Goldman Sachs and the Money vs. Morality Debate

Posted on March 14, 2012 by Larry Miller

Yesterday, a young executive at Goldman Sachs, Greg Smith, resigned in a very public way. He wrote an op-ed in the New York Times titled “Why I am Leaving Goldman Sachs.” In essence he accused the leadership of Goldman Sachs of destroying the internal moral fiber of the firm, putting profit before meeting the needs of customers, and he cited the open contempt that Goldman personnel feel toward their clients. It is a sad commentary.

The readers of this blog who are most concerned with “lean” and continuous improvement may ask, “So what does this have to do with continuous improvement?” Trust me, it does!

Step back a moment to frame this issue. The material progress of a company, country or civilization is directly related to its moral character, its culture. But, not in an instantaneous and direct way. Rather, one is the antecedent to the other.

The historian H. G. Wells made the following observation about the decline of Rome: “After the fall of Carthage the Roman imagination went wild with the hitherto unknown possibilities of finance. Money, like most other inventions, had ‘happened’ to mankind, and men had still to develop – today they have still to perfect – the science and morality of money. What happened to Rome? Various answers are made – a decline in religion, a decline from the virtues of their forefathers, and the like. We, who can look at the problem with a larger perspective, can see what had happened to Rome was ‘money.’ Money had floated the Romans off the firm ground.”

Some years ago I was speaking at a conference and this was a time when I was involved at Honda American Manufacturing. I mentioned to the audience that every morning every Honda associate meets with his or her team for fifteen minutes to discuss how they could correct any problems discovered the day before, how they could improve their work.

Immediately after I said this a hand shot up from the audience. I saw his name tag said “General Motors.”  I called on him and he said “Cost justify those meetings. I can tell you that at General Motors we know the costs of stopping that line for even one second. If you can’t cost justify it, it won’t happen at General Motors.” I could only reply by telling him that he had me, I couldn’t cost justify it, I only knew that they did it.

Of course, he was right. General Motors cost justified everything. GM was run by financial managers, with the Chairman drawn from the financial group and with a financial background. He knew money, not how to make cars.

A month later I was at Honda and asked Scott Whitlock then Executive VP of Manufacturing the same question. How do you cost justify those meetings? Of course, at this time Honda America Manufacturing was led by Iri Irimajir, an engineer and Formula One engine designer, who designed an engine being produced at the very time. Scott looked at me and said “Why would anyone ask such a question?” Which of course made me feel stupid! He then said, “We just have faith, that if every day, every associate thinks about how to improve his work, we will make better cars.”

At that same time the work hours required for auto assembly at Honda was about 12 hours per car. At GM it was in the range of 22-24. Yet, at GM it was about money.

Money had “happened” to GM and the dominance of money, versus serving customers with great cars, drove GM to bankruptcy while Honda’s market share continually rose.

In 53 BC Marcus Licinius Crassus, considered the wealthiest man in Rome, and who had gained his wealth through the lending of money, who knew money better than anyone, led the Roman army against the presumed to be inferior Scythians at Carrhae where they were led into hot sand and the immobile Romans repeatedly charged on foot the Scythian cavalry that circled and fired arrows into the legions.  Twenty thousand Romans were killed and ten thousand more carried into slavery, among them the wealthiest of all.

When those who lead the operations of a company are more expert in money than they are in the operations that serve customers, you are likely in decline and will not recover until your leaders care more about customer service, are expert in the operations that serve those customers, than about money. Then, money will follow.

Greg Smith said of Goldman Sachs “To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.”

“It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.”

I have no direct knowledge of the culture of Goldman Sachs. But the fact that an executive is sufficiently motivated, negatively motivated, to publish a piece like this in the New York Times is a red flag that should trigger intense self-reflection by that firm’s leaders. It should also be a cause for all corporate leaders to reflect on their own culture, the values they imprint on their associates, particularly their young recruits.

Social capital, internal trust among members of the firm, and external trust, or what may be called brand equity, are the leading indicators that precede a decline in innovation and service; and that in turn precedes the decline in financial success. You don’t get money by focusing on money. You get money by following the path of dedicating yourself to service, service to your customers and service to your associates, and then money will follow. Those who lead the firm must be expert in what precedes money, not in the counting of fruits after the harvest created by others.

 

Posted in Corporate Culture, Corporate ethics, Corporate Social Responsibility, leadership, Lean Culture, lean management, Social Capital, The New Capitalism | Tagged , , , , | 14 Comments

Managing the Blog – New Additions

Posted on March 13, 2012 by Larry Miller

I admit it. I am just learning how to do this “blogging” thing. But, then so are most bloggers.

As a one man band, solo consultant, author, publisher and blogger, I take pride in doing it all myself. Frankly, that’s half the fun of it. Having sold my company some years ago, when I had around 25 consultants and staff, I love the fact that I have ZERO overhead, no hiring of people, training of staff, having to market for others, etc. All I really have to do is focus on my clients, provide them the best possible service and develop the best possible materials. And… maintain and develop this blog.

I have made a number of recent changes, mostly in the “widget” department. Widgets are those things in the right column. Widgets are handy things that you can download, from Amazon, for example, and insert. They then take you somewhere, which is hopefully helpful.

You will see that I have added two Amazon widgets. The first one takes you to my own books which, of course, I think everyone should buy for every employee, friend and family member and neighbor, several copies each. The second Amazon widget are books that I genuinely do recommend as worthwhile reading on the subject of lean management and culture.

I have also added a Twitter feed. Most of these are things I find interesting and wish to share. Most of the most recent twits are about my much more famous daughter, Layli, who was honored this past weekend by Diane Von Furstenburg at the Women of the World summit in NY where she and Oprah were both given awards for their work.

Finally, I have added an “Alltop” widget that takes you to other recent postings on the subject of leadership. My blog is now listed and feeds into this summary of leadership blogs. You may find it a handy way to see who else has something to say on the subject.

As I said, I am just figuring out this new world of Internet publishing and marketing and I certainly welcome your feedback and suggestions.

 

Posted in General, leadership, lean management | Tagged , , | Leave a comment

Action-Learning: Cycles of Learning are the Key to Developing a Culture of Continuous Improvement

Posted on February 28, 2012 by Larry Miller

The following article was published today in Industry Week’s Continuous Improvement blog/website today. (Note: this is available for download on the “Papers” page of this blog and you are welcome to use it in your work.)

The best methods and the best of intentions can easily fail unless we take into account how adults learn in our organizations. During World War II a process that has become known as Training Within Industry (TWI) and its component Job Instruction (JI) was developed and was then adopted by Toyota as it developed its system of production. For management development Toyota and other Japanese companies added the role of the sensei or coach. These methods are effective because they are consistent with action-learning that recognizes the reality of how adults learn.

Malcom Knowles who pioneered the field of adult learning identified the following principles as critical to adult learning:

  • Adults are autonomous and self-directed. They need to be free to direct themselves. Their teachers must actively involve adult participants in the learning process and serve as facilitators for them. They must show participants how the learning experience will help them reach their goals.
  • Adults have accumulated a foundation of life experiences and knowledge that may include work-related activities, family responsibilities, and previous education. They need to connect learning to this knowledge/experience base.
  • Adults are goal-oriented. Instructors must show participants how this class will help them attain their goals.
  • Adults are relevancy-oriented. They must see a reason for learning something. Learning has to be applicable to their work or other responsibilities to be of value to them.
  • Adults are practical, focusing on the aspects of a lesson most useful to them in their work. They may not be interested in knowledge for its own sake. Instructors must tell participants explicitly how the lesson will be useful to them on the job.
  • As do all learners, adults need to be shown respect. Instructors must acknowledge the wealth of experiences that adult participants bring to the classroom. These adults should be treated as equals in experience and knowledge and allowed to voice their opinions freely.

Another way of saying this is simply to say that adults aren’t good at sitting at a desk and obediently following instructions and learning theories or abstractions. Learning has to make a difference to them and they have to put it into action. I think the same could be said for children, but we don’t need to argue that point.

Much of my own training is focused on the development of both work and management teams to engage in effective continuous improvement, problem solving, and to become a high performing teams. What has proven most effective is to apply this action learning model to team development. The eight steps illustrated here constitute a cycle of learning and continuous improvement. In many ways they correspond to the PDCA cycle of improvement. However, they are a bit more specific to the actions required for effective learning and incorporate the role of sensei or coach.

The steps illustrated in yellow are primarily knowing/gaining knowledge steps. The steps in purple are more experiential and have more impact on how the learner feels. Knowledge and emotions are equally important in gaining sustained change in individual behavior or in the culture of the organization. Too often our training methods focus more on knowing, and too little on the emotive aspect of learning which is more likely to occur from experience. Often we assume that “if they know, they will do” and this is a false assumption.

1. Build A Case for Action:

It is essential that team members understand the business case for action. Why do we need to do this? What difference will it make to our performance, to customer satisfaction, and to my own work?

As management embarks on a process of continuous improvement they need to point to competitors, best practices, financial benchmarks and the voice of the customers who are telling us that we need to improve. And, it helps to make clear that learning and practicing the new skills will be a component of everyone’s appraisal process. In other words, it is the job of managers and coaches to make change matter!

2. Gain Knowledge:

Transferring knowledge is what most corporate trainers do best. It is what classrooms are best designed to accomplish. It is why we have books and websites. However, knowledge very often does not result in behavioral change. It is the difference between taking a history course in which knowledge acquisition is the goal in itself; as opposed to learning to play the guitar. The former is primarily about cognition/knowledge, the latter is about habits or changes in behavior gained through experience and feelings of comfort with that new behavior.

If we are training teams to solve problems effectively, knowing the steps in a problem solving model is important, but it is only the beginning of employing that knowledge for continuous improvement. Knowledge without action will not change habits or culture.

3. Agree on New Behavior:

Intention is the beginning of change. The guitar instructor may teach a chord position or scale on the fret board. By itself, that is useless knowledge. It only becomes useful when practiced. The student must agree to practice the chords or scales.

The way I have designed my own training manual is so that each chapter is a training module and each training module corresponds to a deliverable – a desired performance or behavior. For example, the second chapter is on writing the team’s charter. The deliverable or action step is to actually go through the steps in writing the charter and gain approval of the sponsoring manager. Another chapter is on defining customer requirements. Of course, the team then brainstorms customer requirements, interviews customers, and agrees on customer requirements. So, each bit of knowledge and training then asks for a new behavior to be performed the team agrees on the behavior and then takes action.

4.      Apply & Practice New Behavior:

Imagine learning to play a musical instrument. How much knowledge of the keyboard or fret board is useful without then putting your hands on the instrument and practicing? The answer is very little. The important learning comes from playing the instrument, hearing the sounds, trying out different positions and chords and experiencing their difference. At one point I had the idea that I would learn to play the banjo and I bought a lesson book by Pete Seeger. When asked how often you should practice his answer was “Never. Just play!” What he understood was that the learning will come from the joy of playing, not from doing exercises or turning the experience into a painful task.

Learning any new skill is much the same way. Teams need to practice problem solving and experiment. It is OK to fail as long as every effort is recognized as a learning experience.

Practicing, evaluating, improving becomes a way of life. A Fast Company article (6/2/2009) on Toyota’s Georgetown, KY plant described the reflection of one worker in the plant: “Artrip has been at Georgetown for 19 years. The way he does his work is so compelling it has become part of his personal life. ‘When I’m mowing the grass, I’m thinking about the best way to do it. I’m trying different turns to see if I can do it faster,’ he says.” This is a clear sign that continuous improvement has become ingrained in the culture.

5.      Receive Feedback from Coach

The role of the sensei has become understood as an element of Toyota culture. A sensei is, essentially, a personal coach and mentor. Someone who can guide, observes, and gives feedback and encouragement. It is worth noting that in every sport, whether the emphasis is on team performance or individual performance, there is always a coach. And coaches are not reserved for children or new learners. The best professional quarterbacks, tennis stars, professional golfers and opera singers all have personal coaches even though they are at the top of their game.

In a May, 2004 Harvard Business Review article (Learning to Lead at Toyota) Steven J. Spear does an excellent job of describing how a new manager is hired and trained at Toyota. His coach introduces him to the organization with structured observation and debriefing on what he sees. He is asked to find improvements, many each day, just from observing. Then he is asked to work on the line with an assembly team. He is asked to find improvements and work with the team implementing them. He is then taken to Japan to again work with a frontline team and implement improvements, even in the very plant where the Toyota Production System began its development. At each step the sensei is encouraging him, guiding, and debriefing with him on the lessons he is learning. It is intensely personal and direct training and coaching. But, the sensei does little instructing in the traditional sense. Rather, he is creating experiences, asking questions, encouraging reflection.

Now consider how you develop teams in your own organization. Do they have a coach? Do they follow a structured learning process? Do they receive guidance, encouragement and feedback from a coach? Let me suggest that this is a necessity for the development of teams at every level of the organization.

6.      Gain More Knowledge:

And now, the cycle becomes obvious. After each lesson learned, action or deliverable completed, the team receives feedback from the coach and then goes on to learn the next element of development: how to develop a balanced scorecard; how to map their work process; how to recognize variances of common versus special cause; how to reduce waste and cycle time, etc. And again this leads to practicing those skills.

7.      More Practice:

The team and their coach should map out a series of ten to twenty steps that the team or individual will learn then do, then gain feedback and reflection. These steps should be those that lead to the complete set of behaviors you want a team to perform.

8.   Positive Reinforcement from Coach and the Natural Environment:

As teams practice the skills of continuous improvement they begin to have an impact on actual performance. They should be able to see this impact on measured performance, on graphs. This is in itself, positive reinforcement and strengthens the learned behavior. It is the job of both the coach and the manager to assure that new skills and desired behavior lead to good outcomes for both individuals and teams. These outcomes can be as simple a certification that you are a High Performing Team, or the opportunity to present the results of your efforts to senior managers. There are a hundred ways to “make it matter” to strengthen the behavior of continuous improvement and this reinforcement should be part of the designed learning process.

While there is nothing entirely new about the eight steps of this action-learning cycle, it is a key to establishing lean management and culture that is too often overlooked.

 

Posted in Change Management, Corporate Culture, General, leadership, Lean Culture, lean management, Lean Manufacturing, Organizational Behavior Management, Team Development | Tagged , , , , , | Leave a comment

Straight Talk: Avoid the Con of Quick and Easy Lean

Posted on January 31, 2012 by Larry Miller

Lean is a strategic initiative that will require at least three to five years for any organization of size. It is a lifestyle change, not a diet.

