Blog Carnival 2012 - Peter Drucker's Management Philosophy

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One of my favorite blogs on leadership is John Hunter’s Curious Cat Management Improvement Connections.  Besides a number of informative posts on a variety of improvement-related topics, John regularly hosts a management blog carnival, where various business and leadership blogs are featured.

This year, I’m happy to participate in the carnival with information on some of the blogs I read on a regular basis.  Reviews of all of the blogs featured in this year’s carnival can be found at http://curiouscat.com/management/carnival_2012.cfm. 

My first review in this year’s carnival is Peter Drucker’s Management Philosophy by Jorrian Gelink.  I don’t know Jorrian personally, but after reading his blog, he is obviously a Drucker zealot with excellent insight into Peter Drucker’s management philosophy.

Peter Drucker’s teachings are closely aligned with a lean mindset.  I have always found the information he provided to be a great fit with W. Edwards Deming’s System of Profound Knowledge, and a necessary component of effective leadership.  Although Deming regularly attacked Management by Objectives (MBO), I believe he was more disappointed with how MBO was implemented than the method itself.  In fact, Drucker even said that MBO only works if objectives are carefully thought through, and that 90% of the time, they aren’t.

I believe much of Drucker’s teachings have been lost over the last several years, as companies look for quick and easy ways to “become lean.”  I applaud Gelink for keeping it alive and using it to teach current and future leaders that Drucker’s philosophy is as relevant today as it was when he was alive.  I enjoy reading Gelink’s posts and expect to continue to learn from the Peter Drucker’s Management Philosophy in the future.

Gelink organizes the blog into four main sections:  Executive Basics, Management Basics, People Management, and Entrepreneurship.  There is also an excellent search tool that makes it easy to find posts on a number of management topics.  A sample of Jorrian’s posts is listed below:

Fear of Conflict – Why Conflict is Necessary  An excellent summary of the benefits of healthy conflict in any organization.  The post reminds me of The Abliene Paradox by Jerry B. Harvey; a story where family members agree to drive 53 miles to Abilene for lunch, even though nobody really wants to do it.  To avoid conflict, however, they all go along, have a terrible time, and blame each other upon returning home.  Unfortunately, too many organizations suffer from the Abilene Paradox because of the absence of open, healthy conflict.

In the post, Jorrian writes, “the result of a stronger, discussed plan is increased effectiveness, and overall satisfaction of those involved because their input was considered into it.”

What is Our Mission?  The Heart of the Organization  Whether deploying lean or not, the importance of a clear and unchanging purpose is critical to success.  Without a clear mission, there is no team – there is only a group of individuals who define success on their own terms.  Any success without a consistent purpose is accidental and destined to be short-lived.

In providing direction for defining the purpose, Jorrian wrote, “the mission starts with what is on the outside of the organization; not with what is inside.  Entrepreneurs that fail are the ones that do what they want to do, instead of what their customer wants.”  Examples of mission statements from successful technology-based companies are provided within the post.

In Personal Development – Becoming Effective in Your Role, Jorrian provides the distinction between being effective and efficient, specifically that effectiveness results from doing the right things.

The post hits on one of Drucker’s most important teachings – the idea that understanding, developing, and continually using your strengths is what leads to success.  Jorrian writes that aligning individual strengths with the organization will lead to increased effectiveness and personal success.

I have so many interesting books on reading list that I will never have the time to complete.  As with Deming, I learn a great deal each time I re-read one of Drucker’s books because he had so much to teach.  Reading Peter Drucker’s Management Philosophy allows me to keep up on Drucker’s theories even when I don’t have the time to re-read his books.

More information on the 2012 Management Improvement Blog Review can be found at http://curiouscat.com/management/carnival_2012.cfm.  For specific posts from this year’s carnival, please go to http://management.curiouscatblog.net/category/carnival/.

The Big Gains? Not Without Transformation

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“In my experience, most troubles and most possibilities for improvement add up to proportions something like this:  94% belong to the system (the responsibility of management). . . No amount of care or skill in workmanship can overcome fundamental faults of the system.” – W. Edwards Deming

Why have so few organizations been truly successful with lean?  The philosophy has been around in one form or another for many years and there is no shortage of books, papers, and seminars on the subject.  Even with well-publicized examples like Toyota, Southwest Airlines, and Herman Miller, the probability that a lean deployment will succeed today is fairly low.

A major factor contributing to the problem I have found is that people tend to underestimate the transformation required to succeed.  When one learns about lean, there is a tendency to believe that teaching people how to identify and eliminate waste is the key to success.  Although there is a fairly good chance that improvement will occur after investing in training and coaching, without transformation the organization will never get beyond the initial stages of lean and never realize the big gains that can be achieved through its adoption.  The pace of improvement will eventually slow, and the resulting frustration and natural pull back to traditional thinking will eventually lead to abandoning the effort.

Transformation in Thinking

There is a point in the process where a significant transformation in thinking is needed to move the organization to the next level and achieve the big gains. Whether occurring at a single point or several points over time, transformation in thinking occurs when leaders begin to realize that the organization's problems are the result of barriers that only they can fix.  It is at this point when workers are no longer blamed for poor performance and the lack of improvement.

Improvement and the point of transformation

Although necessary for improvement, lower level kaizen activity can only take the organization's performance so far, while addressing issues like poor hiring and promotion systems, an unclear or inconsistent purpose, a lack of learning, ineffective planning, and other barriers are the way to tap into the 94% of the improvement opportunities available to the organization.

What causes a leader to transform his or her thinking depends on experiences, perspectives, and outlook for the future – and it’s different for everybody.  The key to success is to keep working with people until they realize lean is a very different approach to business.  It requires a dedication to lifelong learning and change, and the understanding that the inertia associated with the traditional approach to business will cause a continual pull within the organization back to its old ways.

Where are the Generalists?

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"[Management is] an integrating discipline of human values and conduct, of social order and intellectual inquiry, [a discipline that] feeds off economics, psychology, mathematics, political theory, history, and philosophy. In short, management is a liberal art..." - Peter Drucker

Businesses need specialists in order to be successful – this is nothing new or earth shattering.  Having people with specialized knowledge in areas related to the company's products, services, processes, network infrastructure, etc. enable the ability to serve customers and meet objectives on a continuing basis.  What many people do not realize, however, is that having generalists – especially in leadership positions – is just as critical to the organization’s success.

What is a Generalist?

A generalist is someone who has broad knowledge and skills, and understands the organization's high level system, including the hand-offs and interactions between people and processes.  A generalist is not usually interested in working and developing his or her skills within a single area but is more motivated to learning more about the big picture.  He or she is much more comfortable learning a little about many subjects than learning a lot about a single subject.

An organization can have the most talented specialists in the industry but be completely ineffective if these people are not able to agree on what's important and work together to turn their combined talents into commercial success.  By understanding the system, the generalist can bring value to the organization by focusing on overall company performance rather than attempting to optimize any single function or area.  For this reason, generalists often excel in leadership positions and cross-functional roles like project management and planning.

Why Generalists Are Necessary

By clearly understanding the company's high level value stream, the generalist is able to continually align the objectives in one area to those of the organization.

No matter how talented a company’s specialists are; without a common direction and continual effort to improve the way people interact and work together, there is no "organization" - there are only individuals working on what each feels is most important.

Peter Drucker wrote that management is a liberal art in that it requires skill from many different disciplines including psychology, sociology, history, and others.  W. Edwards Deming included psychology, learning, variation, and systems thinking as components of leadership in his System of Profound Knowledge.  What Deming and Drucker were referring to was that management is a role for generalists.

Harnessing the Company's Talent

The obsession many companies have had with specialists over the last several years has created a shortage of generalists that is hampering growth and success.  As a result, many companies are full of great ideas, new technologies, and brilliant technical minds but aren't able to transform them into consistent commercial successful.  A company may be staffed with highly skilled scientists, engineers, and chemists, but if it is not turning this knowledge into viable products or services, it is compromising its future.

Whenever hiring or promoting someone into a leadership position, I have found that a person with a varied background tends to be more effective than someone whose experience and training is completely focused on the function the person is expected to lead.  For example, I would tend to favor a candidate for a quality management position who has experience in procurement and/or manufacturing in addition to quality than one who only has quality control or quality assurance experience.

It's in the Mix

Success in business requires having and leading people to consistently achieve high level objectives.  To do this successfully requires respecting the different talents people have and understanding how best to position and organizing everyone to serve the customer effectively.  This means having the right mix of generalists and specialists to assure success.

Deming and Lean

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I’ve read a lot of books and papers over the years that, in one way or another, touch on the subject of lean, and very few made the connection with the teachings of W. Edwards Deming.  Besides the fact that Deming had a huge impact on Toyota over the years, I don’t think it is possible to truly appreciate lean without a basic understanding of his philosophy on management.

I’ve included some quotes from Deming in this post to help demonstrate how his views on leadership and organizations helped form the foundation of the Toyota Production System.  Although one of the objectives of lean is simplicity, the methodology can be very complex, requiring a level of understanding of organizational behavior that I don’t think many people truly 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.

Deming would never tell anyone how to implement his theories – in fact, he would become visibly frustrated whenever anyone asked him about specific situations.  Like every great teacher, Deming would provide enough guidance to make one think and learn.  As it turned out, Deming’s theory of management provided the what and leaders at Toyota, Canon, and other companies used to develop the how.
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“The average American worker has 50 interruptions a day, of which seventy percent have nothing to do with work.”

The above statement covers the concepts of flow of work and value.  Without a clear and consistent understanding of the value provided by the organization, there is no way to know what has to “do with work” and what doesn’t.

“The emphasis should be on why we do a job.”

To prevent waste and guide improvement within an operation, those doing the work must understand value associated with the work.  Deming commonly used the example of cleaning a table to clarify the concept of operational definitions.  How can the person cleaning the table understand the level of quality required without first understanding why they are performing the job in the first place.  If the table is to be used as a workbench, it would require a different level of cleanliness as a lunch table, which is different from an operating room table.  The “why” provides direction for identifying and reducing waste within the work.

“When a system is stable, telling a worker about mistakes is only tampering.”

A stable system is one where the level of variation is predictable.  Improvement of a stable system requires management action.  Pressuring workers to improve quality in a stable system will lead to frustration, stress, and most likely lower quality.  This is a commonly forgotten concept in the kaizen process.

"Everybody here has a customer. And if he doesn't know who it is and what constitutes the needs of the customer...then he does not understand his job."

A statement on internal customers and systems thinking.  A change in one area of the process, regardless of the impact on that particular area, is not an improvement if it negatively impacts the system as a whole.  Without understanding the system, it is not possible to clearly understand how each area supports the others.

“Experience without theory teaches nothing”

The Plan-Do-Study-Act (PDSA) cycle is central to lean and continual improvement – and a central theme to the cycle, which many people do not understand, is the need to clearly state a hypothesis to test.  Learning, which is critical to the success of a business, occurs through testing a hypothesis and studying the results.

“It is not enough to do your best; you must know what to do, then do your best.”

A business must know its purpose (including mission and vision) and continually connect its activities with the purpose.  The business planning process consists of deploying strategies that will continually move the organization closer to its purpose.  Attempting to improve activities that are not aligned with the purpose – something that is unfortunately all too common in business – is waste.  In lean terms, the “what to do” are the value-added activities.

“All anyone asks for is a chance to work with pride.”

One of the principles of the Toyota Production System is respect for people.  Allowing (and sometimes rewarding) non-value-added work to occur shows a lack of respect for people.  Generally, people come to work motivated and ready to contribute to the organization’s success.  Loss of motivation, mistakes, and high turnover result from management issues and, if these become a problem for the organization, it is up to the leaders to look at themselves to understand the reasons and make corrections.

“Any manager can do well in an expanding market.”

This is closely related to the “experience without theory” statement.  If leaders do not have a theory to explain an increase in performance, there is no guarantee that the success will continue.  The true test of management ability is during a downturn because that is where the organization’s weaknesses will show up.

“Learning is not compulsory . . . neither is survival.”

Lean is about striving for absolute perfection.  Although perfection is something that is impossible to ever achieve or sustain it is nevertheless the focus of continually improving.  Continual improvement requires continual learning as markets, suppliers, customers, technology, and the overall environment changes – and learning does not happen by accident.  It is the result of driving the PDSA cycle into the organization’s culture.

Understanding the Foundation for Lean

This post could go on and on with additional quotes from Deming that help build the foundation upon which to build a lean mindset.  The objective here was to make the connection and stimulate further learning in Deming’s system of management because I truly believe that doing so will lead to a stronger and more sustainable transformation of the organization.

How Well Do You Know Your System?

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“If you can’t describe what you’re doing as a process, you don’t know what you’re doing.” – W. Edwards Deming

As a leader, how well do you understand how your organization works?  Do you have a good picture of the relationships and interconnections that exist both inside and outside that enable the company to operate?  I’m not sure it’s possible to truly grasp all of the complexities within an operation, but the more a leader understands about the overall system, the more effective improvement efforts will be to reduce waste and improve performance.

