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Unity of Purpose and Community of Trust

Steve Tendon
September 20, 2013

Unity of Purpose and Community of Trust

Talk delivered at Lean Agile Scotland 2013

Steve Tendon

September 20, 2013
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  1. Lean Systems Society The Lean Systems Society believes that excellence

    in managing complexity requires accepting that complexity and uncertainty are natural to social systems and knowledge work. Effective systems must produce both better economic and sociological outcomes. Their development requires a holistic approach that incorporates the human condition. The Society is committed to exploring valuable ideas from all disciplines, and fostering a community that derives solutions from a common set of values and principles, while embracing specific context and avoiding dogma. Excellence in Managing Complexity http://leansystemssociety.org/ http://www.linkedin.com/groups/Lean-Systems-Society-1964378/about
  2. Unity of Purpose and Community of Trust Preconditions for the

    Hyper-Productive Organization How to avoid the greatest obstacles that prevent businesses from fostering unity of purpose and nurturing a community of trust by Steve Tendon Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  3. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon WHAT TO

    CHANGE? WHAT TO CHANGE TO? HOW TO CHANGE? 1 2 3
  4. WHY CHANGE? Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon

    WHAT TO CHANGE? WHAT TO CHANGE TO? HOW TO CHANGE? 1 2 3 0
  5. WHY CHANGE? GOAL Copyright (C) 2013, Steve Tendon - http://tendon.net

    @tendon WHAT TO CHANGE? WHAT TO CHANGE TO? HOW TO CHANGE? 1 2 3 0
  6. HIGHER PURPOSE WHY CHANGE? GOAL Copyright (C) 2013, Steve Tendon

    - http://tendon.net @tendon WHAT TO CHANGE? WHAT TO CHANGE TO? HOW TO CHANGE? 1 2 3 0 ℵ
  7. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  8. Cost of Parts, Components, and Materials A: $ 50 B:

    $ 50 C: $ 55 D: $ 52 Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon Costs of Resources: - 8 hours/day - $10 per hour Production Time in Minutes TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20
  9. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 6.33 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 GROSS PROFIT: $55 - $25 - $5.83 = $24.17 / UNIT GROSS PROFIT: $52 - $20 - $5.83 = $26.17 / UNIT GROSS PROFIT: $50 - $25 - $6.33 = $18.67 / UNIT GROSS PROFIT: $50 - $20 - $6 = $24.00 / UNIT LABOR COST: ($10) * (35 min) / (60 min) = $5.83 / UNIT LABOR COST: ($10) * (35 min) / (60 min) = $5.83 / UNIT LABOR COST: ($10) * (38 min) / (60 min) = $6.33 / UNIT LABOR COST: ($10) * (36 min) / (60 min) = $6.00 / UNIT Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  10. A: $ 50 B: $ 50 D: $ 52 TIME

    (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 Accounting Perspective: Highest Gross Profit Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon C: $ 55 6.33
  11. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 Sales Perspective: Highest Price/Commission Accounting Perspective: Highest Gross Profit Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon 6.33
  12. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 6.33 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 Sales Perspective: Highest Price/Commission Production Perspective: Highest Efficiency/Utilization Accounting Perspective: Highest Gross Profit Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  13. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon Different units

    will have different hidden agendas because they are judged by different metrics and are driven by different incentives. Different incentives and Different metrics create internal tension and conflicts! IT IS IMPOSSIBLE TO HAVE UNITY OF PURPOSE AND TO BUILD A COMMUNITY OF TRUST UNDER THESE CONDITIONS. UNFORTUNATELY, THE VAST MAJORITY OF COMPANIES FOSTER THESE CONDITIONS. WHAT ABOUT YOURS?
  14. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon YOU NEED

    A SYSTEMS VIEW to AVOID LOCAL OPTIMIZATION (I.E. PARTIAL INTERESTS!) USE METRICS AND INCENTIVES THAT ARE SHARED BY ALL DEPARTMENTS SO THAT YOU GET EVERYBODY TO PULL IN THE SAME DIRECTION!
  15. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon YOU NEED

