Lisa shares her passion for people in all of the work she's done as a leading practitioner of the Theory of Constraints.
"It's hard for me to do anything without thinking about the people who are involved."
Join Derek Hudson as he explores Essential Dynamics, a framework for approaching the challenges facing people and organizations. Consider your Quest!
Welcome to the Essential Dynamics podcast. I'm Derek Hudson. Essential Dynamics is a framework I've been developing to help people think through their most important challenges and opportunities. In the podcast, we test the concepts of essential dynamics through deep conversations with interesting people. And today, I'm really thrilled to welcome Lisa Scheinkopf to the podcast.
Derek:Lisa's been a leader in the theory of constraints community for many years. She's an author of at least one book I know about, Thinking for a Change. She was with Goldratt Consulting for many years, and she's a recipient of the theory of constraints international certification organization lifetime achievement award, and she's the founder and CEO of Genrata, a consultancy with a much cooler name than my consultancy. Lisa, welcome. Thanks for joining me today.
Derek:So good to have you.
Lisa:Derek, it's great to be here. Great to great to be talking with you again.
Derek:Well, thank you. We we figured out that we, we first met in 02/2009 and, have bumped into each other, here and there, a number of times. And most memorable for me was, being with doctor Goldratt for a week in Tel Aviv, in 02/2010, which was the year before he for before he passed away. So that's, that was a treasured experience for me. So, Lisa, thanks for coming on.
Derek:Essential dynamics, the thing that I've been working on, views life channel views life's challenges in as an epic quest. And we look at the essential elements of people, path, and purpose in the face of dynamic forces. And one of the reasons I really wanted to talk to you is that you've been deep into a very process oriented culture that I believe does great things, but you've seemed to always been able to bring people back to the people element. Is that something that you noticed was your thing early or late? Or how how what's your relationship between the people side and the process side, I guess?
Lisa:So, yeah, the way back when when I first read the goal. So I've always been in pro op before I got into this, thirty some years ago, I was in more process oriented kind of functions from we used to call it materials management. Today, it's called supply chain, to, you know, managing operations in factories and things like that. So there always needed to be a process component about it. And my mind is kind of organized that way.
Lisa:But my passion, it's hard for me to do anything without thinking about the people who are involved. Even when even way back when when I would think about, you know, people would talk about companies and corporations as entities and whatever. To me, it's just a collection of peep that are trying to get something done together. So, and the when I first met Ellie Goldratt, one of the reasons that I joined him way back when, was when he would talk about his mission and purpose in life and his goal about trying to help people think more clearly. And I saw how he was going about it and what he was trying to do, and his claim that there is always a win win solution to any kind of conflict.
Lisa:At that time, I was formulating what I really wanted to do, and it always came down to trying to help people be able to communicate with each other better and find a win win. You know, break down barriers to really being able to collaborate and get the good things done that they wanted to get done with each other. So it was it was a great match from kind of different perspectives with a lot of overlap.
Derek:That's fantastic. I would say that I'm a later addition to, to the people side in in some sense. And that is that I'm also a process minded system thinker, and I can get caught up in those kinds of things and maybe at times have forgotten, you know, that things impact people. So I'm an accountant by training, which is a different way of thinking about process, but it definitely
Lisa:I remember when I met you, you were a CFO.
Derek:Yes. That's right. That's right. And I I just wanted to tell a little little story about being the CFO when I may maybe help me make the switch. So we had a family Christmas party that was at a swimming pool.
Derek:And so there's a bunch of people there. Some of them are our people, and some are, you know, other people from the community. But after the swimming time, we went to the party room, and we got pizza out. And our company had grown a lot since, you know, the previous year. And so now we're in the pizza room, and I see all these kids.
Derek:Moms and dads, and all these little kids. And some of them, the moms and dads, both worked at our company. And I just started to feel the weight of the payroll that we were paying out to these families so that they could house and feed and school their children. And I went, this is only ever about people. Yeah.
Derek:And so one of the things that I'm really interested in your perspective on is, if you're a leader of an organization, doesn't even have to be that big, but, you know, perhaps you're a leader of a big organization, and there's all these people. When you think about people as individuals with, you know, their own interests and stuff like that, how how can you how can you balance that? How can you manage the weight of responsibility with the stuff that has the decisions that have to get made in an organization?
Lisa:So I think it comes back to how we engage our people in what the company is there to do. And so if we can help people find their spark. So so people want to be I have found, and I have yet to get this disproven to me, but I'm always open to being disproven. I have found that the vast majority of people if want to be part of something, we we get meaning from doing something that's outside of ourselves. That's for something bigger than ourselves.
