Diabetic Overproduction

Reports from two nationwide studies show that aggressive treatment of cholesterol and blood pressure do not provide any additional benefit for diabetic patients but do increase the risk of side effects according to Thomas H. Maugh II of the LA Times.

And aggressively lowering blood sugar levels increases the risk of heart disease.

From a Lean point of view, these studies show that these aggressive treatments are a form of unnecessary overproduction.

A few years back, a friend of mine was being pressured to try an experimental bone marrow transplant for her breast cancer. She decided against it and studies later proved her right. More aggressive treatments are not always better.

With an estimated $250 billion in unnecessary tests and procedures performed every year, healthcare can help pay for universal healthcare by reducing overproduction. More aggressive treatment is not always better for the patient.

Angiogram Overproduction

Research discovered that about 20 patients out of every 100 had no serious blockages. With 1 million angiograms per year, that means that 200,000 patients are being tested unnecessarily at a cost of $1,500 to $3,000 per test. That’s a half a billion dollars or more of unnecessary healthcare costs just for angiograms.

Additionally, one percent of these patients may have a stroke or heart attack as a result of the test (2,000 patients unnecessarily at risk).

Overall, unnecessary healthcare testing is estimated at $250 billion per year.

From a Lean perspective, this is classic “overproduction” – unnecessary testing resulting in unnecessary costs. medical errors and deaths.

Healthcare will have to do its part to help cover the costs of universal healthcare. Eliminating unnecessary testing is a good first step.

Toyota Recall

With all the hype about Toyota’s recall, I think the media are overlooking a few key points.

1. The CEO of Toyota publically apologized for the safety issues and went to work on resolving them.

I haven’t heard the CEO of AIG (or any of the other financial institutions) apologize for driving us into the Great Recession. They’re still taking billions in bonuses for their stupidity.

2. Based on their culture, Toyota will make sure these mistakes never happen again. They will build it into their design process using something like failure modes and effects analysis (FMEA) to mistake proof these elements of their design. And, I’ll bet that this gave them dozens of other ideas about what to look for and anticipate in their designs.

I doubt that AIG or any of the other financial institutions has done anything to prevent the kind of far reaching crisis they’ve created.

Trust is hard to gain and easy to lose. At least Toyota is trying to regain our trust. I doubt that AIG even cares.

Bad Root Cause Analysis and Countermeasures

After the recent terrorist attempt on Northwest Airlines Flight 253, some zealous, knee-jerk root cause analysis led to simple, easy-to-understand, wrong-headed countermeasures: passengers shouldn’t be able to get up during the last hour of any flight, anywhere.

Punishing millions of passengers to protect against a few extremists is a bad countermeasure stemming from bad root cause analysis. Random screenings of elderly women who have had knee replacement surgery or young children, a sampling technique, also seems to be silly.

Root cause analysis should get to the root of the problem: Why was a known extremist allowed to board any flight, anywhere?

After some investigation, it appears that the intelligence community knew about the problem, but just failed to put his name on the no-fly list. Duh! We can invest in expensive, invasive, whole-body scanners or just automate updates to the watch and no-fly lists.

It’s clear that TSA has become trapped in a visual scanning mindset. This requires the “inspector” to catch all of the “defects,” but humans make at least six mistakes a day.

Businesses do this as well, they become trapped in one way of solving a problem which usually costs more money and takes more people. Often, however, the problem can be solved inexpensively by shifting to another way of looking at the problem.

As the inventive procedures of TRIZ suggest, perhaps we could find a safe airborne catalyst that would cause an odor or color change when it interacts with known explosives. Maybe we could add screening technologies from some other physical field or method (i.e., olfactory). If dogs can do it, why can’t we?

(Where did I get this idea? In a related incident, J&J recalled Tylenol Arthritis Caplets that interacted with chemicals used in packaging and transportation pallets to create a moldy, musty, mildew-like odor that caused nausea, stomach pain, vomiting and diarrhea.)