(The following was published earlier today in Industry Week’s Continuous Improvement newsletter)

I recently spoke to the head of lean implementation at a large European-based manufacturing and engineering organization. He is discouraged. Contrary to his advice, the senior executives just agreed to purchase the services of a major consulting firm to implement lean.

What they bought were a series of quick and simple kaizen events in which the participants would do A3 problem-solving, and the consultants guaranteed quick financial results. The executives were assured that it would require no burden on their part, just verbal and financial support (for the consultants) and the consultants would handle everything else.

Simple. No problem.

These executives were led to believe that they would then be “doing lean,” Toyota Production System and all that good stuff. There is one thing I can absolutely guarantee you, in addition to the sun rising tomorrow. They will NOT be doing lean or TPS!!

Quick and easy solution = quick and easy sell. Unfortunately, more and more executives are being duped into what is essentially a scam.

Let’s be honest about this problem. Many senior executives suffer ADD (attention deficit disorder) and lack the tenacity, vision or as Dr. Deming would say, the “constancy of purpose,” to implement significant change in the culture and processes of their organizations. Feeding them quick and easy solutions is like selling dope to a drug addict.

Here are some clues to avoiding the scam:

  • If you want to achieve short-term financial gains by just cutting head count, don’t pretend it’s anything associated with lean. And don’t imagine you need a consulting firm to help you. Just do it! Then work on the important stuff.
  • If someone comes into your office and promises you short-term financial results and claims it’s “lean management,” throw him out of your office and tell him never to come back! Check to see that your watch is still on your wrist, first.
  • If someone claims that lean is doing 5S, an A3 or A4 problem-solving sheet or PDCA, they do not know lean and are appealing to your ADD. Tell them to stop insulting you, you have already taken your Ritalin for the day!
  • If someone tells you that you can implement lean “down there,” while you and other senior managers remain unscathed, avoiding effort or pain, tell them you have seen enough late-night cable-TV commercials telling you how to lose 50 pounds without breaking a sweat! It ain’t gonna happen!

On the other hand, here is some straight talk about implementing lean:

  • Lean is a strategic initiative that will require at least three to five years for any organization of size. It is a lifestyle change, not a diet.
  • It requires active leadership. Mr. Toyoda and Mr. Honda were both directly involved in shaping the culture, driving what was important in the organization and recognizing success. They did the gemba walk, were on the spot, where the value-adding work gets done, learning from those who are expert in the work.

Ray Kroc did it too. Ray Kroc spent half of his time visiting McDonald’s locations, and when he did, if the bathroom was dirty, he grabbed the bucket and mop and cleaned it. That was when he was chairman, with tens of thousands of stores. You may think he was crazy, but he did it. He built one of the most significant corporations in the world around a few core values (quick, clean and courteous), and he demonstrated their importance through his own behavior.

You need to do it!

  • Knowledge of lean is more important at the top than at the bottom. The cost of waste is far higher in the poor decisions made by managers and executives than it is on the front lines. Time and again I have seen senior executives making multi-million-dollar decisions without following any disciplined decision process — little fact finding, little brainstorming of root causes of problems, little brainstorming of potential solutions, etc. Adopting lean management means continuous improvement in management processes and behavior, as well as the processes and behavior on the front lines.
  • Consultants cannot do it for you. Use experienced consultants to develop internal capacity and competence among internal change agents and then work themselves out of a job at your company. You need to own the capability to continuously improve. You do not need to continuously employ consulting firms. Consultants should also be willing to deliver straight talk to senior managers. It is hard for internals to look you in the eye and tell you that you need to change! But, that is often the truth, and an external consultant must be a truth teller.
  • Lean is a culture, not an acronym or a workshop. Certainly 5S, A3s, etc., may be part of lean implementation, but they can also be an excuse for not doing the really important things like knocking down significant walls in the flow of work through the organization. Those walls are management walls. Lean requires the development a healthy value system in the organization, and that cannot happen in the short term. It can start tomorrow, but it must be pursued continuously by the leaders of the organization.
  • Lean management is both a social and a technical system, and both need to change together.Yes, lean is just-in-time inventory management, continuous-flow or interruption-free processes, the adoption of IT solutions that enable the process flow, etc. That is the technical system. But it only works if the social system — the trust in employees, the empowerment to make decisions and improve processes at the first level, teamwork, the respect for those who are on the spot, and the recognition and reinforcement of positive behavior — are all aligned to the new work processes. One without the other is likely to lead to short lived success.

And, one more thing: Straight talk, absolutely honest, frank and open conversation about both problems and successes, is a necessity of developing a lean culture. In fact, it is an absolute necessity of any healthy organization, family, community or country. It requires straight talk both to and from leaders.

Comment:

If you detect a note (or a shout!) of sarcastic annoyance in the above you are right. That is a response to a pattern I have seen over and over again from the most prestigious and largest consulting firms. During the TQM days I was working at Inland Steel and one of these prestigious firms was employed there claiming they were implementing TQM. They formed teams of employees to do little more than identify how many heads could be cut. That was their goal, not any change in process or culture. It didn’t take long for employees to catch on. And, they called it TQM. It was nothing of the kind. Now I am seeing that exact same pattern from that same firm and others. I am frankly sick of this exploitation. It needs to stop and someone needs to call them on it. If they really want to implement lean or TQM then they should learn what it really is and have the intellectual honesty to confront the executives of their clients with the real commitment and change in behavior that it will require of those executives. And, that will not appeal to those addicted to quick and easy solutions. It is a fundamental of consulting ethics that you do not simply sell a client what they think they want. You have a moral obligation to tell them what they need, which is often much more difficult and a harder sell.

Also, this is not a condemnation of consultants in general. After all, I am one. And, I know and would recommend many other consultants who have integrity and skill and are not appealing to this quick and easy addiction.

Well, I am glad I got that off my chest!

Have a great day!

 

Posted in Change Management, Consulting, Corporate Culture, Corporate ethics, leadership, Lean Culture, lean management, Lean Manufacturing, Organizational Behavior Management | Tagged , , , , , , , | 7 Comments

New Year’s Resolutions That will Have an Impact

Posted on January 3, 2012 by Larry Miller

Industry Week’s Continuous Improvement newsletter  has just published the following article which you may find of interest as you meditate on the coming year.

OK, I know. You are going to exercise more often, eat less fatty food, lose weight, save more money, and maybe even write that book you have been swearing you would write for the past five years! And, maybe you can add a few things to your list that won’t be so hard to do and which will actually improve your own performance, and that of those around you.

Here are some suggestions guaranteed to improve performance in almost any work place.

First, let’s agree to encourage others. I know it is a simple and obvious thing. But, we all thrive on encouragement. Let us agree to see the potential, not simply the current reality, in each of our team members. There is something I like to call “creative dissatisfaction” which is the gap between who we are and who we know we could become… and, there is always a gap, no matter how great we may be. Rather than pointing out what I am not (and there is lots you could point to!), how about pointing to what or who I could become? It’s a small difference that makes a huge difference. When I have a vision of who I could become I develop a drive, that creative dissatisfaction, to achieve, to close that gap.

