Category: BUSINESS THEORY

Would be helpful for me to look at project lifecycle vs product lifecycle / agile approach.

He asks himself the question: ‘how can I prove to myself that this solution is right for the business’. Then develop a fast, dirty test to prove it to yourself. Uses something called something like VAIP to test.

In a Junior Analyst role, looking basically for intelligence and having a clear understanding of the different stages of analysis – gathering info, analysis and reaching conclusions. Not- just skipping to conclusions. An organised approach.

Like’s to see them challenging  – asking questions until they understand things.

The impression I got from this guy is that being a good business analyst is about taking a structured approach to getting to the root causes of issues, being able to really listen and talk with people really well to get to this. Then, once the problem and needs of the customer are clearly defined, an abstract form of a solution can be developed. You then facilitate the process of reaching more solid solutions, which you then test and recommend to the business as solutions.

 

Cash flow is money that flows in and out of your business over a specified time. Cash is king, it is the lifeblood of business.

Freecash flow is the money which is left over after operational expense – it’s the money left that can be distributed to shareholders.

Cash flow is just the inflow and outflow of cash in a company. It’s sometimes used to refer just to inflow but that’s not technically correct, since you could have high cash flow and an income of £0.

Three key things that impact your cash flow are your:

• Accounts Receivable (cash from customers that have received the produce but not yet paid)
• Inventory (shit you can sell)
• Accounts Payable (money you owe but haven’t yet paid for)

A lot of companies don’t pay you until they decide to and it’s not open for negotiation when you get paid. It could be 6 months time. 72 days is average for small business owner’s. You can avoid this by using the best practices for billing – cloud-based online invoicing software is a good start. The more you can reduce average days recievable and average days inventory the better – you want to extend the average days payable.

You don’t want too much cash locked up in inventory, but equally you don’t want too little.

Cash flow conversion cycle – the time it takes for you to turn cash into inventory and then back into cash again. You want a short cycle.

How to calculate average days inventory:

Number of days in year x average inventory/cost of good sold

Create a simple spreadsheet in Excel. List who owes what, when they made the purchase and the amount owed. Indicate how long you’ve been waiting for payments.

Software automates, is more accurate, can save money through less mistakes  – it’s just better than manually doing accounts (ah but this doesn’t take into account the psychological benefits of understanding what’s really going on)

 

 

• Listen to your customers – sounds easy but people don’t do it
• Don’t listen to their solutions! That’s your job!
• Don’t be afraid to be a thief, you don’t need to reinvent the wheel
• Don’t spend attention on competitors, don’t worry about them either
• Don’t just ask ‘do you like this feature’ that way they get it for free. Ask ‘do you like this feature if you don’t get X’.
• Be careful when you’re really trying to solve YOUR problem rather than your customer’s problem. Sometimes the solution to YOUR problem comes at the cost of the customer’s solution, which prevents you from pleasing customers which is the no.1 priority!
• Stop worrying so much about getting paid. We’re so time/cost-constrained that we’re spending time on business cases, which creates a culture of risk aversion which creates only small incremental gains rather than big ones.
• The customers emotional  and social needs are more important even than their functional needs
• Speed up. The cost of inaction, the cost of delay, I wish I had known this earlier in my career. Every time you put off making a decision you are destroying value. The product has a limited shelf life. We put things off because we have limited info, someone is on holiday, one that really gets me ‘is we haven’t made the decision yet because we haven’t managed to book a meeting room yet’.
• Say no. As product managers we don’t say no enough. Say no for the right reasons.
• Don’t be a visionary. When I was young I thought I had to know the future etc. Elon Musk is a visionary. Product managers don’t need to be visionaries they need to be focused on the customer and what they want, do that instead.
• Be dumb. You have a precious gift when you start, you don’t know anything. You aren;t encumbered by knowledge or inertia. The best PM’s can focus on customers’ problems with a fresh perspective, without injecting your own problems into it.

Chapter 3: Philosophy & Direction

Improvement and adaptation are at the core of their philosophy.

Do you see improvement as an ‘add-on’ to your job, or is it a central type of work? Periodic kaizen workshops are ok, but not enough. At Toyota, improving and managing are the same thing. Improvement is seen as something ‘extra’ in most companies.

If you get the processes right, other things take care of themselves.

Operating efficiently is not the same as being lean, because it doesn’t allow you to keep improving.

Improving efficiency in one area can lead to more waste in another area. You need to consider the whole system.

You need to think about big things while doing small things so that the small things are aligned with a longer-term vision.

One-piece flows mean that products go from one value adding step to the next until the customer with no waiting.

How do we get peeps in a massive organisation to stay on a path towards a vision? Target conditions. Steps that are beyond but not too far away.

Toyota does not aim to make improvements that aren’t financially justified.

Don’t use other companies as a bench mark, improve from where you are.

