Lean Standard Work has become a major component of most Lean systems. This is fundamentally a lean-principled way for managers at all levels to execute their work. There is a natural push back from leaders about having their own standard work, but they should have at least 5-25% of their time spent on recurring and scheduled tasks, These tasks include staff meetings, Go and See activity, coaching/mentoring sessions, strategic planning, weekly email communications to team, scorecard metric collection and review, and more.

The centerpiece or focus of Lean Standard Work systems is the use of checklists. Checklists are a way for leaders to keep up with the work that is important, and remember what they need to complete. This includes meetings, key people to check in with, and monitoring of metrics or standards to ensure the systems are performing properly. When you start reviewing leadership calendars, you immediately notice the lack of white space.

Meetings and tasks are set aside in the calendar and that time is protected, but the problem is overbooking. Looking closely at these calendars, leadership can, typically, be double or triple booked for events on the calendar. This leaves a leader to make a hasty decision at the last minute on which meeting is most important, at the moment. The lack of white space on the calendar leaves leaders with no time to think, plan or problem-solve.  We are taught to never schedule our production lines, or our workers above 80% capacity, but somehow a leader with 125% capacity on their calendar is acceptable or considered a “badge of honor”? Some of the most critical tasks a leader can do are never planned for!  Without creating white space for these unplanned situations, a leader will become overwhelmed. This is part of the reason over 80% of new CEOs fail within the first 18 months!

Creating White Space

Leaders must have time to solve problems! That is what they are hired for. Organizations heavily depend on the ability of their leaders to think, problem-solve and plan. Otherwise, we tend to lead from the hip and make decisions that are not quality focused. This causes leaders to fall into a “firefighting” mode when they are trying to lead the organization to success. By creating white space, leaders start to make better decisions and actually can move the organization forward. Here are three tips leaders can use to make some white space in their daily schedule:

1. Prioritize & Focus: Prioritize where you need to focus your time to best create success for your organization.
2. Stay in Control: Make sure you stay in control of your calendar. Be clear with subordinates and assistants about priorities and that blocked time cannot be crossed. Block time to think, plan and problem-solve.
3. Delegate: Develop subordinates and empower them to make decisions on things that aren’t in your list of top priorities. As they grown and develop their skills and understand your priorities, they will become your most valuable assets. This is the heart of Lean, respect for people. If you are not growing the skills of your people, you will limit your ability to improve, and you will become the bottleneck in the process, as they will seek you out for all approvals.

Lean Standard Work Practice

Preserving white space can be a daunting challenge for some. Some leaders have been raised in an environment of reactionary leadership and have been known to triple-book a schedule. It seems to be what is expected and it is what they understand. The fact is, creating white space in your schedule will empower the leaders of an organization and make them much more effective. It can no longer be a “badge of honor” for leaders to have overbooked schedules, and their white space time is relegated to after midnight. Just like any other Lean practice, it is about habit of practice and discipline around standard work (see Toyota’s Manage for Daily Improvement training materials). Understand and focus your time on what is most important. Make time everyday to think, plan and problem-solve.

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The excel tutorial and the 4:48 minute HD video below shows the history of the Pareto Principle, when to use it, how to use it to show us where to focus our Lean and Six Sigma efforts.

A result of the Pareto Principle is the Pareto Chart. The Pareto Chart is used to graphically summarize and display the relative importance of the differences between groups of data, or to visually represent the Vital Few versus the Trivial Many.

You can create a Pareto Chart in any statistical tool such as GNU Plot, MatLab, Mathematica, Stata, SAS, or MiniTab. For our example, I’ll show how to create a Pareto Chart in Excel.

To create a Pareto Chart in Excel, setup a spreadsheet such that the first column contains the categories of your data, the second columns, percentages of each category, and the third column cumulative percentages of each category. The example below represents data collected on the number of citations issued by police for various violations (Category) in a particular intersection. Overall, 300 tickets were issued for various traffic violations. The percentage of tickets issued for each violation and the cumulative percentage of tickets issued were calculated and entered into an Excel spreadsheet. If the data is not sorted from high to low, then sort the data from the highest percentage to the lowest. The sequence for sorting is Data, Sort, Percent, Descending.

