Discipline makes Daring possible. – Page 25 – Musings from The Disappearing Boss on People, Process and Responsible Autonomy for small-business employers.

July 14, 2023

There’s something about Muri

In Lean, ‘wasted effort’ is categorised 3 ways:

‘Muda’ – effort that does not add value for the customer.
‘Mura’ – wasted effort due to variation.
‘Muri’ – wasted effort due to overburdening or stressing people, equipment or systems.

Muda is the most talked about form of waste, sub-categorised into 7 further types:

Transport – excess movement of product.
Inventory – stocks of goods and raw materials.
Motion – excess movement of machines or people.
Waiting.
Overproduction.
Over-processing.
Defects.

Mura is often a result of Muda, and the solution to many of these issues is to standardise processes and relocate resources so they are available ‘just in time’ when and where they are needed.

The problem with this of course, is that whether an activity is Muda depends on where you draw the line around the system. Biomass boilers are eco-efficient, as long as you don’t count the lorries trucking pellets around a country – a clear case of Transport Muda when you look at the bigger system.

What I want to think about today though, is Muri. Wasted effort due to overburdening or stressing the people, equipment or system.

There’s something about Muri that makes it the Cinderella of Lean.

It isn’t glamourous, fixing it doesn’t attract the kind of kudos Muda does. Perhaps it’s just harder to measure.

Whatever the reason it gets left to pick up all the dirty work.

Muri is often caused by too much attention to Muda. Redundancies are stripped out the system, leaving no room for slack. Everything is expected to run at 100% capacity all of the time. People are expected to do more with less, both at work and at home.

The result?

Look around you and what I think you’ll see everywhere a massive case of Muri. People and systems – including our planetary system – stressed and overburdened to breaking point.

As a small business owner, you can’t fix it all. But you can fix it in your business.

What if you let people work a 4-day week? or a 13-day fortnight? Or take a 2 hour lunch break?

What if you put together a flexible plan of working hours for the year that accounted for busy times and quiet times?

What if you set the example yourself by working only your official hours, having your weekend and taking a couple of weeks off every now and then?

You could do all of this, even in a service business, by paying a little attention to Muda and Muri (but not too much):

Start by writing down your Customer Experience Score , so that everyone can play it consistently.

Automate the parts that are drudgery for humans.
Leave room for variations that will delight the customer.
Then give people the responsibility and autonomy to get on with it, at a sensible level of capacity.

You’ll all work less hard for greater rewards.

Discipline makes Daring possible.

Ask me how.

July 13, 2023

Hiding in plain sight

Orange Oakleaf Butterflies confuse their predators on purpose, hiding in plain sight.

In the dry season, they pretend to be a dried out dead leaf. In the rainy season they pretend to be a damp dead leaf. The birds, ants, spiders and wasps that eat them, already have a mental model of what a dead leaf is. That model doesn’t include being edible. So they ignore this leaf and carry on looking for their next meal.

We humans are the apex predator par-excellence. We don’t have to pretend to be anything other than we are to survive.

Still, we confuse other people all the time. Sometimes on purpose, most often by accident. Because we constantly assume that our mental models are the same as everyone else’s. We think everyone knows what we know, believes what we believe and wants what we want.

Take a small business:

For a shareholder or investor it’s a machine for generating dividends on their capital.

For founders it’s a way to make their unique dent in the universe.

For their accountant it’s a set of connected accounts that need to balance.

For their operations manager it’s a set of loosely related functions, one of which they probably consider to be more important than the others.

For some employees it’s simply a means to enjoy life outside work. For others it’s means to survive. For others still, play.

For customers it’s a solution to a problem, a status enhancer, a community they value or a purpose they believe in.

All these different mental models can pull a business in different directions, leading to confusion.

And as we know, a confused mind says ‘no’.

The answer is to get clear about what your business is here to do as soon as you can, and to present that as an explicit model everywhere.

Choose a model that is simple, easy to communicate and effective in delivering what everyone wants.

Design your business around that model, so that the way it works clearly reflects the concept behind it.

Share that model in your marketing materials, shareholder reports, filed accounts, operations manual, help guides and status reports, so that it becomes utterly familiar, whatever your role or relationship to the business.

That way, nobody’s confused.

Some may not like it, but they will leave you alone. The ones that do like it will be more than happy to help you bring it to life.

If you’re a small business employer, looking for a model to adopt, you’ll be pleased to know that you already have one, hiding in plain sight.

And I can help you reveal it.

Discipline makes Daring possible.

Ask me how.

July 11, 2023

Bake the profit in

I loved this reminder from @Jason Fried this morning, that your main ‘competitor’ is your own profitability.

And that put me in mind of the kind of tragedy I see played out over and over again with amazing small businesses. Tragedy that could be avoided with the right kind of attention to detail at the beginning.

As Fried says, as long as you are profitable, you are winning.

For me, the best way to be sure you are profitable, is to know that every single thing you sell is profitable in it’s own right, every time you sell it.

And I mean truly profitable, net profitable, after all costs have been accounted for.

Here’s how to work that out:

Let’s say I make beautiful sourdough bread, 20 loaves a day for 20 lucky subscribers who pick up daily.

First there’s the obvious costs of ingredients:

I buy these in different quantities, so I split each quantity into the number of loaves I will get from it:

10kg of heritage wholewheat flour at £27 (including postage) gives me 20 loaves at a cost of £1.35 per loaf
25kg of sea salt at £20.95 will season 1923 loaves, at a cost of 1p per loaf
10l of water at 14p per litre, will make 20 loaves at 7p per loaf.

I use 100g of sourdough starter for each loaf, made up of 50g rye flour and 50ml water.

25kg of rye flour at £34 (including postage) will start 500 loaves at 6.8p per loaf.
A litre of water at 14p will start my 20 loaves at 0.7p per loaf.

So far then, the ingredients for my sourdough loaf cost me 1.35+ 0.01 + 0.068 + 0.077 = £1.51

But I haven’t allocated all my costs yet:

Wastewater – for every litre I use baking, I use about 900ml in washing up. At 90p per litre this means 81p in total, or 4p per loaf.
There’s a fixed charge for water and wastewater of 6p and 18p per day respectively, so 24p per day, or 1.2p per loaf.
Obviously I cook my loaves, so there will be fuel costs. I use an electric fan oven, and cook my bread for an hour, so that comes to about 45p per batch of 4 loaves, or 12p per loaf.

That takes us up to 1.51 + 0.04 + 0.012 + 12 = £1.69 per loaf.

And I still haven’t allocated all my costs:

I bake my loaves on trays lined with parchment paper, 2 loaves per tray

10m of parchment paper at £1.45 will do 28 trays, or 56 loaves, so comes to 3p per loaf.
My 2 aluminium baking trays cost me £13.50 each, and will last me at least 5 years. At 200 baking days a year, with 20 loaves per day, that comes to 20,000 loaves, or 0.135p per loaf.
The 8 bannetons I prove my bread in cost me £11.39 each and likewise should last me 5 years. That adds about 0.5p per loaf.
I mix my dough in a couple of 12l stainless steel bowls, at £21.99 each. That adds another 0.22p per loaf.
My dough scraper cost £1.20 and should last me 2 years, which adds 0.15p per loaf.
I invested in 2 heat-resistant oven gloves with fingers at £13.99 each. That adds another 0.014p per loaf.

These are tiny amounts, but together, add another 4.2p per loaf.

We’re now up to £1.73 per loaf.

And I still have to add costs for maintaining my sourdough starter (feeding it, keeping it somewhere where it can grow); cleaning up (washing up liquid, wipes etc.); wrapping the loaves (paper or paper bags); selling the loaves (point of sale system subscription or commission, website, marketing (even something as simple as an A board costs money, uses chalks and wears out); heating and/or lighting my kitchen; wear and tear on my worksurfaces etc., etc.

Let’s say that adds another 5p per loaf.

