Why lean is a magic trick.

My friend Roger is the head of continuous improvement at a major hospital system in Florida. He's also an amateur magician. Shortly after started working at this hospital, he and his team made some significant improvements -- among other successes, they managed to avoid spending many thousands of dollars on unnecessary ventilators, they solved the (seemingly) intractable problem of missing wheelchairs, and they cut down on expired medications. When I would compliment Roger on these wins, he would always say, "Nah, those are just magic tricks. They're not important."

And I would nod sagely over a beer and agree with him, without really understanding what the hell he was talking about.

But I finally realized what he was getting at. The quantifiable successes like lower costs are the carefully planned misdirections that the magician uses to keep our focus away from what he's really doing. "Pay attention to the shiny coin; don't look at what my other hand is doing."

The quantifiable wins are the misdirection that keep senior leadership happy. The CEO can calculate the ROI on the process improvement group and feel good about supporting it.

But for Roger, the real magic isn't those successes, no matter how impressive. Rather, the magic is the development of people's problem solving abilities. It's the creation of a culture driven to improve. It's getting doctors, nurses, and administrators -- getting all employees, in any organization -- deeply engaged and passionate about lean.

Doing stupid work faster is still stupid.

I was teaching a class at Stanford recently on process improvement. One of the students explained how much time he spends collecting, organizing, formatting, and distributing reports from other engineers in the organization for delivery to the senior management. We talked about a variety of ways that standard work, checklists, and templates could streamline this task, making it faster and easier. So far, so good.

Then we drew a value stream map and realized that although we could make his work more efficient, he was adding absolutely zero value. His work was 100% waste. All the value came from the information provided by the engineers in the field.

So we eliminated Rajiv's work entirely. He worked with IT to create a webpage for the engineers and provided them the template and format for the weekly and monthly reports. The engineers entered the information directly,  senior management downloaded and read the reports at their leisure -- and Rajiv had more time to do real work.

It was a good lesson for Rajiv that optimizing waste doesn't change the fact that it's still waste. And it was a good reminder for me that anytime you see repackaging, reformatting, or reorganizing of data, you're almost certainly looking at waste. Why not get the information entered correctly the first time?

August 2013 Newsletter: Grasp the Situation

Faithfully following PDSA increases the likelihood that your countermeasures actually work and improve the situation. However, before you can embark on a PDSA cycle and create an A3, you must first get a firm understanding of the current conditions. Thoroughly grasping the situation is essential to effective problem solving. Download PDF to read the full article

How to make lean ideas spread more quickly.

In his latest article in the New Yorker (Slow Ideas: Some innovations spread fast. How do you speed the ones that don’t?), Atul Gawande argues that there are ways to increase the speed at which new ideas spread. I think there are powerful lessons for lean leaders in his analysis. Gawande relays the dramatic differences in the adoption rates of anesthesia and antisepsis in medicine. In October 1846, the first patient was anesthetized in a US hospital for the excision of a tumor. Within eight months, anesthesia was being used all over the world, and within seven years virtually every hospital in the US and Britain had adopted it. By contrast, Joseph Lister first published a series of reports in 1867 about the benefits of antisepsis, but it was over twenty years before sterile procedures and practices became the norm. As Gawande describes it,

two decades [after Lister's reports], hand washing was still perfunctory. Surgeons soaked their instruments in carbolic acid, but they continued to operate in black frock coats stiffened with the blood and viscera of previous operations—the badge of a busy practice. Instead of using fresh gauze as sponges, they reused sea sponges without sterilizing them. It was a generation before Lister’s recommendations became routine and the next steps were taken toward the modern standard of asepsis—that is, entirely excluding germs from the surgical field, using heat-sterilized instruments and surgical teams clad in sterile gowns and gloves.

