Friday, December 13, 2013

Moneyball In SMS

Moneyball is a movie based on a baseball team where players for the team are picked based on their on-base percentage.  By getting players with a higher average of on-base percentages, the team manager executes a plan to build a competitive team at a lower cost and eliminate the subjective and often flawed process of picking high-impact team members. This approach brought a baseball team to the playoffs with only a salary budget of about 33% of the highest salary team.  Statistical Process Control (SPC) and SMS are profit makers when applied to desired operational results. When applying SPC to Aviation Safety, an Enterprise has established measurable parameters. 

Identified parameters set the stage for greater profit margin. However, precise application is what makes the difference. 
Moneyball in SMS is to know what an Enterprise's values are and what the undesired outcomes are. In the Moneyball movie the value is to win games and the undesired outcome is to play high salary players. This process is an uphill battle since it is not a conventional approach and it is a battle to receive cooperation from other managers. 

A Safety Policy should be written for application of measurable results. An Enterprise's Safety Policy that is measurable would state something like this: "Our Enterprise operates with zero tolerance to compromise aviation safety".  Every aspect of operation is then measurable against "zero tolerance".

The next step is for the Enterprise to establish measurable objectives. A measurable objective could be:" The objective of zero tolerance is to increase profit margin by 1.5% ". When a measurable objective is established, the Enterprise establishes measurable goals. A measurable goal could be:”The profit margin is increased by reducing hazard costs”.

After a goal is established, the parameters are established. A parameter is a variable given a specific measurable factor that sets the conditions of its operation, and could be: ”The condition of assessing hazard cost is limited to a dollar value of $ 1 per 1 second spent in processing hazard reports received, time spent on preliminary risk assessment and time spent processing into hazard registry”.

When the cost parameter is set at $ 1 per 1 second spent, the cost of hazard becomes a cost of the identified hazard. In other words, the hazard is assigned a cost-account and it doesn't matter to whom, or to what level in the Enterprise the task is assigned. 

A goal gives directions of action. However, arriving at the goal is what makes it measurable. 
An Enterprise applying SPC strategy to their SMS has direct and measurable links from Parameter – to Goal – to Objective – to Policy. 
The parameter is $ 1, the goal is to increase the value of $ 1, the objective is to apply the increased value of 1 to the profit margin, and the increased profit margin is based on a safety policy with ”zero tolerance to compromise aviation safety”. SPC is the tool to ensure SMS processes are in control.