Setting the Lean Agenda

Past delegates tell us that our UK Lean Summits and our YouTube channel are setting the agenda for the lean movement in Europe. I am convinced that the speakers Dave Brunt has gathered this year's Lean Summit on 5th - 7th November 2013 will do so again. Let me give you four reasons why, if you are serious about lean practice, I think you should join us. 

1. Last year we shared the lean transformation model in which capability development is the key engine for solving business problems and delivering the performance leaps we know are possible. This year Dave and I will put more flesh on these bones and Art Byrne, the heroic leader from Chapter 7 of Lean Thinking, will describe what it takes to lead multiple lean transformations. Kevin Robinson heads the group helping organisations learn from Toyota Motor Manufacturing UK and well-known sports coach Dr. Peter Treadwell will demonstrate what practice really means. All of this will challenge our understanding of what lean is really about and give new direction to our lean transformations.

2. James Morgan is unique in having not only studied and written about Toyota’s new product development system, he went on to build the lean product development system that was key to rescuing Ford from bankruptcy. He recently retired and having heard his very wise words I would absolutely urge your product development folks to hear and meet with him. They would learn a lot.

3. If you have been following our evidence based experiments with hospitals you will be fascinated by the next installments. Owen Williams, the Chief Executive of Calderdale and Huddersfield NHS Foundation Trust, will show how they are combining the lean building blocks (described at our 2011 Summit) to create a truly customer driven hospital. Liam Duffy, Chief Executive of Beaumont Hospital in Dublin will describe how they are making big steps to catch up fast! Healthcare is a long journey – but the path ahead is becoming clearer.

4. One of the biggest challenges is collaborating across functions. We tackle this from different perspectives. Steve Warren will talk about transforming global supply chains at Akzo Nobel while Peter Ayeni describes how they keep airliners flying at Lufthansa. Phil Mayhew and Kim Silcock show how delivering all kinds of services is not about the services themselves but about improving the lives of the citizens of Solihull Council, a leader in lean local government. Pierre Masai will share some fascinating insights about the very different role played by IT at Toyota Motor Europe.

Our Summits not only make you think but they are also full of wise reflections from very experienced lean practitioners with real stories to tell. They have also triggered many new initiatives and led to collaboration between participants. I always come away inspired by them, I hope to see you in November.

For more details and to view the full programme visit http://www.leanuk.org/pages/event_summit_2013.htm.

Best wishes

Daniel T Jones

Chairman, Lean Enterprise Academy

Lean IT

Lean thinking should always start with the customer or user. We create value in our lives, meet our needs and solve problems by sourcing and using a combination of products, services and information. The same is true at work – we make or use products, we deliver or use services and deploy them to best effect using information. The Internet is fundamentally changing the way we acquire and use this information and translate it into knowledge. Yet there are still enormous frustrations with the way IT is currently used in organisations. We are often still prisoners of the logic of mass production – using big systems for command and control.

A lot of progress has been made in using lean in developing and managing production and services. But a new synthesis is now emerging around how to use lean in the development and management of information and knowledge, combining lean insights into managing processes and developing capabilities, agile insights into software development and the very active Lean Startup movement. This is summarised in a recent article by Dan Jones and Steve Bell on Lean Thinking and Knowledge Work for the Cutter IT journal and recent blogs on the Lean Startup movement on the Lean Edge. We have also added two important books by Steve Bell to our bookstore, Run Grow Transform and Lean IT which are worth reading, as is the Lean Startup book by Eric Ries. You can join in this growing debate at the third Lean IT Summit in Paris on 3-4 October 2013. Please pass this on to colleagues involved in IT in your organisation.

Yours sincerely

Daniel T Jones

Chairman, Lean Enterprise Academy

Two Gurus

We have just posted the final two video talks from our last Lean Summit on our YouTube Channel, featuring two lean missionaries who are making a big contribution to the lean movement.

Mike Rother gave a stunning presentation on his latest research into the Kata discipline of learning and acting. This brings his book Toyota Kata to life and show how important it is to coach and practice Kata. For those who want to go deeper there is more on the Improvement and Coaching Kata site on the LEI web site.

Michael Ballé gave a challenging and inspiring presentation on coaching leaders and employees on the Gemba. This talk distilled his thinking and practice in coaching organisations in France and elsewhere and developed themes from his books The Gold Mine and The Lean Manager. Many of you will also be familiar with his Gemba Coach column on the LEI web site and his contributions to The Lean Edge.

We hope you enjoyed these videos from our Lean Summit and hope to see you at our next Summit on 5-7 November 2013 – details to follow shortly.

Yours sincerely
Daniel T Jones
Chairman, Lean Enterprise Academy

Policy Deployment in Healthcare

We have just posted five more video talks from our last Lean Summit telling a remarkable story of the power of using policy deployment in healthcare. Two years ago, inspired by a talk from Takashi Tanaka, David Furley leading the lean transformation at the United Lincolnshire Hospitals NHS Trust went home determined to do this too. Two years later he returned with his team to show how policy deployment has not only given focus to their transformation journey but has also significantly changed the way management meetings are run and the behaviour of employees at every level in the organisation.

These videos tell this story from four levels from Director level to the Wards. The passion and inspiration of these stories are worth watching and sharing to inspire your colleagues, whatever industry you are in. They complement the pioneering stories of the use of Plan for Every patient and Visual Hospital at the Calderdale and Huddersfield NHS Foundation Trust at our 2011 lean Summit. Together they form two aspects of a management system described in Making Hospitals Work that is delivering significantly better performance

within the NHS.                                                 

Yours sincerely

Daniel T Jones

Chairman, Lean Enterprise Academy

Lean Leadership

Two more presentations from our last Lean Summit are now available on our YouTube channel. They shed a unique light on how two of the most successful manufacturers in the UK, GKN and Rolls-Royce, each with over a decade of experience in using lean thinking, are developing their lean leaders. They talk frankly about how they are tackling this key threshold to sustaining and accelerating their lean journeys.

