leadership Archives - Management Meditations

On-line Training Partnership with Liker Leadership Institute

Posted on May 19, 2013 by Larry Miller

Jeff Liker, the author of The Toyota Way, Lean Culture and Lean Leadership has developed an online training program in Lean Leadership. I have agreed to serve as a coach to those taking the Lean Leadership course. The course is self-paced and online. There are two levels of the course, one leading to a Yellow Belt Certificate and the other leading to a Green Belt Certificate in lean leadership. This is a good way to engage a large number of managers who may not have the time to attend on-site training and who can progress through the course on their own time. This can be supplemented with on-line Webex discussions about application among the managers in your organization.

Who Should Attend

Executive Leadership Team
Managers
Lean Project Sponsors
Team Leaders

Why

This course is designed to give participants a deeper understanding of what it means to be a true ‘Lean Leader.’ Through this interactive series of videos delivered by 11-time Shingo Prize winning author Dr. Jeffrey K. Liker, you will learn directly from Dr. Liker all aspects of Lean Leadership. You will be taking frequent quizzes and getting feedback to gauge your progress throughout the course. Training like this is not available anywhere else.

Liker Leadership Institute (LLI) offers an innovative way to learn the secret to lean leadership

“When I wrote “the Toyota Way to Lean Leadership” with Gary Convis we knew that “lean leaders” would finally have a way to live the company values, become excellent at process improvement following the disciplined approach of Plan-Do-Check-Act, learn to coach others in process improvement, and lead both horizontally across the company and vertically within their area of responsibility. This allows them to achieve the challenging targets the organization needs for success.

“My online course provides an overview of each step in the lean leadership development process: Self-development, Developing and Coaching Others, Supporting Daily Kaizen, and Creating a Vision and Aligned Goals. Throughout the course you will learn more deeply through exercises, case examples, quizzes. and actual projects in your workplace under the guidance of talented lean coaches (LLI Coaches).”

Administered in 15-minute sessions.
Online and on-demand, the course can be taken from anywhere in the world, at any time of day, and on any computer or smartphone with internet access.
Distinguished through accessibility.
Students select a code and are paired with a coach that suits their interests, their preferred language, or their geographical location.
More opportunity.
Students are also given the opportunity to access the LLI WebOffice, making available to them all the resources that Jeff Liker and the LLI Coaches use.

Sign up here at Liker Leadership Institute

Decide whether you want to take the Yellow Belt or the Green Belt course.

Be sure to put in the following code for Yellow Belt course: Either DC or MD
For the Green Belt course: Either GDC or GMD (this will assure that I will serve as your coach)

If you have any questions, please contact me at LMMiller@lmmiller.com.

Creative Destruction and Transformational Change

Posted on April 25, 2013 by Larry Miller

This is about lean management and organizational change. It is about adapting to disruptive technology and markets. The ability to adapt your organization’s capabilities to changing technology and markets is, in itself, a core competence required of every organization today. And, continuous improvement will not get you there. Disruptive technologies and markets require transformational change, revolutionary rather than evolutionary, not simple problem solving or continuous improvement.

The lean management process or Toyota Production System is founded on continuous improvement. But that continuous improvement is built on top of a stable platform that is aligned to a relatively stable market. Cars still have four wheels, for the most part still have an internal combustion engine; but, they don’t fly and they don’t travel over the Internet. But, what if technology completely disrupted the business model. And, how do you transform to adapt to disruptions?

The Creative Destruction of the Book World

As an individual consultant and author, I am my own business unit, seemingly uncomplicated, but definitely multi-functional if not multi-skilled. I have just finished another book. In the good old days of publishing you sent your book off to your agent or your editor and you trusted the publisher to handle everything from that point forward, including editing, cover design, marketing, etc. Hopefully, you received a fat advance making the torture of writing minimally rewarding. For many authors, those days are history. Even highly successful authors are now turning to self-publishing and disrupting the traditional system.

The changes to which authors, and many companies must respond, are driven by the changing demands of the customer or market place. And, those changing demands are the result of technology shifts.

Here is what has changed. Yesterday I visited my local Barnes & Noble in Annapolis, carrying my Nook and visiting their Starbucks where I could sit and enjoy browsing books on my Nook tablet while sipping my favorite beverage. I have watched this store over the past twelve years as it has been transformed. Ten years ago there were six large book cases of management books (not counting finance, investing, etc.). Today there are two. Most of those two are taken up by legacy best sellers. Wandering around the store I saw shelves labeled “Manga.” I never heard of Manga! I went over to investigate and there was a teenage girl flipping through one of the books and I asked her what Manga was. “Japanese cartoons”, she replied, looking at me like I was stupid! There are three large shelves filled with books of Japanese cartoons. Japanese cartoons are outselling the Toyota Production System by a mile! And, I thought I was smart!

At least half of the floor space at this Barnes & Noble is now consumed by children’s toys and electronics associated with the Nook. Add the space for magazines, blank diaries, reading lights, and Starbucks, and less than half the floor space is left for books. And, that is disappearing fast!

I don’t blame Barnes & Noble, which is losing money in its stores. They are fighting to stay alive and trying their best to adapt. They are the only remaining bookstore chain and there are precious few independent bookstores. When I want to buy a book, or browse for what’s new in a field like lean management or change management, I would be wasting my time to go to any bookstore. The books aren’t there. Like you, no doubt, I go to Amazon or B&N online. There I will search key words, read descriptions, reviews and the author’s information and purchase the book or the e-book. That is the market for business books today.

