Article
The 80-20: How decision making in manufacturing should transform
The Pareto principle or 80-20 rule states that, “for many events, roughly 80% of the effects (outcomes) come from 20% of the causes (inputs)”. This principle has been used under improvement drives to primarily prioritize areas of focus. The current global lockdown, due to the COVID-19 pandemic, has temporarily shut down most of the world’s manufacturing companies, and immobilized a majority of its population. No matter how big a position you hold, working from home has brought in a disruption, we didn’t really think existed. The disruption I am talking about here is not business related or lack of technology. But, the ability to take confident decisions sitting at home. You see, a large part of our daily decision making comes from the ability to be present in the moment, being able to touch and feel the situation to tap into our knowledge reservoir and bring out a solution. The older you get, the more experience you gather being in such situations, allowing you faster and faster access to that reservoir. When you shift jobs, companies, and environments, you’re given time to get accustomed to the new surroundings before you start taking decisions again. What we do not realize is over time we give less importance to the same old data and give more importance to our built-in reservoir. Hence the older we get, 80% of the decisions are taken with 20% of the data.
When the lockdown came into effect and people went into WFH mode, the most difficult change to adapt to was first, not being able to take decisions in a familiar environment with a touch and feel of the situation. Second, having to now fully trust the data which until now, was just a routine activity as opposed to an important piece of decision-making information. Third, having to trust the person collecting the data, which may have been overlooked until things changed. While leadership teams are now designing new policies of what everyone is calling the “new normal” for their companies, here are some key guidelines I believe should be brought in as a decision making culture. Let’s use a bottom up approach:
When the lockdown came into effect and people went into WFH mode, the most difficult change to adapt to was first, not being able to take decisions in a familiar environment with a touch and feel of the situation. Second, having to now fully trust the data which until now, was just a routine activity as opposed to an important piece of decision-making information. Third, having to trust the person collecting the data, which may have been overlooked until things changed. While leadership teams are now designing new policies of what everyone is calling the “new normal” for their companies, here are some key guidelines I believe should be brought in as a decision making culture. Let’s use a bottom up approach:
- At an executive level with responsibility for daily production runs and data updates, possessing technical competencies of tools and techniques is not going to be enough. Building behavioral competencies to effectively communicate, build relationships and internal customer focus, could play the role of a key differentiator for the data being used wholly for decision making. The outcome should be the ability to present data in a manner where decision makers do not have to be present at the scene. Create a “virtual touch and feel of the situation”.
- For mid to senior level executives, it is not new. The world is moving to become more digital with the clear intention to reduce decision making time and increase accountability. It is NOW the best time to learn, format, and make data your best friend. Have a conscious mind set to validate 80% of the decisions with close to 80% to 100% of data and build the trust in data presented. If things were to go wrong with the decision or you feel the data presented is not accurate- Hey! You always have your experience to bank on to fix the problem, and then also make the wrong data, right.
- The leadership now must play an even bigger role than ever post this lockdown in creating a culture and infrastructure that focuses on “traceable decision making”. Traceable here means having the ability to pinpoint the reason behind the decisions without having to ask the decision maker. And then have the team replicate those tested decisions to make faster decisions every time.
Important to point here- do not dwell on the low priority 20% of the decisions with large amounts (80%) of data, because then no decision would ever be taken on time. To summarize, during this lockdown focus on building a culture, competency, and infrastructure on how to take 80% of key decisions with an equal proportion of data in such a way that any one decision is traceable across all levels.
Whether the data is captured through a technology platform or excel reports, this data is important to decision making giving you more confidence, even while sitting at home as the room for error is diminishing. In the words of Edwards Deming, “In God we trust, all others must bring data”.
