Sunday, September 9, 2018

Innovation: Without it, You're Not Doing Lean

There seems to be a common misconception that lean thinking and innovation somehow conflict with one another.  Many companies approach innovation as something completely separate from lean in order to prevent concepts like standardization and stability from stifling creativity.

This is unfortunate because innovation not only fits but is actually a significant part of a lean system.  Failure to integrate innovation into a lean journey will lead to missing out on many of the big gains that are possible with the strategy and hurting the organization’s long-term competitiveness.


At its most basic level, improvement consists of two elements: problem-solving and breakthroughs.  Problem-solving involves addressing a drop in performance with the objective of returning to the way things were before the problem occurred.  This is critically important for maintaining performance by increasing the stability of processes and systems.  Most organizations, however, stop their lean efforts there and fail to significantly improve because of a lack of attention to improving performance and raising the standard.  As important as stability is to performance, raising the standards to new levels are just as important to long-term competitiveness.

Breakthrough or kaizen thinking deals with this to continually drive the organization’s performance to new levels.  The successful application of kaizen into an organization requires the type of innovative thinking and creativity that many organizations are missing, have stifled in team members, or address completely separate from lean.


Breakthrough can come from two sources: the vision and ideas from team members to make products better and work easier.  An effective vision provides direction regarding how the company wants to perform in the future to be successful.  It must be grounded in reality to some extent but also provide enough of a stretch to energize people to apply the creativity to make it happen.  From this perspective, a comparison of how the company currently performs and how it is expected to perform 5 or 10 years in the future should provide a gap that needs to be addressed through creative problem-solving, or breakthrough.  As a general rule, this should consume about 20% of the organization’s resources, and the closer to the customer or the company’s main business activities (i.e., the factory floor, service counter, wellhead, etc.), the more the focus on the other 80%, or operating and maintaining processes to meet performance targets, and conducting problem-solving when targets are missed.  It should be noted, though, that the needs of every organization are different and the split must be adjusted to fit individual situations.

Driving breakthroughs to close the gap to the vision is basically management problem-solving and is where leaders need to spend a significant portion of their time.  This is one of the many reasons why micromanagement of team members is damaging to an organization.  Besides the negative effects on motivation, micromanagement shows that a leader is not developing those on his or her team to handle day-to-day problem-solving in to free up the leader to focus improving the system.


Problem-solving and breakthrough both usually reprogramming in the way most people think.  The typical reaction to problem-solving is to immediately jump to the countermeasure.  This is often due to an overloaded schedule, the need to look smart, arrogance, or many other factors that are influenced by geographic and company culture.  The problem with this is that, without understanding the problem clearly, or determining the most likely root cause, the countermeasure can be incorrect and worsen the situation, or even if it does happen to work, the team misses a valuable opportunity to learn more about the product or process involved.

Reprogramming thinking to improving problem-solving requires developing the analytical skills to clarify the problem, break it down to determine when, where, and how often it happens, and using a structured way to discern the most likely root cause.  Basically, people need to learn to become detectives to determine what changed since the process was meeting the standard.

Breakthrough thinking requires developing innovative or creative thinking.  This involves developing the ability to clarify the need as the difference between current performance and what it needs to be to meet the new target (similar to problem-solving).  It also requires learning how to reflect and observe to see what is keeping performance from improving beyond its current level and teaching people to challenge their own assumptions to better understand whether they are real or perceived, and if they are blocking new ideas from being devekioed.  Breaking down the walls that protect one’s beliefs about the work is a key to increasing the flow of ideas and creativity.

Although improvements will occur throughout the journey, patience and a good deal of effort is required to develop problem-solving and breakthrough thinking because it involves reprogramming the way a person has likely thought and approached work for decades.


As an organization is undergoing a transformation toward lean thinking, it is critical to think about the whole system, which includes closing gaps to the standard as well as raising the standard.  Considering problem-solving only and keeping innovation separate from the effort tells people to that their ideas are not valued and to only focus on getting processes to operate to current standards. 

Integrating the creativity of breakthrough thinking with the stability of standardized work and problem-solving, however, can enable the organization to tap into the big gains that most companies fail to achieve.  Like most of lean thinking, however, it is a simple concept that requires patience, vision, and effective leadership to make happen.

