Crack the code

It is not the rocket science. It is just about persistence. Good news because you do not need any special gift. Just determination and a mindset focused on continuous improvement.

In front of any issue at work, I follow this method:

- Identify. I identify a problem and the step in which it appears.

- Suggest. I think about possible solutions. Little or low-cost actions that could fix or improve the process.

- Implement. I implement one little change.

- Asses. I measure the outcomes to accept the change or discard it.

It would be trivial if I hadn’t heard too many times the sentence "we always did it this way".

Iterate this method and the magic will happen.

Two lines connected at a small angle are close near the vertex, but far apart at a long distance from it. Little changes make the difference in the long term.

Shed light on yourself and be unbeatable.

Many people don't understand why others avoid them.

Everybody longs for being the one all people want to talk to. The reference in your field.

The skills of a magnet person are the following:

- They are experts listening to others. I don't mean to drink a coffee while someone else explains stories. 99% of the people don't tell what they want clearly. If you can figure out the primary feeling behind, everybody will feel understood by you.

- Become an expert in your field. Be careful with the Dunning-Kruger effect. It is a cognitive bias where people with low expertise tend to overestimate it.

- Take care of your image. People who look healthy, well-dressed, and fit are more attractive.

Here is an example in the digital transformation world:

Listening to others. If you are selling your product and the prospect asks how many people you are in your company, your prospect does not trust you, is looking for security. When someone says, “it is very difficult”, that means “I do not know how to handle it”.

Expertise. Experts generally don't try to prove it. Experts always talk to everybody, even though they know the other one is wrong. They try to understand every point of view.

That grants you authority. That grants you freedom.

Eloquence is not one of the most common skills among people.

Therefore, when you analyze business processes with key users, it is important to distinguish between what they ask for, what they want, and what they need.

Keep in mind key users typically have little or no experience in process analysis.

They know better than anyone else what they need, but they are often unable to explain it clearly and implement solutions.

That is precisely why they get in touch with experts.

Occasionally, what they ask for, what they want, and what they need are the same thing, but that is rare.

Understand what they want and what they need. Tell them you will give them what they want and then give them what they need.

Listen carefully to what they ask for. They are only allowed to talk about requirements. A key user should never be defining or requesting a specific solution.

Keep asking questions until you reach the core of what they are asking for. That core is what they truly want.

Once you understand what they want, you can determine what they need.

Quick example:

They ask for: all warehouse products to be labeled.

They want: to automate inventory movements in and out of the warehouse.

They need: to avoid incorrect inventory transactions caused by human typing errors.

People first, then processes and then tools

A tale about digital transformation.

Once upon a time, a manufacturing company decided to replace its ERP system. They had many broken business processes, knowledge silos and a constellation of disconnected software applications.

Fortunately, the company had Susan, the CFO, and Harry, the COO. They were two of the most skilled workers and they would be the project managers.

Susan and Harry started the software selection process based on their own criteria. They looked for the best solution, evaluating factors such as functionality and vendor experience, implementation costs and proximity.

They finally selected the best one that met those conditions.

The project started and it did not take long for Susan and Harry to realize the workload was overwhelming. They had to manage the budget and the project scheduling, the business processes analysis and the software testing. On top of that, they still had their daily work.

Susan and Harry followed the recommendations of the consultants because they assumed they succeeded in previous software deployments.

Several months later, the company went live with the new system. After one year operating it, the conclusions were clear:

- The company had spent hundreds of thousands of dollars on the implementation.

- The project exceeded its budget by more than 30%.

- The go-live date was delayed by a full year.

- Susan and Harry were close to burnout.

- The company was still not sure whether the new software has solved the key issues that originally justified the transformation.

Unfortunately, this is not a tale. This is a real story happening every day in companies around the world.

The main mistake was a misunderstanding about what digital transformation really means.

Digital transformation is not about software.

It is about managing change.

It is about people.

And without independent project manager, even the best software can fail to deliver the expected business value.

Companies struggle always with cost determination. Product costing.

Many companies roll the dice to determine product costs. They do not know what the product cost is, but they have a rough idea of it.

Cost determination depends firstly on the legal valuation rules. Which costs can be included in the product. Additional costs can be added later.

Main costs are:

- Material costs.

- Labor costs.

- Machine costs.

The best way to collect them is while the good is being produced.

You create a work order to manufacture a product.

The work order has a bill of materials. You created it previously. The bill of materials not only includes materials, but eventually:

- Material

- Inhouse Operations such as assembly, cutting, etc.

- External or outsourced operations such as surface treatments

The operator on the shop floor must declare the material withdrawn for this work order, as well as the time dedicated to manufacture the product.

Depending on the manufacturing process, more material or time than expected can be declared.

External operations run as a purchase order.

Once the finished good is declared as available stock, the cost can be easily calculated.

