Boeing Moving Line

Boeing’s “PTQ” (Put Together Quickly) videos show a time lapse of an airliner in production. They have been producing the for years – certainly since I was working there.

This one, though, shows something a little special.

When I first started working there, the idea of a line stop was unthinkable. The plane moved on time, period. Any unfinished work “traveled” with the plane, along with the associated out-of-sequence tasks and rework involved.

The fact that the 737 is now built on a continuously moving assembly line in Renton is fairly well known.

But what struck me in this PTQ video is that one of the things highlighted in it is a line stop. It happens pretty quickly at about 1:57.

The video is also full of rich visual controls to allow the team to compare the actual flow vs. the intended flow. See many many you can spot.

He Should Have Seen It

In many processes, we ask people to notice things. Often we do this implicitly by blaming people when something is missed. This is easy to do in hindsight, and easy to do when we are investigating and knowing what to look for. But in the real world, a lot of important information gets lost in the clutter.

We talk about 5S, separating the necessary from the unnecessary, a lot, but usually apply it to things.

What about information?

How is critical information presented?

How easy is it for people to see, quickly, what they must?

This is a huge field of study in aviation safety where people get hyper focused on something in an emergency, and totally miss the bigger picture.

This site has a really interesting example of how subtle changes in the way information is presented can make a huge difference for someone trying to pull out what is important. The context is totally different, so our challenge is to think about what is revealed here, and see if we can see the same things in the clutter of information we are presenting to our people.

The purpose of good visual controls is to tell us, immediately, what we must pay attention to. Too many of them, or too much detail – trying to present everything to everyone – has the opposite effect.

The Human in the Loop

W. Edwards Deming espouses a “system of profound knowledge” as the way to manage complex systems. The key points are:

  1. Appreciation for a system. (Systems thinking)
  2. Knowledge about variation. (Knowing the difference between variation inherent in the system and variation with an attributable cause.)
  3. Theory of knowledge. (Understanding how the organization learns – summarized as PDCA)
  4. Psychology.

This last point – psychology – is the one I want to discuss.

The common view of business and production systems is a technical one. We look at things that can be easily disaggregated and analyzed – production processes, financial models, defect rates. Even when we consider the role of people it is in terms of “heads” and labor hours; absenteeism, payroll, labor costs.

Then we turn around and talk about “corporate culture” as though it is an abstract thing that can be analyzed as well, and that conversation all too often turns into commiseration and a blame game where things would be great “if only they….”

Reality, however, is even messier than that. The culture of a company emerges from how people interact with each other, and with the work environment. The work environment itself is also the product of interactions between people. People also interact with the processes themselves. Every second of every day, it is the people who are sensing, assessing, and deciding how to respond to what they see, hear, feel, perceive, believe.

If we truly want to construct a work environment where people make the best possible decisions, it behooves us to rid ourselves of decades old stereotypes and convenient beliefs about why people decide what they do.

Those stereotypes were largely established in the 1930’s and 1940’s. Since then, however, we have learned a great deal about psychology. Further, we are now (finally) beginning to make the connections between what happens in the mind – how people think, feel, perceive, behave – and what happens in the brain – the neuroscience behind the feelings.

How We Decide is a layman’s overview of those linkages.

As I was reading it, I found many topics that link directly to business and the workplace, and stuffed my book full of sticky notes.

Learning

Deming famously said “Management is prediction.” We also know this in the context of PDCA and the scientific method. We make observations, collect facts, and make a prediction. “Given what I know, if I do x I should see y.” Or “… if I observe x happening then y should follow.” These are predictions. By making them, we set ourselves up to either be proven correct, or confront something that surprises us. In either of those situations, we learn either by reinforcing the prediction for next time, or by examining what was not understood and trying to understand it better.

Well – as much as we like to imagine this is a logical process, it isn’t. This is pure emotion, which in turn is driven by changes in the level of dopamine in the brain as we have these experiences. In fact, our emotions learn to predict a vague situation before our logical brains catch on. “I don’t know why, but this feels right” – except that if you think through it that much, you will likely get it wrong.

Lehrer cites a number of scientific studies, but what they all have in common is immediate positive or negative consequences. Without those consequences, the emotional mind is never engaged, and the people never develop that “gut feel” for the situation.

Now before anyone jumps all over the word “consequences” let me be really clear on this point. This has nothing to do with punishment or “accountability.” Indeed, neither of those is immediate enough for this kind of learning to occur. Rather, it means that there is a situation where the person has immediate feedback and knows whether he made a good or bad choice.

What is more interesting is when these experiments were conducted with people who were neurologically impaired to the point where they could only engage in logical thought – they experienced little or no emotion. They failed, totally, at detecting the subtle patterns of success and failure in the experiments. The dopamine driven emotional part of the brain “gets it” and the logic part follows.

So – if we want a person to learn to correctly carry out a subtle process, and develop a good feel for how it is going:

  • They need practice.
  • They need immediate feedback.
  • They need safe opportunities to get it wrong.
  • They need emotional support for continuing to try. (More about that later.)

Now think about this in the context of how your people are trained to perform tasks that require skill or developing a “knack.” How well does your work environment provide a safe place to practice?

Another factor that plays a huge role in learning is reflection. Again, this is something that we all know at a logical level, but do we structure our situations to actually do it… or rely on happenstance? Worse yet, do we try to avoid focusing on things that went less than perfectly in our desire to focus on the positive?

Leher’s next key point is that, except in trivial cases, practice is not simply repetition. It is equally important to be good at it – to know how to practice. Reflection plays a huge role in this. He uses the example of a master game player – chess, poker, backgammon. Bill Robertie plays these radically different games at a world class level.

Leher describes how Robertie learned to play backgammon.

Robertie bought a book on backgammon strategy, memorized a few opening moves, and then started to play. And play. And play. “You’ve got to get obsessed,” he says. […]

After a few years of intense practice, Robertie had turned himself into one of the best backgammon players in the world. “I knew I was getting good when I could just glance at a board and know what I should do…The game started to become..a matter of aesthetics.”

Leher is describing the process of training the dopamine receptors in the brain to give a positive emotional response to thoughts of the right move, and a negative emotional response to thoughts of a bad move. That is what happens in the brain of someone who is playing by instinct.

But, he goes on:

But Robertie didn’t become a world champion just by playing a lot of backgammon. “It’s not the quantity of practice, it’s the quality,” he says. According to Robertie, the most effective way to get better is to focus on your mistakes. In other words you need to consciously consider the errors being internalized by your dopamine neurons. After Robertie plays a chess match, or a poker hand, or a backgammon game, he painstakingly reviews what happened. Every decision is critiqued and analyzed.

Actually this kind of reflection can be found behind pretty much any world-class performance you might see. Professional sports teams review the films. The U.S. Army does “after action reviews” in training. The opposing force commanders and the unit being trained first discuss and reconstruct what really happened, and then drill in on cues that might have revealed missed opportunities. By consciously learning from their mistakes in a practice environment – with blanks and lasers – they make far fewer mistakes when the bullets are real.

What about business? If you are a regular reader (meaning you are interested in this stuff), you likely know that “reflection” is a critical part of policy deployment, otherwise known as hoshin kanri. That reflection is the same process – examining the original intention and prediction, and then seeking to understand why things went differently (better or worse) than anticipated. By understanding the why behind the deltas, the leaders are better able to make better and better plans. That might look like they are leading by instinct, but just like Robertie’s backgammon game, that instinct is honed deliberately by a process of learning.

Likewise, when organizations try to learn “problem solving” and “A3” I see them start with big, complicated problems. But in my experience, it is far better to start off on small ones that are easy to solve. There are a couple of good reasons for this. First, it gets leaders down to the place where the work is done and shows that they actually care. This is all well and good, but it isn’t the primary reason.

The main reason is so they have an opportunity to practice seeing and solving problems in an environment where they can do it a lot, get immediate feedback, and contain the effects of their mistakes. In other words, it is an environment where:

  • They get practice.
  • They get immediate feedback.
  • They have safe opportunities to get it wrong.

    Unfortunately, what many senior leaders fail to give to themselves or to each other is that last point – an emotionally safe environment to make mistakes. And that links to the next key point that Leher makes.

    He describes research by Carol Dweck, a Stanford psychologist, on the role of making mistakes in learning. In her classic research, she gave groups of school children puzzle tests that were relatively simple for them. All of the kids did well. Two groups, selected at random (the total population was over 1000) were alternatively praised for their intelligence (“You must be very smart”) or their effort (“You must have worked really hard.”)

  • To cut to the chase, in follow-up tests, the group that was initially praised for their intelligence avoided subsequent challenges, gave up on tough puzzles more easily, and sought out opportunities to see that they had done better than others.

    The group that was praised for their effort, on the other hand, sought out tougher challenges, worked harder on those tougher puzzles, and sought out opportunities to understand why others had done better than they had. In other words, they were driven to learn.

    To be clear, the only difference between the groups was the initial praise. Throughout the remainder of the experiment, each group sought to self-validate the single compliment they had been given – one group by selecting tasks that allowed them to look smart, the other group by selecting tasks that allowed them to work hard.

    At the end, they were all given a final set of puzzles. Guess which group had learned more about how to tackle them? In short, the kids who were praised for their efforts got better results because they worked hard to learn how to learn.

    Now, this is with little kids. But what we all learn as kids are the things which drive us throughout our lives. Each of us seeks to renew the conditions that got us the most acceptance and praise.

    Application

    Let’s look at how to apply all of this when we are trying to transform an organizational culture.

    First, what are we trying to achieve?

    If we are trying to instill a culture of problem solving and kaizen, then we want people to try hard to solve the problems they are confronting, are willing to experiment (and make mistakes), realize they have to discover (rather than already know) the answers, and support others in doing the same.

    So what are the best conditions to learn how to do that, and do it well?

    • Practice.
    • Immediate feedback.
    • Safe opportunities to experiment.
    • Emotional support for continuing to try.

    If I go back and look at the learning environment described in Learning to Lead at Toyota by Steven Spear, I actually see these characteristics being deliberately put into play. And not simply for the benefit of the senior executive who is the main character, but for the team leaders in training as well.

