productivity improvement for cost and capacity · 4. productivity improvement for cost and capacity...

47
www.bevingtongroup.com Business Model Design Process Improvement Change Management US, Australia and NZ patents apply to XeP3, Canadian patents pending © Copyright Bevington Group. All rights reserved. US, Australia and NZ patents apply to XeP3, Canadian patents pending © Copyright Bevington Group. All rights reserved. US, Australia and NZ patents apply to XeP3, Canadian patents pending © Copyright Bevington Group. All rights reserved. Productivity Improvement for Cost and Capacity Bevington Resilience Series April 2020

Upload: others

Post on 28-May-2020

4 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

www.bevingtongroup.com

Business Model Design • Process Improvement • Change Management

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Productivity Improvement for Cost and Capacity

Bevington Resilience Series

April 2020

Page 2: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ Bevington Group is a specialist productivity services provider with deep expertise in Operating Model Design and Process Reengineering

❑ In response to the COVID-19 crisis (or Global Viral Crisis) the Bevington Group has prepared an initial series of six webinars to provide valuable management and leadership informationon the response

❑ All the webinars reference leading research and practice

❑ The webinars in the series are

1. Strategies and tactics for turbulent times (introducing the core concept of a “Balanced Response”)

2. Short-term actions that can be taken to get you through the crisis

3. Restructuring for cost and capacity

4. Productivity improvement for cost and capacity

5. Organisational resilience theory in practice

6. Personal leadership and resilience

❑ Each webinar is supported by materials published at www.bevingtongroup.com under the Articles tab

The Bevington Resilience series – An overview

2

Page 3: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ Markets are suffering, the world is in a state of high anxiety, supply chains are being disrupted and many companies are already being driven into deep losses

❑ In short, we are in the middle of the most extreme economic turbulence or our lifetimes. At the same time, many of our loved ones are at risk. Yet now, more than ever, we need to take rational and disciplined actions

❑ In an earlier article and webinar* we have described a "Balanced Response“, which considers research on learnings from the GFC, and recommends the best approach for responding to such an extreme scenario

❑ This presentation will provide practical advice on productivity improvement methods for cost management and capacity creation

The series should be taken in context of the “Balanced Response” described in the first webinar on “Strategies and tactics for turbulent times”

3

* Visit www.bevingtongroup.com/articles or search for “turbulence” from our home page

Page 4: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ As addressed in our first webinar, organisations need to move quickly from a purely cost focus to a productivity focus – because this gives longer term benefits

❑ Productivity methods, particularly those that incorporate Lean Thinking and Theory of Constraints have the benefits of

▪ Reduced unit costs

▪ Capacity creation

▪ Reduced elapsed time (so faster service)

▪ Improved quality

▪ Reduced backlogs

❑ All of the above help you to survive in the short-term and come out of the crisis (which may be in stages) in as strong a position as possible

❑ So this presentation will firstly address key themes in productivity which the Bevington Group team feels are particularly relevant, and we will then describe how these can be applied to the capacity problems that some organisations are facing today

This webinar – Cost and capacity are two sides of the same productivity coin

4

Page 5: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved. 5

We have exceptionally relevant methods to address the challenge – and now is a good time to go hard on improvement

Lean thinking and design

▪ Reduced unit costs▪ Capacity creation

▪ Reduced elapsed time (so faster service)

▪ Improved quality

Agile development and deployment

▪ Collaborative teams – mission focused on waste, flow and customer value

The Minimum Viable Product

▪ Deploying rapidly, minimising waste and starting with critical elements

▪ Testing your hypotheses before large scale commitments

Thinking in options -Bar-bell strategies to create future options

▪ Insurance against model obsolescence

Queuing theory and capacity management

▪ Basic methods to create capacity

▪ Advanced methods to address bottlenecks and uneven resource allocation

Page 6: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Lean Thinking

6

Page 7: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved. 7

Finance team example: Waste analysis

❑ The Finance Team in a large agency spent 37% of their time on waste activity (this is not unusual)

❑ This covered journals, monthly reporting, reconciling accounts, payments, invoices, credit cards, etc.

❑ This Finance Office spent over 1 day a week chasing up errors on corporate credit cards

35.9%

20.4%

43.6%

Long term average for CSDN (activity effort per category)

There is no shortage of productivity opportunity in our economy

Page 8: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved. 8

Productivity methods operate on a staircase of complexity

Lean and Agile Practice:▪ Swift elimination of non-value

adding work

▪ Economical means of creating simpler, more efficient processes and lower cycle times whilst engaging staff

▪ Inherently customer focused and cross functional approach

Process Improvement and Re-engineering Practice:▪ Deeper and more detailed than

Lean and Agile approaches

▪ Understanding of specific role impacts and FTE reductions

▪ Detailed insights can also be used to manage role redesign and system specification as well as process and procedure improvements

Operating Model Practice: An Operating Model is the combination of roles, skills, structures, processes, assets and technologies that allows any organisation to deliver on its service or product promises

Change Management Practice for Deployment

Tools and Software Practice (Builds Lean, Process and Operating Model Tools)

Intensity of Change

Customer

Process design Role

design

Metrics

Information

Technology

CoreFunctions

StructureGeography

Culture

Mgmt. discipline

Workforce capability

Sourcing

Policy

Customer

Page 9: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Lean is a general term used in the marketplace for a set of techniques and tools that

1. Identifies ValueIn Lean, value is defined by the customer. This often means ensuring the product is provided to the customer in the right place, right time and at the right price. All the process steps that contribute to this are identified.

2. Eliminates WasteLean practitioners identify all the steps that do not add value, but consume resources, and eliminate them with the appropriate tools.

3. Creates FlowLean methods expand capacity by reducing cycle time and costs – material and information flows more smoothly through the process.

Lean process improvement approach

✓ Focuses on overall process performance using a robust toolkit from leading organisations

✓ Becomes part of business activities, led by staff

✓ Focuses on year-on-year improvement to move processes closer to theoretical limits

Benefits

Some types of change can begin more incrementally, but are nonetheless incredibly powerful. This is true of Lean

9

Page 10: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Original mass production concepts that informed modern enterprise design

Lean is introduced to Toyota and scaled across the whole

organisation

Lean is gradually adopted by Western manufacturing

Lean thinking spread from manufacturing to other large industries in efforts to cut cost and become customer centric

Present: Lean thinking has been applied across Finance, Health, Retail, Government, Logistics, Sourcing and an ever-growing list of industries

1800’s -1950

1980 -1995

1995 -2005

2005 -2014

Present -Future

Lean is the world’s most popular approach to achieving productivity improvements

10

Page 11: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved. 11

Customers

33%

67%

Customer impacted from inside out

Customer defines value from outside in

The customer defines the value, and is impacted by the inefficiency within the organisation

Page 12: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Waste

Activities

Chasing up information from

customers, departments, and people within the

branch

Duplication of work

Correcting work output from other

departments

Unnecessary checks which are in

duplicate or beyond what is needed

System failures

Errors and having to redo work

Re-keying data into multiple systems,

keying into a system and also recording

manually

Put simply, waste is non-value adding activities

12

Page 13: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved. 13

Ironically, process reengineering is faster than traditional Lean

Lean tends to be somewhat reliant on workshops

This means getting SMEs together – this takes time

Process reengineering methods use software which allows

▪ Information to be gathered directly from the frontline

▪ Can be done remotely

Also, the software supports analysis (finding the opportunities and quantifying them) and also scenario modelling 06.

