Lean Organization & Whole-System Architecture

Posted on January 24, 2011 by Larry Miller

Lean Organization and Culture

A recent discussion on the NWLEAN Yahoo discussion forum compared lean manufacturing systems to the human body, an organic, inter-active and interdependent system. I think this is a very useful analogy to describe how an organization functions.

Sometime in the early ’80s Norman Bodek introduced me to the work of Lou Davis at UCLA and this led me to other writers and thinkers in the area of socio-technical systems (STS) and whole-systems thinking. My firm at the time, took our Team Management process and expanded it to what we called Whole System Architecture which looked at the work system (technical work flow), the human or social systems of the organization, and the business systems (how money flows) and argued that these needed to be designed as one integrated whole, rather than in a disjointed piecemeal fashion. We implemented this process in organizations such as Corning, Dun & Bradstreet, and many others.

In my experience, this preceded the development of lean manufacturing, but we were doing lean implementations even though we didn’t use that term. We started by studying the work-flow, eliminating waste, speeding cycle times, etc.; then we built the human systems around that work flow. Starting with the front-line team or work cell, optimizing the capability of that level, the designing functions as needed to support the work-flow. With the implementation of lean, and my own concentration on lean culture and lean leadership, I have not been pushing the whole-systems idea. However, it is very work revisiting.

The word “organization” is related to “organism” and “organic.” Both of these imply something alive, something into which has been breathed the mysterious spirit of life. And what matters if you want to improve performance is not the organization chart, but that spirit of life. If you improve that, then you have really done something useful.

The organization’s systems are much like the systems of the human body. The human body is a complex whole-system. Yet, it has various sub-systems – the nervous system and brain, the respiratory system, the digestive system, the cardiovascular system and so forth. Each of these can be described as a separate system, but they are not really separate. Each is dependent on the other; they are inter-dependent systems of a whole. If one of these systems is suffering, it will impact all of the others. Often it is difficult to tell which system is the root cause of a problem. If the digestive system is malfunctioning it will quickly affect the nervous system and that may then impact the cardiovascular system. This exact same interdependency exists within the systems of an organization. For example, if the information systems do not provide effective information to work teams, it may appear that the work team structure is not effective. If incentives contradict (individual vs. team) the structure, it may appear that the team lacks the proper skills. It is obvious that a team’s performance will be “optimized” if all of the systems support the same performance; in other words, if they are aligned.

In order to create alignment and continuous learning it is helpful to have a mental model, an organized way of thinking about the organizational system. To be honest, I have developed, used and discarded five or six different whole-system models over the years. The above model is, I think, as good as any. This diagram can help you discover and analyze the components of your organization. Think about this series of circles as what you might find if you put that original circle representing the organization under the microscope.

Of course you can apply this systems model to the individual, the team and the organization. If you are interested, I have a paper that described the application of this model and the process of whole-system design in much greater detail. Just email me at lmmiller@lmmiller.com and I will send you a copy.

The purpose of this, or any other whole-systems model is to engage members of the organization in thinking about the current state of that system, understanding how the different components interact, and designing the ideal future system. The more one understands organizations such as Toyota, Honda or other great organizations, one realizes that their success cannot be attributed to any one element of the system. It is not just single-minute exchange of dies (SMED), or the use of 5S, or visual display, or anything else. It is EVERYTHING. It is how they hire, promote, reward, communicate, structure, etc., etc.

The question you should ask yourself is, “Do we have a group in the organization who understand their job as thinking about, planning, designing and implement the ideal future system?” And, “Do they have a model and process for engaging in that analysis and design?” If not, you are lacking an important element of internal competitive strategy.

Posted in Corporate Culture, Lean Culture, lean management, Lean Manufacturing, Organization Design and Process Improvement | Tagged , , , | 1 Comment

Lean Culture Implementation Flow

Posted on December 17, 2010 by Larry Miller

Lean Culture – Implementation Guide

While writing or editing my material for Lean Culture – The Leader’s Guide I realized that it would be helpful to have a one page flow diagram of the process of developing lean culture. After sharing this and getting feedback from a couple of clients who are engaged in the effort, this diagram is the result.

The change effort can then be divided into two major tracks of activity. One is focused on aligning the systems, structures and symbols of the organization to support the new culture. The second is focused on behavior change, a change in the daily habits of how we work and manage.

