Sunday, November 25, 2012

Deming and Lean

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.

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.

Sunday, November 18, 2012

How Well Do You Know Your System?

“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.

Sunday, November 11, 2012

Using ORID to Guide Business Planning

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.