Sense and Respond Book

Home / Archive by category "Sense and Respond Book"
Agile Review Magazine: „Für mich heißt Lean vor allem: Menschen, Menschen, Menschen“

Agile Review Magazine: „Für mich heißt Lean vor allem: Menschen, Menschen, Menschen“

Stephen Parry spricht mit Doreen Timm über Lean,
den Aufbau von Organisationen, die am Kunden orientiert sind
und woran Manager gemessen werden sollten.


Der Titel deines Buches lautet „Sense and Respond“ – was genau ist damit gemeint? Der Titel stellt eine Aufforderung an Organisationen dar, sich viel eingehender mit den Bedürfnissen ihrer Kunden zu beschäftigen. Es reicht nicht aus zu wissen, welche Wünsche der Kunde bezüglich des Produkts oder der Dienstleistung hat, sondern welcher tatsächliche Zweck erfüllt werden soll und welches Ziel der Kunde verfolgt.

Warum das wichtig ist? Traditionell arbeiten Organisationen nach dem Motto „Ich produziere etwas und vermarkte
es“; man identifiziert sich mit dem Produkt oder dem Service, den man anbietet und betreibt dann großen Aufwand, um den Kunden zu überzeugen, dass er dieses Produkt unbedingt braucht. Dem gegenüber stehen Organisationen, die sich nach dem Prinzip Erkennen und Reagieren (Sense and Respond) ausrichten: Sie definieren sich über den Wert, den sie für ihre Kunden schaffen und sind bereit, ständig mit neuen innovativen Produkten und Dienstleistungen auf veränderte Anforderungen zu reagiere

Download the full article here Agile Review Interview Parry Sense and Respond

Sense and Respond further study section

Sense and Respond Book





This post is in response to a request for further reading to support the Sense and Respond approach. Listed here are the books contained in the further reading section of the Sense and Respond book organized into the four transformation sections of:

Re-View (Analyze the customer needs and end-to-end organizational response from a different perspective)

Re-Mind (Apply a new theory of management to that of industrialization and mass-production)

Re-Inspire (A different form of leadership and behavior for a new type of organization)

Re-Create (Strategy formulation, governance, policy deployment and organizational development)

Our Sense and Respond book has tried to explain a very large breadth of subject matter in a small amount of space. Readers who wish to explore particular topics in greater detail may find the following books and articles of interest. The subjects range from popular business literature to technical research. The books have been grouped to match the four phases of the Journey to Customer Purpose. Many of these texts have been used in our own research and some have influenced our thinking over some time. The list also acknowledges the contribution of earlier thinkers to the body of knowledge contained in Systems Thinking, Lean Thinking, Leadership, Analytical Management Tools, and change.

I have highlighted some of my personal favorites.

Beer, Stafford: Diagnosing the System: for Organisations (Wiley, 1994).

Bicheno, John: The Lean Toolbox (Picsie, 2000).

de Bono, Edward: Lateral Thinking for Management (McGraw Hill, 1971).

Kume, Hitoshi: Statistical Methods for Quality Improvement (Gilmour
Drummond, 1987).

Lareau,William: Office Kaizen (American Society for Quality, 2003).

Oakland, John S.: Total Quality Management ([Heinemann Professional],

Ross, Phillip J.: Taguchi Techniques for Quality Engineering (McGraw
Hill, 1995).

Seddon, John: I Want You to Cheat: The Unreasonable Guide to Service
and Quality Organisations (Vanguard, 1992).

Senge, Peter, Art Kleiner, Charlotte Roberts, Rick Ross and Bryan
Smith: The Fifth Discipline Fieldbook (Nicholas Brealey, 1994).

Shewhart,Walter A.: Statistical Method: From the Viewpoint of Quality
Control (Dover, 1986).

Wheeler, Donald J.: Understanding Variation: the Key to Managing
Chaos (SPC Press, 2000).

Beer, Stafford: The Brain of the Firm: Managerial Cybernetics of
Organization (Lane, 1972).

Checkland, Peter: Systems Thinking, Systems Practice (Wiley, 1998).
Edwards Deming, W.: Out of the Crisis (1982: reprinted MIT Press,

Gleick, James: Chaos: The Amazing Science of the Unpredictable
(Vintage, 1996).