Wednesday, August 1, 2018

Protecting a Lean Culture Does Not Happen by Accident

There is very little debate about the importance of culture to an organization's success, and that the responsibility for defining the culture lies with leaders. Once the culture starts to develop, though, how do you hold the gains and protect the natural tendency to fall back to the way things were before the improvements? The easy answer is that the responsibility belongs with leaders, but that does not provide enough detail to be of any use. Unless there is a clear and standardized system to protect the culture, including the methods, policies, and ability to identify new and existing gaps, the chance of backsliding is pretty high.

The culture needs to be protected by those who have the power to ensure that, among other things, leaders are fulfilling their responsibilities effectively, people are developing adequately, new hires are carefully selected and have values consistent with the those of the company, and people are being promoted for the right reasons. One team that is regularly involved with many of these areas and can ensure that they are done consistently and in a way that strengthens, rather than weakens, the culture is human resources. A strong HR team is in the best position to understand the company's culture, develop systems that protect it from damage, and help people understand the importance of following the associated standards.


It takes a lot of work to define and create the type of culture that will help drive continual improvement and improve competitiveness. Once an organization starts making progress, however, it is very easy to slip back into old ways. Unless decisions related to hiring, promoting, and developing people are made consistently and in a way that is clearly aligned with the company's needs, the gains can easily disappear. The way to prevent this from happening is to develop standards that assure work activities protect the culture and assure that people-related decisions are made by a team that is independent with respect to personal relationships and can make objective decisions regarding a person's cultural fit or readiness for promotion.

Unfortunately, many human resource departments do not consider protecting the company's culture as a prime responsibility – or a responsibility at all. A quick Google search on the objectives of human resources identifies a lot of general statements like hiring, maintaining employment records, and providing counsel about terminating employees. Although some of these are loosely connected to protecting the culture, none that I could find mentioned it specifically. Among the likely reasons for this is that HR teams rarely have the power to challenge attempts by executives to avoid the standards. Also, like other parts of the organization, HR professionals are so busy doing their "day jobs" that they rarely step back to understand the fundamental reasons for doing the things they do.
Culture Protecting
Standards need to be designed to protect and embed the culture and, like any standard, if one person is allowed to bypass them, it will deteriorate and any protection it provides is lost. As a result of this, things move back toward the prior state and the organization's culture loses its ability to provide a competitive advantage.


Bypassing the standards that protect the culture are often justified with good reasons, like needing to make a hiring decision quickly before losing a candidate or a leader promoting someone with whom he or she has worked in the past, so the person's capabilities and values are "already known." Regardless of whether the reasons appear sound or not, it is up to leaders to do their part by committing to the standards and following them every time. It is far less damaging to lose a potential candidate than to ignore a standard, go around the system, and hire someone who is not a good fit for the organization.


Talking about the importance of culture will do little to protect it from damage. Effectively protecting it can only occur when the elements become standardized and embedded into the company's normal operation. Specifically, this requires:
  1. Developing standards for the cultural dimensions of an organization, including hiring, promoting, training and development, etc.;
  2. Making everyone aware of the standards, including what they mean to day-to-day business, and holding everyone responsible for following the processes (or ensuring that countermeasures are implemented when the standards cannot be followed);
  3. Clarifying to the HR team that they have a responsibility to protect the culture by communicating and assuring compliance to, and continually improving, the associated standards (this may require development of HR team members);
  4. Giving the HR team the power to enforce the standards in all instances;
  5. Adding HR positions to job rotations to help key people develop a deep understanding of the standards, systems, and processes, including why they are critical to the organization's competitive position.
This does not mean that HR is the only team responsible for assuring the culture is protected. Everyone has the responsibility to follow the standards in a way that assures protection and continual improvement toward the ideal. What is does mean is that, as the official guardian of the culture, HR is responsible for many of the associated standards and has the authority to stop anyone from going around the system.

There are, of course, standards that protect culture and are not controlled by the HR team, including keeping the vision alive and relevant, helping team members make problems visible without fear, developing team member abilities to see and address problems, etc., but even these can be aided by support from HR to help leaders develop and improve the ability to make these things happen effectively.


Everyone in the company is busy working and improving their part of the system. Identifying and protecting a culture, however, applies to the entire system and requires focus from a team that has the ability to step back to think and act holistically. It is not as easy as many of the responsibilities normally associated with HR but is arguably the most critical.

When you think about it, it is not the products, services, or processes that make a company great, it is the people who develop, produce, and improve them. Without a culture that drives continual learning and lets people use their talents to create great products, services, and processes, the company has little to sustain its success. Talking about the culture does nothing – defining it in clear terms and implementing the systems that identify the gaps and protect the gains is the way to turn a soft, difficult to measure organizational element into something much more concrete.

Saturday, June 23, 2018

Energy Companies Need to Stop Worrying About Oil Prices

This post was published to Avoiding the Corporate Deat... at 7:22:51 AM 6/23/2018
Energy Companies Need to Stop Worrying About Oil Prices

It is not enough to do your best. You must know what to do, and then do your best.” – W. Edwards Deming

If recent history is any indication, energy companies expecting to survive in the years ahead are going to have to adopt a new business philosophy. As is the case with any commodity producer, market price is a factor for financial success. The problem, though, is that many companies have come to rely on it as the only factor and, as a result, surrendered the ability to control their own fate. While crude prices are contributors to financial success, they do not have to be the only factor in determining whether a producer is profitable or not. What is needed is a new business model – one that enables companies to produce oil responsibly and profitably whether prices are $70 or $30. If an energy company cannot figure out how to remain profitable in a world of wide swings in oil prices, it may as well find something else to do because its future, if it has one, is going to be severely compromised.

As companies in other industries have discovered over the years, a business model guided by lean thinking can help secure a future in a world of unpredictable and widely variable market conditions. Although the acceptance of lean in the energy industry has increased over the last several years, there is still significant misunderstanding about the need for transformation in order to achieve the level of success that organizations in other industries have experienced. After several years of failed attempts to achieve improvements through tools-focused approaches like 6-sigma – where improvement methods are placed within existing systems and the responsibility for solving problems is delegated – some organizations are starting to understand the need to apply a new philosophy that integrates improvement at all levels of the business in order to achieve the big gains that are possible in safety, environmental performance, production, and cost.

The industry is still in its infancy in understanding and applying lean to the point where it will reduce its addiction to oil price. When accompanied by true and fundamental transformation, lean can help an energy company take full advantage of the periods of high prices while preparing for the inevitable drops without feeling the need to implement drastic measures that damage long-term health.


Applying lean to an oil and gas producer, as with any company, requires a clear understanding of the philosophy rather than attempting to copy how Toyota – or anyone else – does it. Copying drives a focus on the tools and ignores what you can’t see – the fundamental changes in the company's systems (e.g., leadership, hiring, training & development, promotions, etc.) that are necessary for success. For years, though, Toyota provided the only real example of what many now refer to as lean, and those wanting to learn approached the deployment by rolling out tools like kanban, 5S, or value stream mapping. The problem is, without a clear understanding of lean as a system that requires transformation in the way the organization operates, the best one can expect is random improvements that are difficult, if not impossible, to sustain.

When people begin to truly understand lean, including systems thinking, psychology, and the application of the Plan-Do-Study-Act (PDSA) cycle, they begin to approach work differently, and become much more focused on what's truly important to the organization. The way people think about problems shifts and the organization starts to replace the traditionally overly complex, gut-feel, boss-knows-everything approach with a simpler, more scientific way of operating.

In the most basic terms, lean is about:
  • Having clear standards based on the needs of the business;
  • Following standardized work that enables the standards to be met;
  • Quickly identifying when a standard cannot be met (i.e., when a problem occurs);
  • Identifying and addressing the causes for not meeting standards (problem-solving);
  • Knowing when a standard needs to be improved and having a method for doing it.
Although it sounds simple, making the above work effectively requires transformation in many of the company's systems as well as its culture. When a company ignores the signs that its systems or culture are interfering with improvement, lean becomes a burden and is seen by many as a waste of time.


Once people in the industry begin to understand and appreciate the various aspects of lean, including a focus on continual learning and the connection to the organization's fundamental purpose, things will start to change. The thinking that drove improvements at Toyota like reducing setup times on stamping presses from 3 hours to 3 minutes or completely eliminating wasted paint during the body painting operation while reducing color changeovers to seconds, can help contribute to greatly reducing an oil producer's cost per barrel, shortening its lead time from exploration to first oil, and significantly reducing emissions while improving safety. It won't necessarily happen in one year or even two, but the improvements along the way will show the potential of a culture that is aligned and improvement-focused throughout the organization.

Some of the keys to assuring the successful application of lean to an energy company include the following:
  • Leaders must understand and actively drive, rather than delegate, the transformation. To do this, they must be taught what to do, be open to coaching, and accept the responsibility of creating a culture obsessed with improvement;
  • Establishing a culture where continual learning and development is highly valued and expected of every team member from the newest hire to the CEO; and holding leaders responsible for coaching and developing those on their teams;
  • Developing a clear and consistent purpose (i.e., the mission and vision) for the organization – and staying true to the mission while ensuring that all activities are oriented toward achieving the vision, including helping everyone understand how the work they do connects to the purpose;
  • Designing systems that enable problems to be shown quickly and clearly, and ensuring people feel comfortable showing the problems in their areas. Any area or team that does not have problems only means that they are not being shown, which is likely caused by cultural reasons;
  • Ensuring a single clear and consistent approach to lean. Do not allow alternate training or tools to come into the organization unless it is driven by, and clearly connected to, the deployment. Do not let anyone add confusion by introducing new tools or methods that do not fit within the standard approach.
When deployed correctly, lean entails a vastly different approach than most people are capable of understanding at first. Through real-world practice, effective coaching, commitment, and patience, people will start to understand and see the big gains that are possible through an effective transformation. As the organization starts to unleash the talents of its people through the combination of daily problem-solving and breakthrough thinking, the ability to create an organization that improves profitability by producing energy safely, cheaply, and responsibly regardless of the price of oil will become a reality, and rather than blank stares, eye-rolling, or resistance when concepts like perfect safety, drastically shortened lead times, or zero emissions are presented, people will become energized and focused on making them happen.

Tuesday, June 5, 2018

Problem-Solving & Kaizen: Are They Different?

One of the most important – and elusive – objectives of lean is creating a culture of continual improvement throughout an organization. In most cases, this requires changing the way people think and approach their work, and although helping people transform is never easy, it becomes even more difficult when those driving lean are not clear about the different types of improvements and how to approach each. Solving a relatively small, one-time problem, for example, requires different thinking than reducing fixed costs across the operation by 20%. It is far too common, though, to attempt both by using the same process - i.e., handing someone an A3, telling them to "do a kaizen," and asking them to complete it. Besides the wasted time this can cause, it can confuse and frustrate the person being coached.

The objective of this post is to provide some clarity about the different types of improvement. Although the subject often leads to considerable debate and disagreement, I believe it is an important one, and something that lean professionals need to understand to help move an organization toward a sustainable culture of improvement.

The Different Levels

As shown in the diagram, there are 3 basic levels of improvement within an organization. The two lower levels deal with solving problems, i.e., a situation where actual performance does not meet a standard. This assumes that the process or activity is capable of meeting the standard and has done so in the past, thereby focusing the effort on analyzing what changed or what recently occurred that had not been seen before.

Improvement Pyramid-Purple

The third level, breakthrough, involves raising the standard to a new level to meet current or future business needs. Doing this successfully often requires the ability and willingness to question previously held assumptions, and applying creativity to drive step-changes in performance.

In practice, this means that each requires a different type of thinking. By looking for clues regarding what went wrong, problem-solving requires analytical thinking, whereas a breakthrough, by attempting to challenge the status quo and develop new ideas and approaches, requires creative or flexible thinking. Both are needed for an organization to be successful, and both often require effective and consistent coaching to prevent people from being confused.

Because of natural forces and overall effect on the organization, there tends to be significantly more activity at the bottom of the pyramid than at the top, while, although fewer in number, efforts at the top of pyramid tend to result in more effort and a larger gain.

