Case Study: Applying Lean Thinking in Clinical Pathology

Applying Lean Thinking in Clinical Pathology – Application in Histocompatibility and Immunogenetics at NHS Blood and Transplant

Background

Since 2008, the UK’s NHS Blood and Transplant (NHSBT) has been successful in using lean tools to become a more effective and efficient service and from 2013 the approach has been used to drive improvements in the Histocompatibility and Immunogenetics (H&I) function.

The focus of the H&I work was a national Value Steam Analysis (VSA) of the laboratory network, which consists of six laboratories across England.  VSA is performed annually to focus CI activity and one outcome from the initial national VSA identified that changes in laboratory accreditation standards required the addition of a purity assessment method in the Chimerism service.  Chimerism is a valuable tool in the assessment of engraftment and graft failure post-Haematopoietic cell transplant.

It was shown that a new cell separation method was required, as it was not possible to adhere to the new accreditation standards with the existing method.  An alternate method for cell separation was evaluated, validated and implemented (by established NHSBT change management process).

The newly implemented method proved to be more involved than that previously employed method from comparison of the flow, touch and Takt times. At this time a steady 20% increase in annual workload was observed, with no additional staff resource was available and the method was associated with a sample repeat rate of greater than 60%.

Getting Started

Adapting to change

A chimerism value stream was created (figure 1) which prompted a Rapid Improvement Event (RIE) involving staff of all grades from multiple laboratories. Through the use of lean tools (including A3, 8 wastes, process mapping, gap analysis and standard work) a plan for short and long term objectives for Chimerism was agreed in order to adhere to good practice guidelines and accreditation standards.

The RIE was held over five days and led by a colleague who was specifically chosen due to no direct involvement in the chimerism process.  The team consisted of representative staff from all grades performing the process across the NHSBT H&I network.  This team was joined by an in-house CI representative, a ‘fresh pair of eyes’ from another pathology speciality and a member of the Quality Assurance department.

Standard work was established for each cell and potential bottlenecks were identified (automated extraction platform and genetic analyser due to run capacity).  As a result, optimal batch sizes for each cell was agreed to work towards a pull system.

Figure 1 – Chimerism Value Stream

Figure 1:  An overview of the cells required in the chimerism value stream.  The cells highlighted in orange are exclusive to the chimerism process.  All the remaining cells, highlighted in blue, accommodate multiple values streams.

*Polymerase Chain Reaction **Short Tandem Repeat

Removal of waste

Review of the value and non-value added steps identified improvements to the process that could be made immediately – the ‘quick wins’.  For example, all of the patient data was stored in increasing large paper files, which were just duplications of raw data and analysis already held in electronic format.  Organisation of the local shared storage (backed up on network) allowed easy access to historical data.  As a result, each paper file was discarded in preference of an electronic folder for each patient.

Addressing the repeat rate

Standard work provided the platform by which the variability in the process was removed.  This included standardising the DNA concentration, optimising the polymerase chain reaction process and creating a standard approach to analysis

Reagent review

A review of other known issues in the process identified that problems consistently arose with supply from commercial companies for key reagents. Where possible these have been replaced with validated in-house alternatives.

Semi-automated analysis

A commercial software package was validated for routine use to reduce potential transcription errors. It also allowed user audit and individual access levels to be set while also providing a standard analysis for all transplant recipients regardless of operator.  As an added bonus, statistical analysis and trending of results was more readily available for ISO15189 compliance.

Review of cell separation

A steady increase in workload had pushed the cell separation method to capacity.  No immediate alternative was available, but after consultation with suppliers a new robust method was created in collaboration with a third party by adaptation of their existing repertoire.  This new method has been validated and implemented across the network.

Study & Measurement of the Lean Improvements

The primary impacts of the improvements on the chimerism service were measured by laboratory Key Performance Indicators (KPIs).  KPIs include the number of referrals received, the mean sample turnaround time (TAT) from receipt in the laboratory to clinical report being issued and how many samples failed to meet service level agreed targets (not reported within 5 working days of receipt).  These KPIs also contribute to the overall performance of the laboratory, which is openly reported on a monthly and annual basis.

As each improvement has been implemented, standard work has been reviewed to optimise performance.  Performance of the chimerism service is trended (KPIs, mean TAT, repeat rates) and discussed in monthly laboratory section reports. Trends have been incorporated into a visual management display.

Results

CI – What does it look like?

Since the initial RIE and a need to address shortcomings in the chimerism process, continuous improvements have been suggested, reviewed and implemented over the last five years (figure 2).

Figure 2 – Time line of interventions in the chimerism process

Over the five years that CI has been actively applied to this process, an increased sample workload has been observed (figure 3), while at the same time sample TAT has remained within both service level agreements and recommendations from the best practice guidelines (figure 4).

Figure 3 – Total number of chimerism DNA samples analysed annually

Figure 4 – Mean chimerism sample turnaround (TAT)

Applying CI in the real world

Since CI has been adopted in the laboratory there has been unintended contextual change within the laboratory service, including new equipment, changing/overlapping process value streams, as well as change to the footprint and layout of the laboratory.  All of these events have had an impact on standard work.

By utilising CI during these changes the laboratory has observed positive outcomes, such as increased capacity (e.g. more suitable equipment, management its use) and less waste (e.g. motion due to a smaller footprint).  CI activity in chimerism has impacted other parallel value streams that utilise shared cells.  In these situations, all affected processes have been considered when optimising both standard work and batch sizes.

Counting the £’s?

The costings in the chimerism process have been reviewed at the end of each financial year throughout these improvements (inclusive of staff time, reagents, asset maintenance and software licencing).  They have shown the cost per sample has remained consistent allowing the chimerism service to remain financially viable without additional cost to the customer/user, which is in-keeping with NHSBT financial planning.

By implementing standard work, extra capacity has been created within the process to accommodate a potential 70% increase on current workload.  This has been achieved with no increase in staffing provision or running costs.

Discussion

Summary

Continual improvement and optimisation of the chimerism method has produced a high quality, low cost, rapid throughput clinical service. Standard work has been defined, KPIs are compliant and positive feedback has been received from both laboratory staff and users.  One service user has even lodged an official appreciation of the current service provision through the hospital liaison compliment pathway.

Attention has also been given to the human dimension and small adjustments have been continually suggested and tried based on staff feedback, as well as more major changes such as change of cell separation technique (implementation of alternative technique), modification/optimisation of cell composition/layout (e.g. set-up/orientation and location of cell separation) and work flow within multi-functional cells (e.g. use of flow cytometer and genetic analyser).

Observed Limitations

The irregular work flow due to the user clinic times, the associated time limits of sample processing time given in the best practice guidelines and perceived clinical urgency have, as yet, prevented the process from being a true ‘pull’ system.  To date there have been ongoing discussions with the service users to move the clinics and even workflow.

Stumbling blocks and learning points

At the start of the improvement process the CI and lean methodologies were not very well cascaded and were applied in a top-down fashion.   The resulting lack of awareness and explanation to justify early interventions created an air of unrest and wariness.  After the initial RIE there was also resistance to further CI activity in the process, as to many both in the laboratory and in directorate management, it was viewed as ‘we have already done that process’.

Parallel, stand-alone RIEs targeting individual laboratory cells that accommodate multiple process value streams have impacted and often hindered improvements and standard work already implemented.

These early issues have been largely overcome by involvement of all staff in the CI process and focus on the practical application, where the benefits can be seen day-to-day, not only on A3’s and spreadsheets.  The interaction/overlap of value streams has been addressed by including all stakeholders for comments feedback throughout CI activity, from planning to implementation.

Finally, organisational restrictions within NHSBT, due to the structure and legality of financing and tendering within NHSBT, the potential of CI tools such as PDSA is yet to be fully realised.  For instance, improvements that affect the testing process cannot only be put into place locally due to potential for non-compliance with TPS51/ISO15189 and significant process deviations/alterations could require reassessment laboratory accreditation bodies.

Author’s final thoughts & reflections

While initially CI activity within NHSBT was very much ‘by the book’, over time there has been more ‘blending’ of the concepts with existing NHSBT processes of controlling and documenting change.  This ‘blending’ of CI and quality systems within organisational practice is assisting in positive, ongoing culture change.

In support continued CI ‘super-user groups’ have been created within the organisation, by which each department/stakeholder has a nominated spokesperson for each value stream who meet periodically to update and discuss local CI activity, reaffirm agreed standard work nationally and feedback locally.

In my opinion, without the described improvements and visible evidence of a shift in culture/attitude towards CI, the chimerism service would either no longer be financially sustainable or clinically relevant.   I hope that this brief report may be of use or offer reassurance to those implementing or supporting a CI ethos by showing that big changes can be made with small manageable steps.

The Challenges of Implementing Total Productive Maintenance

Introduction

Total productive maintenance (TPM) is a lean maintenance methodology that looks to maximise the utilization of your available resources such as machines, processes, and procedures as well as your employees, to improve production and ensure product quality.

As we already mentioned, it is a complex method that can be divided into two parts:

1. 5S methodology
2. Eight pillars of TPM

The pillars represent eight types of proactive and preventive activities that an organisation has to implement to improve equipment availability and completely optimise its production process.

Let’s look at some of the major challenges organizations face when they try to implement TPM.

Resistance to Change

An organisation is often compared to a living organism and as such, it is not a stretch to say that it also has some innate resistance to change. This is actually a natural reaction, as nothing changes smoothly in seconds in our entire life.

The reason why resistance to change is such a problem when implementing TPM is twofold:

• Depending on your current processes, TPM might demand significant changes to your workflow
• TPM implies continuous improvement which means multiple revisions of one workflow – it is not easy to be consistent and put 100% of effort all the time

Luckily, there are always some ways around that.

The first is that the introduced changes might actually mean your employees will need to put less effort in certain activities and that, overall, TPM will make their everyday work easier and more efficient. Making sure they know that is a good way to get them motivated to do their best.

The second is to motivate your employees by offering some sort of rewards. You need a working mechanism in place that ensures your employees are happy with the new situation and those who perform best are rewarded. When they see the rewards, not necessarily financial benefits, you are on the right track.

The lack of a lean culture

TPM is touted as the most difficult lean method to implement. One of the main reasons for that are its hard to reach goals and a required lean mindset.

Trying to introduce TPM to an organization that doesn’t have an already well-developed lean culture is just adding complexity to an already challenging situation. So, if you decide to implement TPM, you first need to work to develop a lean culture and a lean mindset across all levels of your organisation.

Top management pressure

You cannot implement TPM without your managers being convinced the change is required. The top management should be the driving force behind any change and lead by example.

That being said, you need to make sure your top managers are well aware of how to implement the planned changes. You need to encourage them to plan for the change and have a strategic vision about the very implementation of these changes.

Ad-hoc approach to implementation, without a clear outline of the steps you need to take and ways to track the progress, will only serve to fuel statistics about low implementation success of TPM.

This is why it is important that the people in charge of making the plan work closely with the people that have a complete understanding of the production process. You don’t want someone to force a change in the workflow that will actually make it less efficient.

That is why managers have to think not only how a certain change will affect one single process, but also how will that change affect all the people and processes that are connected to it.

Staying on top of the implementation process

The main goal of TPM can be viewed as a completely optimised production process with zero defects.

As you can imagine, that is something that is almost impossible to reach. That is why you just can’t set that as your goal without having a detailed set of milestones you want to reach before that.

Working towards something you might never achieve can quickly become depressing and discouraging. That is why you should focus on reaching different milestones and make necessary corrections along the way. Make sure you don’t spread the milestones too far away as that could make you lose control over the whole process and cause serious setbacks.

Also, make sure your employees are aware that this is a journey of constant improvement and not just an isolated change. That way, they will be prepared and not fall into a trap of being satisfied with something working “fine” and not looking at how to make additional improvements.

Conclusion

TPM is where you can prove yourselves as successful managers or owners. You will face many challenges and obstacles but the main one is, and will always be, the resistance to change.

Hence, you need everybody on board convinced the change is required and will produce benefits for everybody. Once you have a dedicated team of employees and managers, you can implement total productive maintenance with relative ease.

Understanding & Adapting to Different Learning Styles

What are the Different Types of Learners?

Visual, aural, verbal (reading/writing) and kinesthetic are the most common categories that people use to define learning styles. One theory called “VARK” (an acronym for the four types), claims that most individuals can fall into one of those four categories of learning. VARK was first put forward by Neil Fleming, a New Zealander, in 1987.

In this article, we will also cover logical, social, solitary and naturalistic as they offer additional insight into the way that people learn.

Visual

Visual is the most common type of learning style. This type of learning includes a predisposition toward images, colors, graphs, pictures, maps, etc. In other words, they want something they can feast their eyes on.

Strengths of Visual Learners

Visual learners can also be very good with spatial thinking and recalling images or places in their minds. Visual learners excel at being detail-oriented because they notice very small changes in their surroundings. They also tend to do well with balance and alignment.

How to connect with a visual learner in the classroom

Typically, a classroom is already geared toward visual learners. PowerPoints, writing on a whiteboard, maps, graphs, posters, pictures and many other visual aids are typical in a learning environment.

This makes sense since visual learners account for up to 65% of the population, according to Social Science Research Network.

Visual learners need text or long speeches mixed with something they can see. If they are watching a presentation, a PowerPoint with graphs and images would greatly help them receive the information and remember it later.

When it comes to listening or reading, visual learners do better if the speaker or text includes imagery that they can imagine. If they can visualize what a speaker is talking about, they can better retain that knowledge.

Auditory (Aural)

Aural learners love music and sounds of all kinds, but especially interesting ones like rhymes, rhythms and the spoken word. Auditory learners retain knowledge best through hearing information rather than seeing it.

Strengths of Auditory Learners

Auditory learners are very good at repeating information back once they’ve heard it. They tend to be good at noticing people’s inflection and tone or subtle changes in their language. Auditory learners are good at picking up language, verbal communication and retaining long lectures. They can also be fantastic storytellers.

How to connect with a auditory learner in the classroom

According to some studies, auditory learners make up for about 30% of learners. While this isn’t as many students as visual, it still accounts for a large percentage of the population.

In the classroom, auditory learners benefit from things like lectures, music and speeches. They would be the type of person who could learn from a podcast and put what they’ve learned into action.

When giving class assignments, auditory learners will often do better hearing the assignment rather than seeing it on paper. They will also benefit from having an oral exam as opposed to a written one. Another strategy for auditory learners is to have them repeat back information to the teacher as often as possible as opposed to always writing information down. An auditory learner may not take as many notes as their visual peers.

Verbal (Reading, Writing)

People who excel at the verbal part of learning differ from visual learners because they are not discouraged by long texts. Verbal learners love language, whether written or spoken.

Strengths of Verbal Learners

People who are verbal learners are very good at absorbing information through the written word. They can take in vast amounts of complex written words and condense it into more easily digestible information.

How to connect with a verbal learner in the classroom

It isn’t as clear how many students fall into the verbal learner category. Previously, the VARK study only included three categories: Visual, Auditory and Kinesthetic. They later included reading and writing as a separate category.

Verbal learners do very well with a lecture and note-taking types of teaching and they also excel at writing assignments and written tests.

A good strategy for verbal learners is to have them rewrite information into their own words. They do very well at research writing projects or writing projects in general. To help them with new concepts, it’s a good idea to include a written handout for them to review.

People in this category can also greatly benefit from the exuberant amount of information available on the internet. A verbal learner can easily pick up a lot of information quickly.

Kinesthetic (Physical)

A kinesthetic learner is a person who learns through physical action. They learn through making something. They prefer tactile learning and hands-on practical experience.

Strengths of a kinesthetic Learner

Kinesthetic learners are good at picking up skills through active participation. They tend to be coordinated and do well at activities like building, sports, art or drama. They also are adept at learning by watching someone else. They’re likely to have great motor skills and hand-eye coordination.

How to connect with a kinesthetic learner in the classroom

Kinesthetic learners reportedly make up about only 5% of the population. Therefore, many classroom environments are not geared toward kinesthetic learning. A student who responds to this type of learning style can come across as antsy and inattentive in the classroom. They may struggle to sit during long lectures or engaging in too much written or verbal learning.

Kinesthetic learners do best when they can physically get their hands on something or move in some way. Kinesthetic learners can be given some leeway to doodle or move a little so long as it is not disruptive to the class. It can be beneficial to have them be a helper in class with things like handing out assignments.

Mix up your class structure by breaking up lectures and sitting periods with physical movement. For younger learners, you can incorporate letters and numbers with movements and songs to get them learning while moving.

Another strategy is to use hands-on experiences to teach them something. Science is a great field for this because experiments and nature observation can be incorporated comfortably into the learning schedule.

Logical

People in the logical category are problem solvers. They see things in the realm of cause and effect. They like knowing that if A is true, B must follow. People with this learning style enjoy mathematical equations because math problems follow a logical flow. They also like patterns and logic problems.

Strengths of Logical Learners

Logical learners are excellent at seeing how things are interconnected. They can understand complex patterns, math problems, and excel at strategy games like chess. Logical learners tend to be attracted to science fields like chemistry, and they’re often very comfortable with technology and computer science fields as well.

How to connect with a logical learner in the classroom

Logical learners like to understand the how and why something happened. They respond well to statistics and data and other hard facts. Science and math are preferable because they offer clear answers for how someone comes to a basic conclusion about something. In other words, these fields often offer definitive answers, or at least a course of action, to get to the answer.

Logical learners do best when the classroom is very structured. They tend to struggle more with open-ended questions and assignments. To help them connect to subjects that may not fit comfortably into the logical sphere, try to incorporate things that they can connect with. For history and geography, including statistics and graphs can be helpful. Explain how countries interact with one another and the reasons there are conflicts.

