Follow the Money

Getting Started with LEAN

You’ve read the books, been to the classes, and have seen and heard what others have done with LEAN.  Now you’re ready.  You’ve looked at your organization with a new eye and now you’re literally tripping over all of the unnecessary waste and the opportunities to create greater customer value.   It’s time to get started on a LEAN journey, but how/where do you take that crucial first step? 

An organization new to LEAN can behave as if they are entering a candy store for the first time.  Each bin holds another enticing opportunity for happier customers, more satisfied employees, and greater profits.  It can almost be too distracting.  Take on too much at once and suffer from overindulgence.  Choose one at a time and loose patience with the slow progress.  Believe it’s there just waiting for the taking and become frustrated by getting nothing. 

Getting started with LEAN means not only knowing what to do, but how to do it.  The best way to go about LEAN depends on different cultural and operational factors of an organization.  Occurring with too much variation to describe here.  But once these factors are identified, the options for taking that first step on a LEAN journey are described below:

• Bottom-up vs. Top-down
  • A bottom-up approach is a grass-root effort that engages employees to identify and reduce wastes.  This “empowerment” takes little management overhead.  Train employees, approve waste reductions, and turn them loose.
  • Top-down is a strategic approach to LEAN improvements.  System-wide current and future state maps are created and initiatives to achieve the future state are identified and prioritized.  Because these initiatives tend to be system-wide, cross-function teams are required for their execution.

• Projects vs. Workshops
  • Most organizations are familiar with the traditional project management approach to executing an initiative.  Which is an advantage.  Note however that project management functions are non-value added.  On their own they do not increase customer value.
  • An alternative is to reduce project management overhead using a defined workshop approach.  All workshop events for an initiative are planned in advance and then executed to consolidate information, make decisions, and manage milestones.  Planned workshops formalize a structure to manage an initiative without the overhead of traditional project management.

• Contiguous vs. Intervals
  • Contiguous projects/workshops occur every day without interruption until finished.  Kaizen workshops or permanently staffed projects are examples of contiguous initiative driven events.  Contiguous events can accomplish objectives quickly but require dedicated resources.  They also feel more like a sprint than a long distance race; when LEAN’s highest rewards go to those in it for the long haul.
  • Staging events at planned intervals can be just as effective as contiguous.  It’s important that not too much time elapses between intervals and that each event shows visible progress.  A 5 day contiguous Kaizen workshop spread across two to three weeks can achieve the same results with less impact, albeit taking longer to achieve the same benefits.

• One-and-done vs. Continuous improvement
  • Initiatives have a start and a finish.  An organization can target an initiative at one point-of-pain and then feel the relief when it’s done.   And then wait for the next point-of-pain to grow large enough to justify launching another initiative dart at it.
  • A continuous improvement approach recognizes there are endless improvement opportunities.  Continuous means continuous, therefore a systematic never-ending program is adopted for making things better every day.  Initiatives are identified, prioritized, and executed to maximize value and avoid a significant point-of-pain from ever developing.

• Internal Staff vs. Consultants
  • Making improvements requires people.  Not only the people to create it, but also the people to learn and accept the necessary changes.  An organization must make internal investments in its people to improve.  LEAN is not a free ride.
  • The return on LEAN investment made by an organization may be accelerated through the use of outside consultants.  Consultants can be the catalysts to launch and sustain a LEAN journey by acquiring their expertise, training, and momentum to keep things on track and rolling through both good times and bad.

During different times different paths can make the most sense in a LEAN journey.  What may be appropriate for getting started may require adjustment along the way.  Knowing the various paths to LEAN helps avoid just choosing the first path found.   So pick from the paths above and get started with LEAN.

The Voice of the (Internal) Customer

Customer service is about understanding what your customers value and then giving it to them.  Great customer focused organizations are known for listening intently to their customers and then responding with products and services tailored to what they hear.  But how many do this internally and listen to the voices of their own employees as well as they do their external customers?

Identifying the Voice of the Customer is a technique for capturing customer feedback in exactly the terms used by customers from their point-of-view.  The Voice of the Customer becomes the basis for future product and service enhancements.  It helps avoid the internal we-know-better bias that can spring up in any organization. 