Last year Peter Watkins, who leads the lean activities at GKN, presented one of the most dramatic examples of the power of compressing supply chains for next generation products. They unscrambled complex supply chains based on “focused factories” and “low-cost sourcing” to reduce total lead times from 90 weeks to 30 days - click here to view. This year Peter outlines how GKN is helping their leaders to change their behaviours as they learn how to develop the problem solving capabilities of their subordinates - click here to view. Brendan Hindle describes the Rolls-Royce lean journey and their Process Leadership Academy - click here to view. These are very important experiments from which we can learn a lot as we all embark the long journey to create our own lean leaders.

These talks build on the insights from John Shook about lean leadership at Toyota. These were summarised in his presentations to our Lean Summits in 2008 and 2011 which are worth viewing again. In them he talks about “leading as if you have no power” and what Toyota means when they say they “develop people before making cars”. Very significantly they change the focus of lean transformation from experts teaching lean tools in a classroom to line managers developing the problems solving capabilities of their staff. The new skills of mentoring and problem solving are only truly embedded through “learning-by-doing”.

Yours sincerely
Daniel T Jones
Chairman, Lean Enterprise Academy

If you are inspired by these videos why not join in the discussions at out latest Lean event, the LEA Community Sharing Day on Thursday 18th April 2013 in Cardiff. We have extended the deadline for abstracts until this Friday 22nd March 2013 if you would like to present and will continue to take bookings for attendees right up until the day itself but please note spaces are limited.

Hoshin and Oobeya

We have just posted two more presentations from our last Lean Summit on our YouTube channel addressing key challenges facing lean managers – how to focus activities on the vital few and how to improve the effectiveness of cross-functional projects.

The fact that most strategic plans are still built on a long list of projects shows how organisations struggle to deselect and focus.  Pascal Dennis and Tom Jackson have described the Hoshin planning tool to unlock this dilemma in their books, yet progress in using it has been slow. In his talk at the Lean Summit Laurie West describes how he learnt to use Hoshin in his own business and then to teach it to other executive teams in the automotive and engineering industries. He stresses the importance of the process a team goes through to define their priorities, not just the tool itself. We will take this further at our Sharing Day on April 18th in Cardiff when Mark Reich from LEI will describe the Hoshin process he was responsible for at Toyota North America.

In 2008 Takashi Tanaka has highlighted the power of using the Oobeya visual project management room to bring PDCA discipline to managing cross-functional projects. In 2010 Takashi and Sharon Tanner described how Boeing was taking Oobeya project management out of engineering and into the Executive Office. In 2011 Takashi described how Oobeya formed a key building block in Toyota’s management system. This year Takashi extends the story to create Digital Oobeya rooms to enable remote teams to work together across the world.

We have been very encouraged by the response to the Sharing Day on 18th April. Already several organisations with a long history of lean have indicated they will share their stories and questions. If you would like to share your stories please submit your proposed summary by Friday 15th March, for us to review and shape the day. Do join us for what looks like being a fascinating day.

Yours sincerely
Daniel T Jones
Chairman, Lean Enterprise Academy

Science and Lean Transformation

We have just begun to post the videos of the presentations at our Lean Summit 2012 on our YouTube channel to share them with the wider lean community. The first two videos are of my opening presentation on Science and Lean Transformation and my closing speech summarising the lessons from the Summit. We will post the rest of the plenary talks in the coming weeks.

The opening presentation argues that Toyota’s example creates a new basis for managing by science. Lean has a much sounder empirical foundation and goes considerably beyond Frederick Taylor’s Scientific Management or modern management’s attempts to correlate strategy and leadership with performance. 

What distinguishes lean practice is that it focuses on customer value and not just investor returns, on the horizontal value creation process as well as the vertical deployment of knowledge and the allocation of resources, and on engaging everyone and not just a few experts in solving tomorrow’s problems.

The latter point entails a very different transformation process than the traditional expert-led training and consulting model. Lean is learnt by solving business problems in their specific context, by developing the capabilities of line managers and their teams to unblock the flow of value creation, with leaders giving clear direction and support. The objective is not simply to solve today’s problem but in so doing to develop the capabilities of the team to solve new problems once the teacher has left. 

The underlying purpose of lean is the systematic use of the scientific approach by every employee every day. This is what Toyota means when they say “we make people before we make cars”. This raises new challenges for managers used to hiring experts to solve problems for them and it challenges lean folk who are drawn to “professionalising” and “certifying” their knowledge of lean tools. Lean practice evolves through carrying line responsibility and through coaching and mentoring the capabilities of employees. What is common is the scientific thought process that can bring different perspectives to very specific business situations.

It also raises big challenges for the lean movement. A true scientific approach starts with reflection on what is currently known as the basis for framing the next step of questions about what is not yet known. If we are to deepen our knowledge of lean we need to initiate, mentor and reflect on many experiments to address these questions and learn from the results. Rather than seeking universal laws through correlating the use of tools with business results, where science can help is in understanding the learning-by-doing process which will in turn build the capabilities that lead to superior business results in diverse circumstances. As long as we are interested in framing the next set of questions there will be a healthy future for lean.

Further Lean Summit presentations will focus on lean leadership, Gemba management, the Hoshin strategy deployment process and the practice of learning through Kata. You might also be interested in three books featured in my talk; The Management Myth by Matthew Stewart, which exposes the lack of any empirical evidence behind scientific management, The Halo Effect by Phil Rosenzweig, which demolishes attempts to correlate leadership and strategy with performance and Ignorance by Stuart Firestein, which is a wonderful restatement of the purpose of science. You might also look at my summary of Lean in 10 Slides.

Yours sincerely
Professor Daniel T Jones

PS. We will be discussing all these issues at our Sharing Day in Caridff on 18 April. This is a unique opportunity to share stories of your lean journeys and discuss your next questions and challenges with a distinguished panel of lean experts, including Mark Reich, COO of LEI, and other lean practitioners. I look forward to seeing you there.

New Leadership and a New Mission

After ten years leading LEA (and another ten years leading LERC before that) it is time to pass the baton and redefine our mission. At the LEA Summit in November last year we announced that Dave Brunt would assume responsibility for leading LEA as our new Chief Executive. Daniel Jones will continue to actively support LEA as Chairman and Senior Advisor, but with more time to mentor, reflect and write on the progress of lean and future challenges.

Dave worked very closely with Dan over the last twenty years on all kinds of assignments. Dave organised the last UK Lean Summit and is part of the core team that has been rethinking the mission of the Lean Global Network. His pioneering work mentoring Toyota car dealers in Portugal, Norway, South Africa and elsewhere helped them win the Lean Prize in Norway and is finally being recognised by Toyota itself! He is the author of Creating Lean Dealers and a contributor to Seeing the Whole Value Stream. He has also been coordinating the development of a Lean Leadership Programme for LGN and is one of most experienced coaches in the use of A3 thinking in Europe.

This transition mirrors the change in leadership at the Lean Enterprise Institute in the USA, where John Shook took over from Jim Womack and has since been joined by another seasoned Toyota veteran Mark Reich. LEI’s mission has also changed to engage in experimental projects with pioneering organisations seeking to take lean to new levels. In doing so they are working more closely with the Toyota Production System Support Centre (previously TSSC) and a network of ex-Toyota alumni.

The mission of the Lean Global Network is to take responsibility for advancing lean thinking in order to improve the performance of organisations and raise living standards while minimising resource use and environmental impact, and to provide more fulfilling work and continuing development for employees while enabling consumers to create more value in their lives. This is achieved by developing the capabilities of every employee to use the scientific approach in solving the business problems that will create value for consumers, for the organisation and for society at large. LEA will therefore focus on Learning through co-learning projects with organisations, Educating through mentoring, coaching and training trainers and Sharing through Summits, our Lean Community and publications.

The Sharing Day in Cardiff on April 18 is the first new initiative by LEA to create a community of advanced lean practitioners in the UK. It will be a unique opportunity to share experiences of what works and what does not in deploying lean and to get feedback on burning questions on the next steps with lean from very experienced practitioners including Mark Reich from LEI (ex-Toyota USA) and Kevin Robinson and Mark Davies from the Toyota Lean Management Centre in UK. Dave is organising this event in collaboration with Dr Nick Rich, who is leading the new Centre for Lean Enterprise Applications and Research (CLEAR) at Cardiff Metropolitan University. We look forward to a very productive and inspiring day and hope you will join us.

Dave Brunt, Chief Executive and Daniel Jones, Chairman

Lean Enterprise Academy

P.S. Full details of the event and guidelines for submitting your story and questions are on www.leanuk.org. Please bring this to the attention of your colleagues.

Five Years into Lean

Five years of lean progress should be rewarded with a vision of how the organisation is going to use the new capabilities of their staff and their value streams to exploit new opportunities that competitors will struggle to follow. By then I would expect top management to be setting the direction for lean, middle management to be focused on streamlining their value streams and the front line to be deeply engaged in problem solving. At this point it should be possible to rebuild the IT architecture of the organisation to mirror and support their lean processes. Then it is time to look ahead.

Five years into their lean journey Tesco had already grown sales through better product availability, saved cash from less inventories, cuts cost from improved store and warehouse productivity and less wastage and saved £400m by postponing their warehouse building programme by four years. They then realised their rapid response supply chains could also supply local convenience stores at almost no additional cost to supplying its supermarkets, opening a whole new retail format now being copied by others. They also realised they could quickly establish national coverage for their home shopping channel tesco.com at little extra cost by picking orders in slack times in hub stores, instead of building dedicated fulfilment centres which its competitors were doing.

While the lean supply chain was the enabler, the vision for new ways of serving customers came from their intense focus and deep understanding of customer needs. In his outstanding new book Management in 10 Words Sir Terry Leahy describes how Tesco pioneered new ways of collecting data and opinions from its customers that drove its strategy. Through Customer Panels and analysing their loyalty card and home shopping order data they understand exactly who their most loyal customers are and what they buy, how their lives are changing and how well Tesco actually serves their needs. This in turn is leading to new innovations like mobile ordering systems in commuter stations, pick-up points and stock-less stores.

Amazon has followed a similar path, building on their web platform and their distribution system also modelled on Toyota's example, to expand well beyond books and consumer goods into industrial supplies. More recently they have been experimenting with pick-up points in cities and building local distribution centres to offer within the day availability to customers. This brings Amazon into direct competition with Tesco as the world of clicks and bricks converge. It will be fascinating to see what emerges from this contest. My guess is that it will be the organisation that best understands how customers' lives and needs are changing and is best able to flawlessly deliver on its promises.

This is just one example of lean capabilities opening new business opportunities in a sector where things move really fast. But even manufacturing businesses with long product cycles the next investment cycle provides the opportunity to radically rethink the design of the product and it's production system in the light of the experience of leaning the current generation. It is also the chance to reconfigure global supply chains to make and deliver products to customers in days rather than many, many months. The same is true for services like banking and insurance, where streamlining back office transactions processes is opening up the possibility of customising bundles of products and services for key customer groups and building a completely new relationship with them.

