Quality and Innovation – New concepts of TQM and Sandboxes

 

Small Batches

With a project there are always the Size to consider! To work on smaller miniprojects goes quicker, than dealing with something very big because it takes time to e.g. move around the products when packaging.

Example: 100 letters to be sent. Intuition says it is better to write the name of all of them first, then put a stamp on it and then put in the letter and seal it. But it turns out that the moving around takes time aswell and the quickest thing could be to actually do 1 at a time.

In the computer software  there are many examples of delayed products that were too ambitious. The technology they are working on is not good enough because they work in such long product cycles. Instead of using steps, they construct a whole stairway at once!

Large batch death spiral – big game projects that doesn’t get out. They just need more and more input just to uncover new things that need to be done or upgraded.

Continuous deployment – smaller batches in long cycles for quick and automated releases and through it data feedback is given quickly.
By doing this one can provide small patches instead of huge releases every once in a while.

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The company should always protect the downside as Richard Branson so often says.

It allows for you to recover quickly, dust off and get up a gain!

That is why it is very important to understand why something went bad, so the issue can be solved.

When a problem arise there are symtoms and there are root causes.

this means understanding problems with the 5 whys:

• Why did this happen?
• Why did X let that happened.
• why….
• why –> root problem

Fix the WHY with a proportional investment on each why level. If the investment takes 100 hours and costs far to much it might not be worth it if the problem leads to 1 minute more per customer.

However if the problem leads to loosing 10 minutes each day and the change could be done in 15 minutes and for 100 euros it is likely to be an appropriate investment in order to solve the root cause.

 

Root Cause Analysis

 

The root cause analysis can be made by using the fish bone or Ishikawa diagram:

 

Fish Bone

 

5 WHYs are close to the 5 blames.

Important to have all people affected in the problem chain for the meeting to discuss. Important to have a WHY-leader and a clear structure and to keep things on track. It is one problem that is discussed and its solution. Not the problem of other problems.

Bring people in on all levels for this. They also learn to communicate better with eachother. This is done by cross-functional teams. Cross-functional teams are mentioned to be something Steve Jobs was a huge fan of.

But the Why´s cannot go on forever because they will eventually, like a child asking why why why to all questions. The why should be based within limits, as should discussions. It should therefore involve problem solving on each level of Why.

Another easy strategy:

1)      Be tolerant for the first time a mistake happens

2)      Never allow the same mistake twice.

Leads to thinking about what counts as the same problem, which problems to focus on etc. many questions follow.
Why should always involve a specific problem. Not general. e.g. “Why did we miss to implement this part of the website?”

Training programs are often the fix of many of the root problems when a problem appears.

Immune system helps to block certain things. Example. A booking system could be deleted by accident. One time I changed the html code by myself and had to ask for help from webmaster to change it back to its original form. Not so good.

 

Another picture of seeing the problem solving as a cycle:

 

Root Cause Analysis

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Polarization can happen when there are two opposing opinions. Often times these opinons are internalized and projected on the people who speak them out. E.g Long cycle vs short one. Normally people meet in middle. Frequent polarization is however not too good. “He is always crazy, and he is always lazy”.

What people forget is that they so quickly place symbols over people. He or she is like to think that and that will always mark their opinion. It is as if they have a filter every time they look on the person´s opinion. Remind me actually of many people looking down on others. Every opinion doesn´t matter for me. My opinion is superior etc. To be able to discuss something is very important.

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Innovation

People are making gut-feelings. These are not scientific but alternative to logic, a pseudo-science. That is why they so many time fail.
it is a form of superstition many times, easily seducing. In business we need metrics. Without them it is hard to see what is going on.

In an episode of Mad Men  Don Draper is told this when in an airplane. Without metrics you do not know where you are flying.

Innovation sandbox – start ups within start ups.

Teams for innovation should have a scarce but secure budget.
The people working on the project should feel a sense of ownership and there should always be a project manager.

• Deadline for experiments, see them through – beginning to end.
• Easy  and understandable reports with actionable metrics 5-10 points are optimal.
• They should be the same metrics to understand success.
• how can they link to the companies growth for instance.
• The reports should be considered to be the truth. They are good numbers if they are correct in their gathering. Most important thing is the cause and effect connection.
• We base choices on assumptions and intuition. We base our decisions on pseudo science.
• Whatever changes exists will eventually become the status quo.
• Remember to monitor metrics and customers reactions and abort if catastrophy occurs.

Customer story, Nordic Invasion and growth engines

This post in about the Customer Story with examples from a company I co-founded, but not actively participate anymore in. It is also about the business growth engine and their actionable metrics. I am following and commenting on the ideas within this texts which come from Eric Ries and his book The Lean Startup.

Customer Story – Explaining the process from the customers´s point of view to fully understand the Value Chain. Below it is seen. For a customer this means each meeting with the company. Every second they are in contact with the company and also the time in between.