For fields like art, music and literature, try to find a more logical angle. For instance, logical learners might identify with the rules of poetry like the meter or rhyming patterns. They might be able to analyze the motivation of characters in books—if this character does this, this character will respond this way. It may not be within their natural comfort zone, but over time, it may connect to their logical style.

Social (Interpersonal)

While it should be noted that any one of the six other (not solitary) learning styles can also be applied to a social learner, people within the social or interpersonal category tend to learn much better in a group atmosphere. This type of learner thrives in group projects and shines in social settings.

Strengths of a social learner

People in this category have strong communication skills and can pick up on verbal and nonverbal communication from the people around them. They can pick up on the emotions of other individuals and groups. In other words, social learners tend to have a high emotional IQ and may be the first to notice when someone else’s demeanor has changed. Social learners gravitate toward extracurricular activities and team sports and are energized by social interactions.

How to connect with a social learner in the classroom

People who are social learners do well when they can bounce their ideas off of other people. To connect to social learners it’s a good idea to include class presentations, group discussion and group projects, as they will feel most comfortable in this type of setting.

Social learners may struggle to sit quietly and absorb information during long lectures. To help with this, it may be helpful to break it up with small group discussions or ask them to repeat back information in their own words.

Solitary (Intrapersonal)

While the opposite of social, a solitary learner is similar in that it can include all the other learning styles, but people in this category learn better alone.

Strengths of a solitary learner

Solitary learners are often self-directed, quiet and independent. These people tend to be very good at identifying and understanding their own emotions and feelings. They value learning independently and quietly.

How to connect with a solitary learner in the classroom

Solitary learners benefit from time alone to work through problems and new ideas. They do well when they’re given time they can spend being introspective and working through issues.

Some strategies that work well for solitary learners is encouraging them to keep a journal, giving them projects that they can work on alone and allowing them to work independently when possible.

They are likely to respond better to writing assignments and projects as opposed to public speaking or in group projects. If group projects are necessary, they would do well to be given a section of the project that they can contribute on their own time.

Naturalistic

A naturalistic learner is similar to a kinesthetic learner in the sense that they like hands-on experience and do better with physical involvement as opposed to learning from a textbook. The key distinction between the two is that the naturalistic learner prefers to do their hands-on learning primarily outdoors.

Strengths of a naturalistic learner

Naturalistic learners are curious and investigative. They can take hands-on experience from nature to understand the world around them and draw conclusions about plants, animals and the environment. They tend to be very good observers and are naturally comfortable with animals.

How to connect with a naturalistic learner in the classroom (or out of it)

Naturalistic learners will do very well if they can have some time outside actually exploring nature. Gardening, nature walks, field trips and park trips are all ways to get naturalistic learners outside. Like kinesthetic learners, naturalistic learners may enjoy science as it lends itself well to outdoor exploration.

How do you engage a naturalistic learner when they can’t leave the classroom? Consider bringing nature indoors. Grow plants, have a class pet or create a tiny ecosystem. If you’re studying the various forms of rocks, bring in samples that they can touch.

Students who have a naturalistic learning style enjoy reporting back the information they’ve learned from the world. You can take this natural desire and apply it to other fields of study like writing. Have your nature-friendly student write reports about things that they are interested in like animals and the outdoors. They can also develop their reading skills by reading books related to nature.

Conclusion

All people approach learning in different ways and from different perspectives. Most people have a range of learning types that work for them but usually have a type of learning that stands out from the rest.

Since not all people are the same, it’s helpful for educators to practice multiple types of learning styles in their classroom to meet students where they’re at and equip them for success.

This article was originally published as a Cornerstone University blog.

Gamification is the Future of the Workplace. Here’s Why

Is gamification right for your company? Are your sales reps excited to come to work each day?

Or do they dread each call, pensively check their monitor clocks, mentally computing how much time there is left before they can leave the floor?

According to the 2014 Global Workforce Study conducted by Towers Watson, four out of 10 employees are disengaged. Some of the reasons they are unmotivated are pay, industry, management and company culture. It is in every company’s interest to have motivated employees. In sales situations that can be high-pressure in nature, ensuring that sales reps are locked in and engaged is one of the sales manager’s most necessary tasks.

So, what motivates employees?

Recognition, remuneration, and a competitive sense are all excellent motivators. Gamification works well with workplaces. It banks on each of these motivators to keep employees locked in and focused. Gamification is the marriage of productivity and technology where game mechanics are used in a non-gaming context.

Traditionally, games and work do not mix. However, engagement is such a big issue for many companies that managers and top-level management are willing to try anything to get their workforce performance in top speed. If businesses do not do anything with disengaged workers, the business will suffer. For many teams, gamification might be the key.