Lisa:And so so if I'm a leader in a team, an organization, a company, you know, whether it's a government agency or a corporate, if I can connect what we're doing, with some larger purpose, you know, and and in TOC, you know, we talk about what's the real value that we're bringing to our customers. Then people can connect with that. It doesn't mean that they're the company they work for now is their life purpose. But when they're able to tap into that, when they're able to see how what they're doing isn't simply to be a cost saver, It isn't simply to be a cog in a wheel. It's actually participating in something bigger that they're part of they're part of a team.
Lisa:Right? And they're we're all on the same team to deliver this value to something that's outside of us. They get more engaged. And and it really can be, you know and and if you haven't figured that out again, I think that what your story was just a great reminder. You know?
Lisa:Our people aren't numbers. They aren't they aren't heads. Right? They're people who we want to bring their best selves to do the work of our business. And the moment we remember that is the moment we have an opportunity to further engage them and help them do a good job.
Derek:Well, that that is fantastic, Lisa. And it and it does tie into the simplicity with which I'm trying to portray essential dynamics. But, there's a purpose. In fact, there's at least two. And if an individual can relate or connect to the organization purpose, that opportunity to open up that energy is there.
Derek:But I find a lot of organizations either couldn't describe a purpose or don't have a purpose, a stated purpose outside of a financial one.
Lisa:Mhmm.
Derek:And I can tell you that if you're if you're an observer in a process that's enriching someone else financially, and you don't feel a part of it as an employee, then it doesn't really matter what
Lisa:Right.
Derek:What happens there. It's not about you.
Lisa:Yeah.
Derek:And and so there has to be some kind of alignment of, you know, what I call purpose x and purpose y that makes sense to people and to their own their own purpose. And then then great things can happen. And I think it's easier than designing a system Mhmm. Of reinforcement, positive and negative, to get people to do stuff.
Lisa:Totally. Totally. Yeah. Yeah. And and we had a conversation a couple weeks ago about the work of Dan Pink
Derek:and Yes.
Lisa:And and what he has found that really, you know, that that really triggers the motivation in us when we're when we're working for somebody. And it isn't and it isn't necessarily the, well, here's the stick and here's the carrot. It's how are you part of something? Right? What what's the purpose of what we're here for and what you're here for?
Lisa:How do I give you some autonomy to help us in that process? And and, yeah, you know, pay them enough that that they don't feel like they're being taken advantage of. You know? It's Well,
Derek:that's a that's a really great point that you can, if you don't do it right, have people feel that they're being cheated or taken advantage of. You can never pay people enough, to feel a sense of purpose.
Lisa:Yeah. Right. Exactly. Exactly.
Derek:Gotta come from someplace else. Mhmm. So have you, in, in all your experience, can you think of some examples, and you can disguise them if you if you need to, where organizations were able to, you know, firm up, find a purpose, and then bring their people along where they didn't have it before?
Lisa:Oh, yeah. Well well, one I I can talk about one right now, and I won't talk about about their name, but, I will say that, you know, probably among your listeners, there's a lot of readers of the goal because you've been attached to the theory of constraints. And, and and Ellie Goldratt, in that book, it appears that making money now and into the future is the real goal of every company. And he walked back on that. You know, he would always try to to explain it further and and, but so many latched on to that as if that's the goal.
Lisa:And it really what I've learned is that is that you become more and more profitable when you are delivering on the real goal better and better. And, of course, you know, you've gotta be you you've gotta be, financially responsible. If a company isn't profitable and isn't growing, it's not gonna be able to serve its purpose for very long. So so and I bring that up because I've become very intentional about helping the the leaders of the companies that I work with get that. That really, you know, whatever we do is about delivering whatever we deliver that satisfying a goal that's really delivering value to our external customers.
Lisa:And when we do that well and we behave in accordance, you know, with with financial with fiscal responsibility, if you will, then the effects of that are profits. The goal is in profits. And the more we try to manage to profits, the more we reinforce this whole cost mentality that that drives us away from actually achieving the goal. So I'm working with, a couple of companies right now. One in particular comes to mind because we're in the midst of a big program with with the next layer of all of their management and, and and brought them through an exercise that helped them see that.
Lisa:Because most of them thought the main reason they were there was to keep their people efficient and to help the company make money and save money and all of that. And when when they open their eyes and they got and and they they verbalized the real purpose, if you will, together or the real value that the company was there to deliver, they're in a business that, you know, you and I can go to any number of places of types of companies to buy what they sell. But what they said was what we're really here for, and they've shown it in their industry over years. What we're really here for is to help our customers have a truly seamless experience, you know, in a way that, you know, they're able to get what they wanna get without any hassle, and their industry is well known for salespeople trying to squeeze you for whatever they can. For them to get their service in a way that it's flawless.
