Monthly Archives: January 2015

Show me the money! 7 questions for making a business case on your next LSS project.

0622_money_630x420I’ve recently been involved in a discussion on LinkedIn related to research on why process improvement initiatives such as lean Six Sigma (LSS) fail, and one of the top reasons suggested by the research is a lack of leadership support.  This conclusion doesn’t surprise me, probably you either, because almost every study I’ve read on this topic tends to suggest leadership as one of the reasons for failure and / or success.

I commented in the discussion that leadership support is no doubt critical to success, but argued there is a deeper cause to why leadership is not supporting, or better yet moving from support to being fully engaged, in process improvement – poor project selection.

My argument is that one reason for a lack of support and engagement by leaders is directly linked to what I would argue is thee most important element of success – great projects!  LSS is no different than any other initiative in that if it yields results that are tied to what leaders care about they will be engaged. One of the key elements of selecting a “great” project is being able to link it to dollars; something leadership cares deeply about.

Talk in a language leaders understand.

While I’m in agreement there is some value in having a “language” for what we do in the LSS profession, I’m finding myself becoming less of a proponent for a lot of the lingo we use (i.e. kaizen, jidoka, gemba, etc.).  If you want to get someone engaged in an effort such as LSS it’s unlikely you will do so by using confusing language, acronyms, etc.

Most of us tend to run away and not toward what we don’t understand (i.e. increased work complexity).  I have yet to find anyone to tell me they are looking for ways to increase the complexity of their work life, which for many is exactly what LSS does, if we are not careful in how we use it!

I’d love to see the day we put all the lingo away and just talk in terms business leaders understand, but until that day perhaps we can start with the concept of cost of poor quality (COPQ). 

This has long been a pet peeve of mine in that COPQ is just too confusing, and from my experience most leaders tend to think of COPQ in terms of defects and manufacturing, which in some cases it is, but more and more as LSS moves into the transactional world it’s becoming less about what most of us typically think of when we hear the word defect.

If you want to talk to business leaders about COPQ I suggest simply describing this concept as your “business case” for doing a project.  This is a language all leaders understand.  Can we make a business case?  What’s the business case?  How do we establish the business case?  These are all questions, if you’ve been working in the business world for more than a few years, you will no doubt have heard on numerous occasions.

7 questions for building your business case.

1. What’s the problem?

I’ve written previously on developing a good problem statement, and this is where it all begins.  You have to know what it is you are trying to improve before you can start to put together a business case.

2. How will the problem be measured before and after improvements have been implemented?

To determine the size of your problem you need to measure it.  I’ve written on how to measure your problem previously.  This is a critical step in the process that will later be used to turn process performance into financial performance so take the time to determine how the problem can be quantified.

3. What is the goal?

How you establish your project goal needs to be objective.  If you aim at nothing you’re bound to hit it, and that’s exactly what you do when making subjective goals such as “getting better” or “streamlining” a process.

One of the simplest, but yet very effective, ways of establishing your project goal is simply determining where you want your primary metric (answer to question #2) to end up when you finish the project.

4. What will happen or stop happening when the goal is achieved?

This is a step / question that often gets overlooked in this process.  Often times when I work with a client they jump straight to the dollars, which if you can do so is great, but most often it’s not a straightforward approach such as counting up the defective widgets we currently get from the process and converting each bad widget to a dollar amount.

Much of the frustration is because this step in the process is skipped, and teams struggle to create a “formula” to turn the problem into dollars.  Most of us tend to think in actions, behaviors, etc., and not in formulas and logic when it comes to change.

Instead, I like to brainstorm with teams using post-its and / or a white board by asking two simple questions, a) “What good things will happen when the goal is achieved?”, and / or b) “What bad things will happen less when the goal is achieved?”.  These two questions will lead to variety of ideas that feed into question five.

5. What do the words equate to in dollars?

This is where “rubber meets the road” and we start to get into some “real” dollars.  With the list from question #4 you can start to ask who is doing what was described, how frequently are they doing it, and how long does it take them to do it as a good starting point.

