Wednesday, November 29, 2006

six simple skewed sentiments sez ski

Six sentiments; simple, skewed, sez SKI #06 :: the right people are your greatest asset i talked recently of zig ziglar's bicycle buying experience... hopefully that hit home with folks (other than just myself). but what about leverage? a number of years ago, i worked in a manufacturing environment, that oft worked more than one shift... sometimes, in a crunch, we worked all three shifts. the owner was always buying more equipment in order to return to a one-shift operation. why? in order to better supervise the work. today, i would fight this approach (much more vocally than i did then). why? jim collins taught us that the "right people" are your greatest asset. not more equipment. it takes a lot of effort to recruit and hire the right people. it is a cost of doing business. the problem is when we settle for someone... or wait too long to make a change. fiorina mentioned this as well. without too much effort, it should be fairly simple to chart the cost of acquiring equipment versus the expenses associated with hiring the right person (or people). but remember, we must find and focus on solving the weakest link in our business. but actually, we must draw a line in the sand first. #05 :: there are two types of constraints: internal and external in the fall of 2004 i made a dream come true (hardly the first, hopefully not the last time) by becoming the Director of Manufacturing for Red Horse Motorworks LLC. as mentioned on several occasions, i was able to double production while reducing inventory (both raw material and work in process) by 50%... but what i wanted to really do, was sign up dealers by cruising up and down the eastern USA on a Red Horse Corsair 250 fat tired custom motorcycle... simple question: if sales doubled, could you handle it (within reason) with your existing facilities? another elementary question: are your shipments less than 80% on time? in other words, do you miss due dates a lot? one of the problems with TQM (total quality management) is the empowerment of everyone, without regard for the "weakest link." same with Lean and Six Sigma: great tools, once you know where to aim them. your business is a system. for the most part, a closed loop system. a change in one part of the business will (actually it must!) impact one or more of the other sub components. double shop floor production and the shipping department will scream! switch from low cost provider to the most reliable vendor and your comptroller will pay you a visit. there are only so many hours in the day... spend them wisely. quickly determine if you need more orders or more throughput. external or internal focus? #04 :: improve cash-flow in order to fight another day i gave a great speech a couple of years ago on the importance of selling, and the fact that if there is not enough money left at the end of the month, then focus on sales and marketing. you can always turn your attention to throughput next. an aside is in order. very few otherwise intelligent business people seem to be able to grasp this simple fact: fix the weakest link. until it is no longer the weakest link. then shift your focus to the next weakest link. repeat. they really have trouble with this next statement: not sure what to fix? pick something and take action! one does not have to guess with any real accuracy. any selection is better than no selection. if you guess wrong, so what? you will do better the next time. another reason for my focus on doing this in 90 day segments. the Boyd OODA Loop demands that we loop faster than our competition. fix sales (the external constraint) first, then you have the money to fix any and all internal constraints. why is that so hard to appreciate? #03 :: the mafia offer by cash-flow guru Dr Lisa there are any number of people better at any number of components of constraints management than me... so what? i am happy and pleased to blow their horn. one such guru in cash-flow and creating un-refusable offers (formerly known as "mafia offers" -- too good to refuse!) is Dr Lisa. get to one of her boot camps... buy her materials... do it today! i am more than "okay" at marketing... and have sold six figure (and a lot of four figure) contracts... so i can help in the short term. if your requirements are beyond me, i will be the first to run to lisa for help on your behalf! #02 :: throughput means "what gets measured, gets done" lets save strategy for another day, other than to say if you are not using CMM (goldratt's TOC and Boyd's OODA Loop, as explained by dettmer), you are probably not serious about results... which, basically could be defined as throughput. i would suggest that few are as good as yours truly when it comes to throughput. yet (and maybe 'because') i have had failures... one of the key's to IBM's success under tom sr. was his approach to failure: it is a requirement of success. yes, goldratt is light years ahead of me... and charges accordingly; but prefers to work with the fortune 100. it now takes me a week on-site to determine the weakest link. two years ago, it took a month. a year ago, about 3 weeks. progress! what metric do you study? you can invent reports of everything under the sun... but if that raw sales number is not a focal point, the rest is oft for naught. remember that GAAP is mostly for taxes. managerial accounting has its roots in cash based metrics, not accruals. the business owners that i prefer to work with are interested in putting more money in their pockets, AND the pockets of those contributing to throughput. a friend of the family, many years ago, worked for a company that offered a 10% commission on everything that he sold. until one day... they called him in, and said his checks were too big. they wanted to cut the commission rate. how stupid can people be? they were getting 90% and it was not enough... smartly, our friend said good bye. ever kill the golden goose? #01 :: what is your dream this topic deserves its very own post... but let me set the stage: humans will do very little without a reason. sure, you may run to the mall or over to friends without one, but prolonged efforts need, no DEMAND, a purpose. a goal. a mission. a dream! Jeff 'SKI' Kinsey, Jonah
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