We are all Lean now. What’s next?

Every once in a while, for nearly 30 years, the question arises: “what’s the next big thing after Lean?”, suggesting that the askers are done with Lean. We write July of 2016 and it seems that everybody is Lean now.

Many people have been repeatedly exposed to Lean methods and tools, have been involved in Lean workshops, kaizen events, sketched Value Stream Maps and identified wastes, sorted out, cleaned up and rearranged stuff 5S style.

They have seen improvements, celebrated the workshop’s success and were dismissed with a feeling of mission accomplished. Others didn’t see a clear outcome, noticeable improvement or a sustainable result and resumed their regular work.

Both may have a legit feeling of being done with Lean, the first because their objectives were met, the latter because Lean doesn’t work.

Almost everybody has heard about Lean, in good or bad, in manufacturing or administration, in hospitals or software development. Lean is a word that found its way into the business lingo, and hearing it often makes it familiar.

There is also the growing impatience as everything speeds up and the instant satisfaction sought by everyone becomes commonplace. Few people are able to commit to a very long and tedious journey towards excellence in the Lean way, most would prefer periodical quantum leaps. Just as they replace their smartphone from one model/generation to the next, keeping up with fashion or state-of-the-art technology.

Of course we are far from done with Lean and very very few companies I’ve visited can claim being Lean. Nevertheless I can understand the fading interest in Lean and the need to reinvigorate it with something new and effective.

Something new means something new to people they didn’t know about until now, not necessarily new per se. Effective means bringing positive results system-wide, not a local optimisation.

My advice would be to consider Throughput Accounting, Critical Chain Project Management and the Logical Thinking Process.

This is not about the next big thing AFTER Lean but the next big thing WITH Lean!

Throughput Accounting (TA) is not really accounting but rather a Throughput-based decision-making approach. In a nutshell, TA shifts focus from cost reduction to Throughput increase and optimization. Follow this link to know more.

Critical Chain Project Management (CCPM) revisits Critical Path Method, the prevalent project management method that failed so far to get developers and project teams to finish on time. CCPM makes sure that projects finish on time and that, thanks to continuous improvement Lean and CCPM style, project durations can be shortened in future.

Logical Thinking Process (LTP) copes with system-wide complex problems. It provides logical tools and methods to surface and neutralize false assumptions, beliefs, conflicting objectives and the like that hinders the organization achieving its goal.

Giving a try with any or all TA, CCPM and LTP, will reveal new potentials and focusing points for Lean to exploit them. Lean isn’t gone soon.

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My takeaways from throughput accounting, the book

I knew the author, Steven M. Bragg from his podcast series “Accounting Best Practices with Steven Bragg” before I came across his book “throughput accounting, a guide to constraint management” published by Wiley & sons, 2007.

Book presentation

The hard cover book has 178 pages, 10 chapters, easy to read in neat presentation and legible fonts, with numerous tables, graphs and illustrations to back up all the provided examples and case studies.
It claims to contain the tools needed to improve companies performance for accountants, financial analysts, production planners or production managers.

The book starts head on by introducing the basics of Theory of Constraints (ToC) in an uncommon, and for me daring way: explaining very briefly the Drum-Buffer-Rope (DBR) logic, in chapter 1 (page 1!).

It is daring because it’s a shortcut putting DBR upfront when it’s usually presented to newbies (long) after explaining the bottleneck concept and the differences between traditional manufacturing, trying to run every resource at full utilisation rate, versus the ToC approach where “only” the bottleneck matters (this is another shortcut, but of mine…).

It goes on with presentation about the different types of constraints, not all being bottlenecks, discussing the nature of the constraint (page 5). The Throughput Accounting (TA) KPIs are presented page 7 and 8 before diving into the financial aspects of TA.

Chapter 2 is about Constraint Management in the factory, starting with how to locate the constraint and how to manage the constrained resource. The various hints are clearly targeting managers or readers keeping some distance from shopfloor as they give enough insight without being too detailed. No people will go through and get bored, the various hints are condensed within few lines, without giving up anything important.

Four pages deal with policy constraints, again something of interest for managers and readers that may have influence within their own organization to educate their colleagues about the drawbacks of some policies and hopefully change them. The importance of constraint buffer comes page 25 followed by the importance of proper batch sizes and machine setups.

Chapter 3 is about throughput (TA) and traditional cost accounting concepts and starts with the emphasis on cost versus Throughput and goes on with all the consequences describing why traditional cost accounting – companies that means – is suffering from several problems.