Typically it is a minority of people within an organization that interact directly with external customers.  Yet those involved directly with external customers are the internal customer of a fellow employee.  And they in turn are the internal customer of other employees, and so on.  Any break or let down in this chain of internal customer support eventually is experienced by the external customer as well.

What works for external customers works just as well for internal customers as well.  Here an internal customer is defined as anyone in an organization who receives a work product from anyone else.  A work product can be data entered into a computer, information obtained through individual research or analysis, or a decision that was made.

Applying the Voice of the Customer internally is a process of listening to fellow employees about what they value about the work products they receive.  Just as with external customers, statements of value and corresponding areas of waste are captured in exactly the terms used by the employee.

Been filling out that form the same way for years?  Providing that analysis exactly the same way day after day?  You might be surprised what your internal customer would say if you asked them to describe in their terms what the value is of the work you give them.  What may appear to be an important and valuable contribution to you might reflect back differently when held up to the mirror of your internal customer’s words.

In fact it can be quite a shock; one that you should prepare for.  When seeking out the Voice of the (Internal) Customer:

• Ask unbiased questions on what adds value to them and what doesn’t
• Write down (where everyone can see) everything you hear using the exact words
• Do not become defensive as a result of what’s said
• Remember that it’s hard to listen while talking

The Time for Office 5S

AGILEAN’s LEAN Office Glossary defines the Five S’s as:

Five S's - Five terms beginning with "S" used to create a clutter free workspace.

• Sort - Separate needed items for those not needed.
• Straighten - Arrange an appropriate location for all items.
• Shine - Clean the work area.
• Standardize - Establish a standard process for maintaining a clean uncluttered work area.
• Systemize - Maintain a consistent standardized approach.

Because 5S was developed by Toyota, the original Five S’s were all Japanese words.  That’s why there are several different English translations that use different “S” words, but the intent is basically the same.

In Manufacturing LEAN, a 5S program is typically the first LEAN technique applied to a new environment.  The targeted area is literally swept out, clearing the decks for future improvements.  After 5S then other LEAN techniques such as pull scheduling, workload balancing, and waste reduction are applied to cut service time and increase customer value creation.

In Office LEAN a 5S implementation can sometimes be too big a pill for knowledge workers to take all at once.  Many of today’s office environments are built on the premise of worker independence. Telling the modern office worker how to maintain their personal space can be considered by some a violation of their constitutional rights; even though it may be the perfect thing to do.  Given this, why initiate a LEAN Office project with a full 5S program?  There is probably not a more difficult place to start. 

As an alternative, consider beginning with only one of the Five S’s:  Systemize!  Because of the sense that everyone in the office can do-it-their-way; there is considerable process variation; leading to high service times, costs, and defect rates.   A systemize initiative looks at all the ways a process is currently performed and picks one or builds a best case composite from the many.

Systemizing makes an easier a first implementation because the “new” process is already on use in some form or another.  Therefore the organizational change management implications are reduced resulting in an easier early win.  It also establishes the baseline for future improvements.  When future process modifications are made after a process systemization, the people impacted by the change all start the change from the same place.

After systemization takes hold, then other LEAN techniques can be applied to continue to build on the early success and solidify the overall return on investment.  Once the organization fully understands how to wield the power of LEAN, then is the time to determine when and how to (judiciously) apply the other four of the 5S’s.

Making Meetings Count

Attending internal meetings is a non-value added activity.  Imagine providing your customers a line item bill for the services provided by your enterprise that included the time spent in internal meetings.  You may be surprised at the percent of the bill allocated to meetings.  But it’s unlikely you’d be surprised by how unwilling a customer would be to pay for all of those meetings.

By definition meetings are a waste.  As with any waste there are ways to reduce the waste and achieve a corresponding increase in value.  The first step in making meetings count is to establish the value of any meeting.  This step occurs even before the meeting agenda is developed.  Since every meeting has a cost, it should also have a corresponding value, otherwise why have it?

With this one step we may have already eliminated the need for at least one third of all meetings.  I’ve seen enterprises require an series of escalating signatures to approve capital expenditures for amounts that are insignificant compared to the cost of a 20 person one hour meeting.  Yet literally anyone in the organization could schedule that meeting with no second thoughts.  And in fact schedule hundreds of them a year.

When the value of a meeting is justified it is usually for the following reasons:

• Education
• Decision Making

It’s a short list.  Note that the majority of meetings held rarely accomplish either.

Education meetings are designed to increase the skills or capabilities of the participants.  This type of meeting is not the same as an information sharing meeting; which probably represents the greatest majority of meetings held.  Given the vast array of methods available to any enterprise these days, the meeting format is probably the most costly and provides the least value.  Either design the meeting to truly educate the participants or shift the content to an email, webinar, text message, blog, voice message, discussion tree, etc.

Decision making meetings are designed to increase the speed of the decision making process.  They are an alternative to having a serial review and approval process.  Instead all of the decision makers are in the room at the same time. The objective of this type of meeting is to make a yes or no decision; maybe is not an optional outcome of the meeting.  However, it is possible to establish a yes decision with conditions that must be later satisfied or the decision automatically reverts to no.

Value-Added Conference Calls

Transportation is one of the seven wastes identified in a LEAN office.  It is a waste because while you, or anything else, moves from one location to another it’s difficult to create customer value at the same time.  Telephone conference calling is one method for reducing transportation waste.  But when done poorly it can the value of a meeting beyond any transportation waste savings.

The most common method of conference calling is multiple people sitting in a room with some poor souls conferenced in via a speaker box.  This approach can be effective when the meeting objective is one-way communication.  Rarely should this be the objective of any meeting, but when it is, this approach works if there is a preset agenda and each speaker takes turn at their monolog. 

It's important to remember that  speaker boxes pick up the sound of rustling paper much more readily than voices.  Plan for everyone to be absolutely still, muting remote locations, and moving each speaker as close to the speaker box as possible.

Perhaps the best solution is to eliminate any "informational" meetings. These tend to be non-value added in their own right.  We live in the information age with many more effective ways of delivering content than scheduling a live meeting.

An alternative to using a speaker box is the conference call bridge.  Many  telecommunication providers offer the capability for all conference call participants to call into a single phone number, each from individual phones. 

It’s important that all participants call in from a separate number; even if they are located in the same office.  There is a phenomenon in how humans communicate that makes us unable to focus on dialog occurring on a phone at the same time as dialog occurring in a room with multiple people. 

Humans are unable to rapidly leap back and forth from: 1) using the visual cues associated with face-to-face dialog, and 2) using the verbal cues associated with a pure phone conversation.  The result is poor or missed communications on one side or the other.

A meeting where everyone is a unique participant on a conference call bridge enables clear and focused two-way communication.  The sound quality is better, it’s more difficult to be distracted by the local environment, and everyone can participate equally in the dialog as they would in any person-to-person meeting.

Value-Creating Growth

Value-creating growth, in terms of market share or share price, is vital to the long term viability of any organization.  The ability to consistently maximize customer value is the greatest challenge of many organizations.  Not from an inability to execute; but from an inability to accurately answer a few key questions.

• What do customer’s value?
• What does the organization value?
• How close is each to realizing those values?

The answers to these questions do not come easily to any organization trained to look for problems and then find solutions.  This is because the answers are not defined in terms of a problem/solution but in terms of value ambition.

Value ambition is defined as difference between values that are held today and those that are desired in some future state.  An organization’s value ambition is established by determining:

1. What customers and employees believe are the values currently offered by the organization
2. What customers and employees believe the organization should offer in terms of value in the future
3. Where are the biggest gaps appear between current and future values

The organization’s value ambition is established from:

• An analysis of the individual value priorities for both customers and employees
• The relative size of the gaps between the current and future individual values

Knowing its value ambition enables an organization to determine:

• The core capabilities needed to deliver the value ambition
• The desired outcomes to measure the success towards achieving the value ambitions
• The few key initiatives for achieving the value ambition

Value-creating growth, in terms of market share or share price, is the result of providing more value to your customers and employees than your competitors.  Maintaining a clear value ambition that is communicated to customers and employees aligns all stakeholders with the same value delivery expectations.  Stakeholder value alignment is the equivalent of pulling on all oars in the same direction and at the same pace, and is the quickest way to steady value-creating growth.

The Value of a Lean Office Business Model

Most people are happier when they are creating something they believe to be of value.  But in the mass production model of most businesses today, specialization has removed any sense of the value being produced by individual employees.  With a mass production model it is difficult to determine the value produced unless an employee’s role has a direct impact on a customer.

Removing any sense of value being produced for a customer leads to employees who only feel they are cogs in the wheel.  We all know of roles somewhere in the middle of a long process with many activities, where employees have no sense of the customer.  A task shows up, they work on it, and then they send it on.  The primary value recognized by the employee is keeping work off their desk.

Lean office engages people in making things better every day.  It provides a framework to continuously increase the value of what is produced for both internal and external customers.

A lean office business model provides an innovative alternative to one based on mass production.  Lean office treats processes as a series of value added activities; referred to as a value stream.  The value of each activity is related to every other activity and eventually the end customer of the value stream. 

Employees are not asked to perform specialized tasks (mass production); they are asked to contribute a unit of value (lean production).  Changing an employee’s goal from completing a task to creating value instills in them a sense of ownership of the result.  Like a landowner instead of a sharecropper, the employee takes pride and responsibility for the measurable value they create; leading to happier employees and satisfied customers.

Waterfall vs. Continuous Improvement Project Management

Most organizations today say they no longer use the traditional waterfall approach to implementing new initiatives.  The current buzz word is continuous improvement.  Yet if you scratch the surface of most continuous improvement projects, what you find is shorter cycles of what are really waterfall projects.

With a waterfall approach schedules are established that include milestones such as analysis, requirements, design, development, testing, training, implementation etc.  Each milestone is completed and signed off prior to proceeding to the next, but the most valuable deliverables in a waterfall approach are not realized until the end of the project.  The most valuable deliverables are why the initiative was launched to begin with.  Projects are not launched to create milestone documentation.   How many waterfall projects have you seen that successfully completed every milestone on time except the last one?

A true continuous improvement approach recognizes there is unlimited opportunity to improve and works to deliver value in steady recognizable wins.  Progress is not measured by milestone documents but by tangible results.  Although it can be more difficult to predict which benefits will be produced for each continuous improvement milestone, it is easier to determine if a milestone adds real value compared to a waterfall.

The problem most organizations have with continuous improvement is that they attempt to guide them using traditional waterfall project management.  Continuous improvement becomes a series of short duration waterfall projects adopting the worst aspects of both; short projects with more time spent documenting than producing results.

An alternative method of managing continuous improvement is to use workshops as the milestones for establishing progress.  Here the definition of workshop is a cross-functional event where decisions are made and knowledge is created.  Not a meeting where information is shared.  As part of the design of each continuous improvement initiatives a number of workshops are established to manage progress.  They could be a current state workshop, future state workshop, gap analysis workshop, etc.  Or a requirements workshop, design workshop, development workshop, etc.

With this method the primary outcome of the workshop is not a document but decisions and knowledge concerning the current state, the requirements, etc.  There may be an actual document produced or not.  The workshops become the focus not the documentation.  Workshop participants determine if the milestone was successfully completed and whether they are ready to prepare for the next workshop.

Strategic Execution: An Oxymoron?

What makes strategic execution an oxymoron?  The Heisenberg Uncertainty Principle states that: “The more precisely the position is determined, the less precisely the momentum is known in this instant, and vice versa.”  In other words we can measure how fast something is going, or measure the direction it is going, but not both at the same time. 

In 1927 Werner Heisenberg applied this statement to subatomic particles.  However the same seems true for most businesses.  If operations are optimized for execution (speed), then the business drifts from its intended strategy. However if operations are controlled to conform to a strategic purpose (direction), then business execution suffers. It is as if efficiency is the enemy of effectiveness; and the two can never be found in the same place at the same time.

Strategy and execution are two different worlds.  Strategy tends to be the domain of big picture outward thinking. What are market trends, where is the competition going, what are the next enablers for customer value creation? Whereas execution tends to be the domain of tactical inward thinking. How can each individual in each functional department be made more productive?

A paradigm shift is in management thinking is needed to treat execution with the same big picture system-wide thinking that is used in strategy development.  Organizations must stop treating organizational structures, business processes, and enabling technology as foundation infrastructures or raw materials and begin to leverage them as strategic weapons.

As strategic direction changes, each and every asset and activity of the organization should be reviewed for how it contributes towards executing the strategy.  Not just how to make them more cost efficient, but more effective overall at delivering the desired strategic value. Designing strategy directly into the operational fabric of an organization enables management to then focus full speed ahead on execution. Execution with strategy already built in removes the need to simultaneously manage and measure speed and direction; overcoming the limitations of Heisenberg’s Uncertainty Principle.

Breaking the Problem Solving Mantra

See a problem; solve a problem. See a problem; solve a problem.  This is the problem solving mantra.  One that is more widely followed everyday.  Yet for every problem fixed, two more appear.  Is this progress, or is this an endless problem solving a trap from which there is no escape?

In our information intensive, reactionary work environment it appears that problem solving and fire fighting is in the job description of most people.  With this age of the sound bite there is no time to analyze the root cause of problems as they arrive.  The primary goal is to fix problems - get them off your desk as soon as possible - knowing full well that the next problem is just on the horizon.

How much of this is self-fulfilling?  Just as fire fighters are drawn to fires, are problem solvers are drawn to problems?  Perhaps the problem solvers mantra is really: Look for a problem; see a problem; solve a problem.  What would happen if they didn’t look for problems?  Would there be less problem solving?  Not that everyone should bury their heads in the sand and let the sky fall down; but perhaps problem solvers should be given something else to look for?

Instead of looking for a problem, let’s give today’s problem solvers a new mantra: find a value, provide a value.  Let’s challenge them to take on a more positive approach.  They can spend their time to better understand what is valued by their external or internal customers.  Then they can discover ways to exceed what their customer’s value.  Provide a value to someone and more opportunities for values present themselves.  Solving problems only presents more problems.

Searching for ways to provide greater value is a more positive approach than problem solving.  Values are about strengths, opportunity, and accomplishment.  Problems are about weaknesses, failure, and blame.  Solving problems does not automatically mean increased value.  Increasing value automatically means fewer problems; in a way that delights customers and employees.

Our words define our reality.  Problem solvers may say they are adding value by solving problems.  But in most cases they’re just putting out fires.  True, there is value to extinguishing a fire.  But not if by putting out one fire two more appear.  A value based approach would focus on creating a fire free environment.

Fix a Dilbert a Day - And Create a High Performance Organization

Scott Adam’s Dilbert cartoon strip was launched in 1989.  For sixteen years we have been entertained by the foibles Dilbert found in everyday corporate life.  What may or may not be surprising, depending on your point of view, is that the things that we laughed about sixteen years ago with Dilbert are still true today.

Dilbert has been brilliant in pointing out areas of waste within corporations.  Any collection of Dilbert cartoons provides an excellent portrayal of the non-value producing activities within any company.  With such succinct and accurate problem descriptions, you’d think that in sixteen years corporations could have made more progress developing solutions.

There couldn’t be a better time to reverse this disturbing trend.  With today’s global competition, what corporation can afford to waste 50% of its resources on non-value added activities?  Dilbert is proof that most do.  Eliminating the wastes highlighted by Dilbert will help create a high performance organization that produces greater stakeholder value at less cost and higher quality. 

Scott Adams has not yet run out of new material; new Dilbert cartoons are published every day.  Imagine the impact if a corporation just committed to taking a corrective action for each day’s new Dilbert cartoon.  No need for expensive analysis to discover what to do next to increase performance.  Just fix a Dilbert a day.

ROI Power to the People

People are the most important asset of any organization.  Labor cost is the biggest expense of most organizations.  Yet more time is spent by organizations maximizing the return from capital investments and not the return on investment (ROI) in people.  Increasing the ROI of labor has potentially a much larger impact than that of capital spending.

Compare the effort of an organization to acquire a $250,000 software package with the effort to add a new staff member to the organization.  In the case of the software package: market research is performed, a request for proposal written, several vendors are interviewed, product demonstrations occur, the total cost of ownership is calculated, a return on investment analysis is performed, and top level management reviews and approves.  To add new staff: several candidates are interviewed and the hiring manager makes an offer.