    A SYSTEMS VIEW to AVOID LOCAL OPTIMIZATION (I.E. PARTIAL INTERESTS!) USE METRICS AND INCENTIVES THAT ARE SHARED BY ALL DEPARTMENTS SO THAT YOU GET EVERYBODY TO PULL IN THE SAME DIRECTION! THINK IN TERMS OF FLOW! A SIMPLE BUT FUNDAMENTAL QUESTION: HOW MUCH CAN WE MAKE PER DAY?
  16. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon Production or Delivery Process
  17. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon Production or Delivery Process Resources: - Mr. Brown - Mr. Green Resource Costs: - 8 hours/day - $10 per hour Staffing
  18. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon Production or Delivery Process Resources: - Mr. Brown - Mr. Green Resource Costs: - 8 hours/day - $10 per hour Staffing Job / Skill Assignment
  19. $ 10 $ 5 $ 5 $ 5 $ 5

    $ 10 $ 10 A: $ 50 B: $ 50 C: $ 55 D: $ 52 Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon Production or Delivery Process Resources: - Mr. Brown - Mr. Green Resource Costs: - 8 hours/day - $10 per hour Staffing Job / Skill Assignment Materials Cost
  20. $ 10 $ 5 $ 5 $ 5 $ 5

    $ 10 $ 10 10 m 10 m 6 m 8 m 5 m 5 m 20 m A: $ 50 B: $ 50 C: $ 55 D: $ 52 36 min 38 min 35 min 35 min Time per Unit Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon Production or Delivery Process Resources: - Mr. Brown - Mr. Green Resource Costs: - 8 hours/day - $10 per hour Staffing Job / Skill Assignment Materials Cost Work Time
  21. $ 10 $ 5 $ 5 $ 5 $ 5