    Think about how much more effective this gradually building hands-on practice and experience is than sitting people through a three day classroom based “Lean Overview?” Just like you can’t learn backgammon (or infantry tactics) in a lecture, neither is it possible to really understand what kaizen is about. You have to play, and play, and play. You have to reflect, which means you have to know what you expected, know what actually happened, and study the differences.

    No matter what you think people’s motivations should be, let go of your judgments, and look at what we know about how people really learn. Use that information to create the best possible space to do it in.

    The next section covers the neurological and psychological aspects of what Deming calls “tampering” – why we are tempted to do it – and the psychology behind relying on hope and luck as a risk management plan. Pretty interesting stuff.

    Information Transfer Fail

    While the dentist was looking over my x-rays, he saw something he would like checked out by a specialist. He used words like “sometimes they..” and “might be…” when describing the issue he saw.

    I get a referral. The information on the referral slip is the name of the referring dentist (which I can’t read), no boxes checked, and “#31” in the comments.

    I call the specialist and start getting technical questions about what my dentist wants them to look at / look for, etc.

    So the process is to use the patient as a conduit for vaguely expressed (in layman’s terms) technical information between highly trained specialists.

    Sadly, I think this happens all of the time in the health care industry. It seems that there is so much focus on optimizing the nodes that nobody really “gets” that the patient’s experience (and ultimately the outcome of the process) is defined more by the interactions and interfaces than it is by the nodes themselves.

    I am really not sure how fundamentally different this is from a pilot asking a passenger to find the maintenance supervisor and tell the mechanic about a problem with a plane.

    The net effect is, as I am writing this, the specialist’s office is calling the referring dentist and asking them what, exactly, they want done.. a net increase of 100% in the time involved for all parties to communicate.

    While the national debate is on how we pay for all of this, we aren’t asking why it costs so much (or kills more people than automobile accidents do).

    Simple and Easy Processes

    In the last post I commented on Ron Popeil’s product development approach – to make the product easy to demonstrate drives making it easy to use, which creates more value for the customer.

    Let’s take the same thinking back to your internal customers.

    What if, rather than just writing a procedure, you had to go and demonstrate it to the people who had to follow it? What if you had to demonstrate it well enough that they saw the benefit of doing it that way, and could demonstrate it back to you to confirm that they understood it? If you broke down the work and organized it to be easy to demonstrate and teach, would it look any different? (Hmmm. TWI Job Instruction actually sounds a lot like this.) Would you still ask “Why didn’t they just follow the procedure?”

    Look at the information displays and the controls on your equipment. Do they provide total transparency that things are working? Or do they abstract and obscure reality in some way? Can your internal customer be sure things are going as expected?

    Do controls give clear feedback that they are being set correctly? Are sequences of operations readily apparent?

    How many “blinking 12:00” situations do you have out there on your shop floor – things that have been put into place, but nobody uses because nobody can really figure it out?

    Come back to the design of the product itself. Is the manufacturing and assembly process apparent, obvious, and as simple as you can make it? Would it be designed differently if you had to demonstrate how to fabricate and assemble it?

    How about your administrative processes? I recall, many years ago, a “process documentation process” being taught. In the class they were using “baking cookies” as a demonstration example. Yet the instructors, who presumably were experts, actually struggled trying to show how this works. This “process” was far less clear than they had thought it was when they had simply thought through it. “It did not work on TV.”

    Look at your computer programs and their user interfaces. What makes sense to a programmer rarely makes sense in actual use. Watch over someone’s shoulder for a while. Could you easily demonstrate this process to someone else?

    Ron Popeil cooks real chickens and real ribs in the production of his infomercials. He does not use contrived or carefully limited demonstration examples. As you look at your examples and exercises, how well do they stand up to the real world application? Can you go out to the shop floor and demonstrate your “product” in actual use?

    This post is full of questions, not answers. I don’t have the answers. Only you (can) know how well your processes are engineered.

    Design your production system (for product or service) as carefully as you would design the product or service itself.

    Customer Service Opportunities

    Today was traveling on behest of a large corporation, so the travel arrangements were made through them. It all went about as routinely as could be expected on the last weekend before Christmas… for me.

    Unfortunately the guy I am supposed to meet here had flights going through D.C. that were on a collision trajectory with a snow storm on the east coast today. Flight cancelled.

    OK, I need to continue on, then shift my departure out 24 hours – hang around here another day.

    Fortunately at the bottom of the itinerary emailed by the corporate travel company is the handy “In case of problems” etc. phone number:

    CONTACT xxx TRAVEL 1-800-3xx-xxxx

    So I call the number.

    A couple of layers of voice menu prompts (including a reminder that airlines are implementing luggage policies, please check your airline’s web site – totally useless information that only delays the response I am trying to get), I end up with the “hold music” being reminded periodically that “Your call is important to us…” etc.

    A human comes on the line and I am cheerfully informed that this is not the 800 number I should call. I am reminded that MY reservation was made through the online system (which it was not, I talked to a human being when I made it), and that I need to call “them.” And, kindly, I am forwarded to “them.”

    After 20 minutes of hold music, my plane is boarding, so I have to drop the call.

    Try again from the seat.

    Different initial operator who makes a little more effort to make me wrong for calling the ONLY number that they print on the itinerary they send, otherwise same result. They are closing the cabin door, I have to drop the call.

