Waste in an organization can take many forms. It can be an overt waste of:
- Budget funds (e.g. equipment that is purchased, but is never used).
- Skilled resources (e.g. a product that staff dedicated eight months of their time to, which did not meet the needs of the marketplace).
- Available time (e.g. staff spending three months developing a discussion paper, leaving them only one month to act on the resulting decision).
Or it can be a much more subtle waste of finances, skilled resources and available time by having:
- Products and services that are ‘over-delivered’ to provide more than the target audience needed (or even wanted).
- Employees who are in a ‘holding pattern,’ waiting on input from others before they can progress their work.
- People who have so many different tasks assigned to them that they are unable to spend meaningful time (or focus) on any one task.
- Staff members who end up recreating work that already exists in the organization because of ineffective communication channels.
All of these circumstances can result in wasted time, budget funds and resources for the organization. These are the very issues that Agile approaches are designed to address.
The ultimate goal of every Agile approach is to increase the delivery of high business-value outputs in an organization by optimizing the organization’s resource and budget utilization (i.e. by reducing its waste). Agile approaches argue that anything an organization does which does not lead to high business-value outputs, is likely to be wasting that organization’s time, money and resources. Therefore, the goal of an organization should be to maximize the value of its current resources by reducing and, where possible, eliminating low business-value activities. The Agile practices of waste management are based upon this very assertion.
Waste management is based upon the lean manufacturing approaches that were pioneered decades ago as a way of maximizing resource utilization in the manufacturing sector. Since the introduction of lean manufacturing approaches, other industry sectors have adopted quality improvement methodologies (e.g. SixSigma) in an effort to better measure, improve and control their business processes. (Further detail on the history and evolution of lean approaches is provided in the Popular Agile methods section of Chapter 1: Agile in a Nutshell.)
One of the quality improvement methodologies that extended from lean manufacturing is lean thinking,48 which advocates that productivity is most effectively addressed when you combine continuous improvement techniques with a ‘respect for people’ (e.g. empowering the staff). Lean thinking sees waste management as the natural outcome of an organization that promotes the value of people and the importance of improving their work practices, business processes and overall work environment.
Agile approaches combine the best of both worlds by valuing staff members (see Chapter 10: Management by Self-motivation, improving their work environment (see Chapter 16: Continuous Improvement) and optimizing their work practices and business processes through the waste management techniques described in this chapter.
There are a number of areas where organizations can have inefficiencies (i.e. waste) in their work practices and business processes, including:
- Overproduction: by producing more than is needed to satisfy the customer’s requirement.
- Waiting: where work cannot progress due to the unavailability of required resources, materials, information, management decisions and/or management approvals.
- Non-value-added processing: which includes over-inspection, reworking and other added tasks to compensate for a lack of effective quality control in the overall process.
- Defect handling: where the organization’s resources are wasted addressing problems in their products, services and business processes, instead of focusing on core business activities. Note that this also includes ‘damage control’ to protect the reputation of the organization when these defects are visible to external audiences.
- Under-utilized people: where staff cannot work to their full mental and physical potential due to ineffective workflows, restrictive organizational cultures and inadequate training.
- Excess movement: where the organization’s resources (staff, materials, etc.) are moved from activity to activity without adding value to the business process. This includes mental movement where staff members cannot focus on their work because they are constantly moving from task to task. It also includes unnecessary movement due to a lack of effective communication channels in the organization (e.g. recreating an existing procedures manual).
- Over preparation: where the organization hoards resources or prepares materials ‘just in case’ the organization might need them in the future.
The key to successful waste management is ensuring that the organization does not squander its time, budget or resources using wasteful approaches that add minimal business value to the organization. Productivity gains in an organization can equally be achieved by not doing things that are wasteful as by doing things that are more productive.
At the heart of lean techniques (and, consequently, waste management) is a focus on the value stream – those activities that directly result in business-value generation for the organization. Any work that is done which does not add to the value stream – or which impedes the flow of the value stream – is considered waste. This is similar in concept to the ‘critical path’ in traditional project management techniques: there are core activities that the organization needs to do in order to get from Point A to Point B; anything that delays or detracts from these activities will directly impact the organization’s ability to deliver the intended outcomes within the agreed time, cost, resource levels and/or quality.
In the manufacturing sector, the value stream is a relatively straightforward thing to analyze and measure. Is the equipment working? Are the people sufficiently trained? Do we have the components that we need in hand at the exact time that they are needed? Do the manufactured products meet the quality standards? Monitoring the value stream in the manufacturing sector is also reasonably straightforward: a hold-up in the production line is visible to the floor manager; a flawed product (ideally) gets picked up in quality testing. However, in other industry sectors, leaks in the value stream may not be as evident.
What if the ‘hold-up in the production line’ is a business process that requires six people’s signatures to approve an employee expense form before the employee can be reimbursed? Or an employee who cannot distribute an analysis report of current market trends until their manager has reviewed it – and their manager will not be in a position to read through it for at least three more weeks (at which point, the ‘current’ information is already becoming historical information).
What if the ‘flaw’ in your product or service was its inability to meet customer needs? It may function as intended, meet every criterion in the original design, pass all of the physical quality checks in the organization – but if the product does not meet customer needs and is, therefore, put away on the shelf to collect dust, has the organization achieved business value from this work? (Beyond, of course, the important – and expensive – lesson of learning from one’s mistakes!)
An equally dangerous ‘flaw’ can be where your product or service exceeds customer needs by ‘over-engineering’ or ‘over-delivering’ the solution to their requirement. This can result in inflated costs, increased training requirements and a greater potential for human error. (See Over-delivery is wasted money in Chapter 6: Business-value-driven Work for further information on the risks of over-delivery.)
The following sections identify areas of waste that are common across all organizations – activities that take employees away from the value stream of their core business activities. These are the ‘insidious problems,’ referenced in Chapter 12: Immediate Status Tracking that can slowly erode the value of an organization by chipping away at its real productivity levels; although most of them are far too subtle to be noticed by the organization.
When a patient in cardiac arrest enters a hospital, every second counts. Emergency workers are trained in critical response techniques to address the life-threatening circumstances. They are positioned to take immediate action to ensure that no time is wasted. They will drop everything that they are doing to ensure that the urgent situation is handled.
When a patient enters a hospital with a sore throat, however, the reaction from hospital staff is markedly different. Because this is not a critical situation, the imperative for staff to respond does not need to be as strong. So, the patient is added to the queue, behind all of the cases that came in earlier that day, as well as any urgent cases that may come in while the patient is waiting. It does not matter how long someone has been waiting, critical issues will always take precedence.
For most organizations, almost every business process is a patient with a sore throat. Unless the situation is truly critical (or a top-down directive from the Chief Executive), people are not likely to drop everything that they are currently doing just to meet your requirements. Consequently, people in an organization will often find themselves waiting for the materials, staff, information, decisions and management approvals that they need to progress their work. These delays and hold-ups are so common that they have become an expected part of business.
The inconvenience of waiting becomes a problem when the input that the staff members require is part of the value stream (i.e. the critical path) of activities, which means that work cannot continue until the input is received. In these circumstances, the lack of essential input at the required time can result in a work stoppage for the rest of the value stream. These are the most critical delays for the organization to address; the issues that cause skilled staff members to be under-utilized while they wait for the resources that they need.
Waste management approaches specifically target the points in the business process where the organization is most vulnerable to work stoppage (or resource under-utilization) due to delays. The three most effective approaches for reducing the potential for work stoppage (i.e. avoiding the ‘waiting game’) are:
- Business process modeling and improvement: this involves documenting the current business processes that an organization uses and assessing them to determine where inefficiencies exist. One of the most effective ways of modeling business processes is by using Business Process Modeling Notation (BPMN), which is an industry standard for documenting business processes in visual diagrams with supporting textual information.
- Effective communication: ensuring that the key participants in the business process are aware of both their role in the process and the timing of their involvement, so that they are better prepared to respond when they are required. This includes providing advanced notice to the areas of the organization (or to the external suppliers) who have the information, staff and materials required, in order to minimize last-minute ‘fire-fighting’ for the resources needed – and the inevitable delays that ensue when your urgent requirement is put in a queue behind everybody else’s needs.
- Facilitation: proactively working with the areas that have the resources that you need, in order to address any delays or impediments in their involvement. (This is so critical that Agile approaches assign a dedicated member of the team – the Agile facilitator – to be responsible for overcoming delivery hurdles. See Chapter 5: Responsive Planning for more details on this role.)
Techniques for addressing waste management through business process modeling and improvement involve addressing the most common inefficiencies in business processes, such as over-handling, decentralized information, serial tasks, over-management and overuse of decision points.49 These are addressed in the following sections.
Techniques for addressing waste management through the use of more effective communication and facilitation is explained in Chapter 11: ‘Just-in-time’ Communication.
Although movement without added value originated from the literal movement of materials on the production line in a manufacturing plant, the ‘movement’ referred to in this section does not always involve the physical movement of materials from Point A to Point B. In most other industry sectors (particularly services sectors), the ‘materials’ being moved can be documents and information – and ‘wasted movement’ can take the form of:
- Unnecessary steps or people in the process (i.e. over-handling).
- Excessive management involvement, including unnecessary approvals (i.e. over-management) and excessive use of decision points (i.e. creating checkpoints at every step of a business process instead of allowing core work to be progressed without interruption – and establishing a mechanism for escalating exceptions and problems when they arise).
In the previous section, business process improvement (BPI) was identified as a key approach for eliminating waste in an organization. One area where organizations can achieve significant BPI benefits is by removing the non-value-added middle man from a business process. When modeling a business process (using BPMN or equivalent modeling tools), this non-value-added middle man can take the form of:
- An administration staff member who is solely responsible for routing a deliverable from one staff member to another.
- The third and fourth staff members in a review and approval process.
In these circumstances, this added movement in the business process is generally endeavoring to compensate for ineffective quality controls in the overall business process (see Chapter 14: Constantly Measurable Quality) or for a lack of effective communication (see Chapter 11: ‘Just-in-time’ Communication). Therefore, improving these underlying issues in the work environment will often negate the need to have these extra non-value-added steps in the business process altogether.
Another area where organizations can achieve significant BPI benefits is by reducing the amount of documentation that employees need to produce. The Documentation is no substitute section of Chapter 11: ‘Just-in-time’ Communication identified the issues associated with using documentation in lieu of more effective forms of communication. Ironically, this means that all of the added time that an organization spends creating documentation can actually result in a sub-standard outcome for the organization when the documentation endeavors to provide communication which would be better handled through face-to-face discussion.
As explained in Documentation is no substitute, the key to reducing the waste caused by over-documentation is to provide alternative methods for staff communication where the same degree of formal documentation is not necessary. Organizations can significantly reduce waste in their business processes by making documentation an activity to document decisions and outcomes after the fact – and only when having that information formally documented would truly provide business value to the organization.
When the ‘material’ being moved in a business process is physical (e.g. equipment), the organization can easily use tools such as BPMN modeling to identify and address inefficiencies. However, what if the ‘movement without added value’ is a much more subtle activity, such as the constant movement of a staff member’s mind from one task to another? In these circumstances, the organization risks losing a little bit of that staff member’s time – and momentum – every time that their focus needs to shift from one activity to another. This is particularly true in circumstances where the staff member is over-committed to work and, consequently, cannot ‘take the time’ to properly focus on the work that they are doing. This means that task-switching does not only risk time leakage for the organization; task-switching by over-committed staff can result in low-quality outputs and burned out employees.
Agile approaches address the issue of task-switching in three ways:
- Allowing the delivery team to estimate and self-manage their work, so that they control their levels of commitment in each iteration.
- Providing the Agile facilitator as a resource who is dedicated to addressing issues that the team encounters, so that they do not need to waste their brainpower on activities other than their core work.
