| by Craig Cochran
Working for a small company
has many benefits. The environment is usually informal,
you can see the results of your work, and co-workers know
and care about you. On the other hand, in a small company,
everyone must do many different jobs. Time is usually in
short supply, too. Often there isn’t enough of a surplus
to spend it on establishing consistent procedures and systems.
Instead, the whole place runs on “tribal knowledge.”
It’s critical that small organizations develop lean
and effective systems for managing their business. They
need systems more than any other type of organization because
they don’t have the luxury of doing things twice.
Mistakes can be fatal.
For small businesses, the essentials of a lean management
system can mean the difference between success and failure.
Fortunately, these are easy to implement once they’re
understood. Let’s examine the key elements of a lean
management system for a small organization.
The term “strategic planning” conjures images
of grim-faced executives, conference tables cluttered with
financial reports and walls filled with scribbled flip-chart
pages--in other words, an intimidating and time-consuming
process. However, strategic planning is critical to small
organizations. It defines their course during an extended
time frame, focusing all organizational members on the most
critical actions necessary for their growth and survival.
Lean strategic planning can be performed in two to four
hours. The underlying concerns are the same as the full-blown
version but with less philosophizing. Lean strategic planning
provides concrete answers to the following questions:
What are we doing especially well? What must happen to ensure
that we continue doing well and even improve?
What are some of our most promising opportunities? Why are
they promising? What should we do to pursue them and turn
them into things we do especially well?
What are we currently doing poorly? What do our customers
tell us we should improve? What do our employees tell us
we should improve? Exactly what should we do to improve
these aspects of our business?
What competitors are howling at our doors? What makes them
a real threat? What should we do to minimize the risks posed
by these competitors? What other forces (e.g., social, demographic,
political, economic or technological) threaten us? What
should we do about these threats?
The answers to these questions form the basis of strategic
planning. Having formulated them, a small business must
then apply project management to make certain that the actions
get done. Specifically, the following must be determined:
Responsibilities. Who is the project manager for each task?
Time frames. When will the action begin? When should it
end?
Resources. What resources are available for implementing
the actions?
Review. When will key decision makers meet to revisit the
progress against the plan?
The results of strategic planning along with project management
details must then be documented simply and concisely. The
entire document should be no more than a dozen pages long.
Copies should be distributed to all personnel who play a
role in implementing the strategy. Depending on the plan,
this could range from the entire organization to a handful
of people. The best way to communicate the strategy to most
people is through objectives.
Even the best strategic plan can be difficult to understand
for those not involved in the planning process. Objectives
take the strategy and translate it into language that everyone
can understand and implement. They also break the strategy
into component pieces that are appropriate for each process.
Let’s say, for example, that the organization must
pay off debt in order to stay viable. The best way to do
this, it’s decided, is to increase net income. The
additional profit will enable the organization to retire
the debt and better manage for the future. Most people within
the organization will sniff and say, “Well, I don’t
have any way to pay off our debt or increase our net income.”
Some might not even know what net income is. Let’s
translate the organizational strategy into terms that are
understandable at each process level:
Organizational strategy: Increase net income to pay off
debt.
Sales objective: Increase sales of high-margin products
by 20 percent during the next 12 months.
Production objective: Increase production efficiency by
3 percent during the next quarter.
Warehouse objective: Reduce damaged goods to 0.5 percent
of total inventory during the next inventory cycle.
Purchasing objective: Initiate long-term contracts with
trucking, packaging and raw materials suppliers. Reduce
overall purchasing expense by 15 percent during the next
six months.
The broad strategy has been transformed into specific,
actionable objectives toward which each process can work.
If each process is able to achieve its objective, then
the overall strategy of increasing net income to pay off
debt will certainly be achieved.
Just like the strategic plan, the objectives for each
organizational process must be documented and made very
visible. The small organization must be a transparent one.
Progress toward objectives must be tracked, posted, analyzed
and discussed. There’s no time to get fancy--display
the charts and update them regularly. The purpose is to
provide a focus to everyone’s work and demonstrate
how all activities fit together to achieve the organization’s
overall objectives. Once objectives have been established,
it’s necessary to develop forums for reviewing progress.
