When most executives think of an industrial company, they picture a highly disciplined factory under constant scrutiny for any evidence of inefficiency. Let’s call this the “downstairs factory.”

It rarely occurs to anyone that there could be similar “upstairs factories” in the same company -- in non-factory departments like finance, marketing and sales.

NOTE: This post is an excerpt taken from an article posted on IndustryWeek.com

When commanders of sci-fi spacecraft give the order to accelerate to light speed they can expect to hear this response from their crews: “Need more power!”

And when senior executives in banking press their organizations to improve operational productivity, they can expect to hear: “Need more technology!”

Yet the sci-fi crews always manage to improvise with their existing technology. The typical bank’s improvement team would do well to do the same.

Last year, I stopped in at the retail branch of a large North American bank. I saw three tellers—and no customers.

This misallocation of resources is not unusual. It is a well-intentioned example of one of the four biggest myths and miscalculations prevailing in today’s bank operating practices.

Belief bias overrides hard data developed from direct observation. If business people are presented with unfavorable comparative performance data, or benchmarks, that exceed what they believe is feasible, they often reject them with dubious rationalizations...

Have you ever watched an improvement project stall out because someone demanded an impossible level of precision in estimating the results? Typically, the detail requested for the project far exceeds the company’s current practice – and does not affect the decision.

You might want to tour your company’s factory, distribution center or even its office furniture management group before you read this.

Not long after the Industrial Revolution arrived, we began to study the making of things.

In Scotland in the 18th Century, Adam …]]> Tue, 18 Sep 2012 15:42:00 -0500 http://www.thelabconsulting.com/fromthelab/2012/09/18/your-finance-group-is-a-value-factory/ billblog@thelabconsulting.com (William Heitman, Managing Director) Finance Lean Manufacturing Knowledge Work http://www.thelabconsulting.com/fromthelab/2012/07/24/improvements-too-big-to-see/

“A man’s errors are his portals of discovery.” - James Joyce

Scientists, artists, mathematicians and stock traders have long cherished all types of errors as tools for discovery. However, they are particularly fascinated by errors of contradiction – any situation in which inconsistent ele…]]> Tue, 24 Jul 2012 12:28:00 -0500 http://www.thelabconsulting.com/fromthelab/2012/07/24/improvements-too-big-to-see/ billblog@thelabconsulting.com (William Heitman, Managing Director) Knowledge Work Cognitive Business Value Value of Errors http://www.thelabconsulting.com/fromthelab/2012/06/20/cognitive-business-value/

Anyone who’s ever worked in an office has been frustrated by the illogical activities and errors that occur over and over. Orders come in with missing data. Numbers have to be reconciled repeatedly. A company can keep track of 100,000 parts on its assembly line without a single error, but can’t seem to manage the chart of accounts in finance.

Executives at a global brokerage knew that errors crept into new account setup and paid a costly staff to correct them. Sound familiar? Everyone at the brokerage thought the sales force was the cause of this “insignificant, unavoidable” cost of doing business.

“People only see what they are prepared to see,” Ralph Waldo Emerson said. And so it is with business improvement, particularly in the realm of the “knowledge worker.” Prepare your mind to see more and you will find improvements that can increase the value of your business by 15-20% or more ...