Insanely Powerful Business Building Framework
The Amplified Impact Podcast
September 18th, 2023
In this episode, I’m sharing a principle that transformed my business, Escape Climbing, from $300,000 to $3 million in just a few years.
This concept applies not only to manufacturing but to any business and even your personal life.
I’m talking about identifying the eight types of waste, a concept borrowed from the Toyota Way and Lean Methodology.
These forms of waste lurk in everything we do, from making products to running daily operations.
The key is to identify these types of waste in your processes and start eliminating them.
By doing so, you’ll streamline your operations, boost efficiency, and watch your business grow.
So, take these principles and run with them. It’s a sure path to success.
TWEETABLE QUOTE:
“And as much as possible, we need to create an asynchronous environment where people are able to minimize how long they are waiting for some part of the process to move forward, or to have people have multiple things that they could be working on concurrently.”- Anthony Vicino
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Episode Transcript:
Anthony Vicino:
Alright, today I’m going to share with you one of the most powerful tools I stumbled upon when we were building Escape Climbing. From doing $300,000 a year in top line revenue to 3 million within the span of two, three years, this guiding principle was so damn impactful, specifically within the manufacturing environment. But what I discovered is that when you master this concept, you’re going to be able to apply it to literally any business, but into all different aspects of your own personal life as well. And I have found it to be so damn impactful that I’m really excited to break it down here today. And I don’t know if I’ve done this before, so if you’re building a business right now, I encourage you to think hard through what I’m going to share with you and sit with it and then start examining your business and your life for areas where you can start to notice this thing. So the concept I want to talk about is how to identify the eight types of waste. Now, this is not an original concept. This is something that I borrowed from the Toyota Way or the Lean Methodology.
Anthony Vicino:
And it’s all about recognizing that there are things that we do that create waste. Wasteful product, waste of energy, waste of time, waste of mental energy, waste of resources. All sorts of waste that we experience throughout our day, through our work, our systems, our flows. And our ability to recognize waste makes us competent at fixing that improving systems. So much of system improvement is merely being able to identify where the inefficiencies lie and then remove those. And this is very interesting because most of us, when we get into our systems, into our routines of how we do a thing, we do it as a result of how we used to do it. We did it one way, one time, and that just kind of stuck. And so we keep doing it and we don’t really examine the intricacies of why we do it beyond a certain point.
Anthony Vicino:
And even if we tried often, it’s hard to read the label from inside the bottle. So you can’t necessarily see what you’re doing and what are the obvious areas for improvement. However, when you master this concept of downtime, which is an acronym for the eight different types of waste, you can start to look at your individual systems and you can look at it through the lens of, like, okay. So defects over, processing, waiting, nonutilized talent. Those are just some of the eight forms of waste that I’m going to break down for you. Where am I falling prey to one of these types of waste? And just having a systematic approach for improving systems by eliminating waste was massively valuable to us at Escape Climbing. For example, when I first came into Escape and started working with Ryan, one of the very first things that we did was we looked at the production cycle of one of our most popular products, something that we were selling. I don’t remember how many units we were selling, but it was a lot.
Anthony Vicino:
Both through Amazon, then through direct fulfillment. And at the time, it was just what we called a power piston. It was just a dowel with an eye bolt on the top of it. And it was for training your grip. You could hang it from things, you could do pull ups on it, you could do isometric holds. Very popular activity within the rock climbing community and then within the American ninja warrior community. Now, we looked at the production cycle of this product and it currently took, at the time, two and a half minutes to make this thing. And our goal was, okay, is there a world where we could get this under a minute? Because just by doing that, you’ve reduced one of the forms of waste by two and a half times.
Anthony Vicino:
And so we started looking at where we were standing, the amount of time it took to sand or to cut the dowel or to drill the eye bolt and to glue it, and how long we had to wait and where the product was sitting as it was moving through the flow. When we looked through the lens of all these eight forms of waste, and we were able to take that process from about two and a half minutes per product to about 45 seconds. So you can imagine the amount of gains that we experienced over the next three years selling hundreds and thousands and thousands of those products. And it was two and a half times faster than it had been. Maybe not two and a half, about two and a half massive gains to be had. Okay? And this applies to if you’re a service business, a coach, you have an online business, whatever. Like there’s all sorts of different types of waste. So let’s dive into it.
Anthony Vicino:
Downtime is the acronym that we’re going to use and there’s eight different forms of waste here. The D in downtime stands for defects. Defects are what occur when our process is insufficient for producing a quality product that is up to the customer’s expectations. As a result, we didn’t just waste time and energy creating the defective product, but we also cost ourselves potentially the reputational damage in customers eyes for having sent them a defective product. And then we’ve cost ourselves the time and the energy dealt with making it right with that customer, potentially getting that product and then making it better, like sending them an improved version of it. So now we’ve wasted time and energy creating twice as many products. Customer service team has to deal with this customer and now we’ve done some potential reputational damage, right? So defects are one of the most costly things that we can experience within a business. And it’s critical that we look hard at our systems and we try to eliminate defects at all costs.