W. Edwards Deming wrote about the importance of understanding the system in Out of the Crisis and The New Economics, and what it means to leadership and transformation.  At first glance, it’s easy to miss the significance of the message Deming was trying to convey because of the assumed simplicity of the system diagram he referred to so often.  A common response after first seeing the diagram is, of course an organization consists of processes working together to produce a product or service . . . so what?

Deming's Production Viewed as a System (Out of the Crisis)

Other important aspects of leadership that become evident when systems thinking begins to take hold include:

• the importance of flow to the success of the organization, as well as some of the areas that impede flow the most;
• how individual functions tend to work against, rather than with, each other within the system, and how detrimental it is to serving customers;
• the importance of internal customers and suppliers and how critical it is to improving quality and productivity;
• a better comprehension of all of the organization’s stakeholders and why they matter to overall success;
• a much clearer picture of what adds value to the overall system and what does not.

Organizations are in a constant state of change and, although it is not possible to completely understand all of the interrelationships that exist, it is important to appreciate how critical continually improving the interactions is to overall performance.  It also becomes evident that promoting leaders who have this level of appreciation and never stop attempting to learn about and improve the system is important to the company’s long-term success.

Using ORID to Guide Business Planning

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Having worked with many teams over the years utilizing A3s to deploy strategies, I am always looking for ways to make the process clearer and more logical.  As with any type of learning, what helps one person connect the dots and better understand the process does not necessarily work with another.

I’ve noticed recently how well the hoshin A3 aligns with the ORID (Objective, Reflective, Interpretive, Decisional) method of questioning.  Based on the Socratic method of learning, ORID is a structured conversation focused on getting a team to arrive at decisions based on the information available.

The process starts with clarifying and understanding the information available, and through a series of questions, guides the team to make decisions based on reflection and interpretation of the information presented.  When applied to business planning, the decisions are the actions or projects to be implemented over the coming period.

Specifically, the ORID stages include the following:

• Objective:  Covers the facts available to the team, including data and evidence related to the topic being discussed.  This stage requires avoiding personal feelings or opinions about the situation and keeps the discussion as objective as possible to calibrate the team’s understanding of the facts;
• Reflective:  The team discusses how they feel about the facts.  This lets team members relate their personal feelings about the information available to the group, including how they feel about the team's performance in the current period (did things go well?  did they go as expected as expected?  could performance have been better? etc.);
• Interpretive:  Focuses the team’s energy on interpreting what the facts mean to the organization or the problem at hand.  The interpretive questions move the team to begin identifying potential causes of the current situation or reasons why objectives were or were not achieved.  The output of this stage is a list of areas needing to be addressed to improve performance in the coming period;
• Decisional:  Specific actions or plans based on the previous stages of discussion.  The actions are focused on addressing the problem(s) identified or developing the plan for the coming period.

The ORID technique can be fairly complex in that it requires a facilitator who can keep the team focused on a specific stage without letting the discussion bleed into the next area phase.  For example, it is perfectly natural for people to want to reflect and interpret the situation – or even make decisions - before the facts are clearly understood, and the facilitator must be able to keep the group focused on an objective review of the information before moving on to next phase (similar to Stephen Covey’s principle of seeking first to understand, then to be understood).

ORID and Business Planning

ORID questioning is perfectly aligned with the A3 for business planning.  As shown in the exhibit, the A3 generally follows the ORID process in moving a team from current year performance to an action plan for the coming period.  Sticking to the phases helps the team deploy strategy by clarifying the facts and building a plan based more on logical thinking than individual opinions and operationalizes a Plan-Do-Study-Act (PDSA) approach to improving performance.

Using the Ideal Condition to Describe Perfection

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One of the elements necessary for transformation of an organization that often gets overlooked is the need to think in terms of the ideal condition.  Describing a process or system in terms of its ideal provides clarity and direction, and creates a framework to guide improvement activities and breakthroughs.

Although lean is based on the concept of continually improving to the point of perfection, many people have trouble understanding what perfection really means to their jobs and the company.  They know too much to think the company could ever reach perfection.  After all, humans aren’t perfect so why would we ever think an organization could reach an ideal state?

Breaking the Path to Mediocrity

In reality, a company will never reach perfection, but without a picture of what perfection looks like and continually challenging whether activities help or hinder the move toward the ideal, the company's improvement efforts will be mediocre, at best.

The more you clarify and emphasize the ideal condition in real terms, the better your chances of getting people to work together to move toward it.  Although you most likely will never consistently achieve the ideal, keeping the organization moving toward it will get you a lot closer to it than just letting things happen naturally.

An excellent example of an ideal condition appeared in a recent FORTUNE article (link) about Yahoo CEO Marissa Mayer. In the article, Meyer stated that she wants to make Yahoo, “the absolute best place to work.”  Is Yahoo recognized as the best place to work today?  If you can trust media reports and glassdoor.com, the answer is no.  Will Yahoo ever get there?  Maybe or maybe not, but if Meyer is serious about the statement as an ideal condition, she and her team will begin to implement changes that will greatly improve the company’s workplace and reputation.

In another example, I used to work with a company where the order-to-shipment lead time for the main product line was 23 days.  Customers did not like waiting so long for the product but, since our quality was good and our competitors were delivering no faster than we were, our sales volumes were okay.

Recognizing the potential increase in revenues we could get if we reduced our lead time, I defined the ideal condition as same-day delivery for the product.  I knew this was a huge stretch for the plant, given the current long lead time for the product, but I wanted to set a clear direction for improvement activities.  To assure that changes represented true improvements, I also made it clear that reducing the product's lead time did not mean increasing costs, lengthening the lead time for other products, or reducing quality levels.

Some people had trouble taking the idea seriously but most bought into the idea right away.  We began to track product lead time on a daily basis, discussed it in all planning meetings, and posted the metric in several places throughout the workplace.

Within one year, the product's lead time was reduced to 12 days.  Besides a 23% increase in revenues, the improvements that enabled the reduction in lead time also led to decreased costs and improved quality in other product lines as well.

It's About the Gap

Once an ideal condition has been identified, the next step is to determine the current situation, or where the process, system, or organization is relative to the ideal. The difference between current and ideal is the gap to be reduced rough improvement activities.

Moving toward ideal.

The idea is not to attempt to close the gap in one step. Attempting to take on too much in one step can lead to frustration and disappointing results.  Instead, kaizen activities should become focused on chipping away at the gap, moving toward the ideal at a continual and steady pace.

Success in business obviously requires much more than merely identifying the ideal conditions, but doing so provides the guidance that is invaluable for improvement activities.  When a leader defines the ideal as something he or she truly believes in, provides the tools and method to enable improvement, remains patient, and gets out of the way, the results can be stellar.

The Enemy Within

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“Your system is perfectly designed to give you the results you're getting." – W. Edwards Deming

When I was first learning to play tennis and would hit poor shots, my instructor would say, “You shouldn’t be surprised. The ball went exactly where you were aiming.” I still think of this whenever I play tennis or golf and am beginning to see implications to business, as well.

Although companies face external forces that impact results, it is generally the internal forces that cause the major problems.  In fact, when it comes to organizational performance and improvement, we are our own worst enemy.  We continually throw up barriers that interfere with focusing on what is truly important . . . serving customers.

Countermeasure Without a Problem

There are countless examples in organizations today of initiative overload, where one or more “support” areas throw out a new system or policy that impacts the work of people throughout the company.  The reasons behind the new initiatives are not often clear – it could result from an article someone read or a meeting held in a corporate office – but on the front line, it does not appear that they came from a fundamental business need.  Although driven by good intentions, this type of activity tends to result in initiative overload for the people trying to serve customers.

The larger the organization, the more likely it is for people to get further away from the company’s purpose resulting in the creation of countermeasures that, although appearing to make sense, create more problems than they address.

Back to Basics

The only way to minimize initiative overload and the negative impact associated with the practice is to continually return to the basics and understand what does and doesn’t support the organization’s reason for existence.  This means getting people to regularly reflect on four basic questions:

• What is our purpose?  Why to we exist?  Who are our customers and what value do we provide to them?
• What is our value stream?  How do we deliver value to our customers?  Within the value stream, which activities directly provide value and which exist to support the direct activities?  This requires a significant commitment to go to gemba to talk to team members and see how things are done firsthand.
• What is our ideal condition?  How would our value stream operate if we were absolutely perfect?  Although it may seem crazy to think you can ever achieve perfection, it is critical to get everyone focused on a consistent direction.
• How do we compare with our ideal condition?  What are the gaps we need to address to move toward our ideal and what are the root causes of the gaps?  How can we support efforts to close the gaps?

A servant leader mindset needs to be created throughout the organization that questions every decision and initiative to assure that it supports the company’s fundamental purpose. Although not necessarily an easy task, the above questions can provide a framework for coaching discussions that can begin to create the type of culture where people start supporting, rather than interfering, with serving customers.

Preparing for the Natural Tendency to Backslide

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“Patience is waiting. Not passively waiting. That is laziness. But to keep going when the going is hard and slow - that is patience.” Alexandre Dumas Père

As I’ve written many times before, I don’t believe there is ever a point where a company can say that its lean mindset is truly sustainable.  There is just too much of a natural pull back to the traditional way of doing things to ever feel that an organization has “made it.” And in many instances, this "natural pull" is strong enough to bring the improvement momentum to a grinding halt.

The Effect of a Crisis

So how do you know when the organization is abandoning lean principles and slipping back into its own ways?  There are actually many signs of lean decay, but one of the most common shows up when the organization faces a crisis.  When the company faces a crisis – falling prices, increased raw material costs, a loss of market share, or a host of other problems – do leaders appear to remain calm, keep the focus on the ideal condition, and continue to drive kaizen activity to address the gaps, or do they abandon lean and develop countermeasures that consist of cost-cutting and other short-term measures that pull the organization away from the activities that strengthen the operation?

When facing a crisis, it is perfectly normal to abandon new thinking and return to old habits, especially when there is a lack of experience in the new way or doubts about whether or not it will quickly address the organization’s problems.  Leaders tend to face immense pressure to assure the organization performs and unless there is a deep understanding of lean and the organization, it is not practical to expect that they will stick to something they do not know will get the organization back on track.

To prevent abandonment of the move toward lean, it is critical that leaders become involved in the deployment and learn as the organization begins its transformation.  It is too easy for those who sit on the sidelines and watch the organization change to pull the plug when a crisis hits.  They don’t understand why the improvements occur and that learning continues to occur even when an attempted improvement does not succeed.  They also do not understand that the most significant improvements require a transformation in thinking and leadership throughout the organization.

Unfortunately, successfully moving the organization toward a lean mindset often requires good timing as much as a clear plan and an experienced deployment team.  Transformation can take many years and Western business has never been known for its patience.  Throughout my career, I have worked with leaders who want to drive Toyota-like improvements without appreciating the decades that Toyota worked on developing their system.  Because of this, it is important to assure that learning takes place as the deployment proceeds.  This can only occur when leaders are involved from the beginning and PDCA-thinking is applied throughout the organization.

"The first step is transformation of the individual.  This transformation is discontinuous." - W. Edwards Deming

There is nothing more critical to success in a lean transformation than learning.  Keep in mind, however, that people can only learn when and what they’re able to at any given time.  By continuing to emphasize the need to understand cause and effect – or the reasons why results are what they are – you will greatly increase the chances that the organization will develop a learning environment.

Do We Know How to Learn?

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“The theory of knowledge that management in any form is prediction.”  W. Edwards Deming

When I first read the above quote many years ago, I didn't fully comprehend what Deming was trying to say.  After a lot of thought, reflection, and experience with a variety of organizations and management systems, I came to realize the significance of this statement as the basis of organizational - and personal - learning.

Whether through arrogance, lack of understanding, or just having too much to do, many organizations have failed to adopt of the Plan-Do-Study-Act (PDSA) cycle within their operations.  Others have implemented the cycle within their problem-solving process but failed to recognized it as a mental model for leadership and decision-making.

The Learning Organization

The power of PDSA thinking lies in the realization that every decision is, in effect, a prediction that a specific outcome will occur.   If one consciously adopts this mindset and practices it to the point where it becomes natural, significant learning can occur.

Taking action and expecting a specific outcome is not profound or revolutionary. But too often, the connection between action and outcome can be so basic that it becomes unconscious. And when the connection is not consciously recognized, little or no follow-up takes place to assure that the outcome is as expected and more importantly, why or why not a particular outcome occurred.  It is this lack of follow-up that prevents learning from taking place.

Too often, I have seen organizations continue to operate in the same manner, even when it does not appear to work.  They try harder or their leaders emphasize performance more strongly but any improvement in results that does occur is short-lived.  Organizations like this don't seem to understand that their performance is not the due to chance, but the result of a set of predictions that are failing to come true.  Improvement requires careful observation and study to determine why their hypotheses are false.

