Wednesday, May 31, 2017

Flattening the Organization - Probably Not the Answer

One of the misconceptions about lean thinking is that it automatically leads to flattening the organization. Many people think that layers of management are always a bad thing and start removing layers as a way to empower employees, speed up decision-making, and improve innovation. While there is no shortage of organizations that suffer from too many layers, it should be noted that flattening does not necessarily lead to improved performance. Many organizations that flattened their structures have experienced little more than burned out managers, frustrated employees, and high turnover.  

Removing layers of management downplays the important role managers play in improving the organization's performance. This includes responsibilities like coaching people to solve problems, developing future leaders, and continually removing barriers to team member performance.  

When an organization removes layers and managers have large numbers of people on their teams, it is not possible to spend the time needed to develop problem-solving or leadership skills of team members. As a result, the managers resort to directing and telling, rather than coaching and teaching, leaving team members feeling stuck with little hope of improving their skills or growing in their careers.  

Flat organizations leave personal development completely up to the individual, something that rarely, if ever, works effectively. When people are left to develop on their own, the lack of objectivity will lead them to focus on the areas they want – rather than need – to improve. When this happens, the team member, as well as the organization, stagnates resulting in a deterioration in customer service and long-term performance.  

Understanding the Problem  

One of the reasons often given for eliminating layers of management is that managers get in the way and slow down processes. Although there are cases where this is true, eliminating layers is not necessarily addressing the root cause of the problem. The company can benefit more by understanding why its leadership is ineffective and its processes and systems are slow, rather than assuming it is because of excessive layers.  Firing managers without addressing the real causes of poor performance can magnify the problems and, after a short-term improvement in results, end up in worse shape than if no action was taken.  

No Quick Fix  

In spite of what many believe about management layers, they do have a purpose in organizations. Flattening the organization is a fad that ignores the importance of developing people and continually improving. As companies like Toyota, Facebook, and Google have proven for many years, long-term success still comes down to effective leadership, respecting people, and a never-ending focus on improvement.  

Sunday, May 21, 2017

Driving Improvement Through Systems Thinking

"Management of a system requires knowledge of the interrelationships between all of the components within the system and of everybody that works in it." W. Edwards Deming 

One important discovery people make when they start on a lean journey is how much they still need to learn about their business.  Although they may have extensive knowledge about individual parts of their products, processes, markets, etc., lean thinking forces them to connect the components as a system, which is something many organizations have never done before. 

When starting an improvement effort, I usually ask about the minimum target the team is attempting to achieve.  The answer is often something made up on the spot or a generalization, like as much as possible.  Improvement efforts should generally be driven by the actual requirements of the business.  For example,  if a company determines that the time between a customer placing an order and receiving the product is too long, it should determine an improvement target based on what the business needs.  If it currently takes 42 days and customers expect to receive the product in 22 days because of their needs or what competitors are offering, the minimum improvement needed is 20 days.  Although the gap appears to be significant, people will look at it as if it is based in reality, rather than a target that management dreamed up.  So,  instead of thinking of it as an impossible target, it becomes possible and something that the business needs to survive.  Attempts to go beyond the 22 day target can be attempted later, but should still be based on strategic reasons. 

Although the concept appears simple, it can become much more difficult when applied to something deeper in the business than a product lead time.  In an oil and gas operation, for example, suppose it is taking too long to change out filters on a compressor.  Setting an improvement target would require first understanding what "too long" means.  This involves quantifying the compressor's contribution to the overall system, and includes things likethe overall production target; uptime of the facility required to meet the production target; uptime of the subsystem where the compressor is located in order to meet the facility uptime; the compressor startup time after maintenance; the current uptime of the compressor; and the time needed to change the filters.  By understanding how all of these elements connect and contribute to the production target, it becomes easier to accurately determine the gap between the required time to change out filters and the actual time. 

The more people learn the connections the components have with each other to achieve the overall business objectives, the easier it will be to see the problems and set improvement targets based on reality rather than gut feel.  It is not enough for people to know that the work they do contributes to the organization's purpose and objectives - they must know how.  This comes through a continual focus on coaching and basing improvement activities on learning, which happens through questioning, discussing, and connecting to gemba.