Will Independent Contractors, Free Agents, and Freelancers Dominate the Marketplace?

There is a valuable new book out on the market titled Free Agent: The Independent Professional's Roadmap to Self-Employment Success, and it addresses the seismic shift occurring with employer/employee relationships. Katy Tynan authored the book, and she believes that success in the changing marketplace -- independent contractors now represent more than 20% of the workforce, and that number is expected to reach nearly 50% within the next 10 years -- requires a pragmatic action plan.

I spoke with Katy recently, and asked her: "Why are people choosing to work independently rather than looking for a job with benefits?" Here is her response:

It is true that being an employee comes (usually) with access to benefits and safety nets, such as unemployment insurance. For many working professionals, however, a full-time job comes with drawbacks too. Despite numerous high-profile efforts by companies to implement workplace flexibility programs, most businesses still require the average employee to adhere to a strict schedule, and to travel to the office regularly rather than working from home or wherever they are most productive.

In fact, employee satisfaction numbers are at an all-time low, dipping below 50% in a recent survey by The Conference Board. Moreover, research experts at Gallup report that less than 30% of U.S. workers report being actively engaged with their work, leaving over 70% of the employees in the workforce to simply go through the motions and collect a paycheck. 

It is no surprise if people find work so uninspiring that many are looking for alternatives. Elance, a freelance industry job board, found in its survey of freelancers that 70% were happier on their own than when they were working as employees, and 80% said they were more productive. An increasing number of professionals are choosing to opt out of working for an employer, both for the enjoyment of the work and the flexibility that freelancing offers. 

Do you see this shift in your industry? What are the benefits and drawbacks? I'd surely like to hear from those who have made the transition from salaried employee to full-time independent contractor.


Combining Statistical Design and Statistical Control -- Can it Work?

Kieron Dey recently published a book titled Competitive Innovation and Improvement: Statistical Design and Control, which explains how to combine two widely known statistical methods — statistical design and statistical control — in a manner that can solve any business, government, or research problem quickly with sustained results.I spoke with Kieron last month and asked him: "Why did you decide to write this book and what makes it unique?" Here is is his complete answer:

I first got the idea about separating tiny signals from large amounts of noise from time spent in radar design, and I wondered why similar was not much used in industry to solve problems. Where statistical design was used, it tended to be on a small scale and not much in processes involving lots of people.

The idea to combine statistical design and control came from a book on survey sampling. This fusion was controversial for years among professionals, and for no reason. Everything used is in the literature.

“Intent-to-treat" is also used throughout (which means, roughly, allowing an element of laissez-faire to get real world results, not forced ones that don't hold longer term).

Simultaneous design (where more than one design runs at once, overlaid) was added in 2012. The simultaneous designs have been important in cross-channel optimization in retail and in complex healthcare improvements. This was the last addition as the theory was tricky and it finally fell in place in 2011. It found that what had seemed weaknesses (where interactions across designs might be a problem) in fact hid a large strength, which is in Chapter 8 with real cases. The method had to be simplified so that users could apply easily.

Finally, the scientific method is used throughout (which folds nicely into comparative effectiveness research, DMAIC or PDCA, etc.), and the book explains what (and how simple) this is. The scientific method allows the same method to be used for existing and new processes: hence the “improvement and innovation” in the title. Innovation becomes less elusive in this way – it can be designed rather than waiting for inspiration. In addition, getting back to pure, simple science means using right-brain (creativity) as well as left (analytic) so more people can contribute in a valuable manner for the enterprise (which can be business, industry, research or government).

There is no mathematical notation so that anyone can read and use these well-established methods. Scientists and researchers will find Chapter 8 challenging on scientific method and randomization, so there's something for everyone. Mathematics is used a lot behind the scenes of the book but the real world is used more: to understand how businesses work and make them work better. 

There are about 20 exercises peppered through the book, for the reader to accelerate what would be learned in field experience and get started on real business competitive problems. 

Surprisingly, it turns out to be a management tool, not one technical people alone can accomplish; it’s not top down though and the book explains why. 

If anyone has read Kieron Dey's book, please feel free to post your comments here.


Meeting Customer Needs is Not Enough

Lance B. Coleman recently published a book titled The Customer-Driven Organization: Employing the Kano Model, and I spoke with him about its content. My main question was: “Why is meeting customer needs no longer enough?” Here is his full response:

In an expanding global economy having international competition, meeting customer needs is simply not enough. Meeting customer needs leads to customer satisfaction but does not lead to customer loyalty, which is what keeps companies in business.