    There actually is a lesson here.

    What defines how well a process or system works is not so much the individual components, but the interfaces between them. In this case the “interface,” if you can call it that, is the hapless (and irritated) customer. I am the one who has to integrate various otherwise separate components of this fractured process.

    The other story is the reason they were likely so busy today. After all, a major snow storm socked the east coast and caused havoc in the flight schedules that went through there. I am sure there were plenty of people who were impacted, and calling them for assistance re-booking flights, etc. And after all, there really is no way to predict when that will happen so they could be prepared, right? The really cool thing about 21st century communications technology is that you can can not only monitor live weather conditions and radar in real time, if you need to react, “extra people” don’t even need to leave home to be available… they don’t even need to be in the same state or even country. It is possible to plan and prepare for extraordinary mind-boggling never-forget-it customer service, if it is important to you.

    In the end, it is about making a conscious decision about the experience you really want your customer to have, and then structuring your processes, deliberately, to deliver that experience – and be sensitive and alert you when they do not. It is not that big a shift from “serving customers” to “customer service,” nor does it cost more in the long haul. “Quality is free” – if you understand how to do it.

    If you want to go faster, stop.

    Mark’s post on The Whiteboard tells a pretty common story. The good news is that this company has more business than they can handle. Pretty good results in these times. The bad news is that they are having problems ramping up production to meet the demand. In Mark’s words:

    I’m working for a company that is very, very busy. They developed a new process that is the first of it’s kind and have taken the market share away from their competition. But they have not spent enough time making the process robust enough to handle the increase demand and the scrap costs are going out of the roof. Currently about 65K a day. Any suggestions? Our number 1 scrap producer is a machine that can not perform at the same capability as when Engineering did their run off…

    At the risk of coming across as flip, the very first thing to do if a machine starts producing scrap material is to shut it down.  It is better to make nothing because that is a cheaper alternative than making stuff you can’t use.

    However, it goes deeper than that.

    Engineering had done a “run off” (which I presume was a test on theoretical speeds). Now actual performance isn’t meeting expectation. This is a problem.

    But let’s rewind a bit and talk about how to manage a production ramp-up. Hopefully it is a problem more people will be having as the economy begins to recover.

    Although this is in the context of the machine, exactly the same principles apply to any type of production. Only the context and the constraint changes.

    Presumably there was some speed for this machine where it didn’t produce scrap, or the scrap was minimal. Going back to that time, here is what should have happened.

    Promise production at the rate the machine is known to support.

    Now crank up the speed a bit and see what happens. In the best case, you are overproducing a bit, but you are learning what the machine is actually capable of doing.

    Crank it up a little more. Oops, scrap.

    STOP!

    Because you have been running a little faster than required, you have bought a little time. Understand why that scrap happened. Try to replicate it. Dig into the problem solving. Try to replicate the problem under controlled conditions. LEARN.

    Hopefully you can find the cause and fix it.

    Try it. Run the machine again, at the faster speed. Scrap? Back around to the “problem solving” cycle. Repeat until you can reliably run at the faster speed without scrap.

    Then, and only then, promise the higher rate, because now you can reliably deliver it.

    Then notch it up a bit until you encounter the next problem.

    This cycle of promising only what you can actually deliver protects the customer while you are pushing the envelop internally to discover the next problem.

    The alternative? Make a promise knowing you actually have no clue whether or not you can meet it.

    But that’s what they did. So now they are burning a lot of money every day making scrap material.

    The same principles apply, however. They are already not delivering what they promised. So throttle things back to the point where they can predict the results, and go from there. Pretending they can run faster than they can is not accomplishing anything other than burning money. Deal with facts, no matter how uncomfortable.

    If you make a schedule based on what you wish you could do, you will have a schedule you wish you could meet.

    No matter what, each time scrap is produced, the fact must be acknowledged. That allows the immediate response that is framed around a simple question:

    “How the hell did this happen?”

    Put another way, “What have we just learned about the limits of this process?”

    It is only within that framework that you actually get any better. Anything else is relying on luck, and in this case at least, that didn’t work.

    Clarity for the Customer

    I have come to expect very little from most airlines, especially for the parts of the “service” that doesn’t involve actually sitting in the airplane. Still, some airlines make their policies more clear than others. Alaska Air, for example, is explicitly clear that I can hold a reservation for 24 hours and cancel with no penalty. They say so on the web site during the online booking process.

    NWA (soon to be Delta), on the other hand, is somewhat less transparent. Thus, I had to call the “Elite Reservations” number, and talk to a human being to confirm the 24 hour cancellation policy. Of course I could have gotten this from their web site, I suppose. Maybe it is somewhere in here. Could this be any less clear if had been deliberately obfuscated? What purpose is served by serving up confusing information in the most difficult-as-possible to read format? How does this help their business? Or do they feel they have to trick their customers into buying the product?

    I often wonder about things like this. Some companies just seem to get a thrill out of making it difficult for their customers to do business with them.

