Demystifying JIT: It is Just-in-Time, not Just-in-Case.

 

Why should time be so complicated? Making FOCUS a habit ought to simplify things. Reminds me of an Ancient Buddhist saying that goes, “If you chase two rabbits, both are likely to escape.”

To create, transform, and deliver something of value – the kind that customers are willing to pay for — needs focused time, resources, energy, and close attention to detail.  This is especially crucial in Operations Management, defined  as “planning, organizing, staffing, and leading the activities of any business precisely relating to the creation, production and delivery of goods and services, through the transformation of inputs into outputs.” In its barest sense, Operations Management manages the company’s “value-fulfillment” system. If it fails to do that, it fails period. OM thus attempts to focus on value, and align organizational resources in order to synchronize the company’s perceptions of value with that of the customer,  i.e. business requirements must match customer, and deliver VALUE, within business constraints. What do we mean by value? Some call it quality products and services or benefits thereof. Some say buyer utility or satisfaction. Collectively, value might mean the combination of X-factors that customers are willing to pay for. OM, then, hopes to concoct how value can be delivered at a profit. All business functions need to support this overlying purpose.

Operations Managers have long discussed Just in Time, or JIT, as a clue to the most efficient value-delivering approach. JIT promises – if properly set up and executed – to dramatically reduce production or service lead times, boost up system throughput, and subsequently, slash fixed costs per unit, by managing operations leanly and efficiently.  Unfortunately, JIT is an elusive operations management philosophy that escapes most of us as to its essence and meaning. Very few souls understand it.  In a nutshell, JIT is about lean, synchronous manufacturing, in order to reduce inventory. By lowering the systemic need for in-process inventory (i.e. excess capacity stock), JIT literally frees the company’s time, energy, and money/resources — previously committed to producing inventory “just in case” it is needed. By releasing the system of ‘just in case’  inventory, resources are freed for productive, saleable goods and services, which actually add real value to real people’s lives.

What’s up with Inventory? Disclaimer: not all Inventory is bad. In fact, some are absolutely necessary. There is an evil kind of Inventory, however – i.e. the excess kind that is not yet needed, and/or, is “needed just in case people have nothing more to work on” or “just in case someone wants it”. Such excess inventory hides problems and gives a false sense that people are “working” when in fact they are just .. well.. fiddling with inventory. By reducing excess inventory to near zero, work flow will naturally stop when one or another “sub-process” encounters problems, quality defects and so forth. JIT mandates that the team immediately work on, discuss and find the root causes of the problem, say the problem of a recurrent defect, and initiate action to solve this problem permanently.  This is when new jigs are designed, new quality assurance procedures introduced, and new systemic policies are formulated.

JIT thus exposes real problems, that cause real delays in operations, real lead time bloaters, say, in manufacturing operations, or any part of the value chain thereof. In a sense, JIT allows teams  to “sacrifice” short term operation time for current throughput, to solve problems that will protect future multiple throughputs. Too much unnecessary inventory, gives operations managers the “illusion” that people are doing a lot of things everywhere, but in truth they are only working on the pieces or batches of product or jobs they are currently working on, nothing else.

JIT, a concept allegedly developed by Japanese Kenichi Ohmae, and first popularized by Toyota, stems from the idea that inventory, especially work-in-progress (WIP) inventory, is the “twin brother” of lead time.  It means that the more WIP a system  or organization allows to exist, the longer the average cycle time, or time each product, batch, job order — or in the case of service, each service order – moves within the business premises until it finally gets to the consumer.  For example, if a job shop furniture exporter’s factory and warehouses are full of parts and pieces of, say, 60 days worth of inventory of unfinished job orders, then if an order of 100 dining sets is placed by a hotel, then technically the company will need 60 days to deliver the unfinished WIP, first before starting the 100 dining set order.

JIT requires giving up your authorized safety net inventories located everywhere, and control supplies and inventory to levels that will just synchronize and support production, and importantly, to feed operations.  The main emphasis of JIT is to reduce inventory-related costs and waste, by eliminating “Just In Case” inventory.

JIT implementation requires Operations teams to take a very close look at every stage of production and inventory carrying points, per product or service stream. This exercise alone is useful in highlighting areas in need of improvement. Ultimately, the more efficient you are and the higher quality product you provide, the lower your costs, the faster your lead times, and so the more appealing you become to customers and clients.

Reduced Inventory means reduced warehouse and factory space requirements, security and handling costs, air conditioning or dehumidifying costs, packaging, labeling, interest expense (on sleeping inventory) and every othe rcost that comes with excess inventory.

JIT is synonymous with Lean Operations which clarifies what leaders, employees, suppliers, should pay attention to, to produce value, and that includes solving obstacles to the swift delivery of value.  JIT eliminates non-value adding activities that drive up costs and extend total delivery time.

With JIT, a company can focus on creating and delivering value – in the Customer’s persception –  rather than excess inventory, wasted materials and supplies, useless movement, unnecessary delays, and so much “noise” that customers are absolutely unwilling to pay for.

The only thing customers are willing to pay for is value, or the benefits and features that go with good (not poor quality) product, and this is exactly what the goal of Operations is… to transform the inputs of time, energy, people, and other resources into Value which the customer will pay for.   Lean operations gives the Operations manager an excellent basis for Operating strategy, which is to reconcile the firm’s resources to meet marketing requirements, to invest in the right strategic elements to increase the company’s long term capability to deliver value (say in differentiation) and/or to lower cost (in low cost strategy), and to organize systems to help employees execute whatever strategy is selected.

A saying goes that “the best time to have an inventory part ready for production, ready for the next step in production, and ready for delivery to a customer, is Just in time.” The same account goes that “manufacturers build inventory of both finished goods and raw materials Just in case!”

The time buffers of inventory that populate most production master schedules, give a false sense of security and are extremely expensive. First you tie a huge amount of cash to inventory costs, i.e. non-value-adding handling, storage, movement, security, pilferage, and all other. Inventory can be lost or damaged, and may deteriorate.

The presence of idle, non-moving stock – or orders authorized for production but are not yet needed – interfere with more critical ordered stock. Shipments get delayed, when countless stocks are produced! Worse, non-moving stock become obsolete so quickly in today’s world of nano-speed time-to-market product introductions. Warehouses, could instead be factories or showrooms or rented to someone else!   All of this means lost profit or lost opportunity (to make money).

When JIT is implemented, a company’s costs are lower. It has more cash. It is more reliable in its promises to customers. Its quality is improved, because people can concentrate and WIP does not hide it. IT gives a company a sustainable competitive edge. And best of all, in my opinion, you need not annoy clients by forcing them “fire sales” of old useless stock.

To execute JIT, you need to complete a jigsaw puzzle of elements. At the heart and sould of this, is the kanban , a Japanese shop-floor visual card system that ensures that a continuous supply of inventory or product are fed to the system “just-in-time”. Kanbans were designed to support the JIT philosophy.  For example, as the supply, say, of needed parts approaches a visual MINIMUM red mark, the supervisor then prepares a requisition for such parts, and so forth.

Next equally critical JIT needs KAIZEN, TQM, 6-Sigma and other continuous improvement systems, usually worked on by small-groups called Quality Circles or Lean Production Teams that work on problems precisely exposed by JIT, but not in a shallow way, but rather in a strategic, permanent way, because root causes are investigated. All techniques of process, product, and service improvement are employed; but in a methodical way, and prioritized on breaking one systemic constraint after another.

Obviously, JIT is not only meant for manufacturing or operations, but throughout the business/firm.  JIT requires that operations work beyond the business – e.g. it involves working with most institutions along the supply chain: suppliers, government, logistics, telco, IT firms and so forth, to synchronize the whole order-fulfillment system.

Finally, and most importantly, to execute JIT, Operations needs to work very closely with Marketing. All value must be consistent with the customer’s idea of value, and not just the company’s. JIT must closely monitor market behavior and history.  One problem is that when orders suddenly spike, the company needs to be very flexible and adjust quickly. Fortunately, if JIT is properly executed, the company is likely to have the money to solve whatever that positive problem is, to begin with.

 

LINKING OPERATIONS with Corporate and Marketing –

 

It is the task of Operations to reconcile both the demands of the consumer, that hopefully are consistent with Marketing requirements,  and the resources of the company, in terms of time, production capacity, staff, systems and methods, logistics and so forth. Marketing decides on the mixes of Product or Service, distribution outlets/ promises to customer in terms of price, lead time, payment terms. Marketing – through sales or accounts people develop the sales forecasts, and so they “decide” when they want the goods delivered and in what quantities, sizes, designs, shapes, features included and so forth.  Production needs to confer with Marketing all the time, with respect to lead time estimates. Status of orders, and actual delivery schedule commitments. Delivery instructions, packaging standards, mode of shipment, delivery address, communication, so many such details need to be coordinated.  Finally information on after-sales commitments, and customer feedback are important, for production, product development, and quality assurance people for example, to make necessary improvements,  or such appropriate responses to feedback.

Linking Operations with the Marketing and Corporate strategy cannot be over emphasized. Unless there is alignment between these three (3), and the rest of the company for that matter, a host of problems can be expected to happen, or recurring problems will not be solved (which means lost customers), but for the most part no new strategy can be properly executed, unless the parts that are tasked to execute it, are aligned.

Information asymmetry can cause delays, mistakes in strategy execution, or a host of many wrong, some even devastating, decisions.

Let me list down some questions an Operations manager needs to ask Marketing. Who is the target customer? What qualities are important to him? What products are the most in demand? What are his/her priorities/ recurring problems in terms of design, quality, lead time, supply chain logistics, delivery performance, packaging, distribution, or other operations issues?   What is the target customer’s perceptions of value? What products are in trend for the next few years? What might be phased out? There will be redundancy, miscommunication, and so many other wrong strategic decisions, if there is no linkage.

For corporate matters, OM has to work with Finance to approve new plant capital budgets (assuming layouts are done), new machines for process flow designs. Operations needs to work with HR to design the work and jobs, identify the right skills sets, personnel needs, prepare/approve job descriptions, performance evaluations, training requirements, and even negotiate with labor union leaders. OM also needs to work with Admin/Legal to understand legal requirements, say environmental bureau standards and maybe food or other standards for other industries.

To execute the linkage between Operations, Marketing, and Corporate strategy, I would recommend that a common Strategic Planning workshop be done. This begins with corporate Situational Assessment meetings first, prior to Business Unit or Department planning workshops.  As many key managers, assistant managers, the Board if possible, Finance, Marketing, HR, Operations, some key rank and file (especially tribal leaders and Union officers if they exist). This way we build a cadre of Strategy Advocates.

At this juncture – we assess the company’s internal (competitive strengths, weaknesses/exposures, performance history, in sales, finance, marketing, HR, operations) and external (opportunities, threats, future trends).  We look at Socio Demographic, Technology-Supply Chain trends Political-Legal and other key external environmental issues and concerns, mostly threats and opportunities are listed. Key issues must be highlighted by concensus. We then analyze the competitive or Industry environment, again looking for Opportunities. From here we build a SWOT matrix, and use other tools like Boston Consulting Group matrix, SPACE/IE GSM and other tools to match internal and external data detailing areas for the purpose of generating alternative strategies (corporate first, then later complementary business and departmental generic strategies). Some suggest we need to jointly decide on over-arching corporate and business strategies – such as Differentiation, or Low Cost, Focus, or Broad Market strategies.

Some think there is no trade off if we focus on reducing inventory and non-value-adding costs, and pour such savings towards differentiation strategies and tactics.  Powerful way to find the money for building competitive advantage.

We then agree on the frameworks (using critical success criteria) to decide which strategies to jointly commit to execute, and finally, most importantly, we must agree on what Implementing mechanisms to inject in the solution –including but not limited to – choosing leadership champions, setting preventive and contingency measures, staffing/ training, hiring and motivating, strategy-supportive systems, changing structure and layouts, allocation of operating funds, as well as addressing resistance to change

Finally, the team ought to be well led – as nothing happens without the leadership of champions — who will scout, select, coach, inspire, equip, and empower team players, leveraging on best practices, frameworks, and technologies –  including qualitative and quantitative methods and measures of success.  This JIT Lean Dreamland may only come to pass, if leaders are both competent and committed– mentally, emotionally, and psychologically – to build the team that matches this dream.

One of my favorite quotes is from renowned psychologist Carl Jeung and it goes this way, “When I dream alone, my dream remains a dream; but when we dream together, it is the beginning of reality.”

– Written by Joseph Pangilinan, CEO Arrowhead Consulting, for DLSU RVR Graduate School of Business, WCE in Operations Managment

Organizations vs. Individuals

“Everyone is a genius. But if we judge a fish by its ability to climb a tree, then it will live all its life thinking it is stupid.” Albert Einstein

Is it ethical to entice an employee to change his behavior for the organization’s interest? Is Organizational behavior a form of unethical manipulation or not?  This controversy stems from a common conflict between the temptation of organizational managers (1) to manipulate or control individual behavior to do what is “right” – both for the individual and the organization’s interests, OR (2) to allow individuals the freedom to act and to decide for themselves what he perceives to be right.

 

Leaders on the one hand may want to “manipulate or control” — or more acceptably, ” encourage, inspire, or motivate” — individual behavior, for several reasons, say to ensure that the final outcomes are good for the organization; or to ensure that plans are properly executed for example. Stakeholders are all expected to want to promote their best interests. This is why they get involved in a business in the first place.  So company managers give the carrot or the stick, rewards or reprimands,  to fulfill organizational goals, greater sales, lower costs, higher value added, and so forth.

 

On the other hand, some leaders are tempted to give individuals the freedom to act, to choose for themselves, according to what they think is best, and hopefully what will not violate their personal values and beliefs.  The intention behind this is to ensure “buy-in” or  participation, or volunteerism.  Volunteerism, in fact is the most powerful and most passionate forms of “motivators.”  It ensures higher commitment, fosters individual self discovery, and a host of other benefits.

 

There is no conflict, when it comes to the underlying needs in the “conflict” between leaders controlling indivdual behavior and letting go or giving freedom. The underlying needs of (1) the need of organizations for the final outcome   to be ultimately profitable, or of value to organizations, (2) then need of individual for the final outcomes to be for the long term interest or welfare of the individual.

 

To resolve this ethical dilemma, leaders must ensure that all engagements are win-win, or where outcomes of the engagements are genuinely GOOD for both the organizations and for the individual, and if I might add for all “stakeholders” as well.  Win-win or no deal. This is the only way towards genuine sustainability.

There are many alternative “win-win” resolutions around the above “ethical dilemma” or “conflict.”  In what possible ways perhaps, can we “encourage” employees to do what is good for the organization, in ways that eventually help them achieve their own individual goals?  The concept of “work-life-balance” for instance has proven to be a deep source of internal strength for organizations. A happy, balanced person is a productive person!  And a company that offers work-life balance, attracts the better and brighter people, which creates an upward spiral of good things.

 

Another  example of win-win  is  when mission-critical projects are assigned, deliberately to maximize the unique individual strengths of assigned employees. BOTH parties i.e. the individual who deploys personal talent and the organization that needs it.  Let a numbers guy do the budget. Let a design-conscious employee spearhead changes in office layout.  Allow a born-writer to be editor of the company blogsite or newsletter,  and so forth.

Well-meaning individuals and prudent organizational leaders, ultimately,  pursue the long term success of the organization itself,  setting goals for the interest not only of the business, but for the good of employees, as well, thereby improving health care benefits, upgrading competency, improving job design, training new skills, and so forth.  The deeper challenge is how to align these goals towards the same strategic ends, at the right time, triggering consonance and not dissonance, say, as in grabbing more shares of a shrinking pie.

Key is to match real individual talent (say, in hiring, placing or delegating), with real organizational needs that address core conflicts and root causes, solve real problems, or that  tap the best of available opportunities. Consider the uniqueness and strengths of individuals and match these with critical work requirements. This resolves the dilemma as it moves from win-lose, lose-win, to win-win. It is not unethical to do this.  In fact it would be imprudent to do otherwise.

 

Another example of win-win is to forge a more clear and shared understanding of the meaning of “value” for the organization.  The “right” thing to do is what adds – not diminishes – “value”. But what is “value”? Is it customer value, share-holder value, value added as in taxation, or is it value to an employee – i.e. his benefits and compensation? Ultimately the end-customer pays for everything in the value chain, and so it can be strongly argued that “value” – for the business-  is what the customer is willing pay for.  So if “value” is defined by the customer, is the customer always right?  By agreeing on unified definitions of VALUE, we can align actions of people with organizational goals. We can synchronize strategic plans with strategic execution.  We can limit our actions to what the customer is willing to pay for.

 

I dream of  less schizophrenic organizations, where inspired individuals pursue company  goals alongside their own individual dreams.  I dream of integrated organizations where strategic plans are aligned with implementing structures and systems are synchronized with jobs. I dream of  organizations that respect – and are therefore able to draw from – the  genius of even seemingly ordinary people.

 

Manipulation and coercion are for the lazy. There is absolutely no need for it, when people voluntarily commit time and resources and passion, to do what they want to do, because they are  cut out and created  to do that. This happens when common purposes and shared values are clear and  individual talents are aligned to them. This happens when structures, policies and systems empower, and do not disempower people from deploying themselves.

 

An organization is one of integrity when it clearly and  collectively defines VALUE, not just to shareholders or to employees, but  to customers and all stakeholders as well. Such is an organization of real sustainable power, that more meaningfully and convincingly  delivers value; the kind of value that blesses the world, and changes it for the better.

by Joseph Pangilinan, Sept. 26.2011

 

 

 

Word Cloud: Crash Course on Cool Technologies; Learnings @ DLSU INFOMAN class of Prof. Benedict Avila

102-INFOMAN Making A Difference profavila@yahoo.com Web 2.0 Internet Apps Are You Living Out Your Destiny? User Generated ContentBlogsites Facebook uncommonsense101.wordpress.com Leadership “DON’T JUDGE TOO QUICKLY!” photography iPhone iTouch iPad Excel Expert Systems MS Office ERP funphotobox.com jnpangilinan.multiply.com WAN optimization Family Life IBM: hu u? Balsillie RIM Android SOCIAL RESPONSIBILITY smart phone Online Apps Intelligence Agents kuliglig Bing prezi.com proshow.com Express Yourself steve jobs STRUMMS When Bill Gates Quit Microsoft Warren Buffet

