Leaning Your Boss

What do top managers need to learn to be able to lead a lean transformation? I get asked this question frequently. The answer is the same at every level of management. It boils down to three key things — learning to see the end-to-end processes or value streams they lead or contribute to, learning to prioritize and focus lean improvement efforts to generate real bottom line results and learning how people actually develop the problem solving skills necessary to sustain lean improvements over time. In each case understanding the true significance of these new skills only comes through experiencing them in practice.

One of the most immediate ways to teach senior managers how to really see a process is to take them for a walk with an experienced Sensei, starting with the end customer and walking back up the value stream as far as you can go. As they follow a product, a patient or a transaction all the way back upstream they will be shocked how many steps there are, how much rework goes on, how excessively long it takes and how unclear it is to everyone just what they should be doing next. This should be the trigger for a more detailed value stream mapping and data gathering exercise using the methodology outlined in Learning to See to flush out what is really going on.

But this is just the start. Back in the conference room after the walk ask the managers to describe what they saw during the walk and then compare this with what the Sensei saw. The managers will quickly realise they have only been looking at obvious symptoms of waste, such as piles of inventories, while the Sensei has been looking for the root causes of the instability and overburden causing all the waste in the value stream and the relatively poor performance at the end of it. Indeed managers are often shocked not just how oblivious they were of the process but also how blind they were to the causes of the way the process actually operates.

While this wake-up call is still fresh in their minds ask the Sensei to take them on a second walk to really learn to see what to look for in diagnosing what is wrong with today’s process and to see what the next steps should be. Do this on a regular basis along different value streams and at the same time the Sensei can introduce them to all the theory and tools step by step as they become relevant to the actions that need to be taken.

Once senior managers begin to see for instance how much cash could be freed up by streamlining core processes the next step is to work out how to go about releasing it. What actions in what value streams would release the most cash, if that is the key business objective? A second “walk” led by a Sensei would introduce Toyota’s policy or strategy deployment process, described in Ge fling the Right things Done. Step by step they will learn how to agree to only focus on a vital few business objectives or performance gaps that need to be closed and to deselect everything that does not contribute to closing these gaps (which is perhaps the hardest thing to do). They will learn how to conduct a dialogue with each layer of management right down the organisation to develop plans for the actions that will close these gaps. And they will monitor and adjust these plans as events unfold. In the process they will come to learn that good results come from good processes, not from issuing targets without an agreed method for achieving them.

Creating lean value streams involves progressively removing all the buffers that previously insulated every activity from any failures elsewhere. Although the performance of the process improves dramatically, so does its vulnerability to any kind of disturbance. Even in Toyota they assume that their lean processes will be continually subject to interruptions. So the key to sustaining these lean processes is the ability of the people running the process to respond quickly to interruptions as they happen and to track and eliminate the root causes of persistent problems. In other words developing the problem solving skills of employees at every level is at least as important as redesigning the value stream itself. This is why Toyota spends so much time training all their staff to think about planning actions and problem solving in a common way, using the A3 thinking process described in Managing to Learn.

So in Learning to See, Getting the Right things Done and Managing to Learn you have the basis for developing the initial insights top managers need to begin their own lean journeys.

Yours sincerely

Professor Daniel T Jones

A Recession Action Plan

A recession is a good time for lean. Organisations can either postpone lean and resort to traditional cost cutting, or they can accelerate and redouble their progress with lean. I doubt the former will last the course. But the latter stand a good chance of surviving and laying the foundations for future prosperity as they turn the tables on their competitors. There is no time to lose and no more time for excuses! So how should we make best use of this important moment? Here is my five point action plan for turning this recession to your advantage.

First correctly define the business problems you are trying to solve right at the top. In this case business problems are about closing performance gaps in order to survive and to take market share from competitors in challenging times. These gaps are now almost certainly bigger than they were. I recently asked the CEO of a large multinational why he wanted his company to go lean. He gave me a very general answer about rising input prices and squeezing margins. However the potential of lean is best understood in relation to specific value streams. 

