Manufactura

Chapter 1

A Pressing Need:
Improving Performance

It is estimated that more than 75% of reengineering efforts do not produce targeted performance improvements. The collapse of the dot.com boom bears vivid testimony to the fact that growth strategies often fail to yield real growth. The great majority of large-scale projects overrun both schedule and budget by very wide margins. Among theavalanche of mergers and acquisitions that has unfolded over the last decade, those that have realized anticipated synergies, number in the small handfuls. Stories abound of costly organizational change efforts that either have fizzled, or worse, exacerbated the situations they aimed at improving. The number of organizations with Balanced Scorecards—replete with metrics that no one understands howto use to improve performance—is approaching epidemic proportions. How come? Why do so many well-intentioned performanceimprovement efforts, conceived by so many smart people, so often miss the mark? And, perhaps more importantly, what can we do about it? What will it take to significantly increase the likelihood that the initiatives we design can achieve the results we intend? These are thequestions we’ll explore in this Chapter. Getting to Root Cause The first step in “fixing” anything is to understand why it’s broken. If, in general, our performance improvement initiatives too often fall short, a good place to start looking for “why” is at the process by which these initiatives come into being. So how do our performance initiatives come into being? The simple answer is: We think ‘em up!That is, they arise out of the process of thinking. So, let’s take a closer look at that process. The first thing to note about thinking is that when we ponder something, we do not actually have that “something” in our head. Think about it… You’re trying to figure out whether you should let your kid drive to the party. You’re struggling to decide whether to quit your steady, but relativelyunchallenging day job, to pursue wild and wooly challenges at a start-up. You’re wondering about the best way to reduce cycle-time in your customer support process. Whatever it is you 3

are thinking about, you do not have it in your head. Then, what do you have? What are you working with when you’re “thinking?” You’re working with a “mental model”—which is to say, a “selective abstraction” of thereality about which you are thinking. You’ve constructed that model using certain assumptions about how reality, in general, works, and also certain specific assumptions about the particular piece of reality you’re thinking about. Let’s go through a simple example to make these ideas more concrete. You’re at a nice restaurant. You are thinking about what to have for dinner. The mental model you are“working with” probably includes certain general assumptions about the reality of eating, such as: eating makes my hunger go away; when I eat too fast I get indigestion; if I eat dinner with my hands, people will think I’m a slob; and so forth. I’ll refer to such general assumptions as “meta assumptions,” because they transcend the specifics of any given eating situation. As you’ll see, the “metaassumptions” we use when constructing our mental models will play an important role in explaining why our performance-improvement initiatives often don’t fare so well. Your dinner-related model also will include some assumptions specific to the particular eating situation: the beef here is superb; I’ll have a dry, red with dinner; and so forth. Once you’ve assembled a preliminary set of assumptionsinto a mental model, you then “think” with them. I’ll use a more operational term to describe what you are doing with them. I’ll call it “mental simulation.” You are simulating your mental model; you’re “running what if’s”…“Yah, the beef is good here, but what about my cholesterol? I can already taste the wine, but the roads are icy and I don’t want to chance it.” And so on. You run these...