PM4: Charity effectiveness/ lean charities

Nigel Kippax, Head of Consulting, NCVO

Dr Mary Davies, NCVO consultant

Introductions

• Nigel Kippax – Head of Consulting and Training at NCVO

• Mary Davies – NCVO Consultant

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NCVO Consulting & Training

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Today’s learning: Remember Pareto

are rooted in

20% of the content

80% of the benefits

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For today

1. Context

2. Introduction to lean thinking

3. Tools

4. Case study

5. Next steps

Challenge

Are there new questions we should be asking?

(Be prepared to adapt the terminology)

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A story of growth …

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• God Daughter suffered a brain tumour

• Not satisfied with the research into child tumours

• Well connected, intelligent, passionate

• She had the energy to start a charity

A story of success …

Created a robust organisational structure

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Senior Management Team

Fund Raising

Finance HR FacilitiesOperations

Stories she was hearing

• “Why can’t that other department give me what I need to do my job?”

• “Why have we recruited another 3 people when we’re already duplicating work between fundraising and business development?”

• “I don’t have time to see that beneficiary as I need to write a paper for the next Board meeting”

• “Why can’t we keep our people? This is the third FD we’ve recruited in 2 years”

• “We knew what needed to be done months ago, so why can’t we make a decision and get on with it?”

• “I’m spending all my time chasing numbers when what I really want to do is help our beneficiaries”

What’s going wrong?

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What happens if we lose sight of our core purpose?

• Working in silos

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“This isn’t how it was supposed to be”

• Departments and bosses become more important than the beneficiary

• Gaps appear between departments

• Wasted effort, wasted time, wasted resources, wasted talent; wasted £

Departments – often necessary to maintain controls

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Departments

Fund Raising

Finance HR FacilitiesOperations

Processes - always necessary to meet beneficiaries’ needs

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Departments

Fund Raising

Finance HR FacilitiesOperations

Key activity

Key activity

Key activity

Key activity

Supporters Suppliers

Customers Beneficiaries

Departmental/process differences

How we manage costs

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Approach Pros Cons

Functional salami slicing

Activity centred

Two approaches to managing costs

• Easy to understand

• Quick to implement

• Fits with current structures and lines of control

• Silo thinking

• Inward facing

• Will miss opportunities for improvement

• Risks destroying capability

• Driven from the core purpose of the organisation

• Outward facing

• Brings departments together

• Identifies improvements that don’t destroy capability

• Requires cross department team working

• Often not a single person’s responsibility

• Requires leaders to think and act in ‘two dimensions’

Lean thinking

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5 key principles

1. Customer: Value is defined through the customers’ or beneficiaries’ eyes (not through silos)

2. Holistic: Views the whole value stream (not restricted to departments)

3. Outward in: Timing driven by the needs of the customer or beneficiary (not artificial internal deadlines)

4. Remove wasteful steps; stops/starts; checking; doing things twice; things the beneficiary doesn’t value

5. Continuous improvement: Relentless pursuit of excellence

“Getting back to how it was supposed to be!”

Resources

Impact

Maximising the ratio

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Why think about value ?

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• Lack of an end-to-end process view based on customers’ value requirements

will generally result in:

Duplication of effort

Unnecessary actions, reviews or controls

Activities performed in the wrong sequence

Over-processing

• Unless you first really understand the value delivered to your customers you will be unable to:

Distinguish between value-adding, value-enabling and waste activities

Identify the most important gaps and delays

Which process steps add value ?

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• There are three questions to determine this:

Would your customer be interested in, care about, or pay for this step?

Does the step physically change the output, or is it a necessary pre-requisite to doing so?

Is the step carried out ‘right first time’?

• You’ll probably find that most steps won’t meet all these tests .... but some steps may still be very necessary.

Try to remove all those that aren’t!

Evaluating the steps in a process

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VALUE ADDING Steps that could be considered essentialbecause they:

• Physically change the product or service

• Are done in the “right” sequence or location in the process

• Provide a genuine, sustainable competitive advantage

• Would be seen by the client as delivering the value they seek, and they would be willing to ‘pay for them’

WASTESteps that could be considered non-essentialbecause they:

• Do not change or add to the product or service to be delivered

• Are done out of sequence and/or are performed to correct prior actions

• Would not be seen by the client as delivering value and so they would be unwilling to ‘pay for them’

VALUE ENABLINGSteps that could be

considered necessarybecause they:

• Support organisation measurement or reporting requirements

• Reduce risk, defect, cost, etc.?

• Allow subsequent work for the customer to be performed more quickly or accurately

• Satisfy legal or regulatory requirements

• Satisfy ‘good business practice’ requirements

Introducing Tim Woods

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Transport: Moving products & information

Inventory: Storing/stockpiling documentation and information

Motion: Walking to and from places to achieve a task

Waiting: For information, documentation, instructions

Over production: Making more than is immediately required

Over processing: Inputting unnecessary information/data

Defects: Rework, errors, incorrect documentation

Skills: Under- or over-utilising capabilities, delegating with inadequate training

Exercise

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• Brainstorm a list of examples of waste in your organisations’ process

In groups:

• Then categorise each example under one of the 8 waste headings

You have 20 minutes

• Each team to make a 5 minute presentation on its findings

Discussion of findings & learnings

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Lean tools – top down approach to understanding a process

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Suppliers Inputs Outputs CustomersProcess

S I P O C

Materials, resources or data

needed to execute the process

Structured set of activities to transform

inputs into outputs that provide value to

customers

Products or services that

result from the process

Recipient of the process

output

Start End

4 - 7 major steps

Provider of inputs to your

process

Lean tools – flow charts & swim lanes

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• They define workflows across functional roles and hep to understand not only the steps and who is responsible for each one, but also how and where delays and mistakes are most likely to occur

• Different shaped symbols denote the start & stop, actions and decisions

Lean tools – value stream maps (VSM)

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• These maps include information flow, e.g. how the customers or beneficiaries order the product or service, the frequency and the method

• Time lines also give information about total process times, lead times and cycle times

Lean tools – the 5S’s (or C’s)

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Meaning Alternative

Sort Separate essential from non-essential Cleanout

Simplify A place for everything & everything in its place Configure

Sweep Maintain the new condition Clean & check

StandardiseImprove achievement of maintaining the new condition

Conformity

Sustain The goal (it’s a habit)Custom & practice

• Fundamental to workplace management:

creates standardised workplace

enables standardised work to take place

enables abnormalities to be quickly identified

enables improvement to take place

Case example - charity £80m turnover

Focus on the invoicing process

• Thought to be inefficient with duplication but needed confirmation

• Process mapped and understood

• Critique of each step: is it adding value?

• Quantify observed waste

• Estimate 25% savings possible offering opportunity to redeploy

What could you do with an extra 25% resource?

Your next steps

Select a process that is thought to be inefficient and wasteful

• Define: The start and end points of the process

• Discover: Map and understand these processes

• Diagnose: Determine which steps add value/enable value or are waste

• Design: • Identify ways for the waste to be reduced or eliminated

• Quantify the waste, e.g. how much time is spent, how often, how many

• Consider how the process might operate without these wasteful steps

• Deliver: Implement the changes and quantify the benefits including cost savings; shorter lead times, quicker or more accurate service for the customers and beneficiaries

Delivery

Definition

Design Diagnosis

Discovery

NCVO Lean Training Courses

www.ncvo.org.uk/training-and-events/events-listing

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Review & summary of workshop

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Final thought

Lean is not just a tool box for

improvement, it’s a way of thinking that

is relevant to all organisational levels

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Thank you Nigel Kippax & Mary Davies