And finally my time. Which I work out by looking at how much I would have to pay someone else to do it – this is pretty much the minimum wage at the moment, so I decide to pay myself the same for now £10.18 per hour. My 20 loaves a day takes a total of 4 hours to make, bake, and wrap. So that’s £2.04 a loaf.

So now we’re up to £3.82 per loaf.

I do this in my own kitchen at the moment, so there’s no rent. But it’s worth pretending that there is rent to pay right from the off. So I look up how much it would cost to hire a dark kitchen. I can find a 170 sq ft one on Bermondsey for £2,600 per month ex VAT. My own kitchen is half that size, so I halve that figure. I only use it for half a day too, so I halve that again, to get a notional rent of £650 per month.

Divided among my 430 loaves a month, that adds £1.51 per loaf.

So my final total cost per loaf is £5.33

Now I need to add a profit to that.

I know I’ve covered all my costs per loaf, so I can experiment with this, to see what my market will bear.

Whether it’s 30p or 70p or £1.70 per loaf, what matters is that I know it’s all profit.

And that profit margin will only increase as I increase production, buy in more bulk, and spread my fixed costs across more loaves – until I have to rent a bigger kitchen, when it would pay to go through this exercise again.

Doing this exercise in such excruciateing detail is undoubtedly a faff.

But it pays off.

Because by the end of it you have a complete and intimate understanding of what it actually costs you to make the thing you make (whether that’s a product or a service), and that means you can charge the right profitable price for it from the very beginning.

If you don’t – and I’ve seen too many small businesses do this – growth turns into tragedy, because all you’re doing is losing money faster. Chasing sales, when what matters is profit.

Bake profit into each and every item you sell and you can relax, knowing that your profitability gets better as you grow.

That way you can be sure of being around to keep the promises you make to the people you seek to serve for as long as they want you.

Discipline makes Daring possible.

July 10, 2023

Repeating ourselves

It looks as though humanity (actually only a small part of it) is about to repeat one of our gravest and most frequent mistakes – to start exploiting a vast and almost completely unknown resource without thinking seriously about the possible consequences. In pursuit of materials that may well prove to be redundant in a few years.

We did it with whale oils, we did it with America’s great plains, we’re still doing it with rainforests and wetlands everywhere, and now we plan to do it with the mid-ocean ridges.

What makes it worse, is that the benefits will accrue to a few, while the harms will accrue to many, for generations to come. We won’t even recycle the materials we extract – why bother when it’s cheaper to mine, for as long as the true cost is never accounted for?

It’s not quite too late to stop this, Greenpeace has a petition you can sign, but maybe the best thing is simply to make yourself and others aware, so they can sign too.

We humans are ingenious creatures, we don’t have to go on repeating ourselves.

We could force ourselves to think of better alternatives by making promises to our planet and our future selves.

Discipline makes Daring possible.

July 6, 2023

What if you could do things the other way around?

Clothing brand Unfolded only makes what they have already sold.

More than that, they only make what they know people will buy. They find out what to make by getting their customers to help with the design process every couple of months.

A very simple way to save waste of all kinds.

Where could you put the cart before the horse in your business?

Discipline makes Daring possible.

July 5, 2023

The future belongs to tadpoles

What if people didn’t have to work for a living? How would you attract people to work in your small business?

Pay would be the obvious first thought, but when people don’t have to worry about survival, money isn’t the motivator we think it is. Not on its own.

So what would motivate someone to work with you?

Probably, good work, that enriches:

The ecosystem of the organization in which the profit is produced
The ecosystem of the community of which that organization is a part
The greater ecology of the planet

And also enriches:

Their inner ecosystem
The client’s inner ecosystem

By enabling each person to achieve more of what we all really want:

Agency – to make our own ‘me-shaped’ dent in the universe.
Mastery – to learn and master (even teach) new skills.
Autonomy – to be free to choose how we make our dent.
Purpose – to do this for something bigger than ourselves, that has meaning beyond the sale.
Community – to do all this with ‘people like us’.
- Status – to know (and for others to know) where we stand in our communities.

