The 25/25 Rule: Using Bullwhips to understand Overcapacity problems

I have enough for my book to include this small sample from the upcoming Gunfighter’s Guide to Business.  There is still a lot of editing to conduct and it will likely be a 2020 project at this point, but thought my audience here would enjoy it, since so many people have been asking how it is coming along.  So enjoy this short sample:

The 25/25 Rule

There are many rules of practice that businesses use to manage their capacity, such as Warren Buffett’s 25/5 rule, or the International Journal of Production Research’s 25/25 rule. With Buffett, he states that out of the top 25 things that you want to do in life, you should only focus on the top five, until you’ve completed them. And with the 25/25 rule the goal is to reduce focus on the bottom 25% of your workload and to squeeze improvements in process out of another 25%. Thinking like a gunfighter however, these measurements in business are only new ways to present targets to hit and have their own sets of problems that unless looked at correctly, are useless. As I have spoke about, there are many weapons that gunfighters can use to do their business, guns are just one of them. Another is the bullwhip which I find has many direct correlations that apply to conceptual business matrixes such at the 25/25 rule.

As I have said about the bullwhip and in fast draw shooting in general, the primary objective is to do the most work with the most power in the shortest and most accurate time span possible. With bullwhips, to get the maximum impact out of the end of the weapon with the minimum effort it requires the handler to project that effort toward a target at a proper moment where the crack will occur in space and time. It is really quite an effort in physics to be able to crack out the flame on a candle with a bullwhip which among those who can call themselves experts, is a common act. When hitting targets with a bullwhip the effort looks effortless when done correctly as most of the action happens within a second’s time of measure. But there are many small steps within that second that must occur correctly to make such a thing happen, especially under the burden of timed pressure. Yet even just cracking out a flame on a candle with all the time to do it in the world takes a very timed approach to inflict the minimal effort to get the maximum results of cracking the whip so near the candle that the sonic boom created blows out the flame.

When companies utilize the 25/25 rule essentially what they are saying is that they are over capacity due to their sales departments over booking the facility and that they are picking the bottom end of their 25% of business portfolio to ignore so that they can focus on their top percent of valuable customers. The problem with this approach is that it allows bad management to hide behind a method of measurement and to use the analysis to disguise bad approaches to solving the problem. In the Cowboy Fast Draw competitions and Wild West Arts work that is like saying that the weapon handler needs more time to do a good job. But as we know in gun fights, the fastest and most accurate were the ones who won the duels. There were no rules for taking time to deal with the incompetence of the duelists. If the gunfighters were incompetent, they were killed. And the same holds true in business.

The aim of the Western Arts isn’t just to enjoy the historical nature of traditional weapons used in war within American culture but is to represent the necessities of living within a western society. The needs of American business is one of those requirements, and not connecting those proper metaphors to the function of business can lead to detriment, which for too many companies is a common occurrence. Such as the case with the 25/25 rule the way it has been proposed to help companies with their problems of overcapacity. The solution to those problems are experienced in western competition where speed and accuracy are measured. There are many very good shooters in the world and very good bullwhip artists who have trouble with the fast draw competitions of Western Arts. They look great when performing for audiences until the pressure of time is added, then things get tough and people start reacting poorly under duress, which is the point.

Most consultants in the United States and Europe are following similar methods of reducing push systems and instead incorporating pull, where one element of a supply chain does not ship until the downstream source is needed. The 25/25 rule is an element of this thinking and it essentially dances around the true villain which is incompetence. If a manager either upstream or downstream just can’t handle the pressure and has a hard time recruiting and retaining good employees, they will obviously have trouble doing the required job. The 25/25 rule gives them some cover to then focus only on their valuable customers and letting the less valuable fall off the portfolio. This might look great for the internal measures of a production environment, but it doesn’t equal the task of the sales department that is trying to book work and help a company profile with new business. The incompetent managers within an organization might be angry toward sales for bringing in more work than they feel comfortable handling. And that is the core of the problem. Many of the Lean consultants do have good ideas but they try to use peer pressure to level load a facilities production output instead of focusing on making the individual contributors better.

I have seen many really good bullwhip artists struggle with the speed and accuracy competitions that are in the Western Arts events, because the rhythm and pressure of a timed competition throws off everything and they would argue that if the rules were not so rigorous, if only they had more time, they could do better. Well, who couldn’t? The point of timed pressure is to sort out the good from the bad and in business that is certainly the case. Thinking like a gunfighter, anything less than fast and accurate would mean death, and it does to businesses also.

It is up to the weapon handler, such as in the case of the bullwhip artist to get better and to acclimate themselves to the conditions of the battlefield. If doing a speed and accuracy competition with bullwhips between 15 to 12 seconds is the parameters needed to win, then that is up to the bullwhip artists to get better to compete in those parameters. In the case of businesses where sales provide jobs and the various program managers within the organization determine that the scope of work fits within the company portfolio it is not up to the weaknesses of production to decide that they can’t live up to the expectations. They must get better to meet the needs, not hide behind some bounty hunter rules created to make their business thrive while the businesses that hire them suffer under their own incompetence. Rather than try to force the industry to deal with the artificial constraints created by bad management, companies should strive to get 25% better to meet those market needs and to create value for their customers. What if a town sheriff stated to the population looking to them for protection that to be a good representative of the law that the criminals needed to be 25% slower in their threats and actions of aggression so that the sheriff could handle the danger? Instead, it is up to the sheriff to get faster, and to be better. And if more bandits come to town, and are smarter and faster yet, it is up to the law to get better to keep the peace. So, it is with any business. The customer needs what they need, it is up to the company to give it to them, or to figure out how to without going out of business in the practice. And that only happens when you force everyone to get better, not playing to the weaknesses of the workforce managed poorly by the incompetent.

Rich Hoffman

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