SCENARIO MODEL FUTURE

05.EVALUATE KEY DRIVERS

04. IDENTIFY NOISE

02.MAP THE PROCESS

01.DEFINE THE PROCESS

03.ALLOCATE TIME

Page 14: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Agile Deployment

14

Page 15: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ Ideally you will be exceptionally well organised to support front-line staff

❑ In crisis situations it is not uncommon to have an 80/20 rule whereby 80% of people are actually supporting frontline staff (say clinicians, cleaners, porters etc)

❑ Front-line staff need to be effectively coordinated and supported. This may mean that…

In many situations the job is to keep the frontline 20% of specialists going. This section addresses how to mobilise everyone else to do this

15

The organisation provides services to the front-line staff to keep them fully productive e.g. transport, food, laundry etc

It also addresses rapid decision making and action

It also addresses Agile practices that are important throughout the crisis such as team stand-ups to convey critical information and review performance

Page 16: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ There is a “flawed” assumption that crises require tight command-and-control from the top

❑ However, the Harvard Business Review has reported that command-and-control systems work best when:

❑ This is not the context for a natural disaster, pandemic or major economic disruption

❑ In such rapidly changing contexts “central command” could easily become a bottleneck or become paralysed by information overload

Recent research indicates that AGILE TEAMS do better than strict command and control in a crisis

16

Operations are stable and predictable

Commanders have greater knowledge of potential solutions

Centralised decision makers handle peak decision volumes

Sticking to standard operating procedures is more important than adapting to change

* Source: Rigby, D., Henderson, S. and D’Avino, M. (2018). How Agile Teams Can Help Turnarounds Succeed. Harvard Business Review. Retrieved from: https://hbr.org/2018/07/how-agile-teams-can-help-turnarounds-succeed

Page 17: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ Agile’s collaborative and iterative nature helps with uncertainty

❑ Turnaround deployment of Agile teams is now also becoming more prevalent

So, unsurprisingly, natural disaster teams are increasingly turning to Agile team structures and methods to make a difference

17

Agile reflects the real world of solution development –the way people work now and how they always have

01 03 05

0402

On-going collaboration between customer, business, and technology throughout the entire program better ensures satisfaction of all stakeholders

Agile demands that you regularly question the value of what you are doing – remove the waste/noise –driving continuous improvement

Greater focus on the success of the specific project component – helping identify problems early to allow change of course where appropriate and reducing chance of failure

Greater allowance for changes to requirements and priorities between iterations – based on actual results and feedback

Agile Guiding Principles

Call us if you need

help

Page 18: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Australia has its own examples of this type of Agile organisational application

18

WorleyParsons, a global engineering and construction firm that specialises in oilfield and other energy-related projects

In 2015 demand for WorleyParsons’ services crashed. After several rounds of cost-cutting proved insufficient to stabilise the organisation, hundreds of individual projects were established

Most of these teams operated in an Agile manner with work structured in Sprints, discipline in decision making, backlogs, daily huddles and other tools. Senior leaders helped clear away obstacles and tracked the teams’ results

The firm achieved significant results:

▪ In the first 100 days, the firm increased its cash position by 20%, reduced its net debt, and registered a $120 million gain in anticipated profitability

▪ After just one year, margins had increased by five percentage points, cost savings totalled $400 million (on an addressable cost base of $1.2 billion), and the stock price was up more than fourfold

This is an example of leaders enabling the change that needs to happen rather than defining every solution

Page 19: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

In summary the Agile approach has six key attributes

19

Working collaboratively (co-located physically or digitally)1

Working through a task backlog4

Clear empowerment and mandate3

Self-managed teams2

Coalition of the willing to advise5

Sponsors to attend and decide6

There are many digital collaboration tools available to support remote Agile teams

Page 20: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Key features and benefits of Agile

Features

of AgileCreativity

Bringing different perspectives into the room can lead to a much richer

solution setMomentum building

The swift pace of Agile sprints and implementation helps build

momentum to drive broader change

Risk reductionReduced implementation risk (from shared understanding) and the risks of design flaws

are reduced because the solution can be tested with critical players in the room

SpeedBrings critical team members together so that solutions evolve more rapidly

Decision makingSimplified decision making with business

owners interacting directly with the team, and decisions made within the Sprint timeframe