Businesses that do all this don’t look like Amazon, Google or Coca-Cola. They look more like Nucor, or Michelin, or Haier, or Buurtzorg.

But these are the big players, the mighty toads in the big business pond.

What if you’re just a tadpole?

That’s excellent news, because you can jump into this future right now, as a Disappearing Boss.

You might even make this future happen sooner.

Discipline makes Daring possible.

Coming soon, The Disappearing Bosses Club.

July 4, 2023

Beyond a Survival Economy

As you know, I like a book that takes a different perspective, that opens up new possibilities, that offers a different mental model for how the world could be.

“Beyond a Survival Economy” by David Foulkes is one of those books.

I haven’t finished it yet, and I’m not going to save you the job of reading it, because I really think you should, but there was one quote that stuck in my mind as I read it yesterday:

“Payment is always forward oriented…when you are buying something, you are ordering its continued production and sale.” Götz Werner

That is how we as consumers continually re-create the world we currently inhabit.

Which means that one of the ways to create a different kind of world, is to buy it into existence.

To look behind the marketing and decide whether the world this brand is actually creating is what we want for our seventh-generation grandchildren.

And if it isn’t look for something else, or do without.

To put our money where our mouth is.

Not because this will change the world on its own, it won’t.

But we can use it as one way in to changing the system, while we tackle it from another direction elsewhere.

Discipline makes Daring possible.

July 3, 2023

Flexibility

What if something you thought was rigid, needn’t be at all?

One of the many gems I picked up from the latest episode of The New Human Movement podcast, in which Gary Hamel and Michele Zanini interview John Ferriola, former CEO of Nucor, was this.

Since the firm started in the ’60s, they have never laid anyone off.

They have worked short hours. At least once, they have worked almost no hours making ‘quality steel, safely produced‘, which is literally what they are paid for. When that happened in 2009, they worked in the communities around their plants instead, because they were having an equally tough time.

So even though people didn’t earn as much pay, they remained employed. This meant they kept their employment benefits such as health insurance, pension rights, holiday entitlements and length of tenure.

The result is of course, massive loyalty to the firm (which everyone part-owns), and zero resistance to changes that will make it more profitable (also because they get a share of unit and group-wide profits too).

Nucor’s work is seasonal anyway, so they already had this arrangement in place, it just happens to make it easier to adapt to downturns and be ahead of upturns.

Any old how, this reminded me of a ridiculously simple approach to seasonality of work, that seems to be commonplace in Europe, but not here.

In essence, you separate the way work is paid for from when it is delivered.

Here’s how:

Every year, a seasonal business works out how many hours it expects to be producing whatever it produces.

It works out what capacity it needs to have in place for the seasonal rush.

It employs that number of people.

The number of hours worked over the whole year per person is total hours/number of people.

An individual’s monthly salary works out as (total hours/number of people)/12.

Next the business agrees with each person individually how they are going to work those hours to fit with the seasonality of the business. When they will have holidays, when they don’t need to come in at all, and when they will be working extra-long shifts.

That’s it.

The result is that the business has a predictable salary cost over the year and the right number of people actually working in it at any one time, without having to constantly drop and recruit new people.

The people have a regular monthly income they can use to plan, and space in their annual schedule to do other things – holiday, study, work another job, start a side-hustle in a meaningful way.

Both have room to be flexible if actual circumstances don’t turn out as predicted.

I came across this idea for a factory, but the product doesn’t have to be physical, it could be a service, like hotel stays, design projects, coaching hours, or haircuts.

I wonder why it has never caught on here?

Still, you could give it a try while you’re small and see what it does for you.

All you have to do is imagine that something you thought was rigid could be flexible instead, and make that flexibility work for both sides.

Discipline makes Daring possible.

June 30, 2023

Your help please

When I talk about a Customer Experience Score in these posts, what immediately comes into your mind?

a number

a piece of music

something else : ___________________________

Let me know.

Thank you!