One of the wastes I teach about the methodology of Lean is that often metrics can be used incorrectly and lead us in the wrong direction...or have us focus on the wrong aspects of our business. Often I see in smaller businesses the pitfall of not analyzing the metrics they do have. They simply report this month compared to last month, year-to-year comparisons. But no test that the change is significant.
Recently, I saw some metrics from a business that had gone through a major management change about four years ago. They reported nicely their customer evaluations, and knew that they were improving. The question is: were they improving significantly that you could say 'something' has changed the company's systems and processes and the customers have noticed that 'something'? Without answering this question, most managers see some improved monthly results and smile. Other months when the results aren't so pleasant, they frown...or in a worst case, wreak havoc within the organization. "The whippings will stop when morale improves!"
After reviewing their data, it looked like customers have experienced better overall value and service since the management change. They averaged 41% rating them at Excellent Value in the earlier 4-year period. In the latest period, 59% of the customers rated them so. That's not surprising that that change seemed significant. In some service aspects, they went from 64% to 71%. Okay, that looks good but is it 'something to write home about'? Turns out, that difference is significant given the number of customers in the last 4 years. Year-to-date results show the Excellent Value score dropping from 69% to 57%. Should the 'whippings' start? No, the drop is not significant. It's just random variation as seen in the customer evaluations.
Seeing this, we can stop any panic this year. And figure out what the new management is doing that has pleased the customers.
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