Daily Problem-Solving

Daily Issues
The most common and basic type of problem people face are the daily issues that are often small, one-time annoyances that, although still requiring action, have less effect on the system than the more complex and repeatable issues that the organization faces. These daily issues still require countermeasures because they interfere with the ability of people to do their jobs easily. Additionally, if we ignore them, we are showing disrespect to the people affected and sending the message that waste is acceptable. Addressing them also helps people begin to develop structured problem-solving skills in a fairly simple and easy way.

Those addressing daily issues are still expected to develop a clear statement of the problem, root cause analysis based on 5-whys, and a countermeasure that proves effective in addressing the root cause, but not to the level of a more complex problem being addressed with an A3.

The daily issues are often addressed by those closest to the process who face the problems firsthand and, because of the nature of their jobs, do not necessarily have the time to step back and look for trends and connections between the problems that occur. As with all levels of the organization, the team lead or supervisor is expected to coach and develop the ability of team members to identify and address the problems they face.

Efforts to address daily issues should be documented on a card or simple electronic system to use for coaching, collection of data, and as a means to assure that problem-solving is occurring. Care should be taken, however, to ensure that documenting the effort does not become a burden or the benefits in terms of developing analytical thinking across the organization will suffer.

8-Step Problem-Solving

Whenever a one-time issue recurs or appears on a dashboard as a gap or trend, more structured problem-solving efforts are required. For these issues, an A3 is necessary to assure that the problem is effectively defined, broken down, and addressed. Although it can still be done quickly, the effort is often coached more closely and focused on developing skills more deeply. Rather than a simple 5-whys exercise to determine a root cause, for example, an A3 problem-solving effort would require additional answers for each "why" and verification with data and visiting gemba to see firsthand before moving forward. Since an A3 effort often involves addressing a problem that is fairly complex and/or large, there is also an expectation that the problem is broken down into more specific and actionable issues to be addressed one-at-a-time.

Breakthrough: Raising the Standard

Within any business, there are times when the existing standard is not acceptable. Where problem-solving requires analytical thinking to understand what has changed and how to get a process back to where it once was, breakthroughs often need creative ideas to make the type of changes that will raise performance to a level not experienced before. Doing this successfully requires challenging assumptions to separate fact from deeply held opinions.

In spite of what many people think, everyone has the ability to think creatively and develop innovative approaches to business. The key is to coach and develop people to access and hone creative powers – something that is admittedly not always easy to do. The more experience one gains in a particular field or organization, the more the person tends to stick to what he or she already knows – or at least thinks he or she knows – becoming more and more set in one way of thinking. Success with breakthroughs requires breaking down this defense to get people to begin questioning what they accept as fact to see when it is actually nothing more than a strong opinion.

Analytical thinking, although critical for problem-solving, will rarely lead to innovative breakthroughs required to keep the company moving forward. In his book, Elastic: Flexible Thinking in a Constantly Changing World, Leonard Mlodinow writes that innovation requires "bottom up" thinking driven from inside the person versus the "top down" outside-driven thinking generally required for problem-solving.

An important point about the balance of analytical and breakthrough thinking is that a company cannot use innovation to stay ahead of quality and productivity problems. There must be a solid foundation of problem-solving and stable processes upon which to build and hold the breakthroughs.

Both are Required

What makes lean powerful, the combination of analytical problem-solving and innovative thinking, is also what makes the transformation so difficult. Understanding the different dimensions of improvement is fundamental to assuring a successful journey and avoiding the confusion and frustration that many companies experience.

Tuesday, March 13, 2018

Lean by Playing One Point At-a-Time

"One thing that makes Chris [Evert] such a great champion, is that she doesn't play games or sets, she plays points."Billie Jean King

I've played tennis most of my life and learned many years ago about the importance of the mental aspect of the game. One thing that particularly impressed me early on was the ability of Chris Evert to maintain an intense level of focus regardless of the score. Whether she was winning handily or losing badly, her expression and focus did not seem to waver. This ability helped her come from behind on many occasions and beat her opponent, even when it appeared that she had no chance of winning. Her focus was never the match, set or game, but the point. Her strategy was based on the idea that points mattered, not the score, and by focusing on winning each point, the matches would take care of themselves.

