Growth Vs Survival Mindset

     As head of the organization, your belief  about your business either as growth oriented or survival oriented  determines your business growth.

     If you look at your business only as profit making motive, you tend to make profit somehow, irrespective of adhering to process,ethics,considering the interest of all stakeholders, long-term sustainability  of business.

      Instead, if you can change your perspective  to look at the  purpose of business as to  “Enhance the value to all stakeholders”. This will improve your thought process towards long-term sustainable business decisions. As there are many stakeholders like employees, customers, suppliers, banking finance institutions, promoters, Government ,society etc  and each stakeholder has different interest or value expectation from the organization. For example , as employee, the value expectation would be good pay, learning, and growth opportunities, as customers, the value expectation would be best product or service for the money, as suppliers, the value expectation would be regular orders, on time payment etc. It is your prime responsibility to enhance the value to stakeholders in a sustainable basis for which sustainable wealth creation is the path.

     If you have this perspective about the purpose of the business, your  approach and thought process would be on building solid foundation on process, systems, technology and talent management , in turn your visionary approach would be long term oriented even though sometimes you lose in short term. That is the Growth mindset of a a CEO of successful organization in the world.

Implication of Takt Time Assessment

As said earlier, Takt time is calculated with the input as "Customer Demand during a specific period".Assessment of Takt time against Cycle time has multiple benefits both at Organisation / Plant  Level and Function / Unit Level.

Takt Time Assessment can be used as Strategic as well as Tactic Tool 

On strategic level, it helps to plan the resources on short and medium term

On operational level, it helps to optimize the resources on short term 


Implication of Takt Time @ Plant / Organisation Level

It helps 

•To identify the constraints to deliver the customer requirements at plant level
•To plan short term and medium term plan to mitigate the constraints
•To plan the resources  or manpower across the plant activities

Implication of Takt Time @ Functional / Cell Level 

It helps 

•To identify the imbalance between the process 
•To plan short term and medium term plan to reduce the imbalance factors 
•To optimize the  resources  or manpower within the cell 

Takt Time

Takt time  is the calculated time, that indicates us  
with what speed or pace we have to produce a certain product to fulfill the customer’s demand.

Takt Time = Available time per period / Customer’s demand per period

For example ,

Available time per period =480 min per shift
Customer demand  =500 units per shift,

Then,

Takt Time = 480 / 500 
                  =0.96 min

i.e  Every 0.96 min,one unit to be rolled out  to meet the customer’s demand

Understanding “Time Elements in Operations Management"

Cycle Time

Cycle time is the time required to process one piece

For example,

Grinding Cycle time = 100 sec

It includes,

Loading Cycle time + Auto Cycle time + Unloading time

=20 sec +75 sec +5 sec

=100 sec

ie Every 100 sec , we can get one component 

Throughput Time 

Throughput time = Sum of ( Cycle time in entire process of a component)

Total processing time for one component

For example,

Bearing ring throughput time = 240 sec

It means

Parting cycle time +Grinding cycle time +Turning cycle time

=60 sec +100 sec+80 sec

=240 sec

ie To process one bearing ring, the total time required is 240 sec

Lead time 

Lead Time = Sum of ( Cycle time in the entire process of a component) + all non-value added times in the system

ie  Lead time = Throughput time + all waste/delay time in the system

For example,

Bearing Lead time = 2 days, 

It means = 240 sec+all delays leads to 2 days

Why do some organizations engage in business transformation drive and others are not...?

Unlike large organizations, small organizations are governed and managed by promoter, family members, or the CEO as hand-picked by the promoter. The growth of the organization mostly depends on the mindset, managerial style of the promoter and CEO. We can classify smaller size organizations into three types based on the mindset of the leadership team.

Growth Mindset:

 The leadership  team continually strives for growth and eventually transforms the organization from small to  mid size and large organization. They continuously engage in transformation initiatives across the organizations.

Mediocre Mindset:

The leadership  team focuses more on maintaining the legacy and feel comfort with the status quo, even though they aspire to grow. Occasionally, they drive localized, standalone productivity, cost efficiency initiatives to manage the external demand especially from its customers.

Survival Mindset:

The management team struggles for survival itself due to  deficiency of financial funding or lack of market for product etc. Sooner than never, they disappear from current business or switch to an alternative.

