Sunday, May 17, 2015

The Case Against the Flat Organization

Since the 1990s, consultants and authors have been touting the benefits of the flat organization.  Among the advantages commonly associated with flattened organizations are improved innovation, empowered employees, and faster decision-making.  I’ve worked with many “flat” organizations over the years and, rather than improved flexibility and increased speed, found burned out managers, frustrated employees, and high turnover. 
Removing layers of management downplays the importance of the coaching and development of future leaders.  When a manager has a large number of people on his or her team, it is not possible to spend the time needed to develop problem-solving or leadership skills of team members.  As a result, the manager resorts to directing and problem-solving, rather than coaching, and employees feel stuck and left out of the process.
Flat organizations utilize the sink or swim approach to developing people - something I’ve never seen work effectively.  When people are left on their own to develop, they will do so in their own way based on their own experiences without the ability to see themselves objectively.  As a result, the company can lose control over its culture and systems resulting in deterioration in customer service and long-term performance.
Understanding the Problem
One of the reasons often given for eliminating layers of management is that managers get in the way and slow down processes.  Although often a true statement, eliminating layers is not addressing the root cause.  The company can benefit more by understanding why its leadership is ineffective, and why its processes and systems are slow, and developing countermeasures that effectively address these causes. 
Although there are many companies that do have too many layers of management, improving the situation requires identifying what the organization is trying to achieve and understanding and removing the barriers that are interfering with success – and this is not a quick process.  Firing several managers without addressing the real causes of poor performance can magnify the problems and, after a short-term improvement in results, end up in worse shape than doing nothing.
No Quick Fix
In spite of what many of those who tout flat organizations believe, managers do have a purpose in organizations.  Flattening the organization is a fad that ignores the importance of developing people and continually improving.  As companies like Toyota, Amazon, and Google have proven for many years, long-term success still comes down to effective leadership, respecting people, and a never-ending focus on improvement.

Sunday, May 10, 2015

Using Dashboards to Develop Leaders

It is pretty widely known that the role and responsibilities of a leader differs significantly in a lean environment.  As is often the case, though, knowing and doing are two different things.  Becoming a lean leader, like most of lean thinking, is a simple concept that is very difficult to apply.
Jeffrey Liker and Gary Convis wrote about the system of lean leadership in The Toyota Way to Lean Leadership.  In the book, they point out that the four basic responsibilities of a leader within a lean culture are (1) develop self; (2) develop others; (3) create alignment between vision and goals; and (4) drive daily improvement.  Although appearing to be fairly straightforward, putting these responsibilities into practice can be very difficult without understanding that lean is a system where the elements have to be applied together to successfully transform an organization.  Lean is like a Charles Dickens novel, where even the seemingly smallest details play a part in the story. 
What this means is that the leadership responsibilities listed above cannot be approached in isolation.  They work together, along with the tools and principles, to drive improved performance.  And focusing on the details while keeping the overall system in mind is not an easy thing to do.
I have found very few people today who don’t agree that lean makes sense for business.  Leading a team, plant, or organization, however, is a complex and challenging undertaking; and with a host of responsibilities and competing priorities and pressures, it’s not realistic to expect a leader to change his or her way of leading just because it makes sense.  The best way to help people understand how the work they do can align with these four responsibilities is to show them.  By going to gemba and demonstrating how the elements of lean work together to drive improvement, those you are coaching will begin to understand how the philosophy connects to real work. 
The Role of Dashboards
Dashboards are a perfect place to demonstrate to leaders how to fulfill the responsibilities of developing others, creating alignment, and driving improvement (and, more indirectly, developing oneself).  By creating a standard script and coaching leaders around the use of questioning based on data, you can help them gain comfort in the application of lean thinking through improved understanding of how the elements work together to drive improvement.
The questions I often use around dashboards include the following:
  • What is the target? This question assures that the team is clear on what they is trying to accomplish.  It directly addresses one of the biggest problems in organizations that people “just know” what they are expected to accomplish by making the targets absolutely clear.
  • Why? This moves the conversation from clarifying the target to assuring that it is the correct target.  To be truly successful, people need to understand why they are doing what they are doing, and clarifying the higher level objective helps drive alignment to the vision.
  • What’s the gap? Effective problem-solving requires clarity around the gap between the target and what is actually happening.
  • What are you doing about the gap? Actions to improve need to be directly aligned with the gaps in performance, and questioning the team leader on this can help assure that: (1) actions are being taken to close the gap; and (2) it is likely that the actions will be successful.  Asking how the actions were developed and assuring that they are focused on root causes will also help improve problem-solving capabilities. 
  • How are the actions going? It should be clear from the dashboard which actions are being taken and how they are doing.  This is the conversation around leading and activity-based indicators that show whether or not the team is carrying out the activities they feel will address the root causes.  If the actions are being completed as planned, is it starting to close the gap?  If not, why not?  If so, what is the team planning to address next?
  • What help do you need? A leader should always close the conversation with an offer of help to show that he or she is just as committed to improvement as the team.
The process can be demonstrated through a scripted conversation or by walking the leader through several dashboards to help him or her become more comfortable about applying it on a regular basis.  What is important is to understand that learning does not happen without action, and action requires that people know what they’re expected to do and how to do it.