Gawande goes on to argue that there were two key differences that caused anesthesia to be adopted more quickly than antisepsis:

First, one combatted a visible and immediate problem (pain); the other combatted an invisible problem (germs) whose effects wouldn’t be manifest until well after the operation. Second, although both made life better for patients, only one made life better for doctors. Anesthesia changed surgery from a brutal, time-pressured assault on a shrieking patient to a quiet, considered procedure. Listerism, by contrast, required the operator to work in a shower of carbolic acid. Even low dilutions burned the surgeons’ hands. You can imagine why Lister’s crusade might have been a tough sell. This has been the pattern of many important but stalled ideas. They attack problems that are big but, to most people, invisible; and making them work can be tedious, if not outright painful.

How about the spread of lean ideas through an organization? It seems to me that we face similar challenges. Most organizations have adapted over time to the inefficiencies and problems that their processes create. People are so used to the problems -- product defects, mis-shipped orders, overworked staff, long lead times -- that they no longer question whether or not those issues can be improved. They're just taken for granted as the way things operate. The problems have, in essence, become invisible -- like germs.

Moreover, embracing lean necessitates adopting new approaches to work -- single piece flow, visual management, etc. These new approaches are neither comfortable nor easy for leadership or front-line staff. Yes, lean makes life better for customers (higher quality, lower costs, faster delivery), but in the short term, it doesn't make life any better for workers.

So how do you get ideas to spread more rapidly? Gawande suggests that:

1. You have to understand existing norms and barriers to change to really grasp what’s getting in their way.
2. You need “seven touches” -- that is, you need to talk to people at least seven times. You can't rely on evidence, no matter how powerful.
3. You need to have just a few key, easy to remember messages about the new ideas.

Gawande explains that

“Diffusion is essentially a social process through which people talking to people spread an innovation,” wrote Everett Rogers, the great scholar of how new ideas are communicated and spread. Mass media can introduce a new idea to people. But, Rogers showed, people follow the lead of other people they know and trust when they decide whether to take it up. Every change requires effort, and the decision to make that effort is a social process.

The lesson of this article is that a training program, or a lean promotion office, or a couple of workshops will not be sufficient to spread the change throughout your organization. No matter how logical the changes and no matter how apparent the benefits, you won't be able to spread lean without consistent, one-to-one mentoring.

For another view on this article and its applicability to lean, read Mark Graban's post at the LeanBlog.

Protons vs. Electrons

It's (relatively) easy to see waste on a production line. When you're dealing with physical things, you're dealing with protons. You can actually touch the defective products and measure the inventory pileup. When you're trafficking in information, you're dealing with electrons. It takes tremendous effort to see and measure the waste in an office process, because most of it resides in files stored on your computer and in your inbox.

My friend Karen Martin stresses to her clients the need to measure completeness and accuracy (%C&A) in their office processes. A process that is 100% C&A means that there are no errors. But it also means that there is no missing information. No misleading information. No ambiguity. No need to ask the upstream person any questions at all. 100% C&A means that when you get the file or the email, you know exactly what to do, how to do it, and when it's due by.

Think about that for a second. It sounds simple, but it's not. Total clarity in communication is a pretty damned high bar to jump over. In fact, our communications are generally so riddled with ambiguity and errors that we don't even recognize them. We just accept them as the normal course of business.

They're not. And just because electrons are smaller, lighter, and less expensive than protons doesn't make wasting them any more acceptable.

July 2013 Newsletter: Leveling the Load.

Sudden spikes in demand—which translates to workload for you and your employees—are toxic to people and processes. That’s why great companies “level the load” -- the workload, that is. They actively smooth out the volume of work to avoid having employees struggle like overloaded pack mules. . . . Download PDF to read the full article

"We are problem solvers"

NPR's story on how three American brush manufacturers are successfully competing with Chinese competition was a dose of reality for those who complain that they can't win against low-cost, low-wage countries. These three companies adopted the following strategies to thrive:

1. Compete on quality, not price. Professional painters don't want brushes whose bristles come off in the paint, which is what you get with low-cost Chinese brushes.
2. Adapt to customer's needs and serve niche markets. One company makes a $40,000 brush used to keep pigeons out of the top of the Freedom Tower in NY, and a tiny brush for NASA's Mars Rover.
3. Nurture strong, personal, relationships with customers. The owners of these companies have been in business for over 40 years, and they're always available by phone to their long-time customers.

