Chapter 13 The Search for Efficiency and Effectiveness

Time Management

Throughout this chapter, the focus will be on the simple fact that one of the great enemies in life—particularly a businessperson’s life—is the existence and acceptance of waste. One of the resources that we can least afford to waste is time. In many ways, time is the most precious of all resources. Other resources can often be purchased or acquired, but time cannot be purchased. Once lost, time can never be recaptured. Time, as a resource, should be of particular importance for the small business owner.

If one is serious about maximizing the use of time, then one should consider two venues: use a time-management system and avoid what are referred to as “time wasters.” The term time-management system is a broad concept and covers many different approaches. Regardless of the approach used, its adoption provides multiple benefits. As one author puts it—“‘Time managementWorking on the right things (effectiveness) and doing them the best way (efficiency).’ involves working on the right things [effectiveness] and doing them the best way [efficiency].”Peggy Duncan, The Time Management Memory Jogger (Salem, NH: Goal/QPC Publishers, 2008), xi. Steven Covey, author of First Things First,Steven Covey, A. Roger Merrill, and Rebecca R. Merrill, First Things First (New York: Simon and Shuster, 1994), 35. a “bible” for time management, identifies four generations of time-management systems. He defines a first-generation time-management systemA system composed of essentially a list of tasks that must be done. as being composed of essentially a list of tasks that must be done. A second-generation time-management systemA system that ties deadlines to those tasks that must be done. ties deadlines to those tasks. A third-generation time-management systemA system that incorporates a system of prioritization to tasks that must be done. incorporates task prioritization. Many businesspeople are familiar with paper-and-pencil or computerized systems for listing tasks, noting their due dates, and prioritizing them in terms of relative importance. Covey argues for a fourth-generation time-management systemA system designed to bring balance into the personal and professional life of an individual.. This system is designed to bring balance into the personal and the professional lives of individuals. It is best illustrated by Covey’s 2 × 2 matrix, where one axis is composed of tasks that can be categorized as urgent or not urgent. The other axis is composed of tasks that can be characterized as either important or not important (see Figure 13.1 "Time-Management Matrix"). He emphasizes that those tasks that might be found in the important/not urgent quadrant (quadrant 2) might be critical to an individual’s well-being. Unfortunately, because they are listed as not urgent, they might fall by the wayside. His goal is to produce a “balanced manager.” This balance refers to what he argues are the four fundamental human needs: physical needs, social needs, mental needs, and spiritual needs. His approach to time management is based on valuing relationships and recognizing that the proper management of relationships will reduce the amount of time wasted in activities.

Figure 13.1 Time-Management Matrix

Source: Steven Covey, A. Roger Merrill, and Rebecca R. Merrill, First Things First (New York: Simon and Shuster, 1994), 37; James Cooper, “3 Vital Time Management Principles for Small Business Owners & Entrepreneurs,” mimosaPLANET, December 2, 2010, accessed February 4, 2012, http://mimosaplanet.com/Small-Business-Blog/bid/55824/3-Vital-Time-Management-Principles-for-Small-Business-Owners-Entrepreneurs.html.

Covey advocates that an individual should have a deep understanding of what is important in one’s life and recognize that, on any day, one will assume different roles. Both elements need to be incorporated into the time-management system. For Covey, we all have to assume different roles in our personal and professional lives. The objective is to identify what these roles require time-wise and how they can be successfully integrated. To achieve integration, we need to better understand ourselves. Covey suggests that developing a personal mission statement is vital to achieving balance. Some characteristics of such a statement might include the following:

• What represents the deepest and best within a person?
• What is an expression of a person’s unique capacity to contribute to one’s family, the organization, and the world at large?
• What represents pursuits that are higher than self-interest?
• What integrates all four fundamental human needs?
• What principles produce quality-of-life results?
• What inspires a person?

The following is an example of a personal mission statement that uses the Covey approach:

Covey’s complete system of time management is comprehensive and is supported by both paper-and-pencil and software support materials.

If Covey’s comprehensive approach appears to be initially overwhelming, where else might a person begin to improve their time-management skills? An excellent—in fact a critical—takeoff point would be to ask the following question: “Where has the time gone?” How often have we asked ourselves or heard others pose this question, and how often are we unable to answer it? Until one has a solid idea of how time is spent, it is impossible to manage time effectively. It is comparable to beginning a journey to a location without knowing the exact starting point. An excellent way of knowing how time is spent is to use an activity log.

An activity logA technique that involves writing down every task and activity that one is involved with during a day. involves writing down every task and activity a person is involved with during a day. It also requires noting when these activities occurred during the day and how long they lasted. It would be very useful to also comment on one’s emotional state and energy level while performing these tasks and activities. The log should be maintained for a period of time—generally one or two weeks. At the end of this period, analyze how time was spent. This analysis should look for some common threads:

• How much time per day or week is spent on particular activities?
• When during the day did you feel the most productive?
• When during the day did you feel the least productive or have the most disruptions to workflow?
• What activities were individuals who created these disruptions to workflow?
• What activities seem to provide little or no value?