Second, strive to become a scientist in the coming year. It may sound strange, but how we make judgments are often colored by learned biases. Continuous improvement is the result of the continuous design of experiments, watching the data, understanding cause and effect and the humility to say “Oh, well, that one didn’t work. Let’s try something else.” The great managers, like the great scientists, respect the data and have the courage to experiment and to learn from what the data is telling them.

Third, demonstrate through your deeds the value of the world’s greatest experts who are on-the-spot. The traditional culture of our organizations has taught us that “moving up” is valued; those who have been promoted up in the organization must be worth more. We naturally value them. But, who actually serves customers? Who does the real work that adds value to customers and who become genuinely expert in the process of serving customers? It is most often not those who are “up” but those who have their hands on the real work. The Gemba walk is a philosophy, not merely something you do with your feet and the philosophy is to learn from and value those who are on-the-spot.

Fourth, commit to your team. A very few significant successes are attributable to individuals alone. Individual successes are more likely to be achievements in the arts or sciences, rather than in business. Most success in business is the result of teamwork. You are a member of a team.  Jim Collins in his book Good to Great defined what he called the Level 5 Leader who managed to sustain great companies over time. These leaders where not ego driven charismatic stars, rather they were focused on building great teams. “Compared to high-profile leaders with big personalities who make head-lines and become celebrities, the good-to-great leaders seem to have come from Mars. Self-effacing, quiet, reserved, even shy – these leaders are a paradoxical blend of personal humility and professional will. They are more like Lincoln and Socrates than Patton or Caesar.” [1] So make this the year when you focus less on yourself and more on your team. Give them credit, demand that they work together as a team, and insist that they do what you expect from everyone else: know and serve their customers; know and improve their own processes; and strive to win against their own team’s scorecard.

Fifth, practice Four-to-One: In the mid 1970’s I worked with Fran Tarkenton and Aubrey Daniels at Behavioral Systems, Inc. We took the research of Dr. Ogden Lindsley who studied the effects of positive reinforcement versus negative comments by teachers in the classroom. He found that the ideal ratio that maximized learning was 3.57 positive to 1 negative. We rounded it off and called it Four-to-One. We encouraged plant supervisors to record their positive and negative comments to employees and too often it was one to four, in other words four times the number of negative comments than positive. This year, try to achieve the four-to-one ration of positive to negative interactions with your employees. This focus on positive behavior and achievements will increase positive behavior and achievements. Almost forty years later that is now being practiced at Toyota and other great companies. It works!

Sixth, Find the Noble in Your Work: We all live our lives in the moment, struggling to do what is urgent, but always longing to find the important, that which is noble and worthy in our work. The most primary source of motivation is the search for meaning, the desire to accomplish something worthy. I believe it is important to meditate on what we do and why it is important. The best public speaking advice I ever heard was to be certain, before you stand in front of an audience, that you have something genuinely important to say, something important for that audience. If you don’t believe you have something important to say, there is no way you can fool the audience into believing it is important. Management and leadership are the same. Have something important to say. Meditate on how you and your company are making this world just a little bit better each year. And, then say it to your employees. Make life in your organization important and worthy.

I am sure you can think of other commitments you can make going into the New Year. It is a good time to reflect on how we can each improve, both personally and professionally. It would be a good idea to ask your entire management team to reflect on their own behavior and how they could each improve, how they could each contribute to the collective performance of the group.

And, oh…, I will complete that book I have been working on for the past five years!!!

[1] Collins, Jim, Good to Great. pp. 12-13.

 

Posted in Corporate Culture, leadership, Lean Culture, lean management, Team Development | Tagged , , , , , , , , , , , | 7 Comments

How You Change Is The Change

Posted on December 6, 2011 by Larry Miller

Today the following article was published in Industry Week’s Continuous Improvement Newsletter.

Lean Management is not a change methodology; it is a destination, a desired set of practices and culture. How you get there will determine the outcome.

There are far more failures than successes as companies attempt to implement lean manufacturing or lean culture. I believe that most of those failures are the result of the absence of sound change management strategies and skills. How you change creates a set of expectations for what will follow. You create a “pull” for adoption of the change; or you struggle to “push” the string of change up hill.

Most managers and most consultants do not make the distinction between the destination and the method of travel. The destination can be defined as maximizing customer satisfaction, eliminating waste in all its forms, reducing variances or quality problems, speeding cycle times through core processes, and it can be defined as a culture of continuous improvement and empowerment. But knowing the “what” is like looking at a photo of Mr. Universe and saying “I want to look like that!” That’s easy. But, getting there is something else. Most failures are not the result of failing to know what you want to look like. Rather, they are failures in the process of change.

Here are some of the keys to successful lean implementation and culture change from my experience.

1. Ownership is 80% of success:

The first rule of change management is People will implement and make successful that for which they feel ownership.

Too often, the very people who are required to implement a change in processes or culture have it imposed upon them and do not feel that they had any say in its creation. This will almost guarantee failure. The worst way to go about change is to hire a high priced consultant and have them study, write a report, make a presentation, and leave the implementation to those who struggle with the day-to-day realities of life.

Habitat for Humanity knows something about managing change. Their program of building homes for the disadvantaged is not merely about putting up structures. It is about building human capacity and human dignity. When they build a home for a family they ask the members of that family to contribute “sweat equity”, their own labor to the construction of the home. This has the effect of giving the new owners a feeling of pride in “their home” that they helped to build. The probability of the family caring for and maintaining the home goes up in proportion to their sense of ownership.

Most senior managers have insufficient appreciation for the human capacity within their own people. For many years I have been facilitating internal “design teams” comprised of both first line employees and managers who are assigned the work of redesigning their work processes and their social system or culture. These are the people who have their feet on the ground and have true knowledge of how things work in the organization. They invite in their customers and listen to their concerns. They map out the current state of the work process and identify all the variances that cause waste in the process. And, they analyze the culture, the sources of motivation and decision processes. Then, they design the future state, an “ideal state” that transforms both the work process and culture.

I can honestly say that after doing approximately one hundred redesign projects it has never failed that those who design the future will develop a passionate commitment to their own design and will fight for its implementation and success. There is this commitment because it is literally “their own” design. It does not belong to a consultant or to senior management. These folks will make it work! That is fifty percent of success.

2. Build Competence, Don’t be Consultant Dependent:

Gaining ownership leads toward the development of competence in those who will implement the new design. But the building of internal capacity must go beyond that ownership. It must develop the skills of change management and skills and tools of training and developing people to live within a lean organization.

I am not anti-consultant. After all, I are one! However, consultants are very often misused. Consulting firms are all too happy to have you dependent on their consultants, the more the merrier, for a long time. That is, after all, how they make money. But, is that in the best interest of the client?

The longer a client is dependent on a consultant the less likely it is that the consultant is transferring his or her competence to the client organization and building capacity within the client firm. I recently completed an assignment at a Merck manufacturing plant where seventy one teams are implementing lean practices in every department and function and at every level of the organization. Everyone is involved. My role was to work with the senior team of the plant and to train and coach fourteen internal coaches, both salaried and hourly, who serve as coaches to all of the other teams.  Who learns the most in this scheme? Of course, the internal coaches who have to turn around and train all of the other teams. They now have the capacity to carry on the process indefinitely. As a team of coaches they meet and learn from each other. This internal consulting team can now learn virtually any new practice that comes along and serve as vanguard for implementation. They don’t need me anymore.