You can use the weighted average price of every material withdrawn.

Sometimes a standard material price is allowed and, if you have advanced mechanisms to determine the exact cost of every material withdrawn, you can use the exact price.

Labor costs come from the employee hourly rate. If you need some machine to manufacture the product, machine costs come from the machine hourly rate.

Finally, you close the work order when everything is already declared.

You cannot handle it without a software tool, but first the process and then the tool.

In fact, people first, then the process and then the tools.

A batch is a group of parts that share the same attributes. If every part has its own unique attributes, it is called serial number.

Batch traceability is something critical in any production process with high quality standards.

To ensure traceability, every batch of raw material used in manufacturing must be linked to the corresponding of the finished product.

It is done while material withdrawal takes place.

In addition, if you produce parts with serial numbers, you can define the attributes of every finished product in advance by using a pre-batch or draft batch.

This automates the creation of finished product batches, regardless the tool you use.

People first, then the process and finally the tools.

There is a well-known problem-solving principle called “Divide and conquer”. It is commonly used in technical fields such as engineering or business processes.

The idea is simple: break a large problem into smaller, more manageable ones. The principle assumes that solving these smaller problems will ultimately lead to a solution for the original problem.

Many people apply this approach without even realizing it. At the same time, many others get stuck because they try to solve a complex problem all at once.

However, an interesting question arises: How and where should we break down the main problem?

A useful approach is to start from the end goal. Ask yourself: What would I need to solve this problem? It does not matter if you do not yet know how to obtain the answer. Each unknown becomes a smaller problem to solve.

By repeatedly asking this question, you can continue breaking the problem down until each piece becomes manageable.

For example, imagine your factory produces pens and you want to calculate the cost of a single pen.

What do you need to determine the cost of a pen?

- The cost of the bill of materials

- Labor costs

- Machine costs

What do you need to calculate the cost of the bill of materials?

- The cost of each material used

How do you determine the cost of each material?

- First, choose an inventory valuation method and define how the cost will be calculated.

If you decide to use the weighted average cost method, how do you calculate it?

How do you determine labor costs?

- Calculate the hourly rate of each employee and the amount of time they spend on the production process.

How do you determine machine costs?

- Calculate the hourly rate of each machine and the time it is used during production.

As a result, the original problem is divided into several smaller ones:

- How to calculate the weighted average cost of materials.

- How to calculate the hourly rate of each employee.

- How to calculate the hourly rate of each machine.

- How to measure the time employees and machines spend producing pens.

Problems are often much more complex than this example. However, the underlying principle remains the same: by breaking a large problem into smaller, manageable pieces, we make it easier to understand and solve.

Sometimes you need to demonstrate the integrity of a group of elements and prove they were created in a specific sequence.

For Example, you need to demonstrate that all invoices were issued according to the invoice number. Easy to say, not so easy to demonstrate unambiguously.

You can achieve it with a digital signature.

A digital signature consists of creating a fingerprint from a string of data.

The fingerprint is created using mathematical functions, which are available in any programming language.

These functions transform an input string (the data to be signed) into an output string (the fingerprint) with the following properties:

- Fixed length: The fingerprint always has the same length, regardless of the size of the string to sign.

- Irreversible: It is not possible to recreate the original data from the fingerprint. However, fingerprints can always be generated from the original data.

- Unique: It is almost impossible for two different input strings to produce the same fingerprint.

Keeping this in mind, imagine you create an XML file containing the main information of the invoice and you get a fingerprint.

Anyone can then verify whether the invoice content was modified just simply by generating a new fingerprint and comparing it with the original one.

Now imagine that each invoice XML file also includes the fingerprint of the previously issued invoice before generating its own fingerprint.

By doing this, you create a chain of transactions whose content and sequence can be independently verified.

In other words, you are creating a blockchain.

In 1892, John Froelich built the first tractor. I can imagine what many farm workers thought at the time. They were going to lose their jobs. And most of them did.

In the 1990s, personal computers started to include sound cards. Suddenly, people could create and record at home. I can imagine what sound engineers and recording studio owners thought. They were going to lose their jobs. And most of them did.

Spotify and CD and DVD producers, Netflix and video rental stores, and many other examples.

Now we have AI. Almost everyone thinks they are going to lose their job. And many people will.

Here are some principles about AI:

- It must work under human supervision.

- Be an expert. Experts who use AI to refine and improve their work will benefit far more from it than people who rely on AI to replace expertise.

- Don’t underestimate it. AI can do things you will never be able to do.

- Don’t overestimate it. AI is not a human being. It will never surprise you with flowers and come up with a crazy plan for the weekend.

- Do not reject AI. It is here to stay.

- Artificial intelligence and human intelligence make the best team.

AI won't replace all humans. But humans who know how to work with AI will replace many who don't.