<Leslie> Hi Bob. I have been so busy this week that I have not had time to consider a topic to explore.
<Bob> No problem Leslie, I have shelf full of topics we have not touched yet. So shall we talk about counter-productivity?
<Leslie> Don’t you mean productivity … the fourth dimension of system improvement.
<Bob>They are related of course but we will approach the issue of productivity from a different angle. Rather like we did with safety. To improve safety we considered at the causes of un-safety and focussed our efforts there.
<Leslie> Ah yes, I see. So to improve productivity we look at the causes of un-productivity … in other words counter-productive beliefs and behaviours that are manifest as system design flaws.
<Bob> Exactly. So remind me what the definition of a productivity metric is from your FISH course.
<Leslie> Productivity is the ratio of a stream metric and a stage metric. Value-for-Money for example.
<Bob> Good. So counter-productivity is also a ratio of a stream and a stage metric.
<Leslie> Um, I’m not sure I quite get that. Can you explain a bit more.
<Bob> OK. To explore deeper we need to be clear about how each metric relates to our intended outcome. Remember in safety-by-design we count the number and severity of risks and harm because as harm is going up then safety is going down. So harm is an un-safety stream metric.
<Leslie> Ah! Yes I see. So if we look at cycle-time, which is a stage metric; as cycle-time increases, the activity falls and productivity falls. So cycle-time is actually a counter-productivity metric.
<Bob>Excellent. You are getting the hang of the concept of counter-productivity.
<Leslie> And we need to be careful because productivity is a ratio so the numerator and denominator metrics work in opposite ways: increasing the magnitude of the numerator is equivalent to decreasing the magnitude of the denominator – the ratio increases.
<Bob> Indeed, there are many hazards with ratios as we have explored before. So let is consider a real and rather useful example. Let us look at Little’s Law from the perspective of counter-productivity. Remind me of the definition of Little’s Law for a single step system.
<Leslie> Little’s Law is a mathematically proven law of flow physics which states that the average lead-time is the product of the average work-in-progress and the average cycle-time.
LT = WIP * CT
<Bob> Good and I am pleased to see that you have used cycle-time. We are considering a single stream, single stage, single step system.
<Leslie> Yes, I avoided using the unqualified term ‘activity’. I have learned that lesson the hard way too!
<Bob> So how do the terms in Little’s Law relate to streams, stages and systems?
<Leslie> Lead-time is a stream metric, cycle-time is a stage metric and work-in-progress is a …. h’mm. What it is? A stream metric or a stage metric?
<Leslie>A system metric? WIP is a system metric!
<Bob> Good. So now re-arrange Little’s Law as a productivity formula.
<Leslie> Work-in-Progress equals lead-time divided by cycle-time
WIP = LT / CT
<Bob> So is WIP a productivity or a counter-productivity metric?
<Leslie> H’mmm …. I will need to work this through logically and step-by-step. I do not trust my intuition on this flow stuff.
Increasing cycle-time is counter-productive because it implies activity is falling while costs are not.
But cycle-time is on the bottom of the ratio so it’s effect reverses.
So if lead-time stays the same and cycle-time increases then because it is on the bottom of the ratio that implies a more productive design. And at the same time work in progress must be falling. Urrgh! This is hurting my head.
<Bob> Good, keep going … you are nearly there.
<Leslie> So a falling WIP is a sign of increasing productivity.
<Bob> Good … and that implies?
<Leslie> WIP is a counter-productivity system metric!
<Bob> Well done. Your logic is flawless.
<Leslie> So that is why we focus on WIP so much! Whatever causes WIP to increase is counter-productive!
Ahhhh …. that makes complete sense.
Lo-WIP designs are more productive than Hi-WIP designs.
<Bob> Bravo! And translating this into financial metrics … it is because a big queue of waiting work incurs costs. Storage cost, maintenance cost, processing cost and so on. So WIP is a liability. It is not an asset!
<Leslie> But doesn’t that imply treating work-in-progress as an asset on the financial balance sheet is counter-productive?
<Bob> It does indeed.
<Leslie> Oh dear! That revelation is going to upset a lot of people in the accounting department!
<Bob> The painful reality is that the Laws of Flow Physics are completely indifferent to what any of us believe or do not believe.
<Leslie> Wow! I like this concept of counter-productivity … it really helps to expose some of our invalid assumptions that invisibly block improvement!
<Bob> So here is a question to ponder. Is zero WIP desirable or even possible?
<Leslie> H’mmm. I will have to think about that. I know you would not have asked the question for no reason.