Project Management Operational Problem Solving Implementation & Change Management Strategy & Alignment

Frank Patrick's Focused Performance Business Blog
This Focused Performance Weblog started life as a "business management blog" containing links and commentary related primarily to organizational effectiveness with a "Theory of Constraints" perspective, but is in the process of evolving towards primary content on interactive and mobile marketing. Think of it as about Focusing marketing messages for enhanced Performance. If you are on an archive page, current postings are found here.

Wednesday, March 31, 2004

Busy People or Productive Organization -- What is the distinction between...
"We need to get the most out of our people?"
and
"We need to get the most out of our organization?"
...other than the fact that the former leads one to the idea of keeping everyone busy and the latter, if taken seriously, leads one to making sure that they aren't. Just something to think about.

posted by Frank - Permanent Link - |

Monday, March 29, 2004

Optimism Management -- Another take on risk management from Laurent Bossavit...
[...] optimism may well be a leading contributor of project failure, as a factor of blindness to project risks. "We're not really late yet, we'll catch up". "It's just a trivial change, it shouldn't take five minutes". "I don't see why our customers wouldn't like that". We can all reel off dozens of these phrases which are usually the harbingers of project disasters.

I suspect it's optimism, not risk, that most needs to be managed.
Nicely put, although I might say that a key to managing risks starts with the management of optimism associated with promises.

posted by Frank - Permanent Link - |

Who Matters More - Workers or Wall Street? -- Friday's WSJ Online features a story on Costco, the warehouse retailer --
"From the perspective of investors, Costco's benefits are overly generous," says Bill Dreher, retailing analyst with Deutsche Bank Securities Inc. "Public companies need to care for shareholders first. Costco runs its business like it is a private company."

Costco appears to pay a penalty for its largesse to workers. The company's shares trade at about 20 times projected per-share earnings for 2004, compared with about 24 for Wal-Mart. Mr. Dreher says the unusually high wages and benefits contribute to investor concerns that profit margins at Costco aren't as high as they should be.
Fortunately, the firm has some enlightened management, who...
...disputes the contention that it takes care of workers at the expense of investors. "The last thing I want people to believe is that I don't care about the shareholder," says Jim Sinegal, Costco's president and chief executive [...], "But I happen to believe that in order to reward the shareholder in the long term, you have to please your customers and workers."
As I've written before, the success of an organization depends on a tri-partite goal of satisfying owners, customers, and employees, and one very effective way of assuring all three -- especially in a low-margin, customer-touching industry like retail -- is to address them in the reverse order. Taking care of employees will encourage their participation in improvements as well as enhance the customer experience, which will lead to consistent profitability for the owners "now and in the future."

From a personal standpoint, I live about equidistant from a Costco and a Sam's, and there's a Wal-Mart even closer. After several breakdowns in the service encountered at the latter (which kind of jives with their treatment of their employees), my wife and I stopped shopping there, even before the recent spate of stories about the political, economic and social problems associated with their business model. We've naturally gravitated to shopping at Costco on a regular basis for a variety of reasons. Now that I know how they respect their people compared to their competition, my loyalty to them is enhanced.

posted by Frank - Permanent Link - |

Task Commitments -- In response to my recent prescription regarding rework -- the one that involved getting rid of task due dates -- Hal Macomber talks about leaving tasks off the schedule. This doesn't work, since as he recognizes, it removes visibility of what one needs to do. In my (Critical Chain) world, tasks remain on the schedule, but float as predecessors take longer or shorter than anticipated. He also offers an alternative way of looking at the issue...
"Make (task) commitments at the last responsible moment."
This is exactly what is done in a Critical Chain-managed environment via frequent and regular (ideally daily) task status updates of estimated time to complete active tasks -- 5 days left, 4 days left, 4 days left (whoops), 3 days left, 2 days left, 1 day left, done. You can't get much later than that. Combined with a rolling look-ahead to future tasks -- Hal talks about a 6-week look-ahead, my clients usually go with watching tasks that are projected to start 2 to 4 weeks out -- these updates provide current visibility of both active and near-term tasks, as well as ripple out through the remainder of the project to provide current project buffer consumption for gauging the health of the overall project promise.

posted by Frank - Permanent Link - |

Sunday, March 28, 2004

On Independent Inquiry --
Explore, and explore. Be neither chided nor flattered out of your position of perpetual inquiry. Neither dogmatize, or accept another's dogmatism.
     -- Ralph Waldo Emerson
(Via Bartleby.com.)

posted by Frank - Permanent Link - |

Friday, March 26, 2004

Think, Then Act -- From Darwin Magazine, The Value of Thinking:
We live in a culture with a strong bias for action. This is good; it is what has propelled American enterprise as the engine of global commerce. But in the process, it has chewed up good ideas and good people. While ideas are not in short supply, thinking them through is not valued enough. Too often we jump the gun with half-baked ideas, not because we are half-baked but because our management system rewards us for doing, not thinking.
Sounds a lot like the point I mentioned yesterday, rewarding promises (and action to carry them out) rather than results (and thought to make sure those promises can be kept).

