Month: March 2012

Herman Miller, the makers of the acclaimed Aeron chair, produce a new chair every 17 seconds.  13 years ago, they were producing a chair every 82 seconds.  Here are some of the facts:

• 500% productivity gain
• 1000% product quality gain
• Safety has increased by a 6 multiple
• Quality metrics have increased by a factor of 10 
• The production of an Aeron chair now takes only 20% of the labour resource it did in 1998.

So how have they done it?  Through the disciplined application of Kaizen (“improvement”), the famed management technique used by Toyota as it built itself up to be the largest car company in the world.  Kaizen generally refers to the practise of continuous improvement across all functions of the business, from the CEO right the way through the business to include external stakeholders when applicable.

Contrary to what one might assume would be the nature of a continuous efficiency drive, kaizen actually drives hard at humanizing businesses, eliminating overly hard work by teaching employees how to spot and eliminate waste in business processes.  This waste not only costs money, the symptom of an over worked, inefficient work force is increased absence, fatigue induced errors, low retention rates and high recruitment costs as a result.   For kaizen to be truly effective the human resource side of the business has to be nurtured as successful implementation relies on the participation of workers in the improvement

Utilising the same labor force, Herman Miller produces 17 chairs, up from 5, and lead times have dropped from 2 months to 10 days.  These improvements have been reached, and continue to be reached, a quarter to half a second at a time, month after month.

This is our assertion at watu.  Staffing agencies have acres of opportunity to create additional efficiencies through the application of Kaizen.  From the recruitment and on-boarding of temporary staff, through to the booking of shifts, the confirmation of contracts, the dissemination of shift details and the overall communication between the office and the field, there are minutes (not quarter or half seconds) to be saved.  Minutes that add up to hours that add up to days.

Save days in increased efficiency and you reduce both costs and the burden of work on your team, increase their happiness at work, turning staff booking time in to client facing time and increasing the time spent talking to staff and building relationships.  As the principle of kaizen states, external stakeholders should be included when appropriate.  No industry requires external stakeholder participation more than the temporary staffing industry and yet so little is done to create efficiencies around collaboration, transparency and the sharing of information.

The application of kaizen in staffing is immensely exciting and will be hugely profitable to the teams that implement successfully.  Successful implementation requires awesome technology.  We’re building that technology at watu.

Reference: www.fastcodesign.com

As we start to bring founding customers on to watu we are having numerous conversations about the difference between out sourced build (when the customer partners with a web design agency to build an application) and buying a SAAS product such as watu.  Here’s the difference:

1.  Wiping the slate clean: Great product is achieved through a process of building, breaking down and building again.  It is an iterative, learning process that requires the validation, and often invalidation, of ideas in order to get to the very best conclusion.

This very process is incongruent to the business model of a web design agency.   By quoting a price for a product, they immediately restrict the trial and error options fundamentally needed to build the best solution.  Their quote, based on an allocation of time and resource, runs in to trouble if they find a problem.  Economically, they have to build a patch as a complete re-think and re-build just isn’t in the budget.

Product businesses such as watu have the luxury of complete focus on one product.  If we believe that there is a better way, our business model demands that we throw away and start again.  We’re only a success if we build the very best product.

2. Focus: When you outsource your build, you usually do so to an agency that counts you as one customer amongst many.  You get assigned a project leader, a set amount of coder and designer time.  After a couple of brainstorms and a functional spec, they go off and build.  You are one project in a long line of projects.

At watu, we’r building one product.  Every moment of every day is spent on this mission, to build the very greatest staffing application for our customers and their staff.  Every brainstorm, every learning, all our user generated feedback, our resource, energy and ambition is focussed on one product.

3. Specialism: Web design agencies are good at web design/application projects.  They know how to build and design good product.  To build GREAT product, they rely on the customer to not only understand the problem they are trying to solve, but to understand the process and be able to easily work alongside the dev team to execute on the idea.  Not easy.

At watu, our team consists of hugely talented developers (our Co-Founder started coding at 7 years old and worked at Google before joining watu) and a CEO who owned a multi-national temporary staffing business, as well as a permanent recruitment company.  Together, they have insight and knowledge across the entire spectrum, from product vision through to awesome execution.

4. The very best coders tend to work at start ups: So there may be a few that don’t, but in the vast majority, the very best coders work in start up land.  Why? Because start up land is about invention and it requires the very best.  Invention requires huge leaps of faith, awesome processing power to visualise and execute on the path to success, exciting exposure to risk and for the few who make it, glory.  Where would you rather work?

5. Two scenarios:

a. You outsource a build and have delivered, a few months later, your £20,000 application.  It requires maintenance and constant iterations to get it where you wanted it to be, purely because you realise as you start to use it, what works and what doesn’t.  The product ages over time and becomes a frankenstein patchwork of add ons.  Technology continues to move forward, but your product stands still.

b. You pay a monthly subscription fee to a cloud hosted application.  The company who build the application spend every waking moment improving the product to the benefit of it’s users.  The technology stays current, the application becomes greater every day, and your monthly fee stays the same.  Two years from now, watu will have had over £500,000 of resource application applied to it and will still only cost a small monthly subscription fee.

You could outsource your build, but why would you?

Here’s what happens when staffing agencies build their own databases:

1.  Agency decides that their particular requirements are unique and require a bespoke solution.

2. Agency sources and shortlists 3 web design companies and briefs them on their needs.

3. Web design companies conduct a brainstorm with the project team from the agency.  The brainstorm brings up the macro problems and highlights some obvious efficiency gains but it fails to address numerous opportunities that are only learnt through trial and error.

4. Three quotes are received, reviewed and one agency chosen.  A further brainstorm wrings out a few more opportunities and the build commences.

5.  Gradually, the product takes shape, each development bringing new opportunities and questions, each with their price.

6. Product is deployed.  £10 – £35k spent.

7. Agency starts using it and creates a list of ‘nice to haves’ that got missed out in the brainstorm.  Average nice to have is anywhere between £500 and £2000.  Agency spends approximately £6-£8k per year, excluding hosting to try and turn the original build in to something that really nails the problem rather than 70% of it.

8. Two years later, the agency has spent another £16k or so on top of the initial outlay and the product is two years old, two years out of date.

9.  Finally, security.  Features are added when money is available, but bugs happen all the time and security bugs will appear in the custom code or the libraries and services used by the application and without a team constantly looking into the app and the infrastructure, constantly updating it, keeping track of new releases and security advisories, the system will become vulnerable to attack. And it doesn’t take a targeted attack to take it down, there are computer programs scanning automatically for systems with vulnerabilities to take them over and generally use them to send spam or do phishing attacks.

But the technology is proprietary so surely this adds value to the business?  Simple answer, not really.  In fact, if the business gets bought, the clunky old software might be one of the first things that gets reviewed and the whole process starts again.

Don’t build your own technology, it’s a false economy.  Your problems are often not unique.  Find the very best cloud hosted application for that particular need, review their pricing model (often a low monthly cost) and sign up for a trial.  They usually don’t have contract restrictions so you can jump on and off with little hassle.  Every month, their product will get better, your price will stay the same, and your company will be run on an up to date, ever evolving, super product from now on in.

Some applications you might want to check out:

CRM – www.highrisehq.com

Project Management – www.basecamp.com

Task Management – www.asana.com

Staffing Database – www.watu.wpengine.com

Easy Newsletters – www.mailchimp.com

* The article above is based on the experience of three different promotional staffing agency founders, two who have tried to sell their businesses.