3. You Won’t Get It Right the First Time – Plan for Experimentation and Iteration:

When either Honda or Toyota have designed a new car and are preparing to manufacture that car, and even though they may have the world’s best manufacturing engineers, they do not assume it will all go right the first time. An auto assembly plant may produce a thousand cars a day. But, when these companies are beginning production of an entirely new car they close the plant production to zero, install the required new equipment and programs, retrain all the employees on the new car and the new jobs around its production, and then they make ONE car. They watch that car go through the production process. Inevitably, they find things that don’t work as planned. They may find machines that need to be re-adjusted or re-programmed. They may find workers who have not been fully trained. They will fix these things and then build another car. It may take months to gradually build up to full production.

Perhaps your managers implementing a major change are smarter than the Honda or Toyota manufacturing engineers, but I doubt it. The idea that we are so smart that we can design something that is complex to work perfectly the first time is pure arrogance; and arrogance is the worst enemy of continuous improvement. It forces managers to try to cover mistakes, inhibits learning, and creates waste.

Design the new process and the new human systems as best you can. Then implement those changes with an “attitude of science”, a willingness to try things out, then make adjustments and modifications. This attitude will drive out fear, maximize learning and maximize the rate of improvement.

4. Partner with Your Customers:

It is not you against the world unless that is how you choose to write the script. I am currently leading a couple of design teams that are redesigning the core work process of a service organization. They have major problems with unhappy customers. The design team invited in the managers of those customers, the very managers who are unhappy with the service they are receiving, and asked them for help. The design team asked the customers what improvements they would like to see. They asked if they knew of any best practices that they should adopt. And they asked the customer if they would help them in their effort to design the ideal service delivery system. It works every time! I have seen this over and over again. If you ask a customer for help in developing a better way to serve them, they always agree to help! Now you have a partner in your customer.

Every interaction with a customer is a sales call. Every interaction either increases or decreases the probability of future business. Asking the customer to co-create a solution to serve them is one of the best sales calls you will ever make. You have created a new partnership, a new co-owner of the house you are building for them. They will help you make it successful.

5. Invite In the Whole-System – Embrace the Complexity:

Every organization is a complex system, an ecology, with a variety of sub-systems (people systems, financial systems, information systems) all interacting with one another to determine the course of the whole. Just like our economy, the human body, or the culture of a country, the culture and competitiveness of a company is never the result of one system standing on its own. Yet, we hire a consultant to redesign the work flow. Another to implement teams or a motivation system. While another is redesigning the flow of information and another may be redesigning the structure. It is a prescription for the creation of waste. All of these systems must be aligned to the same principles and goals. They are all interacting and interdependent. If you don’t approach major change with an appreciation for this interaction and interdependence you are programming in failure.

Charter a design team to implement lean principles through the whole system, the core work process of the organization, and the enabling or support systems. If the human resource processes are not designed to enable the work of the core work process you have reduced the chance of success. If you have not designed the IT/IS systems to provide those who do the real work of service to customers with the information they need, you have again reduced the chance of success.

6. Get in the Boat and Row; Stop Standing at the Shore!

Be the change! If you want change in your organization, LEAD! Lead doesn’t mean writing encouraging memos. Leading is not simply deciding to go, or approving a budget. Leading is leading, being out front, doing what you want others to do. Be the model!

Twenty years ago Nevius Curtis was the Chairman of Delmarva Power and Light. He wanted to transform his organization into a fully empowered, high performance organization. In my first meeting with him I told him that if he really wanted to succeed, he needed to make his team “Team Number One.” He needed to have his team go through the same training, do the same things he desired of every other team in the organization. He signed up and he signed up his team. In a few years Delmarva became recognized as a model for quality management and empowerment. That effort has sustained to this day. It worked because the leader provided true leadership. He didn’t stand on the shore and yell “Row!” or criticize the efforts of others. He provided a model.

If you want to create genuine and lasting change you will get in the boat and pull on the oars and you will soon find that you have an army of rowers all pulling behind you, and in the same direction!

 

Posted in Change Management, Corporate Culture, leadership, Lean Culture, lean management, Lean Manufacturing, Organization Design and Process Improvement | 3 Comments

Lean Healthcare

Posted on November 6, 2011 by Larry Miller

Over the past months I have been working rather intensely with a Canadian healthcare organization, the Victorian Order of Nurses (VON). This work has made very clear in my mind two things: first, that healthcare is in need of lean thinking and culture (I am sure not a surprise to anyone); second, that lean is an “end state” but not a change methodology.

Lean, as we all know, is the elimination of waste, designing processes to meet customer needs, and a culture of continuous improvement. But, too many organizations have reduced lean implementation to the simplicity of using an A3 report, doing 5S, or doing some very targeted and small scale problem solving using PDCA, DMAIC or other problem solving methodology. While all these are good things, none of them transform the culture or major work processes of the organization. They address a fragment of the system, not the whole-system. Whole-System Architecture, a combination of socio-technical systems design, appreciative inquiry, re-engineering, and other methods, does exactly that. Fortunately, at VON, I have the opportunity to once again look at and redesign the whole-system of the organization. It has been very gratifying.

Judith Shamian, the CEO of VON, recently published the following guest blog post by yours truly.

Can Healthcare Learn from Lean?

Guest Article by Lawrence M. Miller

Management fads come and go and leaders of organizations are frequently guilty of jumping on the bandwagon of the next set of buzz words. Now comes the repackaging of the Toyota Production System in the name of lean management or lean culture. On the one hand healthcare managers may reject it as something that fits on an assembly line, but does not fit in a professional service organization. On the other hand, there may be principles, some wisdom, that if we seek to understand, we may be creative and find ways to improve our service to our clients.

Over the coming months VON will seek to apply the following principles to our own work with the simple goal of improving the client experience and the experience of our funders.

Flow and the Elimination of Waste:

Some years ago I was working with Honda America Manufacturing as they developed their manufacturing plants in North America. I learned something important from them. The brains of Honda managers were wired differently than the brains of other manufacturing managers with whom I had worked. Their instinct was to think horizontally, to think about the flow of materials without regard to walls or silos created by internal departments or even the legal walls that separate companies. They viewed the flow of work through the eyes of the customer who catches the end product and has no interest in whether a problem occurred in department A or B. Every day Honda engineers were in supplier locations, seeking to assist their suppliers to improve the flow.

Every interruption to flow is bad. Materials and information, when they move horizontally, without piling up on pallets or in bins, are good. Small piles are good. Big piles are bad. Delays in the flow must be eliminated. Stuff standing is waste. Stuff piling up as inventory is waste. Waiting, delays are waste. Eliminate all delays and rework. Optimize the flow!

To optimize the flow decisions cannot constantly be going up and down levels of the organization. This takes time and represents delays and interruptions in the process. For this reason, as well as others, employees must be truly empowered to make decisions “on-the-spot” and must be respected as the “world’s greatest experts” in their work.

High performing teams or individuals appear natural when their performance flows with seemingly little effort. Athletes experience flow, or what they may call, “being in the zone.” A musician may say she is in “the groove.” Flow for an individual is complete focus, absorption in a task, when all energies move with ease and without interruption. Rather than feeling great exertion, the work feels natural and exhilarating. Mihaly Csikszentmihalyi described flow as the psychology of optimal experience. If you type well, you experience flow, the uninterrupted movement of your fingers. If you play a musical instrument well you experience flow. And, our organizations can experience a collective flow as we work together as a well conducted orchestra, moving to the rhythm of our clients.

