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Management | Strategies Empowering SME manufacturers

Nov 2, 2015

Lean concepts such as Six Sigma, 5S and Kaizen are the best methods of operational excellence, but that does not mean they are the best for your company. The article cites the curious case of Rejections & Accidents Manufacturers, to get rid of ideology and to think in an optimal way.

Imagine there is a firm called Rejections & Accidents Manufacturers Pvt. Ltd. Just like any profit organisation, this company exists in the manufacturing sector by creating value in the market and then leveraging that value for profit by selling its products to customers who see the value in them. All the while, the company pays its dues to not only its employees, but to everyone across the supply-chain that helps it create value in the first place.

It is, fundamentally speaking, a very conventional organisation in all axes except one. Rejections & Accidents Manufacturers operates in the manufacturing sector through the value it generates by creating rejections in everything it produces. It thrives on being unproductive. Its customers enjoy the inefficacious methods that the company adopts to add delays, idleness, uselessness and ineffectualness in its operations. The organisation is able to do this by keeping the work environment dirty and messy. Its racks are disheveled and equipment unkempt. Its workers are rewarded for their slapdash methods and sloppy practices. Haphazard & heedless are the motto printed on all marketing material of this organisation. The production floor of this company, you could argue, is bristling with chemical fumes, metal dust & all manner of disarray.

However, Rejections & Accidents Manufacturers is facing a problem. Its methods are just not unproductive enough. Every now and then it keeps on producing products with no defect and on time. Some of the workers show up motivated and actually finish their jobs promptly. Its maintenance department, or as the organisation calls it – breakdown & neglect department – sometimes ends up fixing equipment right.

At a recent seminar, the organisation’s Managing Director discovers lean concepts such as Six Sigma and Kaizen could help him diminish the productivity of the company even further. It could help him add delays to the productions and replace the few clean areas with dirty ones. It could help him demotivate his employees further and increase his productivity. It could help him increase accidents and breakdowns to a rate positively in the upper 90 percentile. An aim the company has always sought to achieve.

My question to you is the following – Can the Managing Director of Rejections & Accidents Manufacturers achieve a Six Sigma level of leanness in his organisation?
The answer is - of course he can. Instead of 5S charts, the organisation will just have to come up with anti-5S charts. Instead of recording and monitoring its production to generate data for decision making, it will just do the opposite and leave everything to chance. All of its steps will invariably lead to sporadic and intermittent instead of sustained and without deviation.

The point of this bizarre example was partly amusement of the reader but also partly for the reader to rethink the lean concept in a divergent manner. Lean concepts such as Six Sigma, 5S and Kaizen should be thought of as methods of operational excellence. Yes, they are the best methods out there but that does not mean they are the best for your company. True 5S in one firm is not the same as another.

So, where does this broad ambiguity and smoothness in the definition of such concepts arise from? The answer is in a word, ideology.

Getting rid of ideologies

Ideology is the enemy of reason. It is a top down approach that thrives on motivated reasoning, close-mindedness and self-righteousness. It marshals our impressive brain’s abilities not to find the best answer but to defend the answer that is most valuable and deep rooted, the answer that we have latched onto. At its core, an ideology is something we rely on because we believe it.

Ideologies do not have a place in business. They create labels that are hard to scratch off. Of course, not all labels are useless. Labels are guideposts that organise our thinking and can identify philosophies and principles. For example, I can think of electrical engineering as a subject that deals with the study and application of electromagnetism, electricity and electronics. However, if I cross the fuzzy line of identifying myself as an electrical engineer, I would tend to defend it in a motivated manner, downplay its weakness and view evidence and events through the filter of supporting electrical engineers. The non-ideological way of thinking about electrical engineering would be to view its underpinning laws, for example, Ohm’s law.

A relevant example of an ideology would be – the customer is always right. When viewed this way, a firm should do whatever its customers demand from it. The problem comes when this ideology is so set in stone that firms forget that customer satisfaction only leads to incremental innovation. Customers will rarely ever demand disruptive innovation – something that is key to surviving and growing in a highly competitive market.

Another example is Enterprise Resource Planning or ERP, as it’s known more commonly. A lot of smaller firms have trouble implementing the right sort of ERP that is optimised to their firm. Many, in fact, completely fail to implement any kind of ERP module in their firm. The reason for this usually is a conceptual misunderstanding of ERP because it is viewed as an ideology. It is a label identified with the likes of SAP and other companies that provide services and products for it. Smaller firms get discouraged at the sheer cost and depth of implementation of such huge systems.