Who is doing the work will give some insight into the cost per hour for those involved in the problem.  How frequently they are doing it will provide a measure of how big the problem is, and how long it takes to fix, rework, etc. the issue provides the last piece of the puzzle to estimating the business case. 

6. How can the dollars be counted?

This question gets at describing the process by which we could validate the estimated business case.  The question will also lay out the approach the team will use to get the actual data to make the business case and also to count the real money once you enter into the control phase at the end of the project.

Don’t overlook this question because I often see teams get eager about solving a problem only to find out it takes more effort than it’s worth to compile the data, and without the data it will be hard to convince management a real financial impact actually took place.

7.  Who will validate the method by which the dollars will be counted?

A final question to consider is how the dollars will be validated.  Most businesses I work with have someone independant to the project and LSS process review the financial data to validate the dollars.  Having an outsider who has less chance of being biased in the calculations will give greater credibility that the savings are legitamate.

One final consideration is to have the process by which the estimated dollars were estimated validated before getting out of the measure phase.  The last thing you want to happen is believe your project has saved millions only to find out the approach your team took wasn’t accurate in capturing the financial costs.  Get finance involved earlier rather than later!

Shifting from support to engagement.

I would argue there is no better way to sustain a LSS effort than to help your organization’s leadership look like rock stars, which means getting at the heart of what matters to them and then using LSS where it makes sense to help them achieve what matters to them. 

This truly is the holy grail of getting leadership to move from an attitude of “support”, which is just another way of saying, “I’m here if you need my help, but I have other more important things to focus on”, to an attitude of engagement, which means, “Wow, this stuff really worked in helping me accomplish what matters to me….I want more of this!”. 

When you’ve reached a tipping point you’ll know it becasue instead of you going to your leaders and asking for project ideas they will instead be coming to you asking for your help in accomplishing their goals!  This won’t happen overnight, but it’s more likely to happen if you focus on talking in a language they understand, and solving the problems that matter most to them.

$60 billion for free community college. Is it worth it?

2011_State_of_the_UnionOn Tuesday President Obama will give his annual State of the Union address, and one of the topics he will speak about is an initiative to provide two years of free community college.

I’m a firm believer that community college is a gateway to a better life.  Back in 1990 I started working on an associate degree that led to a job as a welder, which opened my eyes to the power of education and how it can impact a life.

I graduated in 1991 and spent the next seven years working as a welder, and through that time realized my passion for learning was beyond welding.  That passion led to pursuing three more college degrees over the next 21 years.  I discovered that one of my life’s passions is learning, and without that initial community college experience I most likely would have never found my thirst for learning, and would have likely spent the next two decades struggling to make a living, and more importantly, had been working in a job I have no passion for.

In a bigger sense, college education, one could argue, leads to greater well-being and happiness.  The research also suggest that higher education may also lead to greater life expectancy.

The Bible even says that “wisdom brightens a man’s face” (Ecclesiastes 8:1), and that “wisdom preserves the life of its possessor” (Ecclesiastes 7:12).  Proverbs 8:35 states, “for whoever finds me (wisdom) finds life and receives favor from the Lord”.  What better argument could one make for seeking wisdom!

While you can certainly argue wisdom does not necessarily come for getting a college degree, I would argue, and am a living example, that going to college helps one develop the ability to learn how to gain knowledge that leads to wisdom.

Fixing the problem or creating a bigger one?

While I applaud the President’s intentions in wanting to help more people go to college, I question whether or not the problem is one of affordability.  The President, in proposing free tuition, assumes that one of the primary causes to why so many people don’t go to college is because they can’t afford it.  While that may be the case for a select few, I would argue affordability isn’t the problem.

The math doesn’t add up.

What does it cost to go to community college?  I looked at the college in the city where I live, Bakersfield College, and the cost of an associate degree in most programs of study is around $3,000.  This is tuition only for 60 credits (~20 classes) and if you add in the cost of books, let’s assume an average of $150 per class, this brings the total estimated costs for a degree to around $6,000.

