Evolution Of Business: The 4 Tools Of Replication
by Richard BarrettThis is part 3 in an ongoing discussion.
Documentation
The documentation of evolution is DNA, the amazing double helix that contains the entire genetic code for each individual.
Contrary to most business documentation, evolution does not store its genetic documentation in printed “white notebooks” that sit on the shelf gathering dust. On a daily operational basis, each cell uses RNA to copy sections of the DNA. Then RNA reads these strands to execute cell functions.
Operating processes (documentation) are the DNA of a company. To replicate its operation from day-to-day a business must have complete documentation.
- How does your business document its operation?
- How does any individual employee know what to do in any specific situation?
Thorough documentation is critical. But remember that evolution uses its documentation every day to drive the operation of the cells.
- How accessible is your documentation?
- Can an employee find it quickly?
- Is the operational sequence embedded in the process itself?
Historically it has been difficult to make documentation easily accessible, and even more difficult to embed processes in the organization. But with the advent of the internet and intranets, help files, business process software, and the entire operational process has come to resemble evolution more closely.
In fact, only online documentation and processes can ever function as well as evolution.
Documentation Checkup
- Is all of your business documentation available online?
- Is it accessible through context-sensitive help?
- Are all of your business processes documented?
- Are your business processes embedded in the everyday operational processes that your employees use to do their work?
- Are your business rules externalized?
- Do your explicit business rules drive your business processes?
Training
Evolution has developed an almost foolproof process to train new cells. Every time a new cell is created, it receives a complete set of DNA documentation . When a cell splits the DNA double helix unzips down the center and each cell receives one of the exact original strands of DNA. Training for the new cell is 100%, with a complete set of original documentation. Note that the cell does not learn the DNA documentation of the processes of life. The DNA simply is the processes. The definition of the processes is intrinsic to the processes themselves.
In the same way, a business needs to replicate itself very carefully. A new employee must be trained thoroughly. Ideally the process description and documentation is not separated from the business processes themselves. The definition and description are embedded in the processes. The closest description is a context-sensitive help file in a completely transparent process.
Most businesses have some sort of training for new employees. Thorough training should present a holistic view of the operation, from the business goals to very specific operation of particular business processes that the employee will do. Further, training should include error checking and correction. Simple online, self-paced, computer-based training (CBT) is a good place to start, but only a start. An old Chinese proverb provides a direction for comprehensive training.
I hear and I forget.
I see and I remember.
I do and I understand.
Training starts with reading the documentation and testing recall. Then it extends to simulation and participation in the actual business processes. Like learning to swim, the employee flounders in the deep end of the simulation until, suddenly, the light bulb goes on. Only simulation and participation in the actual processes can provide the direct feedback that leads to knowledge, mastery, and effective reproduction of the process.
Training Checkup
- Does your business provide complete online, self-paced CBT?
- Does your training include testing and exception handling?
- Does your training include simulations and the real business processes?
- How do you keep records of employee training?
- How often do you retest and retrain your employees?
- When your business processes change, how do you retrain and recertify your employees?
Error Correction—Handling Exceptions
Exceptions happen and some exceptions have serious consequences. Sometimes errors occur in transcribing DNA and almost every transcription error is bad, often fatal to the organism. Evolution assumes that DNA will have transcription errors, so it has developed error checkers that travel the DNA chain specifically to find and fix these transcription errors.
Evolution also assumes that errors will occur in cell operation, so it has developed a number of methods to fix operational errors. Evolution evidently is a believer in Murphy’s Law—Whatever can go wrong, will go wrong. One of evolution’s favorite error correction methods is terminal obsolescence—death. It’s a little drastic, but works well for evolution. All of evolution’s experiments come with expiration dates.
Like evolution, a business must develop a number of mechanisms to detect exceptions and correct errors. Our focus is on exceptions in existing operational processes—”events outside the boundaries of normal operations,” as opposed to true anomalies—novel events which occur rarely and unconnected to existing processes.
Computerized processes automatically identify simple exceptions such as data entry errors, e.g., identifying and rejecting letters entered into a numeric data field such as age. But most exceptions are more complicated.
An exception to a time-based event may have a number of responses conditional upon the degree of the exception. When an insurance policy expires and the payment check arrives late, the response may depend upon how late the check arrived, with penalties increasing in proportion to the tardiness.
Just as operational processes are simply expressions of business rules, the first few levels of exception handling must be controlled by business rules, with automatic detection requiring no human judgment to determine the response.
For processes that manage hundreds to millions of separate events, exception handling must meet four criteria:
- Immediate identification – because the cost of the exception and the response increases dramatically as the exception remains unaddressed.
- Immediate response – even if the consequences are delayed, the response must be quick.
- Appropriate consequences – “Let the punishment fit the crime.” Choose a response that resolves the exception with minimal side effects.
- Recorded for evaluation – trends often start as exceptions. Log the exceptions so the causes can be found and fixed.