Out of all three types of organizations, more education, facilitation  and hand holding are required for mediocre organizations. They could not drive organizational transformation initiatives  due to the following factors.
  
Before getting into factors, let us  understand the meaning of organizational transformation drive.It is  holistically looking at the value chain of the business with the intention of enhancing value to all stakeholders. In this initiative, the business and functional process would be reengineered  in terms of  performance measurement and tracking , constraints in the entire value chain, roadmap for eliminating the constraints and improving the value, ease of communication process with  both  internal and external customers etc. 

Typically, this organizational transformation effort result in radical change in either one or all of the following aspects 

1.Increase in business sales performance and profitability on a sustainable basis
2.A major shift in delivering the product or service experience to customers
3.Shift in people’s  thinking, engagement  towards business process and results



Organizational transformation happens in stages, after which there is no look back to the previous level.

Organizational  transformation is not a

1. Small, incremental productivity improvement in a localized area
2. Standalone initiative, which brings down cost or  improves product / service quality one time


Factors affecting organizational  transformation Initiatives


The Head of the business or CEO’s belief and involvement is vital for the business transformation initiative.

The following factors contribute to the success of  organizational  transformation initiatives

1. Compelling need or urge to CEO or head of the organization to transform. This need can be SURVIVAL threat or pressure from customers to be competitive.
2. Firm belief in the future prospects of the business 3. Willingness to learn and experiment new methods or practices, ability to forego short-term losses against long-term benefits
4. Belief and support from the second level  management  team about the transformation process
5. External facilitation to teach, facilitate, guide, criticize and handhold the team during the transition.

In the absence of the above, the organization finds difficult to pursue any  transformation initiatives

Solutions approach to bring the mindset change:

There is a need for creating awareness to leadership team  about their management style and its impact on the long-term survival of the organization.

They  need to be educated to diagnose the health of the organization in a quantitative  and qualitative manner, as from our experience with many SME’s, most of the small size promoters or CEO  do  not have the exposure to look at the all business performance from long term perspectives. 

They need to be exposed to the different industries and its practices, lean system thinking, employee engagement practices, modern performance management process and customer relationship practices. Here only the role of business associations, external facilitators, or coaches comes in a big way.

In today’s globalized competitive environment, sustaining the profitability through transformational initiative is no more an option. It becomes a survival need!

How to identify the opportunities at BIG PICTURE perspective

       In an organization, throughout the value chain, there are numerous opportunities for value improvement or waste elimination/reduction. Since the resource availability and time is being a constraint, it is wise to focus on the critical or constraint facilities to improve so that overall value enhancement will be improved

    Most of the organizations are tuned to do improvements, but in localized areas or in an assorted manner which results in an INCREMENTAL improvement in the value chain.

When the team from different cross functions identify the macro-level opportunities to improve the roadmap, it gives focus and direction to the entire team to work upon. In this way, team engagement will also be improved.

There are two methods by  which we can identify the constraint or opportunities at the organization level

1. By past data and experience
2. Applying Value Stream Mapping

     1.By past data and experience:

With past experience and data, the team can identify the constraint facilities with the following criteria
• The facility which is giving the lowest output and affecting the plant output
• The facility which is producing a higher percentage of total revenue
• The facility which is utilized very low and affecting the entire flow
• The facility which is producing inconsistency quality output and affects the lead time

2. Applying Value Stream Mapping :

Value stream mapping is a visualization tool derived from the Toyota production system of lean manufacturing.

Using VSM methodology, when we map the activities end to end, we can identify the waste in the system.

Definition of Waste in Manufacturing Setup

Waste in Manufacturing can be defined as follows

1. Useless or unnecessary  resource consumption or expenses

2.Use of  resources , but without adequate return 

1. Useless or unnecessary  resource consumption or expenses

For example , in a manufacturing environment , we will be running the machine or equipment for producing additional  or compensating for rejection etc ..In this case , we are running unnecessarily and the machine is used LESS


2.Use of  resources , but without adequate return 

For example, machine or equipment is operated , but we will not be getting the RIGHT output or RIGHT quality output .In this case, we are running necessarliy,but not getting the right return.

Waste is alternativly termed as "Non Value Added" activities.

Waste tends to be present in manufacturing or in service activities and the aim to completely eliminate the waste or reduce the impact as much as possible.