    Penalties

    CHANGES ANY TIME CHARGE USD 150.00 FOR REISSUE. NOTE – DOMESTIC TICKETS ARE VALID FOR ONE YEAR FROM DATE OF ORIGINAL PURCHASE. THE TICKET MUST BE EXCHANGED AND THE NEW ORIGINATION DATE MUST BE WITHIN ONE YEAR OF THE ORIGINAL PURCHASE DATE DESIGNATED ON THE ORIGINAL TICKET. . TICKETS MUST BE REISSUED WHEN ANY VOLUNTARY CHANGE IS MADE. THE NONREFUNDABLE VALUE SHOULD BE PLACED IN THE ENDORSEMENT BOX ON THE REISSUE TICKET . IF MULTIPLE CHANGES ARE MADE AT THE SAME TIME ONLY ONE CHANGE FEE WILL APPLY. IF FARES WITH DIFFERENT CHANGE FEES ARE COMBINED ON THE SAME TICKET THE HIGHEST FEE OF ALL THE CHANGED FARE COMPONENTS WILL APPLY. . GDPR – GUARANTEED DAY OF PURCHASE RULE DECREASE IN FARE AFTER TICKET PURCHASE. . IF A DECREASE OCCURS AFTER A TICKET IS PURCHASED AND PRIOR TO ANY TRAVEL ON THE TICKET OR A NEW FARE FOR WHICH THE PASSENGER QUALIFIES BECOMES EFFECTIVE THE DIFFERENCE IN FARE MAY BE CREDITED. FOR COMPLETE DETAILS SEE PARAGRAPH VI BELOW. . I. PRIOR TO DEPARTURE A. CHANGES TO DEPARTING FLIGHT ARE PERMITTED FOR APPLICABLE CHANGE FEE PROVIDED THE CHANGE IS MADE TO THE SAME ORIGIN/DESTINATION AND SAME TICKETED TRAVEL DATE AND SAME BOOKING CLASS. . B. CHANGES TO DEPARTING FLIGHT INVOLVING A CHANGE TO ORIGIN/DESTINATION OR DIFFERENT TICKETED TRAVEL DATE OR BOOKING CLASS ARE NOT PERMITTED. SEE CANCELLATIONS . II. PRIOR TO DEPARTURE – CHANGES TO CONTINUING/ RETURN FLIGHTS WHEN THERE IS NO CHANGE TO ORIGIN/DESTINATION OR STOPOVERS. . A. CONTINUING/RETURN FLIGHTS MAY BE CHANGED TO A LATER DATE FOR THE CHANGE FEE WITHOUT REGARD TO THE ADVANCE RSVN REQUIREMENTS PROVIDED THE CHANGE MEETS ALL OTHER FARE RULES. . CONTINUING/RETURN FLIGHTS MAY BE CHANGED TO AN EARLIER DATE FOR THE CHANGE FEE PROVIDED THE CHANGE MEETS ALL FARE RULES. THE ORIGINAL TICKET ISSUE DATE MAY BE USED TO MEASURE THE ADVANCE PURCHASE REQUIREMENT. . B. IF A CHANGE IS MADE TO A BLACKOUT DATE OR THE CHANGE VIOLATES THE DAY/ROUTING/ FLIGHT /SEASONALITY/TRAVEL DATES OR BOOKING CODE REQUIREMENTS TRY THE FOLLOWING OPTIONS . B.1 RE-PRICE THE CONTINUING/RETURN PORTION WITH FARES IN EFFECT ON THE DATE THE ORIGINAL TICKET WAS ISSUED. ANY DIFFERENCE IN FARES PLUS THE APPLICABLE CHANGE FEE SHOULD BE COLLECTED. IF THE REPRICE RESULTS IN A LOWER FARE NO RESIDUAL VALUE APPLIES AND THE FULL CHANGE FEE SHOULD BE COLLECTED. . B.2 THE ENTIRE TICKET SHOULD ALSO BE REPRICED WITH CURRENT FARES. ANY DIFFERENCE IN FARES PLUS THE CHANGE FEE SHOULD BE COLLECTED. IF THE TICKET PRICE IS LOWER WITH CURRENT FARES THE DIFFERENCE IN FARES LESS THE CHANGE FEE MAY BE CREDITED TO THE PASSENGER IN THE FORM OF A NONREFUNDABLE MCO. THE MCO MUST BE EXCHANGED WITHIN ONE YEAR OF THE MCO ISSUE DATE. . B.3 IF THE RESULTS OF B.1 – B.2 ABOVE RESULT IN MULTIPLE PRICING SOLUTIONS THE LOWEST SOLUTION WOULD APPLY. . III. PRIOR TO DEPARTURE – CHANGES TO CONTINUING/ RETURN FLIGHTS WHEN THERE IS A CHANGE TO ORIGIN/DESTINATION OR STOPOVERS. . A. REPRICE THE CONTINUING/RETURN PORTION WITH A CURRENT FARE. ANY DIFFERENCE IN FARES PLUS THE APPLICABLE CHANGE FEE SHOULD BE COLLECTED. IF THE REPRICE RESULTS IN A LOWER FARE THE DIFFERENCE IN FARES LESS THE CHANGE FEE MAY BE RETURNED IN THE FORM OF A NONREFUNDABLE MCO. THE MCO MUST BE EXCHANGED WITHIN ONE YEAR OF THE MCO ISSUE DATE . B. THE ENTIRE TICKET SHOULD BE REPRICED WITH CURRENT FARES. ANY DIFFERENCE IN FARES PLUS THE CHANGE FEE SHOULD BE COLLECTED. IF THE REPRICE RESULTS IN A LOWER FARE THE DIFFERENCE IN FARES LESS THE CHANGE FEE MAY BE RETURNED IN THE FORM OF A NONREFUNDABLE MCO. THE MCO MUST BE EXCHANGED WITHIN ONE YEAR OF THE MCO ISSUE DATE. . IV. AFTER DEPARTURE – CHANGES TO CONTINUING/RETURN FLIGHT WHEN THERE IS NO CHANGE TO ORIGIN/ DESTINATION OR STOPOVERS. . A. CONTINUING/RETURN FLIGHTS MAY BE CHANGED TO A LATER DATE FOR THE CHANGE FEE WITHOUT REGARD TO THE ADVANCE RSVN REQUIREMENTS PROVIDED THE CHANGE MEETS ALL OTHER FARE RULES. . CONTINUING/RETURN FLIGHTS MAY BE CHANGED TO AN EARLIER DATE FOR THE CHANGE FEE PROVIDED THE CHANGE MEETS ALL FARE RULES. THE ORIGINAL TICKET ISSUE DATE MAY BE USED TO MEASURE THE ADVANCE PURCHASE REQUIREMENT. . B. IF A CHANGE IS MADE TO A BLACKOUT DATE OR THE NEW DATE VIOLATES THE DAY/TIME/ROUTING /TIME/FLIGHT/SEASONALITY/TRAVEL DATES OR BOOKING CODE REQUIREMENTS TRY THE FOLLOWING OPTIONS. . B.1 THE