Category Archives: Engineering Productivity

Engineering Productivity

Leave a reply

Engineering leaders interested in improving their profitability need to understand how the Theory of Constraints can improve engineering productivity and perhaps most importantly under what business conditions. This post reviews the evolution of throughput methodologies from where they were first applied in the manufacturing environment to newer approaches evolving for engineering, new product development, and R&D where the business goals are improved profitability and new value creation for growth and competitiveness.

Theory of Constraints

Eli Goldratt’s book The Goal (1984) helped a generation of manufacturers understand the operational principles underlying the Toyota Production System and Lean Manufacturing.  Goldratt defined the goal as improved profits and clarified the operational rules for running a plant to be in order of priority throughput, inventory, and operational expense as opposed to pure cost cutting that lead to localized optimums and poor profitability results. He explained how the Theory of Constraints (TOCs) when applied through these operational rules can improve the profitability of a manufacturing operation with stable input demand. The TOC was first applied to manufacturing operations that can be characterized as a repeatable network of dependent events with processes that are subject to statistical fluctuations.  The TOC focusses on system constraints to improve throughput, inventory, and operational expenses in the total production system.  The key conditions that enable the TOC to achieve results in manufacturing are stable demand, moderate to high volume, repeatable processes, and a small range of products.

Unstable Production Environments

Eli Goldratt’s paper Standing on the Shoulders of Giants (published with The Goal) went on to clarify how certain production environments and conditions can become unstable leading to marginal improvement gains from applying TOC.   In this paper Goldratt described the Hitachi Tool Engineering case where the firm had limited success with lean manufacturing because of their unstable production environment conditions.

The three general conditions Goldratt identified that lead to unstable production environments are:

  1. Unstable Demand Per Product
  2. Unstable Overall Load On The Entire Production System
  3. Short Product Life

The first two unstable production environments fall within the means of a manufacturing company to manage because the production system can still be characterized as a network of dependent events with processes that are subject to statistical fluctuations.  Full productivity gains are not achieved because of how the production system throughput reacts to the unstable input demand due to dynamic mix of products, too many different products, or how dynamically the input demand of different types of products results in unstable overall load on the system. Goldratt explains how a time-based application of supply chain approach of TOC in a method called Drum-Buffer-Rope system can achieve improved performance for the first two conditions. Goldratt observed that low touch time production environments (Touch Time <<< Lead Time) provide enough margin to still exploit TOC benefits.

The third unstable production environment, short product life, emerged in the 1980s from the increased pace of technological change on manufacturing operations. The turn time (lead time) performance of engineering, product development, and R&D became a factor for product companies bringing attention to knowledge worker productivity.  Goldratt observed that product development systems do not exhibit processes that are ‘network of dependent events with processes that are subject to statistical fluctuations’. Each new product develop effort tend to have a unique network of dependent events with high variability which is consistent with a a project environment. Goldratt also observed that the project environments also exhibits time compression where touch time approaches lead time (lead time ~ 2 to 3 times touch time) of the project which degrades project environment throughput.

Unstable Project Environments

To solve the unstable project environment problem Eli Goldratt went on to develop the Critical Chain method in the 1990s.  The Critical Chain method adapts the TOC to unstable project environments with a particular emphasis on engineering development projects. In much the same format as The Goal his book Critical Chain (1997) explains how the Critical Chain method achieves improved project performance over Critical Path methods. The goal of Critical Chain method is to improve the flow (throughput) in project environments for stable and unstable project demand.  The mental jump from manufacturing production environments to project environments is helped when one considers that most project environments are multi-project environments.  Throughput in a project environment is understood to be the flow of projects (and their activities) of various degree of: sizes, durations, complexity, uncertainty and novelty.

The Critical Chain method seeks to maximize project environment throughput by managing feeding buffers and capacity buffers within the project and drum buffers and capacity buffers between projects.  The Critical Chain methods use of buffers (time & resource) to improve productivity by reducing Work In Process (Design in Process), manage bottleneck resources, not allowing multi-tasking of resources, staggering projects along the constraints, prioritizing projects, and resolve resource conflicts on the system level.