Delighted customers, however, are loyal customers. The Kano Model developed by Noriaki Kano describes delightful performance as that which surprises and excites the customer in addition to meeting their basic needs. To “delight” a customer, an organization or individual must become aware of not just what is asked for but rather what is needed. They have to look to the future as inspiration for innovation today.

Quotes from two of our greatest innovators born almost 100 years apart would tend to agree.  Steve Jobs is known to have often said: "A lot of times, people don't know what they want until you show it to them." Henry Ford is reported to have said: “If I had asked my customers what they wanted, they would have said 'a faster horse.'”

Providing delightful service is more than just a nice thing to do, it is an imperative for business/professional survival both for the organization and for the individual. What I have tried to share with readers of my book, The Customer-Driven Organization: Employing the Kano Model, was threefold  -- why a philosophical paradigm shift is required to provide truly delightful service, how to practically apply the concepts espoused by the Kano model, and finally, why one should care to do so.


What Can Lean Do for the Banking Industry?

The banking industry comprises many accounting, regulatory, process, and management challenges, and because its customer-satisfaction and efficiency rates are ripe for improvement, many feel Lean improvement initiatives can transform these financial institutions. A book published just this month titled Lean for Banks: Improving Quality, Productivity, and Morale in Financial Offices, authored by Bohdan Oppenheim and Marek Felbur,shows how Lean and Six Sigma can significantly improve the efficiency of bank operations.

During a recent conversation with Bohdan Oppenheim, I asked him: "Why should financial organizations choose Lean as a methodology to transform and improve their culture and results?" Here is his complete response: 

Few traditional banks are aware that they have vast reserves of productivity. Typically in such banks, both managers and staff work extremely hard, often overtime. Their intuition tells them that there is no reserves left in the system, and that the system is "as Lean as it can be." The knee-jerk reaction is to blame this frantic pace on an excessive amount of work and a lack of employees. The solution appears to hire more employees, but this often has the opposite effect. With more people hired, the system becomes even more difficult to manage, more convoluted, and less efficient.

Fortunately, an excellent solution exists: Lean Thinking. In Lean, employees transition from fighting crises to increasing both customer satisfaction and bank competitiveness. Work becomes more predictable, stable, and pleasant. It soon becomes truly shocking to both management and staff how much work can be accomplished in the same amount of time and with the same resources, simultaneously improving productivity, quality, cost, work morale, and customer satisfaction.

The effects of Lean can be dramatic: up to doubled productivity in the entire system; process times cut by 50-90%; the number of errors reduced by 50-90%; development time for new bank products reduced by half; approval time cut by 90%; modest capital investments (only training); dramatically better human relations at all levels; and, most importantly, vastly better customer satisfaction and company competitiveness.

When faced with stiff competition, traditional companies brutally cut costs, usually by massive layoffs, head-count reductions, and by overworking the remaining employees and suppliers. Without addressing underlying systemic problems, these cuts simply eliminate needed resources and therefore slow down the operations. This causes more frantic work pace, loss of quality, and decreasing customer satisfaction. When this happens, additional customers and profits are lost, resulting in even more cuts and more layoffs. This spiral of failure can easily lead to collapse.

In contrast, Lean focuses on recovering productivity reserves by waste elimination. This in turn leads to lower costs, higher quality, and increased customer satisfaction. Lower operating costs enable banks to keep the employees on the payroll because they will be needed as customer satisfaction attracts more business. During the Lean deployment period, the employees can address those improvements for which there was never enough time, contributing to better productivity and quality. So, the success spiral occurs without layoffs.

One of the most pervasive myths in banking industry is that higher quality requires higher costs. This may be true in the superficial sense of marble floors in front offices, but is totally wrong in terms of the cost of operations. Lean demonstrates that a high quality of operations is actually the least expensive. In Lean, we avoid the high costs of mistakes, errors, defects, rework, delays, frustrations, and subsequent crises, and focus instead on making operations better and better.

The bank industry seems to be one of the last Lean frontiers, delayed no doubt due to the severe 2007-2011 crisis and subsequent massive layoffs in the industry. However, pioneering banks, listed in the book, are rapidly implementing Lean. 

Do you agree with Bohdan's assessment? In which area do you feel Lean can acutely improve financial institutions and the banking industry?


Grasping Lean

A very handy new book was published last month called The Lean Anthology: A Practical Primer in Continual Improvement, authored by Rebecca Goldberg and Elliott N. Weiss, and it provides simple case studies of people observing and integrating the principles of Lean into their personal and professional lives.

I had a chance to discuss the book with Rebecca and asked her: "Which aspect of a Lean initiative is usually the toughest to grasp by those without an operations management background?" Here is her complete answer:

The successful understanding and teaching of Lean means getting people engaged, involved, and committed. This is the toughest aspect of those involved in a a Lean initiative to grasp and those leading the initiative to overcome. So often, students of Lean -- whether in a corporate or an academic setting -- get lost in the esoteric, “armchair Lean” side of the methodology. This misplaced focus prevents or delays success. The Lean Anthology: A Practical Primer in Continual Improvement uses practical examples that readers can intuitively understand and apply -- bridging the gap between Lean theory and true Lean integration. Colleagues and associates are engaged when they understand the benefits of change and are able to generalize Lean concepts in a holistic way. 

Here are some examples: Two people discuss their approaches to car care -- which helps to explain predictive, preventive, and reactive maintenance. A busy executive changes his daily routine to accomplish the same amount of work, yet preserves more time for family. A busy mother designs a "critical path" to shepherd her children to the school bus each day without any "defects." The stories in The Lean Anthology walk participants through a strategic path toward a Lean conversion, represented as the 5-Cs of Customer, Capability, Control, Coordination, and Context/Culture. The best investment an organization can make in successful change is to support true understanding and engagement -- our book makes that investment tangible and accessible. 

How do colleagues without an operations or engineering background in your organization function within a Lean initiative? Has it significantly hindered their involvement?


Lean is the Medicine that Healthcare Systems Require

Last month, an important book titled The Lean Prescription: Powerful Medicine for Our Ailing Healthcare System, authored by Patricia Gabow and Philip Goodman, was published, and it details how Denver Health became the first healthcare organization to be awarded the Shingo Bronze Medallion Prize for Operational Excellence. 

I had the chance to speak with Patricia about her book, and one of the main questions I asked was: "Why should healthcare organizations choose Lean as a methodology to transform and improve their culture and results?" Here is her complete response: 

Let me go back one step from this question and first answer an even more basic question, “Why must healthcare organizations transform at all?” Pondering this question is what led me to Lean. There is a national-level answer and an organizational-level answer to this question. I contend that the USA doesn’t have the best healthcare system in the world. Fortunately, both the state and federal governments are taking a wide array of steps to begin to address the issues of coverage, cost, quality and care co-ordination. But the fruits of the policy changes will only occur if individual healthcare systems are transformed. 

My 40 years in healthcare, first as a practicing physician and then as an administrator, convinced me we needed transformation at an organization level. Standing in any clinic or any hospital unit tells you we are basically doing things like we did when I was an intern more than 40 years ago -- we have new drugs and new technologies, but most of our processes are the same. We need transformation in all our healthcare institutions and that will require clear (and new) methods to achieve it. We must identify, prescribe, and administer some powerful medicine to the system. 

I think Lean is that medicine. The power of Lean lies in the fact that it is both a philosophy and a tool set. The Lean philosophy teaches us that transformation is built on the two pillars of Respect for People and Continuous Improvement. These should always have been the pillars of healthcare. Even if healthcare had to wait for an automobile manufacturer to teach us this, we can embrace it. 

In my decades in healthcare, I, as others in healthcare have tried many approaches to reducing cost and increasing quality. Lean was the most powerful approach I had ever seen. There are few, if any other, approaches that hit the target on quality, cost and employee empowerment. 

For example, other approaches that reduce costs at best can hope to keep quality the same and keep employees neutral about both the process and outcomes of the cost reductions. Because Lean focuses on getting rid of waste that shouldn’t have been there at all, its focus can’t be argued about -- who wants to defend waste? Because Lean is built on respect for people, the Lean tools that let us see and eliminate waste can be used by every employee. You don’t need a PhD to use an elegantly simple tool like a spaghetti diagram. Every employee becomes an engaged problem solver. We gain an army of problem solvers -- it is no longer just up to executives to make our systems better. 

