Operation Improvement Inc.

Shoes in the shoe store were just not selling. After a careful survey of available shoe sizes (6, 8, 10, and size 12) and customer feet (7, 9, and size 11), we happily conclude that the average shoe fits the average foot. What did we miss? Variability.

Variability

The shoe store has some control over the variability in shoe sizes when orders are placed, but tactical management of variability is much more subtle. There are things that you can control and things that you can’t. In project and process management, the inability to tell the difference makes things worse and can even end in failure.

There is an old and silly joke about the man who tells the doctor, “It hurts when I poke my finger in my eye.” The doctor, of course, says, “Well, stop doing that!” Learn how to properly manage variability.

It is often, but not always, easy to manage known causes of variation. In one copper coil winding and insertion operation, our studies revealed a one percent chance of coil failure when current was applied.

Copper coil windings varied in how tightly packed the coils were. Some were wound a little loose and some a little tighter. On average, the tightly packed copper bundle was a perfect fit into the intended machine slot.

The loose coils were problematic. About one percent had to be forced into position with the only tool available to the operator, a screwdriver! Aha! The cause of defective coils! (Details of that journey are in another article.)

The problem could have been solved far upstream by a product re-design or by re-engineering the coil insertion process, but our simple solution to eliminate this defect was tactical management of variability.

No Silver Bullet

“Surely,” many managers think, “there is a product, maybe a tool, a machine, maybe software… something I can buy that will solve my variability problems for me.”

It is axiomatic that one needs tools suited to the task at hand; but while tools can be helpful, there is only one alternative to learning about how to measure and manage variability. The alternative is to suffer through it.

In service industries, many try to punt this issue into the Information Technology department. In call centers/contact centers, staffing never seems to match demand variability, so fortunes are spent on scheduling software and overly complex routing and  load-leveling systems.

The common result is that calls are dispatched and routed in an inscrutable and unmanageable manner. Service quality suffers because calls are not relayed to the right people. (“But we bought skill-based routing!”) Caller wait times still have unacceptable peaks and valleys.

In manufacturing, parts assemblers given average-sized cylinders to be inserted in average-sized openings must fiddle with stacks of slightly under-sized and slightly over-sized “within specifications” parts. They then wonder why items that meet tolerances won’t fit together.

Without a proper understanding of variation, managers direct purchasing to tighten the tolerances and buy more expensive components, raising the cost basis of the product they want to sell.

Be Careful What You Ask For…

You may get it! One cannot apply brute force; one cannot decree that workers stop producing results that have variability. It does not work and only makes things worse. (In his Walkabout © series of books, James Abbott calls this mistake “Forced Capability”; a violation of the principle of Division of Labor in decision-making.)

One tactical manager tried to eliminate variability by decree. He told his three shift managers, “Do whatever it takes.” One shift manager performed measurably worse after the order. We called him the Good Trooper because of his story.

“Of course I’ll do what the boss said. I was in the army. I learned that when the boss says jump, you ask how high.”

The other supervisors performed as they did before the manager’s new rule. They said,

“He doesn’t understand what we can and can’t control down here, and he won’t listen. I guess whether or not I keep my job depends on chance.”

“There is a chance my variability numbers will be bad, but there is also a chance they will be good. I’ll take the credit if they are good and risk the consequence if they are bad. I know I’ll only make things worse if I don’t leave what is currently working alone.”

Manage or Re-Design

An architectural re-design of a process and re-engineering with and capital outlay (new equipment/automation) is a strategic decision. Tactical managers must be masters of variability regardless of the technology and tools employed. New equipment lets an operation make scrap faster!

Tactical management of variability is straightforward and methodical and requires five things:

• Targets. You must establish and oversee a correct operation based on what you presently know. This includes contingency plans to re-deploy resources when conditions change. (“If it rains, we will need umbrellas.”)

• Consistency. You must run that operation as consistently as possible.

• Fresh Data. You must measure and monitor variability in real time. Today’s data must be available for today’s decision-making, and not just at the end of the month.

• New Knowledge. You must learn new things – details about your operation.

• Managed Change. You must incorporate that new knowledge into a new baseline plan of correct process operations.

New Knowledge

Knowledge is power. The manager who has ten years of experience has an advantage over the one who has one year of experience repeatedly over ten years.

You can measure and report variability with statistical tools such as standard deviation and coefficient of variation, but your progress in the management of variability is measured by assessing your inventory of knowledge!

An apprentice carpenter may start with a basic inventory of three or four ideas: the hammer, the nail, the pointy end of the nail goes into the wood, and the desired flush finished result.

The skilled carpenter will know about knots in wood, the behavior of laminate materials, the risk of splitting thin strips of wood along the grain, and more.

Similarly, the experienced tactical manager should have a larger inventory of knowledge after accumulating time on the job. If you can master the skill of managing variability, you may very well accumulate your ten years of experience in a year, instead of the other way around!

Acting on New Knowledge

Some of the things you will learn will represent opportunities and some will represent risk. Some will be manageable and some will not.

Some will require new contingency plans so opportunities can be seized and not lost. Some contingencies may be provisioned to mitigate risk. Some will require a strategic response that will be beyond the scope of a tactical decision.

The important thing is to maintain a mental readiness, an awareness of the difference between the things you can control and those things that you cannot.

In another article in this series on causal analysis, we portrayed cause-effect and root-cause analysis as a potentially infinite chain of events with a decision fork in the alternatives where a human being has made a choice.

One decision fork in the analysis pursues the nature of things as far as we can until we rest our case with this conclusion: “And that’s just the way things are.”

The other decision fork terminates in human choices and actions. Of course, our past choices and actions become a given that no power in the universe can change. They are as indisputable as the fact that nails are pointy and will deflate a tire due to “the way those particular nails are”.

But we can shift our perspective on past human events and submit them to judgment and review. Why did we decide? Why did we choose? What would the outcome have been had we acted differently? Will we have the knowledge, when and where we need it, the next time a similar decision is made?

These are the questions we must ask if we are to incorporate and use new knowledge. These are the questions that highlight what, in the future, we may be able to manage and control.

© Operation Improvement Inc 2025. All rights reserved.

Dilbert and His Boss

There are two sides to an old argument, and I have heard both many times and in many circumstances.

The debate usually begins like this: Dilbert, who is a salesman, agent, operator, mechanic, accountant, engineer, programmer, or some other front-line soldier of business, puts the discussion in play.

“What a disaster in the making! Our new boss has no clue about the details of this business. No doubt they teach them in school that managers need not know the business to run it. This happened at the last place I worked, and they closed in less than a year. Better get your resumes ready!”

The other side of the coin is usually argued by a generalist manager who, by their protests, identifies themself as the boss that Dilbert is talking about. They want to defend their contribution to a company’s success.

“Well, I was hired to turn around XYZ, Inc., and I did it in less than a year! I reorganized (or reprioritized, rescheduled, relocated, re-incentivized) the organization with retreats, goals, Monday staff meetings, MBO, metrics. I don’t have to know what I am measuring to interpret the data. There is a place for the professional manager. Why, just look what happens to a company when they put an accountant, engineer, or a salesman in charge!”

We have all seen situations or heard stories that would seem to support both positions. This leads us to think that there might be an underlying condition, a hidden “if” that tilts a case study to one position or the other.

What Is It About the Organization That Needs Fixing?

In some businesses, operational flaws are minor, and the organization needs a cohesive vision and strategy. Such a business has well-designed processes and a tactical workforce that understands the business product.

Without direction, the best tactical teams often lack focus. A new manager may remedy this problem without spending a lot of time deep in the nuts and bolts of operations. The perfect analogy is a parked car with no place to go, its finely tuned engine running, waiting for a driver and destination.

Competent tacticians who are quite comfortable with tactical decisions are often paralyzed by strategic choices. When an issue is purely tactical, a T ledger can be made of pros and cons, or a clever programmer can code a decision tree. Even if some of the inputs are probabilistic (e.g., 40% chance of project delay due to weather), it is still possible to reduce the issue to a data-driven solution.

When tacticians are confronted with choices that require weighing values and qualitative risks or picking one of three alternatives, many tacticians find themselves in a Hamlet loop. They will debate the “To be or not to be” of the issue endlessly and without resolution. After exhausting everyone with all of their reasons for an initiative, they can return from a break with a hundred and one reasons against, suddenly opposing the position they just held before lunch.

One successful turnaround manager said, “My new staff had fourteen different visions of the company mission.” His success depended on getting the organization to focus on one vision, and not upon learning the details of each technician’s job.

But what if the organization is not a finely maintained and tuned race car looking for a driver? To continue the analogy, what if the car has not been maintained? What if parts have been removed and not replaced because they were too much trouble? How do you make an operation right, and then make it better?

Eventually, Management Needs to Get into the Details

I’m wary of the turnaround experts who brag that they can always “move the numbers” without knowing the operation. Many organizations in trouble have problems that go deeper than motivation, vision, and focus.

Sometimes managers fool themselves. They think improvements have been made, and they haven’t. A problem seems to disappear only to pop up somewhere else.

I know (and can uncover) most of the tricks to transfer costs from the business to the customer or to the employee, from the P&L to the balance sheet, from one department or plant to another, and from the short term to the long term. Such zero-sum changes to a business do not improve the operation and usually cause harm.

A further complication is that many traditional performance metrics are lagging indicators and can temporarily move in the wrong direction during periods of transition. I have two real-life cases that I have used in training classes where operations service level statistics temporarily became better as customer service got worse.

Managers who do not understand their business processes are terrified of a transition when the metrics are providing misleading feedback, and they often say, “I’m scared to run the business right!”

Eventually, all managers must develop an understanding of the details of their business operation. Those managers fortunate enough to inherit a capable tactical organization will eventually need to turn their attention to sustainment. Those who inherit an operation with incapable processes need details as a prerequisite to focus and vision.

As I have said in our Management Philosophy, “You need not be a surgeon to discuss brain surgery, but you should at least be able to define brain and surgery. If it is true that you can’t effectively manage without measuring, you surely can’t manage what you cannot define.”

© Operation Improvement Inc 2025. All rights reserved.

WHERE TO START

As an improvement consultant, I am asked, “How do you know where to start? How do you zero in on a problem area with a high likelihood that sustainable improvements can be made?”

The answer is in two parts. There is the obvious and familiar starting strategy—follow the money—and then there is a trade secret of rapid improvement.

Following the money simply means auditing the critical path—the sequence of tasks that must be executed in order for the business to get paid. I look for the things you might expect along this path: capacities and bottlenecks, first-pass yields, proper tools for the job, and so on.

But the trade secret of rapid improvement is this:

Look for indecision, uncertainty, and trial-and-error behavior.

Now, let me stress that this is not the problem. It is a symptom or warning flag, an X that marks exactly the spot on the business-critical path where one should dig for treasure. Improvement is not simply achieved by squashing disagreement and reckless boldness that pretends to be certainty.

I have tracked these revealing clues through all kinds of processes: call centers, accounting operations, technology infrastructure, and manufacturing. One of the clearest illustrations that trial-and-error behavior denotes a serious process problem is the story of one client’s metal machining operation.

THE STORY OF THE EIGHT STATION

This manufacturing plant had everything, from computer-controlled cutting equipment (CNC machines) to high-end finishing equipment designed for tolerances better than 100 millionths of an inch.

The natural interest of the engineers was the complex CNC devices and the high-precision finishing tools, but in this facility there was a big payoff opportunity that had not been discovered.

An inexpensive series of low-tech workstations prepared every single metal casting before it went into the CNC or finish-work processes. The centerpiece of this line was called the eight-station. Designed for low cost and maximum throughput, the heart of this workstation was a turntable on which eight unworked metal castings were placed at forty-five-degree intervals.

The table would make a one-eighth turn, and each of seven machining stations would simultaneously make their specific cuts. Station #8 was for the operator who loaded and unloaded parts.

It was soon obvious to me that this particular operation was a den of confusion. The operators called it the machine from hell. “Only Johnny can set it up, and it takes hours,” they said.

As I watched, I quickly saw why the machine was so difficult to set up.

• Eight fixtures for holding parts must be bolted onto the turntable.
• They could be placed too close or too far from the center of the table.
• They could be placed too far to the left or to the right.
• Two degrees of freedom times eight fixtures equals sixteen different adjustments that must be exactly right.

There was more.

• The operators had to unbolt and lever the machining stations into position.
• Seven movable machining stations meant fourteen more dimensions to the problem.
• There was a grand total of 30 independent but interrelated dimensional adjustments that had to be brought into harmony before the machine was set correctly.

I watched as Johnny, the best operator in the house, struggled for hours to get all the pieces of this machine into position. Tweaking the setup by trial and error, one adjustment always led to a dozen readjustments.

A trial run meant wasting raw material by making sample cuts that were sent to the measurement lab for evaluation. It was usually fatigue and an urgent demand for production that forced him to surrender the effort and attempt to produce a product.

THE SOLUTION

I took a little time to think about the problem. How should the setup of this machine be handled? When I thought I had the answer, I went back to Johnny.

“Tell me,” I asked, “is there anything on this machine you won’t move to make a correct setup?”

Johnny answered, “Well, the engineers told me that I should try not to move the stations on the left and right of the operator position. They didn’t know why. I tried to leave them alone but I’ve had to move them anyhow.”

His answer confirmed my suspicions. The machine’s designer had intended that two of the workstations, together with the center of the turntable, form a perfect ninety-degree angle.

Those three points would establish the absolute reference frame from which every component could easily and systematically be placed in its one and only correct position.

Once this carpenter’s square had been broken, the machine could no longer be set up with certainty. There was no longer one and only one place to position any component.

The solution was:

1. Re-establish the permanent location of the two machining stations on either side of the operator by precision measurement.
2. Teach the operators that the setup process must be remembered as an ABC sequence that must be followed carefully and in order.

a) The built-in 90-degree reference angle must never be altered. It shows where to exactly place fixtures.

b) All fixtures are systematically placed on the turntable underneath the two permanently positioned machining workstations on either side of the operator. The table is turned, and then all placed fixtures then determine the one and only place for the remaining five movable machining workstations.

c) The remaining five workstations are positioned last, after every fixture has been placed on the table and carefully aligned with the immovable workstations on either side of the operator.

There were some optional elements to this improved setup, but it was no longer trial and error. Instead, it was now a consistent process with a predictable duration and a certain outcome.

THE REST OF THE STORY

The rest of the story has to answer one big question.

What drove the operators to break the rule and move the two forbidden machine stations?

First of all, no one in the plant truly understood the significance of those two stations on either side of the operator.

A perfect 90-degree angle establishes a repeatable frame of reference for measurement.

Although operators were directed to never move two of the machining workstations, they later received directions that created a conflict.

A reliance on obedience to procedure combined with an absence of process knowledge is a risky thing. If there are two orders to obey, and the orders appear to conflict, then what will happen?

Without process knowledge, the outcome is left to chance.

Secondly, the conflict was created by a fundamental flaw in management’s setup decision rules.

How do you know when a setup is correct? The flawed decision rule said, “A sample cut must be made and compared to specifications.”

The proper decision rule for “correct” is, “When you have audited and are certain that you have adhered to every aspect of a correct setup process.” It is engineering’s responsibility to see that a correct process will produce the intended product.

In this plant, setup was deemed to be wrong if a sample part failed a QC measurement check. (Imagine a math teacher who only checks answers and not how the answer was computed!)

This plant’s setup policy was additionally flawed because of the assumption that a single selected sample will always be average.

Questionable measurement precision of sample product in this plant compounded the problem and drove operators to a point where they felt they had no alternative but to break the machine to gain setup approval.

FOOTNOTE FOR THE MECHANICAL ENGINEER:

Pinning this machine was not the solution and only added constraints that made it impossible to correct the problem.

After the reference angle was broken, the engineering department had tried to sort out the mess by welding positioning pins to the turntable. They deprived the setup operator of the ability to make necessary adjustments and therefore made matters worse.

Copyright © 2025 Operation Improvement Inc. All rights reserved.

What are the similarities and differences between managing a few or many? What advice would you give to the newly promoted? What will be similar? What is going to change?

The Similarities

Managers always work with and through the cooperation of others. Management at any level relies on a proper organization of work and on the competencies of others to be successful. Management of many simply exaggerates this fact and makes it more obvious.

Technology may enhance our power to speak, and we have the means to issue directives to a billion people, but technology cannot make it possible to listen to a billion individuals. We will never listen to, read an email from, or read a book by most of the people alive on the planet today, nor will we see news stories or movies featuring them.

Do the math! Fifteen minutes listening only once to a person multiplied by 100,000 people takes 12 years at a dedicated 40 hours per week!

It is a proper organizational structure and division of labor that makes it possible for leaders of few or many to listen to the right things at the right time.

If the organizational structure is sound, all managers deal with approximately the same number of direct reports and peers. I discussed this with a Parris Island Marine colonel who put it this way:

“The Corps develops leadership throughout the organization, training individuals to step forward into the next tier of responsibility. Although I am responsible for more than a thousand Marines, I spend most of my time working closely with about a dozen other people, and so does a squad leader.”

The Differences

As managers are promoted to higher and higher levels of responsibility, there will be two key differences:

1. What is directly perceivable or self-evident to the junior manager becomes increasingly abstract at higher levels. The reverse is also true! Each must think about what the other simply sees.

The view from thirty thousand feet is a metaphor often used to dismiss the CEO’s perspective for being blind to the so-called facts on the ground, but the view from four feet has weaknesses as well. The fact is, from the two perspectives, each observer sees what the other must understand abstractly.

2. With each promotion, a manager’s role in an organization involves more strategic decisions and fewer tactical decisions.

Risk Becomes Real to the Manager of Many

It is difficult for many entry-level managers to incorporate risk analysis in their decision-making. Risk is so abstract that it doesn’t seem to possess the power of reality.

Suppose spare tires were options when you purchased your first car. “Take it,” the dealer would advise. “You’ll need it if you have a flat!” Suppose you don’t buy the spare, and in ten years of driving you never had the predicted flat tire. What conclusions would you draw?

Good management practices in small organizations often target the management and reduction of risk. If risks are small, good habits often go unrewarded and bad habits often go unpunished.

For example, a capability study may calculate an increased risk of scrap if a process is operated while SPC analysis shows the process is out of control. Some managers choose to flout the statistical warnings and press on, avoiding scrap on their watch by luck of the draw.

The manager of many is subject to the discipline of large numbers. The abstract risk in small numbers approaches a tangible certainty as the numbers increase. The principles underlying actions will have many more opportunities to manifest their consequences.

This calls for a small revision of an old warning: “Be careful what you ask for: in small numbers you risk getting it; in large numbers you will!”

This large-number effect applies to the many unlikely but possible adversities and tragedies of life and work. For example, the manager of many will more likely encounter difficult employee issues. Many managers of ten may, with luck, avoid a problem employee decision for a year or even five. The biggest risk for the newly promoted is the failure to deal directly, rationally, and decisively with the unpleasant when it inevitably arises.

Everyday Work Is Abstract to the Manager of Many

It becomes impossible to understand a very large business by just looking. The work must be conceptualized.

Properly done, process dependencies and management metrics tell the manager of ten what they are seeing with their own eyes. For the manager of many, conceptual tools are the only way to grasp the current state of the business.

The newly promoted manager must strive to master the appropriate tools of their position and not simply imitate the motions of their predecessor. They also need to learn to detect flawed legacy reports that are actually floating abstractions,  conceptual fantasies that claim to describe the current state of the business but actually have no connection to reality.

Higher Management Decisions Are Increasingly Strategic

With each promotion, a manager’s role in an organization involves more strategic decisions and fewer tactical decisions. Some reflection on the division of labor in decision-making is in order. Are you ultimately responsible for the commercial success of a product or product family? Do you manage the supporting engineering and project departments necessary to build and modify the processes of your business? Or are you expected to run the existing processes as correctly and consistently as possible?

The top leadership of an organization is responsible for its policy—the integrating idea of what the company will be and what it will do. Strategic decision-makers are responsible for goals, the evaluation of risk, and the identification and operational funding of necessary project objectives and process capabilities.

Within the constraints of operational funding, tactical decision-makers are responsible for (a) the correct and consistent execution of projects and (b) the correct and consistent operations of business processes.

A Final Piece of Advice to the Newly Promoted Manager

It is a mistake to think that your last job has prepared you for your new job. The competencies you have perfected in your last job are perfect for just that—your last job. The policy of learning something new every day is increasingly important with each promotion. It can help you beat the Peter Principle, the pattern of promotion beyond productiveness.

© Operation Improvement Inc 2025. All rights reserved.