Red Bead Experiment Training for Consultants Process Improvement Exchange May 16, 2013 Based on: http://www.redbead.org/group_downloads/bob_daugherty_documents/red_bead_experiment_script_doe.pdf

Game Flow Chart Production Work Management Work Opening: Situation Set-up Production Work Day 1 React to worker performance Day 2 Manage to a Goal Day 3 Provide Incentives Day 4 Work harder, get final results Management Work Set up goals/ standards Set up Performance Incentives Lay off poor performers, add overtime Close down the company Critique: Create chart, assess “improvements” 12/8/2018 2013 © Copyright Sales Performance Consultants, Inc.

Learning (for Participants) 1. What did you observe about the work? 2. Where did the variation come from? 3. How well did the people perform? 4. What did the “pay for performance” initiative produce? 5. What did the “follow the process” initiative produce? 6. What did the attempts to intimidate produce? 7. What did the attempts to praise produce? 8. What did the Banners and Slogans produce? 9. What did inspection after the process produce? 10. What could the workers have done differently? 12/8/2018 2013 © Copyright Sales Performance Consultants, Inc.

Learning (for Participants) 1. What did you observe about the work? The work (process) displays natural variation (voice of the process) Data is different every day, but it is within a range To understand the capability, we have to make it visible To make it visible we must collect and display data 2. Where did the variation come from? Variation came from inputs to the process Materials, machines, methods, equipment There was no evidence that any worker was better than another For workers, the results amounted to a lottery 3. How well did the people perform? As well as they could have Constraints were the Procedure, and the Foreman Even when they tried harder, it did not matter When problems occur look for the cause in the process first 12/8/2018 2013 © Copyright Sales Performance Consultants, Inc.

Learning (for Participants) 4. What did the “pay for performance” initiative produce? Worker “performance” was randomly determined by the process Individual payments amounted to a lottery Motivation to distort the data or the process (the truth) Negative morale in the long term 5. What did the “follow the process” initiative produce? Workers complied, results did not improve Clear instructions cannot improve an incapable process 6. What did the “attempt to intimidate” produce? Workers felt fear, results did not improve Intimidation shut down communication, ideas, attitudes 7. What did the “attempt to praise” produce? Workers appreciated it, wondered about it, results did not improve 8. What did the “Banners and Slogans” produce? Constant reminders created an attitude of frustration, mistrust 12/8/2018 2013 © Copyright Sales Performance Consultants, Inc.

Learning (for Participants) 9. What did inspection after the process produce? Inspection detected defects. Inspectors and inspection added no value (waste) We added value to the red beads (waste) No improvement without corrective action on the process itself 10. What could the workers have done differently? Nothing. Management unwittingly created and sustained the problem. To satisfy a customer, the process must be capable (VOC). 12/8/2018 2013 © Copyright Sales Performance Consultants, Inc.