The Myths of Full Capacity

The concept of full capacity is a tool to estimate revenue for budgeting and a gauge for sales planning. Using sampling, full capacity projects output based on maximum use of existing resources with optimal availability of materials and logistical elements. Think of it as the optimistic average of what existed in the near past projected for the entire forecast period. Assumes optimal output with no disruptions or changes.

A simple illustration: sampling of production volume is 10 widgets per hour; the organization runs two shifts weekdays; 20 workdays per month – full capacity per month is 3,200 widgets (10 units x 16 daily hours x 20 workdays). If actual output is 2,500 widgets, they are at 78% of full capacity and up to 700 more widgets could be made and sold - theoretically. This can be a handy tool when viewed as 'here's what we can do in addition' – it is not so handy if viewed ' we cannot do more than this'.

Business has changed and continues to evolve (government is making similar inroads) – automation eliminates roles needing a live person, flexible staffing reduces fixed overhead, products and services are made new & improved by removing features and chopping the price.

The point is that the past is becoming less and less relevant as a tool for the future, but we hold on to several myths when looking forward.

Myth: presupposing full capacity is the maximum output of the organization.

An organization can adjust to meet higher production volume, when needed – add a 3^rd shift, for example.

Myth: sampling throughput gives a good estimate for projections of capacity.

Assuming each person works at their best pace for all hours on the job is unachievable in practice. Parkinson noted that work expands to the time available – and even NASCAR racers have pit stops.

Myth: all resources are being used fully throughout the organization.

It is unusual for all teams to be fully engaged at the same time. Starting up and winding down require different intensity and pace, than does the core activities of a project. Some functional roles are active at different time – like sales before the project and shipping at the end of it.

Myth: productivity is constant.

Experience boosts productivity – first time a person creates a website there's a learning curve to master; the second time it takes only about 60% of the original time.

Myth: history describes the future with gradual changes.

We are in a time of discontinuous growth – the era of 30-years and a gold watch is gone...now it's start-up + 4-years and sell. The New Normal is driven by agility, collaboration, and continual skill/knowledge development.

Sitting in the Big Chair, I can bring in collaborators to do what the staff can't because of lack of time or experience, when needed, or match up experienced with inexperienced Doers to develop future capacity.

In an environment where customers are reluctant to buy, or projects are awarded but not funded, full capacity is not as important as sufficient capacity and extensive external resources.

Business as usual is now unusual, and there's a premium on flexibility, innovation, and applying new equipment and devices to enhance the technology (how work gets done) within the organization.

The choice is stuck on full capacity, or adapt to the evolutionary changes afoot. How would you like to proceed?

So What – It Doesn't Really Matter, Does It?

When I was head of HR at a large hospital in Baltimore, supervisors and managers would come to me when routine discipline did not correct a situation with their direct reports.

I recall one situation with a rather autocratic supervisor of the supply department. Their responsibilities included unloading several trailer trucks of supplies first thing each morning, securing the supplies, and delivering the non-pharmaceutical supplies to the clinical areas and then the rest of the hospital.

One of the crew was eternally late – every morning he'd show up about 30-45 minutes after the shift started and the supervisor would write him up, applying progressive discipline, including suspension.

The supervisor had asked for a per-termination review with me in preparation for firing this employee. I ask the supervisor to send him to talk to me before his shift was over that day; I was curious why he wouldn't come to work on time.

When we met, I asked him what the problem was with being on the loading dock ready to work by 6:00AM, like all his teammates? Here's how he saw it:

• I get there when I can, but if I'm late, I always make up the time at the end of the shift – my supervisor get's his 8-hours every day
• When I get to work I jump right in and don't waste a minute unloading the trucks and moving the supplies to the floors and departments
• I'm a hard worker – reliable except for coming in late
• I do not think I should be fired for being late – it's no big deal, I do the work.

I asked him to review his typical day with me and list each person he came into contact with in the course of his duties. He told me that it took about an hour to unload all the early trucks when everyone was there, longer if someone was missing.

He listed his teammates, then the clinical staff, then the department staff, and a few others – 75 in all. He volunteered that virtually all of the 75 relied on him for their supplies and would page him for emergency requests, instead of calling general supply.

I asked him about how 'I do the work' applies when he's late to the loading dock to unload the trucks? As he was telling me that he'd jump right in, he realized that not being there shortchanged his teammates, since they had to do his share until he showed up.

He told me there was over an hour delay getting to clinical area delivery when he caused the unloading to drag longer. Asking him to describe what happened when he arrived on the floor, he said the staff would jump him and get the supplies they really needed and rush off to the patient's room. They seemed stressed.

Anything different with the other departments? Often they were anxious to receive the supplies so they could complete or deliver their work.

My last question was how much work was there at the end of the day, when he was making up time? 'Usually not too much – I just chill until I can punch out with 8-hours'.

I summarized what he had told me:

• The other 5 guys on the loading dock relay on him to do his share and have to work harder to cover when he's not there
• The other 70 people he sees each day rely on him to bring them supplies as early as possible so they can properly care for the patients or complete their work
• These same people rely on him for emergency supplies and special service
• He is letting down most of this entire group when he does not come to work on time -
• The other guys have to work harder
• The clinical area is more stressed when they do not have the proper supplies at hand
• The work of the staff in other departments is delayed when he is late on the delivery rounds
• His 'make-up' time doesn't make up for the problems he causes when he's late.

It is a big deal after all and what he does makes a difference to 75 other people in the hospital. He said he had never seen it from that view and agreed that he affected a lot of people by coming in late.

He made me a promise that he would be in and ready to go by 6:00AM from tomorrow on! I gave him an alarm clock to help him keep that promise. And he did for the remainder of time he was in that position, before he was promoted to a more responsible one elsewhere in the hospital.

We get so focused on our tasks, that we can lose track of how our work affects others. If it really does not matter, look out – job elimination may be just around the corner.

How would you impress the value of an employee's contributions on others within and outside the organization or department?

Rainmakers 14 - The Myths of Full Capacity

Full Capacity is an estimate of possible revenue and a gauge for sales planning, by projecting output of resources, availability of materials, and logistical elements. Assumes optimal output with no disruptions or changes.

You can capitalize on an opportunity by busting the myths and leveraging their operations.

Myth: full capacity is the maximum output of the organization. No –more resources may increase production volume.

Myth: sampling throughput can project capacity. No – not each person works at their best pace for all hours on the job.

Myth: all resources are being used fully throughout the organization. No - starting up and winding down require different intensity and pace.

Myth: productivity is constant. No – productivity is increased by repetition.

How could you leverage ability and experience to help an organization at ‘full capacity’?

Definition: A Rainmaker creates a significant amount of new business for a company. The Sales Lab Rainmaker Series is one rainmaker technique for technologists during the first 300 seconds (five minutes) of the monthly Capital Technology Management Hub Meeting.

Here's the growing collection:

Rainmaker 14 – The Myth of Full Capacity

Rainmaker 13 - Making the Most of Opportunity?
Rainmaker 12 - The Future is NOW - Makers
Rainmaker 11 - What Have I Done For You Lately?
Rainmaker 10 - Tune Your Work for the Internet

Rainmaker 9 - Your Internet Personality

Rainmaker 8 - Google + Your Personal Website

Rainmaker 7 - Mark Your Territory

Rainmaker 6 - Networking IS Business

Rainmaker 5 - Start With an Offer

Rainmaker 4 - Time, Talent, and Treasure

Rainmaker 3 - How to Sell Your Skills

Rainmaker 2 - The Name Tag

Rainmaker 1 - Gifts
And The First Rainmakers (11/3/10)
Go to: http://bit.ly/TheRainmakers

June 12 is the next Capital Technology Management Hub featuring Sales Lab's Rainmaker 14 – The Myth of Full Capacity - 300 seconds of pure profit. The main speaker will be Cory Lebson of Lebsontech LLC, presenting User Experience: What it Means & Why a Technology Manager Should Care!

The Pivot Point Is About Transition

A Pivot Point is a 'game-changing' life event that you remember vividly forever, and it changes you.

Last Friday, Myron Radio facilitated a marvelous program at the Leadership Breakfast of Maryland; the core concept was the effect of pivot points on individual and organizational success.

Two stories which illuminate the transition effect of a pivot point:

As an undergraduate student at the University of Maryland studying business and economics, I experienced an ah-ha when a labor law professor opened my eyes to the difference between being a student and being a learner. My focus shifted from trying to discern what would be on the test to actually internalizing the material – linking it prior learning and experience. If it didn't fit I would find other viewpoints to better understand how it related to what I already knew. Suddenly I was using knowledge, instead of just storing it – and have continued to be a learner ever since.

In my professional career I was point-guy for my organization in a merger. The president of the acquiring firm open a discussion about my role in the combined organization – a lateral shift to VP of recruiting. To me recruiting is a functional role, not an executive one, and I shared my thoughts with him, indicating I would not be accepting his offer. With a clear mind, I went on to become a President and CEO.

Many of us realize while pivot points are the major shifts, often we suddenly see how a puzzle piece fits for the issue currently in our minds. For example, when reading the book Makers by Cory Doctorow, it became clear to me how the traditional business structure was evolving – a fictional work NOT about business yielded an explanation of the radical shift currently under way.

Being aware of these shifts, great and small, empowers the leader to transform an organization by creating an environment encouraging applied learning and innovation.

The key to future challenges are in the lessons learned during the journey from the present to the future.

Add to the discussion – share your experience with a Pivot Point.

What Happens When Leaders Ask 'Why Do We Do This?'

Young children are legendary for asking Why? Why? Why? when seeking to learn. Adults, however, tend to simply do what's been done before without asking – why do we do this?

An experience to consider. When appointed as head of operations years ago, I suspended a dozen reports compiled by the accounting department without announcing the change. Out of 200+ employees, one person called about not receiving a report. We continued that report and canceled the other eleven (which freed up ½ FTE in accounting as a result).