Scalable upskillingAs sprint cycles continue it is easy to

engage and upskill more staff

Shared understandingCross-functional teams share the same understanding of the problem and the

potential solution - implementation tends to go more smoothly

FunThere is a sense of satisfaction from

working together towards achieving the same goal and seeing regular results

20

Page 21: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved. 21

Four types of “Agile” are in serious play

Technology related Agile projects

Non-technology Agile projects

Scaled Agile in various forms

▪ Major programs

▪ Full organisational transformations

Agile as BAU – a new way to structure and operate your enterprise (effectively a new form of Operating Model)

Pro

ject-related A

gile

Page 22: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved. 22

Note – when considering Operating Model Design – there are also Agile organisation structures

Traditional organisational structures

➢ Pivot on different characteristics (e.g. function, geography, product, customer type, etc.) but nonetheless tend to use silos

➢ Silos tend to be hierarchical in terms of authority levels

➢ Most powerful governance bodies tend to sit at the top of hierarchy

➢ Budgets tend to be organised by silo (department, division) or by project

➢ Theoretically silo personnel can work together on a project

❑ Agile structures

➢ A network of teams

➢ Teams tend to be called squads

➢ Squads are organised into tribes

➢ Squads have specific objectives

➢ Tribes consist of squads with related objectives

➢ Functional skills are addressed through chapters

➢ Leadership provides a “mission” and integration function

Page 23: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

The MVP

Minimum Viable Product

23

Page 24: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Trial and error have made their way back into the heart of productivity change and transformation (e.g. MVP thinking)

❑ “I have not failed. I've just found 10,000 ways that won't work.”― Thomas A. Edison

❑ Minimum Viable Product (MVP) thinking allows for a structured trial whereby failure is a possibility yet….

❑ There is always value in the learning

❑ “Many of life's failures are people who did not realize how close they were to success when they gave up.”― Thomas A. Edison

❑ The MVP thinking requires a clear hypothesis and the willingness to keep testing

❑ It also rapidly accelerates deployment

❑ For example, one bank trialled a leading edge credit solution on only a thin sliver of deals, but learnt enough to be two years ahead of the market

24

Page 25: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Minimum Viable Product A Minimal Viable Product (MVP) is a strategy used to test a product or product feature

Originated from web applications development

It is designed in a way that comprises only the basic features of that product

Deploying a MVP test allows us to gain valuable information about a product’s possible success on the market with minimal utilisation of resources

Due to its quick implementation, it can get to the customer much quicker than a fully featured product or service

‘Revolutions are celebrated when they are no longer dangerous’ (Boulez). Applying the Minimum Viable Product approach to reduce risk

25

Page 26: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Thinking in Options

26

Page 27: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Strategy Side 2Create options for entirely new offers or business models(our opportunity)

Strategy Side 1 Strategies to optimise and extend today’s business(our strength)

Barbell thinking presumes that in a rapidly changing world, organisations with options for different models will be those that survive. Those organisations that don’t have the right balance and focus

too much on today’s business are those that go into accelerated decline when the environment changes rapidly.

What can we do when the future looks so unpredictable?The rise of ‘Bar-bell’ thinking (Taleb)

27

Page 28: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved. 28

Cases whereby organisations transform themselves are becoming the stuff of legend

• Amazon could have thought of itself as a retailer

• However, in Taleb-esque style it moved to thinking of itself as a provider of web-based services

• It is well into the process of building a massive online services business

• This diversifies its income and acts as a natural hedge against a range of risks

• Alternatively, managing networks, hardware platforms and even software is no longer seen as core for many organisations

• Many have become exceptionally sophisticated at outsourcing these services

• However, some tactical experimentation has proven a prudent path for many organisations pursuing outsourcing of non-core activity

Business models and operating models will now change – will your organisation be a leader in this, a follower or an entity in the organisational history books (and no more)?

Page 29: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved. 29

These really big changes are Operating Model changes

Some changes do require a long term vision – they are the Operating Model changes, as in the automated port system

Page 30: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

What is an Operating Model?