Lisa:You know, when we tell you to come pick up what you've dropped off to us for service, it's gonna be there ready for you on time. It's gonna be fixed well. No hidden stuff. And and so they just went they they really became focused on on the real reason we're here. The real thing we're here to deliver is is to deliver this seamless, wonderful experience to our customers.
Lisa:When they got that and when they realized that their management was totally behind them using that as criteria the first criteria for decision making. Second criteria being, alright. Now, you know, we can't break the business in the process. Right? The the the walls between these hardened silos started coming down.
Derek:Yep.
Lisa:And and they started working together in ways that they never thought they ever would. They started learning people's names, and and it just started, you know, opening the door to them becoming much more effective. And they will be much more profitable as they as they pave the way with getting better flow and doing things that yeah. So I could go on and on about that. But
Derek:Well, you couldn't. That's a fantastic example I wanna pick up on. At least, at least one thing in that was that having a purpose focused on customer value
Lisa:Mhmm.
Derek:Which is delivered by integrated processes across the organization
Lisa:Mhmm.
Derek:That people identify with Yes. Is a way to break down silos. Yeah. And you said hardened silos.
Lisa:Oh, yeah. So so another thing that typically goes along and and as a former CFO, I'm sure you'll be able to relate to this. One of the, one of the one of the invisible assumptions that was underneath the way that everybody from management on down is measured in the in in this corporation is by the assumption is that each department, if you will, is an independent profit center. And so and and so everything flows from there. Right?
Lisa:Managers get paid based on the profits of their profit center, which is largely money that's just been kind of moved. You know, it comes out of the same bank account. It's all just moved on paper and argued about in reality because I don't wanna incur cost that I shouldn't have to. And it it just, you know, made everything more difficult to manage and hardened the silos so that they could think about the others as external rather than all being on the same team. In order for them to really see this faulty assumption that it it was hard for them to verbalize.
Lisa:Right? But once they once they realize that their entire measurement system is based on an assumption that's not real. So we went through every category of things that customers buy from them and then made a matrix. Right? Every category of things that customers buy from them, and then across was every function in major department.
Lisa:Alright. So now I'm a customer buying this. Which departments have been involved leading up to that and which have not? And in almost every case, the vast majority of departments had somehow been involved, and they were like, oh, oh, no. What are we gonna do about this?
Lisa:So now they've got some teams formed, and they're working on what are we gonna change the measurement system to so that we can really work together on this. And it's it's fascinating.
Derek:So our listeners can't see me nodding my head vigorously. I've made matrix matrices like that in the past, and I've also had to sort of beat down profit centers. At one point, I made, I worked Microline was called Alberta Microelectronics Center when it was a not for profit at the university. And I made AMC bucks and photocopied a bunch and hand them out in a meeting and told the people if they wanna make profit that way, they could just photocopy more bucks and then hand them out back and forth. Because the real money came from the customer.
Derek:Yeah. It's the only real money.
Lisa:Yeah.
Derek:And, yes, in in almost every case, everybody touches something on the way to the customer, or has some kind of impact on the customer experience Yep. Including accounts receivable clerks. So I I am I am working with more than one organization right now, that is in process, or perhaps has not yet verbalized what you said your client had to verbalize, which was there is no such thing as an internal profit center Mhmm. When the customer needs every function's help in receiving the value that they're paying for.
Lisa:Yep.
Derek:And I I think, I mean, it's it's it's well documented in, a lot of the literature that mankind's first response to complexity is to break it down into components and then optimize the components.
Lisa:Mhmm.
Derek:And it generally does not optimize the system.
Lisa:Yep. Yep. Right. And yeah. You gotta you gotta optimize the flow from wherever you start to whatever gets to the customer, and that takes a bunch of the components to do that.
Lisa:And, Which there's another interesting side of that because now how do I know whether I'm doing a good job? How do I know whether I'm really contributing? Right? So we still need to have some kind of measurement system that tells us what should I do right now, and it tells us, you know, that we can look back on and say, okay. When are we when are we starting to run off track?
Lisa:What is is it time to start improving something? And what's the something that we need to be improving now? It doesn't come from measuring departmental profits.
Derek:No. And it and, you know, I've I've pushed back against boards more than once, about they wanted a a large individual, incentive. And, and I said, but the individuals don't provide the value on their own. Mhmm. One of the things I've I've pushed back against a number of times in every places is commission salespeople, particularly if the product is highly customized, because there's no challenge in a salesperson promising something.