While these are the intellectual reasons why Lean is the methodology for healthcare organizational transformation, the real “proof is in the pudding.” At Denver Health we realized over $192 million of hard financial benefit, achieved outstanding quality such as having the lowest observed to expected mortality of all academic health system members of the University Healthsystem Consortium and having 83% of our employees say they understood how Lean helped us maintain our mission. Lean is the method that hits the bull’s eye on cost reduction, quality of care, and employee engagement. How could you not use such an approach? 

What do you think of Patricia's thoughts on the power of Lean to transform health systems? I'd particularity like to see comments from those in the healthcare sector who are currently part of a Lean initiative.


The ”Just Do It” Approach to Strategy Deployment Has Proven to “Just Not Work”

Randy Kesterson recently published a book titled The Basics of Hoshin Kanri, and it explains the basic steps to a strategy deployment and execution approach that has proven to be highly effective by companies such as Toyota, Danaher, and 3M.

The book includes interviews with many of the world’s leading Hoshin Kanri experts. For example, when asked to define Hoshin Kanri, Jeffrey Liker stated: “It’s a method for deciding the strategic direction from the top and then cascading that down to goals and objectives and then the means to achieve those goals and objectives.” Lisa Boisvert defined Hoshin Kanri as: "a strategic planning practice that defines a direction and priorities, aligns the organization around that direction through dialog and detailed plans, then implements and measures against those plans in a disciplined way.”

My direct question to Randy was: "What makes Hoshin Kanri a unique and useful strategic objective delivery system?" Here is Randy's complete answer:

What makes Hoshin Kanri unique can be summed up in two words … Catch Ball (which is an interactive process of tossing items and possibilities back and forth like a game of “catch.” It sometimes results in changes to proposed objectives, means and measures). 

Hoshin is unique in that it involves an unusual level of employee engagement in the strategy deployment process by means of the Catch Ball process, which is explained in the book. Hoshin Kanri and employee engagement enjoy a symbiotic/synergistic relationship. Hoshin Kanri requires employee engagement to be effective, and the effective use of Hoshin Kanri will dramatically improve employee engagement within an organization. 

What do you think of Randy's summation of Hoshin Kanri? Has Hoshin Kanri been applied in your organization? Feel free to discuss your results.


Eco-friendly = Profitable

I came across a very interesting article over on the Ensia site titled Manufacturing Goes Lean and Green written by Justin Miller. The article focuses on Highwood -- a manufacturer of synthetic woods -- that considers its product and its manufacturing facility environmentally friendly. 

Although the company was designed as a "green" operation, it started embracing Lean methodology years after inception and here are the results that grabbed my attention:

"In 2009, for example, Highwood cut its energy consumption for lighting by more than 50 percent just by retrofitting its facility with high-efficiency fluorescent light bulbs. With help from MEP (Manufacturing Extension Partnership), the company installed solar panels, which now provide about 20 percent of its energy needs"

"Highwood not only has reduced its landfill waste by 70 percent, but has reduced monthly removal fees by roughly 65 percent."

I'm sure these results came after embracing nontraditional mindsets, which certainly evolved the culture within the organization. The most important test for Highwood will be sustaining and expanding this new culture of challenging the traditional way of thinking.

I am always interested in hearing stories about organizations that are combining their formal Lean initiatives with "green" policies as it is proven to be the natural extension of Lean thinking and implementation.

What are your thoughts on this article? Do you think Lean initiatives can ultimately lead organizations to "closed-loop, zero-waste processes"?


How the LEGO Group Built a Global Learning Organization Using TWI

Patrick Graupp, the foremost thought leader on the topic of Training Within Industry (TWI), has authored an important new book titled Building a Global Learning Organization: Using TWI to Succeed with Strategic Workforce Expansion in the LEGO Group. He wrote the book with two coauthors, Gitte Jakobsen and John Vellema, both employed by the the LEGO Group. The book completely outlines the actual organizational and planning models used by the LEGO Group to build a true Global Learning Organization.

I recently met with Patrick at the 2014 TWI Summit in Nashville and asked him: Why should a multinational company develop a Training Within Industry (TWI) program? What makes LEGO’s unique? Here is his complete reply:

Companies struggling to achieve and sustain gains from their Lean programs have come to realize the vital role Standardized Work plays here and just how difficult it is to achieve. It takes tremendous amounts of skill and effort to get literally everyone in an organization performing tasks in the same way. When this vision of consistent processes and performance expands to include facilities in different countries, with varying languages and cultures, the complexity magnifies exponentially. However, as the LEGO Group recognized when they began to rapidly expand their worldwide production, children don’t care whether their LEGO pieces are made in Denmark, Hungary, Mexico or China, but they have to all fit together perfectly and this requires stable quality across all production sites.

