Sunday, February 23, 2014

It's All Kaizen

"Management is prediction."  W. Edwards Deming

One of the beliefs that often interferes with a successful lean deployment is the assumption that kaizen only applies to workers.  This happens when an organization attempts to overlay lean on top of a management system driven by traditional thinking and its leaders will consider kaizen as something that can be delegated to the shop floor.  A sign that transformation toward a lean mindset is begining to occur, however, is when leaders start to understand that kaizen applies to everyone.  Whether addressing a problem in a work process or dealing with a high-level company-wide issue, a kaizen approach can increase learning and the chances for a successful result.

The Basic Process

Building a sustained improvement process requires much more than merely getting people to submit ideas.  Basing improvement only on worker input often results in haphazard changes and a list of suggestions that continues to grow until people eventually give up believing that management is not serious about their input.

What is often misunderstood – or forgotten – about the kaizen process is that it is rooted in scientific method.  Success with kaizen requires application of the Plan-Do-Study-Act (PDSA) cycle to facilitate continual learning and a clear understanding of the problem being addressed.  Applying the PDSA cycle to the improvement process includes steps similar to the following:

·   Understanding the target/ideal condition based on what the process or system is intended to achieve;
·   Identifying the current condition to better understand the gap or problem that is being addressed;
·   Determining the potential causes of the gap between current performance and the target condition;
·   Creating a countermeasure to address one or more of the potential causes of the problem;
·   Testing the countermeasure to clearly understand whether or not it works as intended;
·   Taking action based on the test results, which can include adopting, modifying, or abandoning the countermeasure;
·   Continuing to watch results, if the countermeasure is adopted, to assure improvement is sustained.

Besides the obvious benefits to business performance with this type of approach, understanding that an idea to address a problem is really just a hypothesis that must be tested unlocks learning that can truly begin the transformation.

Higher-Level Kaizen

Although leaders generally agree with the use of PDSA to address shop floor problems, applying the same level of thinking to the work they do often requires transformation.  High-level issues like the need to improve the success of new product introductions, improving the development of future leaders, or expanding into new markets can be addressed much more effectively when approached with a kaizen mindset.

Whether dealing with defects on the shop floor or a high-level business issue, improvement must still begin with understanding the target condition, or what success looks like.  For example, to address a poorly performing product development process, we can’t understand what “poorly” means if we do not know what defines success.  This could include characteristics like cycle times for new product introduction, clarifying development costs, or expected sales levels during the life of a new product.  Without this type of clarification, the initiative will lack clear direction and likely have trouble staying on track.

Defining the target condition enables a clear definition of the problem as the gap between the target and current performance.  This focuses the effort on closing the gap rather than letting the initiative stray by allowing people to include pet ideas or random changes that don’t directly address the problem at hand.

Clarifying the problem also provides the ability to gage the effectiveness of improvement actions by continuing to measure the gap between the target and current condition.  This is the STUDY phase of the PDSA cycle – understanding whether the improvement actions (hypotheses) are actually improving performance.  If they are, we will want to standardize the improvements to assure they can be sustained.  If the actions have not led to improvement, we would want to know the reasons and possibly adjust or abandon the actions.  Although piloting business-level changes can be more difficult than with process changes, it is critical to try because of the potential damage that can result from a poor decision.  In those instances where running a test is not possible, changes must be watched closely – and objectively – to assure they are driving the type of results expected.

A Countermeasure Without a Problem

A huge benefit of applying kaizen thinking at the leadership level is that is puts a stop to random initiatives – i.e., those that don’t appear to address specific problems.  Actions like changing major systems or adding new initiatives to areas that are not necessarily experiencing problems with current methods are highly disruptive to the workplace and often cause more harm than good. 

Every day, consultants and writers present a variety of unique and interesting approaches to business issues.  Even when a new idea appears to be relevant to a business, though, it should not be attempted without clearly understanding the problem it is meant to address.  Actually, when the environment becomes guided by kaizen thinking, understanding the problem would be followed by investigating the causes rather than attempting to force fit a countermeasure like a software solution or changing a major system.  When a new approach does appear to directly address a problem facing the company, it should still be piloted to assure it works as intended. 

Transformation is Needed

Successfully deploying a continual improvement mindset across a company will not happen without transformation in thinking at all levels of the organization.  It is not possible to turn kaizen on and off depending on the type of problem being addressed or organizational level affected.  If leaders delegate kaizen to the “worker level” while applying a business-as-usual approach to organizational problems, transformation will not occur and lean will be doomed to fail. 

Sunday, February 9, 2014

Business Planning and the 85-15 Rule

A problem organizations commonly encounter during the annual planning process is overloading the plan with too many initiatives.  Although this shows a lot of enthusiasm and energy during the development of the plan, it often results in frustration and disappointment during the year as people get overloaded and confused by too many priorities.  Good intentions don’t always lead to good results.

When applied correctly, the A3 planning process can greatly aid in the development of a plan that provides clear and focused objectives for the team.  And integrating the Plan-Do-Study-Act (PDSA) cycle into the process can enable the energy – and clarity – to continue throughout the year.  A key to making the process successful, however, is to create a plan that focuses 85% of the organization’s effort on meeting current year targets and 15% on breakthrough improvement.