posted by Frank - Permanent Link - |

Heavy Traffic Ahead -- In any of you are planning on attending the Goldratt Institute's TOC World 2004 conference in a few weeks, and if you are coming from south of the Mohegan Sun venue, you might want to allow a bit of extra travel time. From the NY Times...
Fiery Truck Crash Closes I-95 in Connecticut: BRIDGEPORT, Friday, March 26 - A tractor-trailer collided with a car on an elevated stretch of Interstate 95 here Thursday night, igniting a fire that caused part of the southbound roadway to buckle, officials said. The cave-in forced the closure of part of the road - the busiest highway in the Northeast - for at least two weeks, the authorities said.
Talk about your bottleneck. I've travelled that stretch of 95 many time in the last few years. It's always been a nervous stretch of narrow, bumpy, high-speed road, as what has seemed like eternal construction project has dominated the area. This is no surprise to me.

posted by Frank - Permanent Link - |

Friday Fun - March Madness -- In case you weren't aware of it, there is a major sport tournament that occurs every March. Like many sports, it's usually fast-paced, with exciting action (209Kb Realmedia .rm download) and outcomes determined in spurts of activity (366Kb Realmedia .rm download) measured in seconds rather than minutes. Sometimes, however, a slow-down approach is taken, as in this marathon 7 minute battle (11.8Mb Realmedia .rm download) -- no wimpy shot clock here -- definitely a case of unstoppable force and immovable object. More excerpts from the 15-day tournament can be found here.

[Later: By the way, if this pure version of one-on-one sport is not your cup of tea, you might look forward to this new cable channel. I don't.]

posted by Frank - Permanent Link - |

Thursday, March 25, 2004

Waltzing with Bears - Project Risk Management -- Light blogging this week, due to some interesting developments in my life. However, as recently mentioned, I've recently finished reading Waltzing with Bears: Managing Risk on Software Projects, by Tom DeMarco and Timothy Lister. Even if you are not involved in software as the domain of your projects, I highly recommend this book for its advice on project risk management. The following are some excerpts that I'm sure will serve as fodder for future postings here...
In the absence of explicitly declared uncertainty, achieving anything but the most optimistic imaginable result is a failure. Without risk management, projects have no way to distinguish between stretch goals and reasonable expectations. The result is that they adopt their stretch goals as schedule and then -- since such goals are at the hairy edge of possibility -- fail to meet them.
We have met the enemy, and it is us.
A careful assessment of potential causes of delay should oblige you to admit something like this: "Delivery can be expected sometime between Month 18 and Month 29, with and 85-percent confidence factor date of Month 24."
Interesting that this example range of expectations is in line with the usual Critical Chain project buffer size of about a third of the fully promised schedule...even a bit more.
The worst organization penalize unappealing forecasts but not unappealing results. When the project fails, they reason, "Hey, the guy missed the date, but at least he gave it a good try." This problem feeds upon itself: People understand that promising big is more important than delivering, and everybody learns to act accordingly. If you work for this kind of organization, you might as well go with the flow and keep your risk assessments to yourself.
So true. And so sad.

I've seen this first hand when one person in an organization I worked for kept taking pot shots at the project schedules we had developed, saying -- in the style of Name That Tune -- I can deliver that in less months. Respecting her experience, we asked her to critique our plan to deliver the desired outcome. Line by line, phase by phase, she had no problem with what we had done. It was puzzling until we came across a piece of the system/project that she said she didn't think she would get to in her timeline, so she assumed it would carry over to a later project. She was will to promise the whole package in a fast track schedule when, in fact, she was buffering with scope rather than with time. We were promising two different projects. In a sense, she was "promising big," knowing full well that the old culture would accept less than a complete objective. There's a word for that kind of behavior.

Check out Waltzing with Bears; it's in an honored place on my bookshelf, along with it's siblings from DeMarco -- Slack, and The Deadline. Maybe I should put Peopleware in the queue.

posted by Frank - Permanent Link - |

Monday, March 22, 2004

No Project (Manager) is an Island -- Some thoughts triggered by the big comment thread associated with a recent post...

Most project managers are willing to accept the notion of their responsibility for their project. As such, they're comfortable with the notion of managing not just the boxes and arrows of their plans but more importantly, the "white space" of un-pre-defined dependencies. What they often need to be reminded is that they are also responsible for the success of the larger organization within which that project exists. This means that sometimes they need to subordinate the needs of their project to the needs of another project. A good project manager knows where their project fits into the portfolio and pipeline and knows how their project (and the resources and performers associated with it) might be better used elsewhere.

One key to this is an effective, easy to interpret, and consistent means of assessing the health of the various projects involved, available in a timely and useable manner not just for the project manager "professionals," but also by the matrixed functional/technical/resource managers, by project performers, as well as by top management and project sponsors, all of whom care about more than the performance of a single project. It also assumes that project promises have not been made in a way that do not allow for uncertainty in execution and are able to deal with run-ins with Murphy's Law without triggering a crisis. In addition, the ability to even think about subordination to larger needs requires that the system is not over-stressed by attempts to put 10 kilos of projects through a 10 pound pipeline. And finally, the policies (formal and informal), metrics, and reward systems need to be skewed strongly in the direction to support and reward the right thing -- global performance rather than local (project) or even individual performance. Without these prerequisites, it's every project for itself.

posted by Frank - Permanent Link - |

Saturday, March 20, 2004

Resources, Skills, Performers, People Commentary -- Yesterday's post has triggered a great thread of comments. Don't miss 'em, and join in the conversation if you are so moved.

posted by Frank - Permanent Link - |

Friday, March 19, 2004

Resources, Skills, Performers, People -- Some of you might have noticed that I've been recently shifting a bit of the language I use in discussing the people involved in projects. I just noticed it myself, and doing so, have given it a bit of thought.