The goal of this analysis is to identify what task or activity should be eliminated and when, if there is a pattern to productivity, a high-value challenging task should be scheduled. The activity log should provide useful insights into how a person should structure time flow.“Activity Logs: Finding Out How You Really Spend Your Time,” Mind Tools, accessed February 4, 2012, www.mindtools.com/pages/article/newHTE_03.htm. As one author put it, “Find your rhythm and schedule around.”“5 Time-Management Tricks,” Shifting Careers, December 12, 2007, accessed February 4, 2012, shiftingcareers.blogs.nytimes.com/2007/12/12/5-time-management-tricks.

After identifying workflow patterns, then seriously begin planning for time management. The first stage of this process involves identifying the required tasks to be performed across various time horizons, such as the upcoming year, month, week, or day. Draw on Covey and others to include a broad spectrum of life activities, not just work-oriented activities.Rachna D. Jain, “10 Ways for Entrepreneurs to Find More Time,” PowerHomeBiz.com, September 9, 2003, accessed February 4, 2012, www.powerhomebiz.com/vol124/findtime.htm.

In addition to identifying these tasks, it is vital that a person prioritize these tasks. Some tasks are clearly more important than others. As an example, securing a major sale would have a much higher priority than selecting the appropriate stationery for a business. The next step is determining—or more likely estimating—how much time and what resources will be required to complete the tasks. Use these estimates of time to generate a to-do list specifying the completion date for the tasks and the activities. Plan on working within realistic blocks of time.Susan Giurleo, “11 Time Management Tips for Small Business Success,” DrSusanGiurleo.com, April 11, 2011, accessed February 4, 2012, drsusangiurleo.com/11-time-management-tips-for-small-business-success. When dealing with a large complex project, learn to break it down into manageable segments and components.

It is one thing to create a prioritized time schedule; it is something entirely different to successfully follow such a schedule. Time management involves learning how to consistently carry out these tasks while avoiding the many time-robbing traps that exist in all our lives.Donald Wetmore, “Some Time Savers,” PowerHomeBiz.com, accessed February 4, 2012, www.powerhomebiz.com/vol70/timesavers.htm.

The following are some dos and don’ts of time management:

• Learn to “chunk.” Chunking is a process by which similar activities are grouped into common blocks of time. As an example, one might schedule several activities associated with the financial operations of the business—such as paying bills, tallying receipts, and so forth—together during a specific time period.Rachna D. Jain, “10 Ways for Entrepreneurs to Find More Time,” PowerHomeBiz.com, September 9, 2003, accessed February 4, 2012, www.powerhomebiz.com/vol124/findtime.htm.
• Learn to delegate. A common complaint leveled at entrepreneurs and small business owners is their propensity to be involved in every aspect of the business. The effective use of one’s time will involve recognizing that one person cannot do everything. It is important to learn how to delegate a particular task to subordinates. The challenge is to properly supervise the subordinates so that the task is carried out as desired.Susan Giurleo, “11 Time Management Tips for Small Business Success,” DrSusanGiurleo.com, April 11, 2011, accessed February 4, 2012, drsusangiurleo.com/11-time-management-tips-for-small-business-success.
• Learn to say “no.” It is often said that the most important word for a manager to learn is the word no. Time management involves discipline. It means that at times we must stop activities that would become time robbers.Carol Halsey, “The Greatest Technique of Time Management,” PowerHomeBiz.com, accessed February 4, 2012, www.powerhomebiz.com/vol94/time.htm. What about the colleague who drifts into your work space and asks, “Do you have a few minutes?” When we know that this colleague will be talking more about his or her own personal life rather than work-related activities, then we must have the courage to say, “Sorry, but I do not have the time.” In periods of time pressure, we must even find strength to forgo some activities, such as going out to lunch.“5 Time-Management Tricks,” Shifting Careers, December 12, 2007, accessed February 4, 2012, shiftingcareers.blogs.nytimes.com/2007/12/12/5-time-management-tricks.
• Learn to not procrastinate. For many of us, this is the great challenge. It is best dealt with by maintaining a clear focus on the required tasks. This is why a to-do list of tasks tied with prioritization is so important. One way to deal with procrastination is to concentrate on one task and staying with the task until it is complete.“5 Time-Management Tricks,” Shifting Careers, December 12, 2007, accessed February 4, 2012, shiftingcareers.blogs.nytimes.com/2007/12/12/5-time-management-tricks. Another form of procrastination is the willing acceptance of wasting time. Waiting is a form of wasting time if one is not engaged in some useful activity while waiting for some other outcome—such as working while on hold during a phone call.Susan Giurleo, “11 Time Management Tips for Small Business Success,” DrSusanGiurleo.com, April 11, 2011, accessed February 4, 2012, drsusangiurleo.com/11-time-management-tips-for-small-business-success.
• Learn to manage e-mail. One of the greatest sources of time wasting is the improper management of e-mail. The ping announcing a new e-mail message often lures one away from productive work to read the message. One should plan set blocks of time during the day to handle e-mail. Outside these blocks, one should not open any e-mail. E-mail should be approached so that each item can be dealt with once and then eliminated.“5 Time-Management Tricks,” Shifting Careers, December 12, 2007, accessed February 4, 2012, shiftingcareers.blogs.nytimes.com/2007/12/12/5-time-management-tricks. One should also be prepared to “on deadline days…put up the equivalent of a ‘do not disturb sign.’”“5 Time-Management Tricks,” Shifting Careers, December 12, 2007, accessed February 4, 2012, shiftingcareers.blogs.nytimes.com/2007/12/12/5-time-management-tricks.
• Learn to find private time. It is vital that an individual find time where to be alone with one’s own thoughts and work in isolation without interruptions. Time to think allows the small business owner to think about the “big picture.”Rachna D. Jain, “10 Ways for Entrepreneurs to Find More Time,” PowerHomeBiz.com, September 9, 2003, accessed February 4, 2012, www.powerhomebiz.com/vol124/findtime.htm. This type of break can actually improve one’s efficiency and effectiveness.“10 Time Management Mistakes: Avoiding Common Pitfalls,” Mind Tools, accessed February 4, 2012, www.mindtools.com/pages/article/time-management-mistakes .htm. As with e-mail, one must be prepared to demand no interruptions.