Small organizations don’t have time for long, formal
meetings. When people are in meetings, production grinds
to a halt. That’s why business reviews must be performed
in a brief, concentrated manner. They might not even be
meetings; the review might take place over the telephone,
via e-mail, through a folder of information passed from
person to person or by logging onto a Web site. The trick
is to review progress and make decisions quickly and frequently
because small organizations exist in dynamic worlds that
change rapidly.
A business review agenda for a small organization can
include a wide range of topics, but the most typical are:
Special or unusual orders and/or projects
General communication between functions about current work
Progress toward objectives
Problems that have arisen since the last review
Improvement opportunities
Generating action items to address problems or opportunities
Status of pending action items
Additional agenda items can be added as needed, but keep
in mind that reaction time slows with each additional topic.
Many organizations have found that their business reviews
are most effective when they comprise several different
reviews, each addressing a different set of concerns. This
“mixed” review enables flexibility, timeliness
and fast response.
An example of a mixed review format--composed of a daily,
monthly and quarterly review--follows:
Requires no more than 30 minutes
Tactical in nature
Addresses the most pressing issues (e.g., urgent orders,
necessary resources and customer complaints)
Conducted at the beginning or end of the day
Includes the status of pending actions
Can be conducted in person or remotely
Requires one to 1.5 hours
Tactical and/or strategic in nature
Reviews progress toward objectives
Reviews financial results (excerpted)
Addresses the status of pending actions
Includes broader trends (e.g.,corrective and preventive
actions, customer feedback, and audit results)
Can be conducted in person or remotely
Requires one to three hours
Strategic in nature
Reviews progress toward objectives and strategic plan
Proposes necessary changes to strategy
Analyzes financial results over broader time frame
Addresses the status of pending actions
Includes aggregated trends and their implications
Can be conducted in person or remotely
There are many different ways to slice and dice business
reviews so that they accommodate a small organization’s
unique requirements. The only imperative is that they take
place. Small organizations must keep a finger on the pulse
of their performance at all times. That doesn’t mean
micromanagement; it just means that everyone knows the direction
in which the organization is moving and what changes must
be made. When these are known, personnel are able to contribute
effectively.
Documentation refers to the information used by the organization
to run its business and satisfy its customers. The documentation’s
nature and scope will vary widely from organization to organization,
but here are a few of the most typical examples:
Product specification
Service standards
Process setups
Procedures
Job instructions
Policies
Engineering drawings
Strategic plans
Objectives
Documentation should be concise and presented in the most
practical format possible. More is not better when it comes
to documentation; it should get directly to the point and
avoid peripheral information that’s not really needed.
Practical formatting means that the documentation might
not resemble a traditional procedure. Small organizations
must get creative when developing documentation. Managers
should ask themselves, “What format will deliver the
information in the clearest and easiest way possible?”
The answer might point to text, drawings, photos, cartoons,
flow diagrams, physical samples, audio/video media or nearly
anything else you can imagine. In general, people digest
graphic information more quickly than text, so including
images is almost always a good idea.
Whatever formats are chosen, the organization should try
to steer clear of the following documentation paradigms
that plague so many larger companies:
All documents must look exactly alike. Why does this matter?
Each document should look like whatever it needs to in order
to best convey its information. Consistency is only important
if it adds to the documentation’s usability and effectiveness.
Documents should always include certain sections. The sections
that organizations require within their documents run the
gamut of possible topics. These include cover page, table
of contents, introduction, purpose, scope, definitions,
responsibilities and reference documents. Although some
of these sections might sometimes be relevant, others simply
take up space and make the document longer and more confusing
than it needs to be.
Small organizations can’t afford to make their documentation
long and confusing.
Documents must be reviewed and approved by every manager.
With good intentions, some organizations stipulate that
all key managers must review and approve all documents.
This only slows down the documentation system and adds useless
bureaucracy.
Documents must include every single detail about a process.
The thinking is: If we’re going to bother with documents,
they’re going to include every detail anyone could
possibly ever need. This makes the documents large and unwieldy
and discourages people from actually using them. Include
the essential information, but strive to keep documents
as lean as possible.
Avoid tasks that unnecessarily slow down the delivery
of information or complicate its understanding. Get creative,
and don’t be afraid to try something a little unusual.