When decisions and actions are seen as hypotheses that specific results will occur, there is more of a tendency to watch for the connection.  “The why” becomes just as important as “the what” when reviewing results.  When results do not meet expectations, team-level reflection takes place to understand the reasons and the hypotheses are adjusted accordingly.  It is this process that enables organizational learning to occur.

When looked at in this way, it becomes clearer that becoming a learning organization does not mean spending more time in the classroom.  It means teaching people to consciously recognize that decisions are predictions, and honing the ability to study and understand whether (and why) results match the predictions.

Developing a PDSA mindset throughout an organization takes a lot of effort, practice, and patience.  People have to be coached and questioned regularly to understand that actions – even seemingly small ones – are predictions of specific outcomes.  The more developed this level of reflection becomes, the more the process will become a habit, and the more organizational learning will occur.

The New Blood Dilemma

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If there is one statement that always makes me cringe, it's, "we need to bring new blood into the organization." Often the result of frustration, business leaders tend to look to the outside in the hopes that someone who isn't already "poisoned" by the company's systems and culture can bring in the energy and new ideas to address problems and help transform the company.

Addressing Cultural Apathy

There are many examples of companies becoming stagnant and not addressing problems effectively - or getting to the point where the problems are no longer seen as problems. When this happens, though, it's critical to understand the reasons behind the lack of success rather than jump to the conclusion that reaching outside for new leaders is the answer.  New leaders are a countermeasure that can fail if the root causes of the poor performance or apathy are not effectively addressed.

As with any aspect of performance, improving the culture begins with clarifying the ideal condition - i.e., what you want the culture to look like, how people are expected to perform, the energy level, etc.  Once the ideal culture is defined, it's time to look for root causes or barriers preventing you from getting there. This may involve bringing in new leaders from the outside or it may not. Either way, a decision can be made logically rather than as reaction to frustration.

The Problems With New Blood

Although new ideas and increased energy can result from new leaders, there are many potential drawbacks that need to be considered before making the decision to hire from the outside.

New leaders can very easily have a negative effect on the cultural elements that you do want to maintain. I've seen situations over and over again where new leaders bring with them a new management style or differing values that actually damage the organization.   This could result from increasing fear, shifting priorities, ignoring direction, or a host of other elements that are not actually related to the cultural problems you are trying to address.

Another issue with new leaders is they often do not know the company's systems, products, or customers, and the pressure to quickly  bring about change can lead to poor decisions and destructive results.  Unless the organization has a clearly defined way, new leaders have the freedom to operate in any way they see fit - which can lead to confusion and frustration of team members.

It has been speculated that one of the contributors to Toyota's recent problems was the hiring of leaders from the outside who did not truly understand the Toyota Way. The tremendous growth experienced by the company had led them to abandon their policy of promoting only from the inside and bring in leaders who had not grown up in the system.  And if it can happen to a company with a way as well developed as the TPS, it can happen to anyone.

Another major problem with hiring leaders from the outside is the demotivation of existing team members. Those on the team who want to grow and develop can begin to see feel undervalued, frustrated, and stuck.  As a result, they may leave the company or stay with a much lower level of energy.

Finally, hiring for the outside is expensive in terms of recruiting costs, time, and training of the person hired.

How To Do It - When You Have To Do It

Anyone reading this post may think that I never support the idea of bringing in people from the outside. Although I don't particularly like it, I do recognize that there are times when it is necessary.

Before doing so, however, it is critical to clarify the ideal state so you can effectively understand the reasons behind the gap between the ideal and the current state.  If it's a leadership issue and changes are necessary, look inside the organization before going outside to find replacements.   If nobody inside the organization is qualified for the position(s), look outside - but recognize that not having people ready identifies a serious problem within the leadership development process and requires countermeasures to prevent from having to do it again.

Also, the clearer the company’s values and way are understood and developed, the better chance you'll have of hiring the right person and improving his or her chances for success.

Transformation? Not Without Purpose

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Create constancy of purpose toward improvement of product and service, with the aim to become competitive, stay in business and to provide jobs. W. Edwards Deming

One of the most common roadblocks companies face when attempting a lean deployment is a lack of clarity around the organization’s fundamental purpose.  Without a clear and consistent understanding of why the business exists and what it is expected to accomplish, any attempt to transform the culture will lead to frustration, disappointment, and eventual abandonment of the effort.

Identifying Waste?

Waste exists in virtually every process, and can be identified and reduced without a significant amount of effort.  When the organization does not have a clear purpose, however, improvements tend to be superficial and transformation does not occur.

When leaders consistently drive focus around the company’s core business, it becomes easier to identify the systems and policies that interfere with serving customers.  It is unfortunately fairly common to see systems related to performance evaluation, IT, recruiting and hiring, and other areas that are overly complex or do little to help the organization meet the needs of its customers.  Without constancy of purpose, however, there is no lens with which to evaluate whether a system truly adds value or not.

Begin With Purpose

The Cambridge Dictionary of American English defines an organization as, “a group whose members work together for a shared purpose in a continuing way.”  Without a shared purpose, there is no organization.  There is only a group of people who come to work each day, spend time on what they feel is important, and go home.

The purpose does not need to be sophisticated, creative or witty.  It just needs to be clear and unchanging.  Although not necessarily an easy thing to do, clarifying and living in accordance with the purpose helps people understand the value the organization provides and, when this happens, transformation truly begins to occur.

What's Your Countermeasure?

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Creating a lean culture requires a good deal of clarity and consistency from leaders.  Since lean is not normal for most people, there will be a continual pull within the organization to return to old ways.  Because of this, it is important to take advantage of every opportunity to transform the way people think and operate.

One valuable coaching opportunity occurs in the recurring meetings that take place within the organization.  The closer the meeting is to the daily operation, the more problems that will be highlighted because it is much easier to see the issues that affect us today than three or six months from now.  Whenever a problem is identified in a meeting like this, it is critical for leaders to ask, “what’s your countermeasure?”

Never Accept a Quick Fix

Remember that a countermeasure is not a quick fix that only addresses the symptoms of a problem.  To be effective, countermeasures must be developed and proven through the PDCA process where an issue’s root cause is determined, ideas are developed and tested, and actions are implemented to, not only address the current situation, but help prevent the problem from occurring again in the future.

In order for the kaizen process to work on a daily basis, people have to learn to move through the PDCA cycle quickly and frequently.  Because of this, expecting problems to be permanently fixed is unrealistic.  What is realistic, though, is to expect processes to improve and people to get better and more proactive at addressing problems.

