{"id":1590,"date":"2012-06-23T16:16:34","date_gmt":"2012-06-23T16:16:34","guid":{"rendered":"http:\/\/www.saasoft.com\/blog\/?p=1590"},"modified":"2012-06-23T16:16:34","modified_gmt":"2012-06-23T16:16:34","slug":"productivity-improvement-science","status":"publish","type":"post","link":"https:\/\/hcse.blog\/?p=1590","title":{"rendered":"Productivity Improvement Science"},"content":{"rendered":"

\"\"<\/a>Very often there is a requirement\u00a0to improve the productivity<\/strong> of a\u00a0process and\u00a0operational managers\u00a0are usually\u00a0measured and rewarded for\u00a0how well they do that. Their primary focus is neither safety nor quality – it is productivity – because that is their job.<\/p>\n

For-profit organisations see improved productivity as a path to increased profit. Not-for-profit organisations see improved productivity as a\u00a0path to being able to grow\u00a0through re-investment of savings.\u00a0 The goal may be different but the path\u00a0is the same – productivity improvement.<\/p>\n

First we need to define what we mean by productivity: it is the ratio of\u00a0a system output\u00a0to a system\u00a0input<\/em>. There are many input and output metrics\u00a0to choose from\u00a0and a\u00a0convenient one to use\u00a0is\u00a0the ratio of revenue\u00a0to expenses\u00a0for a defined period of time.\u00a0 Any change that increases this ratio\u00a0represents an improvement\u00a0in productivity on this purely financial dimension and we know that this financial data is\u00a0measured. We just need to look at the bank\u00a0statement.<\/p>\n

There are two ways to approach productivity improvement: by considering the forces\u00a0that help<\/strong>\u00a0productivity and the forces that hinder<\/strong> it. This force-field metaphor was described\u00a0by the psychologist\u00a0Kurt Lewin (1890-1947) and has been\u00a0developed and applied\u00a0extensively and successfully in many organisations and many scenarios in the context of change management.<\/p>\n

Improvement results from\u00a0either strengthening\u00a0helpers or weakening hinderers or both – and\u00a0experience shows that it is often quicker and easier to focus attention on the hinderers because that\u00a0leads\u00a0to both more improvement and to less stress in the system. Usually\u00a0it is just a matter of alignment.\u00a0Two strong forces in opposition results in high stress and low motion; but\u00a0in alignment creates\u00a0low stress and high acceleration.<\/p>\n

So what hinders productivity?<\/p>\n

Well, anything that\u00a0reduces or delays\u00a0workflow will reduce\u00a0or delay revenue and\u00a0therefore hinder productivity.\u00a0Anything that\u00a0increases\u00a0resource requirement will increase cost and therefore hinder productivity. So\u00a0looking for something that causes both and either removing or realigning it will have a Win-Win impact on productivity!<\/p>\n

A common factor that reduces\u00a0and delays workflow is the design of the process – in particular a design that has a lot of sequential steps performed by different people\u00a0in different\u00a0departments. The handoffs between the steps\u00a0are a rich source of time-traps and\u00a0bottlenecks and these\u00a0both\u00a0delay\u00a0and limit the flow.\u00a0\u00a0A common factor that increases resource requirement is making mistakes because errors generate extra work – to\u00a0detect and to correct.\u00a0 And there is a\u00a0link between\u00a0fragmentation and errors:\u00a0in a multi-step process there are more opportunities\u00a0for errors – particularly\u00a0at the handoffs between steps.<\/p>\n

So the most\u00a0useful way to improve the productivity of a process is to simplify it by combining\u00a0several, small, separate steps into single large ones.<\/p>\n

A good\u00a0example of this can be found in healthcare – and specifically in the outpatient department.<\/p>\n

Traditionally visits to outpatients are defined as “new” – which implies the\u00a0first visit for a particular problem – and “review” which implies the second\u00a0and subsequent visits.\u00a0\u00a0The first phase\u00a0is the diagnostic work and this often requires\u00a0special tests or investigations to be performed (such as blood tests,\u00a0imaging, etc) which are usually done by different departments using specialised equipment and skills. The design of departmental work schedules\u00a0requires a patient\u00a0to visit on a\u00a0separate occasion\u00a0to a different department for each test. Each of these separate visits incurs\u00a0a delay and a risk of a number of errors – the commonest of which is a failure to attend for the test on the appointed day and time. Such\u00a0did-not-attend\u00a0or DNA rates are surprisingly high – and\u00a0values of 10% are\u00a0typical in the NHS.<\/p>\n