If a firm was to think of an ERP as the ‘awareness of mission-critical information at all relevant nodes and personnel within the company’, they would realise that ERP is nothing, but one of the labels to achieve that end game. This way of thinking opens the door to various other options that are cheaper and simpler to implement and far more adaptable to a company’s needs than a standard ERP. Think of cloud computing, mobile devices, e-mail, apps and you get the picture I am trying to paint.

If not ideology, then what?

The New York Times did an article that included a puzzle. The goal of the exercise was to identify the basic rule behind a sequence of numbers by looking at the three numbers the paper said obeyed the rule and then asking the user to input three numbers of their choice to see whether those user-inputted numbers obeyed the rule or not. Again, the goal was to identify the underlining rule behind the sequence. Everyone approached the problem in fundamentally the same manner. This was because of how our brains operate. To find a solution, the brain creates a hypothesis of what the solution might be and then tests the hypothesis. This is not only true for this particular problem, but almost any problem or decision faced by a human being.

Remarkably, however, according to the article, 78% of the people who tried to solve the puzzle did not input a single wrong guess. Since the underlying rule of the sequence was extremely broad, most of these people got their answer wrong. At first, it may seem like there is nothing wrong with entering the correct sequence, but when the goal is to find the rule behind the sequence, it begs reason to try and test a sequence that does not obey the hypothesis created in your mind because only when you do that you can truly know whether your hypothesis is robust or not. The act of only looking for evidence that supports one’s already-made belief is known as confirmation bias and with the puzzle priming its subjects with 2, 4, 8 as its example sequence (even numbers that are double of the previous number) primed the quiz takers into creating a hypothesis that was very narrow in scope and then confirmation bias did the rest. The right answer was quite simple – each number was just bigger than the previous number in the sequence. That was the simple underlying rule, but a high percentage of people made it out to be much more complicated than that because they did not practice the right way to test their hypothesis. They valued being right more than increasing the likelihood of being right.

Every event has likelihood

In its broadest sense, analysis might be defined as a process of isolating or working back to what is more fundamental by means of which something, initially taken as given, can be explained or reconstructed.

Analysis, and its relatives skepticism, doubt & modeling are the cornerstones of scientific thinking. Yet, they too are narrowly shoved into an ideological label. Most firms think of analysis as something more relevant to research than production. This could not be farther from the truth. In everything you do as a business, you must evaluate all events in their likelihoods. Decisions based on fact, experience and experiment are far more robust than ones made emotionally. Increasing the likelihood of being right is far more fruitful in the long run than trying to be right every time. Not only does this robustness provide a cutting edge over competition in the long run, it dissociates the decision maker and his team from the decision being made. They rely on factual evidence to support a claim rather than personal opinions, likes and dislikes.

Business is an endeavour and just like any other human endeavour, it creates a lot of data. Every single activity your business performs can be represented as a ratio, a percentage, a probability, a graph, a trend, an indicator – you name it.

These methods differ from ideology as they are a bottom-up way of thinking. They value doubt, criticism, logic, empiricism, and the provisional nature of all knowledge. These methods consider each question unto itself on its own merits. They consider all of it as objectively as possible and distance themselves from emotional labels that might form an identity and serve as a filter for their thinking.

It is a system of methods and arguments, a philosophy, rather than an ideology.

How to think the optimal way?

Doubting, logic, self-criticism are all states of thinking that require a high level of energy and that is why they are so difficult to sustain. Like most things though, the best way to start to do something one way is to stop doing things the other way. So, how do you stop being an ideologist? Well, the first step is to identify the bad ideological thinking. Usually, an ideology will be broad in its philosophy and lacking in operational definition. Think – Homeopathy. A more relevant example would be a person in your organisation that cries fowl and says something like “I don’t have control and therefore can’t do the things you ask me to because of the lack of control.” Unless this person has some evidence to explain his claim, he is making an ideological argument. He or she is skirting around the specifics and making broad abstract statements.
On the contrary, if they adopt the bottom-up system of methods and arguments that is provisional and eternally open to revision, they will see all manner of their decisions in the company being far more fruitful in the long run than they ever imagined. They will certainly not ever complain needlessly and endlessly.

You cannot stop yourself from making a belief (hypothesising) when faced with information but you can refine the way you act upon that information by subjecting your belief to the proverbial ‘acid test’ of doubt, skepticism, logic and empiricism.

Always remember, Knowledge is Power, but only as long as the knowledge you gather from the information you receive is subjected to the rigors of a system of methods and arguments, rather than snuggly fitted into pre-existing ideologies.

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  • To find a solution, the brain creates a hypothesis of what the solution might be and then tests the hypothesis

  • A lot of smaller firms have trouble implementing the right sort of ERP that is optimised to their firm

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