Google Docs Powerpoint Google Ads monster apps howstuffworks.com jnpangilinan Yahoo! Answers Your Work Matters to God Google Apps WiFi management information systems SMARTBOOKS entrepreneurship

Benedict Avila keyboard shortcuts Social Responsibility & Ethics Business Resolving Conflict Love

Politics Church Freedom to Change Leave a comment Change Management Work Top 10 Whatever! shareware RIM Playbook Married Life Compassion Championing Entrepreneurship: Bridging the Economic Chasm Between the Rich and the Poor What is Love? Try this mind-blowing definition… LATEST TECHNOLOGY cloud computing Julian Assange wikileaks

Decision Support smart devices Keynote wordpress.com Blackberry LUGAW BUSINESS

bill gates Make A Difference CRM Artificial Intelligence MOBILITY

Google Translate FINAL EXAMS SME opportunities Word Cloud Google Sketchup Is Microsoft Dying? internet PayPal Amazon C3 SCM WIKIPEDIA Google Zeitgist FREEWARE

MARK ZUCKERBERG Time Man of the Year YouTube Use Technology and Bless the World

 

Word Clouds are a form of data visualization or infographics, which are actually interchangeable,  which mean various innovative ways of presenting data.

In this case, more than just a “presentations” of Words,  word clouds are actually inter-active tags because each word is connected to a link, or hypertext link, which connects the word to a location or website in somewhere in the Cloud, or the internet.

As part of the requirement for our Information Management class, INFOMAN-KGA, our professor Benedict Avila, asked us to prepare a Word Cloud for showing keywords we recall learning in class, and to post the same in our blogsite (which we also set up in his class, earlier in the term, by the way). So here it is, just click this link Infoman Word Cloud. If you cannot access it directly, please cut and past the following link:

https://uncommonsense101.wordpress.com/2010/12/16/my-word-cloud-for-dlsu-prof-avila%E2%80%99s-infoman-class/

but which I simply assigned to the phrase “Infoman Word Cloud” above.

One way to construct these cool word clouds is to type several words or phrases on whatever subject you choose, say in MS Word or better yet Powerpoint or Keynote. To make it interesting, use different fonts, colors and positions. You may also post a background. Then, you right click each word or phrase, and assign the appropriate hypertext link, as I did above.

The faster, more pragmatic way, is to Google “Word Cloud apps” or “Tag Cloud generators”, and download these – and there are so many of these downloadable for free – from the internet.

Thanks a lot!

 

JOSEPH

“DON’T JUDGE TOO QUICKLY!”

How does a simple, innocent situation explode into a full-blown misunderstanding, argument, or conflict?

What begins as an innocent attempt at pleasing the other person can indeed – bizarre as it may – explode into shocking, unexpected conflict, as shown in this funny commercial from AMERIQUEST MORTGAGE (no endorsement or complaint intended).

One can almost predict the next scenario: a major, major misunderstanding, if not a terrible fight.  It is not wise then, no, it is foolish and inexcusable, to allow prejudice or emotional biases to figure in any argument. Remember this tagline, especially in conflict situations: “DON’T BE TOO QUICK TO JUDGE.” When one is not armed with proper facts, he or she is bound to jump to the wrong conclusions and, well, act like a jerk or a goat, no offense to jerks and goats.

Prejudice and wrong paradigms indeed prevent couples, teams, and institutions from addressing long standing conflicts, and thereby reach their full potential.  They cannot, in fact, unite and work at common goals, unless they are united.

Make it a discipline then, if not a special power, to listen before you speak, to understand before you give opinions or make conclusions. Otherwise, you can be dead wrong, if not devastatingly offensive.

In critical complex situations, particularly in conflict, crisis, or change management situations, it is always wise to “count 1 to 10” before reacting to attacks or similar stimuli. More than this, however let us keep in mind sound advice of Stephen Covey in Seven Habits of Highly Effective People, and I quote,

“Seek first to understand, then be understood.”

.

by Joseph N. Pangilinan, uncommonsense101.wordpress.com

Freedom to Change

Chinese for Crisis consists of two characters: one means RISK. The other, OPPORTUNITY.

One drop in the direction of meaningful change, can cause far-reaching ripples, waves.

Another look at Eliyahu Goldratt’s generic thinking processes on conflict. (See also: The Anatomy of Conflict: Win-win or No Deal)

One my faves of Sun Tzu’s strategems in his reknowned work Art of War translates, “To win 100 victories in 100 battles is not the acme of skill. To win without need to fight; that is supreme excellence.”

Why is it that to most people, in most institutions, change is uncomfortable, disturbing or unsettling? Yet, why is it that a few daring souls find change situations exhilarating and exciting?  Some people block – even sabotage – efforts to institute change. Others hem and haw in resistance. In effect, they protect  the status quo.

Only a few will ride on the wings or waves of change and embrace the discomfort of true meaningful reforms. They look at the organization’s leaders, take time to study the common goals of the team, and see what they can do to contribute to making these happen. They see obstacles as challenges to be overcome; not to be feared. You probably see yourself shifting between enthusiastic to apprehensive when change is being introduced.

Change by its very nature and definition,  carries with it uncertainty, and because “fear of the unknown” figures in, as a defense mechansim, most people will tend to resist it.

Paradoxically, we all desire the benefits of change, but despise the costs. If wisdom or new languages or scientific theories could be downloaded into our brains and muscular systems in instant, “Matrix” fashion, I would do that!

As employees, we want better benefits for less work, more fulfillment; we want empowerment, more recognition, acceptance, and meaning than what we now experience, and change is necessary to achieve all that.

As leaders or entrepreneurs, we want our companies to sell more, or earn more. We want our people to develop, to be able to take more responsibility. We to empower them more, but we also want them to aspire to be more competent and enthusiastic at work. We want to change our bad habits in and outide our business dealings. Only change can change that.

We all want the benefits of change, but with that comes the price w — the sacrifices we have to make to effect true, meaningful change.

What to Change?

I believe it was St. Francis of Assissi who once prayed, “Lord grant me the serenity to accept the things I cannot change, the courage to change the things I can change, and the wisdom to know the difference.”

