Cadillac's NYC Boondoggle.

Last week's news about Cadillac's management relocating to New York got me in the mood to steal one of Kevin Meyer's old tricks from his Evolving Excellence days: calling out corporate stupidity when I see it. In case you missed it, the leadership at Cadillac announced that it will be moving its headquarters to NYC, in order to better understand the needs of the luxury customer:

[Cadillac President Johan] De Nysschen said being in New York, which he called the epicenter for global trends, will allow the team to build a focus solely on the brand and to better understand the "sophisticated lifestyle" of Cadillac's target customer base.

I can understand the desire to have marketing and design people spend a lot of time in New York rather than Detroit -- although it's worth pointing out that in the US, BMW and Mercedes are both based in New Jersey, which is not exactly known for being a hotspot of global trends. It's also worth noting that the heart of American car culture is in California, and as a result, many car companies have their design centers in the Los Angeles area.

Of course, the truth is that you can understand your customers' lifestyle pretty damn well even without opening up a fancy showroom in SoHo. Toyota's Yuji Yokoya, chief engineer for the Sienna minivan, drove 53,000 miles around the U.S. to understand what American drivers needed in a minivan. (The minivan was not sold in Japan at the time, so Toyota's headquarters in Nagoya were much farther away from the target market than Detroit is from New York.) The Sienna received rave reviews and was a huge success.

What's more worrisome about Cadillac's move is the possibility that the company will send more functions than just marketing to New York:

GM is studying whether to send Cadillac's product planning and finance functions to New York, or to keep those in Detroit. Design, research and development and other technical aspects will remain based in southeast Michigan, de Nysschen said.

This dispersal of critical functions is a recipe for failure -- for missed handoffs, for botched communications, for rework in all phases of product development. Most companies, even well-functioning ones, have a hard enough time avoiding these snafus when people are working on the same floor, much less the same building. But separated by 600 miles? Good luck. And needless to say, GM isn't exactly an exemplar of efficient and effective communications.

My guess is that within 12-18 months Cadillac will abandon this project, citing absurd expenses in New York city, unanticipated project costs and errors in new product development, and a lack of sales growth.

You read it here first.

Reversing the vector of accountability

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One of the most unappreciated benefits of leader standard work is the powerful way in which it reverses the “vector of accountability.”

When we talk about accountability in an organization, typically we refer to the way in which lower level staff is accountable to executives (or managers, or supervisors) for certain actions. Workers must be held accountable if we want to execute and perform well. In this view, the vector of accountability always points upwards, from the front lines to leadership.

This is where leader standard work comes in. When a CEO makes a commitment to visit the shop floor (or the marketing department, or the warehouse) each day and learn what her people are doing and what obstacles they face, she’s now accountable to her team for performance. When a VP creates standard work obligating him to participate in 5S activities once per month, he’s making a promise to his team that he must fulfill or risk compromising his leadership credentials. The vector of accountability flips: the leader is now accountable to the team.

The psychological implications of this reversal are profound. Any organization comprises a web of human relationships, and for those relationships to be healthy and successful, there must be some degree of symmetry. Demanding that lower level staff be accountable to leaders without a corresponding accountability of leaders to lower level staff is a recipe for unhealthy, weak relationships. Reversing the vector of accountability brings balance to the interpersonal relationships in an organization. It’s a concrete way of leading with humility, of being a servant leader.

To implement this idea, post your standard work in the open, visible to the entire company. Create a simple check sheet for the activities that shows what you’ll do and when, and bring it with you when you do that standard work. Then—and this is key—your team checks the boxes to show that you did, in fact, fulfill your commitment. They validate your standard work. Lastly, post the filled in check sheet where everyone can see it.

Try it. It’s one more way to show respect for people. You’ll be amazed at the transformation in your relationships with your team.