In addition to these suggestions, one should learn to use some form of time-management system: a paper-and-pencil system, such as a day planner; a computer-based system; or a system that works on one’s smartphone or an iPad. Select one system and stay with it.Donald Wetmore, “Some Time Savers,” PowerHomeBiz.com, accessed February 4, 2012, www.powerhomebiz.com/vol70/timesavers.htm.

Do not become addicted to the rush of constantly being busy. For some individuals, there is confusion between being “on the go” and actually accomplishing what one needs to accomplish. Many of these people view themselves as successful multitaskers. This ability to multitaskThe ability to handle several tasks simultaneously. is often referred to as a modern-day requisite skill. However, the reality is that multitasking appears to reduce one’s productivity. Some studies indicate that multitasking prolongs the accomplishment of a list of tasks by as much as 20 percent to 40 percent.“10 Time Management Mistakes: Avoiding Common Pitfalls,” Mind Tools, accessed February 4, 2012, www.mindtools.com/pages/article/time-management-mistakes .htm. A better use of one’s time is to focus on one task at a time.“20 Quick Tips for Better Time Management,” Stepcase Lifehack, accessed March 12, 2012, www.lifehack.org/articles/lifehack/20-quick-tips-for-better-time-management .html#. In conclusion, it is important to recognize that one should not expect to achieve a perfect allocation of one’s time, especially as unexpected events arise. The best that can be hoped for is that “we can actually manage ourselves.”Susan Ward, “11 Time Management Tips: Part 1: Coming to Grips with the Time Management Myth,” About.com, accessed February 4, 2012, sbinfocanada.about.com/cs/timemanagement/a/timemgttips.htm.

Quality Management

Throughout this text, the concept of customer value has been emphasized. Intimately linked to customer value is the notion of quality. Therefore, it is extremely unfortunate that for most people, businesspeople included, the term quality is either totally misunderstood or viewed from a rather narrow perspective. This stems from two reasons. The first is based on a correct assumption that quality is defined by the user (customer); however, many then go on to believe that because quality is subjective, it then becomes impossible to define. The second problem centers on the tendency to view quality, particularly in products, as singularly the result of the use of costly raw materials, components, careful craftsmanship, and detailed processes. It is assumed that together these expensive elements must necessarily produce a quality but costly outcome. In this belief system, if one wants to identify the quality of the product, one has to look only at the price tag. Quality is synonymous with cost. This is a huge error because, as will be shown, a true commitment to quality can reduce costs and expenses—and do so quite significantly.

Without a fundamental understanding of what quality really means, it is impossible to achieve it—consistently. So how should one approach a useful definition of the term quality? Many authors suggest that when discussing quality, it is useful to distinguish between product quality and service quality. Today, there may be no clear-cut distinction between exclusively product-based businesses or exclusively service-based businesses. Few products can be viewed in isolation from supporting services. As an example, an automobile manufacturer clearly produces a product; however, few manufacturers would survive long if they totally excluded the area of follow-up services, such as vehicle maintenance across a car’s lifetime. Likewise, many service businesses rely on ancillary products. An investment company provides a service; however, it may also provide its clients with investment perspective reports. Many view McDonald’s as essentially a service company—the service being the delivery of fast food; obviously, the ancillary product is the food.

The literature indicates that rather than having a unitary definition of quality, it is important to identify the dimensions of quality. In a seminal 1984 article, David Garvin identified eight dimensions of product quality: performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality.David Garvin, “What Does ‘Product Quality’ Really Mean?,” Sloan Management Review 26, no. 1 (1984): 25–43. Table 13.1 "The Eight Dimensions of Product Quality" describes what these dimensions mean and gives examples. Garvin recognized that no consumer will find all eight dimensions equally important. However, to ensure success, a business must identify which of the eight dimensions are important to its customers. As an example, if we are dealing with a product such as a heart pacemaker, customers would be most interested in the reliability and durability dimensions of that product. If a customer is buying a car for street drag racing only, then that person’s focus would be on the performance dimensions of the vehicle.

Another approach to examining quality, this time in the service context, is to explicitly consider quality as a comparison between a customer’s expectations and a customer’s perception of performance. Parasuraman, Zeithaml, and Berry argued in their 1985 seminal article that there were ten determinants (dimensions) of service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, knowing the customer, and tangibles.A. Parasuraman, Valerie A. Zeithaml, and Leonard L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of Marketing 49 (1985): 41. After some major research, they reduced this set to five dimensions: tangibles, reliability, responsiveness, assurance, and empathy.Valerie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Delivering Quality Service: Balancing Customer Perceptions and Expectations (New York: Free Press, 1990), 38. Again, it is critical to note that customers will not view all five dimensions as equally important. In fact, the relative rank of these dimensions may differ significantly across industries. The approach of Zeithaml et al. has become well known as the SERVQUALA market research instrument that plays a prominent role in improving quality in service environments. instrument, and it plays a prominent role in improving quality in service environments. The five service quality dimensions are given in Table 13.2 "The Dimensions of Service Quality". This SERVQUAL system explains the notion that quality is associated with a gap between expectations and perceptions. It identifies the following five types of gaps that a service organization should examine and attempt to minimize:

1. The gap between what customers expect and what a business believes are its customers’ expectations
2. The gap between a business’s evaluation of its own performance and how its customers evaluate its performance
3. The gap between a customer’s experience and a business’s specified level of performance
4. The gap between the communicated level of service by a business and what a customer actually experiences
5. The gap between a customer’s expectation and actual experience.

From looking at these five gaps, it should be obvious that a full utilization of the SERVQUAL instrument is quite a challenge and might be beyond the capacity of most small businesses. That does not mean, however, that a business interested in providing its customers with quality service cannot apply some of the elements of the SERVQUAL instrument or use it as a conceptual template.

When using the term quality management, we should recognize that there is no universally consistent notion of how one can produce quality products and services. In fact, the quality management movement has been evolving for nearly a century. Perhaps the best way of tracing this evolution is to examine the contributions of some of the key proponents of quality. One of the first bodies of work that should be reviewed is that of Walter A. Shewhart (1891–1967). Similar to two other “quality gurus”—W. Edwards Deming and Joseph Juran (the authors are hesitant to use the term guru because this might question the true value of the work of these individuals)—Shewhart worked for Western Electric Company, a division of AT&T.“Walter A. Shewhart,” ASQ, accessed February 4, 2012, asq.org/about-asq/who -we-are/bio_shewhart.html. There he developed what is now known as statistical process control (SPC)A mathematical approach that measures how well products conform to previously determined standards., a mathematical approach that measures how well products conform to previously determined standards. The goal here is to develop a control chart that would enable an operator to distinguish between the random change associated with any manufacturing process and specifically assignable causes of such change. As an example, a machine produces 0.25-inch diameter bolts. Not all the manufactured bolts will be exactly 0.25 inches in diameter. There will be some natural variation around this value. Rather than test the diameter of every bolt, in SPC, a sample of bolts is tested on a regular basis. Based on statistical analysis, one can determine if this sample is within acceptable limits around the 0.25-inch value. If a sample is not within these acceptable limits, then the machine is shut down, and every effort is made to determine the assignable cause—faulty materials, machine error, or operator error. The benefit of this approach is that one can determine, with a high degree of accuracy, the operational characteristics of the system without the expense of testing every item produced. A full discussion of all aspects of SPC is beyond the focus of this text.

Shewhart’s two books, Economic Control of Quality of Manufactured ProductWalter A. Shewhart, Economic Control of Quality of Manufactured Product (New York: D. Van Nostrand Company, 1931). and Statistical Method from the Viewpoint of Quality Control,Walter A. Shewhart, Statistical Method from the Viewpoint of Quality Control (Long Island, NY: Dover Publications, 1980). are still available in print and are viewed as the foundation works in the field.

Shewhart also made major contributions in the way we think about implementing a quality program in any organization. He advocated a systematic approach structured in four cyclical phases. This approach is sometimes referred to as the PDCA cycleA series of steps to ensure continuous improvement. (see Figure 13.3 "The PDCA Cycle") or the Deming cycle. (Yet the Deming cycle is an improper name for the PDCA cycle.) The PDCA cycle calls for a cycle of continuous improvement. The first step is to plan for a change that would lead to improvement. The planning process requires data collection to make a decision. Regardless of the approach to quality management, all decision making must be data driven. The second step in the cycle is the do phase. This entails implementing the change. It also implies that a business will implement that change on an experimental basis, meaning that the organization would run a pilot program rather than implementing it throughout the entire organization. The third phase of the cycle is check. This means that after a sufficient period of time following the initial implementation phase, the results are evaluated to ascertain if the change produced the desired effect. If that answer is positive, then the organization moves onto the fourth stage of the cycle (act), where the changes are implemented throughout the entire organization. At the end of the act phase, the process is repeated with respect to some new problem area.

Figure 13.3 The PDCA Cycle

The two other quality gurus who worked with Shewhart at Western Electric Company, as previously mentioned, were Joseph Juran and W. Edwards Deming. Juran’s numerous contributions to the field include the first standard reference work in the field of quality management: The Quality Control Handbook.“Joseph M. Juran,” Juran Institute Inc., accessed February 4, 2012, www.juran.com/about_juran_institute_our_founder.html. He also developed the Juran Trilogy, an approach to quality management that involves three phases: quality control, quality improvement, and quality planning.

