Book Review: The Remedy

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The Remedy

There are few business concepts which are applicable across any company in any industry. From solopreneurs to multi-national conglomerates, the principles of Lean Management are a tool to improve the culture of a company.

I recently got the chance to read “The Remedy” by Pascal Dennis, which is a real life story about how lean was applied across a large car manufacturer.

Lean is predominantly known to be a process to decrease waste within manufacturing processes. Through the travels of Tom and his sensei Andy, stories are told on how Lean Management is applied within non-manufacturing settings.  The reader is taken through a journey where common obstacles of dealing with a company that is heavily placed into silos, non-communitive, and insular culture are dealt with. You get the opportunity to see how Lean Management can be applied in the non-manufacturing departments of Human Resources, Marketing, Product Development, and Accounting.

The reader is introduced to many of the basic concepts and terminology of Lean Management (for example the 8 types of waste) in the style where Tom, the plant manager of the shining star of Taylor Motors, is taken from his current role to lead the development and launch of a new car, originally known as the Defiant.

If you want to learn more about Lean Management, this would be an ‘average’ book to pick up. The Japanese terminology is used throughout the book which can make things confusing at time. There are great animations throughout the book, but at times, too many. It gave the feeling that you were reading a Pictionary book at times.

I personally don’t see this book as being a good starting point if you are a novice to Lean Management. Lean is best learnt within a manufacturing setting since the subject matter can be visibly seen. The author previously wrote “Andy & Me” which details the journey of transforming a manufacturing plant towards being Lean. This book would be a good starting point.

Do you have any books about Lean and Lean Management that you recommend?

Have an awesome week.

Kevin

Kevin MacDonald is a Business Consultant at L6S Business Consulting Inc (www.L6SBC.ca). L6S offers services in management consulting, Controller and CFO contracting, and lean management with either project work or teaching/mentoring of staff. Kevin has his CMA accounting designation along with a Black Belt in Lean Six Sigma.

Kevin is active in the community by volunteering for the South Edmonton Business Association, the Fringe Festival, Goodwill Industries of Alberta and donates blood at the Canadian Blood Services.

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Volunteering at United

The newest corporate public relations blunder now belongs to United Continental Airlines (United). I am sure that Pepsi is very happy to pass the hat onto another corporate citizen.

What Happened

It is ‘commonly known’, in some circles, that airlines will oversell their flights to ensure that they are full at time of departure. United follows the same practice. This practice came to a head for a flight from Chicago to Louisville on April 10th. United staff asked for 4 people to voluntarily give up their seats to accommodate the airline. 3 people volunteered while the 4th person was violently removed from their seat. From a memo off the desk of the CEO of United, Oscar Munoz, the person was ‘re-accommodated’.

Airlines commonly overbook their flights, for multiple reasons. According to the US Department of Transportation, in 2016, less than 1 in 10,000 were involuntarily bumped from the major US airlines. In 2016, this happened to United passengers at a rate of 0.43 per 10,000. It happened on American Airlines at a rate of 0.64 and at Southwest Airlines to 0.99 persons per 10,000.

Why Did It Happen

Overbooking happens for a number of reasons. None, however, can explain the events that occurred.

Resource Allocation: A flight leaving from Louisville had 4 members of its flight crew in Chicago. This is a reason why 4 seats were required. Did United not have any flight crews in Louisville that they could have used? Are their flight crews centrally located in certain locations or based off flight schedule and needs? Overall, did the schedule of the flight crews have then in the correct place?

Leadership: The CEO of United, Oscar Munoz, sent out a memo to staff after the event blaming the passenger for actions which is not seen in any of the footage that was captured. The CEO mention in the memo that the passenger was violent and belligerent. A properly written memo could have helped the situation but instead, gas was poured on the fire. If an employee of mine treats a customer that way, I would take ownership of the situation right away. It can be assumed that staff were not properly trained. That is a responsibility of the CEO. I understand that it was Chicago Airport Police that removed the person but United staff should have been trained on various methods to help get passengers to volunterily give up their seat. I have seen it happen effectively.

KPIs: United is a publicly traded company. Shareholders are constantly looking at the numbers to see how their investment is performing. Revenue per Available Seat and Passenger Miles Flown are key indicators on the health of an airline. Why does this create overbooking? If there is no passenger in the seat, the miles flown per passenger are negatively affected. When travelling, I have waited more than once for a fellow passenger to board the place. By overbooking, airlines are ensuring that there is a person in every seat.

Sensitivity: Consumers are rarely loyal to a certain airline. They will change airlines to save $5. If you don’t have any loyalty to an airline or are constantly purchasing the cheapest flight possible, you are increasing your chance of getting bumped out of your seat.

Legality: Airlines are allowed to overbook their flights and they are also ALLOWED to remove someone from a plane. In the purchasing contracts of Canadian airlines, however, it does not state how a person could be removed from the plane. Based on this assumption, the acts which happened on United are allowed and legal.

Internet Reaction

As you can imagine, the reaction from the Internet, specifically Twitter, was very fast. Videos of the event were online hours after the event occurred. It is possible that videos were posted even before the plane departed Chicago.

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Some reaction from Twitter in regards to the United flight.

Stock Market Reaction

Shareholders of United firstly saw the event in a positive light by bidding up the price of the stock. When reading the headlines, the focus was most probably on the fact that United was overbooking their flights. A great problem for business is to have too many customers. As I am writing this the day after the event, United’s stock price has already decreased by 4%.

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United’s Stock increase after word of event spread

Operating in the airline industry is not an easy task. There is a high capital investment along with the fact that one of your largest costs, jet fuel and airport fees, are largely controlled by third parties. Overbooking of flights is not something that will stop in the near future. Airlines have lost their sensitivity to consumer demands and views…mostly because consumers have trained them to be that way.  Even after dragging a bleeding and paying customer off one of their planes, United is still flying today and will for some time.

Did you know that airlines commonly overbook their flights? If you were a CEO of airlines, would you look at stopping the overbooking of flights? How would you do it so your financials are not compromised?

Kevin

Kevin MacDonald is a Business Consultant at L6S Business Consulting (www.l6sbc.ca). L6S offers services in management consulting, Controller and CFO contracting, and lean management with either project work or teaching/mentoring of staff. Kevin has his CMA accounting designation along with a Black Belt in Lean Six Sigma.

Kevin is active in the community by volunteering for the South Edmonton Business Assocation, the Fringe Festival, Goodwill Industries of Alberta and donates blood at the Canadian Blood Services.

How Are You Competing – Operational Excellence

excellenceThis is part 1 of 4 blogs which will cover the different customer value propositions that a company can use to compete in the market place.

Every company competes, in one way or another. Either they are competing to get attention with a gorilla marketing strategy or to simply get new customers. Competition is a fundamental part of any marketplace. Unless there is a monopoly or duopoly in place, market forces are moving resources between companies.

The weakest of all modes for competition in business is operational excellence. In the eyes of the consumer, you offer the cheapest product of all solution providers within your space. Your business model is based on maximizing your capacity and selling as much of your product as possible.

There is one Fortune 500 sized company that comes top of mind when you think about a company that is operationally excellent….Walmart. Walmart, in the eyes of the consumer, is the cheap place to go, in general, when you need to buy something. They are not very innovative in their offering. Customer service, well, you have to be able to find someone on their store floor to consider customer service. Lastly, quality products is not something that rings with Walmart.

When you create your company with a business model of being operational excellent, you are more than likely to attract a large portion of consumers. Who doesn’t want to save money?

But in following this model, it becomes hard for your company to raise prices. You have to ensure that you stay top of mind for your consumer when it comes to buying something cheap. But what happens when someone else decreases their prices below yours? Well, if you are tried and true to your strategy, you will decrease your price too. This will only start a race to the bottom. In reflection, you have just commoditized your offering and your consumer will always go to the cheapest name, no matter who it is.

There are some circumstances where being the cheapest in the market is the best position. You may be focused upon an economically sensitive target group which is under served. Perhaps you are entering a new market with a new product and you want to help accelerate adaptation of your offering.

Does your company want to be the cheapest in its industry? What companies do you see fitting that bill?

Have an awesome and productive week.

Kevin

Kevin MacDonald is a Business Consultant at L6S Business Consulting Inc (www.L6SBC.ca). L6S offers services in management consulting, Controller and CFO contracting, and lean management with either project work or teaching/mentoring of staff. Kevin has his CMA accounting designation along with a Black Belt in Lean Six Sigma.

Kevin is active in the community by volunteering for the South Edmonton Business Association, the Fringe Festival, Goodwill Industries of Alberta and donates at the Canadian Blood Services.

For help with your business, contact Kevin at kevin@L6SBC.ca or 780-868-1867. You can also follow Kevin on Twitter at @L6SBC or Facebook.com/L6SBC

What Did You Learn?

16203915171_1d486491b9_qFirstly, Happy New Year to everyone! I hope that you had a happy and refreshing holiday season.

My last blog focused on the development and planning involved with making your goals, not a resolution, for 2015. A new year makes us think about our future and how we can make ourselves just that much better.

At this time of year, I also like to reflect on the past year, and more specifically, reflect on the things that I learned.

Networking is Fun: I will admit, I was not an admirer of networking at the start of the year. To make matters worse, since I didn’t enjoy doing it, I created a tendency to avoid networking events. In 2014, I challenged myself to get out there and meet new people. With practice, I now find myself enjoying the opportunity to network with like-minded people at various events.

Just Ask: I followed the mentality that the only person that is going to get stuff done for me is me. I would struggle with certain things (like developing my website) and colleagues would ask me: “Why didn’t you ask for help?” I learned that people are most often willing and able to help you with almost anything.

Constant Learning: I added another skill set to my toolbox by completing my Black Belt in Lean Six Sigma. I have greatly enjoyed the process. It has been approximately 7 years since I was involved in improving my skills to that level of intensity. I can’t wait to learn more in 2015.

Timely Follow Up: I will admit, I have been very, very bad at following up with various people. Apart of it was thinking that I didn’t want to ask and another part was me thinking that other people were too busy and they would eventually get around to it. Follow up is important, but don’t wait 6 months to do it. I am still working on this, but I have made it a goal for 2015.

2014 was a fun year where I got the chance to network more, ask for help, developed new skills, and learned to follow up with people. What did you learn in 2014? How are you hoping to use that in 2015?

Have an awesome week.

Kevin

Kevin MacDonald is the CEO of L6S Business Consulting Inc. L6S offers services in management consulting, Controller and CFO contracting, and lean management with either project work or teaching/mentoring of staff. Kevin holds his CMA accounting designation along with a Black Belt in Lean Six Sigma.

Kevin is active in the community by volunteering for different groups, his condo board and donates platelets at the Canadian Blood Services clinics on a bi-weekly basis.

Feel free to contact Kevin at @L6SBC or www.putechnologies.tk

Photo Credit: Paul Wilkinson

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Receiving Feedback

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When reading different publication in regards to human resources, management, or feedback, it is about giving it out. You can sandwich the feedback with saying something good, something negative, and then something good. You can also tell someone the negative action, tell them how it makes you feel and then give them a possible solution.

Those are all great pieces of advice, depending on the situation and the person that you are dealing with…but what do you if you are on the other end? How do you take the feedback? Do you try to explain yourself?

I enjoy gaining feedback from others. Being a CMA, I believe in constant self-improvement and preparing myself for bigger, more complex situations. When I receive feedback, I like to:

Not Argue: I don’t argue the feedback. I may feel that the feedback is incorrect, from my perspective, but the prospective of the other person, it is warranted.

Listen: I listen to what is being said to me. I also ask open-ended questions to make sure I fully understand the feedback. If I still don’t fully understand the feedback, I try to use the feedback in a scenario with the person giving me feedback.

Thank you: I always try to say ‘Thank you’. The person giving the feedback took the time to formulate and deliver the feedback to me, at the very least, I can say thank you for their effort in trying to make me better.

Apply It: Even if I don’t agree with the feedback, I still try to apply it. It may not work out for me but it doesn’t hurt to try something.

What was your reaction the last time you got feedback? How did you receive it?

Next week, I will be hopefully taking tour of a Boeing plant in Washington. I will let you know how that adventure turns out.

Photo Credit to Armando Sotoca https://www.flickr.com/photos/criterion/