Anthony Vicino:
Because it is truly, in my experience, one of the quickest ways to go under as a business is to put out an inferior product that requires you to fix it and then do reputational management. One of the things I like to say is that if you don’t have time to do it right the first time, when are you going to have time to fix it? The truth is you’re busy. If you don’t have time to do it right the first time, I can guarantee you don’t have the time to fix it. And so you’re going to be caught in this snowball effect and it’s going to be fucking frustrating. Trust me. All right? The first O in Down, I guess there is only one O. The O in downtime stands for overproduction. Overproduction is when we create too much of the product, too much of the thing, and there’s not enough demand for it.
Anthony Vicino:
This creates waste because one, our time was spent creating a thing that we haven’t actually sold yet. And that time could have been spent better on creating a product that was in demand. The other cost associated with this is that now we have too much of this product. Now we need to store it somewhere, right? And so overproduction is, especially within a manufacturing environment, a really insidious thing. It really starts to catch up on you. And if you’re not careful, you can drown in overproduced items. And for us at Escape, we were just in time manufacturing cement. That means we don’t start making the order until we get the product, until we get the order.
Anthony Vicino:
And so if we’re just sitting on tons and tons of product, that’s problematic. Overproduction. Okay. The W in downtime stands for waiting. And this is what occurs when somebody is waiting around for something to occur, let’s say shipping. They can’t ship the product until they receive the product and the product isn’t ready until the guys in the production room create the product. But they can’t actually do their product creation until they get the raw inventory. And so there’s all these different pieces of the puzzle, different areas where people are waiting for something to happen.
Anthony Vicino:
And as much as possible, we need to create an asynchronous environment where people are a able to minimize how long they are waiting for some part of the process to move forward, or to have people have multiple things that they could be working on concurrently. So that if they can’t continue moving this piece of the puzzle, this ball forward, they can turn their attention and focus on something else. The worst thing is to have employees just kind of standing around waiting and being like, hey, why aren’t you doing this? They’re like, well, I can’t do anything. So it’s like the guy at the cashier cash register who is waiting for the sandwich to appear before he takes the order or before he takes payment, right? It’s like, no, you don’t have to sit and wait for that. You could just take the payment now, and then when the sandwich comes, you can take it out to him. And then meantime, you’ve bought yourself maybe 30 seconds. You can go clean the counter or something like that. Which then means the guy doing the sandwich cleaning or creation doesn’t have to clean the counter for himself and he can go straight into the next sandwich, right? I don’t know.
Anthony Vicino:
This is a weird example. I don’t make sandwiches, all right? The in downtime stands for non utilized talent. And this is what happens when you don’t have the right people in the right seats on the bus. So if you have somebody who’s really good at customer service or really good at designing a product or some kind of fulfillment or maybe their marketing genius, but you have them doing something not related or correlated with that area where they’re a genius, you’re just not utilizing their abilities to their full potential. And in the long term, that creates this employee who realizes that they’re not tapping into their genius. So it’s going to be kind of unfulfilling for them, whatever the work is. And that can create a jaded employee, somebody who maybe is going to leave, go find a place that does recognize their genius a little bit more. But it’s also costing you opportunity.
Anthony Vicino:
And opportunity cost is a really hard thing to quantify in a business. But this is one of the biggest, is that when you put your people to solve problems that they’re not well suited to solve, that’s one of the biggest opportunity costs. Instead, if you could put them on the biggest opportunities that they are uniquely suited for, then you get solutions, you get products, you get outcomes that are outsized relative to the inputs. So non utilized talent really think hard about, okay, are these people on the team? Are they being used to their full potential? Are there areas that I’m not tapping into them right now? The T in downtime stands for transportation excess. And this is similar to Motion. I’m sorry, motion is going to come a little bit later. Actually, let’s break these both down. So the T in downtime stands for transportation excess.
Anthony Vicino:
And then the M which comes after the I, stands for Motion excess. So transportation and Motion, let’s just unpack both of these simultaneously. Transportation is what happens is the amount of movement that the product goes through in a process, whereas Motion excess is the amount of movement that you as the individual goes through. So, for example, in the manufacturing environment, the transportation excess is the raw material coming in. So like the raw plastic coming in at the back of the warehouse. And then it needs to go to the molding specialist to get molded. And then it goes to the production specialist to get poured and then it goes to the post production specialist who is drilling and sanding. And then that goes to the shipping department.
Anthony Vicino:
So you can trace the movement of that product all the way through the facility. Now, if you did not design your facility with intention and with Care, you might have that product coming in at the back of the warehouse. And then because it needs to go to molding first, if you had molding at the front of the building now that product needs to go all the way to the front. And then if from molding it needs to go to the production room, which happens to be back at the other corner of the holding, then it needs to travel way over there. And then it goes to post production, which is maybe on the other corner of the warehouse. And so you can kind of see, if you don’t design your warehouse with care, your production system with Care, then your individual raw good is going to be moving all over around the place, right? And each one of those movements is waste. And so, as much as possible, we want to think about creating our systems with flow from one department to the next. So when the product comes in the back door, the very first department that it hits is molding, which is also by the back door.
Anthony Vicino:
And then it moves to the production room, which is right next to it. And then it moves to the post production which is right next to it. And then finally it gets the shipping which is at the front of the house. And that’s important because that is where the mailman or the Ups man comes in to pick up packages, right? So you think of things in a linear way and say how do I reduce the amount of movement this product takes throughout our building? Same thing applies within any kind of other digital service or product. It might not be so obvious and intuitive, but I assure you that whatever system or processes you’re currently following, there is some aspect of the product moving unnecessarily through the flow. So think about how do I streamline this to make it so that as few people on the team need to touch this product as possible from the moment it’s ordered to the moment that it’s fulfilled within this, then. So that’s one form of that’s transportation excess, the M is motion excess, which is then just shrinking down even further and thinking about your particular movement within the design of a system. So when that product comes in and then it goes to the molding department, we think about how much is that molding specialist having to move around within their work cell to be able to produce the thing that they need to produce.
Anthony Vicino:
And as much as possible, we want to create a work cell that does not require them to go left and right and back and forth constantly to find the tools, the resources that they need to create the thing. They need everything to be exactly in the right place at the right time. And this is a concept that we drilled almost religiously into our processes, which is right tool, right place in the right orientation at the right time. Because there’s nothing more frustrating or more wasteful than having to stop the flowing process of building the thing to go find the hammer, right? And then you spend 20 minutes trying to find the hammer, then you don’t actually find it and then you come back, you’re frustrated because you spent all this time looking for thing, couldn’t even find it. And that is just waste incarnate. So we need to eliminate that as much as possible by thinking strategically about how we work in our work cells, so to speak. And again, I think very hard about my particular office and where is everything in relation to me so that I can do the work when I need to. If I want to shoot this video, it is literally just a matter of pulling my microphone forward, pulling the camera over, pushing start, very, very little motion on my part.
Anthony Vicino:
And then when I want to produce this product, I now put it into a dropbox folder. My marketing assistant, she goes into it, she takes it and she does all of the editing and then all of the distribution. And so we’ve minimized how much touching we both have to do of this product. So that is transportation and motion. So di in Downtime stands for inventory excess. And this is what results when you overproduce a product. Or you just think, oh yeah, we are going to sell through this. But then you don’t.
Anthony Vicino:
And this is where supply, demand is one of the most powerful concepts in business. If you have too much supply but not enough demand, you’re going to drown. And the reason inventory is in particular so wasteful is because when you look at the wall of products that you have that have not sold yet, instead of seeing the product, I want you to just visualize the money and time and resources that went into creating that. And instead of seeing like, oh, there are three powerballs and three power pistons up there, you look at that and you’re like, that’s $500. That’s $500 worth of product up there and maybe another $500 of man hours sitting right there, that’s $1,000. Imagine how much more valuable that $1,000 would be if it was in the bank account and I could use it to do something which becomes very, very important in managing the cash flows of a business. One of the most powerful ways to manage and make sure that you have enough working capital in your business is to limit how much resources you have tied up into unsold products, aka inventory. All right? And then the last part of Downtime is the e.
Anthony Vicino:
It’s excess processing. And this is what occurs when we go into perfectionist mode. When we try to make the thing too good, we put in too much time and energy into sanding. It just right. The important thing to understand here is that the customer has an expectation of quality. Your expectation, your standard needs to be above the customer’s standard. And the reason for that is because if you fuck up and you make a defect or you don’t do it quite as well as you typically hold yourself to, it is still above the customer’s expectation. So you buy yourself a little bit of a buffer.
Anthony Vicino:
Now, you have your customers expectation. You have your expectations of standard above theirs. However, there is no value, no additional value bestowed upon you for going in and above your own standard of quality. Once you’ve met your standard of quality, that’s good enough. Don’t try to make it any better, especially in a manufacturing environment where you can just go to the nth degree of trying to make the thing better and better and better. But perfectionism is not the goal. It’s to ship the product that exceeds the customer’s expectations. That’s it.
Anthony Vicino:
Once you’ve exceeded their expectations, ship the damn thing. All right, so that’s downtime. That is the eight different forms of waste from the top. That is defects, overproduction waiting, non utilized talent, transportation, excess inventory, excess motion, excess and excessive processing. I want you to take these eight ideas. I want you to look at your business, your production cycle, whatever it is, whatever you do, and start asking yourself, where am I creating defects? Where am I waiting on something? Where are we creating too much inventory? Where are we excessively processing the thing and start slowly removing those things. And if you do, it’s going to be like a slip and slide to success. It’s all but inevitable that your business is going to start growing at a much faster rate.
Anthony Vicino:
So take this run with it. Hope it brings you a lot of value. This has done a lot for us and all my businesses, so hopefully it does the same for you. If you enjoyed this, leave a review, leave a comment, shoot me a DM subscribe or don’t. Just come back around these parts tomorrow. And until then, stay hyper focused, my friend.
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