This chapter is important for people not very familiar with accounting, especially in operations, because it explains some of the decisions that make no big sense when considered from operations point of view. It is also important for those familiar with traditional cost accounting for to understand the limitations and problems brought up by that approach.

Chapter 4 is about Throughput and Financial Analysis Scenarios and from page 59 to 86 take the readers through 14 different scenarios, from Low Price, High Volume Decision to Plant Closing Decision.

Chapter 5 is on Throughput in the Budgeting and Capital Budgeting Process, chapter 6 about  Throughput and Generally Accepted Accounting Principles and chapter 7 about Throughput and Control Systems.

Chapter 8 details Throughput and Performance Measurement and Reporting Systems, interesting because it links the operations’ reality to usable KPIs, e.g.

  • Ratio of Throughput to Constraint Time Consumption
  • Total Throughput Dollars Quoted in the Period
  • Constraint Utilization
  • Constraint Schedule Attainment
  • Manufacturing Productivity
  • Manufacturing Effectiveness
  • Order Cycle Time
  • Throughput Shipping Delay
    And more.

Chapter 9 is named Throughput and Accounting Management and addresses 12 decision areas among which: Throughput Analysis Priorities, The Inventory Build Concept, Investment Analysis, Price Formulation.

Finally chapter 10 presents 7 Throughput Case Studies each of them in a couple of pages.

My takeaways

The book is easy to read and to all concepts are easy to understand thanks to the simple ways the author puts them. Not being an accounting specialist at all, I always liked the simple, pragmatic and concise ways Steven Bragg explains accounting rules or practices. This book is not different.

Reading “throughput accounting, a guide to constraint management” reinforced both my knowledge and my interest in throughput accounting, as well as the conviction about throughput accounting being a powerful and crucial decision-making approach.

I’ve marked dozens of pages with sticky notes highlighting my points of interest and/or inspirations for posts on my blog, reinforcing my consulting approach, etc.

Throughput accounting

Almost all companies have their management heavily influenced by traditional cost accounting and most of them make ill-oriented decisions. With the book’s content help, it is easier to explain to CFOs and CEOs why their decisions are biased by false assumptions or outdated rules, something that can be quite shocking to them.

The book doesn’t come cheap, but as it explains, quit reasoning in terms of cost savings and consider how much (intellectual?) Throughput it can leverage.

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What is a critical root cause?

A root cause is the beginning of the cause-effect relationship*. Thus when working down the chain of causes and effects from a problem to its cause, a Root Cause Analysis (RCA) meets causes themselves being effects of some underlying causes and so on, down to the root cause from which everything about the problem originated.

According to wikipedia, a root cause “is an initiating cause of either a condition or a causal chain that leads to an outcome or effect of interest. Commonly, root cause is used to describe the depth in the causal chain where an intervention could reasonably be implemented to improve performance or prevent an undesirable outcome.” https://en.wikipedia.org/wiki/Root_cause

In “The Logical Thinking Process, A Systems Approach to Complex Problem Solving”, my mentor and friend Bill Dettmer defines a root cause as:

  • *The beginning of the cause-effect relationship
  • The lowest cause in the chain before passing outside the sphere of influence – the most basic thing one can do something about
  • The first cause beyond the sphere of influence, where someone can’t personally do anything about

In the context of the Logical Thinking Process (LTP) and more specifically when working with Current Reality Trees (CRT), a root cause is an entity with arrows coming out but no arrow going in. In this context a root cause is not necessarily something negative.

So far for the root cause, but what is a critical root cause?

Critical root cause

According to Dettmer, a root cause can be a historical event of the past or a fact of life nobody can do anything about. A root cause can also be out of the sphere of influence to change. Therefore, in order to solve problems and remove Undesirable Effects (UDEs), the problem solvers must search for critical root causes, which are defined as:

A policy, practice or prevalent behavior that constitute the lowest level of causality in existing reality lying within someone’s sphere of influence to change. (p108).

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Redefining “problem” (with Goal in mind)

In problem solving or continuous improvement workshops a problem is usually defined as a gap between the actual situation and the desired situation, and thus a problem causes an unsatisfactory situation or an UnDesirable Effect (UDE).

This definition, while true, is somewhat too vague to be useful when working on solving problems and continuous improvement.

Indeed, in a business environment* many things can be qualified “undesirable situation” or “undesirable effect”, from bad tasting coffee to important production equipment breakdown, from laser printer toner stockout to quality control rejecting an important production batch.

In most business environments improvement opportunities are literally infinite.

