Organizational Performance Part 52: Understanding Problem Priorities | Operational Excellence Quick Hits

In today’s session, we’re going to continue on the mindset change necessary for organizations to achieve breakthrough improvement. And today’s session is on problem solving. When I go into companies and look at how they deal with problems, they take each problem and they look at it and they try to get as much information about that problem. And they assign resources to deal with those problems and all problems are created with the same level of attention. So we call it all problems are created equal and resources are trying to deal with those problems on an ongoing basis. So what does that create for the organization? Organizations try to strive to make processes highly reliable. I don’t think anybody would disagree with that, but we take actions to deal with problems in a timely manner. So when we have all these problems that we’re dealing with, we’re trying to take actions to deal with all of them.

And what happens is resources don’t have sufficient time to do proper analysis on the problems. And when that happens, resources are overwhelmed dealing with issues and they have other tasks that demand their time. And then, resources spend too much time on non-value added activities, reacting to the problems, and then productivity and quality is reduced. So we need to change the mindset. So what does the mindset need to be? So we need to move to a more proactive mode of thinking. Right now, the mindset is all problems are treated with the same level of priority, which is creating these undesirable effects. So we need to recalibrate our mind thinking and let’s look at risk. So when we look at risk, we’re looking at how a process can fail, and we’re looking at it from a different perspective and we’re rating it on three criteria for how it can fail and how that risk can affect the company.

So, first of all, is the severity. So if the problem happens, how much affect does that have on the company performance? So not looking at the process level now. We’re looking at the company performance, then what’s the likelihood that’s going to occur? And then third, are we able to detect it? If we can detect it after the problem, that’s not good. We want to be able to detect it before the problem. We can take those three levels of risk. How severe is it when it happens? How often is it going to occur? Are we able to detect it? We score them on a scale of one to 10. We take those numbers. We multiply them together and get a risk priority number.

Once we get that priority number, we take and prioritize those issues in terms of risk reduction. So when we do that initial analysis, what we’re trying to do is determine what’s the highest priority problems that we need to work on. And if we do that, we can significantly reduce the risk for the organization. And then that helps us in taking our resources and focusing them on the things that are going to be the most productive for the organization. And then when we look at priority, we’re going to look at severity first. So what effect does it have on the business? The ones that have the most effect are going to get a higher score, then how likely is it to happen? That’s our occurrence. And then are we able to detect it? That’s our detection.

So when we move to this type of priority system, then problems in the company should be prioritized based on the risk to the organization. So all problems are not created equal. So our objective is we still want to strive to have processes highly reliable. We want the mindset now problems are prioritized based on risk to the organization. And then what happens is the problems with the highest risk are prioritized. Then resources have time to do the proper analysis to deal with the problems. That’s proactive. Resources put permanent solutions in place. There are fewer demands on the resources’ time. Resources spend time on value added activities and productivity and quality increases. So if we change this mindset, we can begin to get big impact in a short period of time. And that’s what we’re looking for is that breakthrough improvement. So that’s our session pretty today. Next week’s session, we’re going to talk about batch sizing and what’s the effect of batch size on cost.