CONTINUING/RETURN PORTION SHOULD BE RE-PRICED WITH AN APPLICABLE FARE IN EFFECT ON THE DATE THE ORIGINAL TICKET WAS ISSUED. ANY DIFFERENCE IN FARES PLUS THE CHANGE FEE SHOULD BE COLLECTED. IF THE REPRICE RESULTS IN A LOWER FARE NO RESIDUAL VALUE WILL APPLY AND THE FULL CHANGE FEE SHOULD BE COLLECTED. . B.2 REPRICE THE CONTINUING/RETURN PORTION WITH A CURRENT FARE. ANY DIFFERENCE IN FARES PLUS THE APPLICABLE CHANGE FEE SHOULD BE COLLECTED. IF THE REPRICE RESULTS IN A LOWER FARE THE DIFFERENCE IN FARES LESS THE CHANGE FEE MAY BE RETURNED IN THE FORM OF A NONREFUNDABLE MCO. THE MCO MUST BE EXCHANGED FOR WITHIN ONE YEAR OF THE MCO ISSUE DATE. . B.3 IF THE RESULTS OF B.1 – B.2 ABOVE RESULT IN MULTIPLE PRICING SOLUTIONS THE LOWEST SOLUTION WOULD APPLY. . V. AFTER DEPARTURE – CHANGES TO CONTINUING/ RETURN FLIGHT WHEN THERE IS A CHANGE TO ORIGIN/DESTINATION OR STOPOVERS. . A. REPRICE THE CONTINUING/RETURN PORTION WITH A CURRENT FARE. ANY DIFFERENCE IN FARES PLUS THE APPLICABLE CHANGE FEE SHOULD BE COLLECTED. IF THE REPRICE RESULTS IN A LOWER FARE THE DIFFERENCE IN FARES LESS THE CHANGE FEE MAY BE RETURNED IN THE FORM OF A NONREFUNDABLE MCO. THE MCO MUST BE EXCHANGED WITHIN ONE YEAR OF THE MCO ISSUE DATE. . B. IF THE CHANGE IS TO A CO-TERMINAL THE DIFFERENCE BETWEEN THE APPLICABLE FARES MUST BE COLLECTED IN ADDITION TO THE CHANGE FEE. FOLLOW- THE POLICIES LAID OUT ABOVE ON HOW TO RECALCULATE THE DIFFERENCE IN FARES. . VI. GDPR – GUARANTEED DAY OF PURCHASE RULE . DOMESTIC PASSENGER TRANSPORTATION IS SUBJECT TO RULES/FARE/ROUTINGS AND CHARGES IN EFFECT ON THE DATE/TIME THE TICKET IS ISSUED/PTA PURCHASED UNLESS SPECIFIED IN THE FARE RULES. . DECREASE IN FARE AFTER PURCHASE . IF A DECREASE OCCURS AFTER A TICKET IS PURCHASED AND PRIOR TO TRAVEL ON THE TICKET OR A NEW FARE FOR WHICH THE PASSENGER QUALIFIES BECOMES EFFECTIVE THE DIFFERENCE IN FARES WILL BE CREDITED PROVIDED . 1. THERE ARE NO CHANGES TO ORIGIN/DESTINATION/ STOPOVER POINTS/FLIGHTS/DATES. . 2. ALL CONDITIONS OF THE NEW/REDUCED FARE MUST BE MET. THE ORIGINAL TICKET DATE OF ISSUE MAY NOT BE USED TO SATISFY THE ADVANCE RESERVATION/TICKETING REQUIREMENTS. THE BOOKING CODE OF THE NEW/REDUCED FARE MAY DIFFER FROM THE BOOKING CODE ON THE ORIGINAL TICKET. . . FOR TICKETS ISSUED ON/BEFORE 11NOV08 THE PASSENGER WILL RECEIVE A NONREFUNABLE MCO LESS A 50.00USD ADMINISTRATIVE SERVICE FEE. . FOR TICKETS ISSUED ON/AFTER 12NOV08 – THE PASSENGER WILL RECEIVE A NONREFUNDABLE MCO LESS A 150.00USD ADMINISTRATIVE SERVICE FEE . THE MCO CAN BE USED FOR FUTURE TRAVEL PURCHASE. THE MCO MUST BE EXCHANGED FOR A TICKET WITHIN ONE YEAR OF THE MCO ISSUE DATE. CANCELLATIONS TICKET IS NON-REFUNDABLE. NOTE – 1.CUSTOMERS FIRST POLICY. . 1. WHEN RESERVATIONS ARE MADE AND TICKETS ARE PURCHASED ON THE SAME DAY REFUNDS EQUIVALENT TO THE AMOUNT PAID WILL BE PERMITTED UP TO 1 DAY AFTER THE TICKET IS PURCHASED AT NO CHARGE. ANY CERTIFICATE OFFER WILL BE DEEMED USED AND WILL NOT BE REPLACED. 2. FARES ARE SUBJECT TO CHANGE AND NOT GUARANTEED UNTIL A TICKET IS PURCHASED. . B.WHOLLY UNUSED NONREFUNDABLE TICKET POLICY. . A WHOLLY UNUSED NONRFND TKT MAY BE APPLIED TOWARDS THE PURCHASE OF A NW/KL DOMESTIC/ INTERNATIONAL FARE/TICKET. -PROVIDED TRAVEL ON THE NEW TICKET ORIGINATES WITHIN 1 YEAR OF THE ORIGINAL PURCHASE DATE AND THE TICKET IS EXCHANGED NO LATER THEN 365 DAYS AFTER THE ORIGINAL TICKET ISSUE DATE. . -ANY NONREFUNDABLE VALUE IS CARRIED FOWARD IN ALL SUBSEQUENT REISSUES. THE NONREFUNDABLE VALUE SHOULD BE PLACED IN THE ENDORSEMENT BOX ON THE REISSUE TICKET. . -LIMIT OF ONE TKT MAY BE APPLIED TOWARDS A NEW TICKET. -APPLICABLE CHANGE FEE APPLIES. . C. TICKET VALIDITY AND CANCELLATION FEE . 1. TICKETS WILL BECOME INVALID/EXPIRED 366 DAYS AFTER THE DATE OF THE FIRST UNUSED COUPON AND MAY NOT BE USED OR EXCHANGED FOR TRANSPORTATION AFTER THAT TIME AND DATE. . 2. ONCE THE TICKET BECOMES INVALID – THE FARE AND RELATED TAXES AND FEES WILL BE REFUNDED. SIMULTANEOUSLY WITH THE REFUND NW WILL IMPOSE A CANCELLATION FEE EQUAL TO 100 PERCENT OF ALL AMOUNTS COLLECTED BY NW FOR ISSUANCE OF THE TICKET – INCLUDING – THE FARE AND APPLICABLE TAXES/FEES AND ANY OTHER CHARGES. – SEE GENERAL TARIFF RULE 105 – . D. EXCEPTION TO FEE COLLECTION. . IN THE EVENT OF THE DEATH OF THE PSGR A REFUND IS PERMITTED. THE CHANGE FEE WILL BE WAIVED.