Aligning Systems, Structure and Symbols

Many lean implementations focus on the flow of the work alone, establishing just-in-time inventory, Kanbans and reducing interruptions and delays in the flow of “things.” In other it is focused on the engineer of the material side of lean, not the people or culture side. The problem is that if you want to optimize flow, people either make that happen or get in the way. Often the structure of the organization creates silos that inhibit rapid decision making, the levels and job definitions are appropriate for a traditional organization, not a lean organization. And, the symbols create more division and demotivation than unity and motivation to work in teams and continuously improve. Aligning systems, structure and symbols does not happen by accident. The leadership team needs to appoint a team with responsibility for defining the future culture and creating alignment of systems, structure and symbols so they facilitate rather than inhibit continuous improvement.

Building the Daily Habits of Lean Culture

Lean culture can not be achieved by most organizations unless all levels of management, as well as first level employees, develop the habits of continuous improvement within their natural team structure. The plant manager or CEO must model the behavior of process improvement, customer focus, score-keeping and continuous improvement if they are going to expect the same at the work team level. Changing the daily habits of management is often the most difficult part of a lean implementation. Changing these daily habits is the focus of Lean Team Management.

Of course, it is an explanation of these two tracks of change, and the behavior of leaders that is the focus of my new book.

Posted in Corporate Culture, Lean Culture, lean management, Lean Manufacturing, Organization Design and Process Improvement | Leave a comment

Lean Culture – The Leader’s Guide

Posted on December 16, 2010 by Larry Miller

Lean Culture – The Leader’s Guide

I have been quiet on the blog because I have been consumed by a writing project. December is a good time to stay home and get writing done. So… new book! What I have done is to take much of my material from my Lean Team Management workbook and condense it into a book format directed at leaders. I have deleted all the exercises and a lot of the skill building material on facilitation skills, team dynamics, etc. And, I have added a couple chapters directed at the job of leaders to manage the culture. There is a chapter on what I call Broad-slicing: Creating Unity of Energy and Effort in the organization; and, a chapter on Corporate Life Cycles and wealth creation.

Looking at other books on Lean Culture they appear to be largely focused on the tools and techniques of lean, but are not strong on managing the process of culture change. This is where many organizations fall down in their lean implementation. That is where I think this book can be very helpful. I would like to get this in the hands of a lot of corporate leaders!

Lean Culture – The Leader’s Guide will be available in a month or so from all the major distribution outlets, and available on Amazon and Barnes & Noble in electronic format for the Kindle or Nook or other reader. It will also be priced at a normal book rate ($24.95) before discounts. It is 240 pages in standard 6″x9″ book format. I don’t know what they will charge for the e-book version. I will provide a link and announcement on my website as soon as it is available.

From the back cover:
Lean Culture – The Leader’s Guide provides a roadmap to implementing lean culture within your organization. This guide represents the knowledge gained through thirty-five years of field experience implementing large scale change in the culture of organizations. Through this guide you will learn the principles and process of changing organization culture to capitalize on the competitive advantages of lean.

Lean culture is a lot more than tools and techniques like JIT, 5S, or value stream mapping. It is the framework of values, daily habits and relationships within which those techniques can succeed and be sustained. Without the support of the culture, those techniques often fail. The sustainable value is in the culture and management process in which continuous improvement becomes a daily habit at every level. The purpose of this book is to help you build this culture.

The Leader’s Guide will show you how to…

… Instill the habits, values and management process of daily life in a lean organization.
…Engage all members of the organization, from top-to-bottom, in a consistent and organized process of improvement.
…Be the change! Model the behavior you expect from others.
…Align systems, structure, skills, style  and symbols to the new culture.

Posted in Corporate Culture, leadership, Lean Culture, lean management, Lean Manufacturing | Leave a comment

Gross Workplace Happiness – Can it be Measured and Does it Matter?

Posted on October 6, 2010 by Larry Miller

I know that most American business executives, seeing the word “happiness” in an index of how well a business is doing, may choose to exit quickly or require a Dramamine. I know. I know… it’s all about profitability, EBITDA, revenue growth, etc. I’ve run a business and been an investor for a long time. I don’t live in fairy land!

But, take a minute to think about this.

Last week I was in the Netherlands attending the annual conference of the European Bahá’i Business Forum. One of the most intriguing presentations was by Rudiger Fox, who is the CEO of PFW Aerospace AG, a leading tier one supplier to the aviation and aerospace industry in Germany, with 2,000 employees. Before you laugh this off you should know that since he took over as CEO he has dramatically increased the company’s revenue and bottom line.