▪ Operating Models answer the big

questions in how organisations are

organised effectively

▪ An Operating Model is the combination

of roles, skills, structures, processes,

assets and technologies that allow any

organisation to deliver on its service or

product promises

▪ It is in effect the way the organisation is

set up to deliver VALUE – both in terms

of the customer and in terms of the

business

Effective Operating Model Design ensures complex organisations can change and grow, while delivering an excellent customer experience

Customer

Process design Role

design

Metrics

Information

Technology

CoreFunctions

StructureGeography

Culture

Mgmt. discipline

Workforce capability

Sourcing

Policy

Customer

30

Page 31: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Capacity Creation

Constraints Management and Queuing Theory Basics

31

Page 32: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

There are common, and sensible, strategies that organisations usually deploy to manage emerging capacity constraints

32

Demand redirection to alternative service

(e.g. Emergency Depts directing patients to the

GP next door)

Increasing capacityResource-levelling

across teamsCross-training across

teams

Rapid training methods for staff

onboarding

Skills routing to handle new service agents

Promoting self-serviceEnabling out-of-hour

services

Promoting off-peak demand

(e.g. offering price incentives)

Promoting complementary

services

(e.g. when customers have to wait)

Rebuilding demand forecasting models

Creating adjustable capacity

(e.g. Reserve Police Force, contractors, part-

time employees)

Page 33: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

However, to generate more ideas it is useful to recognise that there are 5 sources of customer induced variability (which Lean can help you manage)

33

Source: Frei, F. (2006). Breaking the Trade-Off Between Efficiency and Service. Harvard Business Review. Retrieved from: https://hbr.org/2006/11/breaking-the-trade-off-between-efficiency-and-service

Type of Variability Meaning

Arrival variability Customers arrive at a different rate OR at a different time

Capability variability Customers have different skill levels to collaborate with you on the task in hand

Request variability The larger the number of service types being requested by a customer the harder it can be to rapidly change to address variability

Effort variability Customer make different levels of effort to help out (think of returning the trolly at the shopping centre)

Subjective preference variability

Customers have different levels of expectation on what it means to be treated well

Page 34: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Thinking about the different types of variability helps you work through the different improvement strategies and tactics

34

Type of Variability Accommodation Reduction

Arrival Provide generous staffing Require reservation

Capability Adapt to customer skill levelsTarget customers based on capability

Request Cross-train employees Limit service breadth

Effort Do work for customers Reward increased effort

Subjective PreferenceDiagnose expectations and adapt

Persuade customers to adjust expectations

Source: Fitzsimmons, J. A., & Fitzsimmons, M. J. (2011). Service management : operations, strategy, information technology (7th ed). McGraw-Hill, New York

Page 35: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ Queuing theory is a key part of Lean practice that helps you manage the flows for increased speed of service, reduced backlogs and reduced cost

❑ We will address the following parts of queuing theory thinking

The Theory of Constraints is enormously useful in helping you manage a mismatch between capacity and demand

35

Seeing the flowsBottleneck identification

and managementResource levelling

Fast-track and fall-out management

Understanding non-linear responses to signal delays (think of cars

leaving at a traffic light)

Page 36: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ The means of “seeing” where the problem resides include:

Most of the proven ways to address constraints rely on you “seeing” where the problem is ……

36

See the flow

Interviewing system participants for clues. Amazingly this is often not done – remember the people working in the system can tell you a lot if you ask them the right questions

Tracking devices. Not popular but very handy in knowing where people are physically

Observations. E.g. Specially trained personnel make observations on patient movements and mark-down times for certain activities

System data. E.g. When a patient is marked as free to move from ED to ward

Digital observations. Like “observations” but basically using data recorded on video

Finding backlogs. Either on systems, on paper or by interview find where there is a queue waiting to move to the next stage – YOU HAVE JUST FOUND A BOTTLENECK