Then, highlight Categories, Percent, and Cumulative Percent Columns. Go to the Chart Wizard, select Custom Types and select Line-Columns.

In my line of work, I use the Pareto Principle all the time. As an example, at Amazon, I used the Pareto Principle to separate the value-added time in a process versus the non-value added time. This approach would help direct efforts on where to spend our time to improve a process. The Pareto Chart is a nice and easy way to visually display the data and direct efforts.

In software engineering, to avoid feature creep and to remain focused on the right features, it’s important to use the Pareto Principle to determine which 20% of the features will satisfy at least 80% of the users. In my experience, not enough software organizations use this principle in their software development.

In Human Resources, roughly 20% of the people produce 80% of the results.

In Government, roughly 20% of the group are influential and the other 80% are peripheral.

In word-of-mouth marketing or marketing in general, roughly 20% are the influential, “sneezer” types and the remaining 80% are the slow adopters or followers.

In Project Management, if a schedule slips or a milestone is not met, it must be measured against the 80/20 rule and then quickly recover the project and re-focus on the vital 20%; or, make sure that the milestone kept are part of the vital 20% and if a milestone under the trivial 80% slips, then the team can afford to do that and not freak out that the project will fail.

To apply the Pareto Principle more broadly, as a general rule, it’s important to remember that only 20% of our daily activities matter. Or, put another way, let us focus our energies and time on the 20% that will make an impact on the other 80%.

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Below is a good example of a Pareto — the exact opposite of a Flateto:

The above picture shows that the majority of the processing time for a process was being spent in travel.

A Flateto, on the other hand, would have showed that processing time are roughly the same across all category types.  Indeed, a Flateto doesn’t tell us much or help us focus on the right things.  Whereas, the Pareto above tells us that if we were to reduce processing time for the process above, then we ought to take a serious look at the travel time category because, most likely, any improvements in that category would yield us and the team bigger results and ensures that we are focusing on the right category.

The Pareto

The Pareto Principle was named after an Italian economist who discovered that 80% of the wealth in Europe was concentrated in 20% of the population. This discovery is also known as the 80/20 rule or the Law of the Vital Few. The Pareto Principle is a phenomenon that finds application in many places, such as software engineering, quality, manufacturing, word-of-mouth marketing, human resources, and government; the 80/20 rule was also popularized by the book The Mckinsey Way as a principle by which Mckinsey consultants follow to solve client problems.

A result of the Pareto Principle is the Pareto Chart. The Pareto Chart is used to graphically summarize and display the relative importance of the differences between groups of data, or to visually represent the Vital Few versus the Trivial Many.

You can create a Pareto Chart in any statistical tool such as GNU Plot, MatLab, Mathematica, Stata, SAS, or MiniTab. For our example, I’ll show how to create a Pareto Chart in Excel.

To create a Pareto Chart in Excel, setup a spreadsheet such that the first column contains the categories of your data, the second columns, percentages of each category, and the third column cumulative percentages of each category. The example below represents data collected on the number of citations issued by police for various violations (Category) in a particular intersection. Overall, 300 tickets were issued for various traffic violations. The percentage of tickets issued for each violation and the cumulative percentage of tickets issued were calculated and entered into an Excel spreadsheet. If the data is not sorted from high to low, then sort the data from the highest percentage to the lowest. The sequence for sorting is Data, Sort, Percent, Descending.

Then, highlight Categories, Percent, and Cumulative Percent Columns. Go to the Chart Wizard, select Custom Types and select Line-Columns.

In my line of work, I use the Pareto Principle all the time. As an example, at Amazon, I used the Pareto Principle to seperate the value-added time in a process versus the non-value added time. This approach would help direct efforts on where to spend our time to improve a process. The Pareto Chart is a nice and easy way to visually display the data and direct efforts.