Sunday, May 3, 2015

A Deliberate & Calculated System of Improvement

“A goal without a method is nonsense.” – W. Edwards Deming
One of the key aspects of lean that many people have difficulty grasping is that it is more deliberate and calculated than the traditional approach to business.  Once a target or objective is set, lean provides a framework for mobilizing and organizing the team to make it happen.  In a cultural sense, lean thinking leads to an almost obsessive drive to improve.
As an example, it is fairly common for leaders to set a vision for an organization that’s creative or inspirational, only to leave its achievement to chance.  The barriers and roadblocks to meeting the near-term targets become distracting and interfere with efforts to focus on longer-term objectives.
By What Method?
I remember hearing W. Edwards Deming repeat the phrase, “by what method?” during his seminars.  It is a simple question that is so critical to driving the organization toward achieving an objective.  In effect, it forces efforts to the process to be used to achieve desired results rather than focusing only on the result. 
When approached with a lean mindset, setting a vision is only the first step of a long and deliberate process of making it a reality.  The vision becomes more than a creative or esoteric statement that is only considered when remembered or convenient.  It becomes truly integrated into the organization’s thinking and everyday operation.
The process for making the vision – or any long-term objective – a calculated and deliberate effort includes asking the following questions:
  • What are we trying to achieve? What is it we want to happen and by when? Clarify the objective in terms that everybody in the organization can understand.  This is where ambiguous or imprecise statements are translated into specific objectives (e.g., translating a 10-year vision into 3-year objectives).
  • What’s the plan? What are the gaps between where we are and where we want to be and what are we going to do to close them?  At the highest levels, this includes determining and deploying the targets throughout the organization.  At the business and operational levels, it means determining the steps to achieve the targets.
  • How are we going to measure progress? The long-term objectives are often expressed through lagging – or results-based – measures.  Although it is critical to understand and watch the lagging metrics, the information they provide is after-the-fact and too late to correct the problems that are blocking success.  Because of this, it is critical to establish leading measures that are closely tied to the plans.  When clear and well connected to the plan, the leading measures will provide information to the team early enough to change course before results are affected.
  • How are we going to mobilize the team? This includes communicating the plans up and down the organization to make it very clear how the team expects to achieve the objective.  Most people understand the importance of communicating downward but, what is often missed is the importance of communicating the plan upwards through a catchball process.  Leaders should have a clear idea how the team expects to achieve the plan to feel comfortable that the objective is understood and that the effort will not compromise aspects of performance outside of the team.  Catchball is also an opportunity for the team to express concerns about meeting the objective, and to ask for help from leaders.
  • How are we going to stay focused on the objective? How are we going to hold ourselves accountable?  Making a vision a reality requires much more than communicating or deploying the statement into the organization.  There needs to be a firm meeting rhythm around the objective to follow progress and determine actions when results are not occurring as expected.  It forces the leadership team to clearly understand where the organization is on its journey to achieve its purpose.
  • What adjustments are needed to stay on track? Nobody understands the future well enough to develop an iron clad plan that will lead to long-term improvement.  Because of this, the journey will require adjustments along the way, and knowing when and how to adjust is critical to staying on track toward success.  Understanding when and what to adjust comes from successful application of the previous five questions.
The above questions comprise a system of improvement that makes the long-term objectives truly achievable.  The process can apply to local process improvements or the organization-wide drive toward the vision.  When applied correctly and consistently, it can create the discipline to stay focused on a vision and shift it from hopes and wishes to a deliberate and specific plan to improve.

Sunday, April 26, 2015

Lean Leadership & Systems Thinking

One aspect of lean that often gets overlooked is the depth of systems thinking required to be successful.  For a variety of reasons, people like to jump into the more visible and concrete elements of lean – like dashboards or problem-solving – without clearly understanding the organizational elements that are necessary to support and sustain continual improvement.
What is important to understand about the organizational elements is that they all fall within the responsibility of leadership.  Unless leaders are continually looking for problems in these areas, they can go undetected and destroy efforts to transform the company.  Leaders need to openly and honestly reflect on organizational issues to understand that addressing the problems is their responsibility.  When done well, continually improving the organizational issues will build a foundation that results in sustaining the transformation for many years.
Building the System
Establishing a systems thinking mindset requires the ability to comprehend the whole and how individual components work together for the benefit of the whole.  In real terms, this means establishing clarity around the purpose of the organization and understanding how each system, function, and team supports achievement of the purpose.  It also means establishing balance throughout the system to assure that no individual component becomes optimized at the expense of the overall organization.
People generally think of systems thinking in terms of value stream management and working to optimize the flow of material and information throughout the system.  Although value stream management is a critical element of continual improvement, there are other system-related issues that need to be understood and improved in order to sustain the gains made in throughout the process.  Without addressing issues like hiring, employee turnover, and leadership development, there is little chance that efforts to improve will truly make a difference to the organization.
Kaizen for Leaders
The overall organization is gemba for leaders and as such, needs constant attention and effort to improve.  Leaders must continually look for and remove the high-level systemic issues that interfere with the ability to improve.  Realizing, for example, that a poor hiring decision is the fault of the organization will drive kaizen toward improving the hiring process.  Just as problems on the shop floor require operators to act, hiring problems (as well as other organizational issues) require leaders to act. 
The organization is a system, and leaders must recognize their responsibility to improve the way the components work together to drive and sustain improvements in performance.  They must also understand that the responsibility of driving improvement never ends.

Sunday, April 19, 2015

Beware the Lean Expert

“The man who is too big to learn will get no bigger.” – Chinese Proverb
I started learning about lean during my college days when I took a business class on the subject of W. Edwards Deming’s theory of management.  Since that time, I’ve spent a significant part of my career working to transform organizations to become more focused on sustainable, continual improvement in the way they operate.  Among the many things I’ve learned on this journey is to beware of anyone who refers to him- or herself as a lean expert.
Lean is about striving for perfection - and strangely enough, about understanding that perfection will never be achieved.  The way to continually close the gap between the current state and perfection is to learn; and learning occurs through never-ending experimentation. 
If a company improves to the point of being recognized as an industry leader, and starts to think it has reached perfection, then further learning – and improvement – would stop.
The same applies to individuals.  I’ve run into many self-proclaimed “lean experts” over the years who think they understand lean so well that they visibly stop learning.  They attempt to drive lean thinking into an organization the way they’ve done it in the past and ignore the signs that identify problems.
A requisite for continual learning is humility.  Unfortunately, the culture in many organizations interferes with the ability to demonstrate humility.  Openly showing problems and asking for help can be seen as weakness, which motivates people to hide humility and the associated learning that it can facilitate.
The way around this is to be wary of anyone who claims to be an expert – in lean or any other aspect of the business.  Continually question his or her statements and approach to help drive understanding of the gaps in performance, whether or not the gaps are obvious. 
I’ve been working to drive continual improvement into organizations for decades and find myself learning on a daily basis something I didn't previously understand.  When I look back at some of the things I’ve written in the past (something, by the way, that a writer should never do), I’m amazed at how little I knew at the time and how sad it would have been if I stopped learning.
Organizations that begin the journey to lean thinking often bring in experienced people to help with the effort.  I advise leaders of these organizations that they can avoid a long and painful journey by avoiding anyone claiming to be a “lean expert.”  Unless your name happens to be Deming or Ohno – and I’m guessing neither would really consider themselves experts – you have way too much to learn to use the term.