It goes without saying that all the existing lean activities need to continue and be deepened all the time. However if organisations are not also systematically learning from these to think about their future they are missing what is probably the biggest lean opportunity of all, designing new lean business models that will redefine their industry. The challenge is to think beyond existing assets and channels and the inspiration and direction will be spurred by an intense curiosity about their core customers and how to help them to create greater value in their increasingly busy lives.

Managing Horizontally as well as Vertically

Silos are a symptom of a deeper problem in most organisations. Getting rid of them is not the answer. Traditional management systems organise expert knowledge into vertical functions and departments and use these to allocate resources across the organisation. So does Toyota. However following Toyota’s example, lean organisations also manage the flows of the work (or value streams) that create the value customers are paying for. This is in fact the primary purpose of any organisation, and profits are the result of doing so efficiently and effectively. 

These value streams usually flow horizontally across many departments and even across several organisations. And they are supported by many other activities and support processes that enable this value creating work to flow. But all too often no one sees or is responsible for these end-to-end value streams and the metrics and systems are designed to optimise individual activities rather than the whole. In my view management needs to also learn to see the organisation as a collection of value streams and support processes – think of it as a fishbone diagram overlaid on the traditional organisation chart. The question is how to manage the vertical and the horizontal dimensions of an organisation at the same time. Matrix management is not the answer.

Some organisations have turned their organisation sideways, aligned around their core projects or value streams. However you only have to observe what happens in most construction firms that have been organised this way for years. While their project management is strong their vertical functions are weak and every project starts from scratch with a new team and there is little reflection and learning from project to project. The only way this horizontal structure works is if each function head also leads one of the end-to-end projects, so they can hold each-other hostage to manage the tensions between their vertical authority and horizontal responsibilities.

Some lean thinkers say all you need to do is to teach everyone to pull and gradually the value stream will emerge and the work will begin to flow. This “build the knowledge from the bottom” approach rightly focuses on developing a lean thinking mind set across the organisation. What it misses is the focus on the business problems and performance gaps the organisation needs lean to help to solve. A good sensei is always conscious of the end-to-end context so they can direct improvement activities to the right place. In my experience a lot of well-intentioned effort and support can be wasted if improvement activities are not focused on solving the root causes of the broken processes behind the business problems facing an organisation. “Top down” needs to mirror “bottom up” and be linked “end-to-end”.

Because value stream thinking has been woven into the mind set at Toyota for many decades it is not so easy to see value stream management in action there. But observe how Toyota establishes a team to design a fundamentally new car such as the Lexus and the Prius, where they are designing a new product and a new production system to make several generations of that product over time. The Chief Engineer for such a project carries enormous responsibility for the success of the product that emerges and the resilience of the production system, but paradoxically they have only a hand-full of staff reporting directly to them.

They have to manage by gaining agreement from function heads on the work that needs to be done and the resources function heads need to contribute to the project. They then have the responsibility for surfacing any conflicts between different metrics and targets and managing the execution of the project. So they have responsibility for the project while the function heads retain the authority over the resources to accomplish it. This is not an easy concept to grasp but becomes clearer when you begin to grapple with it. In fact together the Chief Engineers are effectively the “customers” for the resources from the functions.

Turning a set of separately managed activities into an integrated value stream is just such a project. In my experience value stream management is most effective when there is a win-win for all parties: -

• When the purpose is clear and top management has walked the process end-to-end and understands how unblocking the flow is the most effective way to close critical performance gaps and improve customer service.
• When value stream managers can support line managers in creating stability in their work and can direct improvement projects to unblock critical bottlenecks and address system level causes of instability that have big ripple effects on the rest of the system.
• When everyone in the value stream uses the same fact based, scientific method to understand the situation, diagnose root causes, plan and implement countermeasures and review and capture the learning. Value stream analysis is an ideal context for developing the A3 thinking of middle managers.
• When ativity at every point in the value stream is highly visual and the value stream team uses visual management to analyse, plan and frequently review their progress. The visual context is critical in driving collaborative behaviours.

Perhaps the most significant outcome of value stream management is that it reveals not only how to improve the current value stream but it also reveals the opportunities for designing very different value streams for the future, that are simpler, faster and more effective while using less capital and resources. The experience of leading a value stream makes them an ideal candidate to lead the project to design the value streams of the future.

 

Best wishes

Daniel T Jones

 

Reflections on the progress of Lean

Taking stock after two very busy months in the field, meeting people and talking at events and walking the Gemba through several organisations prompted five common reflections. 

First everyone is now doing lean with their own improvement teams. But my questions is can their management teams focus their lean activities on closing the vital few performance gaps that would make the biggest difference to the organisation’s future?

Second many organisations struggle to focus on the voice of the customer rather than the utilisation of their existing assets. Why not start by understanding the problem key customers are trying to solve and jointly analysing the processes they and you have to go through to do so? 

Third many organisations find it hard to look end-to-end at the horizontal flows of value creating work and to diagnose the systemic causes of waste within them. Why not start by mapping the core high-level value streams, observing the biggest delays and the sources and consequences of variability (which is usually generated by the way the system is run rather than by customers)?

Fourth few organisations have any skills or experience of working cross- functionally. Why not give someone the end-to-end responsibility for gaining agreement on what needs to be done to stabilise and then redesign the core value streams in a visual management context that drives collaborative behaviours?

Fifth central improvement teams struggle to sustain pilot projects and to attract top management attention. Maybe this means changing their role from “running lean” to mentoring and coaching line managers to solve their business problems?