Deming was born in 1900 and received an engineering degree from the University of Wyoming and a doctorate from Yale University. During his career, he worked for Western Electric Company, Bell Labs, and the US Department of Agriculture. During the Second World War, he taught SPC methods to thousands of engineers and plant personnel. After the war, Deming worked in Japan with Douglas McArthur’s Office of Supreme Command of Allied Powers. Several years later, he returned to Japan and worked with Japanese scientists and engineers and taught them about SPC. Deming’s work with the Japanese improved his understanding of what must transpire in a business organization to ensure quality products and services.Robert B. Austenfeld Jr., “W. Edwards Deming: The Story of a Truly Remarkable Person,” International Quality Federation, May 10, 2011, accessed February 4, 2012, www.iqfnet.org/Ff4203.pdf. The Japanese recognized his accomplishments by creating the Deming Prize, which is awarded to organizations that exemplify a commitment to quality.

Many consider Deming as the world’s preeminent proponent of quality. In fact, many see him as one of the most important business thinkers of the twentieth century. In a November 1999 issue, Fortune identified Deming, along with Peter Drucker and Frederick Taylor, as three individuals who had more impact on the operations of businesses than any CEO. In its April 22, 1991, edition, US News & World Report covered nine important turning points in human history. The final point was Deming’s impact on the Japanese quality movement.“History’s Hidden Turning Points,” Leadership Alliance, accessed March 2, 2012, www.leadershipalliance.com/demingnews.htm.

What distinguishes Deming from all other quality theorists is his comprehensiveness known as the Deming methodThe philosophy and the techniques to ensure quality that were enunciated by W. Edwards Deming.. It has been stated that Deming proposed an alternative philosophy of doing business. He argued that one should believe that the purpose of a business is to delight a customer. If customers are delighted, then profits will follow. The Deming philosophy was summarized in his fourteen points, which are given in Table 13.3 "Deming’s Fourteen Points".

The last quality theorist who should be discussed is Philip Crosby. Crosby was an executive at ITT and the Martin Company. His approach to quality reflected a practicing manager’s perspective. Although he is often associated (correctly) with the zero-defect program, his great contribution can be found in his first book Quality Is Free.Philip Crosby, Quality Is Free (New York: McGraw-Hill, 1979). In this text, Crosby argued that the definition of quality should be based on conformance to quality, and nonconformance is highly expensive. He estimates that the cost of nonconformance can run as high as 30 percent of revenue.Philip B. Crosby, “Quality Is Free—If You Understand It,” Philip Crosby Associates II Inc., accessed February 4, 2012, www.wppl.org/wphistory/philipcrosby/QualityIsFreeIfYouUnderstandIt.pdf. This figure includes costs associated with rework, scrap, warranties, lost goodwill, reputation, and customers. He further argues that expenditures on quality to guarantee conformance to requirements will always be less than the cost of nonconformance; therefore, quality should be seen as being free. Crosby was embraced by many American executives because of his emphasis on the practical and his formal acknowledgment of the importance of the bottom line. His approach is often referred to as Total Quality ManagementA catchall term that covers a variety of methods and approaches to improve organizational quality..

Implementing quality management concepts in American business has had a long and somewhat checkered history. In the last four decades, total quality and continuous quality movements have blossomed in popularity and then quickly died. Two decades ago, Walter Lareau argued that many American businesses, particularly large businesses, have an almost pathological antipathy toward quality management because some of its (quality) fundamental principles run totally counter to corporate belief systems, namely, customers are a pain and employees are an even bigger pain.Walter Lareau, American Samurai: Why Every American Executive Must Fight for Quality (New York: Warner Books, 1991), 47. In the intervening time, however, it appears that one approach to quality has captured the imagination of many businesses—both large and small. This quality program is known as Six SigmaA quality management program created by the Motorola Corporation that seeks to reduce defects to the Six Sigma level, which translates as no more than 3.4 defects per million parts..

Although Six Sigma is often associated, at least in the public’s mind, with General Electric, it began at Motorola in the 1980s and was spearheaded by William Smith.Wolf Akpose, “A History of Six Sigma,” December 2010, accessed February 4, 2012, www.todaysengineer.org/2010/Dec/six-sigma.asp. The term sigma (σ) comes from SPC and represents the concept of the standard deviationA statistical measure of dispersal about the mean. It is used in SPC models.. Six standard deviations away from specifications signify that the process produces only 3.4 defects per million opportunities. This is a remarkable accomplishment. Imagine a restaurant that is open 12 hours a day, 365 days per year. On average, the restaurant serves 1 meal every 55 seconds or about 800 meals per day. It would take them approximately 3.4 years to serve one million meals. So if this restaurant was operating at a Six Sigma level, it would make a mistake in taking an order only once a year. Six Sigma draws on a battery of tools and techniques derived from SPC and earlier quality management programs. Six Sigma’s mantra for continuous improvement involves what is referred to as the DMAIC cycle (see Figure 13.4 "The DMAIC Cycle"), where D stands for design, M stands for measurement, A stands for analyze, I stands for improve, and C stands for control. Clearly, this concept is derived from the Shewhart cycle.

Figure 13.4 The DMAIC Cycle

What was different about the Six Sigma program was that all these tools and techniques were packaged in a coherent program. There was a heavy emphasis on quick results and the ability to demonstrate to management tangible cost savings. Six Sigma involves committed training programs that promote statistical tools and management techniques. Graduates of the most basic certification training program are referred to as “green belts,” a term derived from the martial arts. Those who receive more advanced training are known as “black belts.”“Six Sigma Training, History, Definitions: Six Sigma and Quality Management Glossary,” BusinessBalls.com, accessed February 4, 2012, www.businessballs.com/sixsigma.htm. Given that Six Sigma is closely associated with large corporate entities and complex training programs, one might think that it would be irrelevant for smaller enterprises. Nothing could be further from the truth. Six Sigma offers a systematic and pragmatic approach for quality improvement in the smaller firm.Greg Brue, “Six Sigma for Small Business,” Entrepreneur Press, 2006, accessed February 4, 2012, www.entrepreneur.com/downloads/assist/six_sigma_for_smallbusiness.pdf.