The traditional word is "resources," which technically refers to not only people, but equipment, facilities, money, and other "stuff" consumed/used by or required to deliver a project. A while ago, I mentioned my opinion that when it comes to "people resources," the real thing used by the project is the skill or knowledge that happen to be contained in the mind of a body. What is scarce and needs to be managed is not the person, but the skill that they (or others) bring to the party. The resource is the skill, not the person.

This isn't just a matter of semantics or some manifesto . To regularly confuse people with resources in a project-planning context leads to over-use of some people and under-use of others, as project managers strive to "resource" their efforts with "the best people." To hold on to those "best people" for when they really need the skill that person has, they often use the person's limited time and attention on other stuff, shutting out other projects from the ability to take advantage of what might be a scarce skill. This practice also results in under-utilization of people who carry the skill but don't get the opportunity to improve it with practice simply because they're not "the best." If they don't use it, the organization loses it.

People are not "plug-compatible," but defined and understood skills are. The practice of defining resources needed for particular project tasks as that minimum level of skill necessary to complete the work, rather than as Joe or Maria or Pat, would help to allow those that manage such resources and people to assign appropriate people as needed to perform the task.

So, if I'm unconsciously shifting away from the impersonal "resources" when referring to people, what word do I find myself using? Well, we already designate some people associated with project environments as "managers" -- project managers, resource or functional managers. "Contributors" has too much of a pro bono feel to it. "Team members" is an overused cliche. For some reason, I seem to have started using "performers", and kind of like the ring of it. Skills are resources, people who apply those skills are performers, individual and unique. Yeah, sounds good to me. (And on top of it, "project performers" is a nice bit of alliteration.)

posted by Frank - Permanent Link - |

Friday Fun - Forget Myers-Briggs -- There's a new way of defining personality types, from pirate dwarves to ninja elves..

posted by Frank - Permanent Link - |

I'm a Focalizer -- That's a word I've come across this week that resonated nicely for me. Chris Corrigan cites an interesting paper by one Frank Smits...
"...in order for Facilitators to participate, as a listener, a 'neutral' narrator or focaliser, they need to be able to understand the language, power relationships, semiotics, etc. in the group of people. In other words, they need to be 'external insiders'. As the name suggests this is a very paradoxical role. By somehow becoming an 'insider' there is potentially an element of 'risk' for the Facilitator with the outcome (emergent action). A delicate balance."
"...focaliser...", or as we write on the left side of the Atlantic, "focalizer."

Cool word. Cooler description of something that I strive to be/do. Aurally related to "vocalize," it leads me to think about reportage or story-telling (the larger subject of Smits' paper). And with it's clear relationship to "focus"...
Focalize
1. To adjust or come to a focus.
2. To bring or be brought to a focus; sharpen.
3. To concentrate or be concentrated; localize.
(From Bartleby.com)
...there's a clear connection to the name of my consultancy, as well as to the need to gather, interpret, and communicate pertinent information that allows one to focus, focus, focus on what's important in a project, an organization, or a life.

Managers in general, but Project Managers in particular need to be focalizers. The need to be those objective "external insiders." They need to be able to bring the key issues of the day into focus for appropriate action. They also need to focus the deliverables of the efforts of their projects on what matters to the customer and to the larger organization. But that said, in order to "focalize" effectively, they need to be aware of their external responsibilities as well, and stand outside of their effort to be aware of the larger story of the organization that owns the project. Only then will they know when and where to focus and only then will they avoid too sharp a focus that might threaten the larger goals of the organization itself.

More paradox. In order to focus and concentrate one's attention, one must know the surroundings of the target. I've often described my specialization as being a generalist. I hope that allows me to see the big picture and focalize others to what is important.

posted by Frank - Permanent Link - |

A Milestone of Sorts -- Broke through 200 subscribers via Bloglet email yesterday.
Nice little spike back around the time of the Promises and Prescriptions series. Given the ugly state of spam- and virus-ridden email these days, not bad. (oooh...I wrenched my shoulder patting myself on my back).

I wonder how many people subscribe to my RSS feed other than these folks, who have shared their subscription lists publicly, like I have.

Thanks for the interest.

posted by Frank - Permanent Link - |

Wednesday, March 17, 2004

Do the Right/Important Thing -- I've started setting aside a bit of time for cellulose-based reading, starting with some of the books that have looked interesting enough to acquire and suggest. Starting with Bill Jensen's Simplicity, I've come across a great quote from Lynn Mercer of Lucent...
We make sure everyone is relentless in asking "Am I figuring out what's important and doing what's right?" And for managers the question is "Am I letting others do what's right and important?" True success comes when you hit a crisis or rough spot, and people don't revert to old behaviors. That's the real hard part for all of us.
Too often, managers expect their charges to be responsible for the first question -- Have you ever come across "Ability to handle multiple priorities" as a category in an annual performance review? -- without addressing the second one themselves.