So what are your main value streams creating value for customers and what are the key support value streams that enable them to flow? From examples elsewhere what is the potential for significantly improving their performance – getting new products to market in half the time, producing 30% more with existing equipment and no additional capital, meeting every delivery on-time and in full and with no invoice errors, responding to customer problems in hours rather than weeks, reducing length of stay in a hospital by half, compressing the supply chain from 200 days to 20, eliminating 80% of errors and effort to process approvals or payments in the back office, getting changes to the IT system in days rather than many months etc.? What improvements in which of your value streams with which customers and suppliers will make the biggest contribution to closing your performance gaps? What are your vital few projects – you cannot do everything?

Second give strong value stream managers end-to-end responsibility for each of these value stream projects. Their role is to gain agreement on the right things to do for their value streams from all the functions and departments involved who retain the authority over their resources). They also co-ordinate the implementation using all the lean visual project management tools and surface conflicts between functional and value stream objectives.

Third establish a Lean Council (like Toyota’s Quality and Cost Councils) of key function heads and value stream project leaders to initiate all cross functional projects, co-ordinate them, review progress and resolve conflicting agendas. They should also have responsibility for developing the lean experts to support these value stream projects and for spreading lean knowledge through networks of peers, workshops and an intranet data base of projects. 

Fourth prepare for the future now by getting a high potential group to think outside the box and make the currently impossible possible using lean. This means thinking back from the customer’s use of the product or service and exploring alternative routes to market. It also means challenging the design of the product or service, the right-sized tooling to make it, the right IT systems to run it in the right location with a co-located supply base. 

Fifth use these value stream projects to teach everyone how to see the right things to do using A3 planning. This is also a great opportunity to teach line managers how to use visual management to track progress in real time and to respond quickly to problems. It is also a great opportunity for line managers to develop the capabilities of their staff to diagnose and solve problems – by using A3 thinking. This means asking the right questions to help them learn rather than telling them what to do!

None of these steps are easy but they are all focused on solving the most important problems facing the business while developing the capabilities to sustain and significantly improve this performance into the future. This path will also begin to make sense of some of the apparent paradoxes of the lean management system pioneered by Toyota. 

Yours sincerely
Professor Daniel T Jones

Lean Action Research

Last month I concluded that simply overlaying lean tools and rapid improvement events on an existing management system using traditional change management techniques is unlikely to be sustainable. Indeed if we go no further than this there is a real danger that lean could well become another wave or programme of the moment that would inevitably subside like so many other waves. Consultants would inevitably look elsewhere for the next thing to sell their clients. Meanwhile the gap between Toyota and the rest would continue to grow and we would have missed a huge opportunity. 

I get asked to look at lean transformations in all kinds of sectors. And I come to the same conclusion every time – the crucial missing element that determines the likely success or failure is management and leadership. Tools and engaging employees in seeking out waste is not enough. Over the years we have spent a lot of time learning how to use the right lean principles in the right sequence to redesign value streams in all kinds of situations – from discrete assembly to process industries and from transactions processing to call centres and from grocery distribution to flows of patients through hospitals. Finally we are beginning to see lean breaking out of operations to true end-to-end value stream redesign. This is very powerful but even this is not enough. It is certainly necessary but it is not sufficient. 

So our challenge is how to describe and create a lean management system that goes beyond what we might call traditional modern management. We have all learnt a great deal from reading about and hearing first hand experiences of how Toyota’s management system actually works. This must be the starting point and the continuing reference point for such a journey – but there is still a lot of work to do before we have a functional equivalent and a lean transition path that will create the management behaviour and leadership roles that go with lean. We know this knowledge cannot be generated in a classroom or by desk research. It is also difficult to do through traditional consulting. The only  way I know to do this is by engaging in real experiments in real situations and systematically reflecting on what works and what does not. Jim Womack and I were fortunate in being able to observe experiments by others in writing Lean Thinking.  Now it is time to get involved in what I call lean action research. 

Lean action research goes beyond traditional consulting in its intent, its execution and in the reflections on its results. The clear intent of lean action research is to generate knowledge that can be acted upon by others. We can draw on Toyota’s example for our questions and hypotheses but the problem to be solved is how to make them operational in other organisations. This is very different objective to selling a repeat product to many clients to make as much money as possible. Yes it is more risky and top management has to sanction the experiments and be willing to learn from the results of both successes and failures. But if the joint intent is clear from the outset it can be a very powerful win-win for both parties. 

To generate real knowledge about what not only creates progress with lean but what sustains and builds on it over time the execution phase is also very different. Right from defining the business problem to be solved and scoping the experiment it has to be based on a mentoring and do-it-yourself approach rather than an expert led roll out. 

The final step is to reflect on the results and to write up the lessons from several similar experiments in order to make them public so others can act on the results themselves. Of course the host organisation for this lean action learning is interested in stealing a march on its competitors. What distinguishes the winners and losers is not the knowledge itself but the ability to act on it over time. Consultants will no doubt play an important role in disseminating these results but only if we are able to create self sustaining exemplar organisations to act as role models for others to follow. 

Yours sincerely
Professor Daniel T Jones

Changing Gear with Lean

I am convinced that it is a mistake to roll lean out across an organisation using traditional change management techniques. They may work for a while – but beyond a certain point they can become a hindrance to further progress. Just as we have to rethink the design of key processes and the role and behaviour of lean managers, so we also have to rethink the change management process to deliver lasting results with lean. 

This can be seen most clearly in the most active sectors embracing lean in the UK today – consumer goods, all kinds of service providers (financial, utilities, telecoms, IT etc) and the public sector including healthcare. All of these are well into the first phase of lean and face a big challenge if lean is to really make a lasting impact. 

The characteristics of the traditional change model are very familiar. Many of you will have used them to deploy Six Sigma through your organisations. Top management is convinced that the deployment of a set of new tools may improve the performance of their business. They hire outside experts and train an internal staff group to fan out across the organisation to identify and run as many projects as possible using one best way and probably with lean using week long rapid improvement events or Kaizen blitzes. The early results generate lots of good stories, and employees become truly engaged and enthusiastic as they identify and eliminate low hanging fruit in their areas. This builds credibility for the methods and techniques. All well and good.

But the flip side is not so rosy. Improvements are not so easy to sustain once these experts leave on another assignment, as they inevitably will. With only loose direction from top management it is difficult to trace the results from these islands of improvement to the bottom line or to better customer service. And no one really checks to evaluate the true success of these rapid improvement events. We recently did an assessment of a hospital that had done 93 Kaizen events. The success rate was less than 20% and none of these had impacted the core A&E process that really kept the CEO awake at night! No wonder they were looking for a change of direction. 

The next phase of lean starts with top management learning to see the vital few actions, on the right products and service lines and with the right customers that would have the biggest impact on the performance of the organisation. In the hospital getting the chaotic flow of patients through A&E under control is the key to establishing stability and a common rhythm across the rest of the hospital. From then on all improvement activities should be resolutely focused on just these vital few projects. 

These projects must also be end-to-end and maybe even involve key customers and be focused around a clear business problem or opportunity. This could be selling more product by marketing, planning, production and logistics working together to improve on-time delivery by producing and shipping more frequently in line with demand. 

Absolutely critical to the success of these projects is a cadre of lean value stream and line managers with the right skills to build agreement between all the involved parties on the right course of action and then to see it through. Because lean removes all the buffers between steps these lean project and line managers need to also spend a lot of their time  developing and focusing the A3 thinking and problem solving skills of employees running the process.

The core of a lean transformation model is the use of the scientific method to define key business objectives and to develop the planning and problem solving knowledge of employees. However unfamiliar the language it is right to think of lean as a series of controlled experiments. For any experiment you need to clearly define the (in this case business) problem you are seeking to solve, with a clear way of measuring success or failure. As well as identifying the root causes a good experiment will not just pursue one possible countermeasure but several. And most important of all you spend time reviewing, writing up and reflecting on the lessons learnt, successful or not. If we are honest none of these are common practice in business. 

Yours sincerely
Professor Daniel T Jones

Doing Lean Yourself

I used to think lean was something best begun at work. I listened to friends who enthusiastically embraced lean in their homes, but I hesitated to recommend those new to lean to follow their example. Replenishing kitchen cupboards using Kanban cards and purchasing two dishwashers so you never have to put the dishes away works for some people, but it can also lead to domestic disputes for others. 

Better to get some hands on experience of lean at work first before trying to convince the rest of your family. Once the lean infection has taken, then by all means think about taking it home. I certainly did warn those taking the lean medicine that there was no antidote and that they would begin to see lean opportunities everywhere. As you go off on your holidays you will no doubt see more Mura (variation), Muri (overburden) and Muda (waste) in new surroundings on your travels. 

Perhaps the best place to start at home in my experience is doing 5S in the home office – managing the flow of paper in and out, using visual management to store everything etc. However I now think we would all make more progress with lean if we really begin using a lot more lean management in running our own personal lives, both at home and at work, particularly if you are a manager.  

This was brought home to me recently in redesigning the complex flow of patients through a hospital. With our team’s guidance they introduced the core elements of visual management – a Plan For Every Patient and Patient Progress Boards - to track the progress of patients from step to step, to respond quickly when things did not go according to plan and to identify recurrent problems that needed tackling. Variability in each step in the process was reduced and overall performance improved significantly. We had begun to create some stability before we began to redesign the process itself. 

However we then walked away to work elsewhere and the discipline of using visual management tailed off things quickly went backwards again and normal chaos was resumed. Not surprising really as the staff were new to this, but much more significantly there was no effective management to make it work. We had made our point and the stability quickly returned when we came back a few weeks later. We have repeated this experiment of walking away on several other projects, with the same results. In these hospitals we were only seeing a more vivid example of what happens time and time again with lean projects in every factory or office. The key to sustaining lean is always management. 

We have always said that learning lean is an experiential journey. The same is true with lean management. So this year I have been experimenting with using the tools of lean management in running my life. One of the hardest things is to do is to use simple policy deployment to focus on just doing the most important things and to deselect the many other things you would also like to do but don’t have time for. The second is using A3 planning to really define what you are trying to accomplish and what actions might get you there.

Next comes using a plan by the day or at least plan by the week board to visually manage your workload. My office calls this “Dan’s No Board” – as it is really beginning to level out my workload and reduce my natural tendency to say yes to too many things. Then if you can, do a little reflection every week on your effectiveness – how many hours per week are you really being effective and how much time is really not very productive. If you are honest you will be surprised how much of your time – and that of your employees - is wasted in unnecessary meetings, fire fighting, travelling etc. Being able to answer emails while on move for instance goes a long way to making this time more productive. 

I wish I could say all this is easy – it is not. It is genuinely difficult to sustain. But keep at it and you will see it makes a huge difference to your life.

Yours sincerely
Professor Daniel T Jones

Lean Homework

The consumer goods industry is waking up to lean in a hurry. With rising input prices and powerful retailers trying to keep the lid on prices they have few other places to go. It is finally time to try lean. But they may be disappointed if they just think lean is another form of cost cutting. No question that applying lean tools like TPM can improve asset utilization. But the real potential of lean is much greater than this.

I get frequent requests to go and explain lean to senior management groups. Before I go I usually set the lean enthusiasts in the organization (and there are always some early adopters of lean in these companies) some homework to do which will help us together to make a powerful case for lean. 

The starting point is to discover the degree to which you are currently disappointing your customers today - how many orders do you satisfy completely on time, in full and invoiced correctly? Then go and talk to your marketing folks and ask how much more they think they could sell if you met every delivery on time, in full and invoiced correctly. They may not believe this is possible - but persevere. 

Ask them how much more they could sell if you were also able to produce 30 per cent more of your high volume products with your existing resources. Then ask them what difference it would make if production could be varied to respond to changes in demand in days rather than weeks. And finally ask them whether supplying much fresher products to the market could also increase sales.

The next step is to analyze your product mix using the methodology explained in Breaking Through to Flow. You simply can't do lean on all your product lines at once - so start with the few high volume products that account for most of your production and sales. Treat these differently to all the other products using levelled production, or as Toyota originally called it “patterned production”. 

Then check the per cent variation in demand for these products and you will see you need much less buffer stock of these products than you think. So you can let this buffer stock absorb the variation in demand which is how you can implement leveled production for these items rather than constantly changing the production schedule as invariably happens now. By so doing you could create the essential precondition to really go to town with lean - basic stability - even where you did not think it is possible.

The next step is to walk the physical flow back from the end customer for these products - counting the steps, time, touches and inventories as you go. Wherever the product stops ask why - is it because you can't rely on getting product when you need it? Or is it because you only make and ship the product once every few weeks? Or is it to buffer against fluctuating demand? Or all three - but how much of each?

Turning these observations into a value stream map for these products following Learning to See and particularly asking the questions outlined in that book will reveal all the improvements to make this product flow from door to door.

Next ask how often production ships its orders on time and in full as planned to the warehouse. Ask planning how often they issue a production schedule - maybe once a week for batches every several weeks. Then find the data to see the gap between what was planned and what was actually produced. 

What you are seeing is the degree to which the planning system rather than buffer stocks are being changed in line with customer orders. You are also seeing the degree of order amplification being passed upstream. If you look at the electronic point of sale data for these products and compare it with the orders your company receives you will see most of this amplification is caused by the way data is handled and not end customer demand. This amplification is an invisible curse created by the algorithms in the planning systems requiring extra buffer stocks and capacity to meet artificial peaks and troughs in demand.

Now you have the basics to establish the business opportunity for lean and a series of actions that could be implemented to meet it. Put this into an A3 proposal so we can begin the dialogue to refine the plan before presenting it to top management. 

Yours sincerely
Professor Daniel T Jones

Lean Consulting

Some time ago I worked alongside a team of super sleuths from a large  consulting firm who were very skilfully looking for opportunities to cut costs – unnecessary activities and surplus heads when compared with their benchmark data from other clients. Our mission was very different – to engage some of this brainpower to create a process out of a set of activities in three locations to speed up the engineering changes on a large project that was way behind schedule. I was impressed by their skills and they were fascinated and enjoyed the intellectual puzzle involved in creating this process and the war room to coordinate the flow of work. 

But my reflection on their original and ongoing mission was what it revealed about traditional management. The reason top management spends such large sums on these super sleuths is that this is a powerful way of challenging the budgets of departmental and function heads or business unit managers playing the traditional game of bidding for resources in the annual planning round. On the one hand department heads are rewarded for “making their numbers” each quarter and on the other hand how they do this is up to them – so don’t pry into how they do it. Which is why the dream of an all seeing financial control system is so appealing to top management – and so are the services of these outside sleuths. This is just one example of how traditional consulting models are a product of traditional management practices. 

Recently I also meet several top managers who want to hire a seasoned lean expert to head a team to deploy lean across their organisations. This form of deployment is another characteristic of traditional management – and the way Six Sigma was rolled out at GE and elsewhere – as a central staff driven change programme. The obvious danger of this approach is that it is seen as another wave which will come and go so it does not matter if experts come and do it for us or even to us because things will revert to normal again when they go. 

It does not matter whether these are internal experts from a central expert group or from an outside consulting firm, the results are similarly difficult to sustain. And yet despite the rhetoric this is the way many are trying to implement lean in their organisations or in their clients. However trying to sell a different path of lean implementation to traditional managers is an uphill struggle, particularly if they believe lean is something for operations to do that does not mean they have to change their own behaviour in any way. So it is easier to sell a lot of Rapid Improvement Workshops and hope they will learn. 

So if lean involves a fundamentally different management model it also means a very different model for implementing lean (maybe implanting lean is a better word) and a very different way of using outside experts and consultants. I am now convinced that we should think about every lean intervention as an experiment as well as an opportunity to build lean knowledge amongst those who will run the process. 

Top management has to grant permission to conduct the experiments and to act on the results. The initial experiments ought to focus on primary value streams that reach the customer and involve the relevant departments, like marketing, logistics and operations. A value stream manager needs to lead the tem to learn to see real demand, to see the verifiable net benefits from the investment in this experiment and to create the future state process design and action plan. And the value stream manager also needs to engage every manager, section leader and employee in a dialogue with their superior using A3 thinking to solve problems that contribute to realising the plan. 

Just like a scientific experiment we need to be prepared from the start to be able to evaluate the success of the experiment and to write up and reflect on the results. Outside experts and Senseis should be judged on how good they are at asking the right questions to guide this learning process rather than how many Kaizen events they can run. 

Yours sincerely
Professor Daniel T Jones