Managing Meetings

As a business grows, it will—in all probability—increase the number of its employees. As the employee base grows, there is increased demand to coordinate activities, exchange information, and engage in decision-making activities. These usually occur at meetings, and one would think that these would be straightforward events. Yet the reality is that many managers and employees come to dread participation at meetings. Data indicate that many, if not most, meetings fail to produce the desired outcome. A study conducted in 1993 found that executives were seen as a spending seventeen hours per week in meetings, and one-third felt that time was wasted.Roy Woodard, “Meetings, Bloody Meetings,” Credit Control 15, no. 5 (1993): 1. Another survey of thirty-eight thousand managers found that 66 percent felt that the meetings they attend were a waste of time.Robert F. Moran Jr., “Meetings: The Bane of the Workplace, It Doesn’t Have to Be,” Library Administration & Management 20, no. 3 (2006): 135–39, accessed February 6, 2012, journals.tdl.org/llm/article/view/1637/917. Still another study found that managers spend as much as 40 percent of their work time in meetings, but only 64 percent of those meetings were seen as achieving their intended outcome;Judith Lindenberger, “Make the Most of Your Meetings,” Office Solutions 24, no. 3 (2007): 40. another study found that executives were spending as much as 70 percent of their time at meetings, but only 40 percent of those meetings had clear objectives, and only 28 percent of those meetings with objectives actually met them.Stuart Levine, “Make Meetings Less Ready,” HR Magazine 52, no. 1 (2007): 107. Yet 80 percent of the participants viewed running a successful meeting as a crucial test of manager’s abilities.Stuart Levine, “Make Meetings Less Ready,” HR Magazine 52, no. 1 (2007): 107. These figures are particularly tragic because so many meetings occur in the business world. One estimate puts the number of meetings, on a daily basis, globally, at 73 million.Charlie Hawkins, “‘F’ Words for Effective Meetings,” Journal for Quality and Participation 22, no. 5 (1999): 56. These are rather depressing figures, but the clear lesson for small business owners is that they cannot afford the luxury of not running their meetings effectively.

The good news is that the successful management of a meeting is a learnable skill.Roy Woodard, “Meetings, Bloody Meetings,” Credit Control 14, no. 5 (1993): 1. Conducting an effective meeting requires that a manager focus on both procedural and behavioral issues. We will first look at procedural issues associated with running a meeting. Before considering holding a meeting, ask the following question: “Is this meeting really necessary?” Frequent meetings are sometimes held merely out of habit.Kelley Robertson, “How to Run an Effective Sales Meeting,” Changing Minds, June 7, 2009, accessed February 4, 2012, changingminds.org/articles/articles09/effective_sales_metting.htm. Can the goals of a meeting be achieved by other mechanisms?Stuart Levine, “Make Meetings Less Ready,” HR Magazine 52, no. 1 (2007): 107. These might include using the Internet; e-mail; teleconferencing; or technologies, such as MS Communicator, which allows for bulletin board interaction, voice communication, and videoconferencing. Interestingly, for all the complaints about meetings, a recent study indicated that face-to-face meetings were seen by 95 percent of those surveyed as being positive, especially in the interest of developing long-term relationships.Jay Boehmer, “Harvard Study Shows Face-to-Face Meeting Value, Rising Virtual Interest,” Successful Meetings, accessed February 6, 2012, www.successfulmeetings.com/Event-Planning/Technology-Solutions/Articles/Harvard-Study-Shows-Face-To-Face-Meeting-Value,-Rising-Virtual-Interest.

After deciding that a meeting is necessary, it is important to determine the nature of that meeting. Meetings may have many different types of goals. They can be directed to problem solving, decision making, conflict resolution, providing information, or generating new ideas.T. L. Stanley, “Make Your Meetings Effective,” SuperVision 67, no. 4 (2005): 6; Curt Smith, “Effective Meetings—Not an Oxymoron!” Manage 51, no. 1 (1999): 10. This is necessary because the nature of the meeting will drive its structure and internal dynamics. As an example, if a meeting is directed to a decision-making task, it should probably proceed in two parts. The first portion should be directed toward identifying solutions, while the second portion should focus on what might be the best solution.Robert F. Moran Jr., “Meetings: The Bane of the Workplace, It Doesn’t Have to Be,” Library Administration & Management 20, no. 3 (2006): 135–39, accessed February 6, 2012, journals.tdl.org/llm/article/view/1637/917. The next decision would be to determine who will participate in the meeting. Ideally, this list would be limited to those who would be directly affected by the outcome of the meeting; however, in the case of informational meetings, the list may be expanded to those who will be directly or indirectly affected. The next decision is associated with determining who will be assigned particular roles in the meeting. The chair is the individual who calls the meeting, provides the initial agenda, and specifies the purpose of the meeting. It may be useful to assign the role of facilitator to an individual. This neutral person can push the meeting along, particularly when conflict arises. It is desirable to have people trained as facilitators and rotate this position among facilitators.Charlie Hawkins, “‘F’ Words for Effective Meetings,” Journal for Quality and Participation 22, no. 5 (1999): 56. Another important role is the individual who is officially assigned to take notes. The notes of the meeting should be written up and sent to all participants in the meeting within two business days. This position should also be rotated among the participants of the meeting. It also might be advisable to assign the role of timekeeper to an individual. The timekeeper has the task of limiting the amount of time spent on anyone agenda item to the previously agreed-on time frame.Wayne Chaneski, “Productive Meetings—Back to Basics,” Modern Machine Shop 79, no. 11 (2007): 52, accessed February 6, 2012, www.mmsonline.com/columns/productive-meetingsback-to-basics.