Bridging the Divide

NPR's Marketplace interviewed me the other day about the Congressional schedule that has lawmakers in Washington D.C. only three days per week. I was asked how a process improvement expert would improve the gridlock that afflicts our legislative process. I replied that if I were running a business that had two factions — whether it’s the east coast and the west coast offices, or the sales and the engineering teams — if I were trying to bridge a divide like the one in Congress, face-to-face time is absolutely essential. The lack of face time and direct contact is particularly visible in Congress. I mean, the place is a ghost town on Mondays and Fridays when representatives are back home in their districts. But you'd be surprised at how little the teams in your company interact. People sit in their own areas, get caught up in their own work, and plan their days around their departmental meetings. It takes an enormous effort to walk from customer service to product development, even when the distance can be measured in yards. Unless your company is organized by value stream, the distance might as well be measured in light years.

Face to face contact is critical in understanding how work is done by people upstream and downstream from you. When you see the work being done, you can understand the cause of problems and waste. Equally important, regular contact between groups builds the human bonds of trust that are essential to successful change. That trust, of course, is what's sadly lacking in Congress today.

Given that your company is most likely organized by functional silo, what can you do to improve the situation? Certainly company-wide events are a good start, but because they're not focused, they're insufficient. Far better to actually schedule time for people to "walk the value stream." Have the sales people walk from customer service, to credit, to the distribution center (if it's local) to see how orders are entered, approved, and shipped. Or have the product developers walk from IT to marketing services to see how catalogs and price lists are produced. Seeing the process, really seeing what people downstream do in order to get their jobs done, is eye-opening. It also demonstrates real respect for what other people do.

Give it a try. You might be surprised at what you learn.

Two Prerequisites for Process Improvement

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I've been talking to a few companies recently about their struggles to improve their product development processes. I realized that they were missing the two prerequisites for improvement: process clarity and process stability.

If you don't have clarity, improvement efforts will simply be reinventing the wheel. If you don't have stability (or predictability), then you're sailing without a compass.

First make the process visible. Then make sure it's followed. Now you can move forward.

Case Study -- Specialty Food Company

Situation: A rapidly growing, $300M specialty food company was outgrowing its sourcing and quality control processes. Due to the increased number of suppliers and the proliferation of internal staff, product development lead times skyrocketed, and the process of qualifying a single ingredient had lengthened to 260 days. Intervention: We created a metrics-based process map for the entire qualification process, identifying bottlenecks, common sources of errors, missing triggers, and other issues that created delays and rework. We then created sub-teams to address the most critical factors. The teams developed countermeasures, gained consensus for the changes, and trained staff on the new procedures.

Resolution: Lead time for ingredient qualification was reduced by 50% -- from 260 to 130 days.

Make your meetings more effective with 3Ps

Three things in life are inevitable: death, taxes, and the inability of organizations to conduct meetings that aren’t a soul-sucking waste of time. You’d think it wouldn’t be that hard to have productive meetings—after all, Robert’s Rules of Order have been around since 1876, and legions of intelligent business consultants have written extensively on the topic. Yet survey employees in any organization about their meeting effectiveness, and you’ll be met with groans, eye rolls, and complaints about how low-value added they are. An easier approach to making meetings effective and productive is to follow the 3P Principle: ensure that you have the Purpose, People, and Process right.

Effective Meetings

Purpose: A clearly defined purpose for the meeting is essential. Purpose is not a topic or a subject; it’s a clear description of the desired outcome of the meeting. It’s a goal that everyone is driving towards. Purpose is often, but not always, a decision—whether or note to open a new office, or to delay the introduction of a new product. But purpose could be brainstorming (to generate 15 new brand names), or gathering information (to get the sales team’s perspective on the new bicycle frame material), or to ensure that everyone understands a strategic shift in direction (we’re abandoning the low-end of the market, and here’s why). Having a clear purpose focuses the discussion, keeps the meeting from wandering, and increases the likelihood that you’ll get there.

People: Are you sure you have the right people in the room? Meetings often deteriorate into irrelevance because the right people aren’t there. This isn’t news, of course, but it’s surprising how infrequently people take the time to figure out who should attend. Job responsibilities change without formal notification, and the person nominally handling a function may no longer be doing it. Moreover, even if you have the right person in the meeting, she might want a specialist from her group to join her so that she can offer better opinions. Therefore, in order to get the right people in the meeting, you need to talk to the participants in advance, explain the meeting’s purpose, and find out from them who the right people are for that purpose. Organizing and conducting a meeting is a team sport—you can’t do it alone.

Process: Is a meeting the right process to accomplish your purpose? Although meetings are a near-Pavlovian alternative to other forms of communication, it’s a good idea to first ask whether you actually need a meeting. Status updates don’t require people to be in the same room at the same time, and can be handled more effectively with asynchronous communication like email, memos, Sharepoint documents, internal Wikis, etc. Moreover, even when a meeting is the appropriate process for your goal, you need to examine the preparation for the meeting. For example, you can’t expect management to sign off on a major capital expense or a significant engineering change in a single meeting: you need to engage in the process of nemawashi (consensus-building) in advance to ensure that the meeting will be effective. Advance one-on-one conversations with key people provide the context for the request, enable you to understand potential objections, and ensure that you can present all the necessary information to enable participants to make a decision.

Time is the most valuable resource individuals have. Time that many people can spend together is even more precious and difficult to schedule. It’s incumbent upon us to use that resource as wisely as possible. If you can get the Purpose, People, and Process right for your meetings, you will make it more likely that the limited time you have together isn’t a waste of time.

Real cooks practice 5S (and lean)

The lean blogosphere today has been atwitter with references to this morning's NPR story on organizing your life like a chef. It's a terrific story, and well worth the listen if kaizen is important to you, personally or professionally. Placing tools correctly, keeping things in order, creating standard work -- all of these ideas are embedded in what chefs call mise-en-place. When I was writing A Factory of One three years ago, my editor, Tom Ehrenfeld, pointed me to a terrific explanation of mise-en-place in Anthony Bourdain's book, Kitchen Confidential. In my view, mise-en-place is a perfect illustration of 5S done right.

Here's what I wrote in my book:

If you’ve never been to a restaurant kitchen, you’d be amazed at the contrast with the “front of the house” where you dine. It’s crazy back there, particularly during the lunch and dinner rushes. People are shouting and cursing, waiters, cooks, and “runners” are rushing through the kitchen trying to get orders out the door—it’s barely controlled chaos.

Except for one spot. The cook’s mise-en-place, the area where she organizes and arranges the ingredients she’ll be using that night. Chef and author Anthony Bourdain explains the importance of mise-en-place in Kitchen Confidential:

Mise-en-place is the religion of all good line cooks. Do not f**k with a line cook’s “meez”—meaning their set-up, their carefully arranged supplies of sea salt, rough-cracked pepper, softened butter, cooking oil, wine, back-ups and so on. As a cook, your station, and its condition, its state of readiness, is an extension of your nervous system—and it is profoundly upsetting if another cook or, God forbid, a waiter—disturbs your precisely and carefully laid-out system. The universe is in order when your station is set up the way you like it: you know where to find everything with your eyes closed, everything you need during the course of the shift is at the ready at arm’s reach, your defenses are deployed. If you let your mise-en-place run down, get dirty and disorganized, you’ll quickly find yourself spinning in place and calling for back-up. I worked with a chef who used to step behind the line to a dirty cook’s station in the middle of the rush to explain why the offending cook was falling behind. He’d press his palm down on the cutting board, which was littered with peppercorns, spattered sauce, bits of parsley, breadcrumbs and the usual flotsam and jetsam that accumulates quickly on a station if not constantly wiped away with a moist side-towel. “You see this” he’d inquire, raising his palm so that the cook could see the bits of dirt and scraps sticking to his chef’s palm, “That’s what the inside of your head looks like now. Work clean!”

Want to know what 5S is, without resorting to all those difficult-to-pronounce Japanese words? It’s mise-en-place. (Of course, we’ve just substituted French for Japanese, so there may not be any advantage for you.) It’s your physical workspace and your information precisely laid out so that you can find anything with your eyes closed. It’s the clean well-ordered inside of your head so that you can stay on top of all the work your boss, colleagues, and customers are dumping on you. . . . Quite frankly, if a line cook during the dinner rush can keep his workspace organized, so can you.

If you think about 5S in this light, and see the connection to the way you manage your work and your time, you can avoid turning 5S into a L.A.M.E. exercise.