Examples of Pareto Phenomenon

• In software engineering, to avoid feature creep and to remain focused on the right features, it’s important to use the Pareto Principle to determine which 20% of the features will satisfy at least 80% of the users. In my experience, not enough software organizations use this principle in their software development.
• In Human Resources, roughly 20% of the people produce 80% of the results.
• In Government, roughly 20% of the group are influential and the other 80% are peripheral.
• In word-of-mouth marketing or marketing in general, roughly 20% are the influential, sneezer types and the remaining 80% are the slow adopters or followers.
• In Project Management, if a schedule slips or a milestone is not met, it must be measured against the 80/20 rule and then quickly recover the project and re-focus on the vital 20%; or, make sure that the milestone kept are part of the vital 20% and if a milestone under the trivial 80% slips, then the team can afford to do that and not freak out that the project will fail.
• Roughly 80% of costs are because of 20% of the activities.
• In task-based, user-path analysis, ~80% of the customer population only use ~20% of the available paths.
• In contact center management, ~80% of contacts come from 20% of the population.

To apply the Pareto Principle more broadly, as a general rule, it’s important to remember that roughly 20% of our daily activities matter. Or, put another way, let us focus our energies and time on the 20% that will make an impact on the other 80%.

The post Pareto Analysis Excel Model is Not Difficult – Learn How appeared first on 6sigma.

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Six Sigma and Snoop Dogg

I have to say this was a huge surprise because I don’t listen to Snoop Dogg, but the Snoop Dogg concert will be fun. Get this, Snoop dogg even has a Snoop Dogg clothing line.  Crazy.

Back to the Snoop Dogg concert.

I like 311, but I’m not into Snoop all that much. When I was in 5th grade, I bought my first tape — a $2 USD bootleg of NWA. I pretty much grew-up on NWA, Eazy-E, and Dr. Dre, but I never got into Snoop. Those early years of my life were years of trouble and self-destruction and I’m glad I’m not there anymore. Now, I’m fully focused on staying positive, contributing back to society, and just doing good in the world.

Seeing Snoop will be fun, or at lease entertaining.

To get myself stoked, I listened to some of his songs and, it made me wonder what Snoop’s songs would be like if he were a geeky business guy. What would snoop’s songs look like as a Pareto Chart, Process Map, and a Regression?

Gin and Juice

Rollin down the street, smokin indo, sippin on gin and juice
Laid back [with my mind on my money and my money on my mind]

Here’s Snoop’s Gin and Juice in a Pareto:

Nuthin’ But a G Thang

Its where it takes place so Im a ask your attention
Mobbin like a *** but I aint *********
Droppin the funky **** thats makin the sucka ******** mumble
When Im on the mic, its like a cookie, they all crumble
Try to get close, and your ***** get smacked
My ******* homie doggy dogg has my back
Never let me slip, cause if I slip, then Im slippin
But if I got my nina, then you know Im straight trippin
And Im a continue to put the rap down, put the mack down
And if your ******* talk ****, I have ta put the smack down
Yeah, and ya dont stop
I told you Im just like a clock when I tick and I tock

Here’s a Process Map for “Nuthin’ but a G Thang”:

Nuthin’ But a G Thang

One, two, three and to the fo
Snoop doggy dogg and dr. dre are at the do

A Linear Regression for “Nuthin’ but a G Thang”:

The regression above tells us that as we increment from one to fo’, the more likely will Snoop and Dre be at the do’. With an R^2 of 1, in fact, there is no argument — Snoop and Dre will definitely — foshizzle bizzle — be at the dizzle. In other words, all of the variation in the data is explained by the regression model. Foshiznit.

I don’t know about you, but Snoop as a foshizzle bizniz fizzle would be a fun d-o-double g. Digg-a-double-dizzle?

The post Snoop Dogg Gin and Juice Pareto Analysis appeared first on 6sigma.

1. What is the Cause and Effect Diagram?
2. When should you use it?
3. How to create one.

We also cover some history and explain how the Cause and Effect Diagram is also the Ishikawa Diagram and how Root Cause Analysis is, at its core, the purpose of the Cause and Effect Diagram.

