Ditch the Diet. And the Layoffs.

If you're trying to get physically fit, don’t try to lose weight by going on a diet. 

If you’re trying to get organizationally fit, don’t try to cut costs through layoffs. 

In my new book, Building the Fit Organization, I argue that real fitness isn’t defined by overall weight, or by body fat percentage. Sure, if you’re 5’6” and weigh as much as a double-door Sub-Zero refrigerator, you should probably put down the box of Twinkies. But if you’re a 5’10” fashion runway model tipping the scales at 102 pounds soaking wet, you’re probably not very fit either. Skinny, yes. But not especially fit. Real fitness isn’t just about body mass index. It includes cardiovascular capacity, muscular strength, and flexibility. You can’t develop those by dieting. 

There’s an organizational parallel here: a company can’t get fit simply by cutting costs, especially through layoffs. To be sure, it can improve its income statement in the short term by laying off workers, closing offices, banning color copies, and getting rid of the coffee machine. That’s not going to make the organization fit, however, because organizational fitness isn’t just about low expenses. It includes the ability to react quickly to market shifts, to create and deliver new products and services, and to continually improve process efficiency and effectiveness—all in the service of delivering greater value to customers. Cutting expenses as a way to organizational fitness is like cutting calories as a way to personal fitness. At its logical extreme, it results in corporate anorexia nervosa—a feeble organization filled with dispirited employees unable to compete in the marketplace and serve customers.

Organizations that simply cut expenses tend not to maintain their new weight either. More often than not, there’s no concomitant reduction in work—it simply gets shifted around after layoffs. Employees take on the additional responsibilities of a colleague or a boss. They work longer and harder, but because the underlying processes aren’t functioning any better, and because these companies haven’t focused on improving how they operate, work doesn’t get done faster, better, or more easily. Eventually, after the financial crisis passes, the organization brings back the coffee machine, permits color copies, and caters meetings again. Travel restrictions are lifted. Gradually, the company hires people to refill the roles that were eliminated earlier. The weight comes back on, and the organization is just a market downturn away from another round of layoffs and cost cutting. 

A new article from Knowledge@Wharton provides further support for my argument. The authors point out that there's precious little evidence that layoffs are good for operational performance or for long-term profitability:  

Contrary to popular belief, there’s not much evidence that layoffs are a cure for weak profits, or, to use the current euphemism, that they reposition a firm for growth going forward. . . . There is no evidence that cutting to improve profitability helps beyond the immediate, short-term accounting bump. . . . Employers also often underestimate the cost of layoffs in immediate financial terms, as well as in the lingering burden it places on remaining resources — both financially and emotionally. There is definitely a huge problem in HR generally that the stuff that is easy to put on a spreadsheet outweighs the stuff that isn’t.

And then, of course, there's the downstream consequence of those layoffs:

But what does that [the short term cost reduction] mean two or three years from now when the firm is growing and now has to ramp back up by hiring a bunch of people? Now the firm must incur all these costs to hire and train workers. In addition to the laid-off employees. other workers may now leave voluntarily, all of which is disruptive for the firm and lowers productivity. Layoffs may look good on paper because they have an immediate effect on costs. Yet in reality there are a lot of costs that layoffs impose on firms that might not show up on an income statement quite as clearly.

What's the alternative? Just as a person striving for true physical fitness has to increase strength, cardiovascular capacity, and flexibility, so too must an organization focus on increasing value delivered to customers. Wayne Cascio, a professor at the University of Colorado at Denver points out that companies that that have avoided layoffs in times of financial difficulty position themselves for greater growth when the good times return: 

[They] come out the other side with positive results. "He points to Southwest Airlines, which, like the rest of its industry peers, suffered during the Great Recession. People were not flying as much, so they took their job recruiters — who are typically great with people interaction skills — and instead of laying them off, redeployed them into frontline customer service jobs, which made flying on Southwest a better experience for its customers. And as the economy recovered they transitioned back to their original jobs.”
Another approach was taken by Steve Jobs, Cascio says, who took advantage of downturns to focus on innovation. “When the bubble burst, he said, ‘We are going to invest our way through the downturn.’ Look back at when the introduction of the iPod was and the iPad. It turns out shortly after the 2001 recession ended was when the iTunes Store opened. Then after the Great Recession, they bring out the iPad in 2009 and 2010. So while the economy was bad and people were being laid off, Apple was actually investing in R&D. 

And of course, we can't ignore the human element, which is nearly impossible to capture in a spreadsheet. Loyalty, morale, commitment to one's job and one's company don't appear in a company's cash flow statement. Yet according to Wharton management professor John Kimberly,

if a company can manage through a rough patch with creative strategies without laying off, employees will emerge with a greater sense of loyalty, and that loyalty will pay off for the company. “I believe at the heart of the issue, that is going to motivate outstanding performance, in any company, no matter what business they are in.”

If you're going for fitness -- personal or organizational -- you've got to do more than cut your food intake or cut your employees. Long-term, sustainable fitness requires that you learn to increase value to your customers. Any other approach will give you a short term thrill, but leave you too weak to compete in the future. 



Shameless Self Promotion: Lean Leadership Institute Podcast

Chris Burnham of the Lean Leadership Podcast interviewed me recently. We covered a lot of ground that I haven't spoken about before, including: 

  • How my background as a running coach has influenced my lean journey
  • The need for leadership to act and think differently as well as front line associates in applying lean principles
  • An experience I recently had with a simple idea that really captures the true spirit of kaizen
  • How a lot of people get lost on their lean journey by getting tripped up by 5S
  • The generosity of the continuous improvement community
  • The power of benchmarking
  • The need to overcome learned helplessness

Check it out here.



The simple improvement board. Not so simple.

Organizations often start on their lean journeys with visual boards to track improvement projects. My recent experience with a new client, however, has shown me that it’s better to start with something much simpler: a basic suggestion board dealing with simple problems. No, implementing these ideas won’t move the needle on the business’s financial results, but starting with a basic board like this is a critical foundational step.

Here are four reasons why these boards are important.

1. They create the right mindset and culture.
It takes a long time before an organization reaches the point where “no problem is a problem.” In most companies, problems are something to be hidden or ignored. Sharing them can be embarrassing, if not threatening. Having people post improvement ideas about how to make their own work easier or faster—to fix what bugs them—is a powerful way to getting them more comfortable with the concept of making their issues visible, to both their peers and to leadership. This kind of simple board is an important first step to creating a culture in which it’s okay to make problems visible.

2. They keep ownership of the problem where it belongs.
Well-designed suggestion cards always have the employee’s name at the top to reinforce the understanding that the employee—not management—owns both the problem and the countermeasure. In this way, the card creates a profoundly different dynamic from a simple complaint to a supervisor. That kind of conversation typically results in the problem being dropped onto a manager’s to-do list, where it may or may not get done in a timely fashion.  Leadership must support the employee in solving the problem, of course, but responsibility lies with the worker.

3. They provide an opportunity for learning how to solve problems.
Improvement cards provide a chance for managers to help employees develop problem solving skills. Because workers retain ownership of the problems, they have to think through root causes and create possible countermeasures. Even if the problem is simple (say, needing more light at their workspace) they can be coached through the development of alternative solutions and assessment of the consequences of each choice—which is a useful habit when the problems they’re solving become more complex.

4. They deepen leadership understanding.
The TV show Undercover Boss depicts situations where executives are comically (tragically?) ignorant of the reality of frontline workers’ daily lives. But even in a small company, it’s easy for the leadership team to lose touch. Even at the earliest stages, when improvement boards deal with simple issues that make work more difficult for the employees, the suggestions—and the conversations around them—give leadership a deeper understanding of what’s happening at the gemba, and develop closer ties and greater engagement throughout the organization.

You don’t start training to swim the English Channel with a five-hour ocean swim. You start with five laps in your local pool. In the same way, you shouldn’t be in too much of a hurry to set up elaborate visual management systems to track and control operational processes. Your organization probably lacks the skills and culture to support it. A simple suggestion board for improvements is a great way to lay a solid foundation for the lean journey ahead. 



Workers aren't lazy...

. . . at least, not the ones I know. Although I can't really speak for the specific ants mentioned in today's Wall Street Journal, which reports that Japanese researchers have found that 20 to 30% of ants in a colony remain inactive while other ants work. The Journal extrapolates from this study to suggest (humorously, I suppose) that a reservoir of lazy workers may be key to an organization's long-term survival. 

Sounds to me that the ant world knows that slack is valuable in any system -- from highways, to coffee shops, to your accounting department. When utilization crosses a certain threshold, the time required to get essential business done increases exponentially. 

Most companies understand this concept as it applies to machines and manufacturing processes, but it's often ignored when considering the workload on people. In a misguided quest for increased "efficiency," we overload people with work, eliminating their slack time -- and thereby cross the utilization threshold beyond which response time plummets. On an individual level, that overload appears as calendars packed with meetings, projects, and tasks, guaranteeing that the inevitable glitch (a meeting that runs long, a software snag, an unexpected problem with a customer, etc.) will create a cascade of failures in our ability to meet deadlines and deliver on time.

More importantly, the absence of slack makes it nearly impossible to implement lean. Think about the principles that Jeff Liker wrote about in The Toyota Way. Principle #5 is "Build a culture of stopping to fix problems." Good luck doing that if there's no slack in the organization. Or Principle #14: "Become a learning organization through relentless reflection and continuous improvement." If you have no time for reflection, you can't possible become a learning organization. Even Principle #13 ("Go and see for yourself") requires time -- and slack -- to get out of the office or the conference room.Without slack, you just can't build a culture of continuous improvement. 

What's happening in your product development team, your finance group, your organization? Do you have enough extra workers -- or more to the point, do they have enough slack in their workdays -- to accommodate new demands, respond to emergencies, or reflect and innovate? Or are you running the team with so few people, or have overloaded them with so many initiatives that there's no slack in their schedules?



Organizational Fitness + Fast Food = Go Figure

I’ve just learned that organizational fitness and fast food are not, in fact, incompatible.

Pal’s Sudden Service, a fast food chain in Tennessee and Virginia, demonstrates the value of standard work and coaching (core principles #4 and #6, respectively, from Building the Fit Organization) in building a company that outperforms other fast food chains in speed, accuracy, customer loyalty, and employee retention. In fact, Pal’s is so good that it won a Baldrige Quality Award for its service. It serves drive-through customers four times faster than the next fastest competitor, with 10 times greater accuracy—a mistake only once in every 3,600 orders.

(Note: before you start firing off angry emails about the politics and gamesmanship involved in winning a Baldrige award, I know that the Baldrige award isn’t the be all and end all of quality, nor is it the same as a deep embrace of the Toyota Production System and lean. But as you’ll see, the company does an awful lot right in its pursuit of excellence and organizational fitness.)

The January issue of HBR has a short article on Pal’s, and the investment in employees is striking:

New employees get 120 hours of training before they are allowed to work on their own, and must be certified in each of the specific jobs they do. Then, every day on every shift in every restaurant, a computer randomly generates the names of two to four employees to be recertified in one of their jobs—pop quizzes, if you will. They take a quick test, see whether they pass, and if they fail, get retrained for that job before they can do it again. (The average employee gets 2 or 3 pop quizzes per month.)
“People go out of calibration just like machines go out of calibration,” CEO Crosby explains. “So we are always training, always teaching, always coaching. If you want people to succeed, you have to be willing to teach them.”
But the company doesn’t just test employees on their knowledge. Leaders are expected to spend 10 percent of their time on teaching, and to identify a target subject and a target student every day. Thomas Crosby, the CEO, realizes that leaders are by definition in a teaching role, so he formalizes and standardizes that responsibility.

In Building the Fit Organization, I argue that effective coaching relies upon three elements: going & seeing; showing respect; and participation. While I can’t speak to the last point in Pal’s case, it’s clear that managers go and see for themselves (it’s hard not to in a fast-food restaurant) and they clearly show respect for employees’ innate ability to learn and grow.

With the right leadership, fast food and fitness can coexist. 



Process ≠ Value

What’s the purpose of the much-reviled performance review? Or to put it another way, what’s the value created by a performance review? Most people would say it’s essential for improving individual performance and providing guidance for career development.

But I think that we’re conflating the process (the tool) with the value (the outcome). The annual performance review is no more necessary for improving performance than a pack of dogs is necessary to create a fox. In fact, in many ways it’s antithetical to the value we’re trying to create.

As W. Edwards Deming wrote in Out of the Crisis,

Evaluation of performance, merit rating, or annual review… The idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise.

Or as UCLA professor Samuel Culbert said (somewhat more colorfully), “a one-side-accountable, boss-administered review is little more than a dysfunctional pretense.” The problem, of course, is that the system in which people work accounts for the vast majority of the individual’s performance. (In the Team Handbook, Deming estimated it to be 90 or 95 percent of performance.)

That’s why it’s heartening to read that starting September, Accenture will get rid of their traditional annual performance review. Instead, it will introduce a system in which employees get regular feedback on an ongoing basis from their managers after assignments. Like an increasing number of large firms (Microsoft, Gap, Medtronic, Adobe), the company realized that the enormous investment in time, effort, and energy wasn’t yielding enough value. Management research firm CEB found that nearly 90 per cent of HR leaders say the annual review doesn't even yield accurate information—and this for a process they estimate costs managers about 200 hours per year.

Leaving aside the specifics of the performance review, this move should serve as a reminder that we shouldn’t equate our existing process with the value we’re trying to create. It’s one way to create that value, but not necessarily the best way. (And in the case of performance reviews, quite possibly counterproductive.)

Now, while it’s true that lean thinkers are accustomed to thinking this way about manufacturing or service processes, we often forget that the way we create and share information—which is the primary task of knowledge workers—is also a process, and we should bring the same improvement mindset to this process as well. When you consider how unhappy most people are with the meeting and email culture in their organizations, why don’t we bring a focused improvement mindset to fix it? Do you really need a 60-minute meeting with nine people in the room to disseminate information, or could you use an internal blog? Is dumping an unending stream of tasks via email on a person the best way to distribute work, or might a team-based kanban be better? Is a two-day strategy retreat the most effective and efficient way to set organizational direction for the next year, or is another form—strategy deployment, play-to-win, etc.—better?

Let’s untether the process and the outcome. The value is independent of the process. When we see that our current way of doing something is only one way of creating that value, we’re free to find a different—and better—way. 



Let's Stop Being Hypocrites: Work is Work

Imagine going to the shop floor and learning that you missed your production target because the line started 10 minutes late when one of the workers was late for her shift. Or finding out that you missed your production target because one of the workers didn’t know what line he was supposed to be working on, and what specs the customer required. Or finding product defects because one of the workers wasn’t paying close attention to the product—he was talking to his mother on the phone while he was performing his job.

Ridiculous, right? Intolerable, right? You would never accept these problems in a factory.

So why do you tolerate the same issues in the office environment? Meetings start late because people don’t show up on time. When they do show up, they’re often unprepared. They miss important issues because they’re checking email. Outside of meetings, many people don’t even know what they’re supposed to do that day—they respond to the latest fire or just tackle the easiest items on their infinite to-do lists rather than holding themselves accountable for getting their important work done on time.

We often talk about knowledge workers as though they need to be treated differently from shop floor workers—They’re creative! Their work is unpredictable! They’re not machines! They’re C-suite executives!—but the truth is that they’re still production workers. And that means that we can approach their work, and solve their problems, in the same way that we approach the work and the problems on the shop floor.

Take, for example, meetings that start (and end) late. Newton did not discover the Law of Late Meetings when the apple fell on his head—they are not an inescapable reality. It’s simply a problem, and there’s nothing stopping you from sending in your SWAT team of lean six sigma obsidian belts to work on it. My guess is that you’d do it if your shop floor didn’t start on time everyday, or if a production cell didn’t run the target number of parts in an hour. 

Or, consider how rabidly lean thinkers focus on increasing the amount of value-added work and reducing the waste when analyzing a physical production process. They’ll eagerly deploy their time-motion studies, standard work combination sheets, and spaghetti charts in an effort to shave off half a second. But when was the last time we looked at the way most VPs spend their days? How much time is frittered away on emails with no value? How much time is spent clarifying or repeating requests? How much time is spent in unnecessary or poorly run meetings?

If we’re going to obsess about creating value for our customers, let’s start talking about how much of our own time we spend on value added work. According to my (very informal and very unscientific) surveys, most mid- to high-level office workers only spend about 20-30% of their day on value creating activities. The rest of their time is spent deleting reply-all emails (and griping about it).

The lean tools that are so valuable in improving the work on the shop floor are just as valuable in the office, where the work is harder to see. Leader standard work, for example, is a powerful way of reducing the “administrivia” that often wreaks havoc on your days and prevents you from engaging in coaching and problem solving with your team. Standard work for internal communication creates clarity around which communication medium you should use for different types of issues (Urgent issues? Call the cell phone. Complex issues? Face to face is best. Emotionally fraught matters? Email = bad.)

Visual controls can help drive improvement in the office environment. Scorecards for meetings enable you to spot problems (“The marketing team meeting never starts on time, while the finance meetings don’t always have clear action items.”), and develop countermeasures. Simple tally sheets and pareto charts can highlight the types of interruptions that destroy flow in your own work. And even a simple chart showing your target and actual production for the day, along with comments about what went wrong, can help you begin to analyze and improve the way work is done.

It’s time to look in the mirror and start applying lean tools to yourself and your own work. Just because you’re salaried and don’t cost the company overtime when you work at night or on the weekends doesn’t give you a free pass. 

And worse: waving the lean flag and demanding improvement on the shop floor without inspecting your own work environment makes you a hypocrite. And no one likes hypocrites.

(This article first appeared in the Lean Post.)



Rotman School of Management

I'm proud to announce the Winter issue of the Rotman School of Management magazine features an article excerpted from my new book. 

In it, I argue that "fit" companies don't get that way by accident: they intentionally pursue a course of action that makes them stronger and more agile over time. I offer nine steps for creating a culture of continuous improvement. Of course, in the end, the biggest benefit of embracing this approach is not just improved processes and better-quality outputs: it is the growth and development of your employees. 

Read more (and purchase the article) at the HBR website



Responsibility Without Authority

Responsibility Without Authority

My friend Sara runs a rapidly growing non-profit in NY. They’ve gone from 5 employees to 55 in the past 18 months. Despite the increased staff, decision-making is more sclerotic than ever, she and her executive team are still consumed with trivialities, and wide-spread frustration is growing over the organization’s lack of nimbleness.

Her situation reminded me of a story I heard about James Treybig, the president of Tandem Computers. He once called a meeting with the engineering leadership team to find out why, when there were 20 people in engineering, the team regularly performed miracles. But three years later, with 300 people in engineering, it seemed like nothing was getting done.

Probably you’ve seen the same thing in your own organization—yet I don’t think that this is an immutable fact of life, on par with Newton’s Laws, or the impenetrability of your medical insurance EOB statement. And while I can’t speak for Tandem, in Sara’s case, the problem definitely isn’t due to a bloated organization loaded with corporate fat.

The truth is that when responsibility doesn’t equal authority, you’ve got problems. Sara beefed up the organization in order to relieve the exec team of the burden of dealing with the innumerable small, daily decisions that devour time like the Eighth Plague: which type of desktop inboxes to buy. Which water bottle style to give away at a fund-raising event. Where to host the holiday party. Whether to use royal blue or slate blue for highlight trim. She wrote job descriptions that specified responsibility for managing these decisions, and hired people for the positions.

Sounds good. Except that the job descriptions didn’t explicitly give them the authority to make these decisions. Further, she didn’t coach the leadership team to delegate that authority. The predictable result? The myriad daily issues still come bubbling up to the leadership team’s level—but now each decision takes even longer, because approval for each one requires a meeting between a senior leader and her subordinates. Slower decisions and more time sucked up in meetings: a double loss for Sara.

In some ways this situation is a more nefarious version of the founder’s dilemma—in which an entrepreneur’s stranglehold on decision-making, so helpful in launching a company, ends up impeding its long-term growth. Sara’s situation is worse because it looks as though she’s avoiding the problem—after all, she’s just hired a bunch of people to handle these decisions. Unfortunately, she’s only exacerbated the situation by increasing headcount and impeding execution.

At Sara’s organization, the mismatch between responsibility and authority created bottlenecks. But this kind of mismatch between authority and responsibility typically creates different kinds of problems throughout an organization:

Screen Shot 2015-12-18 at 3.27.12 PM.png
  • Low Responsibility, Low Authority: here’s the classic recipe for apathetic, demotivated workers. Customer service people who don’t have the power to solve problems. Assistants who don’t get one-on-one time with their execs. These are the people with glazed eyes waiting for the five o’clock bell to ring, who have no energy or desire to help improve the company.

  • High Authority, Low Responsibility: here’s the blueprint for installing a tyrant of minutiae. The person in finance who insists that you fill out your travel expense form in blue ink, not black—or for that matter, that you use their form, instead of your spreadsheet version of it that does the math for you. The person at the DMV counter who sends you to the back of the line because you forgot to put your middle initial on form 2976A/3. These people make life miserable for everyone and will never leave, because they’ve built a comfortable empire.
  • High Responsibility, Low Authority: this is Sara’s world—the grey world of frustrated strivers. Nurses who can’t make changes to procedures that would allow them to spend more time with patients. Product developers who are told to just make what the sales department demands. You can find these people polishing their resumes as they look for another job.
  • High Responsibility, High Authority: this is where you want to be. They have responsibility for a job, and the authority to accomplish it. These people are able to contribute to growth, improve performance, and move the organization forward.

Here’s the thing: the apathetic, the tyrants, and the frustrated—they could be anyone in the company. The engaged, committed workers are no better than the others. They’re just in jobs that allow them to exercise autonomy, achieve their goals, and strive for greatness.

Ceding ownership for decision-making is hard, but totally worth it. Sara and her executive team are now rewriting job descriptions to better match responsibility and authority. It’s an uncomfortable process, because it means yielding ownership of issues that they’ve always handled. But they’re already starting to see faster execution, higher morale, better collaboration among departments, and a drop in the number of meetings they need to attend.

Take a look at your direct reports: do they have authority commensurate with the responsibility you’ve given them? If not, it’s worth the time to revisit their jobs and see if you can bring those two components into balance.



What's a Fit Organization?

Recently, Matt May was kind enough to interview me about my new book for his blog. You can read my eloquent response to his questions here, Or, if you're more of a visual person, check out the inimitable Todd Clarke's one-page visual summary of my ideas below. He does a wonderful job of distilling blog posts, books (and really, any kind of dense intellectual content) into elegantly simple designs. You can see all of his work here



Rethinking the Shadow Board

I was in Zurich recently and stayed at a hotel that was formerly a brewery, established in 1867. I saw this shadow board in one of the preserved rooms.

Very impressive -- 55 years before Toyota talked about 5S, the Swiss were doing the same thing.

I excitedly showed this to a friend who runs a manufacturing company in Zurich, but he was unimpressed. He pointed out that the board is inflexible: if the tools change, or if new machines require different tools, then this board becomes a hindrance to the worker, not a help. 

In his company, he uses photographs to show the *current* best layout for the tools that the worker uses, and posts the photo above the work station so that the workers can spot abnormalities, missing tools, etc. It looks like this:

Photo above workspace

We often talk about right-sizing machines, having single minute exchange of dies, making flexible production lines, and so on, but his comment reminded me that our supporting systems -- particularly visual management tools -- need to be flexible as well. Investing money in tools that can't change and grow with the organization is a waste of money. 



"I Want To Be A Somebody."

Thanks to NBC and the Deming Institute, last night I was able to watch the entirety of "If Japan Can. . . Why Can't We?" (And thanks to Apple TV, I was able to watch it on a full size TV rather than hunched over my computer. With a bowl of popcorn.)

I know that many of the bloggers in the lean community will be writing about the video (I'm looking at you, Mark Graban.), but I wanted to add a comment to the conversation.

I was struck by how little wisdom and understanding the general corporate world has attained since the show first aired in 1980. We still have business leaders who strive only to cut costs. We still have leaders who see technology as the royal road to productivity. And perhaps saddest of all, we still have leaders who don't understand that the real reason for the incredible success of (some) Japanese manufacturers is the way they leverage the thousands of brains they employ to improve the way the work gets done. 

But for me, the most poignant and powerful moment in the video came in the segment on GM's "Quality of Work Life" program. One of the Tarrytown workers said (starting at 59:25), 

Quality of Work Life is involvement. Involving me in the decision-making process. And treating me as. . . as somebody. I want to be somebody. 

His statement was one of the saddest things I've heard in a long while. Think of the thousands -- tens of thousands, hundreds of thousands -- of workers who, in the 35 years since this video first aired, spent their lives feeling like a nobody. Who were treated as replaceable hands, and not brains. Not hearts. Not people. It's enough to make you cry. 

When I think about lean, and about the profound respect for people that lies at its core, this is what I'll think about. At its best, this is what lean does. It makes people feel like a somebody. 




From Flabby to Fit, or Why Track Spikes Don't Make You Faster

When I started running in 8th grade, I was dead last in every race. I stunk. I had asthma, allergies, and I couldn't run more than 3/4 of a mile without stopping (definitely not a competitive advantage in a 2.5 mile race). Over the next nine years, I became a pretty decent runner,  and ended up as a pretty competitive at the college level. Not world-class, not national class, but pretty good. I studied and learned how to train and race better. I became a student of the sport—and of my own body. By the end of my racing career, I was a much smarter athlete. 

The organizational journey from mediocre to outstanding—from flabby to fit—is similar. You need to study the way your organizational processes function on the macro level, and how individual jobs are done on the micro level. You’ll have to become a student of your own company so that you can build better processes and more capable people.

Tools alone won’t make your organization fit, any more than a new pair of track spikes would have made me fast. Don’t get me wrong—I loved buying new racing spikes, but they didn’t make any difference on the stopwatch (sadly). But if the past 25 years have shown us anything, it's that tools alone are insufficient. You can look up how to make a heijunka board; you can read a book on installing a kanban system; you can hire a consultant to set up manufacturing cells; and in the end, you’ll join the very long list of companies that attempted to copy Toyota and ended up mired in mediocrity. There is a place for tools, of course, but they’re useless unless they’re deployed in an environment that observes the fundamental principles of continuous improvement.

Honoring those principles will set you on the road to organizational fitness. And as with personal fitness, the biggest obstacle is likely to be . . . you. Your own well-established habits and preferences, your likes and dislikes, represent a formidable inertia that will be a challenge to overcome. Getting out of bed at 5am in the middle of winter for a swim workout or an eight-mile run isn’t easy, and neither is coaching a front line worker through yet another problem solving session when you’d rather just tell her what to do.

Culture’s no excuse, either. You’ll undoubtedly face some resistance to the changes you want to make. However, it’s likely that the resistance is largely due to fear from past experiences with command and control leaders, or the cynicism of dealing with managerial “flavor of the month” initiatives. That resistance will dissipate when people hear the sincerity of your words and witness the commitment of your actions. Cultural resistance won’t last long in an environment where process improvement and employee development are woven into the fabric of daily work.

W. Edwards Deming said, "Survival is optional. No one has to change." He was right, of course -- but that doesn't mean that it has to be a long slog through the muck under enemy fire. Whether you’re a Fortune 500 company or a five-person organization that doesn’t even subscribe to Fortune, you can embark on the organizational fitness program that I detail in Building the Fit Organization. It’s simple (if not easy), and progress will be slow. But the financial, intellectual, and emotional rewards make it a journey worth taking.



How Not to Look Like an Ass on "Undercover Boss"

CBS’s reality TV show, Undercover Boss, provides viewers with the thrill of schadenfreude when they see a highly paid CEO receive his comeuppance as he experiences first-hand the dirty, difficult, dangerous, or demoralizing reality of many of the jobs in the company. We snicker at the clueless CEO who didn’t know that the air conditioner in the warehouse (in Alabama, in the summer) has been broken for three weeks because of his order to cut expenses; that it takes four levels of approval to order more paper for the copy machine; that demands to increase productivity mean that there’s no time to go to the bathroom.

But it doesn’t have to be that way. One of the fundamental precepts of a lean organization is that leaders at all levels go to the front lines to see what’s actually happening. And as I argue in Building the Fit Organization, it’s also essential for leaders to actually spend some time each week or month doing the work that you’re asking others to do—it’s the only way to earn trust and to gain true understanding of what your people are dealing with.

Of course, you don’t have to know about lean to understand the value of this behavior. Look at the sidelines of any football game this Sunday, and you’ll see the coaches standing on the sidelines—not spending time in some fancy conference room. Or consider spin class instructors, or personal trainers—the best ones spend their time with you, in your world. They don’t just email in your workout. They participate, they model, they observe closely in order to better understand your reality so that they can improve your performance.

Check out this story on Peter Aceto, the CEO of Tangerine (formerly ING Direct). In his first year on the job, he worked in the call center everyday:

I took customer calls every single day. I sat down, got on the phone and really began to understand the challenges the call centre staff were facing. It was very tiring but also very exciting. There was a lot that had to change at Tangerine—I mean, even today, even though I behave in a very different way, there are still people who are intimidated just by the role and title of CEO. So I’m trying to constantly break down those barriers. I think [my taking calls] made people feel a little uncomfortable, but sometimes that’s what it takes.

It’s not always easy to do. As Aceto points out, people are usually intimidated (and probably scared) when the CEO plops down next to you and puts on a headset, or processes an invoice, or picks and packs an order, or cleans the drill press. But if you do that on a regular basis—if you make it part of your standard work—it’ll become more than just a CEO flyby that makes people nervous. In fact, it’ll reduce your daily load of meetings and build morale incalculably.

Oh, yeah. And you won’t look like a clueless ass when CBS puts you on Undercover Boss



Scut Work Matters

Basic maintenance (or as my wife calls it, "scut work") matters. Especially for senior leadership. 

Not because the 10% of the time that senior leadership spends on maintenance makes a significant difference in preventing breakdowns or keeping the company operating smoothly. But because it has enormous impact on how well, and how often, everyone else in the organization does maintenance. 

In Gemba Kaizen, Masaaki Imai suggests that most of top management's time should be spent on innovation and kaizen, with just a small percentage of time devoted to basic maintenance, as he shows in this chart:

In my experience, most leadership teams ignore the area in red: to the extent that they even think about the need for maintenance, they assume that since it occupies such a small percentage of their time, it's unimportant. 

Nothing could be farther from the truth. You could even argue that it's the most important portion of their time. 

As I've written about before, effective coaching requires that leaders both go to the workplace ("go see") as well as participate in the work that they're asking people to do. That doesn't mean that the VP of Engineering has to clean and oil the machines everyday, or that the CFO should organize client files every morning, but they should at least join in once every month or two. Participation in this kind of scut work doesn't just demonstrate "servant leadership." It also sends a powerful signal to employees that this work is important. If senior leadership can do it, then surely it's important enough for everyone else to do it as well.

Want to see what this looks like? Check out Paul Akers, the president of FastCap, on his hands and knees. . . cleaning the company toilet. My hunch is that if more CEOs did this, we wouldn't need 5S audits. And, of course, there wouldn't be a need for Undercover Boss

Maintenance may only be 10% of your time, but don't ignore it. Otherwise, everyone else will, too.



Paris Is All Wrong

Joseph Paris, that is. Not the city of lights.

Recently, Joseph Paris of XONITEK and the Operational Excellence Society argued that the continuous improvement community is making a grievous mistake by worshipping at the altar of Toyota and all things Japanese. He writes:

I believe this reverence of Japan and Japanese companies is largely (perhaps entirely) undeserved—possibly even a myth.  As they say, sacred cows make the best hamburger. And even if all this hype about Japan and Japanese companies was ever true at some point in the past, it is certainly not true today—and has not been true since the early 1990’s.  Further, I would propose that the expected results of any company that has “drank the Kool-Aid” and is trying to emulate the way a Japanese company operates as a path to a better future are misguided at best, and more than likely greatly exaggerated—leading to a disappointment that is almost certainly inevitable.