85% Effort = Maintain

The first step in creating an effective annual plan is to obtain clear understanding and agreement on the targets that need to be achieved during the year.  And generally, these targets should be set at a point equal to the capability of the company’s processes and systems.  As long as processes are maintained at current levels, the targets can be achieved.  Although unforeseen problems will undoubtedly occur throughout the year, they can largely be handled through the company’s meeting rhythm and kaizen process.

This is what I often refer to as the day job.  It involves putting effort toward maintaining the current level of performance and meeting company commitments.  As a general rule, assuring process capabilities are maintained to a level that meets targets should require about 85% of people’s effort.

15% = Improve

As important as it is to put forth the effort to maintain process performance and meet targets, if no energy is directed improving performance, it will only be a matter of time before the company is passed by competitors.  Step-change or breakthrough improvement must be a strategic focus if it is to become a reality.  To assure this happens, the annual plan should include breakthrough objectives that require about 15% of the organization’s effort.

The breakthrough objectives come from a thorough reflection of the company’s past performance and future direction.  A clear understanding of the big problems – i.e., where the organization’s performance needs to significantly improve – must be established in order to comprehend the root causes that need to be addressed.  Examples could include enhancing a weak product development process, establishing a system for coaching and developing future leaders, or significant improving safety performance.

During the year, an unforeseen problem can surface that affects current process capability and meeting targets that will require significant effort to address (e.g., a significant quality problem, repetitive machine breakdowns, or a rash of safety problems).  In situations like this, when the normal meeting rhythm and kaizen process will not be enough to address the situation, breakthrough improvement may be required, and a decision needs to be made whether or not the organization is going to undertake the effort.  If so, people need to be clear on which breakthrough projects may be delayed to maintain the 15% focus on improvement. 

Kaizen for Leaders

Confusion between the maintenance and improvement efforts often leads to the development of an unachievable plan.  There will always be distractions attempting to interfere with maintaining the 85-15 balance, so continued PDSA is required to maintain clarity and focus.  This is basically kaizen at the leadership team level, where annual targets and improvement needs represent the target conditions and the plan (breakthrough actions) and priorities – become the countermeasures.

Sunday, February 2, 2014

6-Sigma - A Common Cause of Failure

Building on the previous post regarding the differences between lean and 6-sigma, I have recently come to the conclusion that failure to understand the differences between the two is often the cause of frustration and disappointment with the results in a lean deployment.

Conceptually, 6-sigma is easier for people to comprehend than lean.  Implementing a problem-solving methodology aimed at attacking the issues with the largest financial impact makes immediate sense to most people.  Developing a few experts in the problem-solving process and sending them around to attack the big issues and help improve company performance requires a relatively small investment and does not necessitate a major shift in the way the organization operates.

So what's the problem?

The problem is that this is not lean.  It is fairly common for an organization attempting to adopt lean to have one or more people involved in the process who drive the change with a 6-sigma mindset.  This can create a significant amount of friction and frustration between the "lean thinkers" and the "6-sigma thinkers."  And if this gap is not effectively addressed, teamwork will break down and the initiative will fail.

Among other issues, a gap in improvement philosophy will lead to disagreement in the types of problems to attack.  6-sigma thinkers will want to address only the big problems while lean thinkers will focus on creating a system where all problems, regardless of size, can be addressed.

The Signs of a Gap

Signs that a lean deployment is being driven by a 6-sigma focus include the following:

Pareto Prevalence:  The use of Pareto charts or effort-benefit formulas to select the problems to address is a sure sign of 6-sigma influence.  Creating an improvement-focused culture will not happen if you tell people to ignore the problems that a chart or formula considers small.  Also, telling a person who faces a problem everyday that it is too small to warrant attention can be extremely demotivating.

An objective of lean thinking is to attack problems as they happen.  This requires turning everybody into problem-solvers and unleashing them on the issues that prevent them from meeting target conditions.  Besides the fact that small problems, when left unchecked, often turn into large ones, continually addressing issues allows people to get better and better at problem-solving.

Lack of Leader Involvement:  When trying to create a lean culture, leaders must be actively involved in kaizen efforts.  Assigning black belts to facilitate the process enables leaders to opt-out of, rather than participate in the process.  Within a true lean environment, the higher the position is within the organization, the more adept the person is at problem-solving.  Getting to this point will not happen when leaders are allowed to delegate improvement responsibilities.

Celebrating the Big Gains:  Creating awards or financial incentives to solve the big issues is a clear message to people that the small problems are not worth the effort.  There are areas within the company that, because of the nature of the work they do, spend significantly more than other areas.  Inconsistent behavior between areas will never result in the desired shift in culture, and since the areas with lower costs will not see participation in improvement worth the effort, transformation will not occur.

Understand What You Want

The point of this and the last post is to create awareness that, despite what many people believe, lean and 6-sigma are not the same, and confusing the two will lead to disappointment with an improvement effort.  It is not easy - and it is definitely not common sense - but being clear with the vision and objectives, studying the results, and adjusting the effort is important to assure the desired transformation occurs.