Using President Obama’s two years of free tuition goal, what he is proposing is essentially worth $3,000 per year per student.  What he is arguing is one of the primary reasons those who want to go to community college don’t is because they lack the ability to come up with $3,000 to cover the annual cost.

There’s a bigger problem than affordability.

So let’s assume that the problem is one of affordability, which I don’t agree with and will discuss next, what if we did go forward with the President’s plan?  Is the cost of the initiative, $60 billion dollars over the next 10 years , a good investment?

When I determine whether or not to make an investment, whether it be money or time, a simple way of determining whether or not it’s worth it depends on the potential results.  Taking a similar approach to what the President wants to invest, one way of determining whether or not this investment is worth it can be established in looking at the graduation rates for students seeking an associate degree.

Illustrated in the chart below is data for 2009 (the most recent year available) that shows after three years of pursuing an associate degree only 29.2% of students were successful.  In other words, over 70% of those who seek an associate degree fail to do so in less than three years.

Slide1

 

What is even less convincing is the data on the percent of students who finish an associate degree in two years.  Research suggests only 5% finish within two years!  So what President Obama is proposing is an investment in something that has a 95% failure rate.

www.usnews.com

 

A potential solution…get a job and go to school!

One of my mentors, albeit a virtual mentor (I wish I could meet face-to-face with him), is Dave Ramsey who spends most of his life helping people get out of debt to actually use their money to build wealth and help those in need instead of being stuck in the middle class because of endless payments on cars, credit cards, student loans, etc. they can’t afford.

People call in to his radio show every day telling their stories about getting out of debt.  They also call in to talk about how they’ve been able to cash flow (pay as you go with no debt) college and work at the same time, which I believe is one potential solution to the problem President Obama is pursuing.

Just doing the “math” suggests it is possible for most people to cash flow an associate degree.  Referring back to my cost data from Bakersfield College, and assuming a student finding a job making the California minimum wage of $9 per hour, here’s how the numbers add up.

$9 / hour  x  30 hours / week  =  $235 after taxes

$235 / week  x  52 weeks / year  =  $12,220 income / year

$12,220 income / year  –  $3,000 / year tuition and books  =  $9,220 / year excess income

Short-term pain for long-term gain-how bad do you want it?

This may not seem like a lot of money left over to “live”, but in most cases the potential student President Obama is targeting are young people who typically live at home with a supporting parent, and have little to no living expenses (i.e. rent, mortgage, food, etc.).

Doing the math on the excess income in this scenario would provide $768 per month to cover basic living expenses such as insurance (i.e. health, car) and still leave a fair amount of disposable income to spend and save.

Can a student work 30 hours per week and go to school?  I’m living proof it can be done, and there are millions out there just like me who’ve done it.  During the five years I pursued a BS degree I worked 40-60 hours each week and managed to take 12-15 semester credits.

Even if you didn’t want to work 30 hours a week, all that would be needed to cover the typical annual costs of an associate degree would be around 8 hours a week; an average of less than 2 hours a day!

The question is whether you are willing to take some short-term “pain” in order to achieve a long-term “gain”.  How bad you want an education will dictate how hard you’ll work for it; not whether or not someone else will pay for it.

With our country’s debt just recently surpassing the $18 trillion dollar mark, investing $60 billion into something with a 70-95% failure rate just doesn’t seem like a good use of our tax dollars does it?

Passions: What makes your heart sing?

bigstock-Find-Your-Passion-44435605What are you passionate about?  Chances are that if your goals are linked to what you are passionate about you are more likely to succeed, which is the premise of this post.  In my last post I discussed values and how they are the foundation for your goals.  In this post I will discuss what a passion is, why identifying your passions matters to achieving your goals, and finally, how you go about identifying your passions.

What is a passion?

I like to think about passions as what enables you to take your values and turn them into specific goals.  What you are passionate about is a bridge between what you stand for (values) and how you turn what you stand for into action (goals).  I define passion as the ability to overcome obstacles and remain engaged.