If you’d like to create a Cause and Effect Diagram, check out an Excel template we created >>>

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Here’s one example:

Have you thought about the sugar content in what you drink? In all honesty, that’s the least on my mind. But, recently, I stopped drinking soda and I’m finding that I feel better, more alert, and I actually have more energy than I did when I drank soda – and I drank a lot of soda.

So, the image below, which shows the sugar content in drinks, came at a perfect time. And, if you watch carefully, you’ll see the Pareto Chart in action.

Do you see it?[1. source: http://www.facebook.com/laurafarago]

HOW MUCH SUGAR ARE YOU CONSUMING? Dr. Tim Mathew, Kidney Health Australia’s Medical Director, said research in the US had shown that one soft drink or sweet juice each day AT ANY AGE was associated with an 80% increase in the risk of acquiring diabetes in females. It’s really all about choices.

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So, in a recent visit to the pet store to buy a new aquarium filter, I stumbled upon this nice description of aquarium filters by type – and, low and behold, it forms a nice Pareto Chart:

The aquarium filter sign says:

The most powerful the [aquarium] filter, the cleaner the water and less maintenance required. Replace filter cartridges every month.

The best part of the sign is that it shows the filter type that is most appropriate for the number of gallons in your aquariums. For example, if your aquarium is up to 10 gallons, then an internal filter is most appropriate; if your aquarium has up to 75 gallons of water, then a power filter is best; if your aquarium has over 75 gallons of water, then a canister aquarium filter is your best choice.

Okay, this is way more information than I needed, but I found it helpful.

In sum, the aquarium filter sign shows the information in an easy to read way and, for someone with almost no knowledge of aquariums or filters, I found this sign to be helpful.

Plus, the sign shows a nice looking Pareto Chart of aquarium filters.

The post Aquarium Filter Types: A Pareto Chart appeared first on 6sigma.

The article explaining the Pareto Chart on the cover is equally interesting. It explains an average breakdown of what Americans spend their money on. The list below is long, and I don’t exactly understand it or even made an attempt to understand it, but it is what apparently American love to buy.

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My main interest was the Pareto on the front cover. Enjoy.

• Water 84 C
• Air $19
• Museums/libraries $2
• Public $31
• Sporting events $8
• Movie theaters $4
• Sporting $8
• Lotteries $8
• Pets $9
• Amusement parks $16
• Cable TV $29
• School lunches $3
• Housing at schools $9
• Hotels $25
• Alcohol purchased with meals $26
• Restaurant meals $161
• Securities commissions $13
• Pension funds $14
• Financial service fees $31
• Investment advice $33
• Insurance $94
• Laundry/dry cleaning $3
• Postal/delivery service $3
• Day care/nursery schools $4
• Lobor-organization dues $4
• Moving/storage $5
• Landline telephone $5
• Funeral/burial services $7
• Accounting/business services $10
• Internet access $19
• Personal-care services $34
• Legal services $34
• Cell-phone services $36
• Foreign travel $43
• Higher education $57
• Medical laboratories $12
• Home healthcare $30
• Dental services $38
• Nursing homes $51
• Physician services $138
• Hospitals $277
• Natural gas $16
• Electricity $60
• Housing $557
• Outdoor equipment $2
• Tools $6
• Dishes $6
• Appliances $14
• Furniture $29
• Bicycles $2
• Musical instruments $2
• Pleasure boats $3
• TVS $13
• Computers $17
• Children’s clothing $5
• Shoes $21
• Men’s clothing $35
• Women’s clothing $59
• Tires $8
• Accessories/parts $10
• Used autos $18
• New autos $27
• Fuel oil $8
• Gas/other motor fuel $139
• Seafood $5
• Wine $9
• Fresh fruit $10

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My friend is in the pharmaceutical industry (pharma) and most pharmaceutical firms have a very large sales force, with geographical territories, targeting physicians and doctors that specialize in the diseases for which the pharmaceutical representative’s drug supposedly treats.

For example, if one is selling a diabetes drug, then the pharmaceutical rep might target primary care physicians, physicians that specialize in cardiovascular health, or ophthalmologist. Why? A co-morbidity of diabetes are heart problems and diabetic retinopathy, or blindness from diabetes.

