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

What Makes Lean Work?

Toyota’s lasting contribution to the practice of management is that it created a unique synthesis of three fundamental approaches to improvement — the analysis of quality and the use of the scientific method learnt from Shewhart and Deming, process thinking about organising the flow of work inspired by the early Henry Ford and honed through Taiichi Ohno’s own experiments at Toyota, and how people learn drawn from the Training Within Industry programme developed by the US Government during World War II.

Many organisations have experienced the power of engaging employees in using lean tools to eliminate waste in their workplaces. Others have gone on to use the lean principles to streamline the flow of work through their value streams. But in fact these are only part of a very different way of managing and leading change. While a lot has been written recently about Toyota’s management tools, such as A3 thinking and strategy deployment, it is equally important to understand the purpose or the glue that makes them effective. The key is not the tools themselves, but how you use them. A good way of seeing this is by asking four fundamental questions.

First; how to focus everyone on the vital few improvements that will make the biggest difference to the organisation? The lean answer is to use the scientific method to understand the choices and to dig down beyond what are in many cases symptoms to the underlying causes, which are often common. Addressing these common causes is much more effective than jumping to many different solutions and launching hundreds of projects, hoping that some of them succeed.

It is no accident that the first things a new manager ¡s given by their superior when they join Toyota is a problem and an A3 form. The A3 frames the dialogue between them and ensures that no step is missed on the journey from really defining the problem, through going to gather the facts (rather than just relying on past data), establishing a target condition or the gap to be closed, understanding the root causes, proposing a series of countermeasures (not just one), checking whether these worked and reflecting on the lessons learnt. All the time the superior is asking questions rather than telling the subordinate the answers.

Struggling to define the problem, understand the root causes and come up with alternative ways of addressing the problem is a really formative experience which lays the basis for a deeper understanding of more complicated problems as managers rise through the ranks. This experience greatly facilitates the tough discussions about deselecting the many to focus on the vital few in drawing up the strategy. I also helps to frame the deployment discussions with each level down the organisation to translate these vital few goals into the vital few actions that will close the important performance gaps. The deeper point of using the scientific method to focus on the vital few is that everyone learns to think in the right way about the right things.

Second; how to close the performance gaps which are critical for the organisation? The lean answer is to remove the obstacles to the flow of work that creates the value that customers are paying for, which we call a value stream. This means combining previously separately managed activities into an integrated value stream, eliminating the sources of unnecessary variation, optimising the whole rather than the parts, removing queues, bottlenecks and handoffs as they cross from one department to another, and aligning the flow of work with the rate of demand. In most organisations no one sees or is responsible for these horizontal, end-to-end value streams. There is now a wealth of experience in using the right lean principles and tools in the right sequence to redesign all kinds of value streams.

However no value stream is an island and exactly the same principles are needed to streamline and synchronise all the support activities that enable the primary value streams to flow, such as delivering the right drawings and parts to assemble an aircraft or delivering the right test results, take-home drugs and therapies to be able to discharge a patient from hospital. The third critical dimension to enable value streams to flow is aligning the management decision-making processes with the heart-beat of the value stream, so problems are escalated and responded to quickly and projects are not held up waiting for infrequent review meetings. Quite simply this means seeing and managing the organisation as a collection of inter-connected processes or value streams as well as the traditional, vertical organisation chart.

The final piece of this puzzle is to see how streamlining these work flows translate into bottom line savings - cash freed up by reducing unnecessary inventories and delays, capital investments in extra capacity or warehousing for instance that are no longer necessary, lower unit costs from being able to make more with less and growing sales from more satisfied customers. The deeper point of taking a value stream perspective is learning to see the whole and where to act to close the critical performance gaps.

Third; how to change behaviour in order to work together more effectively along these value streams? The lean answer is to plan not only what should happen to every product, patient or drawing as they progress through the value stream but exactly when this should happen and to make progress and deviations from this plan as visible as possible. Reviewing progress on an hourly or daily basis enables teams to respond quickly to get back on plan and to prioritize recurrent problems for root cause analysis.

Making progress and problems visible in a no blame environment is much more productive than hiding them from view or in a computer. It is also essential to be able to manage a much more interdependent process where interruptions have a much greater impact on overall system performance. Anyone who has been part of a value stream mapping exercise will have witnessed the dramatic change in behaviour as participants stand in front of the map and see for the first time how to fix their broken process rather than blaming each other Managers also begin to recognise that their role is to support front line staff in doing their work and helping them resolve the most important hindrances to doing so.

This is equally true in a project environment. Toyota’s Oobeya or visual project room is an effective way to gat agreement from different departments on common actions and to agree the few common metrics on which the project will be measured. Breaking the work into daily or weekly increments and reviewing progress daily means that slippages and issues that arise can be dealt with quickly, rather than waiting for the next gate review meeting. Capturing these issues also provides a rich source of learning for future projects. The deeper point about making everything visual is learning to work together to optimise the whole system.

Fourth; how to sustain the gains? The lean answer is by building new knowledge through learning by doing. We have already described the power of mentoring using A3s throughout the organisation. In a complicated social environment where causality is not always clear real learning comes from doing many controlled experiments to see what works and what does not. Very often problems are not where people think they are and the root causes are also not always obvious. Establishing a common language for all kinds of problem solving makes it possible to capture and share not only what worked but also how problems were solved, so others can do the same.

Learning by doing is also the basis for a very different approach to lean transformation. Instead of spending a lot of time planning and then deploying a centrally designed training programme across the organisation that is quickly forgotten when the experts move on, a lean transformation begins with a series of controlled experiments in key activities to build an experience base as quickly as possible. This then forms the basis of further experiments and for building communities of practice to share results and experiences. These may also be consolidated on an intranet accessible to everyone in the organisation and reinforced by competitions and recognition ceremonies for the winning projects. The deeper point to this experimental, evidence based approach is that everyone learns how to learn by doing and reflecting.

The net result of all of this is that organisations are able to do new things that were previously impossible to do economically. The business opportunity is to use these new capabilities to turn the tables on your competitors, until they learn to follow your example, by which time you should have moved further ahead. But that is another story for another e-letter.

Yours sincerely
Professor Daniel T Jones

Convincing Executives to go Lean

I was recently asked how to convince senior executives to go lean. The best way to answer this question is to summarise two contrasting real stories — one that got it and one that still does not — at different ends of the same sector.

The successful case began with a question from a senior Director — “How could these lean Toyota ideas help my business?” “Let’s take a walk and see” was my answer. As we walked it because clear there was waste everywhere. This very quickly led to a meeting with the CEO who was intrigued and gave us the go ahead to begin some experiments to demonstrate the potential scale of the improvements that might be achieved. But I insisted that we begin by taking a team of top managers from this company and a few of their suppliers to walk the end-to-end process back from the customer. This proved to be a game changing experience — they were shocked at what they now learnt to see!

So we were quickly given several places to carry out experiments and these quickly showed huge amounts of wasted time and effort could be saved. At the time no one had tried to do these things in this industry, even though I had the Toyota example as my reference model. Meanwhile teams from both companies began meeting to reap the low hanging fruit they could now see. And their internal team worked with other consultants to calculate the financial implications of the process savings we were demonstrating from each of our experiments. This was essential to get Board approval to go further and do the next set of experiments. In each case once this had happened their team worked out the operational detail before rolling out the next piece of the system as the new standard across the business.

Gradually as the different pieces came together more savings were uncovered. The fastest things to change were the physical operations and it took a few years before the systems could be changed to support the logic of continuous flow. But the CEO was quick to spot new capabilities he could build on to introduce new business models that were previously too expensive to do. The rest is history — they moved from an also ran in the UK to number three in the world in a decade and their competitors are still struggling to catch up with them! The Board never lost sight of the core insight that removing any interruptions to the flow of products through their system would be good for them and their customers and they never used lean language to describe what they were doing, even though their Chairman is a great admirer of Toyota!

The other case also started with the same question — but from the head of improvement. Several meetings in hotels eventually led to a visit to HQ to meet the new CEO. This company was making huge profits so I did not get a clear answer to my question “Why do you want to do Lean?” This was followed by days of meetings with armies of very bright staff in the improvement function at HQ and a few awareness training sessions. Which were followed by more visits and more meetings to refine our PowerPoint proposals and to develop their Training Manual and the Plan for rolling this out across several hundred plants across the world. These visits continued for several months, and frustration began to set in.

Meanwhile we persuaded them to allow us to begin some experiments in chosen plants to build some demonstration sites and create a network of people with hands-on experience. Because this company had a long history of rolling out new initiatives from HQ local plants were very wary of this new programme as they saw it and jealously guarded their independence and as a result these experiments quickly ran into political problems. Our approach was seen as rocking too many boats and they began to look for more traditional consultants who would stick to training and improvement workshops. This came to a head when we were only allowed to do our workshops in hotels and not on the shop floor and when their central improvement team asked for our proposals and then blocked us sending them to the CEO!

We probably learnt more from this “failure” than from the earlier success. In retrospect we failed to get them to define the business problem the CEO was trying to solve with lean. We never managed to persuade his senior team to take a walk through the process with us. We were told this could only be done with an army of minders and a big security presence. We never convinced them that this was not about rolling out new tools across their plants but about getting to action quickly to design a set of carefully controlled experiments to create hands-on knowledge and examples.

But the biggest obstacle turned out to the very bright staff in the improvement function at HQ who wanted to control the roll out of the programme based on their theoretical understanding rather than hands-on operational experience with lean. I have since seen very similar situations in several big multinationals, where we were in danger of getting sucked into a never ending cycle of meetings to discuss ever more elaborate PowerPoint presentations that never result in any action!

But I do not despair — we planted the seeds of lean. I know that several of their competitors have got it and are making steady progress and achieving dramatic results. As these translate into growing market share and volumes this company will be back in a couple of years asking why all the money they spent on more traditional consultants did not yield the same kinds of gains. Resisting the temptation to say “we told you so”, we can begin again with a bottom up programme of controlled experiments, tightly focused on closing the vital few gaps that will make the biggest difference to the business. Over time we will link them together and build the community of experienced lean line and plant managers who can make it happen day in day out. The focus and the will to work across functions to make this happen can only come from the top. I have always said that I only need one company in each industry to really get what lean is all about — and in time the rest will be forced to follow!

Yours sincerely
Professor Daniel T Jones

The Waste of Management

Just imagine that instead of pursuing several hundred projects your organisation was able to focus everyone’s’ efforts on the vital three to five strategic objectives that would make the biggest difference to its performance and that keep the top team awake at night. Imagine that the top team had identified the size of the performance gaps that need to be closed to meet these objectives.

Imagine that they had all walked the processes or value streams responsible for these gaps to begin to see the root causes and the opportunities for eliminating wasted time and effort, particularly between departments. Imagine that someone was given the responsibility for improving these value streams by gaining agreement based on the facts on what needs to be done. Imagine that each department had come up with what it could contribute and had discussed the resources required to do so. Imagine all the potential conflicts between the departmental objectives and the needs of the value stream had been addressed in an open manner.

Imagine that everyone used the same evidence based, scientific method to create their own A3 plans and an overall A3 plan of action to improve each value stream to close each performance gap. Imagine that they had agreed to replace the several hundred metrics for judging their performance by a vital few. Imagine that these plans were built around a visual wall that was updated in real time.

Imagine daily maybe half-hour long stand-up review meetings at this visual wall to discuss what to do immediately about deviations from these plans rather than tedious monthly review meetings trying to justify why things had not gone according to plan way after the fact.

It is not hard to imagine the acceleration in performance that would result from this much more effective use of management time. I call it “Results Driven Lean”, where action is only taken to resolve clearly defined problems with an evidence based plan to achieve measurable results in value stream performance that are translated into money — cash freed up, falling unit costs, capital expenditure saved and growing sales and margins from fulfilled customers etc.

My hunch is that this visual approach also defines an effective operational framework for cross functional cooperation. The focus on improving the end-to-end processes of value creation can also help to restore the balance with over-powerful functions and departments pursuing their own objectives, which have become a major obstacle to change.

It is also significant that the top team sets the example for the rest of the organisation by doing it themselves on their own work, which gives enormous credibility when they ask everyone else to follow their example. It also means they are in a position to mentor the next level down in the disciplines of evidence based planning and problem solving by asking questions to teach them how to think rather than telling them exactly what to do.

This is no dream — but what is emerging as we explore the potential for lean evidence based management to transform the lives of managers in the same way as lean has transformed work on the shop floor. Indeed it is the necessary corollary of that work if lean results are to be sustained.

Looking back many of these things made the initial lean supply chain work at Tesco so successful more than a decade ago. As we discovered more recently it is exactly what NHS hospitals need now to replace their totally inadequate public sector administration systems. And it is the focus of the pioneering work by Takashi Tanaka, who spoke at our Lean Transformation Summit two years ago, at Boeing and several other organisations.

All this leads me to conclude that the most damaging form of waste is not on the shop floor but the waste of management. Visiting many head offices I am struck by the armies of bright young people rushing from meeting to meeting making PowerPoint presentations to each other and by the time and effort senior managers spend in long meetings reviewing their plans and gameing many not very clearly defined objectives. These bright young things also effectively insulate top management from what is really going on in the organisation.

The fraction of management time that actually results in improvements in the way these organisations create value must be pretty small, dwarfed by the amount of time they spend fighting fires. But, as on the shop floor, they are all good well intentioned people trapped in broken and dysfunctional management processes that drive them to do the wrong things.

For me the insights that we need for taking lean into the executive office do not come from boot camps on lean tools for executives or even from the lean practice in production and operations. The more promising route is building on the experience with lean in managing projects in the engineering office, which is much closer to the day-to-day experience of leaders managing all kinds of projects in the executive office.

I see lean thinking and the Toyota example as the next step in our long journey to use the scientific method to improve social organisations. Alfred Sloan used scientific methods to create strong functions for command and control. In my view lean provides the scientific basis for working together more effectively, whether on the shop floor, in the engineering department or in the executive office.

This is the frontier for those interested in reaping the full potential of lean thinking and the Toyota example. We are now at a point where we can review the early experiments to test the hypotheses that emerged from diagnosing the root causes of the waste of management. Which is why this will be a core theme at our next Lean Summit on 2-3 November in Kenilworth, UK. We have a long tradition of only organising Lean Summits when we have something new to share. Now is the time to address the waste of management.

Yours sincerely
Professor Daniel T Jones

New Horizons for Lean Thinking

I often tell audiences that I collect questions, particularly ones I have to go away and think about. I also tell them I judge the quality of the audience by the quality of the questions they ask! Their questions are invaluable in studying a field where the practice of the pioneers is way ahead of the theory of the teachers.

Over the last month I visited seven large organisations doing very different things across Europe, all actively involved in lean. What struck me was how similar their underlying questions are. In many cases the answers lie in a deeper understanding of Toyota’s management practices, but in others it is up to us to explore where lean thinking principles can lead us. How many of these eight questions resonate with your experience?

1. How to convince top management that “good processes lead to good results’? That the most effective way of closing the critical performance gaps facing an organisation is by addressing the root causes of the broken processes or value streams responsible for delivering them. By building a robust business case to show how compressing the time through these value streams translates directly into better customer fulfillment, higher margins, freed up resources and cash, lower unit costs, less capital expenditure and new business opportunities.

2. How to improve the effectiveness of complex projects while at the same time increasing the productivity of scarce engineering and management resources? From Toyota’s experience we learn that daily visual management of the progress of a project, maybe coordinated through an Oobeya room, enabling teams to respond quickly to any slippage as it happens is a more powerful driver than less frequent gate reviews or any computerised scheduling system. Visual management is as powerful in the executive office as it is in engineering or on the shop floor

3. How to develop a common way of thinking and solving problems across an organisation? Toyota’s A3 reports lay the foundation for evidence based management using the scientific method by providing a common language for prioritising, planning and problem solving at every level of the organisation. It is also the way managers throughout their careers learn to think about problems in the right way, guided by questions in a dialogue with their superiors.

4. How to engage knowledge workers to create responsive and efficient service delivery organisations, in both the private and public sectors? This is about organising the customer interface around a problem solving dialogue and developing the capabilities of those who support them to respond quickly right-first-time to changing needs. It is also opens up new possibilities for managing the customer life cycle and integrating services to help customers solve their problems cost effectively.

5. How to work across departmental and organisational boundaries to free up cash, reduce costs and improve supply chain responsiveness? Someone has to take responsibility for surfacing the consequences of excessive lead times, demand amplification and optimising the pieces rather than the whole. This is the basis for gaining agreement on doing the right things and for sharing the gains and losses along the value stream. The knowledge gained is also invaluable in designing next generation products and the much more compressed value stream to deliver them.

6. How to manage patient journeys to reduce length of stay so hospitals can treat more patients safely with existing resources? This starts with a plan-for-every-patient and the visual management of the flow of patients from admission to discharge in a way that aligns the demand to get out with the demand to get into the hospital. This needs top management focus and a value stream management team to gain agreement from all parties, including support services, on the actions necessary to enable this happen.

7. How can lean help to redesign healthcare systems and the supply chains that support them? First by analysing alternative ways of organising patient journeys, co-management of ongoing conditions and care in the community without replicating the problems encountered in managing traditional district general hospitals. Second by dramatically compressing the lead times and costs in producing and delivering all the products and services through healthcare supply chains to the point of use.

8. How can our experience with lean help to design much more cost effective systems for making new products and delivering new services in the future? Lean opens up new ways of organising and managing the work of product development, supplier coordination, production and ongoing customer support. The challenge is to synchronise them in such a way that avoids the sometimes perverse consequences of today’s planning and costing systems. Eliminating unnecessary time and cost opens up new capabilities to work with customers using the web to solve their problems on a continuing basis much more cost effectively.

Thinking about these questions led me to search for those who can best answer them, not just from theory but from practice. I have invited them to share their answers and discuss their experiences in talks and workshops at our next Lean Summit on 2-3 November 2010 in Kenilworth, near Birmingham in the UK. My hope is that this will inspire all of us to follow their examples and show us the direction our lean journeys should follow. We will post the full Summit programme shortly on our web site. I look forward to seeing you there.

Yours sincerely
Professor Daniel T Jones

How Lean is your Organisation?

We are often asked to evaluate how lean an organisation ¡s. How far it has progressed down its lean journey and what its next steps should be. An obvious place to start is to go and take a walk through its core activities to see what they have actually done. This quickly reveals whether they have been able to go beyond lean tools and point Kaizen to make their value streams flow. Looking at their visual management also reveals whether line managers are actually using this to manage progress, to respond to interruptions and to record persistent problems for root cause analysis later. As you talk to employees you also quickly discover how many lean seeds have been sown and how many lights have gone on in their heads. In other words how many employees have been infected with lean, process thinking and would not want to return to the “bad old days” before lean.

But this is just the start. The main problems and obstacles in going lean are rarely on the shop floor but usually higher up the organisation in management. The shop floor is indeed a reflection of management. Here you also see whether top management just sees lean as a way of engaging employees in seeing and eliminating waste, by deploying lean tools right across operations. Or whether in fact lean improvement activities are being focused on closing the key performance gaps that are critical to the success of the organisation, by redesigning both the products and the processes that make and deliver them to customers.

Having defined the scope of the organisation’s lean ambitions we now need to look at their approach to change management. In most cases this will be defined by which consulting approach they used to get started. Who they used will be a good indication of where they are likely to get stuck on their lean journey. The 16 week model line approach is unlikely to last long after the consultants have gone as the organisation will not have learnt enough to replicate it elsewhere. The go to Japan trips to get religion and learn how to do Kaizen approach is also likely to run into the sand once the finance director begins to examine the costs. The repeat Kaizen week approach often goes hand in hand with an over reliance on outside experts so that the results are not always connected, sustainable or owned by the organisation.

Organisations have to develop the ability to build their own lean knowledge and examples as well as scouring for lean knowledge from elsewhere. This means getting as many experiments going in different pieces of the organisation as quickly as possible and then cross learning and building upon the lessons learnt. It does not, as we witnessed in one multinational, mean giving a team of high fliers at HQ a year to develop their one best way and to plan its roll out across the world. Lean is not a programme and has to be learnt by doing - and adapting to different circumstances and cultures.

So, realizing the full potential of lean means building a learning organisation on the one hand and a lean management system to drive it forward on the other But again beware, it is not enough for instance for the organisation to be doing policy or strategy deployment or using A3 analysis of its key value streams or teaching employees how to use A3 reports. It is the quality of the analysis, the decisions and the learning that emerge from them that really counts. Let us take each one in turn.

Narrowing down the critical root causes of the broken value streams that fail to deliver the required performance for the organisation is not easy. Deselecting the many other possible improvement activities in order to focus efforts on the vital few that will make the biggest difference to the organisation is even harder But without this a lot of effort is wasted and a lot of potential performance improvement is missed. The point of policy or strategy deployment is to align improvement activities across the organisation to solve the critical business problems facing the organisation.

Making Hospitals Work describes how a top team in a hospital go through such an analysis. In their case discovering that streamlining the flow of emergency patients and reducing length of stay is the way to meet government waiting targets, improve infection rates and free up capacity to do more and more profitable elective operations with the same resources. This is precisely the area most outside consultants are reluctant to tackle.

In exactly the same way we would look for evidence of similar thinking emerging from the policy or strategy deployment process. For example, whether a food processor recognises that making their high volume products every week in line with demand instead of in big batches to forecast every 14 weeks is the key to freeing up the cash by cutting inventories in their pipeline from 100 days to 10 and meeting all orders from retailers on time and in full. Or whether an auto parts maker begins to understand and tackles the excessive costs of its parts that travel tens of thousands of miles across the globe between its plants before finally reaching its customer some 40 weeks later

Optimising the pieces does not add up to optimising the overall flow of work. These examples point to a second key dimension of lean management, whether it takes an end-to-end perspective. Has someone been given the responsibility for gathering the facts and gaining agreement from key parties to improve the key end-to-end value streams? Do the metrics driving behaviour also include the performance of the value stream as a whole and is there a mechanism for surfacing and resolving conflicts between departmental and value stream objectives? Do managers have a way to see how to free up cash, reduce cost and save capital expenditure along the core end-to-end value streams?

Finally is the organisation really building an experience base in problem solving amongst its key employees? Are senior managers teaching their junior colleagues how to think through a dialogue as they build a robust A3 plan to solve a business problem? In a very real sense scientific problem solving is the foundation of lean, evidence based management. Perhaps the biggest disappointment we have come across is where employees and managers can’t clearly define the business problem they are trying to solve using lean. This is why the first question we usually ask is “What is your problem??”

Yours sincerely
Professor Daniel T Jones