Archive for March, 2017

Operations Management: The answer to “doing more with less”


In every business, there are three major areas of work. With simplified definitions and in no particular order, they are:

  • Marketing – creating the demand for the company’s product or service (examples are advertising and product development)
  • Finance – providing the capital (cash or debt) to fund the company
  • Operations – providing the core product or service (examples are manufacturing and logistics)

A VP Squadron doesn’t have to do Marketing or Finance – it is a 100% operations center. The goal of every operations center is always to seek efficiency. Reducing costs, eliminating wasted effort, and moving faster are all objectives of operations, however they are bounded by being aligned to the company’s product.  For example, a super-high quality custom furniture maker wouldn’t want to adopt the ultra-efficient manufacturing processes of Ikea because those efficiencies are gained only because they produce a lot of the same thing very fast (i.e. they’d lose the customization which is their core offering).

The study of how best a company brings its product or service to life is called Operations Management. There are many fields of study within the umbrella of Operations Management including process improvement, process optimization, risk management, forecasting, and more. You’ve probably heard of “lean” or “six-sigma” and those fall under this category. This field of study is far too big for me to really do it justice in a blog post… But I’ll try to cover some of the big points that VP is missing.

Statistics and Bottlenecks:  Statistics is something that every major corporation incorporates into their daily operations. The good ones understand that there is always going to be some statistical variation. The better companies understand how dependent events become affected by that variation. Amazon, Walmart, and Costco do this better than anyone else which is why they are so successful. They’re able to eek out efficiencies here and there better than the competition.

Operations also involves the understanding of your limitations, and good companies focus on optimizing around their constraints (also called bottlenecks). Apple used to have a big problem getting customers their iPhones on day 1 (remember all those long lines at the Apple store?). They finally figured out the statistics around product mix and improved their operations to have enough iPhones for their customers on day 1 of a product launch. But they only went as far as how many UPS/Fedex/USPS could actually deliver in 1 day. It would make no sense for Apple to continue to improve how many iPhones they can produce when their shipping partners can’t handle that volume. They improved upon a constraint until another constraint became the bottleneck.

Let’s take a typical VP squadron in Jacksonville in the Summer. They have 5 planes. They have 140 aircrew. Here are all the statistics and constraints you’d consider in developing a flight schedule:

Statistics:

  • Some percentage of attempted takeoffs will be delayed or cancelled due to maintenance (there will be variation of this percentage among aircraft too!)
  • Some percentage of aircrew will be med down
  • There will be some probability of afternoon thunderstorms which may cancel or delay flights
  • Some percentage of aircraft will return in a down status and affect the next mission
  • There will be some variation in the length of time it will take to get the plane off-deck

Constraints:

  • Crew rest
  • Number of combinations of aircrew you can field
  • Daily caps on flying and man-ups
  • Number of aircrew needed on each plane depending on the type of mission
  • For training events, available students and qualified instructors

We have all that data. What we don’t have is the knowledge or tools to effectively utilize it. There are techniques and tools that can help us sort through the complexity and answer a basic question like, “How likely is it for the squadron to get x flight hours or y mission quals today?” This particular problem wouldn’t be terribly difficult to model, and the benefit would be that you could understand what a reasonable expectation of performance is.

Too often, we aim for 100% mission completion, or 100% on-time takeoff, or 100% of some other metric that is easy to measure. These are foolish objectives that are reinforced when a detachment gets lucky and goes 10 for 10. That’s like expecting the roulette table to always come up black because it once went 10 times in a row.

So we end up doing some perverse things to attain these unrealistic goals. We schedule backup aircraft. We schedule backup aircrews. We increase maintenance shifts. Once we run out of aircrew, we schedule the ready crew. We do all these crazy things that consume every last drop of our resources. These are huge morale killers. Not only does it sap everyone’s energy, but sometimes the objectives are so unrealistic that there’s no way to actually be successful. Patting ourselves on the back for the ol’ college try when the goal was completely unrealistic reinforces all sorts of bad behavior and attitudes.

Sometimes it’s necessary to try to achieve higher performance outside the range of a statistically probable outcome. However, the cost of achieving that objective grows exponentially the further it gets from reality. We should be smarter about when we use the resources lever to eek out higher performance. It should be for a good reason and at an appropriate time (an ASW exercise 2 weeks after returning from deployment is not a good time for this).

I think VP is stuck in the mindset of trying to hit unrealistic goals all year round. We should invest some time and money into developing some tools to enable the OPS department to understand what a reasonable range of performance is based on the specific stats and constraints of the day/week/month/quarter. This would relieve the pressure our mindless 100% mantra causes and allow us to set reasonable expectations. It would also enable a real evaluation of squadron performance. Over time, the best squadrons would often perform near the upper boundary of the performance range and the worst squadrons would be near the lower boundary.

