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.

Lean: It's More than Kaizen

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NOTE:  This blog is moving!  Please read future posts at http://leadingtransformation.wordpress.com

I have noticed recently that there is a common misconception about the true meaning of lean.  Even among some improvement consultants, what is often referred to as lean is really nothing more than kaizen.  This is unfortunate because many organizations are missing out on the benefits associated with a true lean deployment.

Lean = Kaizen Plus Production Control

Too often, people learn about value stream mapping or the categories of waste and think they understand lean.  Although true that lean includes identifying and reducing waste, this type of activity is only one component of lean.  Changes to improve a process or system – whether through value stream mapping to reduce waste or an independent project to address a quality issue, is kaizen.

What many people do not seem to understand is that a focus on production control is what differentiates lean from a kaizen or 6-sigma process.  Without an emphasis on production control, companies miss an important component to align improvement efforts with business objectives and, more importantly, transform the organization and gain buy-in at all levels.  In the most basic sense, lean is about production control and kaizen is one way to help gain control over the production process.

Aligning Improvement With Business Results

The purpose of a business is to continually improve the value it provides its customers.  A company’s processes are critical to achieving this purpose.  Whether providing a product, service, or both, there is an optimal pace at which processes need to operate in order to meet objectives and, therefore, the needs of customers.  Lean thinking requires clearly understanding this pace (referred to as takt time) and focusing efforts on eliminating or reducing the effects of anything that interferes with synchronizing the overall system to operate at this pace.

Whenever I visit an operation that claims to be lean (a problem in itself because an operation is never truly lean), I ask questions about takt time.  All to often, I get blank looks or comments that takt time does not apply because the company does not have manufacturing operations or that they produce a highly customized product.  By ignoring takt time, however, these companies are focusing their efforts on general process improvement (e.g., 6-sigma or kaizen) rather than lean.  The problem with deploying a kaizen – rather than a lean – approach is that it becomes more difficult to directly tie improvement to business results, making it tougher to gain (and sustain) buy-in throughout the organization.

Takt Time:  Not Limited to Manufacturing

As written in a previous post, takt time can be calculated for virtually any process.  Whether the process produces invoices, maintenance services, gas wells, or sandwiches, there is an optimal pace at which it must operate to meet objectives.  Understanding and striving to consistently operate at this pace is a vital part of running the business. Note:  it should be inherently obvious that success also requires that the process must provide - and continually improve - its product or service at a level of quality that customers expect.

Although a kaizen or 6-sigma process is commendable (and a valuable component of lean thinking), a company that stops there is missing out on a critical improvement opportunity.  Focusing on takt time makes the connection between improvement and business objectives much clearer.  As a result, it becomes much easier to get people throughout the company to buy into the process.  In fact, once people understand – and are held accountable for – takt time, they will begin to look for ways to reduce the waste that interferes with the throughput of their process.  Improvement efforts become seen as part of, rather than interfering with, meeting objectives.  And when this happens, transformation can truly begin to take place.

Determining Takt Time

Takt time can be determined for virtually any type of process.  Examples include:

• Number of invoices processed within a given timeframe to keep up with demand;
• Number of gas wells to be drilled over a period of time to meet production objectives;
• Number of bags handled at an airport to keep airplanes and passengers moving;
• The pace of filling prescriptions at a hospital to keep staff from waiting, and assuring patients don’t experience medication delays;
• Making coffee and specialty drinks in order to meet customer preferences while keeping waiting lines relatively short.

With this in mind, a basic process for implementing lean should include:

1. Clarifying business objectives (including clearly understanding the customer’s needs);
2. Determining the optimal pace (takt time) for critical (and eventually, all) processes to meet objectives;
3. Implementing visual measures for throughput (to enable process leaders to understand how well they are keeping up with takt time);
4. Standardizing processes and systems (i.e., the value stream);
5. Continually identifying those things that are preventing the value stream from meeting takt time (which can involve shortening or reducing variation in cycle times).

