by Gene Kim
“What you’re proposing could lead to more data integrity problems in our order entry and inventory management system. Dick, Ron, and Maggie have made it clear that we must get this data cleaned up and keep it clean. Nothing is more important to understand customer needs and wants, have the right product portfolio, retain our customers, and ultimately increase our revenue and market share.”
I add, “Supporting those projects also requires an incredible amount of work. We’d need to give your vendors access to our production databases, explain how we’ve set them up, do a bunch of firewall changes, and probably over a hundred other steps. It’s not just as easy as signing an invoice.”
She looks back at me scathingly. This is the most livid I’ve seen her.
Clearly, she doesn’t like me quoting Dick’s company objectives to her, using it to deny her what she wants.
It occurs to me that I might have just made a dangerous enemy.
She addresses the room, “Since Bill seems to understand the business so much better than I do, why doesn’t he tell all of us what he proposes?”
“Sarah, no one understands better what your area of the business needs than you. You’re absolutely entitled to go outside of the company to fulfill those needs if we can’t deliver, as long as we make the decision understanding how it might jeopardize another part of the enterprise,” I say as reasonably as I can. “How about you, Chris, and I meet regularly to see how we can help with your upcoming initiatives?”
“I’m very busy,” she says. “I can’t spend a whole day meeting with you and Chris. I’ve got an entire department to run, you know.”
To my relief, Steve interjects. “Sarah, you will make the time. I look forward to hearing how those meetings go and how you resolve your two unauthorized it initiatives. Are we clear?”
She says in a huff, “Yes. I’m just trying to do what’s right for Parts Unlimited. I’ll do the best with what I have, but I’m not optimistic about the outcome. You’re really tying my hands here.”
Sarah stands up. “By the way, I had a conversation with Bob Strauss yesterday. I don’t think your leash is as long as you think it is. Bob says we need to be looking at strategic options, like splitting up the company. I think he’s right.”
As she leaves, slamming the door behind her, Erik says wryly, “Well, I’m sure we’ve seen the last of her…”
Steve looks at the door for a moment and then turns to me. “Let’s go to the last item on today’s agenda. Bill, you’re concerned that we’re going the wrong way with Phoenix—that not only are things going to get worse, but we may never achieve the desired business outcomes. That is extremely troubling.”
I shrug my shoulders. “Now you know everything I know. I was actually hoping that Erik could give us some insights.”
Erik looks up, wiping his mustache with a napkin. “Insights? To me, the answer to your problem is obvious. The First Way is all about controlling the flow of work from Development to it Operations. You’ve improved flow by freezing and throttling the project releases, but your batch sizes are still way too large. The deployment failure on Friday is proof. You also have way too much wip still trapped inside the plant, and the worst kind, too. Your deployments are causing unplanned recovery work downstream.”
He continues, “Now you must prove that you can master the Second Way, creating constant feedback loops from it Operations back into Development, designing quality into the product at the earliest stages. To do that, you can’t have nine-month-long releases. You need much faster feedback.
“You’ll never hit the target you’re aiming at if you can fire the cannon only once every nine months. Stop thinking about Civil War era cannons. Think antiaircraft guns.”
He stands up to throw his bowl of oatmeal in the wastebasket. Then he peers in the wastebasket and fishes his spoon back out.
Turning around, he says, “In any system of work, the theoretical ideal is single-piece flow, which maximizes throughput and minimizes variance. You get there by continually reducing batch sizes.
“You’re doing the exact opposite by lengthening the Phoenix release intervals and increasing the number of features in each release. You’ve even lost the ability to control variance from one release to the next.”
He pauses. “That’s ridiculous, given all the investments you’ve made virtualizing your production systems. You still do deployments like they’re physical servers. As Sensei Goldratt would say, you’ve deployed an amazing technology, but because you haven’t changed the way you work, you haven’t actually diminished a limitation.”
I look around at everyone, confirming that no one understands what Erik is talking about, either. I say, “The last Phoenix release was caused by a production change to the database server that didn’t get replicated in the upstream environments. I was about to agree with Chris. We should pause deployments until we can figure out how to keep all the environments synchronized. That means slowing down the releases, right?”
Remaining standing, Erik snorts. “Bill, that is simultaneously one of the smartest things I’ve heard all month—and one of the dumbest.”
I don’t react as Erik looks at one of the drawings on the boardroom wall. Pointing at it, he says, “Wilbur, what kind of engine is this?”
Wes grimaces and says, “That’s a 1,300 cc engine for a 2007 Suzuki Hayabusa dragster motorcycle. And by the way, it’s ‘Wes.’ Not ‘Wilbur.’ My name hasn’t changed since last time.”
“Yes, of course,” Erik responds. “Dragster motorcycles are great fun to watch. This one probably goes over 230 miles per hour. How many gears does this racer have?”
Without pausing, Wes responds, “Six. Constant mesh, with a #532 chain drive.”
“Does that include the reverse gear?” Erik asks.
“That model doesn’t have a reverse gear,” Wes replies quickly.
Erik nods as he looks more closely at the drawing on the wall, saying, “Interesting, isn’t it? No reverse gear. So why should your flow of work have a reverse gear?”
The silence lengthens when Steve finally says, “Look, Erik. Can you just say what you’re thinking? To you, this may be a fun game to play, but we’ve got a business to save.”
Erik looks at Steve closely, studying him. “Think like a plant manager. When you see work going upstream, what does it mean to you?”
He quickly responds, “The flow of work should ideally go in one direction only: forward. When I see work going backward, I think ‘waste.’ It might be because of defects, lack of specification, or rework… Regardless, it’s something we should fix.”
Erik nods. “Excellent. I believe that, too.”
He picks up his empty French press and spoon from the table, puts them into his suitcase and starts zipping it up. “The flow of work goes in one direction only: forward. Create a system of work in it that does that. Remember, the goal is single-piece flow.”
He turns to me. “Incidentally, this will also solve the problem that you’ve been fretting about with Dick. An inevitable consequence of long release cycles is that you’ll never hit the internal rate of return targets, once you factor in the cost of labor. You must have faster cycle times. If Phoenix is preventing you from doing that, then figure out how to deliver the features some other way.
“Without being like Sarah, of course,” he says with a small smile. Picking up his suitcase, he adds, “To do this, you’ll need to put Brent at the very front of the line, just like Herbie in The Goal. Brent needs to be working at the earliest stages of the development process. Bill, you of all people should be able to figure this out.
“Good luck, guys,” he says, and we all watch as he closes the door behind him.
Steve finally says, “Anyone have any suggestions or proposals?”
Chris replies first. “As I shared earlier, even minor Phoenix bug fix releases are so problematic that we can’t afford to be doing them monthly. Despite what Erik said, I think we need to slow down our release schedule. I propose movi
ng to one release every other month.”
“Unacceptable,” Steve says, shaking his head. “Last quarter, we missed almost every target we set by a mile. This will be our fifth consecutive quarterly miss—and that was after we lowered our expectations with Wall Street. All our hopes depend on completing Phoenix. You’re telling me that we’re going to have to wait even longer to get the features we need, while our competitors continue to pull away from us? Impossible.”
“It may be ‘impossible’ to you, but look at it from my perspective,” Chris says levelly. “I need my developers building new features. They can’t be constantly tied up with Bill’s team, dealing with deployment issues.”
Steve replies, “This quarter is make or break. We promised the world that we’d get Phoenix out last month, but because of all the features we delayed, we’re not getting the sales benefits that we hoped for. Now we’re over a month through the quarter, with the holiday buying season in fewer than thirty days. We are out of time.”
Thinking this through, I force myself to accept that Chris is stating the reality he sees, and that it is based on facts. And the same goes for Steve.
I say to Chris, “If you say that the Phoenix team needs to slow down, you won’t get any argument from me. In the Marines, when you have a company of a hundred men with a man wounded, the first thing you lose is mobility.
“But we still need to figure out how to achieve what Steve needs,” I continue. “As Erik suggested, if we can’t do that inside the Phoenix framework, maybe we can do it outside of Phoenix. I propose we form a swat team by detaching a small squad from the main Phoenix team, telling them to figure out what features can help us hit our revenue goals as soon as possible. There’s not a lot of time, so we’ll need to select the features carefully. We’ll tell them that they’re allowed to break whatever rules required to get the job done.”
Chris considers this for a moment and finally nods. “Phoenix is all about helping customers buy things from us, faster and in larger quantities. The last two releases have all been putting down the groundwork to make that happen, but the features to really increase sales are still bogged down. We need to focus on generating good customer recommendations and enable Marketing to create promotions to sell profitable products that we have in inventory.”
“We have years of customer purchasing data and because of our branded credit cards, we know our customer demographics and preferences,” Steve interjects, leaning forward. “Marketing assures me that we can create some really compelling offers to our customers, if we could only get those features shipped.”
Chris, Wes, and Patty dive in to discuss this further, while John looks dubious. Eventually Wes says, “You know, this just may work.” When everyone nods, including John, I feel there’s a sense of excitement and possibility that was missing just minutes ago.
Part 3
CHAPTER 30
• Monday, November 3
An hour after the meeting with Steve adjourned, I’m still mulling over Erik’s cryptic comments. I feel like we’re on the verge of something big, but I have too many questions. I finally decide to call him.
“Yeah?” he answers.
“Bill here,” I say. “I need some more clues about what the hell we’re supposed to be doing…”
“Meet me outside the building,” he says, hanging up.
When I get outside, the wind is gusty and fierce. I look around for a couple of moments, when I hear a horn honk. Erik is in an expensive-looking red bmw convertible, with the top down. “Come on in. Hurry!”
“Nice ride,” I say, climbing into the passenger seat.
“Thanks,” he says. “My friend insisted that I borrow this while I’m in town.”
As he floors the accelerator, I grab the armrest and hurriedly buckle my seatbelt. I see a purse on the floor, and immediately wonder who this “friend” is.
“We’re heading back to mrp-8,” he says.
When I ask him to raise the convertible top, he looks over at me and says, “I thought there was no such thing as an ‘ex-Marine.’ Maybe they made you guys softer than in my day.”
“You were in the service?” I ask, trying to hide my chattering teeth.
He laughs. “Over twenty years.”
“You retired as an officer, I suppose?” I asked.
“Major, Special Forces, US Army,” he replies, looking at me. I keep hoping he’ll keep his eyes on the road, given how fast we’re going. Instead, he continues, “Same branch as Steve, but he joined as an officer. I joined as an enlisted grunt, just like you.”
He doesn’t reveal any more, but he has already told me enough to understand his military career. He was obviously a senior nco, like many I had to deal with on a daily basis, now recognizing his all-too-familiar demeanor and physical bearing. He must have been identified as one of those rare high-potential people by the higher-ups, who decided to invest in his future, sending him to college and Officer Candidate School, then rejoining the ranks as the oldest second lieutenant around, probably ten years older than everybody else.
It takes a special person to go through that.
We make it to the plant in record time and are now standing on the catwalk. He begins the speech that I’ve been expecting. “A manufacturing plant is a system. The raw materials start on one side, and a million things need to go just right in order for it to leave as finished goods as scheduled out the other side. Everything works together. If any work center is warring with the other work centers, especially if Manufacturing is at war with Engineering, every inch of progress will be a struggle.”
Erik turns to me, pointing, “You’ve got to stop thinking like a work center supervisor. You need to think bigger, like a plant manager. Or better yet, think like the person who designed this manufacturing plant and all of the processes it relies upon. They look at the entire flow of work, identify where the constraints are, and use every possible technology and bit of process knowledge they have to ensure work is performed effectively and efficiently. They harness their ‘inner-Allspaw.’”
I’m about to ask what he means by an “Allspaw,” when he just waves my question away. “In manufacturing, we have a measure called takt time, which is the cycle time needed in order to keep up with customer demand. If any operation in the flow of work takes longer than the takt time, you will not be able to keep up with customer demand.”
“So when you run around screaming, ‘Oh no! We don’t have environments for Phoenix ready! Help, help! Oh, no! We can’t deploy, because someone broke the Phoenix environments again!’” he says in a high, girlish voice, “That means the cycle time of some critical operation in your area of responsibility is greater than the takt time. That is the reason you can’t keep up with customer demand.
“As part of the Second Way, you need to create a feedback loop that goes all the way back to the earliest parts of product definition, design, and development,” he says. “Given the conversations you’re having with Dick, you may even be able to go earlier in the process.”
Pointing at the floor, he says, “Look down at the long lane of equipment between the orange tape on the floor. That lane makes some of the highest profit items we have. But as fate would have it, that particular flow of work involves two operations that have the longest setup and process times: application of a paint powder coating and baking it in the heat treat oven.”
He looks up, arms spread outward. “Back in the day, the cycle time for those two operations was so much larger than takt time, we were never able to keep up with customer demand. How can life be so unfair? The most profitable items used both of our constraints: the heat treat oven and the paint booths! What do we do?
“Customers were even offering to throw money at us, begging us for more of these widgets, but we had to turn them away. The setup time for each job took hours or even days. We had to use enormous batch sizes to meet demand. We had these huge trays to paint and would bake as many units at a time as possible. We knew we had to reduce batch sizes
to improve throughput, but everyone said that it couldn’t be done.”
“How Toyota solved this problem is legendary,” he says. “During the 1950s, they had a hood stamping process that had a change-over time of almost three days. It required moving huge, heavy dies that weighed many tons. Like us, the setup times were so long that they needed to use large batch sizes, which prevented them from using one stamping machine to manufacture multiple different car models simultaneously. You can’t make one hood for a Prius and then one hood for a Camry if it takes you three days to do the changeovers, right?
“What did they do?” he asks rhetorically. “They closely observed all the steps required to do the changeover, and then put in a series of preparations and improvements that brought the changeover time down to under ten minutes. And that, of course, is where the legendary ‘single-minute exchange of die’ term comes from.
“We studied all the works of Sensei Taiichi Ohno, Steven Spear, and Mike Rother. We knew that we had to decrease our batch size, but we weren’t dealing with hood stamping dies. We were dealing with painting and curing,” he continues. “After weeks of brainstorming, investigation, and experimentation with Engineering, we had a crazy idea: Maybe we could do the painting and curing in a single machine. We cobbled together an oven that also applied the paint powder onto the parts, which were pulled through on a chain and gear that we took from a bicycle.
“We combined four work centers into one, eliminating over thirty manual, error-prone steps, completely automating the work cycle, achieving single-piece flow, and eliminating all that setup time. Throughput went through the roof.
“The benefits were enormous,” he says with pride. “First, when defects were found, we fixed them immediately and we didn’t have to scrap all the other parts in that batch. Second, wip was brought down because each work center never overproduced product, only to sit in the queue of the next work center. But the most important benefit was that order lead times were cut from one month to less than a week. We could build and deliver whatever and however many the customer wanted and never had a warehouse full of crap that we’d need to liquidate at fire-sale prices.