I didn't know it at the time but this greatly helped me to understand lean thinking. Keeping the focus on what's happening right now, whether a machined part, assembly, customer interaction, or drill bit location, helps drive improvement by immediately seeing when something goes wrong. When we become distracted by the overall score – the monthly or annual budget – we miss the little things that happen every day and every hour that add up to poor long-term performance.

At its most basic level, lean involves setting standards and addressing the problems that interfere with meeting the standards. This means that, to make lean work, we must: (1) have standards; and (2) provide an easy way to know when the standards are not met. It is a simple concept but is very difficult to put into practice. Company culture, leadership systems, and human behavior often force people to worry about the big picture and forget that the results consist of many small processes and interactions. As a consequence, people ignore the small problems and fail to see that spending 5 minutes looking for a tool, for example, has an impact on missing a monthly or annual production target.

It Starts with Leaders

For a variety of reasons, leaders tend to focus on the big picture and ignore the small problems. What is often forgotten, however, is that the big picture includes creating an environment where everybody identifies and addresses problems every day. By showing concern only about the big gaps in performance, leaders are telling people that the small things don't matter. As an example, although missing a bolt to complete a job can be a headache for a person in the factory, a leader may decide that it is not significant enough to spend time helping the person understand the cause and develop a countermeasure for the next job. The message that some problems are important to fix while others are not sends mixed messages about the importance of problem-solving. In effect, the leader is losing points while thinking about the match.

Changing the culture requires helping people understand that every instance where a standard is not met is a problem and needs to be resolved. Doing this requires spending time at gemba to see when it happens, helping people recognize the small problems that happen (or validating that the problems are important enough to address), and coaching people to effectively solve problems. The objective is to get people solving the problems they face every day.

Changing the Daily or Weekly Standup

Another way to help change the way people think about problems is through the daily or weekly standup meetings. A traditional standup meeting reviews how the team performed since the last meeting, e.g., what problems interfered with achieving the plan discussed in the previous day's meeting. When the discussion is distracted by the annual or monthly budget rather than what happened yesterday, important information is missed. Achieving the budget is obviously important but since meeting standards is the way to achieve the budget, the focus needs to be on what got in the way of meeting standards. When the focus is the budget, the team misses a critical objective of lean: solving problems and performing better every day. In tennis, the standards include things like the stroke, footwork, and ball placement. It is these things that enable a player to win points through an intense focus on doing them correctly and making adjustments when problems happen rather than looking at the score. In work, the standards and associated instructions are the stroke, footwork, and ball placement.

When a company's culture suffers from an attention deficit disorder (a common condition in many organizations) its inability to see the small problems interferes with the daily problem-solving required to continually improve and create a system capable of meeting the budget. By allowing this to continue – i.e., worrying more about the score than the point or the shot – the gap to the budget will continue to grow because the problems are not being addressed. It is also far easier to address the small problems every day than to attempt to take on the entire gap between actual performance and the annual budget.

Focus on the Points

University of Alabama football coach Nick Saban once said, "the process is really what you have to do day in and day out to be successful." In lean terms, he's referring to understanding and continually focusing on the standards. When the focus is results rather than the work that produces the results, standards become meaningless, problems become too big to address, and the gap continues to grow. Besides the fact that it is far easier to identify and correct gaps to meeting a standard than missing a monthly production target, the more people address problems – regardless of how small – the better they get at problem-solving. I've learned the hard way many years ago that my chances of coming back from a 5-1 deficit are much better when I focus on the next point than worrying about winning the next six games.

Wednesday, February 14, 2018

Do People Feel Comfortable Showing Problems?

One of the most common obstacles to successfully deploying lean is failure to appreciate the level of transformation required in behaviors and systems. Far too often, companies attempt to implement a variety of lean tools on top of traditional systems and behaviors and are disappointed with the results.

Among the many behaviors that require transformation for lean to work effectively is the need to make problems visible. Since lean is heavily focused on continually comparing actual results to standards and addressing the issues that cause gaps between the two, it can only work when problems are highlighted quickly and honestly.