Two dimensions for process improvement

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There are two essential dimensions you need to consider when building a culture of continuous improvement: Diffusion and Mentality. Centralized responsibility/Cost savings mentality: This quadrant is the realm of "Chainsaw" Al Dunlop. The focus is on cutting costs, and decisions reside with one person -- usually the CEO or CFO. The result is a culture of fear, demotivated employees, and ultimately a weaker long-term strategic position.

Centralized responsibility/Value creating mentality: This is a better quadrant in which to live, but progress is slow because the "lean team" (or kaizen promotion office, or HR, or whatever) becomes the sole repository of improvement knowledge. Even worse, everyone else in the firm abdicates responsibility for improvement, passively waiting for the lean team to come to the rescue. Which might not happen for two years.

Diffused responsibility/Cost savings mentality: This is where many companies pursuing improvement find themselves. The good news: in this quadrant, you're getting everyone engaged rather than relying on an internal team of experts. The bad news is that with a focus on reducing costs, you'll have diminishing marginal returns (there's a limit to how much cost/waste you can take out of any system). Eventually you'll start to lose ground and end up only slightly better than where you started.

Diffused responsibility/Value creating mentality:Clearly, the place you want to be. (You can tell because it's green.) In this quadrant, everyone is engaged in improvement, and people are thinking about how to increase the value they provide to their customers -- internal or external. As a result, you see breakthroughs in lead times across the organization; innovations in product or service delivery; better customer service -- and lower costs. People are engaged and creative, because they're using their imaginations for lateral thinking, not just cutting and cost reduction.

August 2014 Newsletter -- Making the Invisible, Visible

Peter Drucker’s comment that “What gets measured, gets managed” is widely known. Along similar lines, I’d like to suggest, “What gets seen, gets improved.” (Or at least, has the possibility of getting improved.) The common complaint in an office environment is that processes are unpredictable or too complex to represent visually. But that’s just lazy thinking. . . . Download PDF to read the full article

The Three Elements of 5S

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Mark Graban blogged recently about poorly executed 5S. I've also covered 5S extensively as it pertains to the management of information in an office environment. But people still get it wrong -- perhaps because they get wrapped up in the confusing jargon of Sort, Shine, and Set in Order? In any event, inspired by Mark, I've been thinking of the three key elements of 5S -- Purpose, Organization, and Maintenance -- that ensure the 5S exercise isn't a dispiriting waste of time, effort, and energy.

Framework and Maintenance, without Purpose is a soul-sucking waste of time. It's LAME masquerading as lean. As both Mark and I have written about, you've got to have a reason for implementing 5S. Just trying to keep people's offices neat and pretty without a clear business objective is pointless.

Purpose and Framework, without Maintenance makes you the victim of entropy, which is a particularly potent force in most office environments. If you're not going to make the effort to maintain the organization that you've created, don't even start. It's like cleaning your house once a year -- why even bother? The effort expended on a single, annual cleaning blitz isn't worth the payoff. Sure, for a week or two you won't be picking your way through a living room filled with empty pizza boxes, but the other 50 weeks a year you're a candidate for Hoarders.

Purpose and Maintenance, without a Framework is the epitome of ineffectiveness. If you don't have a framework for how you organize the physical and electronic information, you're just wasting your time. It's like having a car and keeping it clean without knowing how to drive. I mean, you can do it, but why?

Disrespectful communication

Lean Communication

  Microsoft's announcement that it will lay off 18,000 employees is a brilliant example of how not to show people respect in communication. Stephen Elop took 11 paragraphs (!) in his internal email to finally get to the point that, you know, 18,000 people were about to be sacked. Brevity is not only the soul of wit, and plain, direct speech is a key element of respect for people. Less than One Paragraph: This is Donald Trump territory. "You're fired!" hardly constitutes respectful communication.

Eleven Paragraphs: To go this far, you have to bury the lede behind an awful lot of turgid business bloviation. While employees are anxiously looking for information about their jobs, they have to trudge through a bog of business jargon ("financial envelope," "accruing valuing to our strategy," "right-size operations," etc.). If your corporate environment permits emails like this to go out, it's probably ridden with what Bob Emiliani calls "fat behaviors," that create fear, uncertainty, and mistrust. Good luck establishing any sort of continuous improvement culture in that environment.

The alternative to the cruel bluntness of Donald Trump and the clueless circumlocution of Stephen Elop is direct and empathetic communication. State the facts honestly. Be humble. Bring humanity into your conversation. Remember that at the other end of your bloated strategy email is a real human being nervous about losing her job because she doesn't make a seven figure salary, or have millions in stock options, or have the security of a corporate pension.

If you still don't know how to communicate with a little more respect, read Bob Emiliani's work, or talk to Liz Guthridge. And if you want some entertainment, read Kevin Roose's hilarious evisceration of the Microsoft memo here.

Kaizen Lies Between Frustration & Seagulls

Knowledge vs Authority

Continuous improvement requires the coupling of authority to make changes and knowledge about what to change.

Authority without knowledge creates that pernicious breed, the "seagull manager," who, in the words of Ken Blanchard, flies in, makes a lot of noise, dumps on everyone, then flies out.

Knowledge without authority leads to frustrated workers who know what changes to make, but lack the authority to do so without the approval of at least one layer of management.

A structured problem solving approach like A3 thinking creates overlap in these two zones. As John Shook argues in his book Managing to Learn, the A3 creates "pull-based authority," such that the person with the greatest knowledge earns the authority to make decisions and improvements. That's fertile soil for kaizen.

Say ACK! for Kaizen

Courage Autonomy Knowledge

I've noticed recently that even in the presence of obvious problems and easy improvements, people often don't engage in kaizen. They just muddle through their work, wishing it were easier, and resigning themselves to the fact that it's not. But why? I think that kaizen activities flourish at the intersection of Autonomy, Courage, and Knowledge.

• Autonomy: the ability for a person to act without seeking permission. Many organizations are so sclerotic as to require workers to get approval for any change they want to make. Example: Rich Sheridan, president of Menlo Innovations, allows (expects!) people to sit where they need to sit and form the teams they need in order to create the right products for customers. Or any organization that eschews suggestion boxes in favor of improvement boards on the walls.
• Courage to Experiment: the confidence that making mistakes is natural, expected, and -- as long as it doesn't cripple the company -- welcome. Example: Grey Advertising (NY) bestows a "Heroic Failure" award. SurePayroll actually gives a cash award for errors that lead to significant learning. WL Gore distinguishes between "above the waterline" and "below the waterline risks" -- only the latter need approval from the senior team.
• Knowledge: understanding one's work well enough to be able to improve the way things are done. Example: This is the easiest criteria to meet, because anyone who does a job with some modicum of self-awareness has the necessary knowledge to improve the work. In other words, *everyone* has the knowledge they need to make improvements.

Having just one or two of the elements won't create an environment conducive to kaizen. Without all three, you end up with passive bystanders, frustrated innovators, or wasted effort.

July 2014 Newsletter -- Unleashing Kaizen Creativity

Anyone else who keeps digging when they’re at the bottom of the hole instead of figuring out a better way to do their job, is handicapped by poor leadership. Poor leadership stunts innate “kaizen creativity” as surely as poor soil and drought stunt the crops on a farm. . . . Download PDF to read the full article

Don't confuse posters with action.

 

I have a new theory: the more posters, stickers, and banners promoting 5S, the lower the level of adherence to 5S principles. You can extend this idea to pretty much anything a company deems important: if leadership is promoting respect, or innovation, or safety, you'll probably find sexual harassment charges, me-too products, and lots of worker's comp claims.

Point #10 of Dr. Deming's 14 Points states, "eliminate slogans, exhortations, and targets for the work force." (Yes, I'm selectively quoting. This point is in reference to defects and productivity, but I think that the basic argument holds true.) Instead, "institute leadership" (point #7) to get the results you're looking for.

People are social animals. We take our behavioral cues by observing leaders' actions, not from reading the wallpaper. If you want 5S, you've got to live 5S. I know of no better example than the president of a $100M contract manufacturer of electronics boards, who gets on his hands and knees and cleans the floors of his company. Every. Single. Morning. (Check out this photo from Kevin Myer's excellent post):

If you want 5S -- or respect, or cost savings, or safety, or whatever -- first, get on your knees and start doing it yourself.

