In the book, Bare Bones Change Management: What you shouldn’t not do, Bob Lewis explained the seven must-have elements for any change management effort to have a chance of succeeding. Here are my takeaways from one of the topics discussed in the book.

What are the differences between performance metrics and service levels? Each has its purpose and use case.

Performance metrics tell us how we are doing, generally in statistical terms such as mean, standard deviation, and other measurements. With performance measures, we can apply on-going continual improvement activities.

Service level metrics tell us when failing to achieve some level of performance; something will cause problems. Unlike performance metrics, an additional improvement on the already-met service level metric will not result in business benefit.

When constructing a metric plan, Bob suggested to include the following components:

Component #1: Business improvement goals. This component describes the bottom-line benefit the organization plans to achieve, the business outcomes that will make the bottom-line benefit happen, and the internal improvements to effectiveness that will drive the business outcomes.

Component #2: Business improvement metrics. This component includes metrics for the planned improvements to internal effectiveness. The metrics typically include the six major categories: fixed costs, incremental costs, cycle time, throughput, quality, and excellence. It also includes our decision as to whether to use performance metrics or service level metrics.

Component #3: Targets. If the business case calls for it, we might want to go beyond defining metrics and establish improvement targets. Targets can help the organization realize, once the change has been put in place, a clear statement of how much improvement is good enough.

Component #4: Reporting system. This component describes how we build data collection into the process flow, build the means for using the collected data to support the project work, and develop communication mechanism.

Component #5: Metrics parsimony. This component describes the tactics we can use to ensure the metrics fulfill the qualities of being: connected, consistent, calibrated, complete, communicated and current.

In the book, Bare Bones Change Management: What you shouldn’t not do, Bob Lewis explained the seven must-have elements for any change management effort to have a chance of succeeding. Here are my takeaways from one of the topics discussed in the book.

When it comes to quality and excellence, some organizations believe that quality = excellence. Bob explained why these two terms are different.

Quality essentially means free of defects. When organizations improve quality, they reduce the number of defects and increase the number of units that meet specification.

Improved quality can reduce or increase the incremental costs depending on the approach. Improved quality through standardization using fine-tuned and automated processes often can reduce costs. Improved quality through inspection sometimes can increase the incremental costs.

In any case, quality improvement often will improve customer satisfaction in that the company is less likely to ship defective products.

Excellence, on the other hand, means customization or “deluxe-ness.” The customers get exactly what they wanted or get something that is so sophisticated or luxurious.

The biggest fringe benefit that comes from excellence is revenue. Companies can sell excellent products at higher prices, and usually at higher margins as well.

Adding excellence generally makes it harder to achieve quality. Excellence achieved through customization or sophistication is very much the opposite of standardization required by quality.

In the book, Bare Bones Change Management: What you shouldn’t not do, Bob Lewis explained the seven must-have elements for any change management effort to have a chance of succeeding. Here are my takeaways from one of the topics discussed in the book.

Bob outlined some tactics to consider when working with the cycle time and throughput constraints.

Improved cycle time is about increasing customer satisfaction while improving quality. Lower cycle time brings about lower fixed costs because fewer assets are tied up by the cycles.

The common trade-off for improved cycle time is reduced throughput.

Organizations can consider the following options to improve cycle time.

• Shorten the cycle step
• Reduce inter-step buffers or queues
• Consolidating steps

Improved throughput is about increasing volume with the same unit of time. Higher throughput brings about scalability and lower incremental costs.

The common trade-off for improved throughput is longer cycle time.

Organizations can consider the following options to improve throughput.

• Shorten the bottleneck step
• Add parallelism to the bottleneck step
• Splitting a bottleneck step

In the book, Bare Bones Change Management: What you shouldn’t not do, Bob Lewis explained the seven must-have elements for any change management effort to have a chance of succeeding. Here are my takeaways from one of the topics discussed in the book.

Bob outlined some tactics to consider when working with the fixed and incremental costs.

The two most common tactics used to reduce fixed costs for supporting a business change are eliminating expensive infrastructure and centralizing dispersed resources.

When organizations reduce their infrastructure and fixed costs, they inevitably increase their incremental costs elsewhere within the organization. The reason is that investments in infrastructure generally help to reduce the incremental costs. When the infrastructure scales down or eliminated (outsourcing for example), incremental costs rise in the organization to compensate for the adjustments.

Centralization and consolidation can also help achieve a reduction in fixed costs. Centralization can generally compensate the increase in incremental costs that usually accompany reductions in infrastructure spending. Centralization can also contribute to quality due to its ability to increase consistency and standardization.

Centralization does carry a few trade-offs. One trade-off is the loss of ability to customize, which is generally required for achieving excellence. Another common trade-off from centralization is longer cycle times.

Incremental costs are the mirror image of fixed costs, and, as a result, decreasing incremental costs require investments in infrastructure, which increase fixed costs. The trade-off of ramping up infrastructure investment is the loss of agility for ramping down. If volume decreases, shedding fixed infrastructure costs can be quite difficult.

In the book, Bare Bones Change Management: What you shouldn’t not do, Bob Lewis explained the seven must-have elements for any change management effort to have a chance of succeeding. Here are my takeaways from one of the topics discussed in the book.

Bob suggested there are three levels of business metrics: 1) Bottom-line improvement, 2) Business outcomes that drive the bottom-line improvement, and 3) Internal effectiveness improvements that support the business outcome.

When it comes to the improvements of internal effectiveness, Bob suggested there are only six areas to focus our effort.

1) Fixed Costs: This is also known as non-discretionary spending or sunk cost. Fixed costs are what an organization spends to keep the lights on and to operate at a minimum capacity. They are also the costs that come before making any products or delivering any service to customers.

2) Incremental Costs: This is the increase in costs of producing more products or delivering services to individual customers.

3) Cycle Time: This is the time that elapses between something triggering a process and the time when the process finishes.

4) Throughput: Throughput measures the quantity of output produced in a unit of time.

5) Quality: Quality is the quantitative measure of the presence/absence of defects. From an industrial perspective, quality reflects the degree of products and services adhering to specifications.

6) Excellence: Excellence measures the qualitative elements. The presence of desirable features, ability to customize or tailor outputs to specific needs, and flexibility to adapt to changing circumstances.