Solving these problems means acting our way into new ways of thinking and takes time. It is also about recognising that the work of managers needs to change as much as the value creating work on the Gemba. Lean may have won the war but there is still a lot more to do to become the new common sense.

Yours sincerely

Professor Daniel T Jones

PS. You can view my latest attempt to condense lean into 10 slides at the French Lean Summit at www.leanuk.org . There you can also find a link to more video talks from the 2009 Lean Healthcare Summit on our YouTube channel. This is proving to be a valuable source for students to access lean knowledge, attracting 10,000 hits and counting.

PPS. The next UK Lean Summit will be held on 26-28 November 2012 at the Chesford Grange Hotel near Kenilworth, please reserve this date in your diaries, full details will be available shortly.

Assessing Lean Executives

Lean adds new perspectives to the traditional ways of assessing executive performance, namely Results and People skills, and adds a third process or value stream dimension. These mirror the purpose (results), process (means), people (learning) framework of a lean management system. The lean logic behind this is that you need knowledgeable people running tightly integrated end-to-end value streams and projects to deliver results that will be sustained. In other words, good people running a good process generate good results. This also provides the right basis for redesigning these products, value streams and business models to meet changing circumstances.

A lean assessment starts by gathering the facts by “going to see” the work executives are responsible for – by walking their processes with them, examining the way visual management is being used to run these processes and looking at the quality of the project A3s being undertaken. It also involves gathering the perspectives of everyone involved, including internal and external customers, followed by a dialogue with the responsible executive. This helps to answer the questions whether the management system is in place to deliver the results the organisation needs to achieve, whether management time is being used effectively and whether learning is being captured and shared. It also tells you a great deal about the way executives think, lead and learn.

The lean perspectives on assessing executive performance can be summarised in nine sets of questions: -

Which Results?

• Can everyone in the organisation relate their actions to the vital few performance gaps that would make the biggest difference to the organisation and its customers? How many projects are underway, are they properly resourced, what progress is being made against plan and have less important activities been deselected?
• Do managers regularly walk and analyse the core end-to-end value streams in order to focus improvement activities on the underlying causes of these performance gaps, rather than the symptoms, such as waiting and waste? 
• Are managers taking the necessary actions to use the freed up capacity, cash, capital expenditure, better customer satisfaction and faster time to market to generate additional sales and bottom line results?

What management processes?

• Is there a standard process for managers to visit their value streams on a regular basis to audit the visual management of plan versus actual, to review improvement activities and to unblock issues quickly in order to create process stability and drive the right improvement activities?
• Are value stream leaders responsible for the core end-to-end value streams that cross departments and for gaining agreement from everyone involved on the right actions and the resources required, and for reviewing progress and delivering the results? Is visual management being used to resolve potential conflicts and drive collaborative behaviours?
• Is management effectiveness improving? Are focusing on the vital few and deselecting projects, frequent stand-up project reviews and more stable value streams freeing up management time from meetings, firefighting and communication in order to spend more time on developing employees, improvement and innovation?

 

How much Learning?

• Is the practice of using A3s for making proposals, solving problems and making plans widespread? What is the quality of the thought processes and dialogues revealed by the portfolio of A3s being carried out and being supervised by the executive and their reports?
• Are learning and "ah ha" insights being captured at the end of every visual management meeting, problem solving and project review? Are these being systematically stored on an intranet so they can be shared by subsequent problem solving activities and projects?
• Are executives managing by "going to see" the facts, being knowledgeable by "asking why" and "respecting people" by enabling them to do their work? Are they leading by mentoring subordinates, setting clear directions and asking questions, rather than by telling people what to do?

This is truly a daunting set of tasks that demand a lot of new skills from executives and that challenge many of their mental models. They are learnt by doing and carrying out experiments, rather than in the classroom. In my experience executives struggle most with clearly defining the business problems to be solved, seeing whole value streams from end to end, separating the responsibility for managing these end-to-end value streams (the horizontal value creation processes) from the authority over the resources (the vertical dimension of management), and leading by asking questions rather than being expected to know all the answers.

Yours sincerely

Professor Daniel T Jones

 

P.S. Have you looked at our new web site yet with links to all the presentations from the UK Lean Summit on YouTube – www.leanuk.org?

 

 

Closing the Healthcare Performance Gap

Around the world healthcare organisations are being challenged to do more with less resources. In the UK the NHS is trying to find £20 billion in efficiency savings. Can this be done without reducing services to patients? After carrying out experiments in numerous hospitals in several different countries we can now see how lean can help to close this performance gap in healthcare, as lean has done in many other sectors. 

There are two approaches to lean - the bottom-up involvement of front line staff in continuous improvement activity and the top-down use of lean to close critical performance gaps. The weakness of the bottom-up approach is that the many islands of improvement are never joined up to deliver hospital-wide gains. The weakness of the top-down approach is that it fails to address the end-to-end patient journey or to reach down to the front line. 

Combining the two approaches is a winning combination for all parties - less hassle and unnecessary waiting for patients, more time for staff to spend caring for patients and freed-up resources for management to use to meet the challenges facing the organisation - to for instance reduce waiting times, to take on additional elective work or to close excess capacity safely. One of the best examples can be found at the HSJ’s Best Acute Trust of 2010, Calderdale and Huddersfield NHS Foundation Trust, which has reduced medical length of stay by 30% to one of the shortest in the NHS, while also closing two wards last winter. Other hospital pioneers around the world are now following their example.