On the closing point of the quote, it's a matter of habit to assure that crises don't trigger inappropriate behaviors. And consistent, institutionalized, easy to use processes -- the theme of Simplicity -- can help not only to get things done, but also to develop and support desired habits. It's the responsibility of management to build and maintain those processes so that everyone can focus on what's important and do what's right.

Next up...Waltzing with Bears: Managing Risk on Software Projects, by DeMarco and Lister.

posted by Frank - Permanent Link - |

Tuesday, March 16, 2004

Now Who's the Boss? - Lipstick Leader -- Watching last night's episode of Now Who's the Boss? on The Learning Channel, featuring an executive of Estee Lauder spending time in various roles at one of their subsidiaries, brought up painful memories. One of the experiences he dealt with was working on a lipstick finishing and packing line, totally embarrassing himself with lack of speed and quality in his performance. It took me back over thirty years to when I was a freshly graduated Industrial Engineer who foolishly sat down at a similar line at Lanvin-Charles of the Ritz to prove that a certain job could be done according to the standard I developed.

Big mistake.

'Nuff said.

One disappointment with the TLC show. Unlike it's PBS predecessor, "Back to the Floor," this show seemed to focus primarily on the comfort and discomfort of the executive as he pre-weighed and blended a batch of lip gloss, worked the line, ran a forklift, and applied make-up in a store rather than on meaningful lessons learned. In the PBS show, there was usually a full final segment on lessons learned, feeding back to his "bosses for the day" on the experience, and planning improvements based on what the executive encountered. It was cute to watch last night's subject panic when he had to apply mascara to a model. It would have been more interesting to discuss some 5S initiative to facilitate the finding of ingredients in the first segment and to question the silly, time-wasting punching in and out for lunch at the distribution center.

(By the way, another current show on TV -- Airline, on A&E -- which follows around a group of SouthWest Airline workers in Chicago and LA, has given me a whole new appreciation for what customer-facing service industry people have to face on a day-to-day basis. Somehow they manage to largely maintain a smile and politeness in the face of boorish, irrational behavior on the part of customers.)

posted by Frank - Permanent Link - |

Sunday, March 14, 2004

Now Who's Boss? -- Taking a cue from PBS's Back to the Floor a couple years ago, The Learning Channel is currently broadcasting this show about executives spending some hopefully not-too-artificial time "in the trenches" -- Monday nights at 10PM eastern. Hopefully it's better "reality TV" than The Apprentice. Probably better reality, maybe not better TV.

posted by Frank - Permanent Link - |

Yahoo! vs. Google -- A comparison of search engine results.

posted by Frank - Permanent Link - |

For the Library Inbox -- Here's a book that looks promising; Profitable Growth Is Everyone's Business: 10 Tools You Can Use Monday Morning by Ram Charan, co-author of Execution. From the inside flap, according to Amazon.com...
Inherent in this way of thinking is the revolutionary idea that growth is everyone's business--not solely the concern of the sales force or top management. Just as everyone participates in cost reduction, so must everyone be engaged in the growth agenda of the business. Every contact of each employee with a customer is an opportunity for revenue growth. That includes everyone from the people working in a company's call center handling customer inquiries and complaints to the CEO.
It's all about the top line, which, if growing, will take care of most bottom line issues. And taking care of the ability to consistently grow the top line is what a holistic application of the Theory of Constraints (aka Constraint Management) is all about, because it's the constraints that limit growth. (book idea via BusinessPundit)

posted by Frank - Permanent Link - |

Ideation and Creation -- Steve, the Creative Generalist offers up a comparison of what is needed to come up with and idea and what it takes to implement it...
The scale of an idea is not in proportion with the scale of the workforce needed to generate it. That is, an idea is the result of quality of minds, not quantity of minds. A small, diverse group can think of a big idea just as or probably better than a big like-minded group could. [...] Creation, on the other hand, is proportionately scaleable - meaning it often requires more people and equipment for bigger jobs. As the project scope increases so too will the number of people needed to service it. In this case, a client needs to select the best creative supplier who is also competent at the full scope of the project. This is where clients get sucked in to thinking bigger is better because there will always be capacity if the project grows.
It's not only a belief in "bigger is better," but also "more is better," that gets organizations into trouble. More ideas are better if they are used as a pool of opportunity that is carefully considered and pulled from as capacity allows. More (or bigger) ideas amount to less, however, if they are acted on prematurely, without regard to what the organization can realistically accomplish.

This is the raison d'etre of portfolio and pipeline management. These processes serve as essential filters between the tactical ideas associated with a strategy and the project and resource management necessary to understand their size and understand the organization's capacity and capabilities to deliver them effectively. When I get involved with clients in the realm of "multi-project management," addressing the use of the pipeline is as important as the issues of individual project execution and control.

