Sunday, April 12, 2015

The Lean Formula

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

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

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

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

No comments: