-Ian Walsh, Managing Director, Intent Group

Many of you will be aware of the PDCA (Plan Do Check Adjust) cycle made famous by Dr Edwards Deming and sometimes referred as CAPDo (Check Adjust Plan Do). This is a fundamental continuous improvement cycle and when deeply embedded in an organisation drives improvement behaviour and mindsets.

It creates a culture of relentlessly managing improvement in an organised manner, ensuring the desired outcomes are achieved and when they are not drives a problem-solving mindset.

Unfortunately, most organisations I go to in New Zealand have not mastered this process. I recently went to a manufacturing organisation who had decided to install a new labelling machine to add a label to the pack.

I went to look at the process and on arriving there found a pile of labels on the floor. The machine was working perfectly, except for timing. The labels were shooting past the packs and landing on the floor.

The operators had not been trained and did not want to stop the line (the packs were acceptable without the labels), so after they couldn’t fix it, they turned it off.

I saw the manager and congratulated him on the new purchase and asked when he had last visited the line.  “Oh, over a week ago” He said, “I’ve been really busy so haven’t had a chance to look at it myself, but it is pretty straightforward” he said.

I explained what was happening and he was shocked and left for the floor immediately. The problem was soon fixed and the line operating normally. I reflected on PDCA. A really good plan do, but no check, and adjust.

There tends to be an assumption by many leaders that when an activity is done it will work perfectly, everyone will just get on with it and there will be no problems. Of course, the reality is very different.

When I was working in Japan, the managers used to tell me how much they hated new equipment. I asked them why? They would say that the first day was the worst day and every day after that it got better, but it required a lot of time and planning and effort to get the new equipment to perform as the old equipment and they had to manage this very carefully.

They preferred their old equipment which they knew everything about and was performing at a very high level. The efficiency of this plant was around 98%.

Contrast this thinking with many capital projects I have seen in New Zealand and around the world. We assume that the first day will be the best day and we start depreciating the asset after that (so it is only degrading).

Very rarely do I see companies invest in much training before they start production. Usually, the capital project is running late and production starts under pressure to perform to meet demand very quickly.

The operators are not capable, they are still fixing installation problems and usually they fail, with high costs incurred over a period of time to “right” the ship.

The alternative of course is to establish a rigorous PDCA cycle, identify all the success factors and rigorously implement them and check that they are effective in delivering the desired outcomes.

In the last few years, I have seen both approaches which provides an interesting contrast.

In one a new site was built with new equipment costing hundreds of millions of dollars. A week before the installation was complete, they hired the required staff and three weeks later commenced production.

To suggest the performance was poor would be an understatement. The waste was enormous, people left, no-one appeared to know what they were doing.

I won’t go into the health and safety concerns and it took over 6 months to achieve the level of output the previous factory had achieved. Many customers left.

This is akin to buying a Ferrari and tossing the keys to a learner driver and wishing them luck.

At another site, they hired the crew before commissioning and trained them for three months. They helped commission the plant, they developed their operating structures and processes and built the required knowledge in the team, and within a month they outperformed an identical plant that had been operating 5 years!

Why would you not invest in your people and a journey to world class when the cost to not do so is so high?

I also remember the team in Japan explained to me that when you develop your systems, and processes, you must continue to check them. Given they were performing at such a high level, I asked them why this was needed?

They explained that when they stopped checking, even their performance went down, because people stop doing the processes and the check ensured the systems kept working or any problems were identified and “adjusted”

The answer is systems left alone descend to the lowest level over time (Deming highlighted this in systems thinking). You must keep putting some energy in to sustain them. The concept is entropy.

So, if you implement anything worthwhile if you want to sustain it, you must check it, else it will fall over, over time.

If you don’t want to do the check you may as well not do the action as plan do, plan do is just activity and unfortunately many NZ companies are suffering from lots of Plan do, plan do but no check adjust. If you want to change this, drop me a line.