Cause and Effect Managing
In running a company or department, it is important that a manager knows that his primary responsibilities are to improve demand for his work and to improve the productivity of his operation. Many managers think that their primary goal is control, but control without a focus on improvement can lead to stagnation. The manager who knows how to keep improving will always exceed the manager that merely keeps things running.
But aren't the tools for change difficult?
Yes, some of the tools for change are difficult. There are Six Sigma, SPC, Process Improvement, Change Management, Financial Control, Cost Accounting and many others. But all these difficult disciplines are founded upon simple concepts that can be learned and employed by any manager. In fact the most important part of change is not advanced knowledge but a commitment to improvement. Once that commitment to improvement is achieved, the rest can be easy.
Let's consider one basic approach for making improvements. Basic approaches are better than complex approaches because basic approaches are often simple to understand and easy to remember.
Cause and effect.
Cause and effect is so simple and straightforward that many management experts forget to bring it up. They seem to pass over the obvious in favor of more scholarly strategies, but the no-nonsense manager will want to spend some time considering how cause and effect can bring positive change to operations no matter how big and no matter how complex.
Everyone has an intuitive grasp of cause and effect. Everybody knows that turning on a switch, will produce light. They also know that stepping on the gas will make the car go faster.
In business, a manager can streamline his processes to get more results in less time. He can improve his sales function to get more sales. He can choose from dozens of changes to improve many of his processes.
Trial and error works because of cause and effect. Process Control works because of cause and effect. SPC is a statistical analysis of cause in order to improve the effect. Lean management involves an assessment of procedures (causes) with the intent to streamline operations (effect).
The manager who wants to improve will need to take initiatives to get results or devise strategies to achieve targets or make improvements to reach objectives. He needs to make changes in order to realize improvement goals.
Oddly, some managers make changes without much of a plan. These managers pick the changes that hit their fancy or adopt new techniques that are currently popular. They apparently reason that any positive change in their operation is a step in the right direction and, while their intent is correct, their results may leave something to be desired. Sometimes their changes do not produce positive effects. Sometimes their changes fail to accomplish the most desirable goals.
The first step in making changes is to pick the most important goal for your operation. Do not jump at the first improvement that crosses your mind. Only pick improvements that will advance your most significant goal.
What is your most significant goal?
If you are operating well below capacity, your most significant goal is to increase sales. If you are straining to keep up with demand, your most significant goal is to increase production.
If rejects and customer complaints are running wild, your most significant goal is to increase quality.
If you are low on cash, your most significant goal is to increase cash flow.
If you are losing money, your most significant goal is to increase profits.
These five goals are the results (effects) you want the most. So what are the causes?
The causes are promising initiatives that should improve the significant goal. The more initiatives that the manager can think of, the more options he will have when selecting actions.
As an example, let's consider increasing sales.
Sales will increase if the sales department becomes more effective or the company becomes better recognized or the customer base expands or the company's reputation improves or demand goes up. These are secondary goals which are intermediate steps to finding initiatives. They are not initiatives in themselves but they help organize a person's thinking into logical paths. These secondary goals help to open up the manager's mind to many different possibilities.
Each secondary goal has a number of possible actions.
To make the sales department more effective, the manager can institute process controls on the sales function, follow the lead of the best salesman, replace the worst salesman, retrain the salesmen, scale incentives toward targeted markets, improve the sales process, provide better sales software and buy lists.
To get the company recognized, the manager can advertise, write papers, do public relations, attend conventions, join industry organizations, run for office, sponsor events or host a web forum.
To expand the customer base the manager can target new industries, offer new products and services to existing customers, open new territories, form alliances, buy competitors, hire salesmen with a following and find a retiree with connections.
A company's reputation will improve if the manager attains ISO 9000, Six Sigma, Quality Awards, Customer Recognition and Public Acknowledgements.
Demand will go up if prices come down.
So far, I have listed 5 potential goals and 30 initiatives to help reach one of the goals (increase sales). But, hopefully I have done more than that. Hopefully, I have given the thoughtful manager a way of approaching improvement that will work for any goal.
The options for change are plentiful if the manager is resourceful and dedicated to making improvement.
This bears emphasis. Good managers are managers that are resourceful and dedicated to improvement. You can tell a good manager by his initiatives and successes. Good managers search for new ideas. Good managers encourage their employees to make suggestions. Good managers are open to change. Good managers promote positive results. Good managers initiate growth and progress.
Good ideas about cause and effect are part of the improvement process, but the manager must also be able to put the selected improvements into practice. While a comprehensive list of initiatives is a good start, the manager will need to choose appropriate initiatives and plan implementation.
Selecting initiatives involves weighing the most promising possibilities against the most effortless possibilities. Considerations should include knowledge, cost, effort, time, appeal and resources. A difficult yet promising initiative might be disregarded in favor of a more practical initiative.
For example opening a new territory would require a lot of time and effort while hiring a salesman with a following should be simple. Therefore most managers would opt for the new salesman provided such a person exists.
To make any implementation simpler, some managers may choose to hire a consultant. (for example, the author).
The difference between a do-it-yourself implementation and a consultant-supported implementation is a difference between cost and effort. Most consultants will simplify the implementation while increasing the cost.
The next step in this improvement process is planning. The manager must be aware of the steps needed to successfully implement each chosen initiative. To put this into familiar language the manager should write out the processing instructions for each particular initiative.
If, for example, the manager decides to improve the sales process he will want the salesmen to maximize client time (or phone time) and minimize time spent on clerical and leg work time. He might conceive of the following process:
10 Interview the salesmen to determine the steps taken to sell a new account.
20 Draw a chart of the actual work flow with the average time spent on each step.
30 Eliminate useless tasks, simplify routine tasks and emphasize crucial tasks.
40 Consider new software, clerical help and new sales tools.
50 Purchase software, train salesmen and hire clerical help.
60 Monitor, evaluate and modify the new process.
Notice that this process improvement does not deal with the skills of the salesmen. Training salesmen in more effective sales techniques would be a separate initiative.
This reminds me to offer a tip: Do not try to pack too many improvements in one initiative. It is usually better to tackle 3 individual initiatives then to put all the improvements into one initiative. Also, if an initiative seems too complex, try breaking it down into manageable pieces.
Summary:
A systematic improvement process is better than a haphazard improvement process.
Set a goal (desired effect) and then think up initiatives (workable causes) that will improve the goal.
Favor potential initiatives that are practical, cost effective, easy, well understood and interesting. Or hire an experienced consultant.
Plan the implementation by listing the anticipated tasks.
Monitor, evaluate and modify the initiative during implementation.
If, in spite of your best efforts, the initiative doesn't work, then drop it and start over with a new initiative.
Finally, think about cause and effect when dealing with other aspects of your business, like rejects, capacity, downtime, process control, resource analysis, training, productivity, variability, etc. If you understand what makes a process function, you can probably think of ways to make it function faster, smoother and more economically.