    This, of course, is the example of communications they let the customers actually see on their “award winning web site.” Therefore, I have to assume this is communication at its very best. I wonder what the pilots and crew have to deal with – and how much it distracts them from getting the job done safely and efficiently.

    First: Define Value

    A couple of days ago, in “The First Steps of The Lean Journey,” I said that there really is no first step, only the next step from where ever you are right now.

    I admit that I left out a big assumption there – that you know where you are trying to go.

    More specifically, that you really know the value you create.

    Bas Mathijsen has posed the question here on The Whiteboard, as well as in a post in the LEI Forums where asks (paraphrasing) “Who defines customer value?” and “What is customer value?”

    Good questions, and we don’t spend enough time there.
    I have seen a lot of “improvement” effort dissipated because there was no clear idea of what the process was supposed to actually deliver.

    As obvious as it seems, customer value is defined by no one but the customer. The transaction need not be monetary, or even commercial. A volunteer for a non-profit organization gives up time (and possibly money) and gets something in exchange. Usually that is some level of emotional satisfaction. A nonprofit that needs to attract volunteers needs to be conscious of this.

    Since it is subjective, different customers are going to define “value” in different ways. Dan Sullivan once put it really well with this analogy (paraphrasing):

    My neighbor has a really nice lawn. When he buys a lawnmower, he is interested in features like evenly cutting, ease of starting, how well it manages the clippings. But maybe I am looking for different things in a lawnmower. Maybe I hate mowing the lawn. I might be looking for a lawnmower that cuts the grass just below the roots.