Johnson, H. Thomas and Anders Bröms: Profit Beyond Measure
(Nicholas Brealey, 2000).

Liker, Jeffrey: The Toyota Way: Fourteen Management Principles from
the World’s Greatest Manufacturer (McGraw-Hill, 2003).

Ohno, Taiichi: The Toyota Production System (Productivity Press, 1978).

Womack, James P. and Daniel T. Jones: Lean Thinking: Banish Waste
and Create Wealth in Your Corporation (Simon & Schuster, 1996).

Womack, James P., Daniel T. Jones and Daniel Roos: The Machine that
Changed the World (Rawson Associates, 1990).

Fromm, Erich: Man for Himself: an Enquiry into the Psychology of
Ethics (Routledge, 2002 [based on a publication from 1950]).

Maslow, Abraham: Maslow on Management (Wiley, 1998).

Zander, Rosamund Stone and Benjamin Zander: The Art of Possibility
(Harvard Business School, 2000).

Cummings, Thomas and Christopher Worley: Organization Development
and Change (West, 1997).

Daum, Juergen H.: Intangible Assets and Value Creation (Wiley, 2003).

Gharajedaghi, Jamshid: Systems Thinking: Managing Chaos and
Complexity (Butterworth Heinemann, 1999).

Haeckel, Stephan H.: Adaptive Enterprise: Creating and Leading Sense
and Respond Organizations (Harvard Business School, 1999).

Handy, Charles B.: Understanding Organisations (Penguin Books, 1993).

Henderson, Bruce A. and Jorge L. Larco: Lean Transformation (Oaklea
Press, 2002).

Hofstede, Geert: Cultures and Organisations: Software of the Mind –
Intercultural Cooperation and Its Importance for Survival (McGraw
Hill, 1996).

Holweg, Matthias and Frits K. Pil: The Second Century: Reconnecting
Customer and Value Chain through Build-to-Order (MIT Press, 2004)

Jackson, Michael C.: Systems Approaches to Management (Kluwer
Academic/Plenum Publisher, 2000).

Jonker, Jan: Toolbook For Organizational Change: A Practical
Approach for Managers (Van Gorcum, 1995).

Kotter, John P.: Leading Change (Harvard Business School, 1996).

Mintzburg, Henry: The Rise and Fall of Strategic Planning (Prentice
Hall, 1985).

Lusk-Brook, Kathleen, John Bray and George Litwin: Mobilizing the
Organisation: Bringing Strategy to Life (Prentice Hall, 1995).

Murman, Earll M., Tom Allen and Joel Cutcher-Gershenfeld: Lean
Enterprise Value: Insights from MIT’s Lean Aerospace Initiative
(Palgrave Macmillan, 2002).

Porter, Michael E.: Competitive Advantage (Free Press, 1985).

Porter, Michael E.: Competitive Strategy: Techniques for Analyzing
Industries and Competitors (Simon & Schuster, 1998).

Scott, Mark C.: Reinspiring the Corporation (Wiley, 2000).

Shinkle, George and Mike Smith: Transforming Strategy into Success:
How to Implement a Lean Management System (Productive Publications,

Calvert, Natalie (ed.): Gower Handbook of Call and Contact Centre
Management (Gower, 2004).

Camrass, Roger and Martin Francombe: Atomic: Reforming the Business
Landscape into the New Structures of Tomorrow (Capstone, 2003).

Einstein Network: The Business Channel (Programme 1290, 2004).

Goodwin, Brian: ‘All for one … one for all’, in New Scientist, vol. 2138
(June 1998).

Jones, Daniel T. and James P. Womack: ‘Lean Consumption’, in
Harvard Business Review (March 2005).

Lacey, Robert: Ford (Heinemann, 1986).

Landmark Education: (workshops on personal

Marr, Bernard: Performance Measurement and Management: Public
and Private Sector (Cranfield School of Management, July 2004).

Marr, B. and A. Neely: Managing and Measuring for Value: the Case
of Call Centre Performance (Cranfield School of Management,
July 2004).

Morita, Akio: Made in Japan: Akio Morita and Sony (Collins, 1987).