The long-term response to exceptions is to eliminate them. In manufacturing processes a method called “statistical process control” uses operational trends to identify root causes and to resolve them. Example: An automatic lathe trims metal wires to exactly 1 cm diameter. The acceptable tolerance is 0.01 cm. The measurement of the bars after trimming shows upward trend, from 1.002 cm last week to 1.004 cm this week. The wires are still within the specification, but the statistical upward trend indicates problems ahead. A maintenance check on the machine shows the cutting bit has worn down. Once the bit is replaced, the upward trend stops.
This is a simple physical example, but the same concept applies to other operational processes.
Automatic processes make easy examples, but most of our processes are semi-automatic, with people doing the “semi” and people causing most of the exceptions.
Various tests indicate that people achieve success rates of 90-98% for many things, attaining success rates above 98% only in very specific situations designed to support peak performance. So when our business processes include people we must expect exception rates of 2-10%.
The root causes for exceptions generated by people fall into four categories:
Documentation – is the task adequately documented?
Training – is the person trained to do the task?
Task match – Is the task reasonably suited to the person doing it? Obvious examples are physical limitations—requiring acute eyesight or hearing. Less obvious examples are tasks requiring math skills, language skills, or external knowledge.
Personal issues – Does the person have some issues (health, family, etc.) that are affecting performance? How do you identify these situations, and how does your organization handle them?
Exception Handling Checkup
- How does you business plan for exceptions?
- How well does your business define and identify exceptions?
- What is the frequency and cost of each exception?
- Does your business have automatic business rules for handling frequent exceptions?
- How quickly does your business identify each exception?
- How quickly does your business respond to each exception?
- Does your business log exceptions and track exception trends?
- Do you know which of your processes are semi-automatic vs. fully automatic?
- How does your organization handle employee personal issues?
Redundancy through Distribution (Cross-training and Project Teams)
Evolution builds in redundancy almost everywhere, at almost every level. DNA itself has two strands in a double-helix. Evolution prefers bilateral symmetry—two eyes, two ears, legs, arms. Bilateral symmetry provides many benefits, including back-ups.
Evolution also uses cross-training. As an extreme example, some adult reptiles, amphibians and even fish can change sex when needed. Stem cells can change functions. The same gene that controls the number of spines in the fins on a fish also controls the number of fingers on a hand. Enable that gene for a short time to get three fingers on a frog hand. Enable it a little longer to get four fingers and a thumb.
Evolution also uses cross-functional teams. Genes perform different functions when enabled by different proteins at different
times. Genes even respond to relative position in the body—front/back, left/right, top/bottom. The same gene expresses different actions depending upon the proteins that indicate its position within the body.
Evolution uses clusters of genes to drive the development of specific elements in an organism. The overused example—the eye—is the result of a number of genes working together. Frequently genes activate other genes in a long Rube Goldberg sequence of genes and proteins to construct a specific organ. Each gene may be a member of several clusters, each cluster working together for a short time, to accomplish a specific purpose.
In business we use project teams, or cross-functional teams, in much the same way. To install a new software system the project leader may bring together a collection of experts in the software application, business process engineering, subject matter experts, and of course the users themselves. If we look at the entire business as a series of projects, is it possible to operate the business predominantly with a collection of cross-functional teams on a routine basis?
At this point a reader may be considering some obvious objections. First, all this cross-training and project operation must create redundancy and increased overhead with all the associated additional costs. As any good cost accountant knows, there are many ways to analyze cost. Cross-functional project teams typically add value to a business on a longer time horizon and on a larger scale.
Example: Installation of a new software system. The project implementation team has specific goals: improve the internal adoption rate, make the system easier and better to use, and reduce the operational errors it generates.
Each of these goals is an annuity that generates an ongoing economic return over time. So the value of the project implementation team must be calculated over time.
Another common objection to a cross-functional team is the specific expertise required for certain jobs. Can an accounts receivable collections clerk be trained to do software development? Do we really want our lead sales person to learn the intricacies of cost-accounting? Some job pairs simply do not fit into a cross-training model, but many others are amenable to cross-training.
Businesses face considerably different demands for reconfiguration as they grow and change. So the capabilities for reconfiguration must be different. Obviously an accounts receivable collections clerk cannot be retrained to do software development overnight.
Cross-training requires the elimination of many cherished prejudices in order to take advantage of all cross-training opportunities within the business.
Cross-Training Checkup
- To cross-train, you need good training capability. How well does your business train employees?
- What cross-training programs do you have in place?
- How often does your business use project teams?
- Does each project team have a charter, a set of objectives, and an expiration date?
- Are the project team members chosen from different functional areas?
Why so much talk about operations? What about sales, new products, and business leadership?
For some readers this series of posts may feel like a long walk through the weeds of operations. Some sales people left the room awhile ago, to go make customer calls.
However, evolution’s first job is replication and, just like evolution, a successful business must know how to replicate its past success.
Processes, training, documentation, exception handling, project teams and cross-functional training, are the tools by which a business “remembers” what it did yesterday and recreates that success today. In short, operations and execution keep the business going every day.
Do not give up on evolution yet as a model for business. As we consider how evolution uses variation and selection, you will find plenty of opportunity to use your creativity, enthusiasm, insight, and other uniquely human skills.
I’ll return next week for the first of two posts on variation.