Can this principle of flow and the elimination of waste be applied to healthcare? Of course it can. Every waiting room in a hospital is much the same as in-process inventory, input sitting on pallets or bins, waiting to move to a point of adding value. In healthcare, every delay and interruptions in the process are not only waste, they increase the risk to the patient. From the moment a patient feels a pain in their stomach to the exact moment when the right care is delivered to the patient, every moment is a wasteful and risk creating moment. But, healthcare organizations and clients, have come to believe that waiting, being sent from one office to another, from one phone call to another, are all necessary to the process of getting care. But they are not necessary. They are symptoms of poorly designed processes and the failure to apply the right principles.

At VON, as well as at all healthcare organizations, we must seek continuous improvement by eliminating walls, delays, and rework that create interruptions in the patient experience.

Respect for People

Mr. Toyoda, the founder of Toyota said that employees have only two responsibilities: first, to be there, every day, on time; second, to stop the line. That is right. Every hourly employee working on the assembly line is authorized, empowered, and instructed to stop the entire production line on which thousands of other workers are employed. When this is explained to managers of traditional manufacturing plants, they don’t believe you. They think this is impossible. You would have chaos if every employee could stop an entire production line! Within their paradigm and their culture, they are right. But, it is a different paradigm and different culture.

At Toyota, when an employee sees a quality problem, immediately and without delay, every employee, manager and engineer seeks to solve that problem. And, then the work resumes. Quality problems are not passed on to others.

As parents, most of us have witnessed the effect of giving your child responsibility. It gives them pride and they generally rise to the occasion and act in a way that is worthy of respect. Showing respect tends to result in behavior that is worthy of respect. Honda refers to their employees, their “associates,” who work on the line as “the world’s greatest experts” in their work and it is the job of managers to assure that they are, in fact, the world’s greatest experts in their work. If you are doing your job as a manager you will have employees worthy of respect.

If an auto manufacturing plant can practice respect for people, how obvious it should be that a healthcare organization, a nursing organization, should equally demonstrate respect for people. Nurses enter the profession for the highest motives, to serve others. They are worthy of respect, as are our patients and funders.

But, what exactly does this principle mean in an organization like VON? It means that the work of nurses must be designed to respect their ability to make on-the-spot decisions to serve their clients in the best possible way. It means the organization should provide the opportunity for continual learning and development of their skills. It means that we must involve them in the design of the work process and organization that will enable them to provide quality care. We are, after all, an organization of nurses.

Of course there are other principles – continuous improvement, customer focus, managing by the facts, and others. Each of these principles appears simple on the surface. However, it is meditating on their meaning, their implications for daily life in our organization that will return benefits. There is no one right or simple answer to applying lean to healthcare, any more than there is one simple answer to the pursuit of human health.

Healthcare is a complex system. Complex systems are hard to change by pulling on specific or detailed levers. There are too many of them, all interacting with one another. However, complex systems are changed by the adoption of new principles and the determined and sustained application of those principles.

Healthcare organizations must gain dramatic improvements in both the efficiency and effectiveness of healthcare services. Lean thinking can be one source that improvement.

 

 

Posted in Corporate Culture, Healthcare Lean, Lean Culture, lean management, Organization Design and Process Improvement | 2 Comments

Lean Culture and Continuous Improvement Require Enabling Structures

Posted on September 1, 2011 by Larry Miller
  • (NOTE: The following was published earlier this week in Industry Week’s Continuous Improvement Newsletter. This version does contain some additional graphics that they were unable to publish. They have asked me to write articles for their blog, which I will be doing. I will then republish them here.)

Culture tends to spin around the core work process of an organization. It may either enable or hinder the work processes that we spend so much time trying simplify.  Lean implementers generally agree that the most difficult part of achieving a truly lean organization is changing the culture.

A Framework for Lean Culture

A good place to start is with a simple framework of what comprises the culture of any organization. Cultures are whole-systems, like the human body or the economy. They are complex, interdependent systems and should be redesigned with an understanding of how the different components interact with one another.

Every culture must adapt to the external environment: changes in technology, economy, climate, social trends, resource availability and even the political environment. Having spent a number of years working with oil exploration and production companies I am well aware how little control they have over the economy, the climate, or political events, which have huge impacts on their business. They can’t control them, but they must sense and responds to these changes.

At the heart of any culture are the values, vision or beliefs of the culture. The cultures of the United States, Middle Eastern countries, or any corporation are built on a value system. It is the job of leaders to manage this cultural core and align behavior and other factors to the core beliefs.  Symbols and stories often do the most to pass on and preserve the values of a culture.

The factors that are most controllable and which often inhibit lean implementation are the Structure, Systems, Skills, and Style. If one examines great companies like Toyota, Honda, Intel and others, you will find distinct differences in the “S’s” of the culture that are essential to their ability to sustain high performance and to adapt to changes in the environment.

Let’s take a look at how organization structure may inhibit or enhance improvement efforts.

The Structure of Change Efforts

Change efforts are often structured to their own detriment. Continuous improvement efforts often follow a model that is very similar to the Quality Circle idea (repackaged, of course) of forming teams to address specific problems. These teams use good problem-solving methods, make a recommendation and then dissolve. This can and often does result in useful improvements.
Management is often attracted to this model because it does not require them to make fundamental changes in the way they do their own work or to address the real systems and structure that drive the culture. Let’s face it – initiating a problem-solving team is easy for management. It sells well.

There is however a serious problem with this approach. If a temporary team is formed to find and eliminate waste, one might ask the question, “Who created that waste?” Did the problem-solving team create the waste? Do they have the power to make truly significant changes? Will they be the ones to follow through on the implementation of solutions, evaluate and learn from those solutions? Generally, not.

Power resides in the line management teams. Invariably, it was the line management team who made decisions that resulted in the creation of waste. In fact, the management team’s own behavior is often a major source of waste in the organization. Their behavior and poor decisions are often the root cause. Why then are the line management teams not the ones who are analyzing the problem, using good problem-solving tools and making decisions to solve the problems?

The answer is simple: It is much easier for management to appoint a temporary team, with no formal authority, to study and make a recommendation, than it is to look in the mirror and address their own behavior and solve their own problems.

Consultants are often guilty of being enablers of the problem. It is easier to say to management “Let’s form a temporary team, throw some money at it, we’ll take care of it, and you can continue to function as you do, unscathed by the improvement effort.”  That may be an exaggeration, but not by much.

If you want to create serious and sustained change in the culture of the organization, you MUST address the functioning of the line management teams. This is the core management structure, this is where power resides. This is where the big money decisions get made.

Structures that Create Teamwork Follow the Flow

I was once asked by a senior executive “Why do we need any structure at all?” The question surprised me because it is one of those things we all just take for granted. But, it is a good question to ask.

When you consider what an organization does, it takes in input, processes that input, changes its state in some way, then sells the output to a customer. This is the core work of the organization. Everything, and I mean everything, must add value to this core work. The structure of the organization should be designed for one purpose: to facilitate, and not interrupt, the flow of the core work process. Second, they should be designed to maximize the ability to solve problems and make improvements in the process. Ask yourself whether or not the structure of your organization accomplishes these two objectives. Or, does it inhibit the work flow, creating walls, interruptions in decision making, and separating people who need to solve problems as a unified team?


Most of the organizational structures of our corporations were created in an age in which lean, flow, and rapid improvement was not the basis of organization design. They were not designed to optimize the horizontal flow that serves customers. They were not viewed from the eye of the customer. Rather, they were viewed from the perspective of functional specialization. The focus was on moving “up the ladder” in the engineering, manufacturing, or marketing department. “Up” mattered more than sideways teamwork. The customer view is entirely horizontal and our organization design should first and foremost meet the needs of our customers.

I spent considerable time working with a major petroleum exploration and production company to redesign the deep water exploration and drilling work process and culture, in other words, the “whole-system.” The process is massive. It requires years of work to explore a property, do exploratory drilling, analyze the results, and develop the well for production. As the design team mapped the process, one thing became clear: there were dozens of handoffs from geologists, to economists, to explorationists, to various engineering departments, etc., etc. Each handoff resulted in redo loops, blame between one group and the other, and delays. But, one thing was missing. No one owned the project and process from beginning to end. It was like a child who was handed off to new parents each couple of years, parents who specialized in the development during those years. By the time the child reaches maturity he would be an orphan for whom no one would take responsibility. Fortunately, we don’t raise children that way!

The redesign of this process resulted in one project owner team, who managed the project from womb to tomb. They brought in expert teams as those teams were needed, but they maintained the horizontal view and they were given the necessary authority to make the important decisions that guided the process. That process now takes less than half of the time it did before redesign. The primary reason for this success was the creation of organizational structure and decision processes that enabled rather than disrupted the process.

When designing the “whole-system” of organizations I have found it most helpful to design the structure from the bottom up – a zero-base design process. You start with the work process only. You then ask how best to group first level employees who do the real value adding work. How can you group them around the process to give them maximum control over the process, create maximum learning and improvement? You design the tools, the training, the information flow, and anything else you can think of to optimize their ability to do their work. These are your work teams. Once you have done this, you then ask “what help do they need?” You don’t ask “what is the job of supervisors?” You ask the question from the perspective of what will optimize the work of those who create value to customers. Then you form those first level managers into teams. Again, you ask “what help do they need?”

By starting from the bottom and seeking to optimize the ability of each team level, you will find that you often need fewer levels than when you started. You will also create a team structure that follows the flow, rather than interrupting the flow. You will create not only a customer focused process, but a customer focused organization design.

Posted in Corporate Culture, leadership, Lean Culture, lean management, Organization Design and Process Improvement | 2 Comments

Lean Leadership – The ONE Quality that Matters Most

Posted on July 20, 2011 by Larry Miller

I have thought for a long time that there is a profound relationship between the personal qualities, even spiritual qualities, of leaders and the management practices of the organization. When we implement lean management we tend to be focused on value stream maps, leader standard work, problem-solving skills, etc., all of which are important, but all of which produce little if they are not accompanied by one essential personal characteristic.

Rupert Murdoch: Humble or Hubris?

Watching bits of the testimony of Rupert Murdoch and son before the British Parliament I was struck by his planned and deliberate comment that this was the most humble moment of his life. I have no doubt that was true. Rupert Murdoch is a man well known for bullying his way through business dealings and using his media empire to manipulate and bully political figures toward his own ideological view of the world. Humble is not a word likely to be used to describe Murdoch. Nor was humble a word that would have been used to describe the former leaders of Enron, General Motors, Tyco and many of the Wall Street investment banks that led us into an economic tsunami. Rather than humility, it is hubris that better describes these leaders and the entire culture of their senior management.

On the other hand, my involvement with Honda and some other truly great companies has convinced me that the one single most important quality essential to creating lean culture is the quality of humility. Jim Collins in Good To Great documents leaders who possess this quality of humility. He describes what he calls Level 5 Leadership: “We were surprised, shocked really, to discover the type of leadership required for turning a good company into a great one. Compared to high-profile leaders with big personalities who make head-lines and become celebrities, the good-to-great leaders seem to have come from Mars. Self-effacing, quiet, reserved, even shy – these leaders are a paradoxical blend of personal humility and professional will. They are more like Lincoln and Socrates than Patton or Caesar.”

Typifying this at Honda, the former President, Iri Irimajiri, sat at his desk in the open office area with all other managers, walked the floor every day to learn, not to speak, and wore the same clothes as every hourly employee. And, at senior management meetings when solving problems, a vice president would offer a suggestion and someone else would ask “Yes, but have you been on-the-spot to talk to the experts” those doing the actual work.

Humility is the Antecedent to Learning

Arrogance and hubris are the destruction of learning and learning is no where more important than at the top of the management process. It is the most important leadership quality.

Why is humility so important? It is all about learning, listening and inspiring.

First, lean culture is the result of attitudes of science, not ideological points of view. The leaders that built the Toyota Production System did not begin with a religious like belief that they then sold and pushed through the company, an approach common in our corporate culture. It was the opposite. It was the process of scientific inquiry. Don’t “get religion” – get science!

TPS or “lean” is the result of a thousand experiments. The lean leader watches the data and let’s the data speak. The subject of an experiment, or the dependent variable, is never wrong. B. F. Skinner used to say to his students “The pigeon is never wrong!” Pigeons respond to stimuli (independent variables) the way pigeons respond. It is YOU who must adjust your methods. Watch, listen and learn from the data. Learn to read the graph! The pigeon is teaching you more than you are teaching the pigeon. Every classroom teacher understands this same principle of interactivity between teacher and student, manager and employee, customer and supplier.

The customer is never wrong, as Dr. Deming would say. Listen to them. It is you who must change your methods to meet their needs. Too many times I have seen companies develop a new way of doing something, a significant change in their work processes, and then be personally invested in this new way. The manager’s ego is determined to make this new way work! To the degree that this is true, they do not watch the data and let the data speak. Experiment! Try a new method on a limited basis and watch the data. See the results and learn from those results. Do not pile on mistake after mistake when something is not working. Invest enough to learn, and then invest more based on what the data is telling you. Do not get “invested” from an emotional standpoint and then feel the need to make something work when customers and the data is saying something else. This is one of the forms of “waste” most often created by leaders.

The idea of a “learning organization,” as promoted by Peter Senge in his book Fifth Discipline, is not something different from lean management. Rather, it is embedded within lean management. A learning organization is an organization in which individuals and teams watch and learn, make changes, experiment, and then learn from those experiments. This should be going on every day within every team at every level.

  • What are you learning today?
  • What experiment are you conducting today?
  • What is the data telling you today?

These are the questions that should be asked of every team, including every management team.

One of the best articles on lean management, in my opinion, was an article published in the May 2004 issue of the Harvard Business Review by Steven J. Spear, titled “Learning to Lead at Toyota.” It describes how a new, but relatively senior manager is integrated into the Toyota culture. Bob Dallis, the new manager is assigned a coach, Takahashi, who leads him through his learning process.His integration will involve 12 intensive weeks in the U.S. engine plant and ten days working and making observations in a Toyota plant in Japan.