Sunday, April 12, 2015

The Lean Formula

I have said many times that lean is simple but not easy.  Although the concepts are fairly easy to understand, putting them into practice requires such a deep level of learning, discipline, and reprogramming of the way people think that few are able to do it successfully.

There are many ways to begin a lean journey and one is not necessarily more correct than another.  I tend to adjust my approach depending on a variety of organizational factors, including culture and readiness for change.  I generally start with a basic formula that keeps people focused on the results the organization is trying to achieve, the results they are actually getting, and how to close the gap between the two.  
The lean formula that can be used to drive transformation of an organization is as follows: 
The basis of the formula is that all elements must be present to be successful.  If any are missing – i.e., a zero – then the result of the equation is zero.  For example, having dashboards that measure and report performance without regular meetings to review the data or an effective method to address problems identified, improvement will not happen.  Although you’ll most likely work on the element that requires the most attention at any given time, lean is a systems approach that requires all of the elements to be present to sustain the transformation. 
The components of the formula are as follows:
CLEAR & CONSISTENT PURPOSE:  The entire effort must be directed toward achieving the organization’s aim.  Without clarity around the purpose (including the mission and vision), efforts to improve will be isolated and disconnected.  The annual plan will have nothing with which to align, and overall results will be disappointing.
FOCUSED ANNUAL PLAN:  Leaders clarify the purpose by translating it into 3-5 year objectives to be carried out by the organization.  This is driven into the organization through the development of annual plans that, based on the objectives, provide very clear direction and targets to be achieved in the coming year. Included in the plan is the targets that drive daily work (often in terms of safety, quality, production, cost, etc.) and breakthroughs, or the big improvements that must occur to move the organization forward (i.e., those areas where business as usual is not acceptable).
VISUAL DASHBOARDS:  The dashboards represent the scoreboards that identify the gaps between current performance and expectations from in the annual plan.  At the highest level, this is the actual safety, quality, production, and cost targets.  As you move deeper into the organization, though, the measures on the dashboard will become more focused on the processes and activities performed in a particular area.  The dashboards identify where adjustments are needed to get the organization or area back on track, and become the basis for coaching and developing the problem-solving abilities of people.

EFFECTIVE MEETING RHYTHM: The organization must implement a meeting cadence that is focused on identifying and addressing problems as they happen.  The meetings should be short and focused on hotspots - i.e., the problems that are, or have the potential of, interfering with performance.  These meetings are not a forum for people to tell everyone what is going well or how much work they did since the last meeting - the dashboards will do this.  The meetings should be used to highlight problems, determine if problem-solving efforts are working, and ask for help.  The schedule should be set at as closely as possible to the pace of work so the problems can be identified and addressed before performance is significantly affected.

KAIZEN:  Knowing the gaps between targets and current performance is futile if people do not know how to address problems.  Having an effective kaizen or problem-solving process will enable the organization to close the gaps and react quickly to existing and potential problems.
What I like about the formula is that it enables the organizational gaps to be highlighted.  Problems with coaching and developing people to address problems will show up in the dashboards; failure to consistently move toward long-term objective will highlight problems in the annual planning process; and inconsistent objectives between areas could point to a lack of clarity in the organization’s purpose.  
Perhaps the most significant benefit of the formula is that it makes the transformation about the business rather than about lean.  Efforts often fail when organizations focus too heavily on the tools rather than on consistently achieving and improving business results.  When this happens, lean becomes seen as something separate from the business and the number of people fighting the transformation effort grows.  The formula, on the other hand, keeps lean closely integrated with the long-term success and growth of the business – something that very few people can resist.

