Lean Leadership & Systems Thinking

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One aspect of lean that often gets overlooked is the depth of systems thinking required to be successful.  For a variety of reasons, people like to jump into the more visible and concrete elements of lean – like dashboards or problem-solving – without clearly understanding the organizational elements that are necessary to support and sustain continual improvement.

What is important to understand about the organizational elements is that they all fall within the responsibility of leadership.  Unless leaders are continually looking for problems in these areas, they can go undetected and destroy efforts to transform the company.  Leaders need to openly and honestly reflect on organizational issues to understand that addressing the problems is their responsibility.  When done well, continually improving the organizational issues will build a foundation that results in sustaining the transformation for many years.

Building the System

Establishing a systems thinking mindset requires the ability to comprehend the whole and how individual components work together for the benefit of the whole.  In real terms, this means establishing clarity around the purpose of the organization and understanding how each system, function, and team supports achievement of the purpose.  It also means establishing balance throughout the system to assure that no individual component becomes optimized at the expense of the overall organization.

People generally think of systems thinking in terms of value stream management and working to optimize the flow of material and information throughout the system.  Although value stream management is a critical element of continual improvement, there are other system-related issues that need to be understood and improved in order to sustain the gains made in throughout the process.  Without addressing issues like hiring, employee turnover, and leadership development, there is little chance that efforts to improve will truly make a difference to the organization.

Kaizen for Leaders

The overall organization is gemba for leaders and as such, needs constant attention and effort to improve.  Leaders must continually look for and remove the high-level systemic issues that interfere with the ability to improve.  Realizing, for example, that a poor hiring decision is the fault of the organization will drive kaizen toward improving the hiring process.  Just as problems on the shop floor require operators to act, hiring problems (as well as other organizational issues) require leaders to act. 

The organization is a system, and leaders must recognize their responsibility to improve the way the components work together to drive and sustain improvements in performance.  They must also understand that the responsibility of driving improvement never ends.

Beware the Lean Expert

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“The man who is too big to learn will get no bigger.” – Chinese Proverb

I started learning about lean during my college days when I took a business class on the subject of W. Edwards Deming’s theory of management.  Since that time, I’ve spent a significant part of my career working to transform organizations to become more focused on sustainable, continual improvement in the way they operate.  Among the many things I’ve learned on this journey is to beware of anyone who refers to him- or herself as a lean expert.

Lean is about striving for perfection - and strangely enough, about understanding that perfection will never be achieved.  The way to continually close the gap between the current state and perfection is to learn; and learning occurs through never-ending experimentation. 

If a company improves to the point of being recognized as an industry leader, and starts to think it has reached perfection, then further learning – and improvement – would stop.

The same applies to individuals.  I’ve run into many self-proclaimed “lean experts” over the years who think they understand lean so well that they visibly stop learning.  They attempt to drive lean thinking into an organization the way they’ve done it in the past and ignore the signs that identify problems.

THE NEED FOR HUMILITY

A requisite for continual learning is humility.  Unfortunately, the culture in many organizations interferes with the ability to demonstrate humility.  Openly showing problems and asking for help can be seen as weakness, which motivates people to hide humility and the associated learning that it can facilitate.

The way around this is to be wary of anyone who claims to be an expert – in lean or any other aspect of the business.  Continually question his or her statements and approach to help drive understanding of the gaps in performance, whether or not the gaps are obvious. 

I’ve been working to drive continual improvement into organizations for decades and find myself learning on a daily basis something I didn't previously understand.  When I look back at some of the things I’ve written in the past (something, by the way, that a writer should never do), I’m amazed at how little I knew at the time and how sad it would have been if I stopped learning.

Organizations that begin the journey to lean thinking often bring in experienced people to help with the effort.  I advise leaders of these organizations that they can avoid a long and painful journey by avoiding anyone claiming to be a “lean expert.”  Unless your name happens to be Deming or Ohno – and I’m guessing neither would really consider themselves experts – you have way too much to learn to use the term.

The Lean Formula

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

There are many ways to begin a lean journey and one is not necessarily more correct than another.  I tend to adjust my approach depending on a variety of organizational factors, including culture and readiness for change.  I generally start with a basic formula that keeps people focused on the results the organization is trying to achieve, the results they are actually getting, and how to close the gap between the two.  

The lean formula that can be used to drive transformation of an organization is as follows: 

CLEAR & CONSISTENT PURPOSE  X  FOCUSED ANNUAL PLAN  X  VISUAL DASHBOARDS  X  EFFECTIVE MEETING RHYTHM   X   KAIZEN

The basis of the formula is that all elements must be present to be successful.  If any are missing – i.e., a zero – then the result of the equation is zero.  For example, having dashboards that measure and report performance without regular meetings to review the data or an effective method to address problems identified, improvement will not happen.  Although you’ll most likely work on the element that requires the most attention at any given time, lean is a systems approach that requires all of the elements to be present to sustain the transformation. 

The components of the formula are as follows:

CLEAR & CONSISTENT PURPOSE:  The entire effort must be directed toward achieving the organization’s aim.  Without clarity around the purpose (including the mission and vision), efforts to improve will be isolated and disconnected.  The annual plan will have nothing with which to align, and overall results will be disappointing.

FOCUSED ANNUAL PLAN:  Leaders clarify the purpose by translating it into 3-5 year objectives to be carried out by the organization.  This is driven into the organization through the development of annual plans that, based on the objectives, provide very clear direction and targets to be achieved in the coming year. Included in the plan is the targets that drive daily work (often in terms of safety, quality, production, cost, etc.) and breakthroughs, or the big improvements that must occur to move the organization forward (i.e., those areas where business as usual is not acceptable).

VISUAL DASHBOARDS:  The dashboards represent the scoreboards that identify the gaps between current performance and expectations from in the annual plan.  At the highest level, this is the actual safety, quality, production, and cost targets.  As you move deeper into the organization, though, the measures on the dashboard will become more focused on the processes and activities performed in a particular area.  The dashboards identify where adjustments are needed to get the organization or area back on track, and become the basis for coaching and developing the problem-solving abilities of people.

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

KAIZEN:  Knowing the gaps between targets and current performance is futile if people do not know how to address problems.  Having an effective kaizen or problem-solving process will enable the organization to close the gaps and react quickly to existing and potential problems.

What I like about the formula is that it enables the organizational gaps to be highlighted.  Problems with coaching and developing people to address problems will show up in the dashboards; failure to consistently move toward long-term objective will highlight problems in the annual planning process; and inconsistent objectives between areas could point to a lack of clarity in the organization’s purpose.  

Perhaps the most significant benefit of the formula is that it makes the transformation about the business rather than about lean.  Efforts often fail when organizations focus too heavily on the tools rather than on consistently achieving and improving business results.  When this happens, lean becomes seen as something separate from the business and the number of people fighting the transformation effort grows.  The formula, on the other hand, keeps lean closely integrated with the long-term success and growth of the business – something that very few people can resist.