What is it that we must change?  Busy-ness or “activity” does not mean movement from point A to B. The only thing that causes real, positive movement is meaningful change, strategic change, that is for the better and for the long haul. That means we must bridge the gap between what is and what ought to be, in a sustainable manner.

So, among the hundred things demanding our attention today, what is it that we must do to achieve meaningful change?

Perennial fire-fighting cannot cause change. It is precisely our concentration on fire-fighting ( or addressing symptoms and effects) that makes us unable to see and address the key changes that we must undertake to best fulfill our organization’s goals at the soonest time. We must attack the roots to kill the tree of negative effects.  Identifying the roots and dealing with them. That would be the prudent thing to focus on.

To best fulfill organizational goals and move in the direction of common good, we must then overcome that which obstructs us from fulfilling it. We must address the organization’s core problems and constraints, whatever they might be.  Core problems are the root conflicts that give birth to the many other undesirable symptoms and effects.

Because making money – by increasing company throughput – is an obvious standing order or common goal, constraints are therefore those few processes or few policies, that block or slowdown the flow of priority goods or services through the organization’s chain of business processes.  Both core problems and constraints tend to decrease the net “inflow” of money into the system.  On the other hand, opportunities to increase sales and business is the other side of this coin. Must focus on what will bring in business faster.

Usually, the core or root problems are complex. If solving these were so simple, why haven’t we done it, after all these years?    That is why resolving such issues would create “breakthrough” change.

What to Change to?

Having identified what to change, the next question is what do we Change to?   Do we know what will eliminate the core problems or what will increase the flow of goods through the constraint?  What is needed to overcome the physical, political, and psychological obstacles that form this core problem or constraint?

The goal of any for-profit organization is to make money now and for the future. To best fulfill the organizations’ goal, we need to overcome inertia, or resistance to change, in order that we may institute breakthrough solutions that will sufficiently overcome the organization’s core problems. That is the solution. Wishful thinking?  Maybe. In any case, if our so called worn out solutions worked, then we would not need to change, now would we?

How to Effect Change?

Conflicts – Opportunities for Meaningful, Positive Change

The most practical means to effect meaningful change, are the many conflicts that “disrupt” an organization’s day to day affairs.  Arguments, debates, and other forms of conflict, specially the most explosive ones, say nothing much except that people feel “passionate” about something. Character defects are another matter, but assuming this were not the cause of conflict, objectively speaking, there are always underlying reasons why people show resistance, animosity or other forms of dysfunctional behavior, or contrary to what we “think” is good for the organization. In fact, just because one is wild or angry does not mean s/he does not desire what is good for the organization.  Often, he is angry precisely because something is constraining him from doing what he feels is best for the organization.

There are really only a few “good solutions”, or actions and decisions that will actually enhance organizational goals, and such can only be diagnosed, given “complete information” representing “the whole truth”.  Now, who can claim a monopoly of “truth” or of what is absolutely “right or good”?  It is foolish, if not ridiculous, to presume that we know better than anyone else, even the lowliest of co-employees, on what best to do at any given time.

Indeed, who knows better? The one who thought about it, or the one who actually did it?

We all see only part of truth, and so it is wrong, if not stupid, say for me to refuse to listen or to try to understand “your side”.  Co-operating would definitely improve or complete the solution, so you do a disservice to the organization if you perpetuate conflicts with people you work with.   If I refuse to acknowledge that I only see part of the whole truth, then my action or decision is bound to be wrong.  What is most irritating for example is how we tend to repeatedly tag along with the same wrong, incomplete “solutions” of the past, and then blame others if the system fails to deliver what we hoped it would deliver.

Conflict is the twin brother of Inertia, the mother of Murphy.  Arguably, unresolved conflicts, are the root of all organizational evil.  For all “positive changes” require synchronized efforts, which cannot be achieved when there is resentment, distrust, mis-communication, resistance, perceptions of injustice and other fruits of unresolved conflict.

Conflicts that are left “hanging” or worse, are haphazardly settled, are the root cause of resistance to change. When conflict is not adequately resolved, what results is usually compromise, or where one or the other party is satisfied. Whether it is admitted or not, such compromises causes the “loser” to bear a grudge or feel resentful.

Prolonged resentment breeds distrust. This redounds to endless spats, blaming, name-calling, and if left unchecked, this leads to eventual communication breakdown, which leads to more major future conflicts.

How can anyone you do not communicate with, understand, much less cooperate with or support any change you propose, and vice versa? Unresolved conflicts abort any meaningful, positive change, and so by conflicts’ mere existence, breakthrough improvements cannot naturally happen. Precisely, these unresolved conflicts snowball into devastating consequences that severely limit the group’s ability to reach its goals.

To effectively manage change and institute breakthrough solutions, and a culture of never-ending change, we must be masters at conflict resolution

How to Effect Change –  Win-win Conflict Resolution

I will argue with or resist anyone I perceive will disempower me from doing my job. For example, disapproving my requests for materials will disempower me from producing more, and so I will be justified to protest. Reducing my take-home-pay – through new policies or procedures – would be unfair, so do not take my vehement objections personally.  I will resist any so called “improvement” if it will undermine my department’s ability to contribute more, OR if it steps on my rights as I perceive them.   NONE of these necessarily make me right, but in my “local” perspective, my reservations are worth listening to.

Too often, we attribute such grumblings to “poor, irrational attitudes” and as a compromise, we give totally unrelated incentives and morale boosters as though these will change the root reasons why s/he complained in the first place. . By experience, we know this is simplistic and irresponsible.  Penalizing OR distracting the complainant does not resolve the conflict.  Others may feel the same, but simply do not have the guts to complain.  In the end, the very reasons for resentment or disempowerment are hid under the carpet.

Win-win or No Deal

How often have we seen two parties previously in severe conflict finally come into an agreement where both are far more empowered than ever before to do their part in helping fulfill common goals?  Not too often, but we have seen it and that is an example of win-win conflict resolution. What relevance do “settlements” and “compromises” have if this will not contribute to better achieving the common goal?  And such resolutions are not possible through self-centered, hard-line negotiation. Conflict is truly resolved when the settlement gives what both parties truly “need” to achieve common goals, without necessarily giving them what they claim they “want”.  Resolving conflict in this manner encourages people to embrace rather than resist critical changes.