Derek:Right. And getting a sale, and then having an organization have to figure out how on earth they're going to deliver that thing. So it's it's always better to look, integrated and we could dive into measurement and flow and and, you know, financial measures. But we started this conversation with, if a person in that system understands how value is created Yeah. Then they can go to work and say, I am creating value that means something to another person outside of my organization, or perhaps they say, I add value to a component of our organization that adds value outside.
Derek:And that's good enough for me. If I'm not cheated by the payroll office Yep. Then I'm, I I can show up every day.
Lisa:Yep. Yeah. And feel pretty good about it.
Derek:So have you seen, you said in this one class situation that you were working down to sort of the next level of management. Is that a process that will continue until every employee gets the whole picture?
Lisa:It's gonna go down at least another level or two. We'll see we'll see how how, so the way I envision it, is, you know, if if each level is is teaching what they learn to the next, then then you have your own multiplier and you have people who are really internalizing.
Derek:Mhmm.
Lisa:Right? Because because I know that every time I teach something, I learn it that much more deeply. So, so so that's part of what we're we're putting in place there.
Derek:I I would suggest that, one thing that can be, like, really helpful is just helping everyone in organization understand that high level value chain that you were talking about.
Lisa:Absolutely. Absolutely.
Derek:And my experience is I describe that to clients, and they, you know, they tell me if I'm right or wrong, but they didn't have it before.
Lisa:Mhmm.
Derek:And when they see it, it kinda changes the way they look at their business and allows them to communicate with employees better. Yeah. Is that is that been your experience?
Lisa:For sure. For sure. And and that is part of the overall. And, you know, and and you I'm sure you've also been in situations where but we're but we're a lot more complex than that. Well, yeah.
Lisa:Okay. Don't need to understand every every intricacy. We need to have a good high level that everyone can that everybody can put their pin and say, yeah. That's how that's where I contribute, and that's how I'm part of this overall.
Derek:So if you were advising an organization that felt like their people hadn't really caught on or they had they weren't getting the most out of their people, Is what you've been talking about the place you would start?
Lisa:Yes. Yeah. It it actually I mean, you know, unless they're bleeding so much that they're ready to go under, but that's usually not the kind of company that that I'm hanging out with. But, but yeah. Because that without because now I'll go a little further without that clarity on what's the value we're really here to deliver, what are we really here for, then then it's gonna be I'm gonna be hard pressed to understand for them to understand.
Lisa:So what's the constraint? What's the one what's the one thing that if we focus on in making sure that that's taken care of throughout the flow, that that's gonna make the biggest difference relative to our ability to serve more and more customers well.
Derek:So so
Lisa:if we don't start with that, it's hard for me to get to it's hard for me to get to the focus.
Derek:Right. Well, Lisa, I think we found our topic for our next discussion. Because I'm fascinated by that stuff. Like the one constraint and understanding organization's value chain. So let's bounce off of that at our next conversation.
Derek:So I want to pull it pull us together here. Is there anything in conclusion you'd like to say about how to line up the people with the organization?
Lisa:If I were to say one thing, it would be well, I'll I'll say more than one thing. But the first, if nothing else, remember that your organization is a collection of real human beings. They're not numbers. They're people with families, with lives. And if you want them to be happy and bring all that they've got to you, then you gotta remember that first and foremost.
Lisa:Absolutely. Really want them fully engaged, help them connect with the real value that the whole organization is there to deliver so that they could see their part in that. You'll get much more from them through that.
Derek:And that will be a process of creation and and not and not taking from people.
Lisa:Yeah.
Derek:If you get you'll get more from people, but it won't be taking anything away from them. Yep. Yeah. Okay. Fantastic.
Derek:Well, Lisa, it's been just wonderful to have you on. It's good to see you again. We're gonna get back together real soon. But in in the meantime, I just wanna I wanna thank you and remind people that, you can oh, actually, no. I did wanna ask this question.
Derek:How can people find you? And if they wanna learn more
Lisa:about what you do Yeah. They can go to generata.com and either just say, hey. I'm interested. Set up a call with me, or they could just send me an email to lisa@generata.com, and they'll
Derek:be with them. That's that's fantastic. So I said your name was cooler than mine. My consultancy is Unconstrained, and, you can find me at getunconstrained.com. And I'd be happy to hear from people as well.
Derek:And remember to please, as always, let your friends know about this. Like, share, comment, subscribe, and all of those wonderful things. So, Lisa, thanks. Brynn in the studio, thanks for your work today. I'm Derek Hudson.
Derek:Until next time, consider your quest.