- Using daily stand-up meetings (described in Chapter 11: ‘Just-in-time’ Communication) as a tool to highlight potential over-commitments from delivery team members (even if they are too caught up in the work that they are doing to notice it themselves).
This does not mean that every member of the delivery team will have the luxury of focusing on only one activity for the duration of the iteration. For most organizations, it is realistic to expect that employees will be required to take on some level of concurrent work, even mandatory corporate communication activities such as department meetings. (This reality of competing commitments in the corporate world is why this section is called waste management and not waste elimination!) Agile approaches are designed to minimize the occurrences of these distractions, so that the majority of each delivery team member’s time can be spent on their core work.
Defects in an organization can be extremely costly. Organizations that produce consumer products (such as the manufacturing sector) are well aware of the legal and financial implications of producing bad quality outputs. Most service organizations are equally aware of their liability if they provide low-quality services to their customers. This is why customer contracts are filled with liability waivers and indemnity clauses to protect the provider and/or the customer from the impacts of sub-standard outputs. The financial impacts of bad quality outputs in an organization are, however, far beyond the monetary damages that may be awarded in a courtroom (and the associated legal costs).
When a bad quality output is identified before it leaves the organization, there are often a number of wasteful churning activities that occur between areas of the organization. This can include everything from urgent ‘all hands on deck’ staff meetings, to stand-offs between department managers (the ‘blame game’), to endless analysis work to determine the source of the problem. As costly as these activities are, however, they are minuscule when compared with the cost of a bad quality output that is identified after it leaves the organization. When a defect leaves the organization, the cost can include everything from undertaking damage control with current customers, to addressing unflattering media coverage, to the often unquantifiable loss of prospective customers – not to mention the potential legal liability for the organization.
The problem is that most organizations perceive quality control as a checking activity that occurs at the end of the production line, not as an intrinsic part of the organization’s business processes, work practices, corporate culture and work environment. The inherent flaw in this approach is that the end of the process is the time when resolving defects in a product or service can often be the most costly for the organization, especially if the resolution requires a full replacement of the output (100% rework cost), or a partial replacement (with a corresponding percentage of rework cost). Furthermore, the additional costs of rework do not include the potential damage for missing a delivery deadline (or for incurring staff overtime costs to meet that deadline) – let alone the greater likelihood that a rushed replacement deliverable at the end of the process is likely to have even more extensive quality problems than the original.
The reality is that bad quality outputs (i.e. defects) in an organization are often the result of the flawed approaches that preceded the actual delivery of the outputs. These flawed approaches can take the form of:
- Inefficient (or insufficient) work practices.
- Ineffective business processes.
- Miscommunication that causes errors and rework.
- Outputs that do not meet the needs of the internal or external customer (and, therefore, require partial or full rework).
All of these factors contribute to the overall potential for outputs to cost more, to take more time to deliver, to require more resources, and to be produced at a sub-standard quality. This is why building in quality upfront is a core principle in Agile approaches.
Chapter 14: Constantly Measurable Quality focuses on the key facets that can affect the quality of an organization’s outputs, including their business processes, work practices and communication channels. Agile approaches understand that instilling quality in every aspect of an organization can redirect employees from the frustration of addressing problems, repeating their work and ‘fire-fighting,’ to the satisfaction of focusing on their core business activities and delivering valuable outcomes for the organization.
Chapter 5: Responsive Planning explained that upfront plans are destined to fail because everything in an organization is subject to change – and that even the best planning cannot predict every possible situation that a business team may have to face. Part of responsive planning is using flexible business processes that are able to adjust to fluctuations in market demand, staff shortages, equipment failures and competing resources.
Just-in-time planning is strategically designing business processes to adapt the work that employees do to react to the evolving circumstances of the organization. It is positioning the organization to have sufficient staff, suppliers and product available to handle high demand periods, but equally being able to reduce and reallocate these resources in low demand periods. It is ensuring the continued supply of resources when (and if) they are needed without incurring added overheads for storing excess materials, having staff members in a ‘holding position’ waiting for work, or committing to minimum purchase levels from suppliers.