Paris goes on to compare per capita GDP in Japan, Germany, and the US; the movement of the Nikkei, DAX, and Dow stock indices; and finally the performance of Ford and Toyota stock prices over the past 20 years to demonstrate that Japan and Japanese companies don’t outstrip the US and American companies, and concludes that lean isn’t sufficient to improve organizational performance and competitiveness.

I am by no means a macro-economist (as my MBA professors will no doubt attest), so I won’t argue his GDP and stock index analysis. But I’m happy to debate two premises: that lean management is pervasive, and that Toyota is no better managed than Ford.

Paris says that 

the use of [lean] tools and techniques are now ubiquitous across companies—and since they are nearly universally accepted and embraced by companies, they no longer offer themselves as a differentiator nor do they offer a competitive advantage as they once did. And as such, they expose the limitations of the Japanese way of running a business.

I’m not sure what companies Paris has been consulting to, but in my experience, the number of companies that have fully embraced the lean management system is vanishingly small. Autoliv. Lantech. Herman-Miller. Virginia Mason. A few others for sure, but certainly not to the point that lean has become “ubiquitous” and “universally accepted and embraced.” These organizations are the exception, not the rule—both in the US and in Japan. Moreover, lean is by no means “the Japanese way” of doing business. I’ve worked for two Japanese firms over the years; neither had any knowledge of, or interest in, lean tools or philosophy. To say that there is a universal Japanese way of management—or a universal “American way” of management—is ridiculous. Could there be any more divergent management styles than General Electric and Zappos? It’s like saying that there’s one universal Japanese style of literature, or one universal style of American beer. 

Now let’s turn to Paris’s argument that Ford’s and Toyota’s stock price is an adequate reflection of their performance. According to his analysis, this chart doesn’t show that Toyota is a significantly better-managed company than Ford. 

Hmm…where do I even start with this argument? First, Ford has significantly improved its product development processes over the past decade—in fact, modeling them after Toyota. Second, and more significantly, unless you’re completely naïve (or a Chicago School of Economics professor), you can’t really believe in the absolute wisdom of the market. If you really believe that stock price correlates with the quality of management, then I’ve got some stock for you to buy: Enron. Sunbeam. Worldcom. Lehman Brothers. 

Instead of looking at the stock price, let’s look at Ford and Toyota’s net income. That presents an entirely different (and I’d argue, a more relevant) picture of management quality:

Which company would you invest in now?

Paris closes with a straw man argument that reflects his shallow understanding of lean. He states that 

the company that focuses on cutting waste over innovation and driving value to the customer—innovation and value for which the customer is willing to pay a premium—is not at any particular advantage.

He’s absolutely correct here. . . except that lean is not just about cutting waste out of operational processes. The elimination of waste is certainly part of lean, but that’s in the service of driving value to the customer. Less waste means that more financial and human resources can be dedicated to the creation of customer value. 

I agree with Paris that we shouldn’t hold up the Toyota production system as a “holy scroll” and a “sacred scripture.” (In fact, I argue the same thing in my new book, Building the Fit Organization.) But in everything else, Paris is all wrong. 



Training Wheels vs. Crutches

Last week I was speaking about my new book at a company that has a well-developed internal improvement team. In most engagements, the team embeds one of their lean experts within a department, and for the next year or two, that person works within the business to improve operations, while gradually easing herself out of her role. When that posting is complete, the person moves on to another department. 

This company views their office as the equivalent of kaizen training wheels. Their job is to help the various functional departments learn the skills, tools, and mindsets needed for lean and support them on their journey until the department can do it on its own. Their job is not to assume responsibility for improvement, or do all the heavy lifting, for the department. Cardinal Health, which uses a lean six sigma methodology, takes a very similar approach, in which people from the LSS team rotate in and out of functional departments, helping them improve processes, but not owning the improvement projects -- until eventually, the LSS expert finds a permanent position within the business units.

By contrast, many organizations use their internal improvement team as a crutch. In these organizations, the team parachutes into a department for a week/month/year, fixes the current problems, and then moves onto the next challenge. The emphasis is on rapid results, not on skill development -- and I'd argue, on episodic, rather than continuous improvement. When new problems arise, or when the company decides that the department must do still better, it has to wait until the continuous improvement cognoscenti with their belts and decoder rings are able to slot them into their schedule.

Training wheels help you develop new skills so that you can continue to ride on your own. Crutches make life easier today, but don't develop new capacity or capability. How does your organization operate?




The Tragedy of CEO Curiosity

My friend Roger is the president of a small manufacturer here in California that's owned by a larger Swiss company. A few months ago, his facility hosted a global meeting of all the companies held by the Swiss parent. In keeping with company custom, he made a sign welcoming all the participants and listing their names. After peering at the list for awhile, the Swiss CEO said, "Interesting. . . I'm trying to figure out how you ordered the names."

In fact, there was no particular order -- Roger listed the names randomly. But when the CEO made his comment, Roger panicked: did the CEO expect a particular order? By title? Seniority? By shoe size? Roger was so anxious about making a mistake that when he made a list for an event later in the meeting, he agonized over it for 45 minutes before finally putting the names in alphabetical order.

Now, it turns out that the CEO didn't care. He was just curious, because he couldn't see any discernible pattern in the names. (And he's Swiss.) But Roger, as a relatively new head of the subsidiary, couldn't help but read something into the CEO's question that just wasn't there.

