The Spanish Prisoner

Here’s a riddle for you: Nothing in the universe happens without it. You are probably hardly conscious of it when it is occurring. It can be short, long, or the blink of an eye. People are always looking for a new and better one. It can be free, cheap or shockingly expensive. Nobody can make money without it. It was the mysterious subject of a David Mamet movie, The Spanish Prisoner, but was never revealed to the audience. What is it?

Answer: Process.

Betcha didn’t see that one coming. Your obvious follow up question should be “So what”?

Product developers are obsessed with process, whether they know it or not. Sometimes it’s the process of doing actual work, like finite element analysis or ASICS design. Other times it’s the process of improving a process (a “meta-process”), like Six Sigma or Lean Product Development. If you play BS bingo in meetings, I bet you could beat Betty from marketing on more than a few cards with the phrase “We need a better process for ‘x’.”

Unfortunately, process is very limited when it comes to making money. This is true even though it exists at the core of all things: just as matter is at the heart of everything physical, process is at the heart of everything immaterial. But like the bullets in a gun, it’s all in how you use it. And even then, it can be highly inadequate.

What is process lacking? I mean, in some chemical companies, the “process” is the entire multi-billion dollar business, kept behind 6-ft adamantium walls with a gigadecimal password, and guarded by genetically modified men and dogs. It’s that big of a deal. But process does one thing in business very poorly. It creates no demand from customers.

There are two books which I consider absolute must-reads if you are a business person and which have almost eerie similarities. The first is The Goal by Eliyahu Goldratt and the second is Lean Thinking by James Womack and Dan Jones. Both books deal with the exact same problem of inefficient and unprofitable manufacturing. Both go on to prescribe approaches to solving business problems through rethinking processes; in the former the answer is Theory of Constraints (TOC) and in the latter the answer is the Toyota Production System (TPS). Both books are filled with examples of how these similar processes broke through conventional wisdom and stubborn thinking to turn around the fortunes of companies.

Both books are also similar in how they gave birth to parallel movements outside manufacturing and “over the wall” into product development and engineering. “Critical Chain” was the TOC answer to project management while “Lean Product Development” is a current movement to replicate TPS’s revolution in production to the areas of innovation and product design. But again, while these two processes are fantastic at leading you to the most profitable way of making something, they do very little in the area of making the product desirable in the first place, unless availability is your market’s chief concern.

Don’t misunderstand the money-making quality of good process. In Lean Thinking, the authors do connect production efficiencies to profits. For example, dramatically reducing tool setup time could allow a product to be available in many more colors, thus opening up some markets. In both books, companies are taken to task for bloated inventories, and by switching to just-in-time (JIT) operations they freed up tremendous cash that could be used for other investments, even more process improvement. But again, this does not create customer demand, it only allows you to leverage the demand that already exists.

This issue with demand is greatly responsible for today’s global economic malaise and is something that no production efficiencies can address. Recessions which follow periods of prosperity expose the multitude of “faux markets” that skew the basic principles of demand. Only in times of low purchase activity like today are we able to see the naked emperor. Why have Hummer sales been cut in half over the last two years? No amount of cycle time reduction can save the vehicle. That is a job reserved for the blind purchase power of wealthy excess, which is unfortunately retracting. The worst part is that faux markets continue to do plenty of damage to real markets long after they’ve disappeared.

The core fundamental of the Toyota Production System is the pursuit of perfection. Even if logically we believe it to be unattainable, as the saying goes “perfection is the goal, yet excellence will be tolerated.” Taking this to its limit, I would think that the “perfect” lean system would be one that once a customer acknowledges the need for a product, it instantly materializes before them and the company responsible gets a direct donation in its bank account, with very few steps in between. In lean-speak, it would be a “perfect flow value pull.” But what happens if the customer isn’t pulling or even inclined to consider it?

The part that process has a hard time with is not making you more competitive with competitors, it’s making you competitive over nothing. It is like the ultimate ironic Zen koan. GM and the others aren’t competing with one another as much as they are increasingly competing with keeping the old car, walking or biking. This is a problem that single-piece flow and poka yoke can’t fix.

What can you do about it? Very little, unfortunately. This recession has left most companies and their investments in development somewhat out of sync with their markets. Although there is faith in recovery, few companies have the cash reserves to weather downturns like this without the pain of closings and layoffs.

While the human condition discourages us to plan wisely for the future, I’m skeptical that anyone could have created a bold enough strategy to face today’s circumstance. Capitalism, like life itself, is as hearty a force as the radiation immune cockroach, and should come surging back once again to start a new cycle, but when is anybody’s guess. If failure is something to learn from, then we have all earned our PhDs. Which companies remain to see the money come back will be a factor of cash capacity, whether your product’s value is needed or faux, and a whole lotta luck. What can you do? It’s just the process.