It’s All About Expectations

The more leaders ask for countermeasures in team meetings, the more people will understand the importance of addressing problems when they happen instead of hoping they go away by themselves.  A clear message will be sent that it is never acceptable to let problems continue without addressing them through the kaizen process.

At first, the question of countermeasures will be met with strange looks and panic.  Over time, however, people will come to meetings prepared to talk about how problems have been addressed and what is being done to keep the problem from affecting the operation in the future.

Performance Improvement or Performer Improvement?

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To truly reap the benefits of continual improvement, what should be the focus of a kaizen process?  Should efforts be focused on improving business performance or improving people through learning and development?

Obviously every company wants to continually improve performance, but wanting to do it and knowing how to do it over the long-term are two different things.  It comes down to a question of cause and effect – or what needs to happen to cause improvements to occur on a continual basis?

When a person or team comes up with an idea to improve a process, there are two possible outcomes: the idea will work or it won’t.   You can never guarantee that an idea will result in improvement.  What you can do, though, is design the process so that people learn about the areas in which they work by testing ideas, and learn about the kaizen process by participating in improvement activities.

When an improvement process is only about business performance, team members will not necessarily develop kaizen skills.  And in this situation, the organization misses out on the opportunity to grow kaizen activity because the number of people who are able to facilitate improvement projects remains static.

In most cases, the direct financial benefit from an individual kaizen will be relatively small.  True measurable benefits from a kaizen process will result only when improvements occur frequently.  This can only happen when a large number of people understand the process and are actively involved in improvement activities.

To grow the process and change the culture, leaders must emphasize the importance of developing problem-solving skills with each kaizen project.  Whenever the results of an improvement effort are presented, it is critical to inquire about the learning that occurred.  Too much focus on the business result can drastically stunt the growth of the process and keep the organization from reaching the type of success that few have ever experienced.

Letting Up Is Not An Option

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After winning at Wimbledon, Roger Federer is once again the number one tennis player in the world.  Now that he has made it to the top, can he expect to take it easy and hope to remain there?  Will his practice sessions and workouts be easier now that he has only to sustain the level of performance that got him to number one?  And since he has obviously mastered the sport, he is no longer in need of a coach, right?

When talking about competing in a highly competitive environment like tennis, the obvious answer to these questions is, "no."  Yet in a highly competitive business environment, it is fairly common to let up when performance improves as if the gains will hold and things will continue to advance without the type of focus it took to get there.  In some organizations, the effort actually loses support because of the feeling that further improvement is not worth the investment.

Once You think You've Won, You Lost

People in organizations where lean thinking has taken hold understand that continual improvement requires continual effort. This means never letting up on the drive to develop people and assure continued learning.  As with an athlete mastering a sport, there is no such thing as maintaining a certain level of performance.  There is either improvement or deterioration - and as you get better, improvement becomes more difficult to maintain.

It's interesting that people use the term "continuous improvement" while deep down believing that there is a point where things are good enough and not worth the effort to continue.  I referred to this in an earlier post as the we-can-always-improve-but syndrome.   If we're striving for perfection, improvement is always needed.  Changes in people, technology, customer tastes, and many other aspects of the environment invalidate any notion of sustaining the gains.  The only way to sustain a given level of performance is to continue to improve.

Performance Improves . . . And It’s Fun

Those who buy into the continual improvement philosophy find working in a lean thinking environment very satisfying.  They understand the link between their efforts and the company’s performance and are energized by the ability to participate in improving processes.  For those in leadership positions, however, it can be exhausting to continually fight against the barriers that interfere with improvement.  And since these barriers naturally occur within organizations, the effort to remove them will never end.

Just as Roger Federer needs to continue to improve to remain number one, an organization must continually push harder, learn faster, and get stronger in order to remain relevant.  Failing to do this can pretty much guarantee membership in the growing group of companies that, at one time appeared invincible, but have since disappeared because of arrogance or apathy toward improvement.

Making the Workplace Speak

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Do your processes speak or are they too shy to bring problems to your attention?  When it comes to the workplace, you want processes to be as loud and obnoxious as possible when something isn’t running exactly as planned.

Moving toward lean thinking often requires transformation. This means a significant shift in thinking, leading, systems, and general approach to operating the business. Although there are elements that are common to most transformation efforts, organizational differences make it difficult to single out one or two that apply in all circumstances.  One of the most common but often overlooked elements involves making the workplace speak.

Processes must be designed so they sing out when problems occur enabling issues to be identified and addressed quickly.  Without the ability to speak, a process can hide problems until they become such a normal part of the operation that they are no longer recognized as problems.  When this happens, the process moves further away from the ideal state and countermeasures, when applied, consist of throwing money at symptoms.  Examples include increasing inventory, lot sizes, and inspection – all of which increase costs while giving a false sense of security that a problem is effectively addressed.

Clarifying Objectives


Clarity of objectives is the foundation for encouraging processes to speak. When objectives are clear, it becomes much easier to create signals that communicate problems immediately when something puts an objective in jeopardy.  Examples include takt time, inventory levels, and problem boards.

Takt Time
If we can identify the optimal pace for a process and focus attention on maintaining that pace, setting up a signal that identifies when a problem occurs should be fairly easy. This can consist of a takt board or dashboard that shows when a process step is unable to keep up with the rest of the process.

Inventory Levels
Setting up visual cues regarding inventory levels can make it obvious when a process is overproducing.  As an example, installing a bin system between two processes that only holds a maximum or minimum number of parts will signal when the prior process is producing faster or slower than the following process.  Whether the problem lies with one area overproducing or another failing to keep pace will not necessarily be known, but it will be clear that something is wrong.

Problem Boards
Making the process speak can be done as easily as setting up a board in the workplace where problems can be recorded as they occur.  Parts that don’t fit properly, instructions that aren’t clear, or equipment breakdowns can be easily recorded using a checksheet, free text, or both to bring problems to the attention of those who are able to address them.  Without an easy way to record these types of issues, however, they can continue to occur due to a lack of visibility.

Andon
A common signal used in assembly lines is the andon cord, which is pulled by workers whenever something interferes with doing their work as planned.  Even without an assembly line, however, the andon concept can be used by providing people with the ability to signal when a problem occurs.  Whether it's an audible alarm in the factory, a signal light that goes off in an office, or a text message that is automatically transmitted to those who need to know, the andon can be a valuable way for the process to speak.