    Clearly these customers define “value” in different ways.

    The other factor to keep in mind is that this isn’t a black-and-white thing. The value the customer finds in your product or service can be enhanced or diminished by an almost infinite matrix of circumstances. These include the magnitude of the (customer’s) problem you are solving, the degree of emotional satisfaction that is gained from your product or service, how easy (or aggravating) your sales and customer support processes are, the customer’s perception of your quality and a host of other intangibles. All of these translate into what (if anything!) the customer is willing to part with to get your product or service. Indeed, we have all heard of things that couldn’t be given away, or that had negative value.

    The only real way to know what the customer truly values is to be the customer. This great little piece by Dan Markovitz on Evolving Excellence clearly shows how not to do it. Read the article, then do the opposite.

    So, the customer defines what is valuable to him. What does the company do?

    The company has to take their best information about customer value and translate it into specifications for the product and service they are going to provide. QFD is one formal way (though not the only way) to do this. Ultimately that becomes the product design. It is now up to production to actually deliver it at the target cost.

    All well and good. Where this comes apart is (as always) at the seams.

    Marketing and engineering “know best” and provide the “voice of the customer” when the customer actually isn’t even in the room.

    The product may be specified, but the details aren’t worked through. There is only the most casual system to ensure that what is specified is actually what is built and delivered. Do you have a specified go/no-go outcome defined for each intermediate step in your process? Does that go beyond the product, and into the conditions required for success?

    Delivery dates are given in terms of a range of time. In the USA the “cable guy” is famous for telling you he’ll be there between 9:00am and 4:00pm. We all laugh at how aggravating that is. But then think nothing of quoting “4-8 weeks” for a delivery window. WHEN is it supposed to be there?

    Is your product support “leave it on the doorstep and run?” Do you follow-up with the customers and see what is, and is not, meeting their expectations? Do you solicit complaints (not simply collect them)?

    All of these actions (or lack of them) will diminish your customer’s perception of value. Reputation and brand can carry past some transgressions, especially if there is really good follow-up. But even a 100 year old brand can be damaged, and the company is likely the last to know (not for want of clear signals).

    The first step is “define value” but, to be clear, that means understanding what each and every step is doing to provide value to the next step in a long chain that both begins, and ends, with the customer.

    What Is The Customer Really Buying?

    Background: Frank’s still-under-warranty freezer stopped working. The service tech decided it would be repaired, ordered a new compressor and said “See you when the part gets here next week.” Frank and his wife, about to lose a freezer full of food, are not happy with the with this level of service, call “Customer Care” and are basically told that the repair will run its course.

    The question posed at the end of follow-up #1 was:

    “What, exactly, did the customer want here?”

    I asked that question because occasionally it is good to think about not only the product we make or service we deliver, but to reflect a bit on exactly what value the customer receives from that product or service. Sometimes we confuse the technology we apply to get something done with what we are really trying to do.

    Let’s look at Frank’s case. If, instead of Bellevue, Washington in July the freezer had broken down in Grand Rapids, Minnesota last December, this would not have been an issue at all. Take the food out of the freezer and set it on the porch where it was actually colder than in the freezer.

    What the customer is buying is not a freezer, but an environment that keeps food from spoiling. Any environment that accomplishes that purpose will work. With our current technology, freezing the food by placing it in an insulated box with a vapor-compression heat pump attached is the best way to do that. But it isn’t the only way.

    What upset Frank, and his wife, was not so much that it would take a week to fix the freezer, but that their food would spoil in the meantime. Any solution that solved that problem would have worked for them.

    What, exactly, does the customer find valuable?

    You press the button, We do the rest.

    Sometimes the product or service simply helps the customer create, or recreate, an emotion. George Eastman “got that” and grew an empire from that idea by making photography simple enough for anyone to do. Prior to that, amateur photographers had to mess with mixing their own chemicals, glass plates, their own processing, and persevering to actually get a photograph. The value came from the technical accomplishment as much as the image itself. But that didn’t work for families that just wanted to remember an occasion, and share it with their friends. Kodak changed all of that forever. But their way wasn’t the only way, and a few years ago, a better way emerged. It wasn’t about the technology, it was about sharing the memories.

    I have spent a lot of time in the construction equipment business. I recall a senior manager making a pretty insightful comment. “The only part of the crane that the customer cares about is the hook. Everything else just makes it work.”

    Most construction equipment is actually is capital equipment for the customer’s business. The owner-operator of an excavator is selling a service: The customer has dirt where he wants a hole. The excavator is a tool that can fix that problem. The owner-operator needs to be able to deliver the service at a price his customer is willing to pay and still be able to make a profit. That fact, in turn, sets the prices for the equipment.

    But it is important for the seller of that equipment to remember that, to his customer, it isn’t an excavator so much as a business. The seller that thinks “How can I help my customer provide better service to his customers?” rather than “I sell decent hardware at a fair price” has an opportunity to think of things beyond the hardware itself.

    Look at your own operation. What value do you provide to your customers? Not just the product itself. What is the problem the customer can solve, or what is the source of pleasure he gains from your product or service? How would (or could) the customer solve the same problem, or gain the same benefit, without your product or service?

    What is your customer really buying?   What business are you really in?