Friday, October 4, 2013

The Lean Formula

As I've said many times, lean is simple but not easy.  The concepts are fairly easy to understand, but making it happen requires such a deep level of reprogramming of the way people think and act that few are able to carry it through.

There are many ways to begin a lean journey and one is not necessarily more correct than another.  I adjust my approach depending on a variety of organizational factors, but I generally like to 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 basic formula to follow a targets-results-gap approach is:


This basis of this formula is that all elements must be present in order to achieve success.  For example, having a business plan that clearly identifies the organization's desired performance levels and a plan to get there won't do much without dashboards that provide a consistent and discernible picture of results.  Although more common than one might think, this type of situation makes managing the business extremely difficult by leaving too much to chance.

The components of the formula are as follows:

CLEAR BUSINESS PLAN:  There must be a plan that provides very clear direction and targets for the organization.  The plan should break the company's long-term strategy into specific results to be achieved in the coming 1-2 years.  Included in the plan is information or results that drive daily work (i.e., help people understand the level of performance that must be maintained to meet objectives) and breakthroughs, or the big steps that must be taken to move the organization forward (i.e., the areas where business as usual is not acceptable).

VISUAL DASHBOARDS:  The dashboards is the scoreboard to identify the gaps between current performance and the targets or objectives listed in the business 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 in a particular area.  Also, the information on dashboards must be clear, easy to understand, and include leading, as well as lagging indicators.

EFFECTIVE MEETING RHYTHM: The organization must implement a meeting cadence that is focused on actual performance versus targets.  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 how much work they did since the last meeting - the dashboards will do this.  The meetings should used to highlight the problems and ask for help.  The meeting schedule should be set at as closely as possible to the pace of work so the problems can be identified and addressed quickly.

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

Although the basic formula appears simple, there are a lot of elements necessary to make it effective.  Without effective leadership or a culture that supports, rather than hinders, teamwork and the ability to question the status quo, success will be elusive.  
Using the formula as a starting point for a lean transformation, though, will tend to make the organization's weaknesses visible, which is the first step in making the change.

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