What the TWI programs, especially the Job Instruction element, give to this multinational effort is a “common language” around which leaders and operators can communicate effectively. By creating a simple but clear structure for “breaking down” a job into its essential elements, the What and the How and the Why, and then providing an effective “4-Step Method” by which any person can be trained in that job, TWI has allowed any LEGO associate regardless of where they live or what language they speak to learn the job identically to any of his or her counterparts, even in facilities in separate countries. While employees are being trained in their various native tongues, of course, the content and methodology of the training is consistent following the TWI method.

What is truly unique and special about the LEGO Group is that in implementing their global training system they made the conscious decision to regard equally all LEGO employees around the globe thus abandoning the old culture of “headquarters knows best.” This was no easy task. But it embodied the Lean philosophy of Respect for People in the most fundamental way -- across borders and cultures. As one top executive is quoted in the book expressing this new approach: “Any employee of the LEGO supply chain should be able to move from any factory to any other factory and notice nothing else but the language and the local temperature.”

In my own personal experience teaching the TWI courses around the world, everyone understands and agrees with the principles embodied in the TWI methods. In other words, they transcend differences in cultures and attitudes and represent what is fundamental to people from any society. With these foundations in place, TWI skills allow leaders in any country to effectively lead people by building strong relations that lead to good results. When a multinational company attempts to implement their own vision of leadership and business overseas, they would be wise to bring these methods with them. 

What do you think of Patrick's reply? Has your organization instituted any type of TWI program?


Moving Production Back to the USA -- The Better Business Strategy for US Manufacturers?

A new book by Tim Hutzel and Dave Lippert titled Bringing Jobs Back to the USA: Rebuilding America’s Manufacturing through Reshoring was published this month. This book continues the theme of their first book, Keeping Your Business in the U.S.A.: Profit Globally While Operating Locally.

As many US businesses have relocated operations to different parts around the world for supposedly cheaper labor costs and materials, I asked Tim and Dave why should a US company now consider reshoring and reestablishing its manufacturing back in the USA? Here is Tim and Dave’s response:

Some reasons may stem from the original motivation to offshore. Was it strictly cost? If so, what costs were considered? In many cases, the labor cost was the driving force. If that is the case, then looking at the current offshore labor costs, as well as the near term labor cost trend, may paint a very different picture from the original. The rapidly rising middle class in China is eliminating that country’s labor cost advantage.

Another cost is transportation. Energy costs have increased markedly from the days when many companies began their offshoring operations. This is another development that may make domestic manufacture appealing.

Travel costs and time spent coordinating with offshored production are trackable and must be included. While travel costs are calculable, the opportunity costs are probably ignored. That is, could executives traveling to offshored locations be using that travel time in much more productive ways? Also, could the staff time spent dealing with offshore production issues, including complicated logistics, be more productively spent on other matters?

There are also hidden costs that burden the offshoring company in ways it fails to recognize. Scrap and rework can be immense and also unpredictable costs. Do batches of product arrive and sometimes need rework? When that happens, are those costs tracked accurately and reflected in the actual cost of the imported product? What about outages – are there times when product is en route, and stock outages occur prior to arrival? What is the cost of an unhappy customer? Are customers driven to competitors’ products? That can be an unacceptable cost. It can also be difficult or even impossible to measure.

Is the cost of stocking large inventories completely and accurately covered? To avoid outages, extra stock may be kept and stored. Is stock sometimes damaged, or even lost, and are those costs captured? Is a heavily stocked product susceptible to obsolescence through design changes?

Perhaps the most difficult costs to identify are those that result from the distance between production and design/engineering. Are product improvement opportunities lost due to the disconnect between these two entities? Are there quality problems that result in substandard product, which can lead to lost market share? How can such subjective or camouflaged costs be measured, even though they are very real? Sadly, we are convinced that costs like these have been left out of the offshoring equation for many companies. 

What do you think of Tim and Dave's points? Do you think that the era of US companies locating their operations offshore because of supposed cheaper costs are drawing to a close?