Page 37: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ You may need to keep a “Control Room” with a visual (paper on wall is fine) of the process and keep updating the numbers of cases at each stage in the process AND the number of patients waiting for something or a move to the next stage

❑ In a crisis, this room will be staffed for 24 hours. There will be a process team allocated to the room with responsibilities to act on problems as they emerge

❑ You will need to determine the authorities of the process team in advance. Reporting lines should be to operational management

…… and hopefully diagnosing the cause – with a control room and measures

37

See the flow

Page 38: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ According to The Theory of Constraints, a system can only go as fast as its slowest point

❑ This implies that we need to find “bottlenecks” – or the points in a flow where movement slows down

❑ We should all be familiar with “bottlenecks” from our driving experiences, points in a traffic system where the road is narrower and causes a back-up in traffic. In Queuing Theory this is a backlog

Bottleneck identification and management. Understanding and clearing these bottlenecks is critical to creating an efficient process flow

38

➔ Flow of client direct care services ➔➔ POTENTIAL Flow of services ➔ ➔ Flow of client direct care services ➔

Assessment/ Intake

Bottleneck

Servicing

Bottleneck/s

(insufficient

resource)

Discharge

Bottleneck

Unused

potential

capacityNoise and

wasted

effort

The restricted resourcing applies a throttle to the intake, care delivery, and

discharge planning processes and constrains the flow of service delivery

below capacity/demand

Example: Health Care Service Bottleneck identification and management

Page 39: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Once one bottleneck has been addressed, you will need to move onto the next bottleneck

Addressing “bottlenecks” is done in 5 distinct stages

39

Bottleneck identification and management

05

04

03

02

01 Identification of the bottleneck

Finding the causes of the bottleneck (there is often more than one)

Developing solutions for the bottleneck

Deploying the solutions (e.g. add resources, find root causes of problems, find alternative flows)

Observing and adjusting based on feedback on solution effectiveness

Page 40: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ The challenge is that different teams (or individuals) can end up with ineffective or inefficient workloads (either too much or too little)

❑ In fast changing circumstances it can be extremely difficult to “allocate” work appropriately as volumes and rates of flow will change

❑ Rates of flow to different teams will be affected by “case complexity”, available resources at prior “work stations” and by team competencies in prior workstations

❑ So, the best approach is to try and build a fully or partially self-managing system

Resource levelling means ensuring appropriate distribution of work to avoid underload and overload BUT also getting cases and tasks to the right person

40

Resource levelling

Page 41: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Resource levelling (keeping the teams at a fair level of work via workflow management)

41

Resource levelling

Pull systems and flowing cases to

right queue

Staffing the queues appropriately01

03

02

04Building

redundancy into queue staffing

Using multi-tasking and multidisciplinary teams as a source of redundancy

Page 42: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ Pull systems are such that when a person or team is ready for the next customer they “pull” from a queue. Practically, this just means they move onto the next job when they are ready

❑ In operations environments sometimes a digital queue is created so that the team member knows what to do next – hence pulling the work from the queue

❑ The trick is prioritising the queue. In a health context this will require significant triage skill. So the queue needs to be closely linked to the triage system

Self-managing resource levelling relies on “pull” theories

42

Simple Task

Simple Task

Simple Task

Simple ONLY

Complex Task

Complex Task

Simple OR Complex

Team leader can now focus on optimising workflow

Page 43: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ This provides invaluable planning information

❑ Digital queues do NOT need much time to be established. Simple software can be established and utilised within 24 hours if necessary

❑ HOWEVER, one of the skills is deciding on what the queues are and who gets allocated to them

The advantage of a digital record is that it also keeps a track of how long it is taking to address each case at that stage

43

Workflow Management Dashboard

Queue 1 – Standard

Standard 1 – PeterStandard 2 – MaryStandard 3 – (next-1)Standard 4 – (next-2)...

Queue 2 – Complex

Complex 1 – PaulComplex 2 – (next-1)Complex 3 – (next-2)Complex 4 – (next-3)...

Mary is currently working on Standard 2.