You get the point.

In our discussion, he explained that a few of his sales force generates the bulk of the drug sales. During our discussion, I drew a picture of what he described with words:

In other words, the majority of your sales force will generate average to below average sales, while roughly 20% of your sales force will generate 80% of the drug sales.

The anecdotal data he shared with me really validates the Pareto Principle. In fact, for my friend, about 13 sales reps are responsible for roughly 67% of the drug sales in his territory. Indeed, sales force performance is defined by those sales reps.

But this is just the beginning. One can actually use this model and framework to increase the performance of their sales force, or increasing sales force effectiveness.

Sales Force Effectiveness Model

Once you’ve identified the top 20% of your sales force that is generating the majority of your sales, consider the following questions:

1. What are they doing differently than the rest? Look out for small, subtle behaviors or practices or habits. Something small can make a big difference.
2. Related to #1, consider positive variance. Are your sales reps that generate the majority of the sales doing something unique?

These questions, while seemingly simple, are the beginning to improving the effectiveness of your sales force.

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And, for our purposes, it turns out that the clean energy investment picture demonstrates the Pareto Principle and forms a nice Pareto Chart:

By clean energy, the report specifically calls out the following as clean energy:

• Wind
• Solar
• Biofuels
• Efficiency and Low Carbon Technology and Services
• Other Renewables

The Pareto Chart above shows that China is making the largest investments in clean energy, with $54.4 Billion Dollars of investment in 2010. That’s a massive amount of money and is sure to create many clean energy companies, clean energy jobs, and is just a great investment in the future of our planet.

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1. What are the 7 Quality Tools?
2. What are their benefits?
3. How to use each one.

While most companies are seeking six sigma training and lean training, in practice most of what will be needed initially is just a basic knowledge and experience with the 7 Quality Tools, also known as the 7 QC Tools.

The 7 Quality Tools are:

1. Scatter Plot: Graphs pairs of numerical data, one variable on each axis, to look for a relationship.
2. Cause and Effect Diagram: (also called Ishikawa or fishbone chart) and Identifies many possible causes for an effect or problem and sorts ideas into useful categories.
3. Pareto Chart: Shows on a bar graph which factors are more significant. It is a sorted Histogram, but focuses on saperation in the data.
4. Check Sheet: A structured, prepared form for collecting and analyzing data; a generic tool that can be adapted for a wide variety of purposes.
5. Histogram: The most commonly used graph for showing frequency distributions, or how often each different value in a set of data occurs.
6. Control Charts: Graphs used to study how a process changes over time.
7. Flow Chart: Shows a picture of a process in a visual representation – a process map.

In fact, I’d argue that for even the most experienced practitioners of process improvement, the tools that are used most are probably one of the above.

We hope you enjoy the video below.

What is your experience?

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If the customer were here, what steps would they consider value add?

The converse of that question, it follows, would uncover what we consider to be waste. I agree with that approach, in general. The problem with that definition of value isn’t so much how it’s defined, but how carelessly it has been used in business. What I mean is that the question is often asked carelessly, leading to “projects” and activities that are haphazard at best and missing the mark completely at worse. That question – the question of value – should always be within the context of the larger organizational goals.

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Otherwise, the improvement will be point-improvements, not aligned to the larger “true north” of the company. And that takes us to the next edition of Pareto in the Wild, brought to us by Forrester Research. In a recent study, they conducted a study on Shopping Cart Abandonment and what factors lead to customers leaving their online shopping carts while at the Checkout step. Below are the results:

As you can see, the data above forms a nice Pareto Chart, showing that Shipping and Handling Costs as “Too High” as the largest reason for customers abandoning their shopping cart at the point of Checkout. From the perspective of Lean Thinking, the Pareto shows the symptoms of why customers are abandoning their cart – the bars in the Pareto point us in the right direction. The next step is Root Cause Analysis, possibly asking the following with the goal of Reducing Shopping Cart Abandonment:

• What is “Too High” for Shipping Costs?
• Why does the customer not know the Shipping and Handling Costs prior to arriving at the Checkout Step?

