Utilization as a proxy

Does utilization matter?

Most recently I was watching a talk on Kanban. The speakers gave an introduction of the Kanban method and then evaluated Kanban in different respects. One thing they considered to be a disadvantage was that Kanban causes utilization of people to go down. Once again I felt puzzled. The same happens in almost every training class I teach: People ask how we measure utilization with Kanban and how we we can make sure that people are always fully utilized.

My standard answer to this is: „Is it really important if people are utilized? If we deliver as much value for our customers as quickly as possible, why should we care about utilization?“

Kanban and utilization

Kanban does not try to maximize utilization (although my impression is that people sometimes try to abuse it for this purpose). The opposite is true! In Kanban we are aware of the fact that high utilization cloaks our system which leads to longer lead times and poor flexibility. And even worse: If everybody is fully utilized, we do not create slack in our system which means that we will not improve! Yes, I’m sure that there is no Kaizen without slack. This is why I use this quote by David Anderson quite a lot: „Slack is the ultimate weapon!“

In a WIP-limited pull-system we will always create slack – because of variation and due to the fact that there will always be a bottleneck in our system which affects upstream and downstream processes. My experience is that this is the moment of truth: When teams new to Kanban first face the situation of people having slack. What will the people do with this slack capacity: Will they use it for system improvements and for helping their colleagues? Or will they ignore the limits and start working on a new ticket? And how will the management react? Will they trust people that they will do the right thing and support them in improving the system? Or will they fall back into the push model and assign new tasks to people?

Everybody is fully utilized. But is this what really matters?

Utilization as a proxy

Even though most people agree that there is not much value in utilizing people, I think there is a real need that causes people to use utilization as a metric. In my opinion people use utilization as a proxy for something else. They want wo know about the productivity of their team or department, and they want to know if their plan is in danger. And they have a lot of pressure to get things done. So some of them use utilization as a replenishment mechanism: As soon as utilization goes down they think it’s the right moment to assign new tasks to people.

Do you know this old joke?

A drunk creeps under a street lamp. A policemen approaches him and asks: „What are you doing?“ The drunk answers: „I’m looking for my keys, must have lost them.“ Policemen: „Did you loose them here?“ Drunk: „No, I’ve lost them somewhere down the street. But here it’s brighter.“

Instead of measuring things that really matter (customer satisfaction, lead times for valuable features, employee satisfaction etc.) we measure things that are easy to measure. This not only leads to dysfunctional behavior (e.g. people doing a lot of useless stuff in order to keep utilization high) but also obscures real problems and improvement opportunities.

Utilization of tickets

Having said that, perhaps there is another approach to this. If people are used to utilization and are not ready to let go utilization, we could (as a first step) change the scope of utilization: Instead of utilizing people, we should focus on value-added tickets to be utilized. As soon as we work on maximizing utilization of tickets we will tackle wait times and blockers. And this is definitely a good thing to do!

Thanks to Stefan Roock, Henning Wolf and Sebastian Keller for discussing this topic with me!

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Like this post? Then you should check out my post Keep the Ball Rollin´ which deals with the difference between resource efficiency and flow efficiency.