Prioritizing Initiatives with Paul Daoust

Welcome Paul to the Podcast. Paul is the founder of Scio Asset Management. Although, briefly, tell us about yourself.

I have almost 30 years experience in engineering reliability maintenance and both strategic and holistic asset management. At Scio we are providing frameworks for leadership in asset management that is based on first principle decision making. Also launching Assetiers that is a platform for leaders to discuss the challenges that we have in asset management.

There are challenges in prioritising where to allocate resources in asset management. Have you seen this?

That is a primary challenge. It goes to the strategic organisational goals in terms of delivering value from the available resources. Resources are both fast in that there is lots of money and people to invest and they are scarce in terms of budgetIng. It is the leadership’s job to direct the resources to maximise value.

How do we prioritise the initiatives that are already in place such as lean manufacturing, Six Sigma, 5S and reliability maintenance? Do we go for easy wins or strictly focus on our strategic goals?

I think it is multifaceted in the sense that we can focus on things like lean manufacturing that improve people’s capabilities but at the same time focus on business processes to have good, better, and best practices. Organisations need to assess the value in all their practices. And if there is value then what is the cost of going for the best practice?

There are diminishing returns in pursuing reliability best practice. Do we always have to be the best in class in these practices?

The Law of diminishing returns might manifest for people who are in production especially if you calculate cost per unit. However, when a company reaches maturity, there is always room for improvements. The “Beauty Curve” shows that improvement at maturity frees up resources to be utilised in other areas. It has a compounding effect.

This is why companies that carry out best practices deliver more value since they already have a culture of continuous improvement. This runs counter to what is believed as The Law of Diminishing Returns.

The challenge is whether going for those incremental values is worth it and how to prioritise the allocation of the freed up resources to continue problem solving.

There is also a question of where to start. The key is to pick a place where you believe there is need and work on it. The less mature and more reactive the organisation is the more the opportunities. The key for less mature organisations is to first focus on the people and free up capacity. They have to work hard to reduce reactive maintenance and reallocate the people to places where they can solve more problems that prevent recurrences.

Once we have freed up these resources, how do we prioritise their reallocations?

You need to focus on the strategic goals such that everything you do is aligned with the objectives. You have to test the alignment of the improvement initiatives to the strategic goals. Make sure that there is value in making the investment. You also need to ensure that you start initiatives in amounts that you can manage. Do not overload people because there are normal roles that they have to perform other than the initiatives.

There are alternatives that can bring improvements such as increasing work rate, improving business processes, bringing in new techniques but you need to be careful in making the choices.

Sometimes it’s not even a resource problem but a change problem where there are to many changes at a time.

People always seem aligned when they are assigned roles in these initiatives. But when you ask them whether they have the resources or time to prioritise the initiatives you will start to see the gaps.

If you examine all the tasks based on the strategic goals you will eliminate those that do not contribute to the expected deliverables including “skunk works”.

The freed up capacity needs to be allocated towards the goals so that the time and resources are not lost even as we drive innovations..

That is for the visibility of all the activities in the change initiatives. I like to use Hoshin Kanri because it shows the medium terms strategies which are the initiatives and measuring the practices towards the value that you want. It shows the dynamics in the initiatives and you can make changes in the business processes.

I also like to use FAST goal setting where we start high in the frequent discussions about the goals. We need to understand the dynamics of initiatives and how we are influencing or failing to influence things to take action..

When we reach a point where the expected value isn’t being realised, do we pause or do we push through till the expected value is realised?

The answer is both. There is a time and place to put a stop to initiatives that are not working and the same for those that we need to push through with. You need to look at the business case and the underpinning assumptions. If the assumptions were wrong then that’s a reason to stop the initiative.

The other issue is execution where if you can solve the challenges then you can push through. But if you cannot then there is a reason to stop.

There is also the sunk cost fallacy where organisations do not want to build a reputation for not completing the things they start. But there is also a question of the future value of the already sunk cost in a failing initiative and whether there is opportunity in redirecting the resources to other more productive areas or not. We need to both be brave in stopping initiatives or smart in reallocation.

There is a lot of uncertainty in our knowledge but we have to be honest with our organisations. Do not make false assumptions and focus on the few initiatives.

Eruditio Links:

• Eruditio
• HP Reliability
• James Kovacevic’s LinkedIn
• Reliability Report

Paul Daoust Links:

• Paul Daoust LinkedIn
• Paul Daoust Past Episodes
• Scio Asset Management
• The Asseters.org
• Power Curve
• Is your strategy good enough to move you up on the power curve?
• Speed of Business

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