Make the Workplace Scream

Very few of us like to work with people who are loud and obnoxious, yet these are the exact traits we should desire in our processes.  Processes should be designed in a way that they scream so loudly when a problem occurs that we never feel it is acceptable to let them go on for very long.  The workplace should be quiet only when things are running smoothly and all objectives are being met.

Success With Kaizen Requires Thinking Small

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I read a whitepaper recently that touted the benefits of a kaizen process. The paper presented an example from a British company where an improvement project resulted in an annual savings to the organization of £1.2 million.  The point of the paper was to demonstrate the type of improvement that companies could achieve with an effective improvement process.

The unfortunate part of a story like this is that it creates the expectation that implementing a kaizen process will lead to million dollar improvements.  This is not the essence of a kaizen process and often leads to skepticism or disappointment and eventual abandonment of the effort.

Small Improvements by Everyone, Everyday

To be successful and sustaining, an objective of a kaizen process must be to get everyone involved in identifying and attacking waste. This means focusing on - and celebrating - the small improvements that result from the effort. Daily improvement will not happen, however, if the company's leaders are expecting and driving for the million dollar improvements.  People will not invest the time or effort necessary to implement a small improvement when it is not considered important by the company's leaders.

Will you ever get a million dollar improvement from a kaizen process?  Maybe, but it will be the result of a culture that enable ideas to flow and improvements to occur.  Keeping the process alive long enough to reap the benefits, though, requires celebrating the small improvements as much as the large ones.

In reality, a million one dollar ideas are much more likely to occur than a single one million dollar idea.  Because of this, the focus needs to be on coaching people to identify problems, address root causes, test countermeasures, and change standard work at a rapid pace.  Leaders need to be kaizen experts in this type of environment, and able to effectively coach team members in the improvement process.

Practice is the Best Training

As more improvements are made, people get better at solving problems.  The pace quickens, ideas get better, and morale improves.  When the focus is on large improvements versus the small ones, there are fewer projects and fewer opportunities to teach people how to solve problems.  The culture does not change because learning, if it does occur, it is at too slow of a pace to make much of a difference.

Small improvements are generally made very quickly, and tend to cost very little – if anything – to implement.  Large improvements, on the other hand, can take weeks or months, cost significantly more, and are riskier because of the difficulty to test before adopting.   So while you’re waiting for that million dollar improvement to occur, think about the number of small improvements that could have been implemented and the benefits that were lost during the wait.

Applying PDCA to a Lean Deployment

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Anyone who has read many of the posts on this blog will probably notice that I'm a little obsessed with the Plan-Do-Check-Act (PDCA) cycle.  There is good reason for this. I believe that understanding and internalizing PDCA is an absolute necessity to have any chance of achieving a sustained lean transformation.

It surprises me when I see a lean deployment plan that doesn't incorporate PDCA at its core. When this happens, the implementation often lacks the flexibility to address the unforeseen issues that can stall or even kill the effort.

Although there are some elements common to virtually every lean transformation, there is no magic formula.  People, organizations, and business environments differ, and it's impossible to understand and take them all into account when developing the deployment plan.  Also, since people internalize and adopt the philosophy at different rates, flexibility is necessary to continue moving forward.  The PDCA cycle naturally builds continual checks and adjustments to assure the effort succeeds.

 

HOW TO DO IT

 

Besides increasing the probability of a successful transformation, applying PDCA to a lean deployment is an excellent way to demonstrate how the cycle is used to accomplish a major business initiative.  The steps, based on a Hoshin Kanri approach, include:

PLAN As with any improvement effort, a lean deployment plan must begin with clarifying the objectives and vision, as well as an idea of the current state of the organization to understand the gaps that need to be addressed so a plan of action can be developed;

DO  The plan must include clear steps, responsibilities, and timelines in order to be implemented effectively;

CHECK  Understanding whether the action plans are proceeding on schedule, as well as their effectiveness in enabling the stated objectives to be met are necessary to keep the transformation effort on course;

ACT  Based on the results of the CHECK step, the plan continues as designed or adjustments are made to address areas of weakness.

Modeling and coaching behavior are perhaps the most important aspects of leading a lean transformation effort. Attempting to get people to adopt PDCA thinking in their daily work without utilizing it as part of the plan will lead to frustration, confusion, and disappointment with the deployment altogether.

PDCA: Improvement Tool or Mental Model?

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“Management is prediction.”  – W. Edwards Deming

Much of the literature about the Plan-Do-Check-Act (PDCA) cycle focuses on its application to kaizen activities.  This is unfortunate because PDCA has a much wider application across a business and can be used to clarify direction, increase learning, align efforts, and improve results.

The benefits of PDCA begin to appear when people recognize the cycle as a mental model for managing the business rather than merely a tool for kaizen.  Getting to this point, though, requires a lot of coaching, reflection and practice.

Linking Activity At All Levels

The figure below shows how the PDCA cycle applies to different levels of the business and how, even though different in scope, each relates to the others in providing direction and assuring results.

The application of PDCA thinking to a typical organization

Business Planning

At the highest level, Hoshin Kanri applies the PDCA cycle to business planning.  The cycle involves:

• PLAN:  Determining objectives (including key performance indicators-KPIs), identifying barriers and market opportunities, and developing action plans (predictions) to address the barriers and take advantage of the opportunities;
   
• DO:  Implementing the action plans;
   
• CHECK:  Reviewing progress of the action plans and determining whether the plans are leading to accomplishing the objectives;
   
• ACT:  Making appropriate adjustments based on the CHECK activity (e.g., adding resources to get action plans back on schedule or adjusting the action plans to better align them with objectives).

The catchball process helps clarify the objectives and make sure they are understood by more than those at the organization’s highest levels.  Catchball is the thread that connects actions at different levels and helps assure that there is clear alignment throughout the organization between activity and objectives.

System/Area Improvement

Clear and consistent objectives help assure area leaders are focusing on the right things.  In most organizations, there are a virtually unlimited number of areas that can be improved, but since time and resources are limited, it is critical to focus on those things that are the most closely related to objectives.  This is what Pascal Dennis refers to as the “right things” in his book, Getting the Right Things Done.
At this level in the organization, PDCA involves:

• PLAN:  Understanding objectives (through catchball) and setting clear targets at the process level.  For a production process, this could include targets for safety, quality, delivery, and cost (SQDC).  The PLAN stage also includes assuring standard work is deployed for the process, including work instructions and the proper WIP and buffer inventory levels to assure the process can meet takt;
   
• DO:    Assuring the process is operated and managed in accordance with standard work;
   
• CHECK:  Reviewing the KPIs, possibly at the individual process and team level, to determine the gap between current performance and ideal condition.  For any gaps, the general issues that are causing the gaps are identified;
   
• ACT:  Initiating kaizen activities to address the gaps.  This could involve providing direction to a team to assure improvement activities are focused on the proper gaps or creating teams with specific objectives to address gaps.

