Variation in performance is a business's enemy, so understanding and overcoming it should be a priority.
VARIATION is one of the many challenges that threatens to derail us on a daily basis in our journey to achieve better business processes.
We live and work in a society where critical factors – rainfall, house prices, and salaries – are all measured and compared by their averages.
Businesses can tell easily how they are performing – on average.
These figures can be calculated fast and are easy to understand.
Average profit/customer, average time to deliver or average cost/tonne are the sort of metrics we keep at our fingertips and use every day.
You might pat yourself on the back every month because you meet your own goals – on average – every month.
This sounds great.
But if your local pizza place has an average delivery time of 20 minutes, does that mean you will always wait exactly 20 minutes for your dinner? Unfortunately not.
We also need to take into account the variation in the process – the high and low readings in your data.
So if your goal is to answer all calls to the business within four rings and your average is 3.6, chances are high that there are a fair number of calls going unanswered after four rings.
Or if your truck payload is sitting at 182 tonnes, spot on your team’s target objective, it will sound impressive and look good in presentations and reports.
Although your average is 182, there could be many truck loads in there of only 140t or, to the maintenance department’s despair, loads of 210t or more.
The average – or mean – tells us about the central tendency of our data, while variation tells us about the spread.
Despite the fact we use averages all the time, variation is more important to our customers.
While we look at averages and think we are doing a good job, our customers are experiencing the pain of the variation in our processes.
It’s their calls that are answered in a couple of rings one day but after six rings the next.
While time to answer calls may not always be a matter of life and death, it could be if you are running an emergency hotline.
Whatever process metric you care about, whether you are measuring the number of days to approve a loan or another customer service, then the variation can have a huge impact on your customers and you should be measuring it.
Ranging high and low
One of the easiest ways to measure variation is to look at the range – the difference between the highest and lowest numbers in your dataset.
That will give you a good idea of how big your variation is.
If the fastest time to answer your phone calls is one ring but the longest time is seven rings, then you have an idea of the size of the problem.
The amount of variation in your answer service is six calls.
If your haul truck payload varies from 140t to 210t, the range is 70t.
A more sophisticated measure of variation is standard deviation.
Standard deviation is calculated using the distance of each data point from the average.
The further away they are from the average, the greater the standard deviation.
If all the data is tightly grouped around the average, then the standard deviation will be small.
You can have a lot of confidence in a process with small standard deviation.This is a process that is unswayed by the day of the week, the name of the operator, time of day or the type of customer.
It delivers within a predictable range, every time.
Next time you are discussing your company’s performance, take a moment to think beyond the average.
• How did we do in terms of variation?
• What were the highs and lows of the way this process performed?
This discussion can lead very easily into what do we need to do to prevent the process operating below the level we want it.
Or what do we need to do more of to keep it performing at the higher level?
Two organisations may have the same average performance for a key process, but if one of them has a significantly smaller standard deviation, it will outperform the other every time.
Understanding and using variation will give you a better picture of what is happening in your organisation.
In the fight for perfection, variation is the enemy.
Gillian Bester is a director of Spring Board (WA), which works with businesses to facilitate positive changes in the workplace.
Contact Gillian on 0414 743389| email@example.com | www.springboarding.com.au