An interesting aspect of Goldratt’s Critical Chain method was how to consider behavioural issues in multi-project engineering environments. The Critical Chain method addresses:

  1. Tendency for engineers to ‘pad their estimates’ to give local safety margins that degrade the efficiency of the project environment by use lumped buffers (rather than activity-by-activity risk buffers) and focussing less on individual activity time performance.
  2. Overcome the tendency to think locally (within the project or a work area) by encouraging global thinking by avoiding multitasking.
  3. Manage ‘student syndrome’, the tendency for humans with time buffers to start their tasks later and waste safety margins.
  4. Manage ‘Parkinson’s law’, the tendency not to finish tasks ahead of time even they have a chance to by removing activity padding.
  5. Minimize the individual project owners pressure to execute first (local optimization at the expense of the global performance) by adopting a priority system.

An excellent review of the Critical Chain method can be found in a 2005 paper by Lechler, Ronan, and Stohr with some useful simplifications that make the method more practical.

Product Development Flow

Donald Reinertsen developed a parallel set of work to Goldratt that explored and clarified much of the underlying principles of lean product development from the perspective of achieving faster time-to-market in the project production environment. Reinertsen’s books Developing Products in Half The Time (1991) co-authored with Preston Smith, Managing the Design Factory (1997), and The Principles of Product Development Flow (2009) explored an economic model for design, queues in product development work, management systems, managing risk, lean engineering principles, and performance metrics more appropriate for the paradigm shift from the traditional utilization based management paradigm to a throughput management paradigm for engineering, product development, and R&D.

Reinertsen also defines Design in Process (DIP) in the project production environment since inventory is measured in terms of information in the knowledge work space. The abstract nature of information inventory and visualizing how it flows through a knowledge based work environment has probably been the single largest factor holding back the broader adoption of lean product development.

Reinertsen clarifies how the project production environment differs from the manufacturing production environment with repeatable network of dependent events with processes that are subject to statistical fluctuations to one with high variability (uncertainty, learning, experimentation), non-repetitive (every project network is different, sometimes completely), and non-homogeneous task durations (most tasks slightly different each time). Reinertsen’s most recent book Principles of Product Development Flow in particular explores the themes of cadence, synchronization, flow control, WIP constraints, batch size, exploiting variability, queue size, fast feedback, and decentralized control to maximized throughput.  Although these works provide a vast array of tools it is difficult to see the big picture framework suitable for practical implementation.

Lean Product Development

Ronald Mascitelli, Timothy Schipper and Mark Swets went onto develop fully integrated lean product development frameworks that operationalized the principles for engineering leaders who are responsible for new product development.  Most importantly they describe how to fully implement a multi-project production environment based on the all the preceding methods but appropriate for actual business environment.

Ronald Mascitelli’s Mastering Lean Product Development (2011) is perhaps the best integrated framework for the engineering, product development, and R&D leader to establish a throughput managed multi-project production environment. Mascitelli’s framework is an event-driven process incorporating practical lean methods to achieve the goals of improved profitability and new value creation for growth and competitiveness.

Timothy Schipper and Mark Swets published Innovative Lean Development (2010) to describe an equally powerful integrated framework that leverages fast learning cycles and rapid prototyping for project production environments with high uncertainty.

Agile Scrum

In the digital information age as products have become software driven and in many cases entirely software based the agile scrum methodologies have operationalized software product development emerging in early 2000s. The abstract nature of software development defied reliable engineering management methodologies before the emergence of agile scrum. With agile scrum software productivity is more manageable, efficient, and effective. Software driven products require the integration of the agile scrum methodologies within the project production environment framework just described.

The Lean Start-Up

Up to this point in the post we have looked at how established companies with existing demand can exploit the TOC for improving throughput, inventory, and operational expenses to improve profitability in knowledge work. Finally Eric Ries operationalized new-to-the world lean product development (particularly digital offerings) for start-up founders in his book The Lean Start-Up (2011). This is the extreme unstable demand case.  Ries describes how to measure productivity as validated learning for fast iteration and customer insight to find the scalable business model before cash runs out.  Application of lean principles such as small batch size in the form of minimum viable product, build-measure-learn loop for fast feedback, metrics, and adaptability to find product/market fit. Ries observes that The Lean Start-Up is also applicable within existing companies for use by intrapreneurs who may be creating new value with new-to-the-world products because this is also the extreme unstable demand case.

Productivity Methodology Selection Based On Business Environment

Selecting the right methodology to drive business productivity requires leaders to understand their business environment and the stability of their demand environment. The diagram below helps to characterize application & business environments.

Engineering Productivity TOC

The diagram illustrates that in both manufacturing and engineering that the nature of the work can fall into a range of demand conditions.

A key lesson from this review is that leaders should seek to throttle/smoothen (WIP Constrain) the input demand conditions if productivity improvements results are to be achieved.  All the available methodologies are based on the concept of flow and maximizing throughput and managing inventory (physical or information), and operational expense to achieve business the goals of improved profitability and new value creation for growth and competitiveness. As Goldratt emphasized time and again effectiveness of these methods depend the key underlying condition of stable input demand or constraining the process input demand to ensure stable flow. As demand conditions become unstable lean engineering methods have been developed by Goldratt, Reinertsen, Mascitelli, Schipper, and Swets. Ries has described how new cash flow streams can be created in a lean fashion in the extreme case where demand does not yet exist.

Finally a common theme throughout these works is the fact that cost accounting methods and data tools are ill suited to measure throughput, inventory, and operational expenses to achieve business the goals of improved profitability and new value creation for growth and competitiveness. Goldratt explores this issue at length in The Goal why a blind focus on cost reduction leads to bad performance.  This problem has continued as throughput and TOC methods have evolved in the information age as pointed out by Reinertsen of the invisibility of DIP because of how R&D expenses are recognized at the time the money is spent. Information inventory and intangible assets remain as a problem for cost accounting and business performance management. This will be a topic of future posts.

Managing Engineering WIP

Leave a reply

Engineering work in process (WIP) is notoriously difficult to manage because unlike manufacturing WIP you can’t see it. Engineering WIP is information in various forms along the engineering value stream. Value is added to each ‘engineering work item’ at each successive stage up to customer delivery (either internal or external customers). The key goals are managing effectiveness and efficiency of engineering work. Typically management sees input requests and outputs that are often late and overrun but have trouble seeing the causes in-process. Management could take corrective action if they could see engineering in-process WIP more clearly.

Visualizing Engineering WIP

To visualize engineering WIP firms need to establish a simple system to identify ‘in-process engineering work items’ appropriate for each stage of their engineering value stream. These work items act as a proxies for physical items that would be visible in a manufacturing process for instance. Engineering work often varies in size, complexity, and novelty so a simple (ie. small-medium-big, low-medium-high, proven-modified-novel) rating system should also be used to differentiate the scope & nature of each work item without getting too confusing.

A visual WIP flow board should then be established to see where each work item rests on the engineering value stream as it flows along the engineering value stream as illustrated below:

Engineering WIP Flow Visualization

Post-it notes or total work item counts by size, complexity, or novelty identifiers are marked on a white board and updated weekly or at the operating cadence selected for the firm. Managers should distinguish between engineering work items that are ‘active‘ or ‘waiting in queue’. This distinction is critical to see queues, evaluate throughput, and identify capacity bottlenecks in the engineering value stream. The visual WIP flow board allows managers to see engineering WIP in-process and understand the dynamics of their resource allocation performance.

Queues in Engineering Work Flow

A key advantage of the visual WIP flow board is the ability to see where queues form in engineering as illustrated below:

Engineering WIP Constraints

All engineering managers have experienced the effects of queues but often can’t pin-point them with sufficient visibility in any given week to take effective action. Queues begin to form in any stage as capacity utilization increases beyond about 75-80% based on queuing theory (see Reinertsen for an in-depth explanation of why this is so). For example the production support stage in this example. Queues introduce congestion in the engineering work flow that causes delays that can lead to schedule overruns and idle engineers waiting for data in downstream stages.  Queues in earlier stages are more dangerous for engineering delivery performance.

The queue size – capacity utilization curve also helps to illustrate why maximizing capacity utilization in engineering is bad for schedule performance because in-process queue formation will choke flow.  Most firms today are multi-project organized by matrix so choked flow and congestion can have serious negative consequences from complex inter-project connections. The visual WIP flow board helps management to make the paradigm shift from the traditional ‘maximize utilization‘ paradigm to ‘maximize throughput’ paradigm of lean engineering. Probably the single biggest benefit of the visual WIP flow board is being able to see queues forming before they reach choke flow in order to take timely action. This is also why the visual WIP flow board should be updated weekly at a minimum to capture the dynamics of work flow in engineering.

Engineering WIP Capacity Constraints

To maintain streamlined flow , maximize engineering work efficiency, and avoid congestion/choked flow the amount of WIP in each stage of the engineering value stream should be actively managed. This is accomplished by applying WIP capacity constraints at each stage of the engineering value stream. For example the capacity constraints are defined in the shaded middle row of the visual WIP flow board for each stage of the engineering value stream.

WIP capacity constraints enable engineering managers to control the throughput in engineering. The visual WIP flow board helps to visualize the flow on a day-to-day basis enabling more effective control actions.  When combined with small batch sizes WIP capacity constraints are powerful management control methods. Engineering managers can adjust and set the optimum WIP capacity constraints as they gain experience with the visual tool in practice.

Engineering Throughput Management Levers

How can managers use the visual WIP flow board in practice to take corrective-action? Several management control options or responsive levers are now possible with visual WIP flow board:

  • Work Acceptance Discipline – This is the most critical lever because WIP constraints at the initial stages can ‘throttle‘ the work flow in down stream processes. If too much work is accepted in a short period of time the work the visual WIP flow board illustrates how streamlined flow would become rapidly choked and slow progress along the value stream with waves of underutilization at later stages. By applying ‘go/hold discipline’ management can set engineering up for success along the engineering value stream.
  • Resource Allocation – The visual WIP flow board also helps to see how engineering resources should be allocated to deliver value at each stage. The visual tool inherently allows multi-projects but rather than giving a project view gives a resource view to clearly see capacity constraints for faster resolutions.
  • Resource Organization – The visual WIP flow board provides insight into how engineering resources should be organized to maintain streamlined flow.  The value stream model provides an alternate view of the functional-project ownership problem that many organizations get caught in. Firms may have several business lines that possess separate value streams so managers can identify bottlenecks and allocate resource capacity more effectively to each value stream rather than function or too many projects.
  • Allocating Spare Capacity – Engineering resources that are underutilized will be immediately clear from the visual WIP flow board enabling engineering managers to reallocate their time for short periods to work down queues in other stages. Developing flexible resources is key. Some specialist engineers may be more difficult to move but the visual board helps staff to see how their flexibility will help contribute to the firm business performance but also make their work day less stressful.
  • Targeting Outsourcing / Subcontractors – Stages with perpetual queues are opportunities to target outsourcing or subcontractor efforts. The added overhead and lead time for outsourcing is not appropriate for short term queues and will not be responsive enough to maintain streamlined flow.
  • Engineering Process Improvements – Stages with perpetual queues are also ideal opportunities to target engineering process improvements.
  • Adjusting To Seasonal / Cyclical Variation – By tracking and recording engineering throughput data collected with the visual WIP flow board on a weekly tempo over an annual period management can build better insight into seasonal and cyclical variation. This insight can be useful to resource capacity actions, work acceptance decisions, and outsourcing decisions. All firms experience some form of seasonal work volume effects so the visual WIP flow board can be used to manage short term surges at peak work volumes or scheduling long term development activities during slow periods.
  • Efficient Buffers For Variance & Uncertainty – High task duration variance caused by uncertainty during the ‘fuzzy front end’ of the engineering value stream is key operational difference from manufacturing value streams. Although active risk management and risk reduction methods can be applied to reduce the variation eliminating it outright is not possible nor desirable because it inhibits innovation a key source of value creation. The visual WIP flow board enables engineering management to intentionally build-in capacity buffers to increase throughput.
  • Business Line Value Streams – As firm’s grow and support multiple business lines separate visual WIP flow boards can be established to support resource allocation across the multiple business lines to enable prioritization, de-confliction, and possibly even exploiting differing seasonal cycles for efficiency.

Combined together the visual WIP flow board and active WIP management can dramatically improve engineering efficiency and effectiveness. The improved control realized by such a method can dramatically improve project on-time and on-budget outcomes.

Strategically the visual WIP flow board can also help management to make wise resource investments, partnering decisions, and strategic pivots to fuel growth. Experience with the visual WIP flow board provides management a better feel of how to size and allocate new engineering resources if the firm is growing rapidly. The mix of experience and inexperience can be targeted to stages that present the biggest bottlenecks to growth. Alopex Management Consulting can assist you to implement more effective engineering WIP management for improved business outcomes.

Meaning in Engineering Work – Maximizing Engagement and Productivity

5 Replies

How engineers perceive meaning in their work has a strong influence on their engagement and productivity.

As professionals, engineers are committed to serve society and ensure the safety of the public. Engineers who consult independently often clarify their personal view of meaning and align their meaning with business growth as their practice matures but the meaning derived by engineers who work in large organizations are often overlooked.   Poor productivity and work performance in these larger engineering organization can be attributed to a weakened sense of meaning or disconnect with the mission of the business. Meaning in engineering work can be deeply rooted in factors unique to the individual creating a driving force behind their work ethic.  Leadership can seek to align and enhance meaning in engineering work to maximize engineering productivity and organizational goal achievement creating a win / win for each individual and the company.  These principles apply to any work and knowledge work in particular but this blog post looks at meaning, engagement, and productivity in the context of engineering work.

Meaning in Engineering Work

In order to understand how engineers view meaning in their work it is helpful to understand the levels of meaning illustrated in the meaning pyramid based on Maslow’s hierarchy of needs.  The strength in meaning increases moving up the pyramid to its strongest at the peak.   Productivity increases as meaning increases resulting from the deeper sense of engagement and alignment.  Meaning in work can therefore be a powerful driver of engineering productivity.  Each individual engineer is answering the question “why am I doing this work?”.   The role of the leader is to encourage discussion on this question with each individual and integrate the responses with day-to-day delivery and planning such that the individual and business both benefit.

Engineering Meaning Pyramid

Physical Meaning in Engineering Work

Physical meaning is the basic or foundation layer where the meaning in work supplies the most basic drive.  The physical level meaning encompasses: earning a living, supporting self or family, paying off student debts, achieving work/life balance, supporting interests such as sports or travel.   Working only for this layer will provide the weakest connection to the company mission.  If engagement is only fed by this level of meaning productivity will be at or below average.  Unfortunately many business cultures do not evolve beyond this point and leadership is left wondering why performance is average.

Intellectual Meaning in Engineering Work

As a knowledge based profession, meaning in engineering work can be derived at an intellectual level supplying a stronger level of drive.  The intellectual level meaning encompasses: curiosity, self learning & intellectual growth, professional development, working with experts (ie. by doing this work I have the opportunity to receive mentoring from a role model in the work place), receiving mentoring, exploration of a field of knowledge, discovery in a field of knowledge, career advancement in a specialty, and advancing knowledge in a field of knowledge.  Working at this layer provides for a stronger level of connection to the company mission especially for businesses that compete based on knowledge.   Engagement at this level of meaning can fuel productivity at or higher than average.  This level of meaning often sustains research labs, universities, and early the early stages of an engineer’s career.  Mid career stagnation occurs when engineers reach a point where they feel they are no longer developing in a specialty.