But, that is not where the story begins. It begins in Bhutan. You can Google it. Bhutan is a small mountain kingdom in the Tibetan mountains and bordering China. In 1972 the King of Bhutan decided that the development of his country should not be on the Western model of pursuing Gross Domestic Product. GDP essentially measures how much stuff we make and how much stuff we consume. More is better, right? Or as economics Tim Jackson recently said, “We spend money we don’t have, on things we don’t need, creating impressions that won’t last, on people we don’t care about.” But, the way we define economic well-being depends on this model.

The great difficult facing our planet is that if we define the goal of “development” or “well-being” as consuming as much stuff as we do in the U.S., the planet’s ecology will collapse. The older we get (and, I’m getting old!) the more we realize that more stuff does not equal more happiness, or less anxiety, or better relationships. So, do we want to force on Bhutan the pursuit of gross domestic product? More importantly, is there an alternative to China competing with the U.S. on the number of cars, the size of our homes, etc. We better hope that there is.

CEO Rudiger Fox

Back to Bhutan. The King of Bhutan decided to define “well-being” for his country in a very different way. He developed the Gross National Happiness Index and developed a national strategy to increase GNH. GNH is far more than GDP. In includes time use, living standards, good governance, psychological well-being, community vitality, culture, health, education and ecological footprint; in other words, all the things that would combine to produce a good life for the citizens of Bhutan. Going one step further, statistician Nic Marks has proposed a Happy Planet Index (HPI). This is worth watching. Ranking number one on the Happy Planet Index? Costa Rica with a life expectancy that exceeds that in the U.S.; with the highest happiness ranking, using a quarter of the resources per capita used in most developed countries, with a goal of being carbon neutral by the year 2021, and with strong social relationships. Life is good in Costa Rica.

The United States ranks #1 in GDP, but #150 on the HPI. Bhutan ranks 107 in GDP, but #13 on the HPI Index.

Rudiger Fox has taken the components of Gross National Happiness and applied them to his corporation. He has developed a measurement methodology and strategic plans to improve Gross Workplace Happiness. This includes nine domains:

  • Living Standard (financial security).
  • Good Governance: Value based leadership.
  • Ecology: the company’s ecological footprint.
  • Health: measured by body mass index, which he claims in good a simple indicator of other health measures.
  • Education: reading and other indicators of active education.
  • Culture
  • Community vitality: Community relations, departmental cooperation, human resources indicators, and individual relations and trust.
  • Time use: sleep quality.
  • Psychological well-being: a positive work experience.

Our dominant business culture will dismiss this “happiness” talk quickly. I know that. But, just as we better start thinking about national well-being in terms a bit more profound than how much stuff we make and consume (GDP); we are going to have to start to measure the success of management and companies in terms more profound than profitability. We might just find, as one German aerospace supplier has, that GWH leads to EBITDA.

Posted in Corporate Culture, Corporate Social Responsibility, General, leadership | 8 Comments

The Principle of Compromise

Posted on September 26, 2010 by Larry Miller

Governing the Ungovernable

There is one principle of our democratic republic that has been betrayed. It is the principle of compromise. When compromise becomes a forbidden word, a sign of disloyalty to a party or particular interest group, achieving the consensus necessary to govern becomes impossible.

Those who reject compromise and reason in favor of rigid adherence to party dogmatism are the American equivalent of radical Islam. It is said that there is no word in Arabic for compromise. My son spent a year in Iraq helping to develop the election process there. After working with election officials and politicians in Iraq I asked him whether or not he felt the new democracy could succeed. He said, “Yes, if they learn to compromise.” That is no small challenge to overcome. In Iraqi culture to compromise is to lose face, a form of dishonor that is not forgiven. Six months after the most recent elections there is no new government formed. Why? They can’t bring themselves to compromise. If they fail to compromise their democracy is doomed. And we may be following their example.

Corporate managers might have some empathy for those in government.  No CEO would want to lead a company in which the stockholders have expectations that are impossible to meet. And, in which two competing factions raise money to undermine the efforts of the other and their devotion is more to their party than to the success of the company. It is a prescription for failure.

