Monday, March 23, 2020

What is Intellectual Capital?, Part 2

By Pascal Dennis (bio)

In our last post, I suggested that, in the age of Apple, Facebook and Google, Intellectual Capital was at least as important is financial & physical capital.

If you agree, then our annual People Plan is as important as our Financial Plan.

What's the nature & current condition of our IC?

Does our IC match the needs of our Strategy?

What are our 'hot spots' with respect to IC?

How do we, as a management team, develop a shared understanding of our IC hot spots?

How do we grow our people so as to address our hot spots?

Difficult questions, which take time & skill to pose, let alone understand.

The best companies intuit such questions, and actively manage IC.

(Lean thinkers will remember Toyota's cornerstone: Respect for People.)

But these trail-blazers are still a small minority. We need to extend their insights & practices in the years to come.

Why is it so important to manage Intellectual Capital?

Because only thus you can prosper in high cost economies like Europe, America, Canada, Australia, Singapore etc...

Only by investing wisely in your people can you compete with low-cost competitors.

We have enough data points. The best companies in Germany, Switzerland, Denmark, Sweden and such out-compete their low-cost rivals by a wide margin.

China has a massive trade deficit with, wait for it, Switzerland...

Managing Intellectual Capital will be an on-going theme here.



In case you missed our last few blogs... please feel free to have another look…

What is Intellectual Capital & Why Should You Care?
Value Stream Maps
What is a Key Thinker?
Macro Value Stream Kaizen – Zoology

Monday, March 9, 2020

What is Intellectual Capital & Why Should You Care?

By Pascal Dennis (bio)

I left engineering & business school well versed in how to take care of two kinds of assets:

  • Financial, and
  • Physical

Managing these kinds of capital is necessary, of course.

But in the world of Google, Apple, Amazon and Facebook, is it sufficient?

Clearly not. Nowadays, many extremely valuable companies. Have negligible physical assets.

What they do have is Intellectual Capital -- the sum total of all the knowledge, experience, capability, creativity and urgency of all team members.

How well do we manage Intellectual Capital?

The answer is obvious, is it not?

Do we harvest this splendid resource?

Do today's organizations grasp the catastrophic effect of thoughtless layoffs, excessive exec compensation, stifling bureaucracy and all other IC killers?

There are many kinds of wealth -- financial, physical, intellectual, relational, reputation, time and so on.

These are inter-convertible. For example, my daughter Eleanor has time wealth (& Dad's wallet...), which she is transforming into capability wealth.

When she graduates, God willing, she'll translate capability wealth into financial wealth.

But Intellectual Capital differs from financial & physical capital in that,

  1. It can be withheld, and
  2. It can walk away,

IC is controlled by our team members.

Treating them like dirt is akin to hitting yourself in the face with a two-by-four.

How many corporations understand this?



In case you missed our last few blogs... please feel free to have another look…

Value Stream Maps
What is a Key Thinker?
Macro Value Stream Kaizen – Zoology
Poka-Yoke – Preventing Inadvertent Errors

Monday, February 24, 2020

Value Stream Maps

By Al Norval (bio)

Last week I came across an organization with a value stream map hanging on their conference room wall. What’s the big surprise with this? In fact it’s no big surprise at all as I often see this happen. Teams do a wonderful job of mapping their Current State and identifying different sources of waste and various kaizen they are planning on doing to eliminate it. This team had even added a timeline and calculated a leadtime for their value stream which is something I don’t usually see.

What was my concern?

I could see their Current State map but I couldn’t see their Future State map nor what business gap they were trying to close. A Future State is driven by a business need and that need comes from the organization’s strategy. The strategy says what objectives we need to achieve as a business and outlines at a high level how we are going to achieve it. Often the strategy goes on to say what we’re not going to do to meet the business needs or targets and quite frankly this is another often overlooked step but that’s the subject of another blog.

The Value Stream takes this strategy and develops the tactics describing what the value stream needs to improve to meet the business objectives of the organization. There is a direct link between the kaizen and the improvements the value stream is making and the business objectives it needs to deliver to the organization. This link means a testable hypothesis is formed “If we do this, then we will get that”. It’s a simple binary test that can be checked at every review session.

This is a very different approach from the one that says – map the current state, identify waste, drive improvement and remove waste and see what results we achieve. This approach doesn’t set up a hypothesis, doesn’t use the scientific method and although it can lead to some improved business results, doesn’t stretch us to experiment, try new things and learn rapidly, all of which are required parts of a lean system.

What I’d wish I’d seen in the organization I visited last week, was a Current State map, a clear business target with gap identified, a Future State map and a plan on how to close the gap.

Now there are several testable hypothesis:
  • Does the Future State close the gap to the business objective?
  • Does the plan close the gap to the Future State?

By following the PDCA cyle and doing a Check/ Adjust against these questions, organizations can learn a great deal and accelerate their improvement efforts. More importantly, the improvements are driven by a business need rather than being random acts of improvement.



In case you missed our last few blogs... please feel free to have another look…

What is a Key Thinker?
Macro Value Stream Kaizen – Zoology
Poka-Yoke – Preventing Inadvertent Errors
Making the Invisible Visible in Design Projects