The five year direct costs to the organization may be the same for both the new software and the new staff, yet the due diligence is much less for staff.  And it does not stop there...

Once the software is purchased, its environment is constantly tuned to maximize its performance.  A system-wide view is taken to maximize the use of that software with the rest of the hardware and software that it must interact.  To insure overall system performance does not suffer, ongoing investments are made in hardware and software to insure the original investment is maximized.

The same is not true for staff.  Each staff member is expected to adapt to the existing environment.  A system-wide view is not taken to ensure that the contribution of each staff member is maximized with regards to others they must interact with.  Staff analysis is usually done only within an individual organization.  Very little analysis is conducted concerning the overall system performance of all staff, or concerning the ongoing investments needed to insure the investment in staff is maximized.

It’s time to treat people like they are the most important asset of any organization.  With labor costs being the biggest expense of most organizations, increasing the return from that expense by just a few percentage points will dramatically increase revenues and profit.  It’s time to provide more ROI power to the people.

Change Management’s Critical Success Factor

Businesses today appear to be under almost continuous change.  Markets, customers, products, processes, technologies, and organizations now all seem to be shifting on a global basis 24/7.  To complete organizations now must embrace change management as a key competency, and understand the factors critical to its success.

There are many factors to consider for successful change.  Consider the following developmental factors: what should the change entail, what and who will be impacted by the change, how fast should the change occur, what are the costs of change, how the success of the change will be measured, etc.  Developmental factors are all important for success.  But none is more critical than personal change factors.

Critical to the success of any change project is that people make the required changes.  People involved in projects tend to forget that for the change around them to be successful they must change as well.  People managing projects tend to overlook personal change factors and focus on those that are more tangible.

Even though personal change factors typically have higher risks and impacts, have you ever seen a milestone for the date a manager no longer prefers a certain process that has worked for her over the last 10 years, or for the date a staff member agrees that a new assignment is in his best interest? 

It may not be practical to add personal change milestones to a project chart.   But by managing them in some way, (like other milestones with resource assignments, timing, dependencies, etc.) the risks associated with change management are greatly reduced.

Delegate

You would think delegate was a four letter word.  Suggest to someone they should try to delegate a task and they look at you like you’ve just called them incompetent.  As I work with management teams I’m finding that delegation is one of the least understood and most underused management tools.

To delegate is to assign a task to someone that presumably you could do yourself.  Easy to say hard to do.  For lots of reasons, said and unsaid.  One of the most common stated reasons is: “It will take me longer to delegate the task than to do it myself.”   This is a very tactical position to take. It may take longer the first, and even the second, but the third through nth occurrence it will probably save time.  Not to mention the positive benefits of training and engaging an employee.

One of the most common unstated reasons is the fear of becoming obsolete.  We appear to be in an age of almost constant turnover (voluntary and involuntary) in the ranks of management.  Unfortunately this has led to a perception by subordinates, peers, and senior management that if you as a manager are not mucking around in the details then you must not be adding value.

If everyone has their head, arms, and legs in the muck, who is going to make sure that all the oars are pulling together?  Who is looking out for that next change in wind direction? There appears to be a direct relationship between the amount of delegation and the amount of strategic planning that occurs within an organization.  Management teams looking for a leading indicator on top and bottom line performance may just need to measure the amount of delegation taking place within their organization.

The Power of Diversity

Medical science recognizes the importance of diversity to the health of all living things.  Reduce the amount of diversity by any one of a number of factors and over time organisms become weaker in their ability to face new threats.

The same is true for social organisms, whether with friends or business.  Yet many social organizations appear to ignore this fact.  We as individuals seem to purposely look for situations where we are among those whom are most like us.  The exact opposite of what nature tells us we should be doing.

Much of the conflict I see in U.S. based business is caused by people with different backgrounds, experiences, and personalities.  Any surprise here?  Yet somehow this is viewed as negative.  Rather than embracing diversity of backgrounds, skills, or opinions as the secret to success it is, U.S. businesses seem to strive to eliminate it. 

A new year a new beginning.  Make it a New Years resolution to personally thank all of the people whom have at one time or another last year gave you grief, or otherwise represented a diverse view.  Then encourage them to join you in fostering diversity as the means for maintaining a strong and vibrant business community.