I call this problem the "inference effect." The higher up the organizational food chain the person asking the questions is, the more likely we are to infer meaning that isn't there. If it's your colleague asking a question, you probably take it at face value. If it's your (Swiss) CEO, you'll infer all kinds of unintended meaning. The mangers at one of my clients often joke that they'd like to "kill the CEO's curiosity"-- whenever he asks a question at one of the quarterly business review meetings, it causes the team to prepare even more reports and analysis for the next one. Over the years, his team has sliced and diced the data so many ways that they can hardly see the forest for the bark, never mind the trees. And the sad thing is that the CEO didn't care deeply about most of the questions -- they were simply expressions of idle curiosity.

The tragedy of the inference effect is the needless waste and churn it creates. Roger spent 43 minutes more than was necessary to make a list on a sign. The financial team at my client is spending time analyzing sales by region by distribution channel by packaging color by day of the week by store manager's zodiac sign.

As the CEO, you owe it to your team to be cognizant of the inference effect. You're one of their most important customers, and they'll work hard to provide you with an answer, because they assume you value it. Feel free to ask something out of sheer curiosity, but if you don't want them to do additional analysis, say so. Don't let them infer meaning that's not there -- because they will. And that's not only a waste, it's a tragedy.


My new book, Building the Fit Organization, comes out on September 22. It's a fresh approach to continuous improvement -- no mention of Toyota, no Japanese, and no weird English jargon. Instead, it has approachable examples and models drawn from the world of physical fitness and athletic excellence. You can pre-order it on Amazon now:

Joe Dager at the wonderful podcast Business901 interviewed me about the book recently. You can listen to the podcast here: If you like to watch more than listen, you can see my first webinar on the book, which I idd for Joakim Ahlstrom and the C2 Consultancy here:

If you're in the SF Bay Area on Sep 24-25, I've organized an amazing 2-day workshop with Mark Hamel on Visual Management & Leader Standard Work. Mark is a great teacher and deeply experienced in all facets of lean. The event will be held at the hospital job site of Boldt Construction, where you'll have a chance to see an how an obeya can be used to manage the complexity of a major construction project. For more information, go to


That's all the self-promotion for this week. 




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Semantics Matter.

I was helping a client with a process mapping exercise recently, and saw this post-it:

n their excellent book Metrics Based Process Mapping, Karen Martin and Mike Osterling suggest that process steps be written in “Verb-Noun” format to show the action. Therefore, the mapping team defined one of the steps as “Receive Ingredients.” (Although with a process time of a half-day and a lead time of eight weeks, it’s actually more like “wait for ingredients,” but no matter.)

What’s interesting in this example is that the team was viewing the activity from their perspective, rather than from the perspective of the work that’s being done. As a result they defined the critical action as “waiting.” And while that’s technically true, it obscures the critical issue: that while they’re waiting, the production of those ingredients is taking eight weeks. In other words, the focus is on the team that’s waiting, not on the team that’s producing the ingredients.

There’s very little you can do to improve “receiving.” There is, however, plenty that you can do to improve a manufacturing lead time of eight weeks when the process time is only half a day. But those possible improvements are obscured by the passivity of “receiving ingredients.”

What did we do? We changed the process block to “Produce Ingredients” and placed it in the supplier swim lane—and then started the examination of why the lead time is so long, and began brainstorming possible countermeasures. The team now expects that they can reduce the lead time to 1-2 weeks.

Another team in the same workshop had a similar issue: one of their process blocks was “Get Sales Input,” with a small process time but a long lead time. When we moved this block from the design team swim lane to the sales team swim lane and relabeled it “Provide Customer Feedback,” it became apparent that the design team could go directly to customers for feedback, and avoid the time waste of working through the sales team.

If you have similar process block in your maps, the odds are good that the placement and phrasing of the post-it is obscuring both the real action and the opportunities for improvement. Focus on the work and who’s doing it, and let that be your guide. “Waiting,” “receiving,” “Getting” and other such phrases are passive, non-activities that impair your ability to see what’s really going on. In other words, semantics matter. 

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Directive Coaching Isn’t All Bad

I’ve been talking recently with a colleague about effective coaching. Like many in the lean community (including me, in my forthcoming book, Building the Fit Organization), he argues that coaching should largely consist of Socratic questioning that promotes thinking, reflection, and ultimately, self-development. In contrast to directive coaching in which the coach transfers knowledge to the learner, developmental coaching helps the learner discover the answers himself. In this developmental approach, improving a business process is less important than improving the ability of the learner to think.

These two approaches are nicely illustrated in a slide from David Verble of LEI:

Developmental coaching is powerful when you need people to grow. This kind of coaching essentially engages a person in meta-work—in thinking about how their work is done, and how to do it better. Developmental coaching results in improved outcomes over the long term—more Olympic medals, a lower rate of surgical complications, shorter time to market. Even more importantly, it improves people’s ability to improve.

But for many years, I was a high school cross-country coach, and the vast majority of my coaching followed the more traditional, directive model in which I told the runners what to do. And now, as an active member of a masters swim club, my coaches do the same—they tell me how to position my arms, hands, and body in the water in order to swim fast.

The kind of coaching that’s appropriate depends on the situation and the objective. Developmental coaching isn’t a great idea if the learner is competing—you’re not allowed to coach Roger Federer in the middle of a match, Michael Phelps is underwater and can’t hear you, and Usain Bolt is finished before you’ve cleared your throat. It’s also not a great approach if someone is learning how to operate heavy, dangerous machinery—asking an operator about the experiments he could run to improve safety is not helpful if he’s already crushed a finger. When you need results right now, you need directive coaching.

A friend of mine says, “The most powerful improvement tool we have is our employees’ brains.” That’s true. But let’s not forget the value (and role) of our own brains.