Why it works: The psychology behind gamification

Gabe Zichermann said in his book Gamification by Design, “gamification is 75% psychology and 25% technology.” What gamification does is it taps on the psychological cues that push our day-to-day decisions. A gamification tool is a platform for competition, achievements, and progress management. Gamification is fun–but it has one objective. As a manager or C-level executive, you are willing to try gamification to get the results you want: encourage productivity and engagement of your employees.

The biggest hurdle to this is also one thing: Behavior is not an easy to change. To change behavior, there are three elements that must converge, according to Professor B.J. Fogg. The experimental psychologist at Stanford University says that motivation, ability and trigger are the three things that have to happen at the same time for behavior to change. Can gamification impact your employees’ behavior?

Why does sales gamification work?

Gamification only works when it motivates your employees to do something. While it can be successful in curbing bad habits and promoting better behavior, it’s important to have a basic understanding of where the motivation comes from. Done badly, gamification can have the opposite effect on your employees than intended.

Scientific American lists three critical elements that sustain motivation. Knowing these basic elements will help you understand why gamification motivates your employees:

Autonomy

When your employees pursue an activity for its own sake and not because external forces compel them, they gain motivation. They feel in charge. If your employees are given the opportunity to select a course of action based on their own opinions, they will tend to stick to their goals for a longer period of time.

Value

Your employees are more motivated when something of value to them is at stake. If they think it’s important, they’ll work harder on it. Staying true to their beliefs makes them more invested in their job.

Competence

As your employees invest more time into an activity, they will become more competent in it. Believing that effort fosters competence can inspire your employees to work harder on their goals.

How does gamification work?

Gamification increases employee engagement because it changes the way employees interact with their work and their colleagues. According to Scott Buchanan of Nice, it increases their commitment, motivates them through competition and inspires collaboration.

Commitment

To handle complex issues, organizations need more skilled agents. Usually, this requires formal training sessions for your staff. This method takes people away from their work and cost the company valuable staff hours. One of the alternatives to this process is done with gamification.

Your goal is simple – have a skilled agent. Instead of scheduling training sessions, create an arbitrary award for those that meet the requirements of a skilled agent. Have your employees work on becoming an “X skill Guru”, “Product X Master” or “X Badge” owner on their own free time. To achieve those, give them set of tasks they must complete to earn it, something that your employee can do after going through 20-hours training.

Competition

A lot of corporations have whiteboard or email contests on a monthly basis. Gamification provides an alternative to this, but rather than running a single contest, you can engage your employees in multiple “quests” or contests simultaneously.

These quests can range from “The best customer feedback”, “The fastest response time” to anything related to your line of work. Have your employees compete for “Top scores” or the best rank. Mix all these contests together and have a “leaderboard” for personal, team, and company score.

Make sure your employees can track their records on these leaderboards and encourage them to share their achievements. It’s motivating when recognition comes from achievements that are aligned with company goals.

Collaboration

Gamification can be a powerful tool in driving collaboration between your employees. The employee who was a top performer last week can be encouraged to publish their best practices for others to view. In doing so, they can even be rewarded with a special badge if they produce top-rated content. This allows employees to seek out one another. If a new hire is working toward a new badge and is confused by a single objective, gamification allows him to reach out to those who have already earned it and ask for their advice.

By successfully implementing gamification, you will be giving its “players”:

• Motivation to win, get rewarded, or gain accolades
• Ability to break down tasks and empower them to pick up tasks big and small
• Trigger or cue to finish tasks

When all these are met, gamification can change employee behavior. Motivated and engaged employees are the natural result. Well, does it work in practice? Gamification is not an awfully new concept, companies have been using gamification not only in the workplace but to keep customers motivated to stay with their services.

Here are some numbers that can prove the point better:

According to the data science gurus over at Gartner, 40 % of the Global 1000 will use gamification as the primary mechanism in transforming business operations. That’s before 2016! Gamification is seen as a top and legitimate form of enlivening employees. With top corporations and organizations hopping on the gamification wave, it’s only logical to project that more smaller-sized and smaller-scale companies will follow suit. If the best is doing it, why won’t you? It’s not like gamification is not scalable.

From small to huge teams, there are gamification tools and mechanics that can be applied. In a study conducted by the Pew Research Center’s Internet & American Life Project and Elon University’s Imagining the Internet Center, some 1,021 technology stakeholders and critics were surveyed on gamification’s future.

53% said that gamification will play an important role in the workspace and will be widespread by 2020! The rest of them said that gamification will play an important role but won’t be as widespread. Gamification really holds a good place in management efforts. Engagement is one of the biggest and most pressing management issues across industries.