Successful conflict resolution facilitates cooperative action and sound decisions. Less conflict not only grants leaders more time to think more clearly and act more decisively. It also creates synergy in the team, making it capable of even greater accomplishments.

Successful conflict resolution empowers and turns win-lose situations into win-win. To sufficiently “resolve” an argument or debate, all vital parties involved, must leave the negotiation table, genuinely happy about the new “deal” or “policy” or arrangement, then predictably, there will be a lot less resistance to change.

One will not resist anything that does not come in conflict with his/her perceived needs. Predictably, if there is no resistance, then any change can be introduced with ease.

Let us say a broken machine is preventing the company from the on-time delivery of  a shipment worth $100,000 dollars. To resolve this situation, we must simply fix the broken machine (initiate the change), or let the job be done elsewhere. We execute a “solution” that will eliminate or overcome the hindrance. If I do nothing, I become part of the problem. If someone wants to help me solve it, but because I do not like this person I do not accept his help, or shoot down his recommendations, then am I not resisting change. By merely resisting change, do I not contribute to company inertia and deterioration?   In this case, I deprived the company of $100,000 in uncollected funds for as long as the problem is left unsolved.

If I will not initiate change myself, then I owe it to the company to step aside and allow others to do so.  It does not make one a lesser person to do that.

It is a pity though that shooting down recommendations, “sitting” on ideas, crucifying initiators and other agents of change and protecting the status-quo seem to be more of the rule than the exception – in many organizations today.

To allow never-ending growth in our organization’s ability to fulfill its vision, mission, and goals, people must be freed to embrace and initiate change.  To achieve that, we must create an environment that defies inertia, or the resistance to change.  

Defying Inertia

Can resistance to change, or inertia, be overcome? Clearly, some companies taunt inertia in the face, while for others, inertia holds them by the neck.  Achieving this spells the difference between excellence and mediocrity in organizations!

Inertia paralyzes all efforts to improve anything.  One of the most critical roles of leadership is to defy inertia.  As the Law of Entropy, states “all things tend to deteriorate over time.” And according to Murphy’s Law, “Anything that can go wrong, will go wrong, and at the worst possible time.”

This is reality. Without positive, constructive change, organizations deteriorate.

IF people are enabled to overcome inertia, they will be free to take on the breakthroughs needed to get ahead in this increasingly competitive world.

Resistance out of Fear

To defy inertia, we must find its root cause/s and eliminate the same.

One reason we resist change is because we fear the perceived or unknown consequences of the required change.  If there were no fearful consequences, why should there be resistance?   So can the fear of change be overcome? Can its pain be averted?  Why not?

We fear the discomforts brought by the change process, specially when it requires resolving important conflicts.   We fear confrontation, specially when it involves a clash of personalities, because we are not trained to deal with such confrontations.  We are afraid, justifiably, that it will only get worse.

Unresolved Conflict

Here lies our prime suspect. Unresolved Conflict.  Look around you.  Organizations are full of unresolved conflict, or what we might call Win-lose Compromises.  If it were easy to resolve these, it would have been resolved long ago. But up to now, someone still has a problem with it. This is precisely why we call it an “unresolved conflict”.   So is it possible to train oneself to resolve conflict?

To break inertia in organizations, it must become second nature in employees to confront and effectively resolve important conflicts, in a manner that satisfies conditions necessary for the success of the company and the ultimate welfare of its people. This frees people to undertake constructive change.  Constructive change will hardly ever happen by itself.  Destructive change happens all the time.

I recall a shipment we once had of 500 chairs to the Hyatt Regency in Kuala Lumpur sometime in ‘94. The client needed it in time for the inauguration.  Now, it was common practice to award the weaving component of orders for this particular chair to a particular subcontractor who had developed the expertise for it. In-house weavers had not fully developed the skills to do it right. A conflict later ensued with the workers’ union which complained that at that time, the inhouse weavers, “had no work”, and so it was “unfair” for management to farm out any part of the work. To appease the workers, then, we agreed to try the in-house weavers to perform the task. We commandeered all weavers, painters and packers to  go full-speed ahead to make the deadline.  After final inspection, we authorized the shipment.

A couple of months later, all five hundred chairs were shipped back due to substandard weaving. And these had to replaced these at no cost to them. We made the delivery… probably made the right margins at the time.  We even made our own workers “happy” at the time. But quality was compromised, and so money was lost.  Worst of all, we lost the customer.  We all lost, eventually.

The first conflict in the above situation was whether “To farm out work”, or “not to farm out work”. The second was “to deliver” or “not to deliver”.  In both cases, the conflict was not sufficiently resolved. Like on-time delivery, happy workers, and the right “margins”,  “quality” was an absolutely necessary-condition that should not have been compromised.

Unresolved conflict between key people in the organization is one of the root causes of inertia.  Such conflicts are not outwardly discussed and therefore the underlying reasons are not made clear, and not understood by the other party.  Maybe it is a cultural thing. We do not feel it is proper to confront directly. Back-stabbing and gossip seems to be a safer option.

Unresolved conflicts stifle teamwork, discourage cooperation, and eventually kills  progress or constructive change. Responsible leaders will recognize that unless operations are synchronized, precious time, money, and opportunity is lost everyday. Conflicts between key personnel are a prime cause of unsynchronized operations, which have severely damaging consequences on organizational Throughput and profitability.

Without doubt, to effect any meaningful change in an organization, its leaders must learn to resolve important conflicts sufficiently and effectively.   In order to sustain growth, leaders must master conflict resolution.

Root Cause of Conflict

Conflict is not resolved when it is avoided (flight) or ignored. Neither is it resolved when it results in self-centered disputes or arguments (fight).  Lastly, conflict is not resolved by compromise. There are necessary conditions for a company to succeed, and presumably, in any conflict, both parties want to do something in order to satisfy one or another “success” condition.  That is what people are paid to do – to help the company succeed. So developing Win-win resolutions, where all necessary conditions for success are satisfied, is really the only way to resolve conflict effectively.

