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The Blue Yarn

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So, the blue yarn. What does it mean?

The best way to understand the blue yarn is to follow it. That’s exactly what Dr. Gary Kaplan did. In 1998, he was CEO of Virginia Mason Medical Center, which was losing money. As he searched for a better system to manage the hospital, he ‘wound up’ at a Toyota factory in Japan where he spoke to a sensei familiar with the Toyota Production System.

What he found was something very simple that, at the time, had been around for nearly 100 years. Sakichi Toyoda developed a self-correcting loom that could stop when thread was broken or defective. They ultimately automated the process and made it mistake-proof. This process is called Jidoka, or autonomation, and means automation with human intelligence.

Why Jidoka?

Jidoka is important because it stops a process immediately when a problem first occurs. Not only does it fix the condition, but it ultimately eliminates the root cause of the problem or defect. In an automated Jidoka process, equipment monitors its output (products) independently from operators, thereby enabling operators to operate multiple pieces of equipment and improve productivity.

Why the blue yarn?

Back to the hospital. The sensei used the blue yarn to map the path a patient would follow in a visit through cancer treatment. What they found was a mess. Cancer patients were already low on time and energy, but this ‘process’ had them winding all over the building in a seemingly needless pattern: a waste of time and energy.

When they ‘re-mapped’ the process, the savings from insurance expense alone were 37% and they were able to increase the number of patients without additional staff. Ultimately, they reduced patient receive treatment time by 50%. Dozens of hospitals have since adopted the Virginia Mason Production System. Based on a recent study of US hospitals, for two years Virginia Mason has placed in the top one percent in safety and efficiency.

Clearly, the flow of the process is one piece of the puzzle. Of equal importance is the decision to enable employees to: monitor a process, identify defects, stop the process, fix the problem, identify the root cause, and, ultimately, help eliminate the root cause of defects.

Imagine following a blue yarn through every step of one of your processes, including mistakes, corrections, delays, handoffs, miscommunications, etc. Recurring mistakes building on other recurring mistakes will create a big mess. Now imagine every person in that process having the ability to address those gaps and improve the process. Addressing the root cause will build a mistake-free and efficient process that is much cleaner and direct.

There is a method to achieve this. It starts with:

  • Clarity around your dream or whatever it is you want from your business (i.e., ultimate business outcome and whatever ‘freedom’ means to you)
  • Your mindset to achieve your dream
  • Your decision to use a methodology and management system to bring your dream to life.

 

Ready to achieve your dream?

 

Listen to the original story

Here: 99% Invisible – The Blue Yarn

Crisis Management & how to overcome it

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Here is an interesting story I want to share. Back in my past as CEO of an injector manufacturing plant there was a phenomenon for several weeks. Every Friday at 3:00 pm we were in crisis mode. At that time, we were working seven days, three shifts and at 3:00 pm on Friday, the assembly manager indicated that we need to shut down the assembly line on the weekend due to inadequate parts supply. The logistics manager struggled to get the parts from the fabrication department or outside suppliers, which had to produce the parts by working overtime and expedited shipping cost.

Shutting down the assembly line would have had a dramatic impact on the supply to our customer as we were one of their just-in-time suppliers. We would have shut down their production line with a huge financial penalty. We were in crisis mode every Friday for a couple of months.

Finally, I called all managers involved in the supply and production process into a meeting to discuss the constant crisis mode on Fridays. After lengthy discussions and analyzing the root cause of the shortages, we agreed to meeting on Thursday mornings, everyone providing information about demand and supplies for the weekend production. We were now able to prioritize and adjust production where needed. Within two weeks there was no crisis meeting on Fridays any more. Problem solved. We were able to reliably provide the necessary quantity to the customer.

Conclusion: Unless you find the root cause of the problem using six sigma methodology and eliminate the issues in the process, you will not see improvements in your processes and production output.

Dream of Selling

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Every business owner thinks about exiting their business. Some hope to sell. Others may have plans for somebody to ‘take over’ (e.g., next generation; partner/co-owner; employees via employee stock ownership plans; etc.). Maybe the plan is to step away slowly and continue to take an income or profit. Regardless of the plan, the success of each is largely contingent upon the health of the business.

Any buyer will want some assurance of continuing revenue, as well as the ability to continue operations at a profit. The likelihood of recurring revenue lessens when the ‘Selling CEO’ exits and there is no team in place to drive sales. Let’s assume there is a sales and marketing team to drive revenue. Is there an operating system with the accountability in place to execute on delivering the products and services sold? Does the system measure the effectiveness of those responsible? Do you have trusted relationships with suppliers? How well documented are your systems and processes?

It might seem counterintuitive, but a good test of this happens with a passive CEO. What happens when you (the owner/CEO) take time off? Imagine taking a two-week vacation with no access to your phone or computer. Would the business thrive or would you come back to a firestorm? Take it a step further. Does your management team have a clear direction for the next 3-5 years? Are your vision, values, and goals clear? Would they share the same view of that long-term goal in your absence?

Based on our collective experience in leading Peer Advisory Boards (Mastermind Groups) and one-on-one executive coaching, if the answer is ‘no’, it’s unlikely the team will be able to provide strategic direction, much less daily tactical direction.

The following article shares similar guidance. Please tell us about your experience, as you dream about exit and begin to move closer to leaving your business.

Why Many Small Businesses Cannot Be Sold (NY TImes)

Picking Up Girls

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    Treat Prospective Clients Like a Future Spouse or Friend

    Getting clients is (not) picking up girls…

    After spending some time discovering, understanding, and applying solid principles of any good methodology, you notice they are actually quite familiar and also very simple, at the same time. As with anything of value that lasts, they require a FOUNDATION and some ONGOING attention.

    If you are looking for clients and struggle to convert and retain them, remember what you’ve learned from seeking a life partner or friend, for that matter. Sure, it’s easy to meet people, strike up a conversation, have some fun, and move on. Any relationship that lasts requires time. You know something about each other. You share something that differentiates you from everyone else. You have some common interests. You keep in touch. At some point, they know, like, and trust you, and the relationship has a reason to continue over time. This means you can do more stuff together that you probably wouldn’t do on the first, second, third, or 10th interaction.

    You’re more likely to find a lasting relationship if you know what they’re like. If you live in The City and don’t like country things, it probably doesn’t make sense to find that special person on a farm. Similarly, you wouldn’t seek someone in a retirement home if you want to start a family. You have a PROFILE of the person with whom you want to connect. This same process applies to finding a prospective client. You need to define the demographic, the psychographic, the title/position, the industry, the location, the revenue, the maturity. It’s no different than finding the right person. You’ll know when you come across it.

    At some point, you need to POSITION yourself to that prospect. It might work to walk up to them and just ask them if they want to do something, but that’s less likely to last. Wouldn’t it make more sense to somehow differentiate yourself from everybody else? What makes you special? Better yet, how do they know you’re special? Now, some people are fortunate and have special differentiators. A-listers, billionaires, models, Nobel prize winners, and professional athletes come to mind. Good luck with that. If you plan on having a lifetime relationship, you’ll probably spend considerable time demonstrating how you’re different and why you deserve their attention. You build some level of authority and are a leader to them…somehow.

    Unfortunately, not every ‘attempt’ (even with time) pans out. You have to play the numbers and PROSPECT. This isn’t Andy Griffith, where you can just pick up girls and see how much they weigh. You might have to properly introduce yourself. Maybe meet a couple times. Learn something about each other. Have coffee. Go somewhere they like to go. Meet the parents. Make sense? You need to understand where they hang out and you might even need to meet more than one such person.

    Let’s pretend for a moment we’re talking about friends here. We all have best friends, but things happen in life where even best friends move. It’s a good idea to have some other friends. This requires time and attention to CONNECT and BUILD the DATABASE of prospects. All of this foundation is regular and ongoing. In a business, it doesn’t stop until you exit.

    Now that you have your foundation, you have to keep the relationship. You want the prospect to know, like, and trust you, so that they will pick up the phone when you call them. MESSAGING never stops in a relationship. You’ll always have communication to reinforce that trusted connection.

    While it may not be as simple as ‘picking up girls’, it is as easy as:

    Profiling, Positioning, Prospecting, Connecting, Messaging

Before Selling or Exiting

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Before Selling or Exiting

Most business owners hope to exit at some point. Typically, this means you, as the owner (President, CEO), are no longer there or are not there as often. Whether you plan to sell, pass it on to the next generation, or be a helicopter-CEO, there are seven things you need to do before you step away. The bad news is that you should have started this process from day one. Yes. From the day you started the business.

The good news: you are actually reading this and thinking about the steps. Your mindset (1) is the first step. If you only work ‘in’ your business and never work ‘on’ your business, then you are the business. In this scenario, when you step away, the business loses its greatest asset: You.

You have this great idea (a business), now what? If you step back and think about how you direct others, the answer is clear: processes (2) and procedures (3). Your people need some rules to play by and it is your job to provide that direction with constraints. If you fast forward to your ‘exit’, you may know exactly how everything in your business works, but you won’t be around to ensure that same outcome. Now is the time to provide guidance.

Once you actually have some traction, you will need to continually build efficiencies (4). Hopefully, you are focusing on what to improve and how to make it happen. When you’re gone, will this continue to happen?

Now that you have a business that is focused and improving, it is critical that you have the right team (5) to keep the business growing. Remember, you will be gone at some point. You’re better off building and testing your team when you’re around, and gradually step away. As your team develops, you can work from home, take a day off, and maybe even take a vacation.

As you can imagine, business owners expect profit (over time) and they don’t like surprises. Any prospective buyer (or CEO) will look at your finances (6). This is more than your balance sheet and P&L. Buyers will want to peel back the layers and look around corners.

While you may have guessed the last item, we encourage you to be diligent (after all, you will encounter due diligence) and read the full white paper.

If you are really serious, answer 20 simple questions to assess: is your business ready to be sold?

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