If you think your project organization suffers from trying to do too much, I'd be interested in hearing from you regarding the symptoms that define that suffering. Use the comments or contact links below.

posted by Frank - Permanent Link - |

One More On Unit Costs (sort of) -- While on the subject, from a project management perspective, when one is working in a multi-project organization in which most resources are already part of the organization, "project cost" probably falls into the same questionable category as "unit cost." If people are not going to be hired or fired in substantial numbers because a project is taken on or declined, then the real "cost" of doing most such projects is the "opportunity cost" of not doing some other project. Truly incremental costs (cash outlays for that project alone) should be considered when comparing projects, as well as the use of constraining resources, but "total cost" of a project can be a mere distraction in many cases, and should be a consideration secondary to focus on the benefits of a project. I suspect that a lot of very beneficial projects have been killed due to undue focus on costs. (Before you ask, that's conjecture on my part.)

For a text that discusses Throughput per Constraint Unit (that I mentioned in one of the other recent unit cost posts) as a decision tool for in a project portfolio management context, check out the oft-recommended Advanced Project Portfolio Management and the PMO, by Kendall and Robbins.

posted by Frank - Permanent Link - |

Friday, March 12, 2004

On the Calendar - New Jersey -- On Thursday, April 15, I'll be doing a track presentation at the 2004 North Jersey ASQ Spring Quality Conference. The topic is "Using the Theory of Constraints to Maximize Six Sigma Effectiveness." Starting with a quick "compare and contrast" intro of the two management concepts as means to achieve organizational improvement, the presentation will move on to the complementary nature of combining them. This overview of what TOC can bring to the Six Sigma party will touch on constraint management as the logical source of project selection for Six Sigma attention, a view of root cause analysis for complex processes and systems, and multi-project management to maximize the improvement throughput of limited Six Sigma Black Belt resources. If you can't come to the Garden State for the conference, check out the links. If you do go to the conference, stop by and see if I can fit all this in an hour -- and be sure to say hello.

posted by Frank - Permanent Link - |

On Rework Good and Bad -- Some of the best comments engendered by this weblog are in response to the Prescriptions and Promises piece on rework. In particular, Mark Williams noted that
I suppose we could conceive of breaking down a project into tasks where the person carrying out the task has complete and perfect knowledge of that task and it's implications on others. I'm prepared to concede that this may be our goal, but that in practice we are unlikely to achieve it.
The essence and objective of planning is not about trying to predict the unpredictable in order to develop a plan "that must be obeyed," or even to detail future work to absolutely eliminate rework. Rather, planning and promising projects are about winnowing out what we do know from what we don't, understanding where in the project network the decisions are needed, and questioning how much we really have to know to make those decisions.

Maybe it's not so much "good and bad" rework, but "planned and unplanned" rework, or as Mark refers to it, planned "modification through feedback" versus questionable courses of action, planned or otherwise.

posted by Frank - Permanent Link - |

Friday Fun - Not -- While I usually limit my social/political/cultural commentary to my Unfocused personal blog, regular readers here have been graced with the occasional "Friday Fun" posting. Sorry, but I'm not up to it today, I think I've caught a chill.

posted by Frank - Permanent Link - |

Thursday, March 11, 2004

It's Alive. It's Alive! -- I guess the best practice meme is still alive and kicking. Thank goodness, since Jack Vinson has some good stuff on it, discussing an encounter with Bob Hiebeler of St. Charles Partners, co-author of Best Practices: Building Your Business with Customer-Focused Solutions...
The best nugget from the evening is Hiebeler's new definition of best practices: "An example of the best way to perform a process." It used to be "The best way to perform a process." This acknowledges the complaint that people have with the idea of best practices, that best practices in one company or organization may not necessarily be the best for another. And once they are implemented there are always new things to be learned and new ways to do something that are even better.

[...] The other aspect of the definition of a best practice as an example of a best practice is that best practices should be part of the creative process within an organization. Best practices come from outside the organization to inform process improvement effort.

"Best practices should disturb you." was another great nugget. Discovery of how people do things differently gives you the opportunity to rethink how you do things, which gives you the opportunity to think about how to change what you do in light of this new information. This is the role of the process experts at all levels of the process hierarchy: find those different perspectives, get disturbed.
Good stuff. I like it. Go get disturbed.

posted by Frank - Permanent Link - |

More On Unit Costs -- Another question from the comments to my unit cost posting...
"What do the financial controls folks have to say about either the lack of understanding between fixed and variable costs or the lack of a "unit cost" assessment of a firm's performance. I get the sense that the words being used here are the same as those found in the GAAP based processes found in publically audited firms."
That is exactly the case. Generally, knowledgeable financial folks appreciate the difference between financial accounting and management accounting. They know that GAAP numbers are for reporting of performance in a consistent manner, where the key numbers of interest are those at the very top and bottom lines. Making day-to-day decisions for the business require a different lens. Even before I was ever exposed to TOC and its T, I, and OE approach to quantitative analysis, the same basic approach was enforced by the Comptroller/CFO of the division of the Fortune 50 consumer goods company I worked for in the 80s. His words, which I remember well (since they are echoed in the video version of The Goal, which I've seen umpteen times) were, "Don't use my cost numbers for decision-making!"
[From the comments again...]
Finally, are there any recommended texts that discuss the "no unit costs" concept?
I mentioned two in my contribution to the aforementioned comment thread... Throughput Accounting, by Corbett, and The Measurement Nightmare, by Smith. In addition, I'm reminded of another book Theory of Constraints and Its Implications for Management Accounting, by Smith, Noreen, and Mackey, as well as one of Goldratt's non-novelized works, The Haystack Syndrome. I would expect any traditional accounting text that discusses the concept of direct costing (as opposed to absorption costing at the heart of GAAP reporting processes), which is really what this is, might also be helpful in understanding the approach. Other related references include:
- Throughput accounting: a revolution in the making?
- Throughput accounting - The unpretentious road to profits
- Agile Software Management Accounting for Systems
- Lean Accounting for Lean Manufacturers
- Lean Accounting
- Cost Accounting Undercuts Lean
That should keep you busy.

