W. Edwards Deming, one of America’s foremost quality gurus, stated that 85% of an organization’s problems are attributable to variability in their processes, and the other 15% are related to people, equipment and tools. If your goal as an external domain expert (consultant) is to deliver visible, bottom line results for your clients, then focus on their processes! Why waste your time on the trivial 15% when you can deliver breakthrough results by focusing on the principle source of the organization’s problems?
Deming’s 85/15 Rule
Deming’s theory states that problem areas fall into two categories: common causes (85%)-system or process problems found at production or organizational levels, owned and fully controlled by management. Management purchased the inputs, schedules the people and equipment to transform the inputs, and determines the precise method and use of every element in the process through delivery to the customer. Only management can change or fix the process. And there are also special causes (15%)-attributed to people, equipment, or tools.
What Is a Process?
Stated simply, a process is a group of activities that together achieve a specific goal. All work is a process. Every process has suppliers that provide input, which is transformed into an output that is delivered to customers. The transformation stage is the process. Suppliers and customers can be internal or external to the organization.
Processes that take place in almost every organization include, for example, order fulfillment, employee selection and staffing, and new product development. In most organizations, the critical or key processes are cross-functional in nature.
Proof of the 85/15 Rule
In client teams I have worked with, I have found the 85/15 rule tends to hold true. In working with one manufacturer of industrial magnets to reduce manufacturing scrap, I first met Traitement chenilles processionnaires with the management team to brainstorm the causes of scrap. Not surprisingly, 90% of the reasons suggested by management were related to special causes (people, equipment, tools, and so on) and half of these were employee related. (Management often has the absurd need to pin the blame on someone and to be on record as disciplining that person.)
Since management had selected the problem-“scrap is too high”-I asked the management team to form a team of 6 – 10 employees and first line supervisors to brainstorm the causes of high scrap. I facilitated the team using the cause-and-effect/force field analysis (CE/FFA) methodology. We exploded each cause into restraining and driving forces by using Force Field Analysis to determine why the cause existed. When all the force fields were completed, I asked the team to indicate for each driving forces whether implementation was the responsibility of management or of the employee. We tallied all the driving forces to obtain a rough estimate of how many were management or process problems and how many were employee, equipment, or tool problems. The results-ninety-five percent of the problems were process related, and only 5% were due to special causes.
Needless to say, the management team was chagrined to find that many of the causes of high scrap were controllable by them. But once they accepted this conclusion, the organization was able to reduce scrap 50% in six months.
Why Focus on Processes?
Today’s clients want a return on their investment. Since hiring an external domain expert is an investment in improving the business and achieving some measurable result, what better way is there to prove your worth than delivering a high impact or breakthrough result? Consider the following facts: