Last week I had the great privilege to work with an executive team working in the public sector. The job at hand was to help them define the latest iteration in their future strategy planning. As is so often the case these days, the public sector is under increasing levels of scrutiny from politicians and members of the public alike. More often than not, that scrutiny takes the form of league tables and other forms of (usually crude) scoring system. For this team, the scoring system was built around the use of a traffic-light indicator system. The team was measured on around 40 different attributes of performance, each being scored in terms of either a green (‘everything is okay’), amber (‘there are things you need to be paying attention to’) or red (‘there are critical problems you need to be fixing now’).
For the most part, looking at the 40 traffic light images on their scorecard, the world looked pretty green. Green with the odd shade of amber thrown in.
“No matter how well we seem to do,” the Chief Executive said to me, “ we always seem to end up with at least a couple of amber lights.”
“Is it our job to fix them?” I asked, feeling a tad naïve as the words came out of my mouth.
She shook her head, “we’ll always be amber,”
She nodded, “the goalposts keep moving.”
“Isn’t that a little unfair?” I quizzed.
“On one level, i imagine it is,” she said, smiling, “on another if we’re always amber, it’s a great way to keep everyone on their toes. Green lights mean people rest on their laurels. They stop innovating.”
The thought stayed with me for a couple of days after the workshop. I learned that some of the biggest public sector scandals of recent years had happened in organisations that had been given all green lights just a few months earlier.
It made me think of Andy Grove at Intel and ‘Only The Paranoid Survive’. The more I thought about it, the more I thought it was the same thing. Amber lights keep people thinking about doing better. They also – per the Kurt Vonnegut quote – make for what I think is a powerful metaphor for the innovation process:
Amber in a set of traffic lights is all about the transient no-man’s land transition between two stable, opposing states, a point where no-one is quite sure what they should be doing. It is the unknown space between two s-curves. It may just be the colour of innovation.
Q: What are the main differences between the instrument panel in your car and the one found in a fighter aircraft?
A: Because the fighter pilot is travelling a lot faster and survives primarily on the ability to out-maneouvre an enemy threat, the normal ‘steady-state’ information isn’t anywhere near good enough.
In our cars, change happens relatively slowly. Slowly enough at least that when we look at our speedometer, it is absolute speed that matters rather than its rate of change. We learn to use our experience to tell us when to brake rather than our instruments. Above around 160mph, though, and even the best reflexes aren’t good enough to cope with an unexpected event up ahead. Above this speed and we need more information in order to be able to function safely. Increase the speed to Mach 2, and you just created an enormous information problem. Fighter pilots, of course, are expected to fly routinely at these kinds of speed. The main additional information they need in order to do this effectively is acceleration, and more specifically ‘how many g’s am I pulling’. Fighter aircraft are fitted with g-meters precisely to give this information. The pilot needs to know ‘g’ level in order to evade threats on the one hand and to know when there is a danger of exceeding the physical limits of his or her body and those of the aircraft they’re harnessed into.
In the past, organizations have, like the typical car driver, been able to survive using steady-state measurements of a small number of largely now standardised business metrics. Increasingly, however, companies in many industries are beginning realize that the rate of change in their industry has exceeded some kind of limit whereby those traditional dashboard measures are no longer adequate. Change, for most of us, no longer happens in gentle, predictable ways, and so, just like the fighter pilot, our dashboard demands the incorporation of new instruments. Businesses increasingly need their own ‘g-meter’.
The business equivalent of ‘g’ is rate of disruption and discontinuity to the business. In terms of managing the business, it is about identifying rates of change of key business metrics in order that the organization is able to respond appropriately and, crucially, faster than the competition. The key management metric is agility. And the key business requirement is requisite agility – is there sufficient ability to change inside my organization so that I can react faster than my competitors?
We’ve been thinking about ‘requisite agility’ for a number of years now. The problem with designing and implementing a solution that enables it to be measured is that it demands a lot of data in order to be able to sensibly identify where and what the right disruptions and discontinuities to look for are. Fortunately, three million data-points turns out to be sufficient to do a meaningful job. And so, after sixteen years accumulating the data, for the first time, we are able to detail the bones of an organizational ‘requisite agility’ sensing methodology.
Requisite agility, in the context of the story of the two men being chased by a bear, is about making sure we’re faster than the other guy. Being faster than the view private instagram 2017 other guy has always been the predominant business driver. Now, for the first time, we can measure precisely what it means. And, therefore, what we need to do to make sure we’re not the one caught by the bear.