Emotional Meaning in Engineering Work

Meaning in engineering work can be derived at an emotional level fuelling a very strong level of drive if managed correctly.   The emotional level meaning encompasses: new & exciting work, winning & success, pride in outcome, professional accolades / awards, creation of something new, being part of an exciting team, increased self-esteem, cool new technologies, feeling of accomplishment, passion, an amazing experience, fame, overcoming a big obstacle, or solving a difficult problem.   Meaning in work at this level provides for an emotional connection to the company mission.  Engagement at this level of meaning results in higher than average productivity.  Continuous delivery of core products and services lead to reduced emotional meaning in engineering work.   The excitement of a start-up, adjacent market campaign, or new product development can reinvigorate this sense of meaning in work.  The emotional meaning experienced in engineering work is generally something special and can be infrequent depending on the significance of the accomplishment.  They may only be experienced once or twice in a reporting period.   Lower levels of accomplishment such as problem solving or new project assignments can be more regular.

Spiritual Meaning in Engineering Work

The ultimate meaning in engineering work is derived at the spiritual level with the strongest level of drive.   The spiritual level meaning encompasses: social good, solving the world’s problems, helping the disadvantaged (ie. volunteering in developing world), serving one’s country (ie. patriotism), noble cause, religious cause, or establishing an enduring legacy.   Meaning in work at this level provides for a spiritual connection to the company mission.   Engagement at this level of meaning results in the highest possible productivity. Meaning at this level is often a guiding star and therefore long-term in nature.   Businesses with a strong social purpose typically enjoy higher engagement and productivity because engineers are deeply committed to the purpose.   Leaders should therefore seek to define a mission in terms of social purpose wherever possible.

How Can Leadership Harness and Align Meaning in Engineering Work With Business Goals

Unfortunately the larger an organization becomes the higher the possibility becomes greater that each individual is lost in the business and disconnected from the mission.  How can leadership resurface how engineers find meaning in their work and then use this understanding to improve engagement and therefore productivity?

Recruitment is the first area where meaning is critical to consider. Misalignment between individual engineers and the business are often created when new staff are selected. Technical competence and personality are often the primary focus of interviews. Leadership should ensure that new engineers, regardless of career-stage, connect with the mission of the organization and will be satisfied in the meaning they will derive from doing the job. Recruiting staff should describe the mission of the organization and explore how strong candidates perceive the mission of the organization align with their own personal purpose. Recruiting staff should look for the strength of meaning statements in terms of the meaning pyramid, degree of alignment with the mission, and any obvious reasons for concern (eg: moral objection at the extreme).

Work assignment is a key area where individual meaning can be harnessed on a day-to-day basis.  Supervisors should take the time to have 1:1 with each engineer to explore where the individual sees meaning in their work at all levels and then allocate and assign work on an individual basis.   While delivery performance in terms of schedule, cost, and quality remains paramount often declining or poor productivity in engineering can be attributable to insufficient meaning in work.

Performance reviews and the performance management system present opportunities where meaning in engineering work can be explored to improve productivity going forwards.   The performance review is an opportunity for the leader and the engineer to discuss the nature of work assignments.   The discussion should uncover where they see meaning in the current work program.  There is an obligation on each engineer to give this deep consideration before the performance review and put in the necessary preparation to articulate their views during the performance review.  Supervisors should be alert to the statements made and then commit to integrate these in the work plan.   Although the performance review is an opportunity to take the time to explore sources of meaning in work it should not be the only time.  Regular daily or weekly stand-ups, meetings, or “walk-around” present ongoing opportunities to ensure meaning in work is cultivated.

Reward and recognition programs are an area where meaning can be reinforced in conjunction with the work allocation process.  Assigning an individual work where intellectual, emotional, or spiritual meaning can be activated can deliver a win-win for the individual and the business.  Celebration of success also supports a sense of meaning in certain individuals.

Leaders must consider how they communicate the mission and how work connects with the meaning individuals perceive.  Regularly communicating the mission and explaining why the work supports the accomplishment of the mission will sustain productivity.  Integrating a sense of purpose with the mission and constantly reinforcing the connections can sustain engagement and productivity.

These principles must be applied with authenticity, respect, and caution as serious relationship damage can result from their misapplication.  Applied properly and engineering productivity can be dramatically improved.   Future blog posts will explore other aspects of meaning in engineering work and implications in business.