We “resolve” conflicts not  by way of  some stop-gap or temporary “solutions,” but by ensuring that we understand both sides and constructing a solution that meets all necessary conditions to make it Win-Win.

It is no wonder then, that a unilaterally constructed policy, contract, or arrangement (one done without concensus or involvement of the other affected parties), will more likely than not be met with fierce opposition.  If its implementation is railroaded or forced, then you can be certain it will be short-lived.  Ningas Cogon. This is why it is so important that ALL legitimate reservations against a new policy, design, contract, project or arrangement  be heard and addressed from its conception.  Executing without this has little chance of true success.

Take the case of company A, which experienced a strike late in 1996. IF all the alleged agitators intended was to cause trouble, then they “succeeded”. IF management’s intention was to “get rid of  some people”, then management “succeeded”.  But did anyone really succeed? And were these really their intentions? Could the alleged rabble-rowsers merely want the bosses to know and do something about the perceived injustices in the way some people were being treated?  Was this being unreasonable? And didn’t management merely protect the interests of the majority by instilling discipline on some people who did not want to answer for illegal acts of economic sabotage?

Both were fighting for what they perceived was right, but hardly listened to reservations and arguments of the opposing side.  By clinging to their respective positions, to this very day, we still reap the destructive repercussions of this incident.

Necessary Conditions to Succeed

For an organization to make more money now and in the future, there are necessary conditions to succeed.  Quality, On-time Delivery, Profitability, Synergy (teamwork), Employee Welfare, are but a few.  Purportedly to attain these necessary conditions, a multitude of projects, activities, tasks, and other solutions are done year-in and year-out.

Some managers refuse to admit that real conflicts exist within her/his department, and that s/he lacks the skill to resolve them.

In attaining on-time delivery, for example, and one party wants to buy materials earlier while another party wants to finish a shipment first, there is conflict. When two departments fight for limited funds, there is conflict.  When purchasing decides to buy a part or have it made in-house, there is conflict.  When a policy is in question, when a defective product is being rejected, when a contract is breached, when management and labor, management and management, labor and labor,  company and supplier, company and buyer, cannot see eye-to-eye, there is conflict!

Let us set the record straight.  Every single negative effect or undesirable incident in an organization, can be traced back to an unresolved conflict within the same organization.  Conflicts do exist.   Astonishing as it may seem, companies are bursting in their seems with unresolved conflicts, and yet most managers never really cared to learn or study how, to effectively resolve conflict!

When any important conflicts is left unresolved, you can be sure that one or several of the company’s necessary conditions to achieve its goals are “compromised,” or endangered of not happening.  A customer’s rights are violated. An employee is oppressed. Quality suffers.  Delivery is delayed. Critical materials are used for the wrong projects.  Customers cancel orders.  Suppliers refuse to deliver.  Payroll is delayed. Are these not all mere consequences of unresolved conflict between people or departments?

How is Conflict resolved?

Some time ago, I was with a prospective customer from Israel, a market which I had never sold to till then. After several hours of negotiation, the customer checks the Pro-Forma offering for the 99th time, and then drops the bomb.  He asks for a 15% discount across the board, “as a gesture of our good faith.” Otherwise, he claimed, he really could not afford it and must therefore cancel the order.  Some customers can act quite idiotic and illogical.

But here was a clear conflict. As I perceived it, IF I agree to the discount, we would definitely lose money.  IF I do not give even part of it, I might not lose the sale nor the customer, but he will not leave the table happy and prepared to support my product all the way.

So I asked him to come back in half an hour so I may seriously think about it.

Upon his return, I offered “Since price seems to be most important to you, and you are in a special market that will not conflict with any of my current buyers,

I can agree to a 10% discount, provided we change the texture – not the color – of the metal to this antique style.  All other conditions remain the same.”

We closed the deal. The perceived value of the antique textured metal was, to his mind, even higher, and so he was ecstatic.

Did that deal make sense to you?  Maybe not, but I can assure you we made more money on that deal than the original offering without the discount. The previous finish/texture was a bottleneck procedure. Presumably because of its salability, there were weeks of order backlogs for that particular color. Problem is, it was also the most difficult to make.   The antique finish only used excess capacity of the factory. It cost 1/3 the other color, and also took a quarter of the time to prepare and dry. We opened a new market without affecting pricing in our other market segments.  Best of all, everything above variable cost contributed to profit.

Within an organization, conflicts are effectively resolved when all necessary conditions to the organization’s success are met or at least, not violated.  No necessary condition should be given up for the sake of another.  Otherwise, problems related to what was compromised or sacrificed will crop up to haunt the company in the future.   Bad quality will need to be replaced. Poorly treated employees will rebel or perform lousily.  Customers will buy less volume.  Financial losses will stifle stockholder enthusiasm, and block any improvements to employee welfare.  Ultimately, nobody really wins.

But is there such a thing as Win-win?  Can conflict be resolved by it?

What if there was a generic process by which an organization can resolved important conflict in such a way that most if not all necessary conditions are indeed met?   Let us take a look at the root causes of unresolved conflict.

Perceived Injustice

Interestingly, one usual root cause of unresolved conflicts is found to be the perception of some form of “injustice” or “unfairness”.  I say perception because that is all it takes to complicate conflicts to the point of irresolution.

Let us examine the logic behind this. Injustice, even perceived injustice, causes resentment. Let us say that there are two colleagues in a company, and one of them does something where the other party is put at a disadvantaged (happens daily). So the second colleague “perceives” that what the first one did was unjust, and so what does he feel? Resentment. The resentment results in avoidance or possibly some arguments between the two colleagues.

So the second party confronts the first to try to resolve it.  Unless they RESOLVE this situation in a way that both parties are truly happy, what happens?   Let us say, it is resolved through some form of compromise

which (more often than not) is STILL perceived as unfair or unjust. Say that in the form of compromise was done haphazardly, as it is often so, and so the second party is not satisfied. Let us suppose that the first party is the BOSS and the second party is the SUBORDINATE.  Say the BOSS uses his position to tell the SUBORDINATE to just accept the deal – even if it is a bit unfair.

This causes a little MORE resentment and widens the gap further. This eventually causes one to think that the other party is irrational or unreasonable… (or after more of this.. a bit stupid and crazy).