Let’s imagine the Ideal Final Result (IFR). A good countermeasure would be simple, inexpensive and minimize the impact on travelers while detecting 100% of dangerous people, materials and weapons. I know it’s a tall order, but that’s how innovation happens.

Businesses should imagine the Ideal Final Result before coming up with knee-jerk countermeasures to perceived problems. When I worked in the phone company, wait times in the call center ranged up to 30 minutes at times. Someone decided that a better call director technology would solve the problem. They spent $12 million upgrading the call director and wait times didn’t change by a nanosecond.

At the time, 51% of all calls were for repair. Truth was, but no one wanted to explore it, that we needed less repair; less repair would have meant fewer calls. We never did get to the “root cause.”

Everyone from the smallest small business to the federal government needs to get better at root cause analysis and countermeasures. All you have to do is ask “Why?” five times (fishbone diagram); imagine the IFR; and implement countermeasures that prevent the problem as inexpensively and effectively as possible.

Six Sigma – Aberdeen

An Aberdeen Group study shows that:

• Six Sigma companies are twice as likely to be top performers with 19% improvement in profit margins and a 43% improvement in quality in the first two years.  Low hanging fruit indeed!
• Lean Six Sigma is “the most successful approach to business improvement” says the study.

Use Lean to reduce delay. Every 15 minutes per hour reduction in delay results in 20% improvement in profit margins.

Use Six Sigma to reduce defects. 4% of business processes (one step out of 25) produce over 50% of the defects, deviation and lost profit.

With laser focus on delay, defects, and deviation, it shouldn’t take long to dramatically cut costs and boost profits by plugging these leaks in your cash flow.

Voice of the Customer

We just finished exhibiting at the IHI conference at the Orlando Marriott World Center. The Marriott has expanded it’s exhibit hall, but, unfortunately it’s 150 yards from the nearest classroom. The exhibit hall management company, Corcoran, has shown a remarkable lack of interest in the voice of the exhibitors or voice of the attendees.

Voice of the customer is a simple concept: What do customers want?

The attendees want to learn new stuff. Classes and workshops aren’t the only place they can learn new stuff. The exhibit hall can keep them up to date on the latest methods and technology.

For example, it’s still amazing to me how many people stop by our booth who had no idea that Excel could do control charts, pareto charts, fishbones, histograms, value stream maps or other Lean Six Sigma charts and tools. If they don’t get to the exhibit hall, how are they going to learn about the QI Macros?

Exhibitors want lots of traffic. How do you get lots of traffic to an exhibit hall? Food and Drink. Corcoran put 20% of the breaks and lunches in the exhibit hall and 80% by the classrooms. Where would you go to get your free lunch?

We normally expect to handout QI Macros demos to a third to a half of the attendees. This conference we only managed to reach one-sixth of the attendees. That’s down 50% from last year.

Will the IHI and Corcoran listen to our voice of the customer and change how they handle the tradeshow food and drink in the future? Unknown.

To Corcoran’s credit, they did try a “Hail Mary” on the last day by putting 2/3s of the lunches in the exhibit hall (but put 1/3rd in the hallway outside which still gives those people the option to opt  out). And buses had already started running attendees to the airport.

Attendees want to learn something new and exhibitors want traffic. Both are easily solved by putting all of the food and drink inside the exhibit hall (or by changing to a venue that doesn’t require a 150-300 plus yard commute to the exhibit hall).

We have found that having an exhibit hall on a different floor than the classes also cuts attendance by 30-50%.

In these days of declining attendance, associations need exhibitors to make the tradeshows profitable. If you treat exhibitors badly, they simply will not return as many shows have discovered this year and next year will be even worse I suspect.

Who are your customers? What are they saying? What do they want? How can you give it to them? Listening to the voice of the customer is critical to survival.

Surprising Customer Service

Sitting at the gate in Jacksonville, FL, our United Airline pilot came out and spoke to everyone in the area. He’d just flown in from Chicago (our destination) and the ride was bumpy (not scary bumpy, but annoyingly bumpy) for two-thirds of the trip. He told us that he wanted his passengers to be able to use the restroom and make plans to be seated for the last one hour and twenty minutes of the flight.

For this uncommon bit of customer service the passengers in the waiting area gave him a round of applause.

At the QI Macros, we’ve done everything we can think of to let our customers know that when they upgrade to Excel 2007, their versions dated 2006 and earlier would mainly stop working due to changes by Microsoft. Bumpy!

What are you doing to prepare your customers for the bumps in their future? The economy? Surprising customer service isn’t always about handing orders and complaints; sometimes it’s about letting them know there might be turbulence in their future.

Six Sigma for Insurance Companies

This weekend I exhibited at the American Society for Healthcare Risk Management (ASHRM). The risk managers were interested in our Lean Six Sigma books, training and QI Macros software, but every so often I’d offer a demo CD to someone and they’d say: “Oh, we don’t need that. we’re an Insurance company.”

Insurance companies like to pretend that they don’t take forever to do anything and make tons of mistakes while they’re at it.  This is nonsense. Insurance companies desperately need Lean Six Sigma.

My wife and I recently changed from COBRA to self-pay with United Healthcare. Everything seemed to go smoothly. All of the documents showed my wife+spouse (me). However, when I went to get a prescription filled, I discovered that my coverage had been cancelled on September 29th. That’s odd, since I’m sure we’re sending our premiums.

Did I get a letter informing me of cancellation? No. Does our policy still demand payment for both of us? Yes.

Quality in Insurance stinks. It has wasted the pharmacists time, my time, my wife’s time to follow up and straighten things out. My mom had problems with Medicare supplimental insurance. No one has time to deal with the sloppiness of the insurance industry except the industry itself.

Wake up Insurance people! Your processes are so sluggish and error prone that the illusion of universal healthcare may well be  a myth. The rework will burden the system beyond repair.

Don’t pretend your processes are beyond reproach. The people who think they don’t need Lean Six Sigma are the ones that need it the most.

Project Management vs Lean Six Sigma

Last week we exhibited the QI Macros Quality Management Software for Excel at the the PMI Global Congress in Orlando, FL. I was surprised to discover how many PMs were worried that Lean Six Sigma would some how replace them. While quality management is an important part of the project management body of knowledge, it’s not the only thing PMs do.

So here’s my simple observation about the differences between project management and Lean Six Sigma:

Project Management and Lean Six Sigma are related, but don’t overlap that much. The only important thing to do is ensure that once a project is implemented, that process management and measurement (i.e., control charts and control plans) are implemented to make sure the project continues to function as planned.

The other rumblings I overheard were about how Lean Six Sigma doesn’t apply to Agile software development which is just IT’s way of trying to avoid improvement. Every software project encounters delays and defects which can be corrected with Lean Six Sigma.

What is Agile anyway, but the application of Lean principles (smaller batches of code delivered more often and more quickly) to software development. As someone who has been involved in software development and maintenance for the last 40 years, to pretend the Agile is something “special” to which Lean Six Sigma can’t be applied is silly.

Download my special report on the Dirty Thirty Process for Six Sigma Software to find out how to use Six Sigma for software.

Measuring Customer Loyalty

In Frederick Reichheld’s 1996 book, The Loyalty Effect, he recommends that every business should measure their customer defection rate and what causes it. He also suggests focusing on increasing value delivered not just profit. Accounting, he says, is loyalty’s public enemy number one.

I don’t know about you, but I’m tired of being nickeled and dimed by some nitwit’s idea to increase profits:

• Airline baggage fees
• Hotel internet fees
• Surcharges
• Tax increases

My CD duplication company just sent me a letter saying they were going to start charging a 3.5% credit card transaction fee. That’s accounting for you, just being stupid.

If you don’t want my business, just say so. I’ll find someone else.