I was heartened to see that our UK PM, in her Davos Speech, wants to create a “Centre of Excellence” in the UK with respect to AI. There are certainly some huge opportunities to improve our UK productivity and make our lives easier. This was also reinforced with the recent “Sales Assistant Free” shop that Amazon have piloted in the US, and the new scanning till piloted in North London. However, any new idea or technology requires acceptance before it can implemented fully or properly. This is more pertinent than ever because with the ever increasing “Robotisation” comes fear of job losses. We first had it with blue collar in manufacturing and engineering, then in white collar with low level transactional work, but we are now progressing into higher end transactional work. Large law firms are already using AI to scan databases of previous contracts in order to automatically come up with first revision new contracts for a particular client. We are in a rapidly changing world where VUCA applies, and it is the survival of the most adaptable, not the fittest. We have already seen huge productivity gains related to tech in the UK, and AI is the next step.
I was lucky enough to attend a recent IoD Suffolk AI event at Adastral Science Park in Ipswich where there are over 90 tech companies working on AI and related work. The speakers were very engaging, and Kevin Gooding of OXEMS, who has considerable experience of mass technology change roll-outs and working on IoT solutions, stated that the technology functionality is usually way ahead of the humans, and the adoption rate historically is very slow. This is a double edged sword. On the one hand, we want adoption rate to be fast in order to minimise barriers to productivity improvement, but also we need to ensure workers do not feel left out or alienated. I see this is as one of the greatest challenges going forward i.e., finding that sweet spot between the two. Everything is a balance, but this is where senior leaders have to step up to the plate and be honest about tech advances and the impact on society. It has been refreshing that both Sir Charlie Mayfield Chairman of John Lewis Partnership, and Juergen Maier CEO of Siemens UK have been talking about the need for open dialogue with employees, and both the challenges and opportunities for AI.
As consultants in this arena we are going to have to gear up for the changes, not just from a technology perspective but from an employee engagement success perspective.
When we are looking at Productivity, we have a tendency to approach the easy stuff first. There is nothing wrong with getting “Quick Wins” in any Operational Excellence Programme, especially if you are trying to get traction in a new programme, by demonstrating the power of the system. However, there is a danger that we get ourselves into “Tick Box” mode, and we end up working through check lists. This means that we delay tackling the big issues, as we think we are making progress. This is not surprising as humans have what are known as cognitive biases. These are psychological states that can affect our rational thought processes and our ability to look at data objectively. There are many documented biases ranging from 15 to 20 in number. In this particular case we are talking about “Task Completion Bias”, which gives us the sense of achievement when we view a 70% or similar complete list. A recent two year study of 90,000 patients in the hospital emergency rooms, showed doctors not necessarily choosing the patients on the basis of the severity of their condition, which should be the primary focus. They were falling into this bias trap (HBR Paper – Task Selection & Workload)
I have seen some great examples of “Lean” thinking on my recent consultancy trips in Russia. A great one for “Takt Time” , and meeting customer demand for airline passengers. Not only is the immigration both rigorous and efficient at Domodedovo Airport, but they have set a standard of 40 minutes from the time when the plane hits the tarmac, to the time you clear the airport with your luggage. On each of the last 4 occasions when I have been there, my luggage was on the carousel before I got to it, and the shuttles were quick. It would be interesting to do a VSM (Value Stream Map) based around saved business time. I would imagine it would run into Bil. RUB. It would be great to see the same approach at Heathrow.
There is considerable debate about strategy, both ongoing or as part of a new initiative or launch . Company or project strategy needs to linked, or support the “Vision” . It can take time to build a strategy, especially if you are working in a complex environment, multiple inputs and/or multiple stakeholders. If we want to achieve ROI on our strategy, it needs to be understandable , drive employee engagement, involve an element of cultural transformation and be executable. The cultural transformation is the hardest piece, because this will require individuals to change. People are creatures of habit, and don’t like change. Significant change always pushes people out side their personal comfort zones. There is an argument that says we can get our strategy to fit our current culture, but there is a high chance in the rapidly changing market place, we will end up sub optimising our strategy. I recently heard a great quote in a presentation, “Culture eats Strategy for Breakfast”.
Some commentators have said that “Lean” has had it’s day, with the majority of western manufacturers, and those in the developing world, having run lean and similar programmes. These programmes show up under other guises such as “Production Systems” and “Operational Excellence”. However the fundamentals of these are founded in Lean . Lean has always been about continuous improvement and development.
A number of companies have failed to comply with ESOS. This in turn has lead to an increase of legal proceedings against those companies. Seven percent of the obligated companies have failed to comply, and the EA has so far served 353 notices for those who had not met the extended compliance deadline of April 2016. Qualifying companies are UK legal entities (whether part of a larger corporation or not) considered as a large undertaking, with criteria such as more than 250 employees and a turnover of Eu 50 million at the qualifying date in 2015. In total the EA has received 6841 compliance notices. Fines for non-compliance can be significant with a maximum penalty for failing to provide an Energy Audit being £50,000 with a further £500 per day additional fine for continuing to breach, up to a maximum of 80 days.
As we get closer to a UK election there is a lot on peoples minds. The “snap” election has postponed slightly the “Brexit” discussions /negotiations. However, whatever the outcome of the election, because both the main parties have vowed to see “Brexit” through, business will have to be leaner and fitter than ever before. I have talked about speeding up the decision making processes before. Not only do businesses need to get their act together in their own facilities, they also need to look at the supply chain, and ensure they are protected without interruptions.
We know technology is advancing at a rate, but I have become aware of a great example. There was a recent article in The Economist around how a German online retailer OTTO, who are utilising AI effectively to improve the performance of their business and customer service. OTTO used technology developed by Blue Yonder and a deep learning algorithm originally developed at CERN for particle physics experiments, to analyse 3bn previous transactions with 200 variables. These included previous site searches. Armed with this capability they were able to purchase over 200,000 items, predicting what will be sold in 30 days with a 90% accuracy.
I stumbled across a great article about Aldi and their continued pursuit of Lean. The article makes it very clear that Lean is not just for manufacturing, and although Lean may have lost some profile over the last few years it still very much has resonance today. Some say that Aldi’s current success is down to its models and market positioning. That is true, but how did they get to that position ? Lean thinking and principles which are referenced in the article allow businesses to get to a competitive market position. All too often Lean is just perceived about removing unnecessary waste and cost, but effective Lean drives flexibility, adaptability and agility. These are the key elements that allow businesses to have a strong market position. The article also references how Aldi have engaged their workforce, to increase their Lean bandwidth and achieve even more. Aldi also multi-skill their workforce to allow maximum flexibility, alleviate boredom and improve overall effectiveness. This is exactly what the manufacturing sector have been doing for a couple of decades. With the pressure on the retail sector, and the relentless competition, one may think that the staff remuneration would be low. However, Aldi also pay above the average sector pay. These savings allow Aldi to pay above market rates, and entice the most capable staff. They have an empowered and a motivated workforce to deliver on future improvements, and cost savings. The improvement cycle repeats itself. They will also be taking waste out of the all their administrative processes . A Lean mindset drives the removal of waste everywhere.
I thought that this picture is an excellent illustration of how different operational wastes are “Linked” together. The four key physical wastes in any operating business are “Process”, “Energy”, “Effluent”, and “Transactions”. These are not mutually exclusive. If you have process waste, i.e. inefficiencies in making your product, you are likely to be using more energy than you absolutely need, and creating unnecessary effluent in the form of defects or recycles.