Perhaps the most important activity prior to the actual meeting is the proper structuring of an agendaA document the outlines the purpose, membership, and required resources for an upcoming meeting.. In another study, 75 percent of those surveyed said that a good agenda is critical for a successful meeting.Judith Lindenberger, “Make the Most of Your Meetings,” Office Solutions 24, no. 3 (2006): 40. The agenda is the formal strategic plan for a meeting. It is the mechanism for ensuring that a meeting is focused on relevant topics. A failure to have a clear focus will guarantee that the participants will have a sense that nothing had been accomplished.Jim Sullivan, “Focused Agenda Can Energize Manager Meetings,” Nations Restaurant News 37, no. 5 (2003), accessed February 6, 2012, findarticles.com/p/articles/mi_m3190/is_5_37/ai_97392571. Focus stems from having everyone understand a meeting’s purpose and what one intends to achieve.Anonymous, “Running Meetings Effectively,” The British Journal for Administration Management, October/November 2005, 25. Items on the agenda should be prioritized in terms of their importance, which is often done by allocating a specific amount of time to each agenda item.Charlie Hawkins, “‘F’ Words for Effective Meetings,” Journal for Quality and Participation 22, no. 5 (1999): 56. Any and all resources that will be required for the meeting should be identified along with the individuals who are responsible for securing the resources. The roles of chair, timekeeper, note taker, and facilitator (where possible) should be assigned in advance. The agenda should be sent out at least five business days before the meeting so that participants can gather the required information. This timeline also allows for people to make suggestions for changing the agenda. It is also highly advisable to make it a policy that all participants arrive on time at the beginning of the meeting.Max Messner, “Conducting Effective Meetings,” Strategic Finance 82, no. 12 (2001): 8, accessed February 6, 2012, findarticles.com/p/articles/mi_hb6421/is_12_82/ai_n28842307.

Allowing individuals to contribute to the agenda will provide them with a sense that they are contributing.Kelley Robertson, “How to Run an Effective Sales Meeting,” Changing Minds, June 7, 2009, accessed February 4, 2012, changingminds.org/articles/articles09/effective_sales_metting.htm. In setting the timeline for the different items on the agenda, it is advisable that one allow for a few extra minutes at the end of the meeting to discuss how well the meeting went and how it could be improved.Charlie Hawkins, “‘F’ Words for Effective Meetings,” Journal for Quality and Participation 22, no. 5 (1999): 56. These few moments should be expanded into a formal system. Assessing meeting effectiveness can be done through an external observer conducting an evaluation, focus groups, or surveys.Joseph Allen, Steven Regelberg, and John Scott, “Mind Your Meetings,” Quality Progress, April 2008, 42, 4, 51. Figure 13.6 "Agenda Format" provides a format for a part of the overall agenda that addresses some of the previous suggestions. It is available as an agenda format wizard in Microsoft Word 2007.

Figure 13.6 Agenda Format

Customer Value Implications

It should be clear that quality management and lean thinking have the notion of customer value at their cores. Both approaches actively incorporate needs and wants into the design of products and services and, even more importantly, into the design of the processes used to create these products and services. Regardless of what quality program one adopts for an organization, the issue of customer value is the single most important question. Lean thinking also recognizes the vital importance of first identifying the customer’s notion of value so that any activity that does not add value is ruthlessly eliminated. As one article put it, “Lean enterprise never misses an opportunity to capture information about customers.”Christer Karlsson and Pär Ahlstrom, “A Lean and Smaller Global Firm?,” International Journal of Operations and Production Management 17, no. 10 (1997): 940.

The linkages between quality management, lean thinking, and customer value, therefore, should be obvious. What is less obvious is the connection between customer value and topics such as creativity, time management, and running meetings effectively. Nonetheless, indirect connections do exist. Without creativity, there will not be any new product development, and there will be no innovations in design, packaging, promotion, or distribution that can be so vital to the enhancement of value.

Owners, managers, supervisors, and employees who cannot manage their time effectively or efficiently will be unable to provide appropriate attention to improving customer value. Poorly run meetings are inefficient and degrade morale; neither is a recipe for enhancing customer value.

Cash-Flow Implications

The old saying “time is money” may be shopworn, but it is an absolute truism. Wasting time inexorably turns into a waste of money. Poor time management means that time is wasted, which costs the individual and the organization.

