Can one person make a difference to the productivity of an organization?

To answer that question, consider the case of Jean Whitcomb, a zealot for Activity Based Management (ABM). Jean’s boss, the hospital administrator, promoted her to Manager of Radiology. She told him, “I’ve never worked in that area before.” His response was, “That’s okay. I’m sure that you’ll do just fine.”

After two months in the new job, Jean got an unexpected phone call from the chief financial officer. “Jean, I need you to prepare a capital appropriation for a new C. T. Scanner.”

Jean asked, “Why? We already have one.”

“Because the hospital is only processing 20 C. T. Scans per day. We need to double that amount to make money in the radiology department”, replied the CFO.

Before preparing the capital appropriation request, Jean interviewed the radiology department employees. She defined the department’s activities and mapped the patient treatment process. She soon learned from the analysis that the highly trained C. T. Technologists were stopping their C. T. Scans to prep patients, start I.V.’s and treat seriously ill patients.

Based on the facts gathered from the departmental activity analysis, Jean convinced the CFO to add nurses, not another expensive C. T. Scanner. The new nurses performed the patient care activities, thereby freeing up the technologists to keep the C. T. Scanner fully utilized. Adding a couple of nurses, instead of another expensive piece of capital equipment, increased C. T. Scans from 20 to over 40 per day. As a result, Radiology profits immediately improved.

Jean’s story proves that one person can make a difference. Yet the voice inside you may be saying, “Jean was gifted with great insight. I’m just an ordinary person. What can I possibly do to make a difference for my company?” You can make a difference, just like Jean, if you’ll remember to use the following three principles:

• Extraordinary ideas often come from ordinary conversation.The most critical know-how in a company is often not stored in its computer system, but in its casual conversation. Jean did not assume that her job title of manager required her to come up with all the ideas for productivity improvement. Instead, she held conversations with all the C. T. Scan employees. Jean explained the improvement target, e.g. double daily patient procedures, and then listened to their ideas. An ordinary activity analysis resulted in an extraordinary idea.
• Evaluate the process before you evaluate the people.Many managers have been taught to assume that poor performing employees cause business problems. That assumption is inconsistent with a basic principle of Total Quality Management (TQM) and Activity Based Management (ABM) which states, “People don’t make mistakes. Processes allow people to make mistakes.” Don’t leap before you look. Before taking any action, Jean first assessed the process, not the people.
• Adding people can actually lower cost.Traditional cost systems focus on cost. ABM systems focus on costand To eliminate bottlenecks and synchronize the workload of C. T. Scan activities, Jean added people to the process. As a result, C. T. Scan output doubled from 20 to 40 patients per day. Gross overhead cost increased but cost per scan decreased.

Herb Kelleher, chairman of Southwest Airlines, tells the story of a very smart guy at Southwest who “almost graduated from high school.” Years ago this baggage handler asked Herb, “Don’t our planes make money in the air instead of on the ground?” That concise, common sense question played a pivotal role in Southwest Airlines’ development of its strategically important 15-17 minute turnaround process. One person made a difference. And so can you!

For Jean, it was instinctive to analyze the process before making the purchase. For you and others in your organization, activity analysis may not be a familiar tool. ICMS offers you and your organization three ways to learn the principles, techniques and tips of activity analysis and “how to” apply them in your organization:

• Purchase a copy of the “Using ABM for Continuous Improvement” workbook by mailing ICMS at PO Box 13206, Arlington, Texas 76094.

Purchase an on-site Activity Based Management workshop. Workshop agendas and fees are listed onwww.ICMS.net.