posted by Frank - Permanent Link - |

Wednesday, March 10, 2004

Strategic Agility -- If an organization's strategy is it's largest project, then a bit of agility in the form of accepting/embracing uncertainty around an anticipated roadmap is required. Planned tactics need to be both prioritized and adjusted along the way as they run into reality. This post is the start of some thinking along these limes. More will be coming after these starting thoughts...

An organization both owns and is the result of the strategy as well as all of its previous strategies. The strategy is the soul of the accumulated efforts of the stakeholders -- the actualization of the organization's values.

In today's "flattened" organizations, one is likely to find strategic initiatives coming from the ranks of middle management as responses to trying to meet competing and contradictory stakeholder demands. But this is nothing new. Strategy was never the exclusive domain of the executive suite. Potential strategic initiatives have always come from anywhere and everywhere in the organization.

It does, however, remain the responsibility of the executive suite, as those most directly responsible to the owning stakeholders of the organization, to assure that those initiatives that do bubble up to the realm of official strategy are consistent with the larger and longer term goals and mission of the organization.

In some cases, top management and those close to them have traditionally served as the gatekeepers to the "official strategy." Where an evolution may be happening in flatter organizations, or even in some enlightened older pyramids, is that the executive suite is replacing the gatekeeper role with one of assuring a broader and clearer communication of strategy. This approach would assure that the new initiatives coming from the organization are easily understood to be in alignment with desired directions or not, and if not, reviewed to either make a case for a new strategic direction or self censored if clearly inappropriate.

It's also top management's responsibility to assure that the effect (or even the existence) of competing and contradictory stakeholder demands are minimized. Such systemic conflicts are rooted in the assumptions that support either the written policies (the strategy) or the unwritten (the culture). It's the role of the coordinators of the strategy to set up processes to identify these disconnects and implement new tactics to deal with them.

posted by Frank - Permanent Link - |

Tuesday, March 09, 2004

Project/Program Management -- Christian Connett has given warning of some forthcoming writing on the subject of project versus program management, and is asking for two-cent contributions to his thinking. His request triggered the following potentially pregnant thought...

There's something that's been going around in my mind more and more as I expose myself to the "agile" movement coming out of the software development arena. Agilistas like to talk about the fact that many features delivered in a software project are independent of one another, and that they can be prioritized with little regard to dependencies, delivering useable and incremental "value" with each release. However, I assume that there is some synergistic effect from delivering something close to the full collection of features. Otherwise, wouldn't the features/releases merely be projects on their own, ringing their own independent cash registers upon delivery? They would not need to be collected into the larger "project" container.

With no pun intended (although the potential certainly is there), this semi-independent, yet synergistic, character of software development certainly feels like the traditional definition of a "program" to me.

(hmmmm...The other common use of the word "program" -- an endeavor that is more on-going than finite -- also feels like the nature of software development as well, with releases for fixes and new features as the "product" matures through its life cycle.)

posted by Frank - Permanent Link - |

Society for Effective Lessons Learned Sharing --
"The Society for Effective Lessons Learned Sharing is a volunteer organization comprised of members from various DOE [Department of Energy] programs, Operations Offices, sites, and contractors that share the common goal of improving information exchange across the DOE complex, as well as between the Department and other public and private organizations."
If you're interested in the subject of lessons learned, this site might be for you. There's some potentially interesting things under the Fact Sheets and Meeting Proceedings. For me, its use of pdf files for everything, even the one-page fact sheets, is annoying. (I find that many Government-related sites overuse pdfs where simple html web pages would suffice.)

posted by Frank - Permanent Link - |

On Unit Costs -- The comments to my recent post on the misuse of the concept of unit cost in decision-making include a few good questions. One is...
Is the claim there is no such thing as unit costs a common accounting practice in your experience?
Common practice, no. But that does not make it wrong. Common practice is not necessarily good practice. In my corner of the world -- in organizations that have embraced the concepts of constraint management, unit costs do appear in the mandated GAAP number crunching, but a distinction is drawn between the reporting of financial results according to the requirements of somebody's external rules and the use of such numbers for operational decisions. A good example is Toyota's US plant in Kentucky, as described in Profit Beyond Measure by Johnson and Broms. The allocation of non-variable components of cost only muddies the water when one is trying to determine the value of incremental or decremental volumes, new offerings, offers, or contracts that use primarily existing resources, product mix decisions, or pricing.