The first step is to recognise that patient demand (both for admission and discharge) is in fact very predictable, even for emergency patients. Our research shows that much of the apparent variability, including the so-called "winter pressures", is caused by the way internal and external resources are scheduled and compounded by the close proximity to the financial year end, not by patients or the seasons. The second step is to follow the elective and emergency patient journeys all the way to discharge. Typically over 25% of medical patients are medically fit for discharge but continue to block beds for several days. Unlocking this entails re-thinking the way that the work on the wards is planned, the timely delivery of the support services patients need to be able to leave and working with outside agencies to prepare nursing home beds, care in the community or financial support ahead of time. 

The essential building block to manage these patient journeys is a Visual Hospital board where the status of every bed in the hospital is updated every two hours. This makes the "demand to get out" visible, triggers the necessary discharge actions and signals the need to match capacity with changes in demand. The second building block is for the core medical staff to develop and make visible a plan for every patient, detailing what is expected to happen and when during their stay all the way to discharge and that is updated daily. Synchronising these plans makes the work to be done and whether it has been completed clear and visible to all staff. Finally someone has to be given the responsibility for managing the patient journeys across many departments from admission to discharge. Their job is to see that today's work is being done as planned, to unblock disruptions and to gain agreement from all concerned on what needs to be done to improve these patient journeys. Without these foundations, hospital performance is unlikely to improve.   

Putting these building blocks in place, focusing improvement activities and turning freed-up capacity into bottom-line savings is the responsibility of top management. But in our experience NHS managers are locked in a viscous circle that distracts them from doing so. They are continually responding to new policy initiatives from central government, which can translate into over 500 live projects chasing 350 or more targets in a typical organisation The endless rounds of meetings to prepare these project plans, review them and then explain why, on top of an already overloaded day job, they were not completed eats up all their time. We call this the "Bermuda Triangle" of management in the NHS. This makes it impossible to support managers improving patient journeys or to focus efforts on the vital few actions that will make the biggest difference to the performance of the organisation. As long as this viscous circle continues, managers will struggle to realise any efficiency savings. 

This viscous circle also explains why so many well intentioned initiatives to reform the NHS from the centre have run into the sand and failed to deliver performance improvements. Although these initiatives are often hijacked by vested interests, the core problem is that there is no effective mechanism for translating them into action. This is often made worse by periodic structural reorganisations that further distract managers and their staff to worry about their job security rather than improve hospital performance. 

A period of stability in which hospitals and commissioning bodies can work together to align demand and capacity with the available resources and remove sources of unnecessary variability in the healthcare system is the key to escaping this viscous circle. Foundation Trust status is improving hospitals' ability to manage their own finances, but the next step is to create the operational management to improve patient journeys and reduce unnecessary length of stay. Once hospital management begins to see that this is delivering results they will have the confidence to deselect the many other projects that consume valuable resources but do not contribute to improving healthcare
performance. 

Join us to hear this story first hand at our Lean Summit 2011

Yours sincerely
Professor Daniel T Jones

Lean and Operational Excellence

It is a mistake to think of lean as just one of the many tools in the Operational Excellence portfolio. Operational Excellence is really a catch all label for many different "best practices". Lean on the other hand is a very specific set of interlocking practices, tools and behaviours derived from a very clear reference model. Lean grew out of years of practice and experimentation at Toyota and at companies in other sectors that have followed their example. It did not come from applying theoretical insights to business practice.

Correctly understood, lean is a much more fundamental and comprehensive approach to solving business problems and creating value for customers. It is also a great deal more than engaging employees in continuous improvement and eliminating waste.

One of the key things that distinguishes lean is its scope – which encompasses the whole value creation process – such as a global supply chain or an end-to- end patient journey. Instead of developing new support systems - such as better forecasting or decision support systems - lean focuses on the actual work that creates the value customers pay for, which lean thinkers call value streams.

Lean brings many different tools to bear so each value creating step can be performed right first time on time, then links the steps together in a physical flow or through pull signals and then levels the workload to align capacity with demand. As the primary value creating work begins to flow lean applies these tools to synchronise all the supporting activities that enable the primary value stream to flow and all the elements a customer needs to solve their problem – such as the test results, medications and therapies for a hospital patient. This in turn requires the right lean management to ensure the work can flow according to plan, to escalate issues and unblock obstacles to flow and to support root cause problem solving.

The net result is a value creation system designed back from the customers’ definition of value and around the activities that create this value, more accurately and with far less wasted effort and cost. While most organizations cut their teeth leaning their existing activities the true potential of lean comes from the opportunity to redesign the next generation products or services and the value streams that deliver them without the drag of existing assets. Manufacturers are for instance now looking to local rather than distant “low wage” suppliers and polyclinics are now offering services previously only available in big district hospitals.

The other thing that distinguishes lean is its depth. The more activities are linked together and synchronized and the physical or time buffers between them are removed the more the operation of the whole systems depends on the skills, behaviours and direction of every employee.

On the one hand such an integrated system multiplies the probability of interruptions that must be responded to quickly. On the other hand it provides extremely valuable feedback on the causes of these interruptions and other changes, which may otherwise be hidden or lost. It is precisely to leverage this feedback that the core lean skills are not just the tools and techniques, but the use of the scientific method to define and diagnose a problem, understand the facts, try several countermeasures and check which of them solved the problem. Because solving problems can only be done by combining a detailed knowledge of the work with the context of the problem these skills need to be learnt by every employee, not just the experts. Developing these skills and using this experimental approach to constantly improve the performance of each value stream is learnt by doing rather than in a classroom.

In order to enable value streams to flow across facilities, departments and organisations someone has to take responsibility for creating the conditions for collaboration between all the actors involved. Lean chief engineers, project managers and value stream managers carry the responsibility for the performance of their product, project or value stream while the authority over the resources needed to accomplish this remains with vertical department of function heads. The keys to making this work are agreeing the right metrics for tracking the operation and performance of the system as a whole and creating the right visual management context in which to gain agreement from all parties on the facts of the current situation and to commit to a jointly agreed plan going forward. The team then reviews deviations from the plan very frequently, unblocks any obstacles and captures any learning for the future. Lean thinkers use visual management everywhere precisely because it reinforces collaborative behaviours.