Is it Really That Difficult?

Assuring problems are visible makes perfect sense and is something many organizations mistakenly believe they already do. For a variety of reasons, showing problems is not something that does not come naturally to many people. It is more natural to hide – or at least not openly display – problems with the hope they can be resolved before being discovered.

It is important to understand the reasons people hide problems and to realize that transformation is required in order to make it okay – and even an expectation – to show problems quickly and clearly.

Why do we Hide Problems?

Although there are a number of reasons that people don't feel comfortable showing their problems, a few tend to show up more than others. The first is a fear of looking incompetent or unable to do the job effectively. Whether the result of a highly competitive culture, overreaction of leaders to problems in the past, or something built into the person's emotional makeup, some people will not feel comfortable openly showing problems. Even when internal competition is not openly encouraged, a history of promoting people who hide problems or twist the story to make it appear that things are under control can cement the idea that it is not okay to openly discuss problems.

Another cause of hiding problems is the fear of getting "help" from people who don't understand what's really happening in the workplace. Some leaders feel that it is important to have all the answers and will regularly offer solutions to the problems without having all the facts. When the leader is disconnected from gemba, this leads to frustration in team members because they will feel compelled to follow the proposed solutions even when they know they won't work.

It is perfectly normal for people to want to show that processes are running smoothly and things are under control.  Because of this, it is up to the company's leaders to continually instill the idea that highlighting problems is not only acceptable but expected within the organization.  This means that there should never be negative consequences for making a problem visible.  On the contrary, it should be made clear to everyone that hiding problems or failing to take action to address them is an unacceptable behavior.

As leaders are able to create the culture that it is okay to make problems visible, there are three common ways to help people show problems quickly and clearly: alarms or andons, dashboards, and meetings.


An andon signal is a way to immediately show that some aspect of work is not meeting standard. Andons are perhaps the most effective way to show problems because they are designed to highlight a problem immediately and at the point where it happens. Examples include ropes or buttons in the factory where people can signal a problem as it happens, or sensors that detect problems immediately (e.g., retrieving components for an assembly in the incorrect sequence by sounding an alarm when the operator reaches into an incorrect bin).

The keys to making an andon successful include having clear standards, enabling quick notification, providing immediate help, and recording the problems for longer-term problem-solving.


A key objective of a dashboard for an area or process is to clearly and objectively show the gaps between expected and actual results.  Hiding the gaps or continually putting a positive spin on how things are going misses the opportunity to align team members on what's important, and the problems that require attention.

Posting charts that track what's critical for an area help keep people focused on how a process is expected to perform and, the more sensitive the chart, the more quickly action can be taken when a gap occurs.

Dashboards become ineffective when too much data is displayed or the charts lack simplicity. Think how difficult driving would be if the dashboard in your car contained 10 or 12 gages with a variety of information on each.  The same applies to a dashboard for a work area.  Keeping it simple and clearly connected to company or system targets is a key to assuring it is effective.

It is also critical to keep dashboards easy to maintain. Too often, people create multi-color, three-dimensional charts that show too much data, making the charts become nothing more than eye candy.  The purpose of a chart is to highlight problems, not prove how adept someone is at creating graphs.


Many companies waste a lot of time in meetings talking about what is going well.  Performance is reviewed and discussed – sometimes in excruciating depth – even when processes are on-target.  People learn to dread meetings and use the time to catch up on email, Instagram, or the latest headlines on their phones.

The more daily and weekly meetings are focused on gaps - existing and potential - the more engaged people will be.  The dashboards should drive the meetings and, the better the dashboards, the quicker people can zero in on the gaps and talk about what is truly important.

When teams do this well, they begin to take advantage of the collective knowledge of the team by focusing on improving performance.  If they dance around the real issues by ignoring the gaps and continually putting a positive spin on how things are going, they miss opportunities to build teamwork and address the real problems.

The Problems Are There - Why Not Look at Them

Every organization has problems, and a key determinant of success is how well the problems are addressed.  Openly showing the problems is the first step to resolving them.  Getting to this point, however, often requires shifting behavior to make it okay – even expected – to look for the gaps.