Sunday, March 29, 2015

Deming's Influence on Lean

There are numerous books and papers available today that, in one way or another, touch on the subject of lean. I am amazed, however, at the number of these publications that fail to make the connection between lean leadership and W. Edwards Deming’s theory of management.  Besides the fact that Deming had a huge impact on Toyota over the years, I don’t think it is possible to truly appreciate the impact of lean on the overall organization without a basic understanding of his philosophy on leadership and transformation.

I am not discounting the effect that people like Taiichi Ohno, Eiji Toyoda, Shigeo Shingo, and others have had on the development of lean thinking, but Deming’s influence, especially in the area of leadership, is so critical that I wonder how anyone can truly lead a transformation without developing an understanding of his System of Profound Knowledge (SoPK).

The System of Profound Knowledge

Deming developed his system of profound knowledge as a “framework of thought and action for any leader wishing to transform and create a thriving organization, with the aim for everybody to win.”  The SoPK has four elements that work together as a system to enable transformation toward what we now refer to as lean thinking.  If leaders ignore any of these elements, the chances of unlocking the “big gains” available to organizations or sustaining improvements over the long-term are extremely small.

The four areas within the SoPK are as follows:

1.     Appreciation for a System  Leaders need to understand that the organization is a system comprised of a complex interaction of people, processes, and the environment that work together to achieve an aim.  Failing to identify and continually drive toward the aim will lead to behaviors and actions that are destructive to the organization.  Conflicting objectives, short-term thinking, and poor supplier relationships are some of the results of failing to understand and apply systems thinking.

Within lean thinking, helping people understand how the work they do aligns with the organization’s long-term objectives is a critical responsibility of leadership.  Without an understanding that the organization is a system, however, it is virtually impossible to do this on a continuing basis.
2.     Knowledge of Variation  Assuring the right measures are collected and understanding what the measures are saying about performance is critical to assuring an organization continually improves.  When performance is not as expected, whether above or below expectations, we need to understand the reasons for the gap and the type of action to take.  Knowledge of variation will help leaders understand whether problems are built into the system requiring management action, or caused by something outside of the system and can be addressed locally.

Also, having an understanding of variation will drive the organization toward the creation and use of standardized work to help stabilize performance.
3.     Theory of Knowledge  For a team to continually improve performance, it must be able to learn effectively, and learning effectively requires continual testing of opinions, ideas, and hypotheses, which is the basis of the Plan-Do-Study-Act (PDSA) cycle.  Although Deming was not the first to apply the cycle to process improvement, he is credited with identifying it as a critical element of leadership.  In organizations that have successfully adopted lean thinking, the PDSA cycle is applied at all levels, from the shop floor to the board room.  The cycle is the basis for changing the way people think and approach work.
4.     Psychology  Organizations are made up of people and, without an understanding of what motivates people and how they learn, interact, and develop, the ability to develop an organization that continually performs at a high level will be severely hampered.  Too often, organizations promote people who are technically good at their jobs and leave their development to chance.  As a result, the organization suffers from varying leadership styles and confusion among team members.  On the other hand, when the organization standardizes its approach to developing leaders and teaches them how to
Although one of the objectives of lean is simplicity, the methodology can be very complex, requiring a level of understanding of organizational behavior that many people do not appreciate.  Success requires a continuing commitment to learn about the theories upon which lean was built in order to understand and deal with the specific situations, relationships, and interactions that make up an organization.  The more you understand the what and why of lean, the more effective you will be with the how during the deployment.

I would never refer to myself as an expert of Dr. Deming’s philosophy.  Like much of lean thinking, though, the more I apply the SoPK, the more I learn about it.  I believe a big part of what Deming was trying to teach, though, was the idea that transformation is a journey, and the only way to keep progressing along the journey is to continue to learn.