Sense and Respond Book Review by Tomislav Petrovic

4.0 out of 5 stars Insightful, proven, necessary in today’s world,26 Nov 2012
Amazon Verified Purchase

I find the book very insightful. It offers proven new methods for organisation architecture and management. For those who until now had contact only with “classical” (Tayloristic) management techniques, book will offer new very interesting and challenging ideas and views.
I especially liked parts with typical comments of the employees in specific situations and comparison between new management model vs mass-production management model.
I think that most of company owners in today’s world should read this book and have in mind ideas mentioned here.

I didn’t give 5 stars to the book only because I prefer to have theory and examples mixed. Theoretical part of the book has 4 major chapters and only after reading all of them, you will get to the examples part in which writers describe how it all looked in practice. For example, mixture of examples and theory which you can find in book Kanban by David J Anderson is perfect for me. Simply, I understand better theory when example follows immediately.

Burgers or Subs? Batch and queue vs Flow.

Burgers or Subs? Batch and queue vs Flow.

Creating the flow of value, Let the work dictate the design

I am often amused by so many ‘Lean’ experts citing the McDonalds fast food system as a ‘Lean’ system when in fact its an excellent ‘mass-production’ system. It does not even qualify as ‘fake-lean’ because its not trying to pass itself off as Lean. Rather its the confusion in the minds of the so called Lean experts. So what are they getting confused about.? I think it’s probably the concept of on-demand, flow and standardization.

In the McDonald production method the products do seem to flow, using the ordinary understanding of that word, in-fact its just a batch and queue system, it’s not one piece flow, that is the product is moving continuously with only one item at any position at any one time.

Misunderstanding standardization: McDonalds have a standardized process and  its designed to deliver a standardized product with little variation and little customer influence over what is produced.

Now there is nothing intrinsically wrong with McDonalds, I like then now and again, probably too often for my wife’s liking. What I am taking exception to is calling it Lean. The following article (extracted from my book Sense and Respond: The Journey to Customer Purpose Macmillan 2005) compares a Mass production fast food system with a Lean Fast food system.

I hope this clarifies what is meant by Standardization and Flow in Lean terms. If you have any comments or questions please post them.

Creating flow is an important feature of an on-demand ‘pull’ service (Womack and Jones, 1996). The concept is simple, yet the practice can be difficult.

Usually the current organisation is based on a batch-and-queue system, whereby work gets stockpiled and moved around departments. In manufacturing this can be seen in the form of inventory waiting in staging areas; in services it can be seen as sorting and prioritising service requests, tiered services such as ‘first-line, second-line’, sorting invoices into batches for processing, and so on.

A simplified illustration of both approaches can be offered in the ways two fast-food chains have approached the task of preparing food and serving customers.

Most fast-food burgers chains follow, to a large extent, the batch-and-queue principle. In one such chain each worker is assigned a particular task in the production and serving process. Food is cooked in batches, usually according to a forecast based on daily trends and the manager’s intuition. The kitchen workers prepare ingredients to a forecast and wait for instructions to cook it. The food is then placed in a staging area for frontline staff to serve customers.

If the forecast is wrong, then either too much food is produced, resulting in waste, or not enough food is produced, resulting in lost revenue. Production in expectation of customer demand can result in high levels of waste, so staff in this situation are targeted on meeting demand and minimising waste. The customer is offered a choice of standardised products and combinations.

If the customer wants any other variety, then this can only be achieved as a special request – in effect, production by exception and priority. This circumvents the main production process, usually leaving this customer waiting much longer than other customers even though she or he is now getting special treatment. In this scenario, product standardisation reduces variety, thereby simplifying the production process.

Contrast this kind of flow with the one-piece flow achieved by another fastfood company, which makes sandwiches and ‘subs’. When you enter you are immediately offered a number of varieties of bread and rolls from which your meal will be constructed. You are invited to choose what ingredients you wish.

You are free to look at the ingredients and to make choices based on what appeals. You give your order; and the ingredients you have chosen are placed in the sandwich, which is then passed to another worker who finalises the order and takes the money.

In this situation, the ‘sandwich’ flows as one piece, from the start of the operation to final completion. The customer is involved in every part of the process. Variety is built in and does not need special off-line treatment. There are no staging areas where food could go to waste: all food is produced on demand, not to forecast.

One piece flow

All the workers are involved with the customer and with the creation of customer value. This enables workers to be involved in helping the organisation select new ingredients – they are closer to understanding particular customer needs. This allows the organisation to keep changing the variety offered, almost on a daily basis. Waste is minimal, because every order has a customer and is produced to her or his requirements.

What has been standardised, therefore, is not the product but the production method.

Both approaches have been designed to solve a fast-food problem, yet the approaches are based on two quite different sets of principles. The mass-production approach – standardisation and the elimination of variety, functionalisation, batch-and-queue, and working to forecast – makes change difficult because the whole machine and the connecting procedures need modification and re-training.

In contrast, the on-demand flow system, in which variety is designed-in, not designed-out, produces continuous flow. The customer is involved in the production process at every stage, and workers are engaged with the customer and can learn her or his likes and dislikes. Change is adaptive and daily.

From this simple illustration, it is evident that the second company is better placed to create variety on demand and to continually adapt to changing customer needs and even to local tastes. Both these companies are successful, but in a world where customers are demanding more variety, even successful organisations have to ask themselves, ‘What do we need to do to maintain success? Are our current operating principles likely to cause us to lose competitive advantage?’

Extract from Sense and Respond: The Journey to Customer Purpose. Stephen Parry

©Stephen Parry 2012 All rights reserved.

Mass production vs. Customer Value Principles

Mass production vs. Customer Value Principles

There is a cataclysmic difference between mass production and the creation of a Customer Value Enterprise® through the application of Customer Value Principles. Customer Value Principles come from many sources – particularly from Lean Service and Systems Thinking – but the line between mass production and the Customer Value Enterprise® is not a continuum: these are completely different ways of thinking and working. You are either doing one or you are doing the other –you will not find yourself doing some elements of each.

Working to forecast vs. working on demand
Compare the activities and behaviours you would find in a mass-production environment with those found in a Customer Value Enterprise®. In the massproduction environment, the primary concern is to maximise all assets and capabilities. If there are several assets and capabilities, it is assumed that none of these should be idle: keeping them working all the time thus becomes the driver – the consideration that determines management actions (Womack and Jones, 1996).

Maximising production does seem to make logical sense – but only if there is demand for the product: if not, the business needs to reduce production. In the Customer Value Enterprise® world, however, the business aims to produce only in response to known demand – it doesn’t build up inventories. You don’t make things ‘just in case’, because if you did you might make the wrong things and waste resources, and you would certainly increase the cost of storage. Mass-production enterprises in the West are often driven by the production forecast: output is generated in the expectation that all products will be consumed.

Many production companies are now moving to ‘build to order’ – that is, ‘on demand’. The principles of operation between these two approaches are very different. In the ‘on demand’ world it is logical to keep some assets idle and to accept idle costs in exchange for the reductions in inventory, in storage costs, and in losses from discounting over-produced products. In the ‘on-demand’ world, even the idle-time cost can also be recovered if the organisation uses this time to improve and optimise the value chain and thus to reduce the cost of production still further and to increase quality.

The term ‘on demand’ is used by many today to mean simply the transfer of transactions and ordering to the internet. While in many cases this is an effective means of providing customers with access to products, it does not necessarily mean that the end-to-end organisation has been set up to respond ‘on demand’. Throughout this book extract  (from Sense and Respond – The Journey to Customer Purpose S.Parry) we will not use ‘on demand’ to refer to an electronic shop window: rather we will use the term to signify a complete change in how the organisation is designed built and operated end-to-end.

Processing all demand vs. removing unwanted demand
Whereas mass-production systems tend to process all demand and services irrespective of the nature of work, the Customer Value Enterprise® aims to remove certain types of demand – the demand that adds cost without adding value. The driver here is not just to do work as fast as possible, but actually to reduce work by removing non-value added activities. The thinking is very different.

Batch-and-queue vs. continuous flow
The way that work flows through an organisation is usually what is called batch-and-queue. Because of functional specialisation, the work gets fragmented. A given piece of work stops and starts each time it is put it into someone else’s inbox or passed to another department: while waiting for someone else to get round to it, the work stays idle. The customer may also experience the effects of this when trying to track progress as the work is passed around departments – this too adds more work, creates no value, and increases frustration.

