#246 from R&D Innovator Volume 5, Number 11          November 1996

Fighting the Fire Before It's a Conflagration: Steps to Take to Avoid a Crisis
by Jeanne Sawyer, Ph.D.

Dr. Sawyer is principal of The Sawyer Partnership in San Jose, California.  She helps clients solve expensive, chronic problems such as those that cause customers to consider taking their business elsewhere.  Phone (408) 929-3622. www.sawyerpartnership.com

A crisis was coming.  It was the middle of April, and a new, one-time of production run that was to begin July 1 and last until September 1 was having serious troubles.  The new computer systems were anything but stable, and test performances of the process were inadequate, even for small volumes of product.  People from just about every department in the company were frantically trying to resolve the multitude of technical problems, but it was obvious to all concerned that the current path was leading to a crisis.  At risk were millions of dollars and the company's reputation.  Failure would certainly make news in the industry.

As Stephen Covey, author of Seven Habits of Highly Effective People puts it, "If we keep doing what we're doing, we're going to keep getting what we're getting."  This story of how the company resolved the mess should be relevant to just about anyone involved with a crisis situation.

Step 1:  Define Success Criteria and Measure Performance

Identifying and defining any problem begins with data:  we start by defining what success means in measurable, objective terms. This tells us what to measure and clarifies both "trouble" and "optimal" performance levels.  We can track trends in these key measures to help us:

•  Determine the truth about what is actually occurring

•  Understand and plan for risks and vulnerabilities

•  Focus action to achieving specific results

•  Verify that the action taken achieved those results

We have to define, from the data, when the problem is solved, or at least when it is out of the crisis state.  This key step forces us to focus carefully, get specific, and agree about what is important.

Key management, vendors, and technical representatives agreed to success criteria in an intensive, facilitated all-day work session.  It was hard work.  The group struggled with limiting the success criteria to the minimum product volume and quality standards required during the three-month production run, without adding "would-be-nice" objectives.  If extra production or other requirements were added, no matter how desirable for other reasons, the work required to survive the busy months ahead would be diluted or even obstructed.  However, survival depended on our ability to focus on exactly what was needed to just satisfy our market--nothing more nothing less.  This was not the time to stretch goals.

Choosing the right metrics was the hardest part because everyone had to discipline their thinking differently than they ever had before.  The first difficulty was staying focused on defining survival.  The second difficulty was pinning it down to specific, measurable criteria.  The third difficulty was accepting that less than perfect thresholds were not only OK, but necessary.  We succeeded in brainstorming possible metrics, then questioning each rigorously:

•  Was the metric important to surviving this once-a-year production run?  If we didn't make the threshold, how bad would it be to the company?  If we did achieve it, did we deserve congratulations (and, perhaps, a party)?

•  Was the metric specific and measurable?  Would we know--unambiguously--whether or not we were successful?

After much discussion, the group agreed on threshold levels of performance, the definition of success.  These measures included time to start the production run, shipping rate, product concentration and product purity.

Once the metrics were defined, it was relatively straightforward to begin collecting the data to demonstrate how we were progressing.  Graphs were updated and reviewed weekly.  This allowed us to detect and intervene early if any trend lines headed in the wrong direction or got dangerously close to the trouble level.  Because we started collecting data at the same time we started taking action, we were not able to demonstrate improvements over previous performance.  This was not important, however, since we really didn't care about past history.  What was important was that the metrics showed our actions were effective at keeping performance below the trouble threshold.

Step 2:  Identify Priorities and Risks

The next step is to identify priorities based on the success criteria.  By analyzing the data, we can choose the areas to focus that are most important to achieving our success metrics.  For example, if the concentration of the product started to fall, we knew we must investigate why and address that specific problem immediately.  If we didn't, the total production wouldn't make its goal.  The defined success criteria dictate the priorities:  we would focus on anything that threatened our success metrics--and not waste time on anything that had little or no impact on those metrics.

This step also requires that we analyze the situation specifically for risks.  We consider both threats to the company that could result from attempting to address the issue and getting it wrong (or from not addressing it at all) as well as the vulnerabilities, of possible obstacles to success.  What could go wrong?  Once we knew what could go wrong, we could take steps to eliminate the possibility, or at least contain the impact.

Priorities and risks were always evaluated with respect to their impact on our ability to achieve the success criteria.  The goal was to resolve first the issues with the largest negative impact on the production.  For example, the new software had been prepared with some fancy features that were supposed to really fine-tune the process.  These features, if they worked, would make things easier.  However if one of these features failed during the run, it could cause significant enough delays to jeopardize the whole run.  The risk of having them far outweighed any possible advantage.  We agreed to use only the most essential elements of the software, and not to change the software unless it was to correct a bug that threatened our performance metrics, our success criteria.  These criteria gave us the ability to say "no" or "not now" to changes that previously had been considered mandatory.

Step 3.  Develop and Execute Project Plan

With the priorities and risks clearly identified, the next step is to decide what to do about them and then do it.  For each priority and risk, we do the following steps:

•  Chunk it into component issues and define success criteria to measure that the issue is resolved

•  For each issue, analyze for root causes and verify that the causes are real and important to achieving success criteria

•  For each cause, identify what deliverables will enable us to eliminate the cause

•  For each deliverable, identify what actions we must take to create the deliverable.

The actions are the bottom line:  until somebody does something to change things, we'll keep getting what we're getting.  Taking action to avoid or mitigate risks is as critical as taking action to resolve issues that are directly causing the problem.

We identified one major chunk as the lack of change management in the company.  Thus, individuals from both production and packaging would change things according to their independent requirements, usually with inadequate planning and often conflicting with each other.  We determined that one of the causes of the change management problems was that there was no procedure for authorizing any given change or determining when that change should be implemented.  Deliverables included procedure documentation, a change request form that had to be approved before the change could be implemented, and change criteria for deciding whether a change was essential to the production run, and therefore should be implemented.

Step 4:  Measure Results

As actions are implemented, we measure how we're doing by continually checking our success criteria metrics.  If the metrics indicate an undesirable trend, or that we've actually exceeded the trouble levels, we immediately re-evaluate what we're doing to find out why and adjust course as necessary.  In this case, it was clear from the steady trend of the shipping rate that the actions were having the desired effect.  Some of the other metrics were less ideal, but in every case the metric provided advance warning and we were able to identify what caused the reversal and correct it before we were back in serious trouble.

Step 5:  Celebrate

Avoiding a major crisis is hard work and the people who achieve it deserve congratulations.  This key step is often overlooked, perhaps because new issues are always ready for our attention or perhaps because it's hard to identify when a crisis has been avoided.  In any case, avoiding the crisis is valuable to the company, and we must take care to identify when that occurs and reward individuals who make it happen.

The success of the production system was celebrated in mid-September, after the three-month run was finished, and the metrics proved we survived.  In this case, everyone who participated in the effort was invited to a special breakfast hosted by senior executives.  The charts demonstrating the achievement were proudly displayed.