Keen Insight
How is the system you manage currently performing?
Did you improve anything last year?
And your strategy? How much progress have you made toward your strategic goals?
How do you know?
If you don’t know what your today looks like how can you set goals for tomorrow? Many organizations would like to do 10 or 25 or 50 percent better in the coming year. The question is better than what? If you don’t know exactly where you are today, there’s no way to clearly see tomorrow.
Many don’t know what 100% of today looks like. They rely on the latest quarterly number, comparing it with last quarter or the same quarter last year. The most vital thing to understand about these “fool‘s trend” two-point comparisons is this: they teach us nothing useful about performance! Woodside offers proven strategies and tools for building high levels of organizational learning. From developing strategic metric systems and scorecards to building linked, timely and truly meaningful performance measures, we will bring unprecedented levels of accurate insight into current performance. You can know not only what your current system is doing, but how it’s likely to do in the near future!
For example, suppose you’re responsible for yield in a production process. If the picture below is your current “method” for tracking yield, what can you really know about the behavior of the process producing your results?
The correct answer is “nothing.” All you can say is “some quarters are better than others.” How much better? How much worse? What can you expect next quarter? What action would you take? Reprimand for being worse than last year, or reward for being better than last quarter?
Below see a picture of six years of these quarterly numbers (the three in the table are circled):
What do you know now about your yield? What action do you take? When should you take action? What will happen next quarter?
With this picture, we can see the behavior of this process over time. Yield will naturally vary from time period to time period; now we know how much of that natural variation we can expect. We now know that none of those numbers in the table were numbers for which action is required. If someone wants to know what yield is likely to be in the next quarter or so, we can say that “unless something unusual happens, yield will be between about 59% and 87%, and closer to 73% than farther away.” (My thanks to Dr. Charles Liedtke for this phrasing.) We now know what the real world gives us; this is knowledge we gain through an understanding of variation.
This insight into the behavior of our processes is the essence of management. To manage, we must be able to predict, to know when to take action and what actions to take (more on this in Sound Decisions). It’s not enough to look at data, you have to be able to glean some insight from the data. Woodside can help build competency throughout your organization, in using the simplest tools that provide the greatest insight, targeted where they can best be used to optimize all your business and production systems.