Conversely, just-in-case planning is spending excessive time, resources and funds trying to prepare upfront for every possible contingency – even when the majority of these situations never arise. It is the excessive stockpiling of materials that may be required in the future – and the associated storage costs. It is hiring permanent call center employees to support a sales campaign that may (or may not) occur six months down the track. It is preparing four different variations of the same management report in the hope that one of the variations is what the executives are looking for.
Contingency planning is a risk versus reward game. If you spend all of your time planning for every possible eventuality, you will most likely be prepared for everything – and accomplish nothing. For example, if a team prepares for four potential outcomes ‘just in case’ they occur – and only one of those outcomes eventuates – the team has effectively wasted 75% of its efforts.
That is not to say that contingency planning is a waste of time. Any organization that does not keep up-to-date backups of their computer systems (including off-site backups) is significantly risking the ongoing operations of the organization. However, there is a difference between reasonable contingency planning and planning for every possible eventuality that might occur.
The thinking behind just-in-time (versus just-in-case) planning is straightforward:
Control what you know – and be well positioned to respond to what you don’t know.
The concepts that underpin just-in-time approaches emerged in the manufacturing sector as a way of ensuring that materials were delivered as close as possible to the point in the production line when they were required. This reduced the need for organizations to invest in long-term storage (e.g. utilize costly warehouse space) and, consequently, reduced the need for excess movement between temporary storage locations. Stockpiling was identified by just-in-time approaches as an added overhead that results in increased operating costs, including wasting both storage space (physical and virtual) and the resources required to manage the excess stock until it is needed. The prevailing logic was that, unless the overhead costs of stockpiling are offset by a corresponding cost savings (e.g. discounted prices for purchasing bulk materials in advance), the organization was paying a substantial price simply to avoid the potential for prospective customer orders not being fulfilled in time.
Just-in-time planning enables the organization to establish processes that allow the supply chain and the production line to increase or decrease their levels of productivity, based on the level of customer demand. For example, having active arrangements with four different suppliers of product components, so that the organization can double or triple its levels of productivity in a high demand period – and ensuring that equipment, staff and distribution centers are equally positioned to handle magnitudes of increased activity.
The converse to this is positioning the organization to be equally prepared for low demand periods by avoiding minimum purchase commitment clauses in supplier contracts and by having sufficient levels of alternative value-added work for production line staff to do during the downtime; in other words, by establishing a process that allows the organization to effectively respond to changing demand in the marketplace, without incurring the significant overheads of preparing for every contingency. This is at the very heart of Agile approaches.
In Agile approaches, just-in-time planning is delivering what the customer needs when they need it – no more and no less. It is not focusing the delivery team’s energy on predicting what the customer might need (e.g. four different variations of the management report); it is working hands on with the business owners to find out what they do need – and then focusing all of the team’s efforts on delivering the required outcomes in the agreed timeframes.
Every aspect of lean techniques is designed to maximize the human, physical and financial resources of the organization:
- It is increasing the upfront quality of work to minimize resource time spent on addressing problems, reworking and damage control after the fact.
- It is making better use of existing resources by reducing the amount of unnecessary work that they do, including the overheads associated with ‘over-management’ and ‘just-in-case’ preparation.
- It is reducing ‘task-switching,’ so that staff are able to properly focus on the work that they are doing, instead of being physically (and mentally) pulled in different directions.
- It is improving communication channels within and between areas of the organization, so that employees are all working from a shared understanding.
One aspect that has not been addressed sufficiently, however, is the waste that results from the under-utilization of resources.
By definition, under-utilization implies that a resource has greater capacity to produce value than the business process (or the organization) is using. This could be as simple as:
- A photocopier that is only used twice a day.
- An empty office space.
- Surplus corporate funds in a non-interest bearing account.
- Employees who cannot progress their work because they are waiting on information, management approvals or materials.