Another way of looking at what you are passionate about is that passions are what help you to live out your values.  For example, one of my family’s values is Humbly Confident, and a passion that enables this value for us is Lifelong Learning.

To be confident we believe you need to have a solid knowledge foundation that comes from always being in a state of learning.  To be humble we also believe you need to believe there is always an opportunity to learn and grow in your knowledge; it’s hard to be a humble know-it-all!

Identifying your passions.

So how can one go about identifying passions?  There is no magic formula for identifying what you are passionate about, but some simple questions that may help you start to narrow your list down include:

  1. What makes your heart sing?
  2. What makes you smile?
  3. What can you talk about for hours without losing any enthusiasm?
  4. When does time stand still for you?  What are you doing when this happens?
  5. Where do you spend most of your time?  What are you doing during this time?

The first question is one I found while reading Carmine Gallo’s book on TED Talks where he argues that to speak well about a topic you need to be passionate about it.  I believe the same is true when it comes to setting goals.  What makes your heart sing are those things you do just because you love doing them.

Another giveaway to what you are passionate about is when you are doing something that makes you smile.  The research on smiling suggest those who smile more often tend to live longer, have a greater sense of well-being, and live a less stressful life.  Whether you believe the research or not it’s hard to argue against that when you are doing something that causes you to constantly smile it’s unlikely you are doing something you hate doing.

A dead giveaway for me in identifying something I’m passionate about is how much time I can spend talking about a topic.  Ask me about process improvement and lean Six Sigma and you’re likely to get an earful!  We tend to talk faster and with greater excitement when we are telling someone about something we are passionate about.

The old adage, “time files when you’re having fun” comes to mind when I think about identifying passions.  The research on work engagement suggests that what gets us engaged in our work are those things that we get absorbed into.  You’ve probably experienced this in the past, at least I hope you have, when you are so engrossed in your work and hours seem to fly by like they were minutes.  This is a clear indication that what you are doing (work or home) is something you’re likely passionate about.

A final aspect to identifying what you are passionate about is where you spend most of your time, however, this may or may not be true for all of us.  Sometimes we’re required to spend most of our time doing something we’re not super passionate about just because “we’ve got bills to pay”, but hopefully this isn’t the norm for most of us.  Looking at where you spend, or perhaps where you wish you could spend, most of your time is another simple way of identifying what you are passionate about.

Put it into action.

Asking the aforementioned questions is a great starting point in identifying what you are passionate about.  I suggest looking back on the past year and asking these questions from that perspective, and looking for examples to support the passion you have identified.

For example, this past year I probably read upwards of 100 books, and in most cases when I’m reading time just seems to stand still.  I can sit for an hour and it only feels like it’s been a few minutes.

This could lead to a passion of “reading”, but I’ve dug a little deeper and decided I don’t read just to read; I read to gain knowledge, to apply knowledge, and to use knowledge to help others.  From this discovery the passions of Lifelong Learning and Doing Work That Matters emerged.  Working back to my family’s values, these passions clearly link to two of our values that include Humbly Confident and Helping First.

There are no “right” or “wrong” passions, but I would argue some are more right that others.  It takes time to discover your passions, but if you ask the right questions and find the evidence in your life to support your answers you’ll be one step closer to achieving your goals.

Values: The Foundation of Your Future

goal-setting-in-actionThe great thing about a new year is that it gives everyone a chance to start over with a fresh perspective on the 12 months ahead.  It’s also a great time to reflect on the past year and learn from both the good and the not-so-good that took place the prior year so that we keep doing what works and quit doing what doesn’t.

What I find disheartening is how so few of the people I know actually set goals each year.  As the old adage goes, “if you aim at nothing you’re bound to hit it.”  I can’t do much to help you get motivated to set goals, but I can point to what the research suggests.

Tom Corely, author of Rich Habits: The Daily Success Habits of Wealthy Individuals,
studied both wealthy and poor client’s habits and found that 67% of the wealthy write down their goals vs. 17% of poor.  Thomas Stanley, author of The Millionaire Next Door: The Surprising Truth of America’s Wealthy, found that the millionaires in his study spent twice as much time planning their future than others do.

What the research suggests, and I would also argue common sense suggests, is that those who set goals are more likely to succeed in life, from both a personal and financial perspective, than those who don’t set goals.

Building a foundation on values.

We could just jump straight into setting goals, but I believe there are two important elements that need to be put in place as a foundation upon which to build your goals from.  They include values and passions.

We often look to the future with a list of tasks or achievements we want to accomplish without first looking at who we are and what we believe in.  What I’m describing are your personal values, and everything we do should be based in them.  In essence, a value is a description of how we behave.  Values should be reflected in what we do, say, and live our lives.

In this first post of my annual goal setting series I’m going to share the process my family has used the past few years to determine our values.  From values we’ll move next to passions, which can be described as what makes your heart sing and gets you pumped up.  With values and passions defined, we’ll finish with setting goals that align with your values and passions.

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Determining your family values.

Most of us are part of a family so I’m going to be looking at this process from that perspective, but if you’re single the process still works the same only from an individual perspective.  For the most part values are who we are and shouldn’t change much over the course of a lifetime.  One way of looking at your values, albeit a bid morbid, is that they should be the bullet points that could be used to describe your obituary.

This can be somewhat of a depressing exercise, depending on how you look at it, but one way to begin developing your family’s values is for each member of your family to write out what they want to be remembered for and look for common themes.  For example, here’s what I wrote as some of the things I’d like to be remembered for in no particular order:

  • Always doing what’s right, even when it’s not easy to do.
  • Being a man of God; someone who lived a life God could be proud of.
  • A father who was always there for his family when they needed him.
  • A husband who always put the needs of his wife first.
  • A son who’s parents were proud of him.
  • Helping others find success in life and career.
  • Sharing my knowledge to help others.
  • Someone who was in constant pursuit of knowledge and wisdom.
  • Someone who used their financial resources to help those in need.

A good way to validate your values is to look back in the last year and identify a time when you actually lived true to the value.  Every value your family agrees on should have a story to go along with it to validate the value.  This is also a good exercise to review each year as you review your values.  If you can’t find an example of a time in the past year you actually lived up to a value it probably shouldn’t be on your list.

How many values your family selects is up to you, but I’d suggest no more than 3-5 values.  You need to be able to recall your values at any point in time, and a long list just gets to be too much to remember.

Another thing to consider is how one value is / could be linked to another.  In some cases you can’t have one value without another and can eliminate one of them.  For example, one of the values my family brainstormed was God First, Me Second, but we also came up with another value we described as Eternally Focused, which we agreed was linked to the former.  Instead of two separate values we agreed Eternally Focused covered both.

Just to provide one example to work from, our full list of values is as follows:

  • Eternally Focused
  • Humbly Confident
  • Helping First
  • Driven

Parting thoughts.

A few parting thoughts on values include making them visible and spending adequate time to determine your family’s values.  The past few years we’ve just sat around the kitchen table and worked through our goal setting process, but we’re considering taking a family retreat this next year as a way to get away from it all and spend some quality time together thinking about our future.  This doesn’t need to be extravagant, but somewhere away from cell phones, TV’s, and Internet is what we’re thinking for next year.

Another idea we’re likely to put in place this year is to post our values prominently in our home to not only remind us of our values every day, but also to let others who visit our home know what we stand for and how we live our lives.

One more thought, although it’s probably a bit over the top for some of you, is a wallet / purse card or a note on your cell phone with your values so that they are with you at all times.  This may seem a little excessive, but I like constant reminders in front of me at all times, and it’s also a great conversation tool to help others use the process in their own families.

My challenge to you is to spend some time this next month brainstorming your family values and share them with your family members and friends.  It takes a little time to discover your values (we’ve revised ours a few times since starting the process), but within a year or two of doing this process you’ll come to see which values truly define who your family is.

You have to start to finish, so the next time your family gets together to eat take 15 minutes to discuss the process and start taking control of your lives by setting the foundation to build your goals!