The cumulative productivity hindering effect of this multi-visit diagnostic process design is\u00a0large.\u00a0 Suppose there are three steps: New-Test-Review and each step has a 10%\u00a0DNA rate and a 4 week wait. The quickest that a patient could complete the process is 12 weeks and the\u00a0chance of getting\u00a0through right first time (the yield) is about\u00a090% x 90% x 90% = 73%\u00a0which implies that 27% extra\u00a0resource is needed to\u00a0correct\u00a0the\u00a0failures.\u00a0\u00a0Most attempts to improve productivity focus on forcing down the DNA rate – usually with limited success. A more effective approach is\u00a0to redesign\u00a0process by combining\u00a0the three New-Test-Review\u00a0steps into one visit.\u00a0 Exactly the same resources are needed to do the work as before\u00a0but now\u00a0the minimum time would be 4 weeks,\u00a0the right-first-time yield\u00a0would increase to 90%\u00a0and the extra resources required to manage the two handoffs, the two queues, and the two sources of DNAs would be unnecessary.\u00a0 The result is a significant improvement in productivity at no cost.\u00a0 It is also an improvement in the quality of the patient experience but that is a unintended\u00a0bonus.<\/p>\n

So if the solution\u00a0is that obvious and that beneficial then why are we not doing this everywhere? The answer is that we do in some\u00a0areas – in particular where quality and urgency\u00a0is important such as fast-track one-stop clinics for suspected cancer. However – we are not doing it as widely as we could and one reason for that is a hidden\u00a0hinderer: the way that the productivity\u00a0is estimated in\u00a0the business case\u00a0and measured in the the day-to-day business.<\/p>\n

Typically process productivity is estimated using\u00a0the calculated\u00a0unit price of the product or service. The\u00a0unit price\u00a0is arrived at\u00a0by\u00a0adding up the unit costs of the steps and adding an allocation of the overhead costs (how overhead is allocated is subject to a lot of heated debate by accountants!). The unit price is then multiplied by expected activity to get expected\u00a0revenue and divided by the total cost (or budget) to get\u00a0the productivity measure.\u00a0 This approach is\u00a0widely taught and used and is certainly better than guessing but it has a number of drawbacks. Firstly, it does not take into account the effects of the handoffs and the queues between the steps\u00a0and secondly it drives\u00a0step-optimisation behaviour.\u00a0A departmental operational manager\u00a0who\u00a0is responsible and accountable for one step in the process will focus their\u00a0attention on\u00a0driving down costs and pushing up utilisation of their step because that is what they are performance managed on. This in itself is not wrong –\u00a0but it can become counter-productive when it is done in\u00a0isolation and independently of the other steps in the process.\u00a0 Unfortunately\u00a0our traditional management accounting methods\u00a0do not prevent this\u00a0unintentional productivity hindering behaviour – and very often they actually\u00a0promote\u00a0it – literally!<\/p>\n

This insight is not\u00a0new – it has been\u00a0recognised by some for a long time – so we might ask ourselves why this is still the case?\u00a0This is a very good question that\u00a0opens another “can of worms” which\u00a0for the sake of brevity\u00a0will\u00a0be deferred to a later\u00a0conversation.<\/p>\n

So, when applying Improvement Science in the domain of financial productivity improvement then the design of both the process and of the productivity\u00a0modelling-and-monitoring\u00a0method\u00a0may need addressing at the same time.\u00a0 Unfortunately this does not seem to be\u00a0common knowledge and this insight may explain why productivity improvements\u00a0do not happen more often – especially in publically funded not-for-profit service organisations such as the NHS.<\/p>\n","protected":false},"excerpt":{"rendered":"

Very often there is a requirement\u00a0to improve the productivity of a\u00a0process and\u00a0operational managers\u00a0are usually\u00a0measured and rewarded for\u00a0how well they do that. Their primary focus is neither safety nor quality – it is productivity – because that is their job. For-profit organisations see improved productivity as a path to increased profit. Not-for-profit organisations see improved productivity … <\/p>\n

Continue reading “Productivity Improvement Science”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10,15,18,22,30,32,42,43,45],"tags":[],"class_list":["post-1590","post","type-post","status-publish","format-standard","hentry","category-business","category-design","category-finance","category-healthcare","category-operations","category-productivity","category-how","category-why","category-what"],"_links":{"self":[{"href":"https:\/\/hcse.blog\/index.php?rest_route=\/wp\/v2\/posts\/1590","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hcse.blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hcse.blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hcse.blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hcse.blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1590"}],"version-history":[{"count":0,"href":"https:\/\/hcse.blog\/index.php?rest_route=\/wp\/v2\/posts\/1590\/revisions"}],"wp:attachment":[{"href":"https:\/\/hcse.blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1590"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hcse.blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1590"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hcse.blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1590"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}