NOOK Media, LLC Given this disrupted reality, what does a publisher do for an author, that the author cannot do himself? The primary reason for publishing with a major publisher was distribution… their sales force that would sell your book to the book stores. But, with shelf space rapidly disappearing… they aren’t buying. Need an editor? You can hire one in any town or from the Internet. Google “book editor.” No problem. Need a cover designed, do the same. Need a publicist. Hire one. You can manage the entire process yourself and keep the majority of the margin on the retail sales.

Lean is the elimination of waste, non-value adding activity. If the reader can get exactly what he or she wants, directly from the writer, everything between the writer and the reader is waste. Trips to a bookstore are waste. Standing in line is waste. Staring at a bookshelf where you can’t find what you want, is waste (unless you are looking for Manga!). It is entirely possible that the Internet will soon make both publishers and bookstores a thing of antiquity. Where is that blacksmith’s shop, anyway. Of course, I am fond of bookstores. I remember when my American Spirit and Barbarians to Bureaucrats were on the front table at Walden Books, Brentano’s, and Border’s. There is no greater satisfaction for a writer than to see your book on that display table at the entrance. But, unless you are a celebrity, a politician or a famous sports star, it probably won’t happen but for a very few.

Publishing is becoming a lean business. Author to printer to Amazon to reader, directly. It is a pull system. You order a book from Amazon, and although they say they have x number in stock, in most cases they don’t have any in their warehouse. The electronic order goes from your desk, to Amazon, to the on-demand printer, in seconds. The printer prints the book you ordered, a single copy, that night, and ships it the next day. It arrives at your door in a box that says Amazon the following day, but it is coming directly from the POD (print on demand) printer. Of course, it is faster than that if you order the Kindle, Nook or iPad version. That is lean publishing, all enabled by the technology of the Internet and new printing technology.

So, what does that have to do with your business? The shorter answer is everything. The exact same principles and process are being applied to almost every business.

The Strategy of Adaptation

If you believe that creative destruction can’t happen in your business it is possible that you are like the frog in the gradually heating water who only tries to jump out when it is boiling. Almost every business is being disrupted to some degree. Here are some things you can do to survive creative destruction.

1. Who Gathers and Analyzes Intelligence?

Sensing is the beginning of strategy. Strategy is about sensing changes in the external environment and defining how to adapt, how to position your organization for competitive advantage given the changing landscape.

When I was a young man I served in the U.S. Army Intelligence Corps in Europe and Vietnam. Most people don’t realize that more than 90% of intelligence gathered, processed and analyzed by the CIA and the DIA is overt, rather than covert, intelligence. In other words, it is available from public sources. I am not advocating spying by any company. But, I am advocating having a deliberate process of gathering and processing intelligence on the external landscape. The external landscape include technology, economics, political changes, social changes, competitor behavior and even climate change. With all the information about disruptive changes you cannot evaluate all the data casually. It requires a system, responsibility and accountability.

It has amazed me that large organizations will have hundreds of sales people out speaking with customers and learning about their changing preferences and competition every day, yet do almost nothing to process the intelligence they are gathering. It is like having eyes but not seeing. And, that is only one source of readily available intelligence.

The real problem is that most companies are like a government would be if they had not CIA or DIA to process and analyze information. Who is responsible for objectively analyzing all of the available sources of information on your markets, relevant technologies and competitive behavior? And, is that information presented to senior managers in a way that leads to effective responses? From my observation, in most companies this process is entirely haphazard.

2. Who Builds Adaptive Scenarios?

Potential disruptions to your business model must be prioritized.The military is very good at this. They constantly build scenarios around irrational behavior from North Korea, another revolution in the Middle East, or other potential threats. Chances are they have a planned response for almost any contingency you can think of.

What are the greatest potential threats to your business? And, how can you capitalize on any new technology or social trend to create a threat to your competitors? Better to be the disruptor, rather than the disruptee.

Which management group has oversight for strategic adaptation? It should be the senior management team with clearly delegated responsibility for both sensing and responding. How often does the senior management discuss the intelligence and potential scenario? The president of the United States receives an intelligence briefing daily. That’s a clue. In today’s rapidly changing environment, an annual strategic planning process, with annual plans, is entirely too slow.

3. Who Designs the Future?

In truth, many organizations today are poorly designed for their current reality. The structures and systems were created in an age of stability and slow change. In The Machine that Changed the World there is a case study of a two teams designing a new car model. One was the new Chevy Barreta and the other a new Honda Accord. Both companies designed the cars utilizing cross functional teams comprised of engineers from engine, chassis, transmission, manufacturing, etc. But, in the case of the Barreta the members of the team each reported up to their siloed structure for the engine division, chassis division, etc. Every decision had to be approved up through the line management of those silos. In the case of the Honda Accord team, the team leader reported to the CEO and everyone understood that the two most important teams in the company were the team designing the next Accord and the team designing the next Civic. Everyone else worked for those teams. In the Barreta case the team leader quit three times in frustration. Needless to say the Barreta doesn’t even exist anymore. It took twice as long to design and it had little appeal in the market place.

Structure matters. When technology and markets shift, as they are in healthcare and many other fields, the structures and the systems of the organization need to be transformed to align with the new reality. Continuous improvement will not break down major organizational walls or redefine major systems and processes. Continuous improvement is ideal for improving micro-processes within existing structures. But, if those structures are not aligned to the external environment, and not aligned to each other. Continuous improvement will not get you there. Transformational change management is required.

4. Transformational Change is a Core Competence

In stability you don’t need to transform your systems and structure often. But when the landscape is changing and at rapid speed, this competence of managing change is likely to determine winners and losers.

Strategic planning should sense the external landscape and define the future markets and market positioning of your company. That should be a core competence. But, transformational change goes beyond that. Transformation change creates the internal capabilities required to compete in the future environment. Your strategy might say that in five years fifty percent of your sales will be direct to end-use customer sales over the Internet. That is a market strategy. But, it does not define the internal capabilities that will enable that result. What skills are needed? What culture will enable you to manage that type of business? What processes are required to perform in that marketplace? What structure will enable those processes?

Transformational change management is a process, not of problem solving, but of creating the future – the organizational capabilities required to adapt to the changing environment.

Fast Cycle Lean and the Rebirth of American Manufacturing at GE’s Appliance Park

Posted on January 23, 2013 by Larry Miller

The only thing certain about a trend is that at some point it will reverse or achieve stability and be a trend no longer. For the past thirty years the United States has witnessed the decline of manufacturing as China, in particular, became a willing provider of low cost labor with few health, safety or environmental regulations. The outsourcing trend may have run its course.

Outsourcing was based on an understanding of the different functions in the product innovation-to-market process as distinct and separate functions. It was not a lean, interruption free process. Product design and engineering could be done in the U.S. or Europe, the product specifications could be shipped to China where the process/manufacturing engineering and the manufacturing was done. It was then transported, sold and serviced in the country where the cycle began. The logic of this process assumes that each function is separate and distinct. But, might there be a competitive advantage in the overlap of these functions? In other words, might the ideal process be a bit more non-linear, with overlap between design/engineering and manufacturing and sales? What if each was a team, and members of each team spent time with the other teams engaged in dialogue about how to improve the product and respond to market intelligence? How would that change the outcome? And, then might there be an advantage to co-location, rather than having the process separated by a very large ocean, language and culture?

GE is proving that this is not a theoretical question, but one that is demonstrating results and drastically altering the manufacturing strategy of one of the world’s largest manufacturers. The return of jobs by GE to its Louisville Appliance Park is the best evidence yet of a new trend and it is important that every company engaged in manufacturing consider the key elements that make this a sound business decision.

The Landscape Shift

The exporting of manufacturing jobs to China was based on a few simple premises:

First, wage rates were low enough to offset the cost of transporting finished goods back to the U.S.
The outsourcing trend assumed a relatively stable social and political environment that would not disrupt the flow of goods back to the U.S. Low costs plus low risks made for high returns on investment.
The assumption that technology development, design and engineering could be done in one place, the U.S. or Europe, while the dirty work of making the product could be done in China.

What may be the best news yet for the U.S. economy (and spell serious trouble for China) is that all three of these conditions have changed and will continue to change. The landscape is shifting, as it always does. Now, the risk/reward equation is not the same as it was.

Wage rates in China have gone up four to five times what they were in 2000 and are expected to rise 18% a year. At the same time oil prices, which move goods back to the U.S., have gone up three hundred percent in the same period and are not likely to decline.
Despite efforts to control the media in China, the Internet is working its magic there as it has done throughout the world. Impossibly dangerous environmental conditions, corruption by public officials, and the growing gap between the few rich and the mass of poor has resulted in growing social unrest and worker strikes. Labor unrest is growing in numbers, is better organized, and will represent a genuine threat to supply chain stability in the coming years.
And, there is a growing realization that disconnecting the functions of design, engineering, and manufacturing slows down the improvement cycle. The world of competition will increasingly be one of rapid response to consumer preferences, rapid adoption of technology innovation, and this is best achieved in an environment of dialogue and teamwork across those functions.

The case of GE’s Appliance Park illustrates this well. The Atlantic magazine last month published an excellent article by Charles Fishman on the turnaround at Appliance Park.

Employment at Appliance Park kept rising through the ’60s, but it peaked at 23,000 in 1973, 20 years after the facility first opened. By 1984, Appliance Park had fewer employees than it did in 1955. In the midst of labor battles in the early ’90s, GE’s iconic CEO, Jack Welch, suggested that it would be shuttered by 2003. GE’s current CEO, Jeffrey Immelt, tried to sell the entire appliance business, including Appliance Park, in 2008, but as the economy nosed over, no one would take it. In 2011, the number of time-card employees—the people who make the appliances—bottomed out at 1,863. By then, Appliance Park had been in decline for twice as long as it had been rising.

Macro-Lean Rapid Innovation Cycle

However, this past year, Appliance Park opened an all-new assembly line to make cutting-edge, low-energy water heaters. It was the first new assembly line at Appliance Park in 55 years—and the water heaters it began making had previously been made for GE in a Chinese contract factory. On March 20, just 39 days later, Appliance Park opened a second new assembly line, this one in Building 5, to make new high-tech French-door refrigerators.

CEO Jeffrey Immelt, writing in Harvard Business Review in March, declared that outsourcing is “quickly becoming mostly outdated as a business model for GE Appliances.” Just four years after he tried to sell Appliance Park, believing it to be a relic of an era GE had transcended, he’s spending some $800 million to bring the place back to life. “I don’t do that because I run a charity,” he said at a public event in September. “I do that because I think we can do it here and make more money” (from The Atlantic, December, 2012).

While every manufacturing company has somewhat different requirements, it is essential to consider the logic of GE’s strategy and how that might apply to your own. Listen to the effect of creating a unified, interruption free, fast-cycle design to manufacture system as GE began manufacturing the GeoSpring water heater at Appliance Park:

“The GeoSpring project had a more collegial tone. The “big room” had design engineers assigned to it, but also manufacturing engineers, line workers, staff from marketing and sales—no management-labor friction, just a group of people with different perspectives, tackling a crucial problem.

“We got the water heater into the room, and the first thing [the group] said to us was ‘This is just a mess,’?” Nolan recalls. Not the product, but the design. “In terms of manufacturability, it was terrible.”

“The GeoSpring suffered from an advanced-technology version of “IKEA Syndrome.” It was so hard to assemble that no one in the big room wanted to make it. Instead they redesigned it. The team eliminated 1 out of every 5 parts. It cut the cost of the materials by 25 percent. It eliminated the tangle of tubing that couldn’t be easily welded. By considering the workers who would have to put the water heater together—in fact, by having those workers right at the table, looking at the design as it was drawn—the team cut the work hours necessary to assemble the water heater from 10 hours in China to two hours in Louisville.”

The traditional assumptions of the traditional innovation to manufacturing process was that the smart guys were in marketing, design and engineering. The almost smart guys were in process engineering. And, the not smart at all guys were in manufacturing. Obviously, the manufacturing workers could not design or engineer the product. Only the smart guys could do that. There wasn’t any need for the smart guys to talk, or listen to, the not so smart guys.

There is one big fallacy to that thinking: In the manufacture of technology based products, and products that require frequent innovation, the manufacturing guys or gals, better be smart, and their brains can contribute more to the development and improvement of the product than was previously assumed. It is management’s job to create, as Honda says, “the world’s greatest experts” on-the-spot, where the work of manufacturing gets done. There are no “not smart” folks in lean manufacturing and to achieve macro-lean, the entire system, from market research to delivering the product to customers, must be transparent and the product of teamwork across all functions.

The Lean Enabling Social System

The most common cause of failure in lean implementations is the focus on the work process, the technical system, and ignoring the social system that will enable that work process. This is no where more true than creating the fast-cycle integrated lean process demonstrated at GE’s Appliance Park.

There are some critical characteristics to that social system that are essential to its success:

Dialogue is the skill that results in an emerged collective wisdom from the group. It is a skill that is not common in most of our organizations.
Teamwork: The GE GeoSpring team was a true team in the sense of working as one unit, without respect to rank, degree, or where they came from.
Respect: Genuine respect for people who are different rather than the same, different experience, training, or titles must be viewed as an asset to be appreciated, rather than an invisible wall erected to separate people.
Shared Learning: Every member of the team must be genuinely engaged in continuous improvement which means constant examination of the data and shared brainstorming of possible improvements.
Shared Data: All great teams have a common scoreboard that reflects the results of the entire team effort. The team must also share data and experience from each function because it has implications for the next or previous function.
Common Purpose: It is the job of leadership to instill a sense of common purpose, common vision, and common values in the group.
Shared Space: You have to be there! Internet conversations are better than no conversation, but the ability to look at the part, the product, observe the process together is a critical enabler of fast cycle innovation.
Celebration: All great teams celebrate together because the victory or loss is a shared victory or loss. This motivates future collaboration.

This integrated, synergistic process demonstrated by GE is based on the ability to create collective wisdom, the wisdom that comes from a group, and that requires a well designed social system as well as the technical work process. This is unity and diversity in action. It may well be the future of American manufacturing and a key to revitalizing our economy.

Meta-Lean: The Unity Principle

Posted on December 6, 2012 by Larry Miller

When the Western mind encountered lean organizations such as Honda and Toyota, we overlaid our ways of thinking, the mechanics of our mind, onto those systems and reduced them to their component parts. It is the tendency of the Western mind to employ reductionism to explain the workings of systems. But, that is not the way of the Eastern mind.

Lean Metaphysics

Some companies have engaged in what they think are lean implementations by reducing lean to component parts and experimenting with one component over there, another over here, and a third somewhere else. That is guaranteed to fail. The very idea of reducing lean to its component parts fails to “get it.”

There are components to lean: just-in-time, continuous flow, quality detection systems, plant design, teams, information sharing, etc. But, there is also something that holds them together, something that is almost metaphysical, which I will all “Meta-Lean.” It is a Zen, a philosophy, a working of the mind that is distinctly different than the workings of the mind in traditional Western organizations. Meta-lean principles hold the parts together and enable them to work together in a dynamic that leads to self-correction and improvement.

I believe that the first principle of meta-lean is what I called in a previous book, The Unity Principle. Honda took this principle to heart and sought to apply it in their U.S. operations. It is simple, yet profound. Let me give an example:

The human body is a natural system. It is organic, living, changing, adapting, and composed of interdependent parts or sub-systems. It is a “whole-system.” It can be reduced to component parts. There is the digestive system – the mouth, throat, stomach, etc. There is the respiratory system; the cardiovascular system; and, of course there is our natural IT/IS system, our brain and central nervous system. You can describe each of these systems independently. You can remove them from the body and dissect them. But, they will be dead. Their life depends on their interdependence. The whole is greater than its parts.

The reductionist mind would view the human body as merely the sum of each of its subsystems. Yet, each of these subsystems contains no life unless completely integrated with the others. Only when the body is whole can we say that it is a human life. It is more than the sum of its parts. I think any scientist would agree that even after more than a thousand years of dissection and study of the human body, we truly do not understand the magic of its connections, its unity as a whole, which gives it intelligent life.

I will argue that lean culture, lean organizations, contain a similar mystery of life. Separate the parts and it becomes lifeless, unify the parts and a magical thing happens. It gains life as the parts interact and support one another.

The Unity of Social and Technical Systems

When I was last in Marysville, Ohio at the Honda assembly plant I also visited a supplier, Stanley, that produces headlight and taillight assemblies. The Stanley plant has no outgoing warehouse or storage area. Pallets of assembled headlights or taillights go directly onto a truck. That truck moves every two hours to the Marysville plant. The “pile” of headlights and taillights at Marysville is merely a two-hour pile. The truck must move every two hours. That, of course, is the just-in-time work flow. However, that is only subsystem of the whole organic system.

Associates on the line have a phone at their work station. When they find one… I repeat… ONE bad part, they pick up the phone that rings in quality assurance. A quality assurance associated immediately answers the phone. He then comes out and picks up the part. He returns to his desk and picks up a second phone. That phone rings at the supplier. The suppliers is informed of the defective part and the supplier must get back within one hour to explain what he is doing to correct the defect that was created only hours ago. Remember the two hour pile!

Notice that this human feedback loop involved only first level hourly associates. No manager got in the way to slow it down. No meetings were called. No studies made or reports written. The hourly associates were trusted to transfer information through the artificial walls of legal company boundaries that become irrelevant in a lean system.

The immediate feedback loop conducted entirely at the first level is employee empowerment, engagement, trust. Without this, the two hour just-in-time process becomes impossible. One system is entirely dependent on the other… just as in the human body.

Thinking that Unites and Thinking that Divides

In the culture of the Lakota Sioux the hoop, the circle, has sacred significance. Kevin Locke is a friend of mine and he is a well known “hoop dancer”. He told me that the Lakota Sioux, when they first encountered Europeans moving west, referred to them as Oblatongyangpi, which means “people of the square” or just square people. Why? They carried things with four separate sides (books); when they built homes they built squares; they cut out squares to look through; if they had a lot of homes they organized them into squares; they even tried to do square dancing… almost impossible. Obviously, they loved squares with four separate sides. Each side can be measured separately and each side has a beginning and an end.

And, in the world of the Sioux, they built round homes, organized them into circles, danced in circles (much easier!) and the hoop, which has no beginning and no end, symbolizes the unity of all human beings, people and animals, earth and sky, in one organic whole created not by man, but by the Great Spirit. You may have heard the phrase “Indian giver”, someone who gives and then takes back. This misunderstanding comes from the fact that Native Americans had great difficulty understanding the idea that you “owned” a piece of property. How could something that was created millions of years ago and is eternal belong to someone who will last only an instant? The land will soon own you, not the other way around, and you will own nothing but your soul.

Westerners are obsessed with property lines, ownership, divisions between things. We employ armies of lawyers to argue over who owns what and where the lines of squares are drawn. Much of it is cultural insanity that adds no value but consumes energy.

We love to organize people into two separate categories. In the recent election campaigns we had the absurdity of the population being simplistically divided into “makers” and “takers”, “producers” and “mouchers.” It is an insane example of square thinking. Yesterday, I read that John Sununu, former Governor of New Hamphshire, weeks after the election was explaining the Obama victory by the dominance of takers over makers. The irony is that John Sununu has spent his entire career in the employ of government, taking from the people, never having started a private company or managed a productive enterprise in the private world. Yet, it is comfortable and an easy explanation to divide the population of the United States into those who take versus those who make. Nothing is so simple and the nonsense of these false divisions (and there are many) are destructive of the unity of the nation.

Divisive thinking tears apart the unity of the whole. Every genuinely great leader sought to unify people in common purpose. Every general of every victorious army understood that the army had to act in unison, marching together and claiming victory together. A divided army is easily defeated.

The sickness in many of our organizations is a sickness of division. We create compensation systems that separate and divide rather than unite. We create different forms of dress, offices, buildings and symbols that separate people into those who do labor and those who make decisions.

Lean culture and management requires the destruction of divisions. There is no division of thinkers/deciders and doers/order takers. Every associate is a thinker and every one a decision maker. Every member of the organization should be rewarded based on the success of the whole. Symbols such as the different dress codes or uniforms should be abolished because they inherently imply divisions of class.

The lean mind does not see divisions created by lawyers in the form of corporate walls. The flow of the work process must flow through the division of legal walls as if they do not exist. They are irrelevant to the end user of any product. Lean is like the stream flowing from the top of the mountain to the sea in one continuous motion. The flow of the stream is not interrupted by legal property boundaries and does not wait for management decision making.

Until the leaders of the organization have understood the power of unity over division and have meditated on the creation of unity within their organization and the unity of flow through all the walls and silos of departments or companies, you have not adopted lean culture or thinking.

The idea of the Unity Principle is simple. The idea of whole-systems is simple. Yet, putting these ideas into practice is not simple and requires dedicated effort.

Lean Lessons from the Hawthorne Studies

Posted on November 2, 2012 by Larry Miller

Hawthorne’s Lessons for Lean Management

From both my clients and in a number of other publications there have been references to the so called “Hawthorne Effect” in the past few months. The Hawthorne studies have been a frequent source of misinterpretation over the years. It happens that they also have significant implications for the implementation of lean practices in organizations.

Understanding the research can help one develop a system that is sustainable and not merely a short term boost in performance.

Women in the Relay Assembly Test Room at the Hawthorne Western Electric Plant

As you may know, the Hawthorne studies were conducted in 1924 by a team led by Elton Mayo at the Western Electric Cicero, Illinois plant. These studies are credit with beginning the entire field of industrial or organizational psychology. As might be expected, the research methodologies at the beginning of any field of study are not particularly refined and may lead to erroneous interpretations of the data. The most significant modern investigation of the Hawthorne studies was conducted by H.M. Parsons and published in Science Magazine (1974) in which he went back and re-examined all the data from Hawthorne and even interviewed some of the participants.

The “Hawthorne Effect” Myth

The general interpretation, and I will say “myth” of the Hawthorne Effect is that if you make almost any change (in this case it was changing the lighting in the plant) it will produce a positive effect, a so-called novelty effect, which is likely to be temporary. However, the more recent re-study of the data and the conditions of the experiment revealed that in some cases performance improved, in some it stayed the same, and in some it became worse. In those cases in which performance improved, more was happening besides changing the lighting. The workers in the rooms in which performance improved were made aware of feedback on their performance, and in some cases received positive reinforcement for improvements in performance. In other words, if all conditions had been held constant, and if there was no feedback to workers, there is no evidence that merely changing the lighting would have had any effect.

The Feedback Effect

The idea that “being studied” improves performance is true when “being studied” involves workers being given attention that they did not previously receive (feedback and reinforcement) and when they can see the output measures of their performance and observe their performance improving. That is what the Hawthorne studies really demonstrated. There have been hundreds of research experiments since that have demonstrated the exact same thing. In fact, nothing in organizational behavior has been more studied then the effect of feedback on human performance.

Elton Mayo who led the research team at Hawthorne

It is also worth noting that Elton Mayo, who conducted the studies, also attributed some of the effect to the fact that workers felt better about themselves because the researchers were demonstrating “caring”, “interest”, etc., toward them. If you can imagine the conditions on an assembly line in 1924, it is not hard to understand that workers craved any “caring” attention and would respond positively to that demonstration by the researchers. Is this a “novelty” effect? In reality, students in a classroom, children at home, and workers in almost any environment respond positively to interest in their performance demonstrated by their parents, teachers or supervisors. This is a form of positive reinforcement. This again has been demonstrated in hundreds of research projects after Hawthorne.

Pay for Performance Does Matter

All of the workers at the Hawthorne plant were on a pay for performance, piece rate system. However, it was well documented that the workers managed upward, controlled the pace of work because they had learned that if some groups increased their rate management would increase the requirements for piece rate. In fact, the workers were self-organizing and working as a large team.

Because it wasn’t what the researchers were looking for, they didn’t report on the effect of both a change in the piece rate and a change in the team dynamics that allowed a small team to manage their own behavior to maximize their compensation. Here Parsons, who carefully examined the data and interviewed the workers, describes what happened In the Relay Assembly Test Room experiment:

“Two other extraneous variables particularly affected production rates. One was an alteration in the group piecework procedures for paying the workers; its base was changed in period 3 (when performance improved) from the output of an entire large department to that of their little five person group, making their earnings more contingent on individual performance. Though the investigators acknowledged that this change might have induced the women to work faster (and thus confounded the results), they attempted to discount that likelihood. Thereby they incurred later criticism from some of the few analysts who paid attention to this variable.

“The experiment’s major dependent variable was productivity as evidenced in output rates. When the five operators moved to the test room after period 1, they were seated together with a chute beside each person’s work area. When one of them assembled a relay she dropped it down her chute, in which a hinged flap then activated a microswitch that sent a pulse to a counter. Every half hour a sixth employee tabulated cumulatively the totals of the five counters on a table behind the operators, and daily total were posted. The operators could and did examine those individual totals, during and between days, but the investigators never regarded that behavior as significant or even worth pointing out in their accounts… This information (discriminative feedback) was the second major extraneous variable that, coupled with the first, the money reinforcement, turned this study into an Organizational Behavior Management experiment. It also explained the Hawthorne effect, anchoring it to a particular experimental procedure.” (H. M. Parsons, Hawthorne: An Early OBM Experiment; Pay for Performance: History, Controversy, and Evidence; Journal of Organizational Behavior Management, Volume 12, No.1; The Haworth Press, 1992.)

So, an alternative explanation for the improvement in performance in the Relay Assembly Test Room was that the workers were reformed into a small team; those workers could visually see and discuss the results of their work; they were freed from larger group pressure to hold down production; and they felt in control of their results as a small team. This is a powerful combination of motivating forces.

An interesting side note on the Hawthorne Studies is that W. Edwards Deming, when a young man, was employed as an hourly worker in the Hawthorne plant at exactly the same time the studies were being conducted. Many of Deming’s views about workers in manufacturing plants are related to the conditions and treatment of workers in that plant. Needless to say, those conditions were not positive. Deming experienced the “normal” piece rate system at Hawthorne and became an extremely strong advocate of eliminating all financial incentives. However, Deming did not have the data. Deming had not studied the effect of these experiments, nor dozens of experiments that have been conducted since that time that demonstrate that money can motivate. However, as can be seen in the above experiment, it is never simply money. It is how money is employed along with the ability to control performance, empowerment, and the social system of teamwork.

Implications for Sustaining Lean Implementation

What does all this say about sustaining and improving performance at sites that have gone through a lean implementation? The changes in performance are not the result of “novelty” or being studied, as the general view of the Hawthorne Effect might suggest. Rather they are most likely the result of 1) the technical system changes that enable better performance, and 2) the improvement in motivation that results from small group ownership, feedback and reinforcement.

It is the job of management to provide attention, caring and feedback to employees as the experimenters did in these studies. This is the essence of the Gemba walk, or “being on-the-spot.” If managers stop doing this and go back to their own “old ways” it is likely that some of the gains in performance will be lost. If they continue to engage in good management practices, changes in performance are likely to be sustained or improved.

The effect of “ownership” and teamwork cannot be over emphasized. Teams need to be of a size where they can experience the contingent effect of their own performance on results. The results of their effort to improve performance must be positively reinforced in some way. It doesn’t have to be money, but it does have to be real in their world.

What needs to be reinforced? The simple answer is experimentation and improvement. Who needs to be reinforced? The team members who work together as a team so you are reinforcing not individuals in a way that creates disunity, but the small work group so that you are strengthening their bond and confidence in their ability as a team to improve.

If managers follow these practices you will not have to worry about regression to a mean, or the mythical Hawthorne Effect wearing off any more than Honda and Toyota are worried about die change regressing to a 24 hour process. I am not worried about staff performance or motivation. I am worried about management performance – managers reverting or regressing to their baseline habits. That is what will destroy performance.

The Practice of a Lean Management System: Achieving Economic Efficiency and Social Intimacy

Posted on August 19, 2012 by Larry Miller

Many years ago one of the first books I read on management was Peter Drucker’s The Practice of Management. In it Drucker defined and extolled the virtues of the management profession and gave credit to Alfred Sloan the longtime CEO of General Motors for developing the model of professional management in much the same way we speak of Toyota today. The system that Alfred Sloan created at GM was built on the theory of management as a distinct profession, separate from engineering and other specialties.

Womack’s View of Modern vs. Lean Management

Jim Womack’s (founder of LEI Institute) recent book, Gemba Walks, contains a number of interesting and helpful short essays. These are Womack’s more recent meditations on the implementation of lean management. One of the more interesting, in my view, is his essay on Modern Management vs. Lean Management in which he contrasts the system of management build by Sloan at GM and lean management as it was built at Toyota.

What then is the contrast between the “modern management” of Sloan and the lean management of Toyota/Honda? These are the contrasts that Womack describes:

This is a great list and you could literally write a book with a chapter on each of these contrasts. Let me make a few comments on these contrasts by putting them in the context of a matrix I have long used to describe the transformations of organization cultures from the family farm forward.

Modern management at General Motors created a social class system, a disunity or social strata, and that disunity was the ultimate cause of collapse, as it has been in every civilization.

Social Intimacy and Economic Efficiency: The Miracle of Lean

Those of you who have participated in one of my seminars have no doubt heard me discuss the idea of sociobiology, that there are not only physical, but behavioral characteristics that are genetically passed on because of their contribution to our survival. For most of human history, beginning on the Serengeti Plains of Africa where we hunted antelope in small tribal groups, human beings have worked in family units. The family farm and the small craft shop structure are only the more recent examples of work systems where there was high social intimacy, high interdependence, and high trust.

This so-called modern management that Womack speaks of began at Ford with the specialization and separation of work and management, the separation of doing versus deciding, and the isolation of workers who were instructed to “do your own work.” This instilled fear and created the loss of the social intimacy that had become the “natural” work environment for the human species over the previous millions of years. The work system and organizations of both Ford and Sloan had become contrary to human nature. This led to the natural rebellion, the need for association, the need for “brothers” in the union as inner city youth seek the safety and security of their brothers and sisters in gangs. Seeking security in groups is healthy psychological survival behavior in the presence of isolation and fear.

The industrial revolution and the revolution in management and organization had created great gains in productivity, economic efficiency, but had destroyed the social intimacy necessary to well functioning human beings and well functioning social systems.

Each of Womack’s contrasts between “modern management” and lean can be seen in this light. Decisions being made remotely versus decisions on the spot is another way of describing the class system, the alienation of leader and led, top to bottom, which almost always results in rebellion from below. The same is true for “staffs improving the process versus teams and those close to the work” improving the process. Similarly, standardization by staff groups versus standardization by line managers and those doing the work is another symptom of the this vertically disengaged culture. Experiments by those doing the work, versus imposed plans from above is the same. Each of these contrasts described by Womack illustrate how lean management is solving the social and psychological alienation created by both Ford and Sloan.

Lean Could Follow Modern Management: Pride Precedeth the Fall

While I generally agree with Womack’s analysis he does leave out an important historical context. The system of production created by Henry Ford was a great advance over craft-shop production in economic efficiency. Resources were made more productive – capital, labor and materials. However, as that system conquered the world of manufacturing it led to the excess of specialization or fragmentation of work, the dis-empowerment of workers, inhuman working conditions, bullying supervision and the natural response of unionization as a counter force. Ford’s system, still extolled by Toyota, became barbaric.

Similarly, there was much initial good in the system of management created by Alfred Sloan. Ford’s system did not provide for the management of a large differentiated organization and the integration of diverse and complex functions. The General Motors system added this capability by creating accounting and control systems that enabled the design of a diverse range of cars, sharing many parts, and utilizing shared engineering and production facilities. GM developed a superior system of administration and this is why GM overtook Ford and became the leading manufacturer of automobiles. It wasn’t until Ford hired Robert McNamara and “the Wiz Kids” after World War II that Ford developed its own system of management.

General Motors not only developed a system of integrated organization, but they promoted and developed professional managers. An entire hierarchy and departments of professional managers emerged. Power and decision making shifted from the engineers to the professional managers, accountants and strategic planners. However, just as happened at Ford, excess pride in their system led to the assumption that all things could be solved by professional accounting and strategic planning systems. Unfortunately for GM, none of those systems of “modern management” as Womack calls them, could engineer a superior car or produce one with few defects. Both GM and Ford grew to place excess faith in their accounting and administrative systems and failed to focus on the core skills of engineering and manufacturing.

This historical context is important because each management theory or system has its day and makes its contribution. And then, their methods tend to become mechanical, bureaucratic, a set of standardized and unthinking procedures that blind their followers to new methods. And are there no signs of the same in lean implementation? Is 5S, standard work, and other methods becoming bureaucratized? Are lean practitioners a little too certain about what they think they know?

Pride and arrogance always precede the fall, whether in civilizations, companies or management methods. Lean practitioners beware!

The Miracle of the Lean Management System

The miracle of lean organizations is the achievement of both economic efficiency and social intimacy. This can truly be labeled “the high performing organization” because it not only serves the needs of customers but also the needs of the people within the organization. It achieves not only business performance, but it enables the realization of human potential. It is not only a technical system, but a social system.

The power of well functioning teams, at every level, is that they are the key to creating unity of social intimacy and economic efficiency. Teams are the family unit of modern organization. Having done some work at both Ford and General Motors I can tell you that the psychological isolation was not only symptomatic on the factory floor, but in senior management ranks as well. They were not safe environments. Isolation, whether a worker at one machine in the factory, or within the confining walls of an executive office, leads to fear and distrust. The elimination of walls and silos must be both horizontal, between departments, as well as between levels of management and employees. Disunity must be replaced by social unity.

At this same time I was involved at Honda in Marysville and the social unity between leaders and led was obvious and in stark contrast to the alienation at GM and Ford. The arrogance of “professional management” was gone and replaced by a deep respect for those who did the value adding work on-the-spot.

I am seeing lean implementations that address front line work processes, but fail to recognize the social illnesses that have been created over many years of fragmented organization, the dead carcass of so-called modern management. The principles of lean management that Womack articulates can heal that illness.

Stephen R. Covey, R.I.P.

Posted on July 16, 2012 by Larry Miller

Stephen Covey died today. Stephen was a truly “good man” in every reasonable sense of that word. He did his best to practice what he preached and what he preached was not simply good management, but moral, spiritual, ethical conduct in the board room, the workplace and in the home.

Many years ago, 1983 to be specific, when my American Spirit book was published, I joined Stephen in his Master’s of Excellence series, a once a month all-day workshop in which an author presented his book and the audience planned how to apply the lessons in their workplace. This was before Stephen had published 7-Habits and he sent me a copy of a pre-publication copy for my comment. I also joined him in Acapulco, Mexico for an Aetna presentation.

In all things Stephen practice the “abundance” mentality of sharing in the belief that all gifts are ultimately returned in some form that you may never expect. Both his writings and his life are a testimony to the value of applying spiritual principles in both your life and in your work.

Don’t pray for Stephen’s soul. There is no need. Pray that you (and I) can practice what he preached in our work and in our families.

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.

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.

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!

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.

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!

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.

Liker Leadership Institute (LLI) offers an innovative way to learn the secret to lean leadership

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The Creative Destruction of the Book World

The Strategy of Adaptation

1. Who Gathers and Analyzes Intelligence?

2. Who Builds Adaptive Scenarios?

3. Who Designs the Future?

4. Transformational Change is a Core Competence

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The Landscape Shift

Macro-Lean Rapid Innovation Cycle

The Lean Enabling Social System

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Lean Metaphysics

The Unity of Social and Technical Systems

Thinking that Unites and Thinking that Divides

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Hawthorne’s Lessons for Lean Management

The “Hawthorne Effect” Myth

The Feedback Effect

Pay for Performance Does Matter

Implications for Sustaining Lean Implementation

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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.

Here are some clues to avoiding the scam:

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

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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.

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A Framework for Lean Culture

The Structure of Change Efforts

Structures that Create Teamwork Follow the Flow

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