I probably shouldn’t, but I often find myself having to smile when talking to people working within ‘lean’ organizations. Especially when they start telling me how they’re now x years into the journey and they’re finding it more and more difficult to identify bits of waste that can be eliminated from the systems they’re responsible for. Part of the reason for the smile is that I’m already suspecting the reason for the problem is that they’ve hit the ‘lean with consequences’ phase. Meaning that every time they strip out what they think is a bit of ‘waste’, because it was connected to something else in the system, it came back and bit them with a different bit of waste somewhere else.
The main reason for my smile, though, is for the 800lb gorilla waving at us from the corner of the room. This is the 800lb gorilla waving a flag with the words ‘what about all the intangible stuff, dummy?’
Take a look at the various different categories of ‘waste’ that organizations tend to use as a check-list to make sure they haven’t forgotten anything, and you’ll quickly see the gorilla has a point.
Here’s a compilation of the various different lists we’ve seen Lean teams use:
waste – process, business (employees, managers suppliers, etc), pure
waste of over-production
waste of waiting (internal and external)
waste of transporting (internal and external)
waste of inappropriate processing (using a hammer to crack a nut)
waste of unnecessary inventory
waste of unnecessary motions
waste of defects
waste of untapped human potential (empowerment)
waste of inappropriate systems (over-specified computers, machines, etc)
waste of energy and water
service and office wastes (excess meetings, food, photocopying, etc)
waste of customer time
waste of defecting customers
waste of un-captured/misunderstood customer needs
All in all, it represents a great start point from which organizations can begin to reframe their view of what is waste and what isn’t. Start points are great. Or at least they are if they evolve into all the stuff that needs to happen after the start has finished. And that’s the problem for a lot of organizations right now. The list has remained static. And, back to our gorilla, it hasn’t evolved to encompass the missing half of the real Lean story.
A useful way to help see the bigger picture is to construct a simple alternative model of the world. A modified version of our Outcome Mapping template seemed to me to present a good way to try and cover everything in a 2×2 matrix. Here’s what it looks like with the ‘usual suspect’ sources of waste mapped onto the relevant segments:
What the picture in effect says is that the Lean world has been really good at identifying the tangible – i.e. easy to measure – sources of waste inside and outside the boundaries of an organization, but that it has completely failed to tap in to all of the intangible – i.e. difficult to measure – things. Things like trust, loyalty, engagement and fear. In other words, the things that fall into the ‘unknowable’ category in W.Edwards Deming’s famous aphorism, ‘the most important numbers are unknown and unknowable’.
I like W.Edwards a lot, and I still find myself agreeing with the large majority of the legacy that he’s left behind. But I also like impossible challenges, and the moment someone tells me something is ‘unknowable’ or ‘irretrievable’ or ‘unbreakable’, my instinct tells me that I’ll prove them wrong one day.
Take intangibles like engagement. Either of your employees or your customers. It might be crude, but you could go and ask people how engaged they are. They might not tell you the truth, whole truth and nothing but the truth, but I know I’d rather have the information than not have it.
A recent study by Gallup suggested hack clash royale that on average, somewhere around 25% of employees are ‘fully engaged’ in their jobs. Over half – on average again – are not engaged, and the last quarter 20% are ‘actively dis-engaged’. Which basically equates to paying a fifth of your employees to come and play on their iPhones, manicure their nails and watch the others work. Which in turn strikes me as quite a large source of waste.
Extrapolate that kind of non- or dis-engagement outside the four walls of your organization and start looking at the amount of ‘waste’ associated with all of your bored, promiscuous, over-served, underwhelmed customers and suddenly the numbers head in the direction of close on $1T globally every year.
One of the things we’ve been working to achieve for the last decade is help organizations to build tools to enable them to tap in to the ‘intangible’ half of the Lean waste picture. The rationale has been very simple: we can’t manage what can’t be measured. Until we’re able to meaningfully measure things like trust, engagement, and loyalty there’s not a lot we can hope to do to improve them and start recovering some of the waste they produce.
No measure is perfect, of course, so a part of the deployment strategy for these tools – something we’re just starting to do through what we’re now calling PanSensics – involves, first taking on board all of terabytes of data that exists in most organizations these days and ‘reading between the lines’, to tap in to all of the stuff that traditionally gets ignored (oh, sweet irony), thus getting a first cut at the intangibles. Once we’ve done that, we can then start implementing tools and measures that will allow us to tap into the rich seams of intangibles that emerge when we’re able to listen to the real, metaphor-rich narrative content.
Now it’s the 800lb gorilla’s turn to smile, as he puts down the flag he’s been waving and starts to think about all those previously invisible waste-elimination opportunities you’re about to see for the first time.