Customers may feel as if they are being ‘timeshared’ by various people and departments. In a Customer Value Enterprise®, the aim is to create continuous flow and to make sure that this flow is as short as possible. When you get any sort of service demand, you act upon it now, this moment. And you see the work through to completion – you don’t half do it, put it in a queue and come back to it later (Womack and Jones, 1996).

Prioritising and expediting vs. on-demand capability
In the mass-production world, limited capability means that the business must choose to prioritise or expedite some  things, and other things therefore have to wait. But waiting causes waste. In mass production, managers think that they must prioritise and expedite because they don’t have enough resources: yet the systematic prioritisation of work actually creates more work. – Prioritisation is a symptom of the disease it purports to cure.

When instead you create continuous flow and work on demand, you remove this need to prioritise and expedite.

Continuous improvement vs. continuous value creation
In the mass-production world ‘continuous improvement’ is a familiar mantra. This aspiration has been around since the Industrial Revolution, and has been the biggest message in the quality movement. And it is an effective aspiration – as long as the products or services remain fairly constant and predictable, without variety being demanded.

Continuous improvement towards perfection is not enough, however – what is needed also is continuous value creation. There is little point in producing something that has no defects if it doesn’t completely meet the customer’s needs. At the heart of a responsive business strategy, therefore, is understanding what value looks like to the customer, and then using the pursuit of continuous value creation as the driver for the business.

Root-cause analysis vs. root-cost analysis
In the mass-production world, attention is often focused on analysing the root cause of any problems that arise. Despite this analysis, however, action to cure the problem does not always follow. Why not? To make change happen, the business needs also to focus on the costs of not correcting problems – the cost to the organisation, the cost to the customer (especially crucial), and the cost to society. Taken together, these costs provide the business case for change.

In the Customer Value Enterprise®, therefore, change occurs when customer intelligence data has allowed the true origins of cost to be determined and quantified. In other words, root-cause analysis is superseded by root-cost analysis.

Working to standard vs. working beyond standards
In a mass-production world, the drive is to obtain standardisation. This makes sense provided that there is little complexity and variety in the nature of the demand, and that the adoption of ‘standards’ does not prevent improvement.

Having standard processes and standard products can help to ensure high quality, for example in manufacturing, but it can also lead to a work ethic in which ‘working to a standard’ is accompanied by the abdication of any improvement responsibility to the owners of that standard. This mindset, we believe, is the biggest constraint on creativity, innovation and workplace ownership. We are advocating instead a world in which employees work beyond standards, breaking through to higher performance and continually raising the bar.

Measuring output vs. measuring capability of means
In the mass-production world, the performance of individuals and departments can be measured by determining their output – how many items they have produced, how many they have sold, or how many they have shipped. Much more important to know, however, is what those individuals and departments are capable of doing: do they have the means of production overall, and what is the capability of the operation?

It is actually much more productive for managers to spend time in developing the capability of their organisation than in trying to push the organisation to meet production targets. Whereas in the mass-production world you measure the performance of people and departments in terms of their output, in the Customer Value Enterprise® you measure performance in terms of the capability of means.

Capability of means is more important than output. For example, if you were asked to drive 50 miles when your car had only one gallon of fuel and a capability of 30 miles to the gallon, it would be silly to set out on the journey. The ability to measure capability can thus be more important than the ability to measure output. In their book Profit Beyond Measure (2001), H. Thomas Johnson and Anders Bröms write encouragingly about companies that have moved away from ‘managing by results’ and towards ‘managing by means’. They call upon managers to move from targets to pathways.

Delivering to specification vs. delivering to purpose
In the mass-production world, the business delivers to a contract or to specification, and endeavours not to deviate from that. In the Customer Value Enterprise®, continuous value creation accepts that customer purpose is constantly changing and that contracts can’t keep up: instead of delivering what was specified, you need to deliver what matters. Construct your whole proposition to the marketplace around continuous value creation, and continually change your products and services to meet that proposition.

Traditional contracts and specifications can never keep up with changing customer needs. Although specifications may still be helpful in manufacturing, they will tend to constrain the delivery of services. Instead of working to a specification or contract, and defining itself by the products or services it delivers, it is better for a service organisation to define itself in terms of the value it creates. This basis leaves the organisation free to experiment and to innovate with new products and services.

Flexible specialisation in a mass-production world is just a more sophisticated means of controlling customers. It is not about being flexible by offering variety, as in mass-customisation and personalisation: it is about responding quickly to customer purpose. In the mass-customisation world, the organisationis still in control; in the Customer Value Enterprise®, the customer is in control.

People performance vs. system performance
When things go wrong in an organisation, managers in the mass-production arena usually start to criticise their staff: ‘You didn’t make your quotas’ or ‘You didn’t make your output numbers’. Yet performance problems can have other causes, such as when demand exceeds the end-to-end capability; when an unknown and inappropriate demand enters the system; or when someone along the value chain improves performance locally and inadvertently creates a knock-on effect downstream.

Factors such as these account for over 90 per cent of the variation in service performance (Edwards Deming, 1982).

Most of this variation is outside the power of the individual – individual performance can only contribute as much as the constraints of the current system will allow. Performance is created by the system, not by individuals, so systemic changes are needed if there are to be breakthrough improvements. In the Customer Value Enterprise® model, changing the system is the responsibility of those who work in that system.

As has been said above, the mass-production paradigm contrasts significantly with the Customer Value Enterprise® paradigm, and there is no continuum from one to the other. Yet in practice most organisations currently work using mass production. How can one flip from one paradigm to the other? To make this shift takes strong leadership which allows staff to work in both ways for a short space of time while transitioning from one to the other. With a lot of courage, tenacity, honesty and clarity of purpose, staff and managers can drivethe organisation from one paradigm to the other. This allows staff to experience both paradigms – and the flip, when it happens, is very quick.

Three major components are necessary. First, you need to collect data about how your organisation responds to the real needs – as opposed to the perceived needs – of your customers. Second, you need to assess how your organisation performs end-to-end in achieving the customer purpose. Once staff have collected the data, they can discuss it with their manager and talk more easily about change. Third, as well as gathering data, staff also need to understand what the reality is like. As they grasp this reality, they become better able to collect the data. This process thus becomes an iterative one with these three elements.

The type of change that we are advocating depends on learning the principles of all three and bringing all three together. Because they are so interdependent, change will occur only when all three are addressed at the same time.

Copyright Extract from Sense and Respond: The Journey to Customer Purpose (MacMillan) Stephen Parry


Re-post Sense and Respond Linkedin Discussion

Stephen Parry • Hope you all had a good Christmas and New Year, or a Happy Holiday which ever suits.

Thank you to all who outlined the proof your company looks for when trying to create a Sense and Respond Lean Enterprise.

I think the problem faced by most companies is they have usually already decided which KPIs they need to hit and want Lean to help them hit their existing targets.

However what we know from Sense and Respond Lean is that the company’s measurement system is usually the second problem which needs to be addressed – come to the first in moment- After all the measurement system reflects what the business thinks is important but the vast majority of company measures are usually based on mass-production thinking.

So we come to the first thing to be addressed and that is changing the company thinking from Mass-production theories to Lean Theories where the design of the measurement system (and ultimately the design of the whole company) is centred on Customers and Liberating Employee creativity and ingenuity to better serve them.

Most of you who have been involved in Sense and Respond know instantly when seeing a set of company KPIs the basic underlying theory and thinking behind the design and behaviour of the organisation, it’s from this point we must start thinking about the re-education entry points.

The Measures matrix on page 78 of the Sense and Respond book is a good place to start. Most people fill this matrix out thinking their measures are important to the customer and indeed work end to end.

Having done that the trick is to then walk the value stream together asking questions from both the customer’s and employee’s perspectives. Once completed ask them to do the same Measures matrix exercise again.

Usually the second time around most of the measures are placed in the ‘functional’ and ‘does not matter the customer’ – lower left quadrant.

There is usually a sharp intake of breath at this point, the point at which they realise they are measuring the wrong things, feeling pain about the wrong things i.e. waste pain. Its only from this point (new thinking) can we now have a discussion about what sort of measures need to have in the top quadrant i.e. ‘Matters to the customer’ and ‘ work end-to-end’

Some of you reading this will have had this experience, perhaps you can tell your own story on this subject.

Warm Regards Stephen.