Highly transparent and interdependent systems throw up literally thousands of possible things that could be improved across an organisation. The skill of a lean leader is to be able to set the direction and to focus everyone’s efforts on the vital few things that will make the biggest difference to the organization, its customers, employees and shareholders. This means being able to translate organizational goals into measurable gaps that need to be closed and using strategy deployment to create a dialogue down the organization to agree the actions that will contribute to closing these gaps, so these can be adequately resourced while others are deselected. It also means diagnosing and addressing the underlying causes of instability - such as the amplification of orders passed upstream or discharge delays causing queues for admission to a hospital. Finally leaders must act to use the freed up  capacity or cash to reduce costs and grow sales without requiring additional capital.

Yours sincerely
Professor Daniel T Jones

PS. I look forward to debating this and other issues with you at our Lean Summit on 9-11 November in Kenilworth.

How to Judge the Sucess of Lean?

Lean is a journey and to my mind the best way of judging success is by how much people have learnt so far and how ready they are to take the next leg of the journey.

I often meet people who tell me that “Lean has changed their lives”. While this certainly makes writing books worthwhile it also presents an opportunity to ask some probing questions. Can they show me how lean has changed the way they work with their colleagues and the things they are working on? Are they for instance really working together in teams, defining their own standard work, visualising progress against the plan and solving problems that prevent them doing the right things for customers and their organisation? This tells me a lot more than how many training courses or Kaizen weeks they have done.  

I then ask them to show me whether lean has enabled them to change the way the work flow or value stream that they are part of is run. Has lean helped them to create stability where there was chaos, to level the work and to allow it to flow in line with customer demand? Indeed are they clear who their immediate and final customers are and can they distinguish real from created demand? From their answers and looking at their value stream maps it soon becomes clear how much of their end-to-end value stream they can see, particularly beyond their own area, facility, department or organisation. It is also easy to see whether the underlying logic has fundamentally changed – from batch to flow and from push to pull etc. 

The next step is to ask whether they have managed to join up all the lean improvements along their value stream and deliver significant results for customers in terms of quality, delivery and cost and for the business in terms of freed up cash, greater productivity and growing sales, while saving or forestalling capital expenditure. Moreover have these results been recognised by senior management, because being able to demonstrate that a good process is the best way to get good results is essential to sustain support for lean from the top. 

As we learn to practice the scientific method embodied in A3s I increasingly hear managers say that “Lean has changed the way I think”. I now start by asking what the problem is that I am trying to solve and how important it is that this, rather than many other problems, get solved.” Taking a look at their A3s shows you a lot about the thought process behind the stories their A3s are telling. The less polished – in pencil and rubber rather than PowerPoint – and  the more visual – more pictures and less words – the deeper this thinking has taken root. Their portfolio of A3s also tells you the scope and level of the problems they have been able to tackle to date.

Then I ask managers to take me on a Gemba Walk of the areas they are responsible for to understand how deeply this thinking has spread and influenced decision making. Are the key targets, the progress of the work against plan and current problems visible and regularly reviewed on the Gemba, or are decisions still based on data reviewed in an office? Are escalation processes to respond quickly to problems clear and is everyone engaged in reviewing the progress of project A3s on a daily or weekly basis? Is management using A3s to translate higher level goals into actions and to create a dialogue between teams along the value stream and are they using these projects to mentor staff in using the scientific method?

I then ask whether this scientific approach to thinking has improved the productivity and effectiveness of management, particularly in the way they use their time. Can they really focus on the vital few actions that will make the biggest difference in meeting their goals while having the confidence to deselect the rest? Do they spend far less time in endless meetings and more time reviewing progress and projects on the Gemba? Has the greater stability in their processes freed up time spent fire-fighting that can now be used to lead and mentor improvement activities?

I am now beginning to hear managers say “Lean means we need to change the way we manage” . Yes it does! This is an important threshold when top management recognises that they have to lead their lean transformations and focus these new ways of working together and new ways of thinking on closing the key performance gaps that will make the biggest difference to the business and to their customers. Has the debate over the vital few gaps been visualised in an Oobeya room and turned into key projects and actions using strategy deployment? Have these key projects been resourced and the many other projects deselected? 

This leads to the next important step which is giving someone the responsibility for leading these end-to-end projects to turn previously separately managed activities into an integrated work flow or value stream, including synchronising all the key support processes. Managing the relationship between this horizontal responsibility and the vertical authority over the resources necessary to accomplish this redesign is a new challenge. Is the organisation ready to embark on experiments to learn how to make this work?

The final challenge is to recognise that in the end lean is a line and not a staff responsibility and that lean knowledge is developed through involvement in successive controlled experiments – learning by doing – rather than through a standard training programme rolled out by experts from the centre or by outside consultants. A lean transformation is built through running clusters of controlled experiments, building knowledge through communities of practice and shared through recognition ceremonies and an intranet of project A3s. In my experience this “get to action quickly” approach not only generates faster results but also “turns on the lights” in peoples’ heads to own it and run with it over time, rather than survive another initiative from head quarters.  

As we have seen the lean journey is about learning new ways of working together , learning new, scientific ways of thinking and learning new ways of managing organisations. The more you learn the more you discover there is to learn!

Yours sincerely
Professor Daniel T Jones

Managing Visually

Learning to See is the starting point for Learning to Act. By making the facts of any situation clearly visible it is much easier to build agreement on what needs to be done, to create the commitment to doing it and to maintain the focus on sustaining it over time.