*business environment can be very vague as well, I suggest every reader to transpose this article into his/her environment.

From these few examples it becomes obvious that the too broad definition of problems need some refinement. The limited time and resources of an organization should not be wasted on every so-called problems, but instead solely focused on the critical ones.

Failing to do so bears the risk of spending time and burning up resources to solve “problems” without any system-wide noticeable positive effect. That’s what happens to so many Lean initiatives or continuous improvement programs, draining significant resources for frustrating results.

So, how to select the problems worth coping with?

In a business environment the organization exists to achieve a Goal, itself subordinated to the achievement of several objectives. When something hinders the organization to achieve its objectives, hence its Goal, the hinderance is worth attracting (all) focus for problem solving.

In “The Logical Thinking Process, a  Systems Approach to Complex Problem Solving”, Bill Dettmer defines a UDE as “something that really exists; something that is negative compared with the system’s goal, Critical Success Factors or Necessary Conditions.” This definition is linked to The Goal Tree and if this one is properly built, the understanding of what an UDE is will be straightforward and unquestioned.

Now with the organization’s Goal in mind, a “problem” can be understood as an UnDesirable Effect (UDE) being an obstacle for the organization to achieve its objectives, its Goal. Anything felt undesirable but not directly threatening the achievement of the objectives or Goal is an annoyance at best.

Does it mean anything NOT threatening the objectives and Goal is not worth considering?

While priority must clearly be given to issues and UDEs hindering the organization to achieve its Goal, some “annoyances” should be taken care of as well. Things making job or life easier for employees for instance may not directly contribute to corporate objective achievement but can help improve morale, ergonomics, safety and the feeling of being important enough to the organization to deserve some attention.

Well, how to select these “problems” worth considering?

This is where methodologies handover to management, “science” handover to “art” and plain rationality to humanity. It’s up to managers to sense what is to be done, why and to what extend.

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June 2016 LTP Alumni Reunion

June 2016, right after the 6-day Logical Thinking Process (LTP) training course with Bill Dettmer in Paris, France, the first LTP Alumni Reunion took place.

The 2-day reunion’s intent was to bring together former LTP students who attended one of Bill Dettmer’s numerous courses, share experience and “war stories” and start building a community. Bill was also proposing a hands-on workshop to demonstrate how to build a Current Reality Tree with tighter logic using the syllogism.

I participated as an alumni (2015) as well as a host. The event was hosted in our (Marris Consulting’s) offices in downtown Paris

The reunion proved to be a success, although the participants were limited in numbers (seats were not limited) mostly because of personal agendas.

Listen to Bill Dettmer opening the reunion

One participant was not a “true” alumni as he did not (yet) take the LTP course, but came in as a “guest observer”. Nevertheless, Jean-Luc was familiar with the TOC Thinking Processes and had personal experience using them.

In this video I am discussing the learnings from this event with Bill on the very evening of the last day.

As decided during the reunion, we will keep on proposing periodical reunions, yearly probably for gathering in some place and every six months in between with a live webinar.

We also created a LTP Linkedin discussion group to have a common space for announcements, sharing and promoting LTP: https://www.linkedin.com/groups/8555389

The future alumni reunions will be relatively open to newcomers upon invitation and the LTP group will remain open to non-alumni.

I hope to meet you somewhere in near future!

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Discussing the Logical Thinking Process Alumni Reunion with Bill Dettmer

Immediately after the 6-day Logical Thinking Process (LTP) training course in Paris, France, June 2016, the LTP alumni of former training sessions gathered for 2 days in order to share experiences and hone our Logical Thinking abilities with Bill Dettmer.

Right after the second day of this reunion, I discussed the event with Bill in front of the camera:

Testimonies after the Logical Thinking Process training course – June 2016

June 1st to 8th, 2016 I was involved in the 6-day Logical Thinking Process training course with Bill Dettmer, in Paris, France.

I was part of the hosting party, did some organisation and promotion work, served as an assistant to Bill when participants went building their logical trees, shot pictures and videos of the event. During the last day I asked the participants if they would share their feedback in front of the camera.

Here are 3 of them: Max (Sweden), Nicolas (France) and Spyros (Cyprus)

Goal Tree chronicles – The mafia goal

During the June 2016 Logical Thinking Process alumni reunion, I shared some of my experience on building and using Goal Trees.

In the video excerpt here under I explain how I came across a probable hidden agenda leading to  what I call a “mafia goal”.

After listening to the story, Bill Dettmer gives his opinion about that.

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