In Nordic Invasion, the Student-travel company which I co-founded in 2010, complaints came in from students in the time in which they were not talking to us.
This would be the time between the part payments. They would mostly book during the fall and winter. Since it is a high-cost product (albeit remarkably low price in the industry) we allowed for paying during a longer period of time.

Since we focused on larger groups of customers travelling together this also led to an increased amount of discussion within the group itself. Lack of information within the group gave rise, as it often does in group, to things as our validity; Where were hotel confirmation vouchers? Or why did they not get a receipt each time we received a payment instead of only sending this after the second payment, followed by airplane tickets after third payment.

Porter´s Value Chain

Write customer story and try to support it with your company.
product backlog is the queue of stories yet to be built. This allows to build for the future.
Don’t forget learning and actionable metrics. Cohort and split-tests aswell.

Example in Nordic Invasion, would be my desire to give away cinema tickets to customers during the cold and dark winter and thank you letter. This would show how much we really care about the customers, because we really do. At least when I used to work there.

Splitttests often uncoveres surpricing things. Experiments put beliefs into quest
ion and thus the Ego of the owners. In order to test things one has to move with earnest self-critisism.

What drives innovation is actually not the customers but the hypothesis about the customers.

New customers come from the actions of previous customers and from attraction of new. The different ways or the different motors of business are:

1)      Word of mouth

2)      Side effects of product use

3)      Funded ads

4)      Repeat use

Sticky enginge of growth: High repeat use because of problems of changing. Phone companies who lose custoemrs lose them because they are very unsatisfied for instance.

Attrition/Churn rate = customers who fail to remain engaged with company again.

Did you know that phonesupport in some companies have an Antichurn-department many times. When a customers threatens to go to a competitor or end subscription, then this department is called in and can normally give better deals than the normal customer service dapartment can.

Speed of growth = Natural growth rate – churn rate.

Viral – Higher K = More spread. Here the K means the rate of referal.

if K is more than one the product grows exponentially. If it is close, it means that maybe some work could be done to make it grow more.

Paid: LTV ( Life Time Value). If cost per acquisition is lower than LTV the product will grow. CPA will grow if competitors start budding. Lower CPAà Less valuable customers.

Also: each engine of growth has its own feedback loop meaning own metrics.

Slow learning cycles – School is a good example. 1 new loop each semester. Test tracks on different customers and compare. Combine this with different tests in short cycles.

Agile Development – 1 month iterations.

Which engine of growth? Remember that early adopters gives you possibility to learn about them through actionable metrics. Pivot to a better engine of growth for example.

Also with respect to LEARN: You cant pay staff and investors with knowledge.
but dont forget why your company exists. Test a clear hypothesis in the service of the company´s vision.

The Lean StartUp – Part 2 – Quality and MVP

Last post about the Lean Startup ended with a quote: If we don´t know who our customer is, we do not know what quality is.

Just before I mentioned two hypothesis: the value and the growth.

Analogy(Discussed in last post) obscures the real result. Just because a says: we are better than they are because our technology is better, doesn’t mean that the company will attract customer awareness and attain critical mass to become sustainable.

One must ask: What assumptions are being made? Are they correct?

The  IMVU avatar walking system is an example. The characters do not walk. Instead they teleport to a transportation point. The only reason it was there from the beginning was that the production crew did not have time to implement normal, and more advance, walking features. Although thinking it was very important with this feature as in the Sims, customers turned out to love the teleporting and seeing it as a wonderful feature.

Assumption about quality was faulty.

 

What can be learned from this experience is to not to make assumptions but to learn from customers. The product one goes online with or test is something called a MVP( Minimal Viable Product).

It is the lowest quality product that customers will accept which will be sold.
The idea is that Early Adopters will not care too much about the quality because they understand the underlying idea, and through them the company can learn.

Although an Idea it is obvious that it cannot be a horrible product. furthermore some features that goes online will need to be understood legally. Does a company really want to allow some features in the beginning? They might want legal counsil before which can take time. better start off with something else.

The reason for an MVP is to see what works and then upscale it!

MVP concierge service is a special way.
When the upscaled system is not implace the company will instead have a very personalized and expensive product/service. They will take care of a customer as if they are a king or queen. They put a lot of effort in making them happy in order to understand what they reall want. With each cycle they learn something new and in the end can start systemize it. The company could go home to the customer and really talk the process through etc. This can be worth the investment and man hours because of the learning output.

Wizard of Oz – testing is another concept. Humans, instead of a computer, do the service and pretend to be a computer. In that way the company can test out ideas without having to implement a whole system.

One example of this could be the text-message service that allows the user to ask for any  question for a mere 1 euro. One expects that the system comes back with the answer but in fact it is a person on the other end googling and writing you the message themselves. No real automization is used for this although, one day they might be.

Another example ov MVP is the Dropbox Video. Dropbox did not even have a working product to show before money started flowing in. They did this by having a video is a MVP.
Check it out: http://www.youtube.com/watch?v=7QmCUDHpNzE

MVP concierge service is fantastic service which is, though, inefficient on a scale, great at learning about customers. MVP lets you test your products immediately.