More steps, more waste.

The more steps you have in a process, the more waste you'll have. No matter how smooth, efficient, and well-designed the process, more steps (and more people) means more waste. Why? More steps means work is most likely waiting in more queues. It also means that you have more opportunities for miscommunication between people -- as Karen Martin (along with Mike Rother and Drew Locher) demonstrates, the compounding effect of even small errors in communication and handoffs causes an explosion of waste, as measured by the percent complete and accurate (%C&A) quality metric. Finally, the inevitable friction of coordinating multiple steps -- think of the emails that must be read, the low value meetings that people attend -- reduces overall efficiency.

The antidote: Cross-train people to do more than one job. Redesign processes to remove steps. Create standard work with templates, models, and checklists to reduce the errors in the remaining steps.

Standard work, creativity, and Apple

I've written before how checklists are a valuable element of standard work, and certainly the use of checklists in the military, aviation, and healthcare has reduced errors and improved outcomes. But did you know that checklists lie at the heart of Apple's new product development process? When we look at an iPhone, it's easy to get seduced into thinking that its creation was a magical piece of genius, that it sprang full-grown from Steve Jobs' forehead like Athena from Zeus. However, according to a recent post on Quartz (and Leander Kahney's book about Jony Ive) the iPhone -- and all other Apple devices -- are the result of a rigorously detailed product development process.

Embodied in a program that runs on the company’s internal network, the ANPP [Apple new product process] resembled a giant checklist. It detailed exactly what everyone was to do at every stage for every product, with instructions for every department ranging from hardware to software, and on to operations, finance, marketing, even the support teams that troubleshoot and repair the product after it goes to market. "It’s everything from the supply chain to the stores," said one former executive. "It’s hooked into all the suppliers and the suppliers’ suppliers.Hundreds of companies. Everything from the paint and the screws to the chips.”

Now obviously, the ANPP is much more than a simple checklist. At the same time, however, it's also much more useful than one of those coma-inducing, 500-line Gantt charts that many companies use to drive and monitor projects. The ANPP ensures that standards are followed, that silly mistakes are avoided, and most of all, that knowledge becomes explicit and reusable, rather than tacit and tribal.

When you have an ANPP, you eliminate the non-value-adding drag on people's time and attention caused by rework, loopbacks, and superfluous confirmations and approvals. You give people the time and space they need to create something genuinely wonderful.

June 2014 Newsletter -- Becoming the CEO of Your Problems

A few years ago, the NY Times interviewed Mark Pincus, founder and recently-replaced chief executive of Zynga. Pincus told the interviewer that one of his key methods of leadership is to make everyone into a CEO in the company. Making a person the CEO of a problem is, I think, very much in keeping with the idea of granting ownership via A3. It ensures that something—and very likely the right thing—will get done. . . . Download PDF to read the full article

Don't confuse "lean cream cheese" with "lite cream cheese"

Ben's Cream Cheese has a bit of a cult following in New York. Food writers love it, Murray's Cheese shop (the city's temple to all things fromage) stocks it, and the good bagel shops swear by it. No one knows exactly how they do it -- the owners keep the recipe a secret -- but according to a recent article,

The real secret is basic freshness. They use dairy products delivered directly from upstate New York farms. They decline to add preservatives, because their cheese shouldn’t take up permanent residence in the back of one’s fridge; it is meant to be eaten soon. “We have nothing in stock,” Simon [Friedman, the son of the owner] said. “We only produce the orders we get in.”

Low inventory, producing to customer pull. . .  It's not light (or lite) cream cheese. It's lean.

Respect for people (Shingo Edition)

More wisdom from last week's factory tours with Ritsuo Shingo: 1. Don't ask workers for improvement ideas. Ask them:

• What work they don't like
• What work is tiring
• Any suggestions they have for management

In other words, you can't just ask for "improvement ideas" unless and until you've established trust -- i.e., until you've earned the right to ask for their help.

2. "Blaming your workers is like spitting in the sky. It comes back down on your face. It's your teaching that needs to be improved."

'Nuff said.