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How do we decide whether we should adopt a new technology? It needn’t be new to the world, but new to our organisation. After all, Peter Drucker noted that selling Eskimos a fridge to keep meat from freezing was a creative new use of current technology.
[ Listen to audio version, read by David Hodes]
This is Part 1 of our series on Six Technology Questions: Part 1 | Part 2
First, let’s cast our minds back a couple of decades. When the Y2K threat hit the world in the late 1990s, Eli Goldratt, along with Eli Schragenheim and Carol Ptak, wrote a novel, Necessary but Not Sufficient. The story revolved around a company that sells and develops ERP (Enterprise Resource Planning) software. In the process, we see that the fortune spent by companies looking to enhance performance while mitigating their Y2K risks was often money thrown down the drain.
The twin virtues the ERP salespeople were selling—risk mitigation and enterprise-wide process automation—may have been necessary for the desired outcome but, in the telling by the authors, they were by no means sufficient. The gap lay in what you did with the new technology once you had it. Merely automating the practices of the past would yield little for the cost and effort required for implementation.
Woven into its narrative, Goldratt’s novel presented four ‘new technology’ questions to which he later added two more. These six questions apply equally well to a new product, a new service, or the repurposing of an existing product for an original purpose, as with Drucker’s Eskimo example.
1. What is the power of the new technology? What are the boundaries where it will and will not work?
2. What current limitation or barrier does the new technology eliminate or vastly reduce?
3. What policies, norms or behaviour patterns do we use today to bypass the limitation?
4. What policies, norms and behaviour patterns should we use once the new technology is in place?
5. Given the above, what changes and additions to the new technology should we introduce?
6. How do we integrate the new technology with the overall strategy?
Since we are living through the age of Industry 4.0 and the digitalisation of the means of production, distribution and exchange, I’ll illustrate with an example from a recent assignment. I hope this will convey the power of these questions and encourage you to apply them to whatever technology change you are looking at adopting.
The problem we were trying to solve was how to determine and then control the right quantity of resources required to fulfil the scope of the large number of capital projects slated for execution over the following two years. Our client, a mining house, was planning on spending more than they had ever done before, and the senior management was acutely aware of the risk to the bottom line of both cost and schedule overrun.
They had the experience of using Critical Chain Project Management (CCPM) in their engineering function during the selection and design phases of the portfolio. As they got ready for the first of the pipeline of execution phases, they were staring into the mobilisation of thousands of tradies and associated management teams from a multiplicity of vendors.
Historically, they managed the articulation of resource needs on a variety of spreadsheets. A resource estimate plan, by craft, was prepared with each vendor. Each vendor’s resource plan had a tab with the quantity required by day and night shift for the duration of the given project. Another tab recorded the schedule of negotiated rates used for that vendor, by craft, by shift and the penalty rates applicable for weekend and public holiday work.
Planners passed the spreadsheets down from project to project, and there were inevitable errors in cross-casting and summing. Superintendents used these estimates to develop detailed budgets for the cost of these scopes of work and used those budgets to raise the necessary purchase orders once their managers approved the contracts.
These spreadsheets were sent by email attachment to the vendors, who replied in kind with spreadsheets of their own. Contained within them were the names of the people they had in mind to fulfil the approved project roles, along with a column to indicate they had the craft required to meet the need expressed in the resource plan. The project administrators routed the vendor spreadsheets to the training department for them to validate the qualifications of each candidate.
This vetting task was particularly onerous for anyone who had never worked on this site before, as the team had to vet all the quals by contacting the registered training organisation responsible for issuing them. On many occasions, the faded photo of a grubby certificate was the last remnant of a training organisation which had long since gone broke.
“What current limitation or barrier does the
new technology eliminate or vastly reduce?”
Even if the intrepid training team could validate the formal quals, there was still the hurdle of health and safety inductions onto site, monitoring of the mandatory renewal of technical and safety clearances, and recording of the issue of PPE and other prerequisites of being ‘good to go’.
Once the training team had completed their work, the job was back in the hands of the project administrators. Every week they would have to assemble thousands of records from the time and attendance system, download them into a spreadsheet and reconcile what was being demanded by the vendors against the client’s system of record. There were pivot tables, VLOOKUPs and all the tricks of the advanced Excel user. It was in any practical way impossible to multiply all the hours by the correct rate for any given person, add any overtime at the penalty rates and come up with a number they could confidently say represented a true reflection of the amount owing.
Historically, whenever there was a query about, for example, overtime worked by a specific contractor on a particular work package, the administrators would have to go back to paper-based timesheets, signed off by one of the supervisors at the prestart and end-of-shift meetings, sometimes days or even weeks before. These physical timesheets were kept by the vendor’s administrators, logged, batched and summed in yet another spreadsheet.
On many occasions, on such a large site, to make the best use of the contractors, it would be necessary to move them from one project to another. For example, once scaffolders had erected the scaffolding, they would have to wait for demolition before they could go in and dismantle. Meantime, another project could be in a prework phase looking for just such scaffolding capability. However, each project ran their own budgets, had their own purchase orders and needed their own supervisor signatures to validate that the individual in question had worked part of their day at the second work front.
“How do we integrate the new technology
with the overall strategy?”
It was not unknown for the more wily of the contractors to get two signatures, one from each supervisor and claim two full shifts of pay for one day’s work. But for the vigilance of the project administrators, the practice would have been far more commonplace than it was.
Of course, it wasn’t as if the vendors escaped the pain. When they got either the paper-based timesheets signed off by the supervisors or the electronic download from the time-and-attendance system, they had to code it for the employee ID within their systems before they could pay their staff.
Given this synopsis as context, we asked the first of the six questions, made up of two sub-questions:
We determined that, at a minimum, the new system should have the power to do the following:
• Forecast resource requirement for the next 12 months at an increasing resolution as we move closer to each project
• Develop a finite-schedule-based resource requirement for any given project
• Provide accurate contractor resource cost estimates for each project based on craft, shift and penalty rates
• Be able to assign individual contractor candidates to the open positions generated by our resource requirements ensuring the correct fit of qualifications held in the learning management system
• Determine what stage each candidate contractor is at in the mobilisation process and what we need to do to get them to be ‘good to go’
• Ensure that any time-based constraint on qualifications is notified well in advance
• Know who’s authorised as ‘good to go’ and who is on site on any given day
• Continuously monitor daily project load by craft against capacity provided
• Report daily on absenteeism
• Know which projects every contractor has worked on and for how long, on any given day
• Know which supervisor(s) they report to on any given day
• Determine every contractor’s swipe times from the moment they enter the premises until they leave and know how much of that time is chargeable to which project
• Instantly know how much we owe each vendor based on the contracted rates and swipe times
• Provide the vendors with a self-service capability to easily monitor time, attendance and value and, where possible, help them integrate it into their systems of record
• Know what has been invoiced by a vendor and what we have accrued for services performed but not yet invoiced
• Continuously monitor the variance of budgeted contract costs to actuals
Those are a lot of capability requirements to extract from two simple sub-questions making up the first of the six technology questions. Yet you can see how asking them leads to an understanding of what the ideal version of your new technology might do.
In the next article, we’ll look at some of the remaining questions. With these, we identify amongst other things, behavioural and policy changes that must be considered to leverage the value of your new technology.
Read Part II: Six Technology Questions: Part II
The change from standard thinking to Theory of Constraints (TOC) is both profound and exhilarating. To make it both fun and memorable, we use a business simulation we call The Right Stuff Workshop.
We’d love to run it with you. To learn more:
[Background image: Electronic board, Mathew Schwartz on Unsplash]
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