    $ 10 $ 10 10 m 10 m 6 m 8 m 5 m 5 m 20 m Time per Unit 20 min 16 min 20 min 18 min 30 min 5 min 30 min 5 min Resource Time per Unit 36 min 38 min 35 min 35 min A: $ 50 B: $ 50 C: $ 55 D: $ 52 Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  22. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 Constrained Resource Time per Unit 20 min 20 min 30 min 30 min Max Units per Day 24 units 24 units 16 units 16 units (8 hours) * (60 mins) / (20 mins) = 24 UNITS/DAY (8 hours) * (60 mins) / (20 mins) = 24 UNITS/DAY (8 hours) * (60 mins) / (30 mins) = 16 UNITS/DAY (8 hours) * (60 mins) / (30 mins) = 16 UNITS/DAY Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  23. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 NP/DAY 352 Accounting - Highest Gross Profit: ($52-$20) * (16 units) - (2 workers) * (8 hours) * ($10/hour) = $352 / DAY 20 25 25 20 160 160 160 160 TVC oE Net Profit / Day Max Units per Day 24 units 24 units 16 units 16 units Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  24. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 NP/DAY 320 352 Accounting - Highest Gross Profit: ($52-$20) * (16 units) - (2 workers) * (8 hours) * ($10/hour) = $352 / DAY Sales - Highest Price/Commission: ($55-$25) * (16 units) - (2 workers) * (8 hours) * ($10/hour) = $320 / DAY 20 25 25 20 160 160 160 160 TVC oE Net Profit / Day Max Units per Day 24 units 24 units 16 units 16 units Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  25. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 NP/DAY 440 320 352 Accounting - Highest Gross Profit: ($52-$20) * (16 units) - (2 workers) * (8 hours) * ($10/hour) = $352 / DAY Sales - Highest Price/Commission: ($55-$25) * (16 units) - (2 workers) * (8 hours) * ($10/hour) = $320 / DAY 20 25 25 20 160 160 160 160 TVC oE Net Profit / Day Max Units per Day 24 units 24 units 16 units 16 units Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon Production - Highest Efficiency: ($50-$25) * (24 units) - (2 workers) * (8 hours) * ($10/hour) = $440 / DAY
  26. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 NP/DAY 560 440 320 352 Accounting - Highest Gross Profit: ($52-$20) * (16 units) - (2 workers) * (8 hours) * ($10/hour) = $352 / DAY Sales - Highest Price/Commission: ($55-$25) * (16 units) - (2 workers) * (8 hours) * ($10/hour) = $320 / DAY Production - Highest Efficiency: ($50-$25) * (24 units) - (2 workers) * (8 hours) * ($10/hour) = $440 / DAY Business - Maximum Net Profit per Day: ($50-$20) * (24 units) - (2 workers) * (8 hours) * ($10/hour) = $560 / DAY 20 25 25 20 160 160 160 160 TVC oE Net Profit / Day Max Units per Day 24 units 24 units 16 units 16 units Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  27. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 NP/DAY 560 440 320 352 20 25 25 20 160 160 160 160 TVC oE Net Profit / Day Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon WHICH IS THE BETTER DECISION NOW? +60%
  28. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 6.33 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 UNITS/ DAY 24 24 16 16 TVC 20 25 25 20 oE 160 160 160 160 NP/DAY 560 440 320 352 Constraints Accounting Cost Accounting Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  29. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 6.33 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 UNITS/ DAY 24 24 16 16 TVC 20 25 25 20 oE 160 160 160 160 NP/DAY 560 440 320 352 Constraints Accounting Each wants his own... PRODUCTION ACCOUNTING SALES Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  30. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 6.33 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 UNITS/ DAY 24 24 16 16 TVC 20 25 25 20 oE 160 160 160 160 NP/DAY 560 440 320 352 ...Unity of Purpose Each wants his own... ACCOUNTING SALES PRODUCTION ACCOUNTING SALES PRODUCTION AND ALSO THE BUSINESS! Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon
  31. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 6.33 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 UNITS/ DAY 24 24 16 16 TVC 20 25 25 20 oE 160 160 160 160 NP/DAY 560 440 320 352 Constraints Accounting Each wants his own... ACCOUNTING SALES PRODUCTION ACCOUNTING SALES PRODUCTION AND ALSO THE BUSINESS! Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon CONSTRAINTS ACCOUNTING REPORTS THE PERFORMANCE OF THE WHOLE SYSTEM AND AVOIDS LOCAL OPTIMIZATIONS ("INTERESTS," "HIDDEN AGENDAS," ETC.). USE THE SINGLE SYSTEM WIDE THROUGHPUT METRIC MEASURE AND REWARD ALL DEPARTMENTS SOLELY ON THROUGHPUT SO THAT THEY ALL PULL IN THE SAME DIRECTION!
  32. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 6.33 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 UNITS/ DAY 24 24 16 16 TVC 20 25 25 20 oE 160 160 160 160 NP/DAY 560 440 320 352 Constraints Accounting Each wants his own... ACCOUNTING SALES PRODUCTION ACCOUNTING SALES PRODUCTION AND ALSO THE BUSINESS! Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon ALIGN SELF-INTERESTS WITH COMPANY DIRECTION CONSTRAINTS ACCOUNTING REPORTS THE PERFORMANCE OF THE WHOLE SYSTEM AND AVOIDS LOCAL OPTIMIZATIONS ("INTERESTS," "HIDDEN AGENDAS," ETC.). USE THE SINGLE SYSTEM WIDE THROUGHPUT METRIC MEASURE AND REWARD ALL DEPARTMENTS SOLELY ON THROUGHPUT SO THAT THEY ALL PULL IN THE SAME DIRECTION!
  33. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 6.33 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 UNITS/ DAY 24 24 16 16 TVC 20 25 25 20 oE 160 160 160 160 NP/DAY 560 440 320 352 Constraints Accounting Each wants his own... ACCOUNTING SALES PRODUCTION ACCOUNTING SALES PRODUCTION AND ALSO THE BUSINESS! Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon CONSTRAINTS ACCOUNTING REPORTS THE PERFORMANCE OF THE WHOLE SYSTEM AND AVOIDS LOCAL OPTIMIZATIONS ("INTERESTS," "HIDDEN AGENDAS," ETC.). USE THE SINGLE SYSTEM WIDE THROUGHPUT METRIC MEASURE AND REWARD ALL DEPARTMENTS SOLELY ON THROUGHPUT SO THAT THEY ALL PULL IN THE SAME DIRECTION! NURTURE A STRONG UNITY OF PURPOSE BUILD A COMMUNITY OF TRUST ALIGN SELF-INTERESTS WITH COMPANY DIRECTION
  34. A: $ 50 B: $ 50 C: $ 55 D:

    $ 52 TIME (MIN) 36 38 35 35 MATERIAL ($) 20 25 25 20 LABOR COST ($) 6.00 6.33 5.83 5.83 GROSS PROFIT 24.00 18.67 24.17 26.17 UNITS/ DAY 24 24 16 16 TVC 20 25 25 20 oE 160 160 160 160 NP/DAY 560 440 320 352 Constraints Accounting Each wants his own... ACCOUNTING SALES PRODUCTION ACCOUNTING SALES PRODUCTION AND ALSO THE BUSINESS! Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon CONSTRAINTS ACCOUNTING REPORTS THE PERFORMANCE OF THE WHOLE SYSTEM AND AVOIDS LOCAL OPTIMIZATIONS ("INTERESTS," "HIDDEN AGENDAS," ETC.). USE THE SINGLE SYSTEM WIDE THROUGHPUT METRIC MEASURE AND REWARD ALL DEPARTMENTS SOLELY ON THROUGHPUT SO THAT THEY ALL PULL IN THE SAME DIRECTION! NURTURE A STRONG UNITY OF PURPOSE BUILD A COMMUNITY OF TRUST ALIGN SELF-INTERESTS WITH COMPANY DIRECTION +60% . . . AND ALSO . . . MAKE MORE MONEY FOR YOUR BUSINESS
  35. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon 1. Identify

    the Constraint "Herbie!" 2. Exploit the Constraint "C'mon Herbie! Speed up!"
  36. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon 1. Identify

    the Constraint "Herbie!" 2. Exploit the Constraint "C'mon Herbie! Speed up!" 3. Subordinate to the Constraint "Everybody stays behind Herbie!"
  37. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon 1. Identify

    the Constraint "Herbie!" 2. Exploit the Constraint "C'mon Herbie! Speed up!" 3. Subordinate to the Constraint "Everybody stays behind Herbie!" 4. Elevate the Constraint "Everybody carries a piece of Herbie's gear!"
  38. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon 1. Identify

    the Constraint "Herbie!" 2. Exploit the Constraint "C'mon Herbie! Speed up!" 3. Subordinate to the Constraint "Everybody stays behind Herbie!" 4. Elevate the Constraint "Everybody carries a piece of Herbie's gear!" 5. Repeat
  39. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon 1. Identify

    the Constraint "Herbie!" 2. Exploit the Constraint "C'mon Herbie! Speed up!" 3. Subordinate to the Constraint "Everybody stays behind Herbie!" 4. Elevate the Constraint "Everybody carries a piece of Herbie's gear!" 5. Repeat THE FIVE FOCUSING STEPS
  40. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon 1. Identify

    the Constraint "Herbie!" 2. Exploit the Constraint "C'mon Herbie! Speed up!" 3. Subordinate to the Constraint "Everybody stays behind Herbie!" 4. Elevate the Constraint "Everybody carries a piece of Herbie's gear!" 5. Repeat THE FIVE FOCUSING STEPS
  41. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon 1. Identify

    the Constraint "Herbie!" 2. Exploit the Constraint "C'mon Herbie! Speed up!" 3. Subordinate to the Constraint "Everybody stays behind Herbie!" 4. Elevate the Constraint "Everybody carries a piece of Herbie's gear!" 5. Repeat
  42. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon 1. Identify

    the Constraint "Herbie!" 2. Exploit the Constraint "C'mon Herbie! Speed up!" 3. Subordinate to the Constraint "Everybody stays behind Herbie!" 4. Elevate the Constraint "Everybody carries a piece of Herbie's gear!" 5. Repeat 5FS AS FOUNDATION OF UNITY OF PURPOSE & COMMUNITY OF TRUST
  43. Copyright (C) 2013, Steve Tendon - http://tendon.net @tendon STEVE TENDON

    THE ORGANIZATIONAL HYPER-PRODUCTIVITY EXPERT http://tendon.net http://chronologist.com A MODERN-TIME METHODOLOGY ALCHEMIST https://leanpub.com/tame-the-flow TAME THE FLOW
  44. Copyright (C) 2013, Steve Tendon - http://tendon.net https://leanpub.com/tame-the-flow Thank you

    for looking at this presentation! As a gift, please accept this discount code for purchasing Tame the Flow UoP&CoT13 The code entitles you to 30% discount and is valid until December 31, 2013.