It's that last one -- pricing -- that gets most companies in trouble. By bloating the cost per unit with allocated overhead and other essentially fixed expenses like labor, many businesses forgo potentially profitable work because of the perception of insufficient margin or unit profit when, in reality, they might have sufficient capacity to deliver that work only incurring purely variable costs such as raw materials, shipping, or commissions. The concept of unit cost leads directly to the idea of acceptable unit margins or profits when compared to possible prices. This then leads one to believe that there is some "fair price" that one should set for one's offerings (related to cost plus some reasonable margin), and to forget that prices are not in one's domain of control, but rather in that of the market. A slippery slope indeed. In the world of T, I, and OE, as long as the price is greater than incremental direct costs attributed to Throughput plus incremental Operating Expense, it is probably a situation that deserves careful consideration...

...with one caveat...

If the product in question consumes the time and attention of an internal constraint of the organization (that piece of the organization that constitutes it's limiting factor regarding capacity), then the decision process needs to take that into account, favoring those products or jobs with a higher ratio of Throughput per Unit of Constraint Usage.

Another advantage of the T, I, and OE accounting paradigm is that it is scaleable. Addition of T, I, or OE at any level of an organization "add up" to the total T, I, and OE of larger components of the system. Unit costs that take into account allocations of "fixed" costs that, in all likelihood, stay behind (at least partially) if the business -- the units -- go away do not maintain a similar integrity as the costs erroneously allocated to the old units now need to be re-allocated to the remaining ones. Yes, it is a simple system, but in my mind, that is its strength. One still has the ability to break down OE to its various components and analyze their detriment to the bottom line, and for that matter, this is simplified when one doesn't have to un-allocate for analysis.

posted by Frank - Permanent Link - |

Monday, March 08, 2004

Creative People (and Process Improvement, Too) -- Flemming Funch passes along a great snippet from Carl Rogers about creativity and comparisons to others. Ming also summarizes:
"If you only try to do what a good artist or a good writer or a good *something* does, you might well become good, but you probably won't become great, and you won't end up doing what you particularly are here to do. Rather it is about trusting your own process and finding what particularly it is that YOU do, and do that the very best you can."
Right in line with my oft-stated comments on bench-marking and best practices, which are great for playing catch-up but not leap-frog.
Along these lines, Esther Derby points to similar takes on Best and Useful Practices.

And BusinessPundit gives us a CFO.com/Mckinsey Quarterly article on the same topic.
OK, I think we've beat this meme to death. For now.

posted by Frank - Permanent Link - |

The Reach of a Weblog -- There I was last week, almost 2,000 miles from home, up north of the border in Canada giving an in-house workshop. The client had arranged for me to speak to the local PMI luncheon meeting, for which over 120 people show up regularly at mid-day. Impressive. So my talk is over, and I'm kibitzing with a handful of people with questions and comments. A woman sticks her head into the circle of people, apparently in a rush, and quickly mentions that she regularly reads and enjoys this blog. Nice stroke of the ego.

Then she rushes off before I could break out of the conversation and chat with her. If you're that woman and you're reading this, thanks for making my day. Drop a note in the comments and say "Hi."

posted by Frank - Permanent Link - |

Sunday, March 07, 2004

Sparklines or Wordgraphs -- "...some draft pages from Beautiful Evidence," a forthcoming book from Edward Tufte. Take a look at the early examples. They could work nicely to provide a concise picture of buffer consumption history of a project, useful for highlighting trends.

posted by Frank - Permanent Link - |

Impossible is Potential --
Impossible is just a big word thrown around by small men who find it easier to live in the world they've been given than to explore the power they have to change it.

Impossible is not a fact. It's an opinion.
Impossible is not a declaration. It's a dare.

Impossible is potential.
Impossible is temporary.
Impossible is nothing.
...from Adidas and their ad campaign based on these words. Check out the Flash ads, especially the one with Stacy Kohut, for a great perspective on encountering constraints.

Just do it.

posted by Frank - Permanent Link - |

Saturday, March 06, 2004

Project Jazz and Composition -- As a former school musician (clarinet and sax), I've been incubating on a number of links regarding the parallels between project management and the improvisational nature of jazz. Having touched on this briefly last year in the context of PM as conductor or band leader...
Tempo, vision, guidance, and assurances of harmony and timing are all provided by the conductor. Whether interpreting the clear strategy or a composer's score, or leading a tight ensemble of seasoned improvisors through new music being created on the fly, the occasional nods, cues, and appreciative responses are welcome input to the players.
...I had started to rough out more thinking on the "project jazz" metaphor...thinking that revolves around the importance of a plan or structure in which improvisation can easily feel where it fits and where it doesn't.

Many of the links I've come across on the subject have come via Stephen Norrie and Chris Corrigan. And now I see yesterday, Mr. Norrie has pointed to a piece by Robert Fritz that makes most of my preparatory thinking redundant:
"If we look to the history of the arts, our answers about self-organization are all there. The great experiments have been conducted, and the experience stands as a bright beacon of insight. The wisdom that had emerged was that improvisation was particularly useful in the context of a larger compositional process, and less useful without such a composition."
Be sure to go read the whole thing, maybe with a little jazz on in the background, maybe some Coltrane (a superb site), following plans originally laid out by Rogers and Hammerstein or Ellington (also here and here if you have iTunes on your Mac or PC).

posted by Frank - Permanent Link - |

Friday, March 05, 2004

On Performer Over-Utilization -- There are still too many project organizations that put emphasis on keeping everyone busy, due to the erroneous assumption that "an idle resource is a major waste." Someone on one of the discussion groups I participate in recently suggested one way to get managers to think about the error of these ways. Ask "If your people are 90% utilized, how long would it take (without overtime) to recover from missing a day of work, or of running into Murphy's Law to the tune of a day? How about 95%? 99%?" With a little bit of thought, the dangers to speed and throughput quickly become evident.

posted by Frank - Permanent Link - |

Needs and Wants -- Dale Emery is writing about the distinction between needs and wants...
"What distinguishes needs from other wants is that a need implies necessity, our belief that the means is necessary if we are to achieve the end."
...in terms of examining "requirements" of a proposed effort. Clarke Ching is talking about the same thing in the context of offering or not offering feedback to someone. Both of them are correctly insisting on the need to question the possibly erroneous assumptions that are perpetuating the belief that something is a necessity or need, when it is really only one possible way of achieving a more important, deeper, and more real need.
"There is absolutely no inevitability as long as there is a willingness to contemplate what is happening."
  -- Marshall McLuhan (1911 - 1980)
Go break an assumption today. Turn what you think is a need that bothers you into an irrelevancy.

posted by Frank - Permanent Link - |

Current Posts (Main Blog Page)

Previous Posts

It is a common delusion that you make things better by talking about them. - Dame Rose Macaulay



What's this XML thingie all about?


View Frank Patrick's LinkedIn profileView Frank Patrick's profile



Google
Web focusedperformance.com


FP's Recommended Reading
- From the FP Bookshelf...

...from My AStore

...and some ideas from Amazon...


Best of the FP Blog Archive
- The really good stuff...

Strategic Thinking and Improvement

Enterprise PM - It Starts with Strategic Interdependence

Face Reality

How to Think With Your Gut

Hugger-Mugger and Helter-Skelter

Managing for Murphy, Satan, and Yourself

More of the Same (Local/Global)

PMI Congress Notes: Using Risk Management for Strategic Advantage

Tell Me How You'll Measure Me and Ah, But What to Measure?

What's in Your Strategy?

Why Can't We All Just Get Along?

Why TOC Works
Project and Multi-Project Management
Critical Chain and (not or) XP

Defining Project Success (But for Whom?)

Down 'n Dirty w/TOC and PM (Part 1 of 5 consecutive posts)

End of Project Review

If Project Management is the Answer, What's the Question?

In Defense of Planning

It Ain't the Tools

Lessons Learned, Revisited

Predicting Uncertain Futures

Project Conflicts

Project Determinism (and other myths)

Project Portfolio Management

Promises, Predictions, and Planning

Removing Bottlenecks - A Core Systems Design Principle

Stage Gates and Critical Chain

Ten Top Sources of Project Failure (The Executive Version)

The Meaning of "Schedule"
Leadership and Change Management
Consistent Leadership Behavior

Invisible Dogma - Perpetuating Paradigms

Nothing But Value

On Assumption Busting

Personal Productivity - An Excuse?

The Psychology of Change Management

FP's Blogroll
- Other weblogs and sites I read


FP's Ryze Page


FP's Technorati Profile
- Click the pic



Who links to FP?


For Your Charitable Consideration:

Give Something Back Foundation

Global Virtual Classroom


FP's Link List
- Selected Sites and Resources

Critical Chain Discussion Group

Lilly Software: Visual DBR

Sciforma PS (Critical Chain Software)

Spherical Angle (Critical Chain Software)

Synchrono Supply Chain Planning Software


FP Blog Archives
- All the oldies, but goodies...

Current
10/09 | 09/09 | 08/09 | 07/09 | 06/09 | 05/09 | 04/09 | 03/09 | 02/09 | 01/09 | 12/08 | 11/08 | 10/08 | 09/08 | 08/08 | 07/08 | 06/08 | 05/08 | 04/08 | 03/08 | 02/08 | 01/08 | 12/07 | 11/07 | 10/07 | 09/07 | 08/07 | 07/07 | 06/07 | 05/07 | 04/07 | 03/07 | 02/07 | 01/07 | 12/06 | 11/06 | 10/06 | 09/06 | 08/06 | 07/06 | 06/06 | 05/06 | 04/06 | 03/06 | 02/06 | 01/06 | 12/05 | 11/05 | 10/05 | 09/05 | 08/05 | 07/05 | 06/05 | 05/05 | 04/05 | 03/05 | 02/05 | 01/05 | 12/04 | 11/04 | 10/04 | 09/04 | 08/04 | 07/04 | 06/04 | 05/04 | 04/04 | 03/04 | 02/04 | 01/04 | 12/03 | 11/03 | 10/03 | 09/03 | 08/03 | 07/03 | 06/03 | 05/03 | 04/03 | 03/03 | 02/03 | 01/03 | 12/02 | 11/02 | 10/02 | 09/02 | 08/02 | 07/02 | 06/02 | 03/02 | 02/02 | 12/01 | 11/01 | 10/01 | 09/01 | 08/01 | 06/01 | 02/01 | 01/01 | 12/00


Powered by Blogger

If you are interested in adding an easily updated weblog to your site, I would suggest you look into the free service provided by Blogger.

Who is FP?
Contact Focused Performance