In a depressed economy, both large and small firms attempt to preserve cash flow by adopting a program of cost cutting. This often begins with laying off employees. However, this presents a rather significant problem. As Nancy Koehn, a business historian at Harvard business School, points out, “If demand picks up, you can’t exploit it because you don’t have the resources.”Sarah E. Needleman, “Three Best Ways to Get Lean,” Wall Street Journal, March 25, 2000, accessed February 6, 2012, online.wsj.com/article/SB10001424052748704094104575143680597058528.html. Lean thinking offers an alternative to cost cutting by reducing staff. Lean thinking, a focus on more intelligent cost-cutting, and the efficient use of all business resources have produced significant results, such as an 80 percent to a 90 percent reduction in inventory investment, an 80 percent to a 90 percent reduction in manufacturing lead times, a 50 percent reduction in space requirements, and a 50 percent reduction in material handling equipment. Such results translate into tremendous cost savings.Lawrence P. Etkin, Farhard M. E. Raiszadeh, and Harold R. Hunt Jr., “Just-in-Time: A Timely Opportunity for Small Manufacturers,” Industrial Management 32, no. 1 (1990): 16.

Firms that have used the principles of the Toyota Production System have also found that they can achieve a 50 percent reduction in human effort and a 200 percent to a 500 percent improvement in quality. One small manufacturer, Gelman Sciences, adopted a lean approach to operations, and during a nine-month period, one section of the company saw inventory turns go from twenty to fifty-seven, inventory value dropped from $86,000 to $33,000, and lead time dropped from three to four weeks to one to three days.Matthew Zayko, Douglas Broughman, and Walter Hancock, “Lean Manufacturing Yields World-Class Improvements for Small Manufacturing,” IIE Solutions 29, no. 4 (1997): 36. Estee Bedding Company applied lean concepts to its operations and reduced its labor cost as a percentage of sales by one-half; Ameripay, a payroll service firm, saw sales increase from $1.8 million to $6 million in three years.John T. Slania, “Lean Firms Look to Ride Recovery,” Crain’s Chicago Business 27, no. 2 (2004): SB6. Some small businesses that are part of a larger supply change may find their movement toward lean thinking supported by firms that are further up the supply chain. In the 1990s, Pratt & Whitney initiated a program to assist smaller firms in its supply chain by requiring them to move to more of a lean focus.Mario Emiliani, “Supporting Small Businesses in Their Transition to Lean Production,” Supply Chain Management 5, no. 2 (2000): 66–71. Even small foreign firms are beginning to recognize the economic benefits from adopting lean methodologies. A polyvinyl chloride manufacturer in Thailand adopted a lean management program and saw its average production time per unit decline from forty-four minutes to twenty-three minutes while decreasing the number of operators from fifty to forty-one.Nanchanok Wongsamuth, “Nawaplastic Pushes Lean Management,” McClatchy Tribune Business News, July 31, 2010. The concepts behind lean thinking, with its focus on efficiencies, should dictate that a small business should automate as many processes—such as bookkeeping—as possible and rely on outsourcing when feasible.Matt Dotson and Brandon Kennington, “Eliminating Waste Using Lean Concepts for Small Business,” Automate My Small Business, November 9, 2009, accessed February 4, 2012, automatemysmallbusiness.com/eliminating-waste-using-lean-concepts-for -small-business.

One does not have to commit to major organizational programs, such as a quality management system or lean thinking, to find ways to save on cash flow. Earlier in this chapter we cited two studies. One said that better than one-third of executives believed that all meetings were a waste, while the second study said that two-thirds of all meetings were a waste. We split the difference between these two studies and arrive at a figure that one-half of all meetings are perceived as useless. This can have significant cash-flow implications, even for small firms.

Let us illustrate this through a simple example. The owner of a small hardware store believes it is important to have weekly meetings with the store’s supervisor and five employees. Let us assume that the owner values his or her time at $70 per hour. The supervisor’s value is given at $35 an hour, while each employee’s time is valued at $10 per hour. Employees are expected to produce 2.5 times their pay. This means that a 1-hour meeting should be valued at $282.50 [$70/hour + 2.5 × (5 employees × $10/hour) + 2.5 × (1 supervisor × $35/hour)]. Assuming 52 meetings per year, the total opportunity cost for these meetings is $14,690. If one-half of those meetings are a waste, then the business is losing nearly $7,350 a year. There are many areas throughout a firm’s operations that can be evaluated to reduce wasteful activities and improve its cash-flow position.

Implications of Technology and the E-Environment

Time-management systems are available in a variety of paper-and-pencil and software formats. They generally allow for listing to-do tasks, setting due dates, identifying required resources, and prioritizing their importance. Some allow for a project format, where one can break down the project into smaller interrelated tasks. Many of them provide the capability to synchronize this information across several computers and smartphones. This would allow a person to have the time-management system available on an office computer, a home computer, and in the pocket (smartphone). One system is based on Covey’s fourth-generation approach to time management.

Multiple software packages are geared to assist individuals and groups who wish to improve their creativity. There are packages to help with brainstorming in its various forms. Numerous companies provide mind-mapping software in a variety of formats: computers, iPads, and even smartphones.

Quality management encompasses many tools and techniques, far more than could ever be covered in this chapter. There are packages geared just for statistical process control (SPC) models. Some can receive data from a process and then automatically inform the operator of a “drift” from conformance to standards. In addition to SPC models, other packages include tools that are used to improve quality. These packages range from less than $100 to many thousands of dollars.