A study of the rise and fall of civilizations demonstrates that in the emerging periods of growth and integration the citizens have a long range view. They will sacrifice for the “cause.” In decline the focus is increasingly inward, on self and short term. “What’s in it for me now?” In the later days of the Roman Empire, Caesars were given only a few years to right the ills of Rome, an impossible task that soon resulted in their rejection. The field of combat is increasingly within, civil warfare, rather than against an external enemy that unifies the energies of the citizens.

The citizens appear to have expected the economic crash of two years ago to be “fixed” by now; unaware that Roosevelt required eight years and a world war to pull the country out of economic downfall.  The failure of a young President to perform miracles has resulted in declarations of failure and calls for his head. Without debating whether his policies are the best or not, I am more concerned that the very system of governance in the United States is in a process of disintegration. This disintegration is fueled by ignorance and false mythologies  concerning our country’s founders.

If you listen to the Tea Party candidates you would believe that at our founding there was some conservative Garden of Eden in which the Founding Fathers prayed to Jesus and unanimously agreed to a government that did not tax its citizens and maintained the most minimum powers to govern. This claim is ignorance of immense magnitude.

The idea that the Founding Fathers were “conservative” is absurd. If they had truly been conservative they would have been Loyalists to the King. They were not merely “liberal”, they were radical revolutionaries. They believed in change, progress, and creating a new and better way to govern. Thomas Jefferson even proclaimed that “Revolutions in human affairs, like storms in the natural environment, are from time to time, a necessary and desirable thing.” In another place he declared that they should occur about every twenty years; hardly the mindset of a conservative.

But, more importantly, the idea of rigid ideologies, or party loyalties, would have destroyed the country at its beginning. The Constitution itself required a “Great Compromise” that settled the dispute over how large and small states would be represented in the legislature and resulted in both a House of Congress and a Senate. In George Washington’s first term as president he confronted two opposing views of the Federal government, a dispute that had not been resolved in the Constitution itself. The very men who authored and signed the Constitution did not agree on its meaning. On one hand was Treasury Secretary, Alexander Hamilton who felt the need for a strong federal government and a national banking system. On the other side was Thomas Jefferson who preferred minimal Federal government and strong state government (until he was elected President, of course!).

How can modern day politicians boldly proclaim that they know the intentions of the Founding Fathers when they disputed it themselves?

The argument about the role of the Federal government, particularly in matters of finance, was so intense that it led both men to align themselves with newspapers (the FOX News and “mainstream media” of the day) and fed them rumors and personal insults to undermine the other. The dispute was settled only by Washington himself and he came down on the side of Alexander Hamilton and supported the need for a strong Federal role in the economic affairs of the nation. But, the important element was not who won. Rather it was that these great men were able to argue their points and then agree to move forward and implement the position that prevailed. They were willing to compromise for the good of the country.

Washington’s Farewell Address

When George Washington finally retired, he gave a Farewell Address to Congress. In it he warned against what he viewed as the two greatest threats to the success of the new Republic. One was entanglements with foreign powers. The second was the “spirit of party.”

I have already intimated to you the danger of parties in the State, with particular reference to the founding of them on geographical discriminations. Let me now take a more comprehensive view, and warn you in the most solemn manner against the baneful effects of the spirit of party generally.

This spirit, unfortunately, is inseparable from our nature, having its root in the strongest passions of the human mind. It exists under different shapes in all governments, more or less stifled, controlled, or repressed; but in those of the popular form it is seen in its greatest rankness and is truly their worst enemy….

So, what are the lessons for our corporate leaders?

First, good governance results from thoughtful and strong willed individuals who are willing to argue their points of view forcefully, but… then are willing to compromise and achieve common ground for the common good. This is the essential requirement of participation on a leadership or executive team.

Second, know the facts and base your arguments on real facts, not on dogma or mythology.

Third, labels are destructive of intelligent analysis and sound decision making. It would serve our country well if our leaders at every level restrained themselves from labeling any opponent as either liberal or conservative, labels that have come to have little meaning in today’s complex world. Argue for specific programs or the elimination of programs. Labels do not lead to sound decisions about which defense or social programs need to be cut; or which taxes need to be increased or decreased. Labels only inflame the “spirit of party.” Both parties agree that the budget needs to be balanced. It is neither a liberal or conservative idea, merely a fundamental principle of economics and sound government. Get on with it!

Remember that the defeat of corporations and civilizations comes from within, from disunity, when the energy expended toward internal combat exceeds the energy expended in the common good.

