having all the elements together as a system. It must be practiced every day in a very consistent manner, not in spurts.

If you are going to do TPS you must do it all the way. You also need to change the way you think. You need to change how you look at things.

The only place that work and motion are the same thing is the zoo where people pay to see the animals move around.

People who can’t understand numbers are useless. The gemba where numbers are not visible is also bad. However,  people who only look at numbers are the worst of all.


Taiichi Ohno. (n.d.). AZQuotes.com. Retrieved June 16, 2017, from AZQuotes.com Web site: http://www.azquotes.com/quote/731341
https://www.slideshare.net/mobile/optimaltransformation/a-collection-of-quotes-from-taiichi-ohno
Https//www.inspiringquotes.us/author/2150-taaichi-ohno

W. Edwards Deming

(October 14, 1900 – December 20, 1993) was an American engineer, statistician, professor, author, lecturer, and management consultant. Educated initially as an electrical engineer and later specializing in mathematical physics, he helped develop the sampling techniques still used by the U.S. Department of the Census and the Bureau of Labor Statistics. In his book, The New Economics for Industry, Government, and Education, Deming championed the work of Walter Shewhart, including statistical process control, operational definitions, and what Deming called the "Shewhart Cycle" which had evolved into PDSA (Plan-Do-Study-Act). This was in response to the growing popularity of PDCA, which Deming viewed as tampering with the meaning of Shewhart's original work. Deming is best known for his work in Japan after WWII, particularly his work with the leaders of Japanese industry.    https://en.wikipedia.org/wiki/W._Edwards_Deming

People are entitled to joy in work.

Management by results -- like driving a car by looking in rear view mirror.

It is not necessary to change. Survival is not mandatory.

The greatest waste in America is failure to use the abilities of people.

The moral is that it is necessary to innovate, to predict needs of the customer, give him more. He that innovates and is lucky will take the market.

The consumer is the most important point on the production-line.

Export anything to a friendly country except American management.

Whenever there is fear, you will get wrong figures.

A bad system will beat a good person every time.

To manage one must lead. To lead, one must understand the work that he and his people are responsible for.

Does experience help? No! Not if we are doing the wrong things.

The supposition is prevalent the world over that there would be no problems in production or service if only our production workers would do their jobs in the way that they were taught. Pleasant dreams. The workers are handicapped by the system, and the system belongs to the management.

Defects are not free. Somebody makes them, and gets paid for making them.

Every system is perfectly designed to get the results it gets.

A leader is a coach, not a judge.

Pay is not a motivator.

The merit rating nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, [and] nourishes rivalry and politics. It leaves people bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior, some even depressed, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior. It is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in.

Quality is made in the board room. A worker can deliver lower quality, but she cannot deliver quality better than the system allows.

http://quotes.deming.org/authors/W._Edwards_Deming

Shigeo Shingo

 (1909 - 1990), born in Saga City, Japan, was a Japanese industrial engineer who is considered as the world’s leading expert on manufacturing practices and the Toyota Production System.      https://en.wikipedia.org/wiki/Shigeo_Shingo

Lean is a way of thinking- not a list of things to do.

The most dangerous kind of waste is the waste we do not recognize.

Are you too busy for improvement? Frequently, I am rebuffed by people who say they are too busy and have no time for such activities. I make it a point to respond by telling people, look, you’ll stop being busy either when you die or when the company goes bankrupt.

Unless you change direction, you will end up where you are headed.

We have to grasp not only the Know-How but also 'Know Why', if we want to master the Toyota Production System.

Those who are not dissatisfied will never make any progress.

There are four purposes of improvement: easier, better, faster, and cheaper. These four goals appear in the order of priority.

A relentless barrage of 'why’s' is the best way to prepare your mind to pierce the clouded veil of thinking caused by the status quo. Use it often.

Shigeo Shingo. (n.d.). AZQuotes.com. Retrieved June 18, 2017, from AZQuotes.com Web site: http://www.azquotes.com/quote/731329

Masaaki Imai

(born, 1930) is a Japanese organizational theorist and management consultant, known for his work on quality management, specifically on Kaizen.     https://en.wikipedia.org/wiki/Masaaki_Imai

The message of the Kaizen strategy is that not a day should go by without some kind of improvement being made somewhere in the company.

The Kaizen Philosophy assumes that our way of life - be it our working life, our social life, or our home life - deserves to be constantly improved.

It is impossible to improve any process until it is standardized. If the process is shifting from here to there, then any improvement will just be one more variation that is occasionally used and mostly ignored. One must standardize, and thus stabilize the process, before continuous improvement can be made.

Progress is impossible without the ability to admit mistakes.

The standard is not written on the stone. The definition of the standard is that it is the best way to do the job for now. It should be regarded as a next step to make further improvement.

Where there is no standard, there can be no improvement. For these reasons, standards are the basis for both maintenance and improvement.

Kaizen means ongoing improvement involving everybody, without spending much money.

I believe that management should focus on two particular areas. One is Gemba (shop floor) and the other is customer (not the shareholder).

You can't do kaizen just once or twice and expect immediate results. You have to be in it for the long haul.

All of management's efforts for Kaizen boil down to two words: customer satisfaction.

I have a theory that among the large Western companies (mostly American) the higher an executive is promoted, the more wisdom is lost and by the time he or she reaches the top becomes a complete idiot. Certainly they do not deserve the outrageous salary.

Japanese management practices succeed simply because they are good management practices. This success has little to do with cultural factors. And the lack of cultural bias means that these practices can be - and are - just as successfully employed elsewhere.

Kaizen is like a hotbed that nurtures small and ongoing changes, while innovation is like magma that appears in abrupt eruptions from time to time.

Under the lean system, any tools which are required for solving problems are used.

Masaaki Imai. (n.d.). AZQuotes.com. Retrieved June 18, 2017, from AZQuotes.com Web site: http://www.azquotes.com/quote/1555116

Final Thoughts

Can you recognize some themes here? Do any of this quotes resonate with you? Maybe one or more hits a little closer to home?! Which ones are you going to take with you and/or share with others? Did any challenge your previous mindset?


Thanks for stopping by. Tell your friends about us and, please, leave any comments and questions you may have.