However what makes visualisation really powerful is that it changes behaviour and significantly improves the effectiveness of working together to make things happen. It changes the perspective from silo thinking and blaming others to focusing on the problem or process and it generates a much higher level of engagement and team-working. This can be seen at many levels on the lean journey. Here is my list, but I am sure you can think of many more.

Standardized work defined by the team as the best way of performing a task makes the work visible, makes the need for training to achieve it visible and establishes a baseline for improvement. Likewise standardized management makes regular visits to the shop floor visible to audit procedures, to review progress and to take away issues to be resolved at a higher level.

Process Control Boards recording the planned actions and what is actually being achieved on a frequent cadence make deviations from the plan visible, so teams can respond quickly to get back on plan and record what problems are occurring and why for later analysis.

Value Stream Maps make the end-to-end process visible so everyone understands the implications of what they do for the rest of the value creation process and so improvement efforts can be focused on making the value stream flow in a levelled fashion in line with demand.

Control Rooms or Hubs bringing together information from dispersed Progress Control Boards makes the synchronisation of activities visible along the value stream, defines the rate of demand for supporting value streams, triggers the need to escalate issues and to analyse the root causes of persistent problems.

A3 Reports make the thought process visible from the dialogue between senior managers and the author or team, whether they are solving problems, making a proposal or developing and reviewing a plan of action.

Strategy Deployment makes the choices visible in prioritising activities, deselecting others and conducting the catch-ball dialogue to turn high level goals into actions further down the organisation.

Finally the Oobeya Room (Japanese for “big room”) makes working together visible in a project environment. So far it has been used for managing new product development and engineering projects. However organisations like Boeing are realising how powerful it can be in managing projects in the Executive Office (see the presentation and the podcast by Sharon Tanner).

The Oobeya Room is in my view the key to making all this visualisation effective. It brings together all of the above to define the objectives, to choose the vital few metrics, to plan and frequently review the progress and delays of concurrent work-streams, to decide which issues need escalating to the next level up and to capture the learning for the next project (see the Discussion Paper, presentation and podcast by Takashi Tanaka).

But more importantly it creates the context in which decisions are based on the facts and recorded on the wall, avoiding fudged decisions and prevarication. It also ensures that resource constraints and win-lose situations that can arise between Departments are addressed and resolved so they do not slow the project down.

Reviewing progress and delays on a daily or weekly basis rather than waiting for less frequent gate review meetings leads to much quicker problem solving. Because these stand-up meetings only need to address the deviations from the plan and what to do about them they also make much better use of management time.

In short the Oobeya Room brings all the elements of lean management together. Taken to an extreme visual management can of course itself become a curse. I have seen whole walls wallpapered with often out-of-date information that is not actively being used in day-to-day decision making.

Learning how to focus attention on just the right information to make the right decisions in the right way is the way to unlock the real power of visualisation and team-working in the Oobeya Room.

Yours sincerely
Professor Daniel T Jones

The Financial Consequences of Lean

Why is it so hard to see the financial consequences of lean? Failure to answer this dilemma has derailed many lean initiatives. This is not such a problem if top management really understands the significance of focusing on getting everything to flow right-first-time-on-time to customers. Like top management at Toyota and Tesco, they know that good processes lead to good results. Alternatively if you have an experienced Sensei who knows where the gold lies buried and who has worked on similar situations before, there is a good chance that they can help you to deliver the kind of results you expect from lean.

But in my experience help is needed if you are pioneering lean in your organisation while at the same time trying to convince top management that it can deliver lasting financial results. This is particularly true when you are dealing with a complex shared pipeline with multiple steps and routings through which many different products or services flow. It becomes much harder to see where to act to deliver the greatest gains for the organisation and for its customers. And as my colleague John Darlington has shown traditional accounting systems and even sophisticated product costing systems end up rewarding the wrong kinds of actions.

As John puts it, they encourage overproduction by valuing what has been made not what has been sold, they do not recognise the importance of bottlenecks and constraints, they encourage point optimisation rather than flow, they have nothing to say about lead times, they promote the idea that bigger batches lower the unit cost and they encourage cost reductions that often prove to be mirages. In other words they fail to show the power of focusing on compressing lead times, which lies at the heart of lean. Struggling against this kind of headwind is almost impossible for any length of time.

Unlike Financial Accounting for reporting results to the outside world, we are free to choose how to construct our internal costing systems to drive the right kinds of actions. For instance lean organisations use Target Costing systems to focus improvement efforts in new product development. Why do we not do something similar to design and improve how well we run our end-to-end processes or value streams, particularly where they involve shared resources and cross several departments?

John shows how adding operating expenses to value stream maps for all the products going through these shared resources and turning inventories into time gives us the basis for Flow Costing, which relates the time products take to flow through the value stream (rather than to the cycle time through each operation) to the operating expenses of running it. Inventories (and delays in services) are the richest source of insight into how well we are using our capacity to generate money through sales.Shorter throughput times increase the ability to respond to quality problems and to introduce engineering changes, they may make it possible to raise margins and postpone the need for new investment, and meet due dates with lower finished goods stocks.

The real value of Flow Costing is to help set the priorities for lean improvement actions by being able to see the financial consequences in terms of increased sales, less cash tied up in inventories, reductions in operating expenses and postponed investments. These priorities can then be built into the policy deployment goals for each department, and the resources in their budgets to accomplish them. Flow Costing is a powerful way to help to bring throughput times much closer to value creating times, by which time the differences between Flow and Product costing systems almost disappear.

Yours sincerely
Professor Daniel Tiones