This brought into sharp focus the effect of doing something because: we've been doing it; it's a tradition; it's SOP.

A leader will not only question why but will also encourage the doers to ask 'why do we do this?'

Base evaluating why on:

• Does it directly create sales?
• Does it directly serve the customers' needs?
• Does it directly support operations and production?
• Does it directly advance the mission, vision, or progress to the goal?
• Does it exist in a different form – e.g., stored data – can it be accessible as needed instead of compiling a report?

A significant factor in the current turmoil in the labor market is the obvious becoming clear – the computer is now doing tasks and processes, and fewer people are needed. For example - when you check in at the kiosk in the airport, you get your boarding pass, the passenger list is updated, your seat is confirmed, your connecting flight is notified you are coming, food provisioning is updated, and the pilot and cabin crew are informed you are boarding.

Visualize the effect of multiple individual processing that was eliminated by sharing the check-in information – resulting in less airline employee gate agents and less passenger lines. Computer vs. people is occurring in all sectors – corporate, non-profit, government, and small business, with similar results.

Process automation frees up individuals to do something else; however, currently there is a limited amount 'something else' available.

To re-frame the picture of jobs and roles, a leader can ask - What would directly improve key areas in the organization. Focus on sales, results, customers, and effective production – bundle tasks and processes together to define new jobs and roles, then train people on the technology – not the equipment, but how to produce results.

Have a story about 'do it because we do it' work or innovative job creating? Please join the discussion.

If You Are Always Right, You Are Doing Something Wrong!

There's a wealth of stories about what individuals learned from making mistakes, or how they recover from failures. Anyone who does not make mistakes (or admit them), will not be exposed to this expanded dimension of experience.

I once had a boss who would ignore an idea at a meeting this week, but would raise it at the next meeting as his idea – if it worked, he took credit, if not the original thinker would get the blame. Can't be wrong under this system.

Similar results happen when the goal is too easy or is not specific – when the bar is this low there's a danger of tripping over it – hard to make a mistake if the measure is simply coming to work.

In an early iteration of networks and the internet, my organization had an eclectic collection of PCs of various brands and capabilities, software which spanned the DOS and Windows worlds – we had 6 different versions of word processing software – a rag-tag collection at best. The equipment failed frequently and our techs could spend up to 30 minutes just figuring out the combination of hardware and software BEFORE they could work to fix the problem.

We were planning a patchwork solution for replacing network equipment and software within available budget - about to place the order - when a doer from production suggested leasing all new equipment.

With this new perspective, we worked the numbers and found we could accomplish a complete replacement of the network over 90-days by leasing everything. The monthly cost of the lease fell within our budget constraints and the savings from fewer and shorter service calls offset most of the greater overall cost of leasing.

We would not have made this decision, or moved the network forward had we not avoided the mistake of repeating what we've done before without investigating other alternatives. The outcome was better by avoiding the 'safe' do it because we've done it before approach.

Recovery is a powerful teacher – it only takes on time as a child touching the stove to develop great respect for the appliance – and we learn a great deal more if something does not come out as we had expected (or hoped). The critical element is how we use this knowledge – and, as leaders, that we permit error with recovery as a natural event of professional growth.

If you are always right, you are doing something wrong! What have you learned by mistake?

Advice – The Give and Take

Do people ever offer you advice?

How valuable is it when you request it? When unsolicited?

Earlier this week I heard from an entrepreneur – he had an idea, started a company, and successfully sold it in four years. He would make a change if he did another start-up: during the planning for the start-up, he would plan the exit strategy as well. In addition to avoiding problems with exiting the business, his experience was the entry and exit planning together would have helped him better focus on how to delivery the services more effectively.

For me, this was a useful data point in business planning. My experience in planning the start-up has been total absorption in the up and running phase. Later changes were needed to complete the spin up and provide efficient delivery of services. Some in & out planning could have avoided later modifications.

Why was this advice credible and of value?

It was grounded in experience and offered as 'I would' not as a 'you should'.

Is ego the reason for resisting 'you should' advice? No – in the above story, the individual knows what his situation was and offered that he would do things differently for another start-up. How can a casual observer offer specific advice ('you should') without knowing the details of my problem?

My acceptance would be different had the individual offered his interpretation of principles or approaches done by others, suggesting that next time he would do things according to this 'new' approach. It is a data point without verification – his theory but not his experience. Is it lessons from the past – no longer applicable in the New Normal - can't tell from a theory.

Unsolicited advice often comes with a preface of 'you should'. This causes me to wonder about the underlying purpose for offering the advice, in addition to its applicability to my situation – if there is an actionable situation. There is usually an abundance of unsolicited advice offered about how to improve your golf game or to change political, corporate, or government operations – valuable?

Hearing how others have faced similar situations adds to our knowledge, but does not substitute for personal experience.

We learn by doing. We learn a great deal by avoiding or recovering from mistakes.

This is experience.

Advice: What's your experience?