Some of the most unusual documentation styles are often
the best for small organizations. Here are a few user-friendly
documentation formats I’ve seen applied effectively:
Flowchart and/or troubleshooting guide combination. This
is a single-page document printed on both sides, posted
directly at the workstation. It’s often laminated
or otherwise protected. One side of the document shows a
flowchart of the process, describing the basic steps required
to carry out the activities and make correct decisions.
The opposite side describes various troubleshooting situations
that might arise and what should be done about them. The
troubleshooting situations reflect the collective knowledge
and experience of everyone familiar with the process. In
effect, they’re one-page encyclopedias of the process
and its pitfalls. The document’s content is limited
by the fact it’s delivered on a single page, ensuring
that only the most important details are included. The brevity
also ensures that users are not intimidated.
One-minute reminder. This is a single-page document, posted
directly at the workstation. It features a photograph of
a particular aspect of the process, followed by a short
description of what should be done. The text is often presented
as a bulleted list. The intent is that the entire document
can be digested in a matter of seconds; hence, its name.
One-minute reminders are developed during any stage of the
process that’s particularly error-prone. Because errors
usually are made at only a few critical steps during any
process, this means that the documentation will only be
applied where it’s most needed.
Hyperlinked process diagram. This is an electronic document
available on a shared drive or network. The document depicts
a high-level view of the entire process, showing the major
steps. Each step includes a hyperlink that drills down to
a lower-level activity in the process. In effect, document
users can continue drilling down as low as they need to:
process overview, activity-specific view or task-specific
view. The document’s content is completely dynamic,
driven by the users’ needs. Specifications for goods
and services can also be hyperlinked from the main process
diagram. This type of document is incredibly versatile but
is only appropriate for organizations that have the computer
infrastructure and technical competency to support it.
Documentation is worthless if it isn’t controlled.
Thankfully, the necessary controls are very basic. The fundamentals
of document control include:
Approving documentation before it’s made available
Making the documentation available where it’s needed
Keeping the documentation up to date
Approving documents is a simple process. It’s nothing
more than ensuring the information is accurate and appropriate
for distribution, then making it clear that the document
has been approved. The act of approving a document can be
done by a single person, and the approver doesn’t
even have to be a manager. There are no rules about who
can approve documents, except for any rules the organization
itself stipulates. Small organizations should keep document
approval as timely and streamlined as possible. There’s
rarely a need for a herd of managers to review and approve
a document before it’s put into use. I don’t
know how many times I’ve heard people within larger
organizations say: “I’m not sure what happened
to that document. I guess it’s making the approval
rounds.” In the meantime, everyone is working with
outdated information. Don’t fall into that trap.
Making the documentation available where it’s needed
means exactly that: Get the information in front of everyone.
If the information users have computers, then electronic
documents are often the best way to make documents available.
If the users have workbenches, then hard-copy documents
posted directly at the workbench are probably more appropriate.
Use good sense. Practices that don’t make sense include:
Enormous binders. They’re intimidating and confusing.
Provide only the information that’s needed.
Procedures stored in supervisors’ offices, training
rooms or other remote locations. When documents aren’t
available at arm’s length, they have little value.
Put the information where it’s needed.
Procedures provided electronically but without directions
on how to access them. I’ve seen this more times than
I can count: impressive documentation systems that employees
can’t get to. Ensure everyone knows how to use the
new technology.
Documentation is subject to change, of course. Small,
dynamic organizations must provide especially seamless methods
for revising documentation because the need for timely information
is great. One out-of-date specification can make the difference
between a good month and a disastrous one.
A decentralized document control system, with multiple
employees who are in charge of their own documents, provides
the most efficient process for revising them. When a document
must be revised, whoever recognizes the need simply approaches
the document control person in their process and initiates
the change. The less bureaucracy, the better. Simply make
the change, get it approved and make it available. This
is where electronic documentation really shines, by the
way. Revising and approving an electronic document can be
performed in a snap. Once the document has been approved,
distribution is accomplished instantaneously by uploading
the document to the server or Web site. Everyone simultaneously
has the most current version.
We’ve examined some of the components for a lean
management system within a small organization. In coming
months, I’ll provide additional lean systems so that
you can build an overall system for success.
Craig Cochran is a project manager with the Center
for International Standards & Quality, part of Georgia
Tech’s Economic Development Institute. Contact CISQ
at (800) 859-0968 or on the Web at www.cisq.gatech.edu.
Letters to the editor regarding this article can be sent
to letters@qualitydigest.com.
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