Posted in Corporate Culture, Politics | Tagged , , , , , , | 7 Comments

Goldman Sachs and the Need for Hangings in the Village Square

Posted on June 13, 2010 by Larry Miller

Are public hangings an essential feature of capitalism? Or, can we trust in principle based morality?

_______________________________________________________________

This is not a trivial question. The child like and pseudo religious belief that the free market will, by itself, right all wrongs in time, a belief adhered to by Alan Greenspan and other groupies of Ayn Rand, is at the heart of our financial crisis and the crisis of capitalism. This Greek tragedy was played out at Enron, Lehman Brothers, and now Goldman and BP. It is the failed reliance on “rational self-interest” as a moral code.

The question is whether corporate executives are capable of adhering to principled behavior, behavior that supports a good other than their own, in the absence of punishment of significant severity to balance out the significance of potential rewards for unprincipled behavior.

Extreme rewards cause the mind’s eye to be severely out of focus and nothing serves as well to focus the mind as the anticipation of hanging in the village square at sunrise. So it appears that we must periodically publicly execute an executive to assist us to become principled. It would be nice if they didn’t make themselves such convenient and obvious targets.

I have been in the corporate world long enough to know two things: most executives are principled and do seek to adhere to fundamental values; and, there are companies and there are subcultures in which the value of “winning” as defined by financial performance alone, completely overwhelms any other morality.

On June 10th Goldman Sachs stock hit a one year low after another report of legal problems. This time the SEC is investigating a mortgage investment Goldman bundled and sold in 2006. They were already investigating possible fraud involved with an investment Goldman created called Abacus, a CDO, that was allegedly set up to enable Paulson & Co. to take short positions against this basket of what they believed to be distressed mortgage securities, while at the same time marketing this to their customers.

Goldman Sachs CEO Lloyd Blankfein

This was obviously not set up on the Deming philosophy of “delighting” your customers. If you are selling something you have created to your customers while at the same time betting against it, you are shafting your customers and you are, therefore, not trustworthy. The morality of this is simple.

What proves to me, beyond a reasonable doubt, that Goldman has not learned the lessons of principle centered leadership is not the above charges. It is the pathetic game being played with a Congressional Commission investigating Goldman’s dealings.This week the Wall Street Journal reported that…

A commission probing the financial crisis denounced Goldman Sachs Group Inc., saying the firm first dragged its feet over requests for information then dumped hundreds of millions of pages of documents on the panel.

This is an old and tired lawyer’s trick: You want documents? OK, here is a truckload of documents. See what you can find! And the investigators are so overwhelmed with irrelevant documents that they never find what they are looking for. As the police tell young thieves everyday, “If your not guilty, why are you running away and making yourself look guilty?” The Goldman legal team is either tacitly admitting guilt or is too dumb to know what “guilty” looks like.

The virtual collapse of every major Wall Street financial firm was not sufficient to awaken the spirit of moral conduct or the sensibility of moderation. The intervention of the government, required to prevent the collapse of the entire financial system, allowed many of these executives to obfuscate their own participation in the events that led up to that disaster and caused their minds eye to be blurred to consequences of their own behavior.

Before I was a parent, and a student of behavior modification and the power of positive reinforcement, I was convinced that I could raise my children without ever resorting to the “old way” of punishment for bad behavior. Nothing humbles one as well as parenting. I did resort to punishment, sparingly, as I realized that even the most superior children (my own!) occasionally needed to experience the pain associated with misconduct. But, you hope that as one matures, the intellect takes over, and the ability to adhere to moral principles, religious or otherwise, will be sufficient to keep behavior within acceptable control limits.

But, I fear that the more one is paid into the millions, the more one develops a childlike need to test the limits of the environment, to exceed the bounds of what is obviously “right conduct” until one once again one must contemplate the significance of a well constructed scaffold erected in the village square.

Posted in Corporate Culture, Corporate ethics, Corporate Social Responsibility, leadership, Politics, Spiritual Capital | Tagged , , , , | 8 Comments

Lean Politics: Give Up Ideological Waste

Posted on June 6, 2010 by Larry Miller

The environmental disaster in the Gulf of Mexico is in part the result of political/ideological waste. Lean management focuses on the elimination of waste from manufacturing and other processes. Lean managers develop a keen sense for what adds value and everything else is waste.

I normally do not comment on politics in this blog, but in this instance I must. Our politics have been dominated by the left/right, big government/little government, politics and debate. Most of this debate is an entire waste! It is adolescent nonsense that belongs, and will end up, in the historical trash bin!

Maria Bartiromo’s (CNBC) Logic:

This debate has made us crazy. On Friday I was watching Maria Bartiromo on CNBC. The DOW was dropping more than 300 points because the jobs report had revealed a lower than expected rate of private sector job creation. She commented that the low rate of private sector job creation proved that government policies were failing. So, the failure of the private sector to create jobs is, in the mind of this free enterprise advocate, the fault of government to do more to create private sector jobs. This despite hundreds of billions of tax dollars spent to save the private sector banking institutions, saving GM and all its suppliers, and lowering taxes on small businesses. Why isn’t creating private sector jobs the responsibility of the private sector?

Somehow the failure of BP to stop the leak from their own well becomes the burden of the President who knows nothing about oil exploration or production and can’t possibly know how to stop the leak. We blame the government for the failure of the private sector to operate in a safe manner while at the same time arguing for less government regulation and control.Every conservative politician on the Gulf Coast is now arguing for the Federal Government to do more to rescue their beaches and business, not to do less. The libertarians would argue for virtually no regulation and letting the free market sort it all out. How many Gulf disasters would it take for consumers to put BP out of business or force their stock holders to give up their dividends?

There is some mass schizophrenia when it comes to the role of government and the private sector. This madness is a complete waste of resources and is itself responsible for many of our problems. It is past time to get beyond this madness.

Both the BP disaster and the collapse of the banking system have proven the need for effective government regulation – not more or less – better. Not waste, but value-adding actions. I have no doubt that we did not need more inspectors or more money spent at the Minerals Management Service that regulates the safety of offshore oil drilling. But, we did need regulators who were focused on serving the public good, not serving those who may violate safety and put the public at risk, as was BPs practice! Why didn’t the government do its job in administering justice to a serial criminal whose behavior has been well known and widely reported? In recent years BP killed thirty workers in its operations before the Deepwater Horizon explosion killed eleven:  From ABC News…

BP’s safety violations far outstrip its fellow oil companies. According to the Center for Public Integrity, in the last three years, BP refineries in Ohio and Texas have accounted for 97 percent of the “egregious, willful” violations handed out by the Occupational Safety and Health Administration (OSHA). The violations are determined when an employer demonstrated either an “intentional disregard for the requirements of the [law], or showed plain indifference to employee safety and health.” OSHA statistics show BP ran up 760 “egregious, willful” safety violations, while Sunoco and Conoco-Phillips each had eight, Citgo had two and Exxon had one comparable citation.

Can anyone seriously argue that we do not need government regulation of the oil industry’s environmental and safety practices? Can anyone seriously argue that we do not need regulation to prevent excessive risk and transparency in the banking industry? Or, effective pharmaceutical regulation, food labeling, traffic laws, or a national defense?

What we need is effective government action, not too much of it, not too little of it, but effectiveness. Of course, we would all like to pay as few taxes as possible. Of course, we do not want government bureaucracy inhibiting business formation or innovation. Of course, we all want small government. But, we want a government that utilizes its resources well; that does its job in the most effective manner with the least wasted resources.

In the corporate world we do not argue whether we should have management or not. We do not argue whether we should have accounting or not. We accept the need for “governance”. But, we know that management and accounting can be efficient or wasteful. Why can’t we focus our political debate on creating effectiveness of government, not whether government is good or bad? Ronald Reagan famously said that “Government is not the solution. Government is the problem!” It was one of those incredibly simplistic comments that created a demon one group could rally around. Demonizing has been a favorite tool of politics and demagogues since the beginning of time. Government is not the demon. Poor government, ineffective government, wasteful government, is the problem. The opposite is the solution.

It is time to get beyond the adolescent ideological nonsense of “government good”, “government bad.” The entire discussion is cultural waste. Let’s get lean and eliminate it and focus on what is important… the effective enforcement of practical regulations that protect the public safety, while encouraging business creation and innovation. Effective rules and referees do not destroy, but enable, great competition in sports. This should be the goal of every politician. As citizens, it is this that we should be demanding from our politicians and from our political discourse.

Larry Miller

www.lmmiller.com

Posted in CNBC, Corporate ethics, Corporate Social Responsibility, lean management, Politics, President Obama, The New Capitalism | Tagged , , , , , , , , | 7 Comments

Obama’s Gulf Leadership Lesson: The Limits of Power and the Power of Empathy

Posted on June 1, 2010 by Larry Miller

I admire President Obama. I support him. He is smart, has a world view and understanding that makes him well suited to the modern world. Unfortunately, in the past few weeks we have not experienced his finest hour. There are times when intelligence, analytic ability, is far less important than urgency and empathy. It is the difference between leadership in combat and leadership in a court room or academic setting.