But here's my favorite part of the story: the plant manager at one of the companies, Adam Czarnowski, who has been with the company for 63 years (sixty-three years!), says:

We are not ordinary brush makers. We are problem solvers.

Think about the pride, sense of ownership, and engagement for that kind of attitude to exist. Do your employees see themselves as cogs in the corporate machine, or as problem solvers?

(You can read a longer version of this story in the NYTimes magazine.)

You Call That Leadership? (Part II)

In last week's blog post, I took Strategy+Business to task for suggesting that a leader ought to make three major decisions within the first ten days. I think that's a lousy way to lead and is fundamentally disrespectful to the people who work in the organization. So I was gratified to read this week's NYTimes Corner Office column with Bill McDermott of  SAP. Apparently, Bill also believes that asking questions and showing respect for employees is much more important than acting quickly to impress people:

I moved up to become the sales operations manager for the New York region [of Xerox], then became the district manager for Puerto Rico and the Virgin Islands. Our region was ranked 86th in the company out of 86....

So now the challenge was, how are you going to make these guys winners? I spent two weeks interviewing everybody and listening. I’d sit there and just say, “What do you think we need to do?”

This attitude is exactly what's meant by the lean precept of "go and see." And the result?

After doing that for two weeks, I found out the three things that were unanimous in terms of what people thought we should do. No. 1, they wanted to be motivated. A previous boss, they told me, had been very financial in his orientation, and focused on cutting expenses. The second thing was that they wanted to have a holiday party, because they had lost the holiday party. The third thing is that they needed clear direction on what they were supposed to do. “Just tell us what to do,” they said.

So we basically gave them three things that we were going to focus on in the business. Then we gave them inspiration and pageantry at every turn to celebrate the victories as we made progress against those three goals. And then we had the holiday party, which was the most important of all. By the end of the year, we ranked No. 1 in terms of beating our plan.

Now, some of these things might seem trivial. I have a Stanford MBA, and I'm pretty sure that we never had a class that taught the significance of a holiday party. I can almost guarantee that if Bill hadn't talked with everyone face-to-face right up front, he wouldn't have understood its importance, and he would have missed the opportunity to make a real improvement in morale and employee engagement.

Go and see. Ask questions. Show respect. You might be surprised at what you learn.

You call that leadership?

Booz & Co’s recent article on strategy and leadership misses the point of, well, real leadership. What You Should Accomplish in Your First 10 Days argues that in our “exponentially faster” business world new CEOs must take meaningful action in their first 10 days on the job. Only through rapid, dramatic action can a new leader reinvigorate a struggling company. Nonsense.

The author proposes that the ten-day plan should involve

three significant decisions. Granted, three is an arbitrary number but it is one that will allow the incoming CEO to demonstrate knowledge of the business, surety of direction, and bias for action—without coming across as reckless. These decisions could include a declaration of general strategic direction, moves among senior personnel, or the launch of a new initiative. . . . The goal is to blast through legacy roadblocks, set the organization in a firm direction, and energize activity from top to bottom.

This proposal surely feeds into the egos of those CEOs who want to put their personal brand on the organization, but I doubt that the employees would respect anyone who makes dramatic changes so quickly, before they really know the company.

“Go and see” is one of the core principles of lean thinking. You can’t make good decisions if you don’t understand a situation deeply, and you can’t understand a situation deeply without actually seeing first-hand what the reality is. “Go and see” is also a fundamental way to demonstrate respect for people. Making sweeping changes that effect hundreds or thousands of people in the first ten days—without having a deep understanding—is fundamentally disrespectful.

In rare cases—say, Steve Jobs on his return to Apple—that kind of fast action might be appropriate, but it’s hard to think of any other successful leadership change that involved major changes in the first ten days. Allan Mulally at Ford? Sam Palmisano at IBM? Anne Mulcahy at Xerox? No, no, and no. If you want action that fast, you’re more likely to end up with “Chainsaw” Al Dunlap than with Andy Grove.

Real leadership requires listening and understanding. And that takes longer than ten days.

June 2013 Newsletter: Standard operating procedures are not handcuffs.

Many people view standard operating procedures—or standard work, in the Lean lexicon—as shackles, constraining flexibility, creativity, and innovation. They’re wrong. Download PDF to read more

Eliminating "TIMWOOD" for Success

I have the pleasure today of featuring a guest post from Tony Ferraro of Creative Safety Supply. Tony has an excellent understanding of lean, and I thought he would do a good job explaining how the elimination of waste can be beneficial to a sporting goods retailer. *                         *                        *                      *                        *                           *

Most businesses are constantly on the lookout for new and innovative ways to increase sales, enhance customer satisfaction, and streamline business practices for better efficiency. One tactic that is growing in popularity is the focus on waste elimination through "TIMWOOD."

For those of you who are unfamiliar with this expression, TIMWOOD is an acronym that outlines the seven most common wastes in business. The seven wastes are: Transport, Inventory, Motion, Waiting, Over processing, Overproduction, and Defects. If you're a sporting goods retailer, here's how focusing on just two of these areas can improve your business.

T: Transport Every time an item is moved it runs the risk of being lost or damaged, thus losing value. Most retailers inevitably transport items multiples times into and around the store: there's the initial unloading of the goods off the truck and into the storeroom or warehouse.  There's putting the goods onto the floor or the shop window. There's the transport involved in refreshing the window or floor display, to say nothing of the daily cleanup and maintenance of the store fixtures. Each time store staff touches and moves the product, there's a chance for damage, which inevitably lead to markdowns.

O: Overproduction Overproduction is commonly referred to as one of the largest wastes in the business world. In the case of a retailer, overproduction is actually the over-purchasing of inventory, which leads to items sitting on shelves, tying up financial resources and physical space. Obviously, it's impossible to forecast consumer demand perfectly, particularly when you're ordering 6-9 months ahead of the actual delivery date to take advantage of early order discounts. Consequently, it's essential to have a strategic plan for balancing your pre-season orders with your fill-in orders. Too many retailers gorge themselves on products with special discounts without factoring in the true cost of the inevitable markdowns.

Take a Closer Look In future posts I'll address the other types of waste in "TIMWOOD." In the meantime, it may be beneficial to take a closer look at the amount of unnecessary transport and overproduction/purchasing that might be costing you money. Just by implementing a few simple steps, you could take your sporting goods store from mediocre to magnificent.

How can you bring standard work to communication?

I'm back from the annual Shingo Conference, where my book, A Factory of One, received a Shingo Research Award. A common topic of conversation at the meeting was the importance of standard work in an organization. Seems that whether you're talking about the factory floor or "carpetland" (the office), companies aren't reaping nearly as much benefit from standard work as they could. The R&D engineers at one of my clients have done some interesting work in this area. They're inundated with email (like most people), and they're obligated to check messages as they come in because there might be something urgent. Of course, most messages aren't urgent at all, but the possibility -- and the anxiety -- exists that they might miss something critical, like a major product quality problem.

Their situation is hardly unique, of course. But unlike most groups who simply wave their hands feebly and bemoan their fate, they've deployed standard work to fix the problem. They created a new, standard communication protocol:

Pay attention to the critical benefit here: everyone has agreed that email is NOT to be used for urgent or complex issues. This agreement really is significant, because it unshackles people from their BlackBerries during meetings, or product development work, or strategic planning. Or their kids' soccer games. Or dinner. Or sex. Which means that there's now a fighting chance to have some uninterrupted time to, you know, think.

This protocol isn't a breakthrough along the lines of, say, cold fusion. (Or duct tape. Or Oreos, for that matter.) However, the clear expectations and standards around the use of communication tools give the engineers license to ignore the beep of their smartphones and focus on real value-creating activities.

This exact protocol might not work for you. You might want to account for text messages, or IM, or even old-school memos. Every company has an idiosyncratic culture and needs. The important thing isn't how you define your communication protocol, but that you define it.

Give it a try, and let me know how it works out.

Size matters. Not.

I brought my Prius to the Toyota dealership today for a regular check-up and a recall repair (some pin thingamajiggy in the steering column). I said to the service guy that Toyota sure seems to have a lot of recalls these days -- four in the past three years for my car. He said,

"Sometimes it's tough to keep track of all the little things when you're the world's largest car company."

Okay, he was proud of Toyota's growth, but really, that was a disappointing response.

Consumers don't care if you're the largest car company, heart transplant clinic, or high-cholesterol salty snack food producer. They only care that you're the best. Period.

Much of my work is done in the outdoor industry, where products are, by and large, guaranteed for life. No one will buy a tent or a carabiner that isn't backed by the full confidence and credibility of the company. No consumer will buy a tent because it comes from the largest tent maker; that's totally irrelevant when you're hunkered down in a hail storm in the Wind River Range, or anchored to the side of El Cap. The only thing that matters is the value and the quality of the product.

Size doesn't matter. If you can't keep track of "all the little things," you won't be the largest company in your industry for long.

Focusing on quality and value will get you size. Focusing on size will get you trouble.

May 2013 Newsletter: How to Make Your Work Flow

If you’re a supervisor, a manager, or an executive, your days and weeks probably seem impossibly hectic, filled with an unending series of fires that you have to put out. There’s so much variation in your daily job that it probably seems impossible to create a smooth flow of customer value—and that’s stressful and exhausting. Nevertheless, you can create some semblance of flow in white-collar work. . . . Download PDF to read more

A Factory of One receives the Shingo Research Award!

I'm at the Shingo Conference this week to receive a Shingo Research Award for my book, A Factory of One. Here's the 30 second video I made for the conference to explain the purpose of the book. Aside from my inability to hold the camera perfectly still, and my eyes shifting heavenward to my cue cards, I think I do a pretty good job. (Next time, I'll hire a videographer.)

For more info on the book, check out the website here. To order from Amazon, click here.

http://www.youtube.com/watch?v=CKNVgfA8p3A

Little's Law, redux

In reference to my April newsletter, about the perils of a multi-tasking environment that forces teams to constantly switch activities among multiple projects, a client wrote:

I am a little surprised you didn’t refer to Pull and WIP control more overtly as part of the solution. I know it is production language, but it should work in admin and is a great way to match input/output rates and to keep resources dedicated until a job is done. Also the queues can then be used as indicators of true capacity (vs coordination) opportunities.

I anchored my argument against this kind of multitasking in Little's Law, which demonstrates that the more items in a queue of work (particularly manufacturing or service), the longer the cycle time for that work becomes.

My client is exactly right, however. A push system, where work is foisted upon a department from the outside, by its very nature will lead to overloading a system and exploding lead times. A pull system, where work is taken from a pile of projects by the people doing the work when they're ready for it, ensures that the department matches inputs and outputs for maximum efficiency.

Interestingly, this approach is rare. There's a tendency in the office environment to treat "production" capacity as infinite. Partly this tendency is due to people's willingness to work late into the night or on weekends. Partly this tendency is due to the difficulty of calculating how much time a particular project will take. Inherent in knowledge work is the inability to take a project to completion in a smooth, uninterrupted flow.

Because there are so many interruptions, and because these projects tend to be multi-stage affairs, there's a powerful argument to use more visual management tools and lean/agile development methods. Both will help clarify and make workloads visible, and help to better match capacity to business opportunities. And that results in shorter lead times, happier customers, and less-stressed employees.

Are you providing leadership or support?

I’ve been talking to many companies recently that are committed to improving their processes. Or at least they say they are. What I usually see is a company that wants improvement, but management isn’t necessarily willing to make the commitment to the changes necessary for real, sustainable improvement. Case in point: one firm I know has embarked on a project to speed up product development. Although the company dominates its category, there are far too many dropped balls, rework, and missed deadlines for it to continue thriving in its market.

However, management is unwilling to postpone any of the current development projects to free up the developers’ time—these new projects have terrific revenue potential. But to the developers, who are currently working 60 hours per week, this decision seems unreasonable. The developers are expected to carry their current—full—load of work, and still add on this major new responsibility.