Sunday, February 4, 2018

Stop Judging - Start Leading

Much has been written over the years about the destructive effects of the traditional performance rating systems used by so many organizations. It's a process that most people do not like but nevertheless continues to be an important part of the HR systems of many organizations. In a study conducted by CEB Global (now Gartner), 21% of nearly 300 companies surveyed worldwide have dropped or are planning to drop the practice of assigning performance ratings to employees. If this is representative of business in general, it means a vast majority of companies still use ratings.

The idea of eliminating ratings has gained increased attention in recent years but many appear to be apprehensive of dropping the process because they don't know what to do instead to provide feedback to improve performance. According to the CEB Global study, though, employee performance has actually dropped in those companies that have eliminated ratings. My fear with reporting study results like this is that people – especially those who favor rating employees – will see it as proof that the process needs to continue. Upon further reading, however, it is noted that it is management practices and leadership skills that cause the problem, not the elimination of the ratings process itself.

There are many compelling reasons to eliminate performance ratings that greatly outweigh any that seem to support continuing the practice. The reasons are not new but, as long as they continue to be ignored, each significantly interferes with transformation and sustained levels of improvement. Like any process or system, we should never look at the performance rating system in isolation of organizational performance. Too many managers look at the performance review process as if it has value by itself and keep it disconnected from where the organization is going or what it is trying to accomplish.

Problems with Performance Ratings

There are several problems with assigning ratings to people that hurt, rather than help, performance. These problems have been discussed and written about for many years but, due to the continued popularity of attempting to rate individual performance, need to be revisited every now and then.
  1. Manager Responsibilities Ignored – Ratings put the responsibility for development completely on the team member rather than the leader, who has an obligation to provide coaching to employees. We somehow have an assumption in business that becoming a manager automatically means one can give proper and effective feedback to team members, which is not the case;
  2. Inconsistency – Since the ratings are assigned by people, there is a level of inconsistency that comes with human intervention in the process. Even when there is a larger calibration session consisting of a team of leaders that review the numbers and force fit ratings into a normal distribution, there is inconsistency in the ratings assigned and feedback given. Like any type of meeting, group calibration sessions tend to be dominated by the loudest and most aggressive leaders. Another problem is that many of those who participate in the sessions have little knowledge of how most of the individuals being assessed performed – or even what they do;
  3. Unclear Expectations – A significant problem in many organizations is the lack of clear expectations for people. There is often an attempt to assign objectives at the beginning of the year but there is an inconsistent understanding of the purpose and expected result of the objectives, and they tend to ignore the person's everyday responsibilities which can easily interfere with larger objectives.;
  4. Conflicting Objectives - People are generally smart enough to meet objectives or at least provide some evidence to show they did whether or not it actually helped the organization. Objectives are often assigned in a vacuum, i.e., supply chain reducing price of incoming materials, customer service increasing the number of customer calls handled, etc., and in most organizations, there is little effort to assure they are aligned and truly focused on achieving the organization's purpose.
  5. Lack of Systems Thinking – Most leaders fail to appreciate how much the overall system affects the performance of the organization, and that it is their responsibility to develop and maintain the system. If they did understand, they would never put so much effort on trying to "fix" the part of the organization that accounts for less than 3-4% of the company's performance. Performance ratings assign blame to people who are likely attempting to work in a flawed system, and those who receive higher ratings are often working outside of the system, something that should never be encouraged. I once worked for a CEO who gave each of us on the management team a mirror and told us whenever we had an employee who underperformed to look in the mirror to see who is truly responsible for the underperformance.

The CEB report, along with several other studies on rating systems and performance in general, point to leadership issues as the main cause of performance problems. When a new employee is hired, that person is generally enthusiastic on his or her first days with the organization. When that person starts to "underperform" or show attitude problems, though, rather than punish or threaten the person with a poor rating, we should try to figure out what has changed. In most cases, we will discover that it is the person in the mirror who is responsible for the underperformance.

It comes down to helping leaders understand that their job is to coach and develop rather than judge. Spending time clarifying this to leaders and helping them learn how to do it would be a far better use of everybody's time than assigning numbers to people.