For many organizations, however, under-utilization of people is a much more subtle activity where the physical, mental or creative abilities of employees are not used to their fullest potential. This can be a result of under-employment (hiring someone whose skill set exceeds their responsibilities); ineffective workflows or inadequate training (so that people are not able to perform as efficiently as they could); or high turnover (where people spend so much time focusing on knowledge transfer and new hire training that they are unable to focus on their core work). No matter what the cause, under-utilization of people is both a waste for the organization (who could be better leveraging their capabilities) – and a risk for the organization (as it has the potential to reduce employee motivation, satisfaction and pride in their work).
Ideally, organizations should endeavor (where possible) to implement hiring practices, business processes and training programs that allow employees to perform at their fullest potential. Realistically, however, even the most skilled employee needs to be available (and willing) to do work that the organization requires, even if it is not the best use of their skills (e.g. status reporting). A good metric is for the organization to aim for at least two-thirds of an employee’s work to be suited to their skill levels; and to accept that the remaining third of their time is likely to be spent addressing organizational administration requirements, supervising other people or undertaking supplemental work for the team.
The ACTION plan described in Chapter 5: Responsive Planning identified the Tell us what can be done step as the point in the responsive planning process where the delivery team translates the highest-priority actionable goals into the specific activities that will be required to achieve these goals – and then advises the business owners on the work that can realistically be achieved in the upcoming iteration. Not only does this approach empower the members of the team to manage their responsibilities and workload, it allows them to identify the subset of work that will utilize the team’s collective physical, mental and creative abilities to their fullest capacity. This enables the delivery team to divide the work amongst themselves, to compensate for each other’s strengths and weaknesses, and to use their velocity as an indicator of their optimal levels of productivity.
Under-utilization of employees has two comparable circumstances that can result in equivalent levels of waste for the organization: the over-utilization and the mis-utilization of employees.
Both over-utilization and mis-utilization of employees can occur when employees focus their time and skills on work that has limited (or no) business value for the organization. This can include redundant or repeated work (due to a lack of effective communication channels), work that does not meet the needs of the target audience (requiring rework), and work that exceeds the needs of the target audience (over-production and over-delivery). The ACTION plan provides approaches for encouraging communication (see Chapter 11: ‘Just-in-time’ Communication) and confirming that the work that the delivery team is doing meets the needs of the business owners (see Chapter 8: Real-time Customer Feedback), but how does it ensure that the delivery team does not fall into the ‘just-in-case’ trap, focusing on the work that the business owners might need, instead of the work that they do need?
The very nature of Agile approaches means that teams do not have the time (or luxury) of focusing on hypothetical situations. The short iterations and ‘Apply, Inspect, Adapt’ mindset of Agile approaches mean that delivery teams are not in a position to go too far down the wrong path before the business owners (or other factors in the organization) get them back on track. It also means that delivery teams are not in a position to over-deliver in preparation for what the customer might require; they have just enough time available to deliver what they know the customer really needs.
If the ACTION plan requires that everything the delivery team does is in response to what the business owner needs, then what happens when team members (who are closest to the work) have their own suggestions to improve the outcomes for the organization, such as the addition of a ‘shopping cart’ feature on the website that the business owner did not ask for? Do lean techniques allow the organization to consider additional (or alternative) activities beyond the most basic work required to respond to the immediately identified needs of the business owners?
Agile approaches encourage the delivery team to think about what the business owners might need beyond what was already recorded in the requirements backlog, and to bring these ideas to the iteration planning sessions for discussion with the business owners. The biggest difference in the Agile approach is that the business owners are given the opportunity to approve, postpone or reject these suggestions before substantial organizational resources are utilized – and the delivery team resources have not sacrificed their time and energy on an outcome that is likely to result in minimal business value for the organization.
For more examples of how lean techniques can be applied to maximize staff productivity, see Section 3: A Case Study, which compares two organizations that have exactly the same business objectives, but take very different approaches to achieve these objectives.
49 From my research paper, Using Business Process Modeling Notation (BPMN) to Identify and Reduce Inefficiencies in Business Workflows, adapted with permission from the University of Canberra (www.canberra.edu.au).