CHAPTER 4

Systems theory tells us you can’t effectively optimise a system by optimising its constituent parts individually.

There are many ways of improving KPI’s, but many of them do not improve the underlying process they are intended to measure. Managers want to look good, this means the data senior management get is likely to be deceptive.

Parts flowing from one process to the next with little waste between – synchronisation.

PART 3 Improv Carter – How Toyota Continuously Improves

The question Toyota asks is ‘what do we need to do’. There is this focus on the long term vision, the current condition and the next-stage target condition to move you towards it.

The process level is a good place to focus our attention, since this, along with product development, is where value is added in a manufacturing company.

Having a target condition is so important for CI, Toyota don’t start to make improvements often until they have a target condition. It’s a desired future state. ‘How should this process operate? What should ‘normal’ look like? Where do we want to be next?’.

I will review these techniques and its relationship to target condition thinking:

• Tac time: rate of customer demand for the group or family of products produced by one process. Used most often at assembly type processes. E.g. dad sells one duck every 4 hours. Tac time represents an ideal rate: sell one, make one. We can use it as something to strive for as part of a target condition. Try to move the planned cycle time to be closer to the tac time. This creates a stable process.  This is just one tool, it’s not a priority improv for every situation. Toyota use it as a metric to strive for.
• One by one production: …..
• Continuous flow
• Hyjucer
• Leveling production
• Kanban
• Pull systems

Personal Take Away’s / Summary: 

Lean is an approach that aims to make an entire organisation streamlined to deliver maximum value to the customer as cheaply as possible. Lean aims to achieve this by empowering the workforce – the people directly involved in processes – to share their insights into process problems and to help generate solutions. The approach combines rigorous, scientific thinking with deliberate practice throughout the organisation. This means forming and testing hypothesis using experiments to continuously find ways of maximizing value to the customer.

What do I like about this?

The author states that the approach of lean is part of a broader theme of human scientific advancement and entrepreneurialism. I can see that this is true. The abstract idea this links to is that of investigative and creative enterprise itself.

You have a clear sense of direction, add to this a grasp of where you are now and establish a practical next step. Then, you form a model in your head about how this will work. You develop an awareness of your assumptions and find low-cost ways to test them. Now you have more information, you repeat this until eventually the model you have in your head WORKS.

This is not how people naturally operate. Instead, we encounter a problem, have a vague undefined direction, analyse the problem sloppily and without clearly identifying ‘knowns’ and ‘unknowns’, then delight in generating solutions to this problem. We implement these solutions fully, assuming that they are the correct one and will work, and if it doesn’t we scrap it entirely and repeat the process until we get the desired outcome OR more likely, we give up and say it’s impossible. The real cost of this approach is that it’s very costly, unlikely to succeed because it doesn’t take into account your limited understanding.

What I really like is this idea:

• Define the problem and the direction in crystal clear terms (and define what your understanding prevents you from defining as best you can)
• Have an ongoing process whereby you identify opportunities to improve in accordance with this overarching direction and systematically make incremental (or not so) improvements to how you do things
• Over time if you do this you will have dramatically transformed your chances of moving in the direction you want, and will be a formidable competitor.
• The big idea is this: continuously making small improvements in ONE DIRECTION, with continuous, focused and high quality reflections on these attempts combined with an openness to new ideas from whereever they come from will lead to extreme results.

Notes from a YT lecture:

You can’t explain or persuade people to change their behaviour, because behaviour is determined by habit etc not by reason.

What makes Toyota different? It’s the combination of two things: scientific thinking and deliberate practice through the organisation.

Toyota’s CI Process

1. Toyota always has a sense of direction and challenge throughout the company
2. They grasp their current situation
3. Establish the next target condition
4. Conduct experiments to get there (PDCA cycle)

The map is not the territory, but can be useful. LEAN is a only a simplistic model but is damn useful.

The lean approach mirrors in some respects the human approach to science and entrepreneurship – the PDCA cycle is how people move forward in all investigative and creative domains.

‘Eliminate waste’ is too unscientific, it’s an outcome of a process not the process itself. You don’t start by eliminating waste, that’s what you get in the end with LEAN.

If you ask people you get too many answers, you need a target condition & to recognize your limited resource.

Toyota does not ask ‘what can we improve’ but ‘what do we need to improve’.

Recognise uncertainty, don’t fill in the gaps. People assume they understand things they don’t understand which prevents them from understanding problems well enough to find smart solutions. There’s always a knowledge threshold, they’re hard to see & you need experiments when you identify them. The issue is that people love theorizing rather than experimenting, because it’s fun to talk about things and create your own coherent narrative rather than test things to find out whats really true. The knowledge threshold is the learning edge.

Small, rapid experiments with direction, in order to reduce what you don’t know so you can make superior improvements is the way to go.