The second shock was the size of the problem. One third of organisational activity (33.6%, or 1? days in every five days worked) is interfacing activity noise which obviously destroys productivity, customer service and employee satisfaction. These noise steps occur usually because of perfectly understandable human misunderstandings, omissions and, for the most part, simple errors which can behave like a virus: that is, enter the process and cause mayhem (more interfacing activity noise) downstream. These often simple errors creep in potentially, with every staff and product change as well as being ramped up by outsourcing and off-shoring initiatives. There were hundreds of different causes of this noise in the data, but Pareto analyses pinpoint the 20% of causes which address 80% of the problems.
There are therefore two key components to what we see as the solution, interface mapping: capture all of the micro activities routinely done and accumulate them by cause. This is where the breakthrough lies, because if you know the location and quantum of every noise activity, then it can be addressed precisely and the benefit harvested.
Of course, quality, lean and Six Sigma programs strive to eliminate this noise in key parts of the process but, with 1? days of pure noise in every 5 worked in our sample of 117 organisations these programs (which have been widely implemented for the past 20 years) are clearly not delivering.
Further analysis revealed why. The fixes for each “viral” causal factor are often required to be made in a number of parts of the process and likewise the benefits generally need to be harvested in other, again often widely scattered parts of the process.
For instance, the provision of correct, timely and complete information may involve the client, sales administration and order team changes to yield time and material benefits in order taking, order handling, delivery, finance and even in sales as well as delivering excellent customer service. Our analysis demonstrates that the two-thirds of the benefit which lie elsewhere are never made visible by conventional approaches and so issues are not tackled and benefits are not harvested. If you are undertaking change, you need to start looking in the right places, such as the interfacing activity where the consequential noise is located.
Now I can get really excited about driving productivity forward. Interface mapping allows the important causes of interfacing activity noise to be pinpointed. Our work shows that these can be directly aligned with strategy and the top level management principles found in the best in the world. Catching up with the Toyotas of this world has now moved from a pipe dream to practical reality. We no longer need the 30 years that Toyota spent getting to its level of operational excellence while bringing to fruition the theories of operations management luminaries such as Skinner, Penrose and Wernerfelt.
In summary, a short-form solution to the productivity paradox is now possible and proven. In less than a month, an organisation’s staff can map the interfacing activities, analyse and prioritise the noise to address the toxic, viral “noise drivers”. Then within three to six months, significant noise reduction can be effected. Managers have the opportunity to solve the problem on the shop floor by engaging the staff to get the data; working with the staff to develop the solutions and oversighting implementation.
Danny Samson is Professor of Management (Operations Management) at University of Melbourne. This article first appeared at The Conversation.