Gartner said that 70% of business transformation efforts fail due to disengaged workers! There are tons of business solutions that aim to streamline work, marketers that help with filling the sales pipeline, research companies that help you evaluate your market–but when the effectors and implementers are disengaged, it’s hard to push any development.

Companies need to co-opt techniques used by game developers to keep players interested. Using incentives is one way of achieving employee engagement in light of transforming business operations. And gamification pioneers are getting in on a market that’s about to blow up! In 2012, the market for gamification was at $242 million. It was sizable but not really significant to make ripples to other industries. But in an M2 Research-headed study, it was revealed that by 2016, gamification will be a $2.8 billion industry, with the primary market being enterprise-level workforce.

Well, how has it worked for companies who use it right now?

Stewart Agency, an insurance company, doubled their three-year productivity in just two months with gamification. Through this new approach, their agents managed to collect double the number of email addresses in their database. Here’s how they did it. The objective was simple: Collect more email addresses from leads.

The management knew that this wasn’t a simple task. They need a motivated workforce to reach that objective. They needed a shift in behavior, to change the behavior that caused them to need more contacts! They incentivized the objective by starting a competition among their sales representatives based on the number of email addresses they can collect over a couple of months.

The result: In two months, their existing email addresses were doubled. Those existing addresses were collected over three years! In 2013, Salesforce surveyed 100 Sales VPs who are using gamification to help with employee engagement.

To say the results were staggering is an understatement.

Sales performance is increasing

90.4% report that sales performance is improving, where 71% report sales bumps of 11% up to 50%. Here’s a video of Cisco talking about how they used gamification to reduce their call centers’ call time by 15% and improve sales by almost 10%:

Gamification is the future of workforce management. The little pockets of success are definitely an indication of better things to come for gamification. Do you think gamification can improve your team’s operations? Let us know your thoughts and comments!

Defining Lean Accounting

Lean Accounting is applicable to any company, in any industry, that commits to a Lean strategy. I like to define Lean Accounting this way:

• Lean Financial Accounting: applying lean practices to accounting processes
• A Lean Management Accounting System to support any business that is Lean.

I’ve also heard Lean Accounting experts such as Jean Cunningham, Jerry Solomon, Brian Maskell & Orie Fiume explain it this way:

Lean Financial Accounting as “Lean for Accounting” and a Lean Management Accounting System as “Accounting for Lean.”

It doesn’t really matter exactly what terms or phrases are used, what is important is to understand the distinctions. Let’s look at both in more detail. Lean Financial Accounting is applying lean practices in all accounting processes to improve productivity, delivery, quality and service. Eliminate waste in accounting processes. A simple example is applying lean practices to eliminate waste in the month-end close process to have a shorter close cycle.

Any accounting department can begin applying lean practices to its accounting processes, even if your company has not yet committed to beginning its lean journey. Applying lean practices to accounting processes in no way compromises meeting financial reporting requirements, maintaining compliance with tax laws or other regulations or the internal controls to maintain compliance. In fact, from a lean point of view, maintaining compliance is the quality standard of accounting processes.

Management accounting systems are used by management to control and measure the operations of a business and provide a decision making framework for all types of business decisions. Management accounting systems are for inside the business and not intended to external stakeholders. What we are really talking about here is financial analysis, operational analysis, measurements and other information required to run the business. Management accounting systems do not have to comply with any external regulations.

When a company commits to a Lean strategy, the fundamentals of how the business operates will change as Lean practices are put in place. How the business is controlled, what needs to be measured and the criteria for business decisions will be different than “before Lean.” Internal financial reports, financial analysis, measurements, data used to control the business and decision making criteria all must support “Lean Thinking.”

So a Lean Management Accounting System must be created. This is a journey, much like Lean is a journey. Without a Lean Management Accounting System, there is a disconnect between Lean practices and the information management will be receiving to understand how well the Lean business is running.

Because Management Accounting Systems are not externally regulated, they can be changed by companies. And changing Management Accounting Systems in no way compromises external financial reporting.

The accounting function of any Lean company must lead the transition to a Lean Management Accounting System. The needs and requirements of customers of a Management Accounting system, the management of a company, have changed because of Lean practices. It’s important for the accounting function to make the changes to the output of the Management Accounting system to meet its customers’ needs.

Further Information & Resources

Introduction to lean accounting video

How Should Your Company Consider Customer Lifetime Value?