After a quick 5 Whys on the questions above, the root cause should point logically and nicely to practical and very surgical countermeasures that we hope will reduce shopping cart abandonment. Then we implement, watch and measure, then we Adjust. Thus following the PDCA Cycle.

The post Shopping Cart Abandonment Reasons Shows an 80/20 appeared first on 6sigma.

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In 2008, China spent $4.3 Trillion, which represents about 1/3 of the total consumption in Asia. By 2030, the Asian Development Bank estimates that Asia as a whole will spend $32 Trillion which represents 43% or worldwide consumption. That’s a staggering estimate.

What is driving the consumption rate? Well, wages are increasing, standard of living is increasing, creating a massive increase in the Chinese Middle Class.

And, the growing Chinese Middle Class also forms a pretty nice looking Pareto Chart as you’ll see below:

In the words of the Asian Development Bank,

Asia’s middle class” defined by ADB as earning $2 to $20 per person per day” is growing dramatically relative to other regions of the world. Some 56 percent of developing Asia’s population was considered middle class in 2008, compared to just 21 percent in 1990.

From the perspective of Pareto, you’ll see above that the growth of the middle class clearly separates the Asian countries from each other.

Implications of the Growing Chinese Middle Class

Implications of the massive middle class in China and elsewhere in Asia means that those consumption needs will open opportunities for new products and services aimed at the Asian market, which means that the current flow of products and current supply chain networks will need to be reconfigured. This is a big opportunity for all and a challenge as well. The logistical challenges alone, coupled with warehousing, fulfillment, and distribution opportunities abound.

Is the rest of the world going to be able to keep up with China’s growing consumption?

Other posts from the Pareto in the Wild Series:

In my daily living, I’ve attempted to document how and where Pareto happens to show up. Below are my posts that I’ve called Pareto in the Wild:

• Pareto in the Wild: Emergency Room Visits
• Pareto in the Wild: Location Based Services the Check-in
• Pareto in the Wild: Water Usage by Country
• Pareto in the Wild: Thanksgiving Turkey Edition
• Pareto in the Wild: Cybermonday and Black Friday Edition
• Pareto in the Wild: Poopy Diaper Edition
• Pareto in the Wild: Money Spent on Hamburgers
• Pareto in the Wild: Phone Texting Usage by Age
• Pareto in the Wild: The Forbes Billionaire List
• Pareto in the Wild: Sarah Palin Edition
• Pareto in the Wild: Snoop Doggy Dogg Edition
• Pareto in the Wild: Not a Pareto, but a Flateto

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In this episode of “Pareto in the Wild”, we look at how Pareto can help us understand the outcomes in the TV show Law and Order: Special Victims Unit (SVU). I’ve actually never seen the show, but the folks at overthinkingit have analyzed the outcomes data from the tv show, which I show below:

If you look carefully at the Law and Order outcomes data, you’ll see Pareto in action. Based on the data above, roughly 80% of the cases in Law and Order have an outcome of a “please bargain” and “guilty”. The remainder, or the trivial many are “not guilty”, “implied guilty”, “defendent killed or fled”, “guilty of lesser charge”, “no trial”, “mistrial”, “hung jury”, “charges dismissed”, and “no clear outcome”.

The post Law and Order SVU Outcomes Forms a Nice Pareto appeared first on 6sigma.

The data, obtained by AdAge represent just a fraction of shopping activity on Black Friday 2010; in all likelihood, most people that usually check-in via Foursquare probably shopped online that day instead of at a brick-and-mortar retailer.

In any event, below are the brands that had the most check-ins via Foursquare:

As you can see, the top 80% of check-in activity were concentrated in the top five brands: Target, Wal-Mart, Best Buy, Toys “R” Us, and Apple. Below is another picture showing the concentration by percentage:

Yes, Pareto strikes again, separating the trivial many brands from the vital few brands. Incidentally, no check-in data was obtained for Cyber Monday 2010.

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