Continuous Improvement:

There’s a really good lesson to be heard about GM in the 80s. Basically Toyota had GM send its worst factory’s workers and managers over to Japan where they were shown exactly how Toyota was able to make cars of much higher quality and much lower cost than GM. Those workers came back and turned GM’s worst plant into the best plant, by far. But today, GM cars still don’t have the quality of Japanese imports, and GM went bankrupt along the way.

The difference was in culture and how it was applied to their operations. Toyota strongly enforced the idea of continuous improvement (“kaizen” in Japanese). Every person in their organization was committed to improvement – from the CEO down to the lowest person on the factory line. I strongly recommend listening to this podcast https://www.thisamericanlife.org/radio-archives/episode/561/nummi-2015 – it’s about an hour long and I guarantee you will find yourself drawing parallels between GM and the VP Navy. Toyota’s culture of continuous improvement is something that the VP Navy could adopt because our people are extremely dedicated and hard working. The only thing stopping us is our own leadership.

Conclusion:

When I got out, I was certain that there were better ways to do things … and there are. Lots of them. Too many to list in this article. I believe that we should start by better defining our performance expectations using statistics, but we just don’t have the education or exposure in the VP Navy. But that’s my opinion and I’m biased because I like statistics. At the very least, every Operations Officer and Maintenance Officer should have to do some amount of required training in Operations Management. In the business world, similar jobs require years of experience and quite a bit of education in this field before running something as big as a VP Squadron.

Adding management education to our leadership track should be a no-brainer. While we wait, I recommend required reading for all DHs – “The Goal: A Process of Ongoing Improvement.” I won’t spoil it but it basically covers a simple idea: there are a limited number of constraints in any organization. Identify them, and then work to help them or remove them (only to find another constraint). https://www.amazon.com/Goal-Process-Ongoing-Improvement/dp/0884271951/ref=sr_1_1?ie=UTF8&qid=1489386642&sr=8-1&keywords=the+goal

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Incentives are Important: Why our DUI prevention incentives don’t work but our mishap prevention incentives do


On the surface, incentives seem really simple. You want people to behave a certain way so you establish a reward for that behavior. But incentives can be tricky, especially if poorly implemented. A well-known example of misaligned incentives is real-estate sales commissions. A home seller incentivizes a real-estate broker by giving them 3% of the home sale price. The broker is therefore incentivized to maximize the sale price. If you’re trying to sell your house for $210K, and the broker gets a buyer willing to pay $200K, the broker is already getting $6K in commission, and will only going to get another $300 if they get up to $210K. That extra 10K might be really important to you the seller, but that $300 doesn’t mean jack to the broker. The real incentive for the broker isn’t to maximize sale price, it’s to sell as many homes as quickly as possible.

The Navy has limited positive incentives like cash bonuses for high performance. What the Navy does have is a lot of negative incentives, like punishment. This idea is that people want to avoid punishment, so they don’t do the behavior that gets them that. A note on negative incentives: using too many of them creates a culture of risk-aversion (not in scope for this article, but it’s definitely a problem).

For both positive and negative incentives to work, they must be carefully constructed so that you actually get the behavior you want. I’ll use two examples – one we do right and one we do wrong.

1)     Airplane Safety: We all know that we have a very safe platform because when things go wrong, everyone does a deep dive, learns from what happened, and then those lessons are disseminated and incorporated into our training curriculum to make us safer. This requires people to divulge mistakes, safety incidents, etc. So our incentive is to reward squadrons for the number of HAZREPs they produce. Further, each squadron and wing publicly rewards individuals for doing safety related acts of kindness. Great alignment to get the behavior you want.

2)     DUI and the friend: We all know that if you’re out with a buddy, and he offers to drive but gets pulled over and arrested for a DUI, not only does the DUI offender get in heaps of trouble, but everyone that “allowed” him to drive drunk gets punished too. The idea is that you want people to take care of each other, so you will punish when they do not. There are two choices If I have to decide what to do in this situation: 1) take care of a sloppy drunk (really hard) or 2) steer clear of them (really easy). The result (avoiding punishment) is the same if I do either one successfully. Because the incentive is the same I’d much rather do the easier of the two options and just steer clear. Further, even if I work really hard to take care of people, there’s no guarantee I’d be successful. This is a perverse disincentive combined with a risky situation where it’s more likely to cause people to do the opposite of the behavior you want. How many people have seen the senior most person just disappear when things were getting fun? How many of you have been the senior person that recused themselves from going out in the first place?

Incentives should also not be universally applied. Consider the Skipper that punishes the JO pilots when they make a mistake. Didn’t like how they handled that emergency? Pull their papers. This negative incentive is directly opposed to the airplane safety incentive listed above. You run the risk of causing people to simply not report safety incidents for fear of punishment. It makes you less safe, not more. This happens often enough that I’m convinced we don’t understand how to effectively use incentives.

Group incentives are also a useful tool – there’s a social component to it that we respond to. Remember when the drill instructor made everyone else do pushups except for the ass that showed up late? Everyone pays a heavy price except for one person, who shoulders all the blame. That person probably never shows up late again. This works great for negative incentives, but is pretty weak with positive incentives. You remember the 365 days without a DUI and everyone gets a day off? The incentive rests on the behavior of 300+ other people… am I really going to respond to this? Not really.

The interesting thing is that preventing DUIs and increasing aviation safety should be in the same category of incentives. Use negative incentives only for the things you really want to punish – safety incident cover ups and actual DUIs should be punished severely and publicly (add the social element). Punish the right people, not the bystanders. Punishments should also be public enough that everyone understands exactly the reason for it. If you’re severely punishing someone for covering up a minor safety incident, it could be misconstrued as a big overreaction. But also incorporate rewards – reward the individual who stops a DUI with a day off (and don’t punish anyone for reporting it).

We tend to rely heavily on intrinsic (or innate) motivations rather than incentives. Here are some common rebuttals to incentive schemes that I’d expect to hear from typical VP. “Stopping DUIs is the mission of every good leader. Work hard because you’re patriotic and doing it for your country. A prestigious but really hard job is your reward for high performance.” Innate motivation is great, and we in the military have it in spades compared to the corporate world. It’s a cultural attribute unique to the military and should be celebrated. But intrinsic rewards can’t be universally applied nor are they universally effective at motivating everyone. Not everyone has Captain America level patriotism. Not everyone cares about prestigious roles. Not everyone is a leader that cares deeply about the people around them. Adding a robust incentive system applied in the right way could build on that innate motivation. It would not only fix a lot of problems but would also maximize the productivity of our best asset: our people.

A couple of key notes about incentives:

1)     Incentives need to be aligned to the behavior you want to achieve. Be honest about what you’re really incentivizing (harsh punishments for safety incidents is more likely to cause cover-ups than improve safety). “On the folly of rewarding A while hoping for B” is a classic management article that talks about this in several industries, including the military.

2)     Group incentives add a social component which is powerful, but the benefit is essentially split between all the participants.

3)     Incentives have a time component to it: the longer it takes to get the reward, the less sensitive people are to it (people just don’t internalize rewards that are too far out).

4)     Too much reliance on negative incentives creates a culture of risk-aversion.

5)     Any meaningful change to VP culture should include changing our incentives for everyone from the Skipper down.

6)    There is no reason not to experiment with different incentives and share the results amongst community leaders. I’d insert this into the DH and CO/XO curriculum at VP-30.

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Strategy: Why we need to be bad in order to be great


A good business strategy must answer the question, “What are we going to be good at?” and equally as important, “What are we going to be bad at?” You can’t be great at everything, and trying to do so makes you worse at everything. Companies that do this the best and have their strengths aligned with something customers will pay for rise to the top. Strong focus allows companies to say no to opportunities that would be distracting and put their resources only towards what will make them successful. In VP land we’ve long been at the game of trying to do everything without a real strategy that addresses our very real constraints.

A well-known example of focus and tradeoffs can be found in Apple. What are they really good at and focused on? High-end design and the quality manufacturing of consumer electronics. What are they bad at? They have high prices and pretty limited variety of products with limited flexibility in what you can use their products to do. When Steve Jobs returned in the late nineties to a nearly bankrupt Apple, he cut their product line by 70% down to 4 core products. That is focus.

Apple trades off cost against quality, which are natural tradeoffs – it’s hard to do both well, and it’s better to focus on one or the other. The much-maligned F-35 program is a good example of how a desire to everything great (i.e. lack of focus) costs a lot of money and ensures that you are never that great at anything.

cost-vs-quality-tradeoff-curve-copy

Typical Tradeoff Curve (cost vs. quality)

What are all the things that VP tries to do well? Starting with our mission set, we do ASW, ASUW, ISR, C2, MIW, SAR. For the sake of brevity I’ll leave it at those missions, but you could break them down further by weapon type, over-land vs. maritime, etc. Outside of the missions, we do aircraft maintenance, ordnance handling and loading, admin, Intel, IT support, classified material handling and storage, legal, mission training, MWR, geedunk, medical, scheduling, NATOPs, Safety, and on and on and on… This post aims to provide 3 ways we can be more focused.

1.  Organizational Focus:

A VP Squadron has one core mission: put maritime patrol aircraft on station, on-time, and execute the mission. A VP Wing’s core mission is to support the VP Squadrons under it. If I wanted to put more of our constrained resources towards our core mission at the squadron level, I would start by getting rid of legal, admin, IT support, and the geedunk. All of these functions could be centralized at the Wing level. There would be a lot of tangible benefits to doing this: economies of scale, increased standardization, freeing up resources of the squadron… But even better is that the strategic advantage would be to put these support functions where they align with the core mission of their parent organization.

There would be growing pains in that you’d lose some responsiveness and customization, but I’d argue that VP squadron doesn’t need or want to be great at these functions anyway, but the VP wing does. The functions mentioned above are just a starting point. Safety/NATOPs could be the ending point. There’s really no reason why that function needs to be duplicated in every squadron.

 

capability-tradeoff-copy

Organizational Focus: Put support functions like Admin where they’ll thrive. Allow the VP squadron to focus on the mission

2.  Mission Focus:

On the mission side, the VP community has allowed our core competency of ASW to be diluted by requiring competency in ever more complex, diverse, and disparate missions. There might be good reasons to diversify our capabilities, but focus would demand us to have an honest discussion about what we’re going to be great at. Start with the actual utility of some capability and compare it to how difficult that capability is to maintain. Then look for overlap with other capabilities to get some scale economies. For instance, ASW and MIW have some overlapping training and execution requirements. If we’re good at ASW, it doesn’t cost much for us to be good at MIW also.

However, if we want to also be good at Maritime Air Support, which is a totally different skillset from ASW, it costs a lot more. Add enough of these disparate missions to the requirements and you’ll eventually run out of resources to attain any sort of excellence.

Fortunately, it doesn’t have to be all or nothing, it could be a hybrid model. For example, half of our squadrons could be great at ISR and ASUW, half of our squadrons are going to be great at ASW and Mining. You’d get better tactical performance but trade off against only having half the global capacity for either mission.

3.  Competency Focus (be ready only when you need it):

But maybe the Navy needs us to be the jack-of-all-trades, master-of-none. After all, the original name for the P-8 was the Multi-mission Aircraft. Because our missions are too dissimilar and require high levels of specialized training, it’s foolish to think every aircrew could be good at every mission, all the time.

One could logically say it’s a waste to be ready for 100% of our mission set when we only utilize 10%. For example, getting ASW ready only to deploy to El Sal or the Middle East is wasted effort. An even bigger waste of resources is to try to maintain an unutilized capability during high op-tempos (EMATTEX in the Arabian Gulf comes to mind as a giant waste of time and morale-killer). And if there is one certainty, it’s that the VP Navy can’t predict which mission set will be most utilized.

Rather than try to be great at all these disparate missions all the time, which is extremely costly, we could change what we define as our core competency. It’d be much more effective to be great at rapid training, ramp-up, and capability deployment as needed. In simpler terms, we should be great at adapting to real-world situations by making our core competency to be ramping-up aircrews and airplanes for specific missions really fast.

Of course, there are some missions that require too much training to be able to ramp up quickly (like ASW). And we’d need to be competent in the missions required for our deployments. And if we wanted to rapidly train our crews, we’d probably need trainers to train and possible serve as rapid response teams while the rest get up to speed. I think the Wing’s WTU and/or the MPRWS could fill those roles quite nicely.

Summary:

  1. Focus allows for excellence in something by trading off against something else
  2. VP Squadrons can focus on mission performance by trading off their support functions to the Wing
  3. VP Navy can focus on specific missions by reducing the number of missions (i.e. no more ASUW) or by reducing the number of aircrew required to be competent in each mission (i.e. half ASW, half ASUW)
  4. VP Navy could be ready for a wide variety of missions only when needed, not all the time. To accomplish this best, redefine our core competency as the ability to rapidly train and deploy capabilities as needed.

We’ve been guilty of not having a coherent strategy for too long. Rather, we’ve just been blindly following our marching orders: be combat ready at an ever-increasing number of diverse mission sets, and transition to a new aircraft. Meanwhile our P-3s get older, our budget is uncertain year over year, our adversaries are improving and other platforms are outperforming us at everything. I’ll add that the P-8 is not going to solve the fundamental problems within our community. The P-8 is only solving surface level issues – without focus, without strategy, we’ll be left scratching our heads as to why P-8 squadrons don’t seem to be performing that well.

More on business strategy and focus

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