Preface

The concept of lifetime value is well founded in the sales and marketing field, where there has been a growing appreciation that it is cheaper and more profitable to maintain than gain and that a business needs to think over the long term regarding its customer relationships, rather than take a narrow, single transaction perspective. HP’s David Packard famously once stated that “marketing is too important to be left to the marketing department” implying that all employees are part-time marketers and so those in operations and service delivery also need to grasp the lifetime value concept and ensure that they play a role in nurturing customer relationships, so as to maximise both the return for the company and the value received by the customer.

This article first appeared on tenfold

Introduction

What is the value of acquiring one customer? Many marketing campaigns carefully consider this cost. They total up all the advertising and free perks offered before the customer commits to a paid product. However, once the customer commits, how much is that relationship worth? The customer lifetime value is the sum of all the customer’s purchases over the entirety of the relationship with the company. It can be the total over years.

While it may seem difficult to compute this value, it’s an important metric for evaluating the effectiveness of a marketing campaign. The lifetime value of a customer can influence how much companies decide to spend acquiring a customer. The value shows whether the acquisition cost was worthwhile. The customer lifetime value (or customer LTV) can be used to determine a good marketing campaign budget that balances lifetime value and acquisition cost.

The Customer Lifetime Value Formula

There are many ways to calculate customer lifetime value. Models range from the complexity of predictive analytics to a simple formula using average values. A formula that relies on averages is shown here:

Average Value of a Sale x The Number of Repeated Transactions per year x Length of Relationship in Years

The lifetime value calculation gives you the revenue from each customer as an average. To get to this number, use the total value of sales over the total number of sales as the average value. The number of repeated transactions per year can be estimated. In the case of a subscription service, this number is simple. A monthly subscription service would be repeated 12 times a year. To calculate a less regular interval, averages are useful. The number of transactions divided by the number of customers over a year will provide a close estimate. Finally, the value of the customer is multiplied by the years in the relationship. This simple customer lifetime value model will give a good estimate of a customer’s value to the company.

Starbucks Customer Lifetime Value

Calculating customer lifetime value can seem abstract until it is applied to a real business. Kissmetrics shows three ways to calculate the lifetime customer value of Starbucks customers. The ‘custom’ customer LTV is most similar to the one described in the previous section. To start, five Starbucks customer purchases are averaged into a $5.90 sale value. Then the customer’s number of visits per week is averaged to be 4.2. To convert this number into years, Kissmetrics multiplies by 52 (the number of weeks in a year). The final variable is the average customer lifespan, which is 20 years for Starbucks.

The Starbucks example also takes into consideration the profit margin. Many customer lifetime value calculations only look at the total revenue. However, the Starbucks example multiplies the value by the profit margin to get a better idea of the profit to the company per customer. The number at the end is smaller but possibly more useful. To further refine the customer value, companies can also subtract the cost of acquiring the customer in the first place. These refinements to the customer lifetime value model give a clearer picture of the profit from each customer, instead of the revenue shown in the simplified calculation above.

Linking Customer LTV to Acquisition Cost

Before starting a new marketing campaign, companies can calculate the customer lifetime value as a guideline for the acquisition cost. If the acquisition cost exceeds the lifetime value of the customer, the acquisition cost is far too high. In practical terms, if the average customer only purchases $25 worth of product but costs $30 to acquire, the company is bound to lose money. Fortunately, companies can determine how much they spend on acquiring customers and build a system that maximizes the customer lifetime value.

Two gyms serve as an example of linking customer LTV to acquisition cost. Gyms are a good example because they utilize a monthly subscription service. The calculation of the average sale and number of repeated transactions per year is simple. It’s the cost of the membership. If two gyms have the same pricing structure of $20 per month and an expected customer relationshipof 2 years, they both have a customer lifetime value of $20 x 12 x 2 years or $480. But each gym can take a different approach to the acquisition cost. The first gym may want the customer’s value to exceed the acquisition cost after 1 year. Therefore, they can spend up to $240 acquiring a customer.

The second gym may need to become profitable after 6 months, so they can only spend $120 acquiring a customer. These acquisition numbers are linked to the marketing campaign budget. A marketing campaign designed to acquire 10 customers would have a budget of $2400 for the first gym and $1200 for the second. Basically, a customer lifetime value model can help a business home in on a reasonable marketing budget.

Summary

A customer lifetime value calculation can guide the development of marketing campaign budgets by providing insight into how much companies should spend on customer acquisition. At the very least, customer LTV puts a limit on how much the company can spend to acquire a customer. To be profitable, companies need to have higher customer lifetimes values than the cost of acquiring a customer. A customer lifetime value is thus a very valuable metric for developing marketing campaigns.