Listen to his first experience: “Bob Dallis’s first assignment at the U.S. engine plant was to help a small group of 19 engine-assembly workers improve labor productivity, operational availability of machines and equipment and ergonomic safety. For the first six weeks, Takahashi engaged Dallis in a cycle of observing and changing individual’s work processes, thereby focusing on productivity and safety. Working with the group’s leaders, team leaders, and team members, Dallis would document, for instance, how different tasks were carried out, who did what tasks under what circumstances, and how information, material, and services were communicated. He would make changes to try to solve the problems he had observed and then evaluate those changes.”

In other words, this manager’s first fourteen weeks at Toyota were spent “on-the-spot” learning to observe, conduct experiments and evaluate those experiments. Put another way, he was learning to engage in continuous improvement. This is the essence of lean management.What Bob Dallis was learning at Toyota was, more than any skill, the attitude of humility which is the antecedent to learning and improvement.

Now compare this to what happens when you hire a new manager or give a new assignment to a manager. How many times have you hired managers who entered their new jobs, not with humility, but with an attitude of demonstrating their superior knowledge and ability? How many times have you implemented new programs or practices with an attitude of determination to make it work, rather than with an attitude of continuous improvement and learning – an attitude of science?

Lean cultures are able to engage in rapid improvement because they make changes with an eye on the data. They experiment and like any good scientist, they are willing to toss aside changes that don’t work. They can then quickly move on to another more productive experiment.

This humility, I believe, is the one most important personal quality of lean leadership.

President Lincoln and the Victory of Humility over Hubris

The reference to President Lincoln in Jim Collins’ quote is worth a moments meditation. Lincoln was a man who suffered chronic depression, at the time called “melancholy” so severe that he cried frequently and feared that if he carried a knife he would use it on himself. But one author, Joshua Shenk, argues that this suffering purposefully prepared him for the role he assumed. His opponents in the great Civil War, Lee and even more so Stonewall Jackson, fervently believed they were doing God’s will and prayed for his assistance against their enemy. They rode into battle believing they were God’s warrior and that God would surely assist them in their efforts. And it was this hubris in battle, particularly at Gettysburg, that led to Lee’s defeat.

On the contrary, Lincoln said “I shall be most happy indeed if I shall be an humble instrument in the hands of the Almighty, and of this, his almost chosen people, for perpetuating the object of that great struggle.” Lincoln prayed that he might be a humble instrument of God’s will, rather than praying for God’s help in doing his own will. This is not a small distinction and is part of his moral leadership.

It was also not coincidental that Lincoln was required to, and willing to, make change after change until he found the two generals, Grant and Sherman, who would lead his armies to victory.

Hubris lost, as it inevitably does, and humility won.

 

Posted in Corporate Culture, leadership, Lean Culture, lean management, Organizational Behavior Management | Tagged , , , , , , , , | 9 Comments

Survey Results: Execution and Importance of Lean Culture and Leadership Factors

Posted on June 28, 2011 by Larry Miller

I recently solicited the opinions of lean implementers regarding the progress they have made and the importance of what I felt were key factors when implementing lean culture or management. The individuals who responded were either those who read my own blog, those who participate on the NWLean Yahoo discussion forum, or members of the Lean/Six Sigma LinkedIn forum. It is safe to say that all of these individuals are engaged in the process of implementing lean, either as an internal change agent or an external consultant. A total of 82 individuals completed the survey.

To download the complete report please go to my “Papers, Etc.” page and click on the report to download a PDF file that presents my analysis of the data. You can also download the complete data set if you like.

How can you use this data? All of those who implement lean practices are in the business of influencing, convincing or changing the behavior of both managers and employees. I think this data can be helpful in making the case for changes in behavior and practices that are essential to lean implementation.

Who are the participants in the survey? 63% work in the manufacture of “things”; while 9.3% are in chemical or liquid manufacturing. Only 2 were in healthcare and only one was in sales or marketing. 25% were in service organizations.

All surveys simply report the perceptions of those taking the survey, rather than some absolute measure. The pursuit of “lean” is often described as a journey. I felt it was worthwhile to ask where these practitioners perceived their organizations to be on their journey.  It turns out that they have a fairly humble view of their progress. About sixty percent felt that they were no more than 25% of the way on that journey.

One of my own biases is to view the lean journey as containing two parallel tracks:  the technical track of modifying factory layout, inventory processes, and other technical aspects of the work; and, the social track – all of the issues around the engagement, motivation and management of people. I asked the participants whether they felt they had made more progress on the technical or social aspects of lean implementation. Thirty one percent reported that they “have made little progress on either.” Twenty seven percent said they had made significant progress on the technical side, but little progress on the culture, while only 12.5% felt that the reverse was true. Almost thirty percent felt that they had made equal progress on both the technical and social sides of lean.

Progress on Technical vs. Social

 

I then asked which would be most important in the coming year or two. Only 7.3% felt that progress on the technical side would be most important. 45% felt that progress on the social side would be most important and 50% said they would be equally important. (Note: I do realize that those percentages don’t exactly add up! But that is the way SurveyMonkey reported them.)

 

 

 

 

 

 

Which Factors Are Most Important?

Factor                                                                                    Importance               Execution

Creating a sense of purpose (5)                                                            89                    53.4
Managers have instilled a spirit of teamwork (53)                          84.4                 50
Promoting strong values  (7)                                                                83.8                 54
Leaders are effective at engaging team members (13)                    83.5                 49.4
Leaders have created employee empowerment (15)                       83.5                 47.2
High trust between employees and managers  (17)                        83.2                 44.8
Leaders act with urgency (9)                                                               82.7                 52.2
Managers focus on improving the process (31)                               80.6                 47.2

Which Factors Are Most Deficient in Execution?

Now let’s look at the items that got the lowest scores for how well they were executed or performed in the organization.  Again, this is entirely arbitrary, but we will take scores below 45 as a cutoff.

Factor                                                                                            Execution       Importance

Managers have defined leader standard work (63)                          30.8                 67.9
Most manager engage in disciplined problem solving (11)             36.6                 72.6
Managers are able to follow a disciplined PS model (61)                38.3                 76.6
Every employee is a member of a team (57)                                       39.9                 75.6
Managers can show a visual map of their processes (35)                40                    66.6
Managers are competent at motivating employees (21)                  41.8                 79.7
Feedback from customers to employees (25)                                    43.4                 70.4
Managers are competent at facilitating meetings (59)                    43.5                 73.7
Each team has defined their customers (27)                                      44.1                 71.6
There is high trust between employees and managers (17)            44.8                 83.2
Managers are good at motivating employees (47)                            44.9                 77.8

One of the more interesting set of factors, in my opinion were the comparison between performance and importance for the two items (19) “Managers are highly competent in the technical work for which they are responsible;” and (21) “Managers are well trained and competent at motivating and developing employees.”

Click on the following images for a better view.

There is a lot more data and analysis in the full report that you will find on the “Papers” page. You are welcome to download this and you may use the data as you wish, and do your own analysis.

For myself, it reinforces the need for managers to “be the change” by practicing the methods of lean culture personally. It also points to serious training needs in regard to problem solving and motivating employees. One of the greatest concerns in this data is the poor rating of trust between managers and employees. However, this may be explained by the other data. If managers are not practicing what they preach, this alone will lead to low trust.

I welcome any different interpretations or suggestions for future surveys of lean practitioners.

 

Posted in Corporate Culture, Lean Culture, lean management, Lean Manufacturing, Organizational Behavior Management | Tagged , , , , | 4 Comments