Kaizen / Daily Improvement

This is what comes to mind for most people when they think about kaizen– the daily activities that result in small, continual improvements to a process.  At this level, PDCA consists of:

• PLAN:    Understanding the ideal condition and gap between current and desired performance (through catchball).  Identifying the root cause(s) of the gaps and developing countermeasures that may help close the gaps;
   
• DO:  Testing the countermeasures to understand whether or not they result in closing the gap;
   
• CHECK:  Reviewing the results of the test to determine whether the countermeasure did, in fact, result in expected improvement;
   
• ACT:  Adopting the countermeasure and updating standard work; adjusting the countermeasure based on test results, or abandoning the countermeasure if it did not result in improvement.

The Learning Organization

One of the most critical aspects of PDCA thinking that is often ignored is the amount of learning that each trip around the cycle provides.  Whether an action results in the desired improvement or not, proper testing can provide valuable information for future activities, as well as increasing the knowledge of team members.

As with much of a lean deployment, the benefit lies in transforming thought rather than implementing tools.  Thinking of the PDCA cycle as a management model rather than a tool is critical to a successful and sustained lean effort.

Fighting Organizational Complacency

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Applying lean requires a significant shift in thinking for most of us.  One aspect that I have found to be particularly difficult for people is the notion that anything less than perfection is acceptable. There seems to be a natural tendency to accept that things are good enough - and when people in the organization reach this point, complacency sets in and the improvement process begins to die.

One of the warning signs of organizational complacency is a passive resistance that shows up in statements like, "we can always improve, but . . . "  The "but" is the tip off that a person does not truly feel things can get much better.

Believing Your Own Press

Over and over again, I have seen periods of significant improvement followed by a return to mediocrity fueled by a belief that the most significant problems facing the organization have been solved and further improvement is not necessary.  In one instance, I worked with an organization that, over a period of several years, achieved marked improvement in product quality while increasing inventory turnover fivefold.  As the company became recognized as the industry leader, however, arrogance began to creep into its culture - which was not surprising given the remarkable turnaround that occurred during the previous period.

As is often the case, the arrogance was accompanied by complacency, and signified that people were satisfied with the current level of performance.  Within two years, the company's improvement efforts stagnated as inventory levels increased, quality declined, and profitability suffered.  The CEO who led the company during the period of growth (and was since promoted to a higher position within the parent company) returned to the organization to re-establish a continual improvement mindset.  After several years, humility and a drive for perfection began to return to the culture.

Some of the articles on the problems faced by Toyota a few years back point to organizational complacency as a potential cause.  Although much of the accelerator issue was eventually blamed on driver error, the company's rise to number one in such a short period of time, along with the significant increase in stock price, caused a loss of focus and made it difficult to maintain the motivation to improve.  Recognizing this as a problem, Akio Toyoda has said on several occasions that the company's future success requires a return to the basics - something that, at least from the outside, it seems to be working.

Perfection is the Only Acceptable Result

People in companies that appear to sustain the process over long periods of time tend to exhibit an obsession with improvement.  The drive to improve is integrated to the point where any resistance to change is quickly identified and repressed to prevent it from creeping into the culture.

As written in a previous blog (link), the notion behind the use of the term countermeasures rather than solutions is meant to keep anyone from thinking that there is an end to improvement efforts.  When the goal is perfection, there can be no such thing as a “solution” to a problem.

Continually striving for perfection can be tiring, so it is important to celebrate successes along the way.  While recognizing achievements, however, it is important that everyone understand that achieving and sustaining success requires never letting go of the idea that perfection is the only acceptable result for the company.  And a culture that continually strives for perfection has no room for the word, “but.”

Batching or Single-Piece Flow?

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One critical aspect of lean thinking that many people have trouble grasping is the importance of moving from batching to single-piece flow.  After all, if improving productivity is one of the things we're ultimately trying to achieve, isn't batching the most logical choice?

WHY WE THINK BATCHING MAKES SENSE

If we're striving for higher efficiencies within an individual step of an operation without regard for the effect on the overall process, then batching tends to make sense.  In fact, batching is a common practice in so many organizations today because of a fragmented approach to setting goals that forces people to maintain an inward focus to improvement.

When following a systems thinking mindset, on the other hand, it becomes clear that local ideas for improvement need to be evaluated - before they are implemented - as to whether or not they result in improvement to the organization.  And in the end, isn't organizational improvement what we're ultimately after?

Although batching often appears more efficient than single-piece flow for an individual task, the practice tends to create waste for other parts of the organization that more than offset the perceived benefits.  Some of the wastes that result from batching include:

• increasing the time between spending money in a process and receiving money from customers due to an increased overall cycle time and inventory that is not yet sold;
• waiting and downtime in one or more steps of the process while previous steps complete work on multiple units;
• larger amounts of inventory between process steps to reduce the likelihood that one step will shut down while waiting for a previous step to complete a batch;
• increased rework and delays when a defect is discovered that affects an entire batch of work rather than a single unit;
• increasing the time required to implement a design improvement because of the need to use up a larger  amount of inventory.

A dilemma commonly associated with a batching mindset is determining the the optimum batch sizes.  It is very likely that the "best" quantity to run for each step in the process will differ, resulting in further increases in inventory throughout the system.

IS SINGLE-PIECE FLOW ALWAYS POSSIBLE?

There are situations where batching is more cost effective because of limitations resulting from tooling, equipment, technology, or process design.  Although producing work in batches under these circumstances may be the most logical and cost-effective choice today, it should never be considered acceptable into the future. Batching must be considered a countermeasure until the process can be improved to the point where single-piece flow (or smaller batches) can occur.

Whether applying lean to a manufacturing process, administrative operation, or drilling gas wells, it is important to understand the effect that batching has on process flow, operating costs, and overall competitiveness of the organization.  To do this requires a systems thinking mindset, as well as a deep understanding of the process and the needs of the customer.

As long as people are evaluated on objectives that are not carefully aligned throughout the organization or do not clearly support high-level objectives, batching will appear to be preferable to single-piece flow.  Like many other aspects of lean thinking, trying to move to single-piece flow before transformation of leadership has occurred will most likely result in frustration among team members and disappointing results for the organization.