Improving processes in order to meet takt time is where kaizen or 6-sigma enters the picture.  These approaches provide a framework for improving the throughput of processes in order to meet objectives.  Without creating energy around takt time, however, a 6-sigma implementation can easily lose focus and miss an opportunity to gain full buy-in of the improvement process by leaders.

Introducing takt time gives perspective to people to help them better understand why the organization is pursuing lean.  It provides the business context that is so critical for successful transformation and commitment, and helps reduce debate regarding the importance of spending time on improvement projects.

Getting Support from Support Functions

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"Everyone 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."  - W. Edwards Deming

One of the most difficult jobs of a leader is getting everyone in the organization to work toward the same objectives.  The issue is especially difficult in support functions where team members are generally isolated from customers, which makes it harder to create a connection between work performed and the success of the business.

The problem is magnified even more when the company utilizes a shared services model (i.e., decentralized business units with centralized support functions).  I've heard many business unit leaders over the years complain about poor quality service and lack of support from corporate functions.  In many cases, business units hire their own support people - even if it results in the company doubling up in some positions - in an effort to have more control over these functions.

With the focus and pressure on reducing costs these days, more companies are implementing the shared services concept and combining support functions into a single team in an effort to reduce the company's costs of providing support.  If not done correctly, though, this concept can actually increase costs due to poor quality service or slow response to operating units.

Establishing and communicating the company's purpose can help, but it's not enough.  It is also important to show people how their roles align with the purpose and, without a systems thinking mindset, this can be very difficult, if not impossible.

It's About Value for the Customer

The key to reducing the total cost without sacrificing the quality of support is to continually focus on value.  Focusing on value to the customer is what keeps everyone aligned on what is truly important, and helps make decisions regarding where to invest and where to cut much easier.

It is the entire company's responsibility to serve the customer, and doing it effectively requires a systems thinking mindset by those in leadership positions.  But merely telling people to be systems thinkers is not going to make it happen.  Increasing understanding of the company's high-level system requires education and coaching on a continual basis . . . and the value stream map is a great place to start.

A company's value stream is the chain of events that the transforms knowledge, information, and materials into goods or services to customers.  The value stream is how the company serves its markets and makes its money.  In theory, a company should not do anything that is not directly related to the value stream because it does not provide value to customers or bring in revenue.  Even those functions that exist for purely regulatory reasons should be oriented directly toward supporting the value stream's efforts to serve the customer.

The better people understand the company's value stream (i.e., the high-level system), the better they will understand their jobs.  It will become much clearer to everyone why their job exists, who they serve, and where improvement efforts need to be focused.

The Value Stream Map and Shared Services

Once developed, the value stream map (a diagram, or flowchart of the value stream) becomes the foundation to implementing an effective shared services function.  The internal service providers are just as critical to the company's success as the operations functions.  Without an understanding of the value stream, however, it is difficult to know exactly what value service functions provide to the organization, and particularly how to improve quality and reduce costs.

With this in mind, implementing an effective shared services function requires addressing the following:

• Clarifying expectations that serving customers is everyone's responsibility, and those who do not directly serve external customers are responsible to support those who do (i.e., their internal customers);
• Develop the purpose of the shared services function.  Since this is most likely a new approach for the company, it is important to bring support team leaders together to develop the purpose and assure that, once developed, the purpose is clearly communicated throughout the company;
• Map the company's value stream.  Develop the high-level value stream map for the company and clarify how the shared services functions fit into the system.  Follow up with more detailed maps to show how each support function serves the value stream, keeping in mind that support functions can also serve each other;
• Understand the barriers to effective teamwork.  There are likely obstacles that will interfere with getting people to focus completely on serving the value stream.  These obstacles (e.g., fear, or objectives and rewards that discourage serving internal customers) need to be clearly identified and addressed.

Outsourcing services or cutting support budgets will not, by themselves, result in improving company performance.  It is critical to clearly understand the interactions between functions that exist and how these relationships contribute to serving the external customer.  It is only with this level of understanding that costs can be reduced while service to customers is improved.

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