Some readers may be familiar with my situational leadership model described in Barbarians to Bureaucrats, following Toynbee’s lessons of the rise and fall of civilizations, leaders and cultures go from the imaginative and creative “Prophet” to the conquering “Barbarian” and into the more mature periods in which systems, structure become more important than personalities.

You may remember that great scene in the movie Patton in which George C. Scott, playing Patton, visits the beds of his wounded men, kneels down and prays with them. He then literally leaves his jeep and marches gleefully through the mud with his troops as they race to relieve the surrounded 101st Airborne Division. Of course, Patton is playing Alexander the Great who did the same. Patton believes he is the reincarnated spirit of Alexander. He is the Barbarian, the conquering hero who demonstrates his love for his soldiers and receives their love in return. And, this love, what we call “loyalty” in organizations, is not the result of deep analysis, intelligence or good policies. It is the result of emotions. It is the result of the leader demonstrating the same emotional sensibility of his soldiers, their urgency for the battle, and pure empathy for the fear and pain they are asked to bear.

Having consulted with Shell, Exxon, Texaco and Amoco in years past, and having coached senior teams at those companies, I have some appreciation for the process of deep water drilling. It is a fact that no one, in either government or industry, knows a sure solution to the tragic flow of oil into the Gulf of Mexico.

I am somewhat amazed at news commentators who want Obama to take charge of the efforts to cap the well and stop the flow as if he had some unused magical powers. The U.S. Navy, Coast Guard, or anyone else in government has no answer to this. There is no power that can be commanded into action by the President to stop the flow. In a real sense, the president is helpless and must rely on the best efforts of BP and the other companies involved. Perhaps he could command more forces to the clean up effort.

But, that is not his problem or his failure. His failure is to perform the great theater of leadership in which the leader does as Alexander did, as Patton did, when they visited the tents of the wounded men, kneeled and prayed with their followers, and demonstrated the emotion of love and empathy for those who are in pain. There are little limits to the power of empathy, the power of letting those in pain know that you are with them, you are feeling what they feel, and that you will be by their side in their suffering. This is what George Bush failed to do in the aftermath of Katrina and I am afraid it is what Obama is failing to do or understand in the present case.

John Adams, speaking of the American Revolution, said that “A whole government of our own choice, managed by those persons whom we love, revere and can confide in, has charms in it for which men will fight.” He did not speak of intellect or analysis. He did not  speak of factually correct decisions. He said that men will fight for leaders in whom they can confide, whom we love. And, we love those who demonstrate empathy and understanding for our own situation; who demonstrate the urgency that we feel; the fear that we feel. The tragedy of the BP Gulf spill may be more in the loss of affection for this president, a loss at his own hands, than for the coastline that in time will recover.

Posted in Corporate Culture, leadership | Tagged , , , , , , | 7 Comments

Decision Making Chaos on the Deepwater Horizon

Posted on May 31, 2010 by Larry Miller

I have long been an advocate for team decision-making, but more importantly, for decision-making appropriate to the situation. It appears clear now that the Deepwater Horizon, the Transocean drilling rig under contract with BP, suffered from poorly designed decision processes.

The Wall Street Journal reported recently that

“The chain of command broke down at times during the crisis, according to many crew members. They report that there was disarray on the bridge and pandemonium in the lifeboat area, where some people jumped overboard and others called for boats to be launched only partially filled.

The vessel’s written safety procedures appear to have made it difficult to respond swiftly to a disaster that escalated at the speed of the events on April 20. For example, the guidelines require that a rig worker attempting to contain a gas emergency had to call two senior rig officials before deciding what to do. One of them was in the shower during the critical minutes, according to several crew members.”

An important consideration when establishing team decision-making processes is to clarify which decisions should be command, which consultative, and which should be consensus decisions.

Acknowledging the legitimacy and critical need for effective command decision making is the only way to gain an acceptance for the situational appropriateness of consultative and consensus decisions. In any environment in which there is a potential for crisis it is essential that there is a well defined and well rehearsed command decision process. It is insane that a rig worker attempting to contain a gas emergency would have to call two senior rig officials before deciding what to do. That is the equivalent of a marine on the ground in a combat zone coming under fire and having to go two levels above to get instructions to take action. That is a certain way to get your marines killed and lose a war. It was a certain way to get eleven rig workers killed, also.

Soldiers on the ground are trained to take action, to take initiative, to improvise, and are drilled in those actions that require instantaneous responses. Bureaucratic control is not the same as effective command. In a crisis it must be assumed that the means of communication are incapacitated, that individual leaders have been cut off from the action on the ground. Those who can and must act must know that they are expected to take initiative and they must be trained in the appropriate responses.

You can use consultative and consensus decision making to arrive at the best procedures… long before the crisis. In the crisis, everyone must know who in command, who can take action, and what action must be taken immediately. This is a good time for every organization to study this negative case and use it as an opportunity to review your own crisis management procedures.

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Management Waste – Get Lean and Eliminate It!

Posted on March 24, 2010 by Larry Miller

One of the core ideas of Lean Management is the elimination of waste. This usually means eliminating unnecessary tasks, motions, inventory, rework, etc. However, the new challenge for lean management is to improve the efficiency of management itself. Much management activity is waste. This waste is just as destructive, or more so, than waste on the factory floor.

What does this waste look like? I have identified six forms of management waste. Feel free to add to the list.

Management Waste # 1: Sucking decisions up due to the lack of empowerment, education and encouragement at lower levels. Management thinks they are busy because they are doing other people’s work and they do this because they have not structured the organization, established the training and systems to create competent problem solving and decisions at lower levels.

Management Waste #2: Displaying contradictory models. If you want to teach your children not to smoke, drink or swear, but you walk around the house smoking, drinking and swearing, your efforts are going to be little more than waste. Management, leaders, must model the behavior they desire of others. The failure to do so cripples any change effort. Millions of dollars in consulting and training have become waste because management didn’t walk the talk.

Management Waste #3: Failure to define and manage your own processes. There are processes that are owned by the senior management team. Every team, at every level, should have a SIPOC that defines input, output, and value adding processes owned by that team. They don’t own any process? Than the entire team is waste! Tell them to go home. MOST management teams do not know what there processes are, and reinvent them in a random or annual manner. Developing strategy is a senior management value-adding process. Where is the map that visualizes how they develop strategy? When they did it last year, did they study the process and what did they learn? Unfortunately, they probably learned nothing and are not themselves engaged in continuous improvement. Therefore, they don’t understand it and do not set the model.

Management Waste #4: Failure of decision making: I have coached dozens of senior management teams. One would think, logically, that the higher you go in the company, the more skilled would be the decision makers and decision making process. The value of decisions made at the top, should be of greatest value. Errors made at the top are the most expensive. The truth is that in most companies, the decision making process at the top is terrible.

Many years ago I was doing a socio-tech redesign of a major financial organization on Wall Street. The only room the design team could find to meet in was THE BOARD ROOM!! Very expensive furniture, huge table, mahogany paneled walls, etc. After a day or two the design team had half the wall area covered with flip chart sheets. In stormed the official keeper of the room with steam spurting out of his ears. He yelled, “Take that down immediately! No one has ever put anything on these walls!” I asked, “Really? No one has ever brainstormed or put flip charts on the walls in here?” “Absolutely Not!” He yelled back. Poor fellow. He had never seen a room in which people were actually solving problems, brainstorming, reaching consensus, developing action plans, etc. It tells you a lot about how senior management teams fail to employ disciplined decision processes.

Management Waste #5: Wasted space and resources. That board room was used once a quarter. It sat empty and unused most of the time. Why do managers need larger offices as they move up the ladder. Do they get fatter? Do they have bigger computers or more books? What is that about? It is about waste. It is the waste of ego. The time spent at resorts doing annual strategic planning that could be done in their own conference room, or in someone’s home, is also waste. Apply the same disciplined standards of waste and resource utilization at the executive and management level as you apply to the factory floor.

Management Waste #6: The failure of trust. An effective management team, like any team, is a social system built on trust. That trust enables members to share, to ask questions, to offer suggestions, and to listen well to each other. On MOST management teams there is a failure of trust among its members that inhibits their ability to solve problems and make effective decisions.

The solution to these forms of waste, which is the opposite of lean management, is not only training, but coaching and feedback. They need hands on help in order to change their behavior, their habits. It is these habits that define the culture.

Larry Miller

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