Jonah Program® for Operations
Every business operates around a primary business function. Some are based on production make-to-order and/or make-to-stock, others as repair operations, still others on procurement and distribution. Some primary business functions tend to operate more in a "production-mode", while others are more oriented around project management. Regardless of your primary business function or how it operates, AGI-Goldratt Institute's Jonah Program® for Operations provides the understanding necessary to significantly improve your competitive position. Offered as either an open learning program, or as part of a dedicated leadership alignment process, the Jonah Program® for Operations provides participants with the most advanced use of the Theory of Constraints Thinking Processes. This updated and improved Program focuses on the analysis and improvement of Business Performance Outcomes, commonly called Net Profit & Return on Investment.
Analysis and Underlying Strategies
Achieving significant improvements to your bottom-line starts with an analysis. We begin with a clear understanding of the business system that we are working with and a review of a basic, almost universal, statement of Business Strategy – i.e. what we do to be successful. A common mantra is "we provide customers what they need, when they need it, while lowering the overall cost of delivery and improving ROI". Not a bad start. (In fact, we use that very statement to describe AGI's Operations Performance-Based Business Strategy, which we call Demand-Driven Performance.)
In addition to stating what we do to achieve success, we need to figure out how we can accomplish it. That element begins with some Operational Strategy that states how the business goes about achieving its Business Strategy, such as "We strive for full utilization of our resources while producing and selling the most profitable products/projects". That statement certainly captures what most organizations say and appear to be following.
Having established what we are trying to accomplish, and at least a high-level statement concerning how we go about it, we can get to the real crux of the Jonah Program® - why we get the results, or outcomes, that we do. That is the important issue. Most every business begins with statements similar to those above for what and how, but, in spite of best efforts, their outcomes are not what they desire. We call these outcomes UnDesirable Effects (UDEs) – while most business managers call them "problems". They are actually quite well known; encompassing issues like "we do too much expediting", "our inventory turns are too low", "our overtime is too high", "our lead times are too long" – those kinds of things. This is where we begin to examine, using the TOC Thinking Processes, why these outcomes are just logical effects.
Jonah Program® Question #1: What to Change
First, it is necessary to clarify the Operational Strategy. It is not "actionable" as it is written, so we must translate the Operational Strategy into smaller constructs, or "Operational Understandings", that provide specific guidance to each of the business functions (production, sales, marketing, etc.). In other words, we determine what the term "full resource utilization" actually means to each function. Interestingly enough, these answers are dependent upon how the organization and how the business functions are managed.
If all business functions are managed as if they are semi-autonomous, i.e. managed like "silos" or "links", the term "full resource utilization" means "busy producing everywhere". What else could be more "productive?" That is the most common management method. If the business functions are managed as if they are interdependent – a chain, the answer is probably different – however in the Jonah Program® we will first continue on the most common (silo, link) path.
Once the Operational Understandings for each business function are clear, we are ready to use "cause and effect" to determine the types of Actions that naturally result from these Understandings. Cause and effect is one type of logical construct from the TOC Thinking Processes.
Because these Actions are seen as correct, it is important to each business function to ensure that they are sustained. How is this done? To start, we can follow the adage: "Tell me how you measure me, I'll tell you how I behave." In other words, Measurements are established to ensure compliance to the desired Actions.
The second requirement to ensure Actions are sustained is the recognized need for tools or information to enable the correct Action to be taken. This necessitates the development and availability of Decision Support (enabling) Information. Both the Measurements and the Decision Support criteria are derived in the Jonah Program® using "necessity," which is the other logical construct from the TOC Thinking Processes.
The result is a clear understanding of the basis for all business function Actions: Measurements, Operational Understandings and Decision Support Information.
Actions produce outcomes - and we derive the Actions and discuss the outcomes (or UnDesirable Effects, UDEs) in the initial phase of our analysis. The final step is to logically connect, once again using cause and effect, the Actions taken by each business function to the resulting problems (UnDesirable Effects, UDEs). When this effort is complete, we can clearly see the connections – from what causes the Actions to what outcomes the Actions produce. We have a complete roadmap of causalities from the source of the problems to the problems.
In our review, we begin to recognize that every UnDesirable Effect (UDE) either directly or indirectly impacts one or more of the following "Operational Measurements":
- Throughput (T): The rate at which the Business System generates money (through sales).
- Investment (I): The amount of money the Business System Invests in buying things, it intends to sell.
- Operating Expense (OE): The amount of money the Business System spends turning (I) into (T).
The importance of this realization is shown in the following relationship
- NP = T – OE, &
- ROI = (T – OE) / I
Stated otherwise, these "problems" are not just "problems" – they actually impact the bottom-line!
Jonah Program® Question #2: What to Change To
Achieving the Business Strategy to "provide customers what they need, when they need it, while lowering the overall cost of delivery and improving ROI," will often be measured in accordance with the following outcomes:
- Delivering On-Time
- Delivering In Full-Quantity or With Full-Scope
- Providing Shorter, More Reliable Lead-Times (Time to Market)
- Providing Greater Shelf Level Availability for Stocked Items (MTS)
- Ensuring Proper Control over (I) and (OE)
These begin to describe what we are looking to achieve with our changes, and play a role in changing our UnDesirable Effects (UDEs) to Desirable Effects (DEs), i.e. what we don't want – to what we do want.
The roadmap of causalities built in the "What to Change" phase of the Jonah Program® serves as the path to improvement. With a clear understanding of the Measurements, Operational Understandings, and Decision Support Information required to sustain the type of Actions that lead to UnDesirable Effects (UDEs), we can see what needs to change to move to a reality of Desired Effects (DEs).
This understanding begins with new look at the Operational Strategy. Using different types of exercises and simulations, we work to recognize what is required to manage in a method where business functions are seen as interdependent – a chain. While our Operational Strategy remains the same, our Operational Understandings change. We recognize that the primary business function provides the focus. The other business functions exist to provide it necessary support. In addition, the definition of "full resource utilization" considers reality – where variation exists and some resources have less capacity over a time frame than others. We move to the realization that capacity, and full utilization, comes in two necessary types - productive to process product/projects and protective to process variability.
What needs to change? First, our new Operational Understandings must be clarified. Then, remembering that Actions produce Outcomes, it's obvious that the Actions need to change, and we derive them to be in alignment with the new Operational Understandings. Finally, we need to ensure that the Measurements, as well as the applicable Decision Support tools and information, are modified to reinforce and sustain the new Actions.
We do this as we build the causality to our Desired Effects (DEs). The understanding built in the "What to Change" becomes the roadmap of "What to Change To"!
But we're not done yet…
Jonah Program® Question #3: How to Lead the Change
The final use of the TOC Thinking Processes is in defining the implementation plan. This is accomplished by sequencing the agreed-to changes in the Actions, and the corresponding changes in Measurements, Operational Understanding, and Decision Support Information.
The resulting plan will address the necessity of training required to instill the desired Operational understanding, the IT/IS support required to provide necessary Decision Support Information, and a clearly defined set of Measurements that will reinforce and sustain the Actions that will produce the desired Outcomes.
The end-result: Leadership is properly positioned to lead and direct their organization to the Outcomes they desire.
Leadership now knows
- What to Change
- What to Change To
- How to Lead the Change
They have clear and logical process by which they can more effectively assess, define and communicate where they are taking the business and why they will get there!