This is where real leadership comes in. As Jamie Flinchbaugh says,

I go to many organizations that say, “We have management support. They’re 100% behind us.” The problem is, behind is behind. Leadership is out in front. Leading lean is an inside out transformation, and must begin with the leader’s own mindset and behavior.

In this case, leadership means making the difficult decision to forego some short-term revenue by postponing one (or more) of the new products in development in order to create the capacity for process improvement. Truly leading the improvement effort means making the organization-wide, financially challenging investments that will lay the foundation for future success. Leadership means hacking through the jungle with a machete, clearing a path for front-line staff, supervisors, and managers to follow.

What are you doing in your company? Are you leading or supporting the efforts of your team?

Change management? Stop wasting your time.

Your change management efforts are a waste of time. And effort. And energy. And money.

I just returned from giving a talk at the Association of Change Management Professionals in LA. Just as with corporate mergers, the vast majority -- from 60-90% -- of change management initiatives fail miserably.

Why? It's certainly not due to a lack of change management models, books, or conferences. I think the high failure rate is due to the framing: when we talk about change, we talk about how *we* will change *them*. I think that says it all. No one likes to be changed, even if the change is beneficial to them.

In my talk, I argue that we should forget about "change management." Instead, we should involve people in solving business problems. Human beings are problem solving machines. We love solving problems. Someone invented the bow & arrow when she realized that the fastest human carrying a knife wasn't going to outrun the slowest gazelle. The brilliance of Angry Birds is that each level requires a new round of problem solving -- which birds to use and where to aim them.

Of course, I'm partial to using A3 Thinking to solve problems, but the truth is that it doesn't really matter what problem solving tool you use. The key is to pose a problem to the workers actually doing the job and have them design the change. The autonomy and skill development that comes with solving the problem for oneself will do more to overcome resistance and motivate change than anything that a cloistered HR professional can develop. Dan Pink makes this point eloquently in his book, Drive. And in her new book, Sleeping With Your Smartphone, Leslie Perlow recounts the enormous change in work habits she was able to foster among BCG consultants by simply setting a goal and having them work towards a solution themselves.

It's commonly said that successful change requires you to explain to everyone "what's in it for me." That's not enough. If it were, you wouldn't have meetings that start late and end later, your mailbox wouldn't be engorged with a daily supply 75 irrelevant reply-all emails, and you wouldn't have 20-30% non-enrollment in employer-matched 401(k) plans.

April 2013 Newsletter: The Single Biggest Mistake in Managing Projects

Managers hate idle time. When people aren’t working every minute of the day, managers see excess capacity, and they start a new project. Even if it’s clear that the new project won’t be completed immediately, they assume that starting sooner means the project will get done sooner. . . . Download PDF to read more

First things first.

I've been helping a large outdoor goods company with its strategy development. The CEO has been struggling to move the process forward for a few months now, and he turned to me for outside perspective. It became quickly apparent that his difficulty was not with the process per se. The difficulty was rooted in the lack of a clear direction: what does his company represent, and where does it want to go in the next 5-10 years? You can't develop a strategy until you can answer those questions.

I'm personally fond of the approach Jim Collins described in Built to Last. He suggests that you first clarify your core values and purpose, and a "big, hairy, audacious goal" that will take you 10-30 years to reach. (Read more about it in this HBR article, and download this helpful worksheet from his website.) Now, not many companies are ready to commit to a 10-30 year goal, but there's no reason you can't modify it by setting a 5-10 year goal.

I haven't consulted to them, but my guess is that both Nike and Patagonia have absolute clarity in these areas, and as a result they're able to set -- and change -- their strategies as needed to attain their goals. Their strategies are documents designed to help them create their envisioned future. As for what particular tool or process they use to develop the strategies? Who cares. There are a host of approaches out there, any one of which will do an adequate job. And since strategy is flexible -- It has to be, since external conditions change so frequently -- it doesn't really matter which you use. The critical part is defining who you are and where you want to go.

Following a strategy without first having a core ideology and a clearly defined goal is like following a compass without a magnetic needle pointing north. You'll certainly move, but you have no idea where you'll go.