Say that more of this situation happens – as it does – throughout the year… for several years.  Haphazard compromises – perceived to be unfair – are made or tolerated, without much effort to resolve the root conflicts.  Such a situation creates serious “distrust”, which further spirals into more and bigger conflicts, and greater mutual distrust.

Can cooperation be expected from anyone who has harbored chronic distrust in his heart, say, due to an unjust “contract” he has had with management for several years? If unresolved conflict gives the impression that the perpetuator is callous and insensitive, can any mutual respect ever be expected?

Can the other be expected to “support” your ideas, no matter how RIGHT they might be?

Communication breaks down, and what happens? Finally, this explodes in some form or another. It could be as simple as a screaming match, or as severe as a labor case, rebellion, or a strike, for example. So this unending spiral of distrust and vicious conflict evolves. This results in never-ending deterioration, not in never-ending improvement!

See, we are all volunteers here, even if we are paid to “work” for the firm.

No one can force me to “like” you or support your ideas.  No one can force me to give you my all out support if I do not trust you. And how can I  trust you unless you change that “unjust” situation you keep talking about but never do anything about.

You can use fear or even grave threats to change my behavior, temporarily, but you can never change my perception of you, unless you change the very reason why I perceive that you are being unfair or unjust to me/my department in the first place.”

Such unresolved conflict, and its painful effects, can linger on for decades, but can never really be kept in a lid. It will explode one day, in some form or another.

How will this vicious spiral of growing distrust be stopped?  If “injustice” is the root cause of unresolved conflict, and unresolved conflict is the root cause of inertia, then removing “injustice” resolves the conflict and brings us closer to defying inertia.  Eliminate the cause. Study it and make it more fair, not for one party but for both.  It is really simple as that.

Let us examine this word “injustice.” Conflict arises when one party sincerely perceives, rightly or wrongly, that s/he is being unfairly treated, or is not getting what s/he deserves.  A more recent term used for “injustice”  or “unfairness” is “WIN-LOSE”, where one party is perceived to be “winning”, and the other is perceived to be “losing”.  Not fair, is it?

Whenever I perceive I am not getting what I believe I need to perform my job well, or when I feel a colleague is doing something that will have a negative effect on my own performance, then I might do one of the following things:

(1) Fight – I will use power, manipulation, violence, influence peddling, shouting or more persuasive argumentation and debate tactics to get what I want. After all, I want to do this, in order that I can do my job better, to fulfill my department objectives (and the company, too)!   Or maybe I am just a spoiled brat, and will surrender without a fight; or

(2) Flight –I will avoid the conflict and just do my job in some other way, without bothering the other side. I will not look at this person or talk to him/her until our heads are cooler. I will avoid talking about this issue ever again. Or better yet, I will just quit my job and find a less hostile working environment.

A better approach might be to develop the courage to  talk things out with my “adversary” and try to resolve the conflict. As Woody Allen says, 80% of success is showing up. The problem is we have done this a zillion times and it just doesn’t seem to work. Deep inside we know we just didn’t  handle that talk very well. There must be a better, more logical way to talk with “irrational” and “sensitive” persons, for example. Until that I develop the expertise, that conflict will remain unresolved for ages.  Meanwhile, can I work “well” with this person?  Can I get his/her cooperation for anything I will need in the future? Will I give my cooperation if s/he needs anything from me in the future?

IF fight, flight or aimless talk will not work, what will?   IF the root cause of intrigues, distrust, resentments, inertia, lack of cooperation and most unresolved conflict is injustice or a Win-Lose situation, then unless the conflict is identified and replaced with A Win-win deal, it remains unresolved. Its evil tentacles will continue to wreak its ill effects, and most likely spiral into worse things in the future.

Replacing Win-Lose Situations with Win-Win Resolutions

Until a Win-lose situation is replaced with a Win-win situation, the conflict will remain unresolved until it brings the company down with it.

Any “for-profit” company is composed individuals, “allegedly” working together towards a common goal, for example, to make money. I say “allegedly”, because in real companies in the real world, very few individuals really work for the “common goal”.  Some work to protect their own hides. Many work to get higher commissions and benefits. Others work to sincerely please their boss.  Others fulfill their job descriptions.  Some even try to fulfill for department objectives.  They work for many things, but whether or not it contributes to the “common goal”  is another matter.

We are all trained to think local, but act global.  This means that we all work for our own department’s specific “objectives’, thinking that improving all departments at the same time ultimately results in improving the company. Nothing could be farther from the truth.   Only the bottleneck department constricts the total output of the entire company.  “Improving” output elsewhere will only create inventory at a faster pace. Now improving bottleneck output – without a doubt – improves total output.

This is why we have a situation in TQM run companies where departments literally “improve” themselves out of existence.  They create so much excess capacity that terminating half of their department won’t affect the company’s over-all throughput.

Root Cause of inertia.

Win-lose compromises – unfair arrangements — are the root cause of inertia.

Replace such compromises with Win-win, and you break the root cause of the conflict. Minimize unnecessary conflict, and you empower people to effect real, meaningful and constructive change.

When we avoid conflict in the workplace or neglect to address it, status quo wins and the organization decays.  Developing Win-win solutions is key to sustained growth and the benefits that go with it.

Win-win solutions are those solutions that make both parties win, by giving both what they need in order to achieve the common objective, and not compromising (50:50) simply because you  don’t have the patience to sit down and think, before talking.

To achieve the common goal, we must each do our share. To be able to do that, we must agree to avoid doing anything that will undermine another department or prevent them from fulfilling their own objectives.  We must de-focus or detach ourselves from the insisting on the exact conditions we demand, and seek a OTHER, better ways that will give us both what we need to attain the common objectives for which our relationship stands for, without necessarily getting the exact thing we were fighting for.

If we can both get everything we need to make this relationship work, then neither of us shall want anything more. No individual can “improve” herself while remaining oblivious to the needs of other co-workers, including those in other departments. And so when a conflict arises, the needs of all departments involved – and all individuals involved must come into play in its resolution.

This is what Win-win is all about.

Joseph Pangilinan

P.S. The tool  recommened to develop Win-win solutions is the Conflict Resolution Diagram or what Goldratt has labelled “Evaporating Clouds Diagram”. (to be continued)