Complex 2 and Standard 3 will be assigned next .

Standard 8: L

Standard: M

Standard: H

Standard: H

Complex 4:L

Complex 3:M

Complex 2:H

Tasks sorted by customer need, e.g. urgency

Queue 1 – Standard Queue 2 – Complex

Standard 1: H

Complex 1:H

Standard 2: H

Page 44: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Staffing the queues appropriately – ‘Competency-badged’ management provides resource levelling benefits and identifies resource levelling risks

44

➢ Badging is an accreditation technique that verifies staff as competent to perform specific skills or to demonstrate specific capabilities

➢ Allows resources to be allocated to tasks by matching competency to task complexity

➢ Enables work to flow continuously by avoiding unnecessary blockages due to complex tasks

➢ Reduces handovers and errors because the right people are getting the right work and getting the work right the first time

➢ Provide clarity around staff development without the proliferation of role types

➢ New staff work on standard tasks at first but gain experience and accreditation over time to operate in multiple queues, providing the benefits of flexibility and resource levelling

Queue filter 1: Badge A, B & C

Queue filter 2: Badge D & E

Standard: L

Standard: M

Standard: H

Standard: H

Standard: L

Standard: M

Standard: H

Tasks sorted by customer need, e.g. urgency

Queue filter 3: Badge F & G

Complex: L

If complex queue becomes

empty or low urgency

compared with simple queue...

Staff can move between queues to balance resource level

Complex: H

Page 45: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ It is a Lean principle to ensure you have some spare capacity

❑ This may or may not be possible in a crisis BUT you can

▪ Look for cross-trained team members

▪ Cross-train for critical queues if the crisis is likely to continue

❑ The idea is that you have team members who can run on multiple queues… so when one queue is appropriately resourced this person can operate a queue that is “short-handed”

❑ The trick with queue design is to take account of multiple bottlenecks (CALL US if you need to do this) – take hospital as an example

▪ Clinicians (of various types)

▪ Beds

▪ Equipment

Building redundancy into the resourcing of queues and using multi-tasking and multidisciplinary teams as a source of redundancy

45

Page 46: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

❑ Triage is often introduced to perform a first level (quality) assessment of each task as it arrives, and place it in the appropriate stream, but triage operators are often the most lightly trained/experienced, so...

❑ Placing the task in the wrong stream or missing items in the task detail, resulting in the requester being contacted (multiple times) about problems as the task progresses

❑ There are two potential solutions

▪ Put the most experienced staff closest to the front (in triage roles)

▪ Remove the triage step – use fast-track fallout (if most tasks are simple)

Fast-track and fall-out management – the most basic forms of streaming are based purely on task complexity

46

Fast-track and fall-out management

Page 47: Productivity Improvement for Cost and Capacity · 4. Productivity improvement for cost and capacity 5. Organisational resilience theory in practice 6. Personal leadership and resilience

US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.US, Australia and NZ patents apply to XeP3, Canadian patents pending© Copyright Bevington Group. All rights reserved.

Contact details and disclaimer

47

Contact points for any questions or clarification of the content of this report can be directed to:

Report authors

Roger Perry +61 3 9663 5522 [email protected]

Jan Kautsky +61 419 432 404 [email protected]

Other enquiries can be directed to

Bevington Group Office

+61 3 9663 5522 [email protected]

Bevington Group is a specialist consultancy providing the following services:

This report has been prepared in good faith on the basis of information provided by client staff and other sources of information available at the date of publication without any independent verification. It is the responsibility of the client management to ensure that their staff provide accurate information and that management are not aware of any issues that may impact the usefulness of the data for its intended purpose. Bevington Consulting Pty Ltd does not guarantee or warrant the accuracy, reliability, completeness or currency of the information in this report. Readers are responsible for their interpretation and actions based on the content of this publication. Bevington Consulting will not be liable for any loss, damage, cost or expense incurred or arising by reason of any person or organisation using or relying on information in this report for purposes other than its intended purpose.

Disclaimer: