Quietly Re-Thinking Out Loud

Just the other day I was checking in to one of the environmental blogs I read and ran across an interesting post about “An insanely clever bike-advocacy ad from the U.K” : Do the test | Gristmill: The environmental news blog

I actually knew as soon as I saw just what the test was going to be all about in that I had seen it use before in a Discovery Channel television program that was about our brains and cognition but I still almost missed ‘it‘.

Beyond the message regarding bicycles I think the actual ‘test’ has so very interesting and poignant management implications and lessons in it.

In talk and discussions on management, notably Tom Peter’s 1986 article What Gets Measured Gets Done we often hear the expression:

“What Gets Measured Gets Done”

While that is so very true and a very valuable tool in and of itself it comes along with the caveat we see and learn about in the Cognition Test. While what’s measured sure enough does get done can we be too focused on our measurements that we miss other important data and information that is flying right in front of our noses?

by: Jerrald Hayes

In the Critical Chain Project Managment Yahoo group that I am subscribed too I just read a great post by Michael Carroll that I thought everyone here might benefit from reading. The topic his post was in response to was How common is it to have "No plans"? (The emphases placed are mine.)

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I have been helping my son train for his swim team. Most local high school teams follow a tradition of generating what you might call brute force to achieve their results by what would seem to be a wise strategy to work harder, faster, and longer than the other teams. Yet this approach is a tad bit frustrating for both the coaches and swimmers as academics standards must also be met. In each of these swim programs you will always have a few swimmers who are naturals and rise to the top and yet the rest of the team struggles. You can observe all of the other swimmers putting their might into swimming with poor technique struggling against the water going home each day discouraged because the long hours, hard work and efforts are not paying off. To make it worse the coach is sure to let all know that to be more like the top tier swimmers you must have a better work effort, more drive, and more dedication.

Why do I bring this up when talking about project plans? I do so for three reasons: Time, perspective, and tradition.

Time - The more pressure and organization has to perform a given task the more apt they are to roll up their sleeves and re double their efforts by working harder, faster, and longer. Why? Mainly because the technique has worked in the past. Yet on the other hand I think it would be fair to say business managers are wise and know that they need to think things out and generally will agree that planning is as equally important as taking immediate action. So attempts are made to plan. Often these show up as the daily stand up meetings like swimmers meeting with the coach each practice to get pumped up about how hard they are going to work, how they are going to change, and to discuss the upcoming meet. Fortunately swimming has an off season and the coaches will have a few months to create next years winning strategy. Unlike swimming teams most businesses don’t get an off season. More often then not, serious deep strategic planning is done in a shoot from the hip manner, for time pressures do not allow much of any thing else.

Perspective - Coaches study the tapes of Olympic swimmers over and over again looking to help their swimmers mimic the gold medal winning strokes. However there is a serious flaw in this. Swimmers swimming at max speed do not display perfect technique because they are swimming close to being completely out of control. Yet watch the great Alexander Popov and his practices sessions look nothing like his racing because he swims only fast enough to make his technique perfect. Yet watch most high school swimmers and they practice poor technique and swim at max effort. So when they get to race day and they push the engines hard they cross the line and the extra effort at race day only buys a minimal improvement in performance. Yet the great Popov’s muscles remember the perfect technique and allow him to stay in enough control to devastate the competition. Similarly in business, our perspective on the most successful companies is distorted because we watch the great organizations without seeing the disciplined approach to planning, training, and methodical execution. Additionally add in time pressure and inadequate training and the only thing left is the strategy of harder, faster, longer.

Tradition - Swimming has a long history of tradition and so do businesses. In fact most business leaders gained their first lessons in leadership in the sports arena. Most swimmers who make it to college level swimming are almost impossible to retrain. If they have defects in their stroke it can take years to erase because of muscle and nerve memory. The problem is even greater for men than women because of the tradition of using sheer strength to solve stroke problems. Do we not see the same thing in business?

As I apply these lessons to my own companies I am cognizant of how important disciplined project planning and execution is. It takes a conscious effort to set aside the appropriate amount of time to not only plan, but to build solid systems that allow business execution to occur not only during the slow cycles but to do so at race time when customers are knocking at the door in the up cycle and to do it without going over the edge of control.

Regards,

Michael Carroll

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by: Jerrald Hayes

Relative Income, It’s a great concept so what is so many of us don’t seem t get it.

As I was working today I was re-reading the The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich, by Timothy Ferris by listening to the audio book edition as I was working today I was remnded of a passage I really enjoyed when I read it the first time through.

Two hard-working chaps are headed towards each other. Chap A moving at 80 hours per week and Chap B moving at 10 hours per week. They both make $50,000 per year. Who will be richer when the pass in the middle of the night? If you said B, you would be correct, and this is the difference between absolute and relative income.

Absolute income is measured using one holy and inalterable variable: the raw and almighty dollar. Jane Doe makes $100,000 per year and is thus twice as rich as John Doe, who makes $50,000 per year.

Relative income uses two variables: the dollar and time, usually hours. The whole “per year” concept is arbitrary and makes it easy to trick yourself. Let’s look at the real trade.

Jane Doe makes $100,000 per year, $2,000 for each of 50 weeks per year, and works 80 hours per week. Jane Doe thus makes $25 per hour.

John Doe makes $50,000 per year, $1,000 for each of 50 weeks per year, but works 10 hours per week and hence makes $100 per hour.

In relative income, John is four times richer.

… The top New Rich mavericks make at least $5,000 per hour.

The other day I was in one of the discussion forums and I heard one contractor telling another fellow that was getting set to start out on his own that he could expect to spend

"…65 hours working [in the field], another 20 for office crap"

…and I thought that was just insane. That’s not a life , it’s a self imposed prison sentence and in my estimation evidence of poor business design. To his credit the guy who was putting the pieces together and doing the planning to go out on his own wasn’t buying into any of that insanity. The insane guys who work that kind of schedule (and there are lot of them out there) are often the ones who don’t have a decent or respectable Net Profit margin in place and try to make up for that lack by doing it "in volume".

Generally speaking contractors need to work smarter learn to substitute that for working harder and longer.

Perhaps the key central premise of the booke The 4-Hour Workweek is that you are only “rich” if you have leisure time to enjoy yourself. It probably should go on the contractors required reading list.

Tags: getting a life, income, net profit

by: Jerrald Hayes

I was going through a stack of old handwritten notes yesterday tossing what I no longer needed (which amounted to about 99% if what I had in the shoe-box) and found this scribbled on a old 3×5 card and thought it was project management relevant and worth saving.

“Although I can accept talking scarecrows, lions and great wizards of emerald cities, I find it hard to believe there is no paperwork involved when your house lands on a witch.”
— Dave James

by: Jerrald Hayes

Last night I bought and downloaded Jeff "SKI" Kinsey’s e-book Purple Curve Effect: Throughput on Command (hey it’s just $2.00, what a deal!) and picked up on this little lesson in Lean Thinking that had a touch of Six Sigma to it too.

This little lesson came up as I was printing it out. I like to print out documents so I can read, highlight, and write notes in the margins (see Looking Back on My Thoughts On Reading from August in ‘97 for more on that). Generally speaking if whatever I’m printing out works out to be about 15 pages or more I’ll bind them up using A GBC hole punch and presentation binding comb setup I have.

Well I went to print out SKI’s book and given that it’s 185 pages both to make the book less thick and to save on paper I would print the odd pages first and then flip the bundle of printed pages over and print again only this time printing the even pages and then I have the book in front and back printed pages.

Well I printed it all out and as I was getting set to bind it up I noticed something was wrong with the page sequencing starting around page 80. Instead of page 85 having page 86 printed on the backside it had page 84. What the h….?!?

I quickly discovered what must have happened. Printing through the first run of just the odd pages at some point the printer grabbed two sheets of paper rather than just one so in that first run I had a uncalled for totally out of place blank page. When I printed it through for the even pages everything printed out just fine until I got that blank page which would then throw the rest of the printing page logic off.

That’s not a big deal right? I can just print the pages from 85 on again. And what is the lesson in Lean and Six Sigma in all of this?

Well as soon as the problem arose I realized there was a simple Lean term or tool for a procedure that I ignored and didn’t use that had I done it, it would have prevented the problem from ever occurring. The lean term is Poke-Yoke which is "a method of making process robust and mistake-proof". What was the Poke-Yoke? Often printed on the packaging the paper comes in and certainly in the printer manuals for our printers in mentions that we should bend back the stack of paper and flip or leaf through it to separate the pages before loading the paper into the printer.

A simple second and a half procedure I just simply ignored wasted some 40 sheets of paper, a little ink and the entire process of printing out the e-book which should have taken maybe 7-9 minutes ended up taking me four to five times longer that it should of had. I had to discover and then diagnose the problem and then find where I had to restart the process from and then restart and repeat the process again from that point.

A little lesson learned….

….again.

by: Jerrald Hayes

For a long time there a quote I like that I repeat over again from time to time that I’ve attributed to Jim Collins & Jerry Poras authors of Built to Last: Successful Habits of Visionary Companies.

Profit is like oxygen, food, water, and blood for the body; they are not the point of life, but without them there is no life.

I did a search online this evening to try and verify my sourcing and found the full quote:

Profitability is a necessary condition for existence and a means to more important ends, but it is not the end in itself for many of the visionary companies. Profit is like oxygen, food, water, and blood for the body; they are not the point of life, but without them, there is no life.

But in addition to that verification I also found a great post in another good blog with “Profit is like oxygen,…” commentary.

In the Talentism Blog I found the article: Principles Of Talentism: Part 4 - Purpose Before Profit

by: admin

1. Lack of Skills and Experience
   Listed perhaps in an increasing level of importance
   1. Trade Skills This is pretty obvious to most contractors but perhaps because it is so obvious it is incredibly over emphasized with is just as dangerous as having no trade skills at all. Often contractors will think this area is the most important or the only thing that is important. Thinking that is often a huge fatal mistake.
   2. Project Management Many small contractors think because they execute small projects or have the trade skill to build a house they should just naturally be able to manage the project of building a house and that just not true. Project management is a unique set of skills unto itself.
   3. Sales Skills. Contractors need to have the basic customer relationship skills to understand what their clients want and how to respond to those needs. And of the basic sales skills contractors need to understand and learn how to close the sale.
   4. Basic Business Acumen & Financial Control Many small contractor business operation fail because managers do not integrate accounting and accounting practices to any kind of reasonable level in their business. By failing to do so, they suffer from the lack of financial control and consequently cash flow problems force the business to fail.
2. Insufficient Capital (Money)
   And that can mean anything from insufficient capital to market the business enough to get it rolling to not having the capital for a operational reserve (an OCRA account) to get you through a bad stretch or cash flow crisis. How many contractors even know how much money to even keep in an OCRA account (Operating Capital Reserve Account also sometimes referred to as a CYA account).
3. Poor Location
   Meaning your working the wrong business in the wrong market area. This doesn’t at all mean to survive and thrive you need to work in Beverly Hills or Greenwich CT but it does mean you need to tailor your product offering for the region you plan to work in.
4. Poor Inventory Management
   This means a couple of different things. In the management schools of Lean Thinking, Six Sigma, and the Theory of Constraints work-in-progress is considered inventory so having too much work in progress. That’s where you’ve paid for the materials and have put in you time or paid for your labor’s time but the client has yet to pay for it. People might say well that’s just a matter of keeping your Accounts Receivable to a minimum but it goes beyond that in that Accounts Receivable only represents the work that is completed and ready for payment and not the incomplete work that is in the pipeline.
5. Over-investment in Fixed Assets
   Renting shop space, buying an Altendorf table saw, Festool saws and drills and the brand spanking new truck while not having the profitable cash flow to support those purchases or leases
6. Poor Credit Arrangements
   Or no credit.
7. Personal Use of Business Funds
   Spending the businesses money on that boat you want so that you can go fishing. Real bad idea.
8. Unexpected growth or the Inability to Manage Growth
   Getting too big too fast and not having the infrastructure in place to support the growth
9. Competition
   Well there is not really too much competition in the building and remodeling market we been in for the past few years but who knows how long these flush times will last and even then you could always be blind sided by a good skilled contractor who has devised a better way to produce the same out you are only cheaper and faster or you could be blind sided by a gray or black market contractor underbidding you.
10. Mistaking A Business for a Hobby
    Woodworkers and and good cooks (restaurants are # 2 for having the highest business failure rate right behind contractors) may in fact be the most prone to this. We love our trades and would do them even if we were in another career field.
11. Asking Friends & Relatives for Advice
    They will more often than not tell you what you want to hear rather than what you really need to hear.
12. Asking Friends & Relatives for Money
    When things get tough the pressure they can put on you for their money can double the stress.
13. Mismanaging Money
    Paying too much or paying for things at the wrong time.
14. Poor Marketing
    Gets you caught between a rock and a hard place when your word of mouth leads dwindle or dry up in a tightening market.
15. No Business Plan
    Dwight D. Eisenhower once said: "In preparing for battle I have always found that plans are useless, but planning is indispensable."
16. No Understanding of Pricing
    Boy this is a big one in my estimation. This means understanding both the concepts of markup and overhead recovery and how to estimate at least semi-accuratly.
17. Inability to Plan for Transitional Periods
    What to do during the peaks and valleys when the work you do is seasonal or the peaks and valley of an economic cycle
18. Lack of Commitment
    Not realizing that running a business is a full time relationship that needs to be worked on to succeed.
19. Failure to Set and Revise Goals
    Out of the start gate you need a goal to head for but you have to be able change as the opportunities in the market change.
20. Inability to Develop and Monitor Financial Statements
    Not understanding what the bottom line you have to achieve can be deadly. I think every contractor has to understand and know precisely what their break even point is.
21. Inability to Balance Business & Family
    As the stress and needs of a business build up they compete for what is a finite resource. The waking hours you have available in a day so the two can very easily end up in competition to each other rather than complementing each other.
22. Underestimation of the Time Requirements
    This applies both to in the area of understanding and planning for the time a business owner needs to spend on the business house keeping, administration, and marketing as well as the understanding of the time requirements of the actual trade work.
23. Poor Internal Communications
    Poor internal communications between project sites and the home office plague many construction companies. Consequently, there may be little warning of project execution problems or financial difficulties. This can be anything from not having an actual phone connection from the sit cellular of land line to a company culture problem such as "shooting the messenger" where employees don’t want to tell their bosses the bad news because they’ll be punished for it. In most cases, it only takes one or two disastrous projects to bring down a company. Early warning is essential if corrective action is to be taken in time.
24. Poor External Communications
    Not talking to the customer.
    Or talking at the customer instead of listening.
25. Inaccurate estimates — Many contractors do not make a detailed estimate of their projects before they bid and some of them simply rely on past experience. They do not get the job because their bid for a project is too high and if ever they win one because they gave the lowest price, they also end up losing money because the price that they were paid for can never deliver the service that they promised. Having a detailed and accurate estimate for any construction job brings more confidence and increases the probability of getting a construction job.
26. Poor purchasing — Good material sourcing is a critical success factor in the construction business. Good purchasing is not just getting the lowest price but also involves quality and delivery. Looking at alternative materials and suppliers is a good strategy in trying to bring down costs.
27. Poor pricing decisions — Even with an accurate estimate, some contractors still would want to shave off their bid price just to ensure that they are the lowest bidder and would eventually win the job. Although dropping prices is a pricing strategy, it is most of the time not sustainable and should be looked at as a short-term strategy.
28. Poor quality control — A lack of quality procedures and control would only lead to poor workmanship. If this happens, the customer will not accept the job and will only result in rework and additional costs for the builder. Many builders have closed shop due to poor quality.
29. Unsafe construction site — An unsafe work site is an unproductive work site. Accidents at the work site affect costs, image and the overall morale of the workers. A responsible builder is one who makes sure that the work site is safe for the employees, customers and its surrounding environment.
30. Contract management failure A construction contract is a legal contract in which the owner agrees to use the services of the contractor and the contractor also agrees to provide the required services based on the agreed price and specifications.
    A legal failure is caused by poor contract management. It is the responsibility of the contractor to build to specifications but it is also the responsibility of the owner to pay the builder on time. The construction contract should detail all of the requirements on the project and both parties — the owner and builder — should fully understand these. When in doubt about contract interpretation, builders should always seek the advice of a legal counsel.

    by: admin

From the Dharma-Haven.org website a good explanation of one of W. Edwards Deming’s lessons for us:

What I find particulary interesting is "The people work IN a system" and "The job of a manager is to work ON the system," in that that is at the core of the message that Michael Gerber talks about in his books The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It and The E-Myth Contractor : Why Most Contractors’ Businesses Don’t Work and What to Do About It and Susan M.Carter writes about in her book How To Make Your Business Run Without You.

by: Jerrald Hayes

Peter F. Drucker 1909-2005

Many years ago my girlfriend at the time once commented that I was never lonely in that when I wasn’t spending my time with her or someone else I would just go down to the shop and and paint while listening to music or get wrapped up in a book. She said that way I was always hanging around with virtual friends like Bruce Springsteen, Aaron Copland, or Tom Peters.

It struck me as a little bit ironic then when this morning I learned through Joe Ely’s Learning About Lean blog this morning that Peter F. Drucker had died. What was ironic was that Joe Elys post started by saying:

How do you describe a dear friend whom you have never met? Further, how do you explain the pit in the stomach when that dear friend dies? Which is what I feel this evening upon just learning of Peter Drucker’s death earlier today…..read more>

I wasn’t as well up on Peter Drucker as Joe Ely was but he was a friend and teacher of one of my dear friends that I have never met, Tom Peters. What I did read and listen to (audio tapes & CDs) of Peter Drucker came from Tom Peters mention of him. What I did know was that he was a remarkable thinker and that:

" …he preached that employees were a resource, not a cost." (from the NYTimes obit )

also from the New York Times:

As his career progressed and it became clearer that competitive pressures were keeping businesses from embracing many practices he advocated, like guaranteed wages and lifetime employment for industrial workers, he became increasingly interested in "the social sector," as he called the nonprofit groups.

Mr. Drucker counseled groups like the Girl Scouts to think like businesses even though their bottom line was "changed lives" rather than profits. He warned them that donors would increasingly judge them on results rather than intentions. In 1990, Frances Hesselbein, the former national director of the Girl Scouts, organized a group of admirers to honor him by setting up the Peter F. Drucker Foundation for Nonprofit Management in New York to expose nonprofits to Mr. Drucker’s thinking and to new concepts in management.

He certainly will be missed but his influence will be felt through those who learned from him for a long long time.

Godspeed.

by: Jerrald Hayes

I think it was in researching employee ownership or growth that I first came across and read about Marthas’s Vineyard based The South Mountain Company. From an article SMC owner Jon Abrams wrote in the Journal of Light Construction entitled Taking the Pain Out of Growth I must have googled his company to learn more. On their website I read THE SMC STORY and felt there was lot in SMC I could model the company I would want to build after.

I don’t recall now how I stumbled across it but last week I found out that John Abrams had written a book on his company called The Company We Keep: Reinventing Small Business for People, Community, and Place and I ordered it right away. During my coffee break earlier this morning I started the book and read the Forward and the first chapter entitled Cornerstones. While I’m going to make every effrot to read this book as fast as I can I think it’s going to take me a while. For me at least I think there is going to be a lot in the book to highlight, notate, and think about.

Right there at the start of the book was a passage that spoke to me:

"Along the way, as we have become a part of this place, we have come to sense that we are not only at the beginning, that our endeavors— and our company—may have, or can aspire to have, some of the enduring qualities of qualities of the buildings we fashion."I’ve been very fortunate in my career to have built some very artistic and beautiful projects that I know will be there a hundred years from now but what has eluded me till know is being able to build "a company" that with that same kind of enduring quality.

A few passages later Jon Abrams goes on to write:

" ….We not only build houses, we build connections and bonds between people, between people and land, and between commerce and place. We are organized around the idea of maintaining and perpetuating an ongoing business community. We think we are crafting a company to keep.

I think that may be the key. It’s about building connections and bonds between people, land, their homes, and commerce.

Jon Abrams describing how he learned about and discovered the cornerstones of his business ideology:

"
The stone mason sorts through a pile of material to find just the right stones for the base, the corners, the fillers, the stretcher that lock the wall together, and the capstones to finish it off. he discovers the wall as he builds it, as I found the cornerstones of our business"

About Growth:

"
At South Mountain we favor certain kinds of growth, but not expansion for it’s own sake, which author Edward Abbey described as ‘the ideology or the cancer cell’…
….When we grow it is intention rather than in response to demand. We think about "enough" rather than "more" — enough profits to retain and share, enough compensation for all, enough health and well-being, enough time to give our work the attention it deserves, enough communication, enough to manage, enough to headaches"

All this from just the first chapter.

Ya know how every once in a while you crack open a book and in reading the first chapter you get real excited and start to think wow this is going to be great. Well I think this is one of them. I know there some people here who will really hate this book (maybe that’s why I like it so much) but I also can think of many more people here who I know who will really indentify and appreciate it.

There will be more on what I’m thinking and learning as I read on. Anyone else want to join in the discussion? If so drop in to Fine Homebuilding’s Breaktime Forum or The Journal of Light Construction’s Business Strategies Forum and speak your mind.

by: admin