The One Question

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My husband was in a meeting recently when a CPA asked him something I have been thinking about ever since.

He said: “What question should I ask a client to determine if an introduction to Long Run Business Services is appropriate?”

When my husband shared with me later that day, it gave us pause. Because the question itself was exactly right.

It wasn’t…. What does your revenue look like? How many employees do you have? Are you planning to sell?

What is the one question that tells you whether a business is performing the way it should?

Our response. And I want to explain why.

“Are you happy with how consistently your business performs or does it feel like results depend too much on certain people being in the room?”

Measure with Consistency

Most business owners can point to good months. A strong quarter. A stretch when everything clicked.

What separates a high-performing business from one that is working harder than it should is not the peaks. It is what happens between the peaks.

Consistent businesses perform reliably because they have built a system that does not depend on any one person’s presence, memory, or force of will. The planning is clear. The communication is rhythmic. The team knows what good looks like and how to get there without being told every time.

Inconsistent businesses have great people who are working too hard to compensate for a system that is not doing enough of the work.

When I ask an owner whether results depend too much on certain people being in the room and they pause, or they smile, or they say “well, it depends”, we already know what we are going to find.

The Deeper Follow-up Questions

One question is usually enough to crack pandora’s box. But if you want to understand what is going on inside a business, we have found these four questions will tell you almost everything:

  1. Direction: Do your people know what the priorities are this quarter and does that actually guide what they work on daily? Most businesses have goals. Fewer have goals that genuinely shape how people spend their time.
  2. Performance: When something goes wrong, do you fix the root cause or find yourself solving the same problem again six months later? Reactive vs proactive planning is a terrible business decision. These are businesses that have not yet built solid infrastructure.
  3. Future: Are you thinking about what the next chapter looks like? Growth, transition, or something else entirely? Real conversation tends to come out of this question. Owners who are thinking seriously about what comes next need a clear picture of where the business actually stands today. Not where they hope it stands. Where it firmly stands this second.
  4. People: If you stepped back for 30 days, would the business perform the same way? This is the ultimate test of whether a management system exists. Not whether the owner is good. Whether the business can perform without them.

The Question Matters More Than the Answer

Here is what we have learned from asking our clients these questions.

The owners who answer confidently and quickly are rarely the ones who have it figured out. They are the ones who have stopped questioning.

The owners who pause — who think before they answer, who add a qualifier, who say “mostly” or “it depends” or “we’re working on that” — those are the ones who are paying attention. Those are the ones ready for the kind of honest work that actually moves the business forward.

Uncertainty is not a sign of weakness in a business owner. It is a sign of awareness. And awareness is where every good engagement starts.

If something in here landed, the Predictable Performance Self-Assessment is probably worth a look. No sales pitch attached.

Predictable Performance Self-Assessment – Long Run Business Services

Takt Time vs. Cycle Time: Capacity Considerations

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At the core of every manufacturing business are processes designed to convert raw materials into finished products for customers. In a purely physical sense, these processes are what keep us in business, and each of those processes has a finite amount of capacity to serve. Do you keep tabs on how much total capacity exists by process, how much of that capacity is currently being utilized, and where capacity adjustments will be required to either control costs or increase revenue? I believe it’s valuable, especially in a dynamic market, to understand any upcoming investments required to add capacity, or where existing capacity could be leveraged. If we balance the ledger daily, and close the books monthly, then wouldn’t it be wise to establish some similar routines for the hardest working assets in our business? In this paper, I discuss the concept of Takt time, and how Takt time can be compared to cycle time to gain insight into capacity.

Most businesses have some measures in place for labor efficiency or productivity that can be representative of overall capacity, but in many cases the measures don’t give us a dependable or accurate view of our actual capacity utilization. Measures like labor utilization (total labor hours applied divided by total payroll hours) might provide us with a decent estimate of available labor, but usually fall short of providing specific, actionable insights. Productivity measures, on the other hand, provide feedback on performance to established standards, but rarely correlate directly to capacity.

Introduction to Takt Time

I like to consider capacity through the lens of Takt time, or simply ‘Takt.’ Takt is a Lean concept, however it is based on the German word for pace. To determine Takt time for a given product, divide the customer’s demand requirement into the available time. For example, if our customer requires us to ship 60 units per day, and we work a single shift with 480 minutes available, the Takt time is 8 minutes. Let’s say your customer is anticipating growth to 80 units per day? Then divide the new requirement of 80 units into the available time of 480 minutes, to calculate a proposed Takt of 6 minutes. You can think of Takt as a target rhythm or heartbeat, one we’d like every process to be in sync with.

Your Takt calculations are probably a bit more complex, but Takt thinking is simple at its core and is a great foundation for considering capacity in terms of what our customer(s) require: We need every process capable of operating consistently at Takt time, and processes that are consistently operating above – or below – Takt are most likely generating costly waste.

Comparing Cycle Times to Takt

For machine-based processes, we need a cycle time less than or equal to Takt to keep up with demand. However, if we are currently running the machine at a faster cycle time than Takt, then we introduce unevenness into our operation and begin to generate waste. If the machine is not reliably achieving Takt, then we consider it a constraint and must look for ways to improve the machine rate. It is common for businesses to outgrow the capacity of their assets, but it is even more common for assets to underperform due to a lack of routine preventive maintenance. Usually this results in unplanned downtime in addition to degradation of cycle time capability, further introducing unevenness and waste.

For labor-based processes, this is where time studies come into play. Developing solid standardized work begins with time observation on a job-by-job basis. We look at “Big T” and “little t” times. Big T focuses on the average cycle time of a job, as well as the amount of variation or ‘fluctuation’ between cycles. For little t times, we break the job into smaller steps to understand the contribution of each step to the total cycle time and the total fluctuation. We won’t delve much deeper into time observation at this time, but it is important to remember that while 10 cycles is commonly considered a minimum number of cycles to observe, sometimes we must observe many more cycles to grasp what’s happening within the job. We observe until we understand.

If team members bristle at the thought of time studies or the sight of a stopwatch, then there is likely a misunderstanding about the purpose of time observation and standardized work. First and foremost, our aim with time observation is to understand the struggles that team members face while performing their job(s). We leverage our observations to identify and execute on improvements, and ultimately to create “smooth work” by identifying and driving out fluctuation. Once we understand the individual work elements within each job, and have driven out fluctuation to the extent possible, we can balance the work between all jobs within a process to ensure the entire system is capable of achieving Takt time.

For processes that contain a combination of machines and labor, we can use tools like a Standardized Work Combination Table to understand the overall cycle times and process capacity. In fact, we are barely scratching the surface here and there is a world of tools and methods to address the unique circumstances within your business.

Summary

The aim of this paper is to encourage you to view your operation, and the processes within, through the lens of Takt time. If this is a new concept, it might not strike you as initially intuitive, but with some consideration and application in your business, I believe you’ll soon see the value in it. One aspect of Takt I appreciate, is that not only can we learn a lot about our capacity compared to future volume scenarios, we also learn a lot about the state of our current operation and where various wastes arise. Most of the time, there is capacity waiting to be unlocked without significant investment into assets or additional labor.

Don’t hesitate to reach out if you’d like to discuss this topic further or explore its application in your business. We can help you to see the effects of imbalance within your operation without taking out a stopwatch, and have the experience to unlock value in your operation while developing your people. Win – Win!!!