The Missing Link in a Lean Deployment

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A common difficulty many companies face when embarking on a lean journey is getting people – at all levels – to buy into the philosophy and commit to a new approach to business.  Lean generally follows a different way of thinking, and success often requires transformation of leaders as well as a change in behaviors across the organization.  Without significant transformation, lean becomes nothing more than a short-lived effort to attack waste on a project-by-project basis.

It is not enough to say that leadership is the key to successful implementation of lean thinking.   Without understanding what this means, we cannot truly transform an organization and build a sustained improvement process.

I have come to the conclusion that a critical – and often missing – component of leadership necessary to transform an organization is a deep understanding and application of the Deming system of management.  Most lean deployments include training of the management team in basic lean methodology, the categories of waste, and improvement tools, but very few organizations include Deming’s system of profound knowledge as part of the roll-out.

Although there are many people over the years who contributed to the development of the Toyota Production System (TPS), W. Edwards Deming taught the managers at Toyota about leadership, which was critical to the development, success, and longevity of the system.  I have been lucky enough to visit Toyota on several occasions and, although I never heard Deming’s name mentioned, his influence on their culture and systems is still readily apparent.

The System of Profound Knowledge

In his final book, The New Economics, Deming presented his System of Profound Knowledge.  It basically defines the competencies required for effective leadership.  Since transformation of an organization begins with transformation of the individual, a company has no chance of deploying lean thinking unless its leaders completely believe in the need to change and clearly understand what it means to the organization.

According to Deming, there are four areas that anyone in a leadership position must possess and continue to develop in order for the organization to remain competitive and continually improve performance.  Being competent in – and actively practicing – these four areas is what separates leaders from bosses.

The four areas that must be part of an organization’s leadership DNA include:

• Systems Thinking:  A clear understanding of the organization’s overall system – i.e., the entire process for transforming materials and information into products and services for customers – and how each area (including suppliers) affects its ability to serve customers;
• Knowledge of Variation:  Understanding how to use metrics and data to gain insight into the causes of variation in quality and performance.  Requires training in basic statistical theory and, among other things, how to separate trends and true changes in performance from normal variation;
• Theory of Knowledge:  Continually developing and testing assumptions to gain knowledge is a critical part of management.  Applying the Plan-Do-Check-Act (PDCA) cycle improves leadership by enabling learning about the business and clarifying relationships between causes and effects – which is vital to successful planning;
• Psychology:  Organizations are made up of people and those in leadership positions need to understand how to hire effectively and motivate people and help them continually develop and improve.

Without a clear understanding of the company’s leadership DNA and faithfully using it to select and develop leaders, a company can end up with such a wide variation in leadership styles that attempting transformation  - or pretty much anything else – will be futile.  Deming’s System of Profound Knowledge gives us a foundation from which to build a company’s management system and begin the transformation toward lean thinking.

Gaining Involvement in Improvement Activities

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One of the most common frustrations expressed by those involved in a 6-sigma journey is the inability to get others to participate in improvement activities.  In some cases, energy levels may be high during initial projects only to have a production focus return fairly quickly.  Often there is less accountability for process improvement than meeting production targets, and it becomes a battle to get managers to commit time and resources to improvement projects.

The Wrong Focus

A common reason for a lack of managerial engagement in improvement activities stems from the lack of a natural alignment between improvement objectives and a manager’s normal  work – i.e., meeting production targets (production referring to any type of output for which a team is responsible).  As long as improvement objectives are considered separate from production objectives, there will always be tension between the two; and when this happens, production will virtually always win.

Production is how a company makes its money, and managers are typically measured on their ability to produce.  No matter how logical it may seem so some that focusing on improvement will make meeting production targets easier, others will see it as a distraction and interference to meeting production objectives.

By design, a 6-sigma process is project focused, where people identify improvement opportunities, develop objectives, and form teams to address the issues.  This approach can make the job of creating and sustaining alignment between improvement and production a challenge.

Although some companies have been successful implementing and sustaining project-focused improvement, many have not.  In my experience, the life of a typical 6-sigma deployment is 6 months to one year.  Beyond the initial success, a lot of time and energy is required to keep the process going against the inertia of a production focus.

A Better Approach

A much better way to create a strong and natural alignment between improvement and production is to focus the effort on lean rather than 6-sigma.  Companies that ignore lean and attempt to implement an isolated 6-sigma process are missing out on a perfect opportunity to connect and closely align production control and the improvement process.  With lean, it is takt time that makes the need for continual improvement clear and logical.

Takt time, which can be calculated for virtually any process in any industry, defines the pace at which a process needs to operate in order to meet objectives.  Once the output objectives and resource constraints are understood, the takt time of the process can be calculated with little effort.

Understanding the takt time for a process makes it clear that, in order to meet production targets effectively, improvement efforts must occur.  This approach places the responsibility for initiating improvement projects with the supervisor of a process since he or she is the one accountable for consistently meeting production - or takt time - targets.  In effect, takt time creates pull from those directly involved in the operation.

The PDCA diagram below identifies a basic approach for implementing and sustaining improvement-based on lean thinking.  Once business objectives are understood and processes are standardized, process leaders become responsible for meeting production objectives on a continual basis.  Unless the person responsible for leading a particular process drives improvement within his or her area of responsibility, the odds of meeting takt time consistently become severely hampered.  Continually comparing throughput to takt time naturally drives the identification of improvement projects that enables objectives to be met.

The Improvement Process

To be successful in a lean thinking environment, very little pressure is placed on people for the current performance of the process(es) they lead.  There is significant pressure, however, on leaders to demonstrate how they are reacting to current performance, and the steps they are taking to drive improvement.

Every leader must be held accountable for assuring that the overall system (i.e., production line, location, business unit, etc.) meets its takt time.  Otherwise, improvement efforts may consist of pushing work or inventory to a downstream process, and when this occurs, there is little chance for the organization to meet its objectives.

Back to Basics: The Key to Improving Performance

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After many years of working with organizations in different industries on a variety of issues, I have discovered that the most common reason for performance falling short of expectations is a lack of attention to the basics.  I have seen numerous initiatives fail because of misalignment between, or inconstancy within, a company's purpose, values, objectives, and reward systems.

Consider the following objectives:

• Improve EBITDA by 20% over the next two years;
• Achieve compounded double-digit revenue growth each year for the next five years;
• Introduce 5 new products to the market next year.

In each of the above examples, the organizations failed to achieve the stated objectives.  This was not because of a lack of talent or desire to meet the goals.  In each case, managers responsible for the objectives felt extreme pressure to succeed but were handcuffed by the problems related to trust, teamwork, reward systems, and overall company focus.

An organization cannot perform at a level beyond its capabilities for a sustained period of time - and its capabilities are determined by the basics.  Setting objectives that are beyond capabilities will do little more than create frustration or apathy among those assigned the responsibility to meet them.  You can challenge, pressure, or cheer as much as you want but unless you deal with the fundamental roadblocks to success, you will end up sorely disappointed.

In sports, it's common for individuals and teams to address a slump by getting back to the basics.  In tennis for example, correcting poor performance requires thinking about footwork, watching the ball, and focusing on each point.  Attempts to ascend to a new level of performance will be fruitless without mastering these basic aspects of the game.

Getting Back to the Basics

Addressing the fundamental issues in an organization can take several different paths depending on the company's situation, but generally involves the five areas listed below.

• Reaffirm & Recommit to the Purpose:  Assure that the organization's purpose - including mission and vision - is absolutely clear.  Obtain commitment to the purpose at all levels and develop objectives that support its achievement;
   
• Clarify & Commit to the Values:  Define the company's DNA and assure that the hiring process includes some type of assessment to assure candidates possess the desired values.  It is important to understand that, regardless of how successful an individual appears to be performing - if he or she does not follow the same values as the rest of the organization, damage will occur;
   
• Align Focus on the Customer:  In relation to the purpose, assure that everything the organization does is focused on the customer.  As Gene Perkins, retired Group Vice President-Flow Products at Emerson Electric Company once said to his management team, "if we're not thinking about the customer first in everything we do, we might as well fold up our tents and go home;"
   
• Increase Understanding of the System:  Especially at the management level, people must understand the company's overall system (i.e., how the company serves the customer) and work to continually improve how materials and information flow through the system.  Managers must be company-focused rather than functionally-focused;"
   
• Align Measures & Rewards with Direction:  Once the direction and focus has been established, make absolutely sure that there is close alignment between them and the reward systems in the organization.  Be continually on the lookout for rewards that may encourage undesirable behavior.

It is very easy for an organization to stray from the above areas.  There is often so much going on and everyone is so busy that it is easy to be distracted with internal issues that do not tend to be as glamorous as improving EBITDA by 20% or achieving double-digit revenue growth.  Without a strong foundation on which to build the business, however, achieving and sustaining any type of significant improvement will not happen.

Successful Job Search: Getting the Interview

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It's been a few years since the worst economic downturn since the Great Depression began and a large number of highly talented people remain unemployed and frustrated at their lack of success in the job search process.  Many regularly submit resumes for positions for which they feel perfectly qualified and receive only electronically-generated rejections - if they receive anything at all from the hiring company.

From a pure numbers perspective, it is easy to understand why this is happening, but understanding the reasons does little to reduce the frustration and depression that many searching for jobs are feeling.  It comes down to the fact that anyone applying for an open position needs to find a way to stand out from the crowd and get noticed by those doing the hiring.

Below are my thoughts on the job search process.  Although I would never describe myself as an expert on the subject, I have witnessed these steps achieve a 40% success rate in getting a positive response from the hiring company.  Keep in  mind that these steps will only help you get a dialogue going with someone in the company - getting beyond the initial contact is up to you.

Resumes are Secondary

Most people focus on the resume or CV as the critical part of the job search.  Resume writing services are booming these days with the promise of providing a CV that will set a candidate apart from the thousands of others who may be applying for an open position.

I believe that the resume is actually secondary in finding a job.  Attempting to communicate the ways in which you will benefit the company through a resume puts the responsibility on the person reading it to make the connection between your background and the needs of the job.  Regardless of how impressive they may be, a listing of qualifications, accomplishments, and keywords will not set you apart from others.  You really need to find a clear and concise way to communicate to people exactly how you will help the company.

Your resume will come into play after you convince the hiring company that you can provide what they need.  With this in mind, it is critical to have a clear and well-organized CV - and one that is specifically tailored to the open position - but it is not the most important part of the job search process.

The Critical Steps

With this in mind, a successful job search process should include the following elements:

1. Read the Job Description very closely to gain a deep understanding about the company's needs.  Use the job description along with other information (e.g., website, annual report, etc.) to look for themes that identify what the company is truly looking for in the position.  Highlight the areas that identify critical issues and those where you have particular expertise.
    
2. Develop a Plan that clearly addresses the issues identified specifically in the job description and, more generally, in your research.  Present a basic overview (exhibit 1) and include a more detailed explanation of the steps that need to be taken to be successful (exhibit 2).
   
   
   
   Sections of the plan will differ depending on the specific position.  The plan shown in the example is for a Lean Director position.  It would obviously need to change for other jobs (e.g., for a VP of Operations, the categories may include such things as People Development, Process Improvement, Product Development, etc.).  It depends entirely on the scope of the position and the needs of the organization.
   
   
   
    
3. Identify the Hiring Manager.  With apologies to my friends in the HR field, most of the people who screen resumes do not really understand the position well enough (or have the time needed) to look beyond what is written in the job description.  In many cases, a junior person or computer filters the resumes to screen out those that don't have the correct keywords.  Your chances diminish greatly if you don't send your information to the person to whom the position reports.
   
   Depending on the level of the position, the hiring manager can be located through sources like LinkedIn, the company's website, or a web search.  This can take time, but is extremely important to assure you reach the correct person.  For higher level positions, don't be afraid to send the plan directly to a C- level person (i.e., CEO, COO, CIO, CFO, etc.).
    
4. Send the Plan to the Hiring Manager.  This step requires patience and creativity to determine the company's email address format.  In some cases, the domain name for the company's website differs from the domain for email addresses, so it may take several attempts to finally get it through.

I can't take full credit for the above approach.  A friend of mine is a lawyer and told me that pursuing a position at a law firm often requires submitting a business plan to identify the target clients the candidate can bring to the firm and how much business these potential clients represent.  Combining this with my own experience leading an organization, I thought that a similar approach would make sense for those in other professions as well.  When I led an organization and hired for an open position, I was much more interested in how well the candidates understood our needs and how they could help than what was in their CVs.

The drawback of this process is that it takes a lot more time to apply for a position and you will probably not be able to apply for more than three or four positions per week, at best.  Besides getting you an interview, however, the plan can also provide a point of reference for discussion during the interview and help you get started once you land the job.

Good luck!  Everyone deserves a job that is challenging and rewarding.

Fast Does Not Mean Cutting Corners

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I believe that, to be successful today and in the foreseeable future, companies will need to continually increase speed and flexibility.  Changes are occurring faster than ever, and those companies that are able to adapt to - and drive - changes quickly will be much more competitive than those that are not.

Whenever I  mention the subject of improving speed and flexibility, however, I inevitably receive comments about the dangers of making decisions and acting too quickly.  The comments often include examples where efforts to increase speed have resulted in major quality or safety problems.

In my view, however, "fast" does not mean cutting corners or operating out of control - since dealing with quality or safety issues does little to improve speed or the ability to adapt to changes int he environment.  Being faster and more flexible actually requires improving focus and perfecting processes on a continual basis.

Successfully streamlining processes and systems requires understanding and continually improving the activities that add value to customers while reducing or eliminating any activities that do not.  And when the focus is on customer value, cutting corners on safety or quality is not an option.

Speed Requires Stability

When driving, the more stable the car, the safer it is to drive at high speed.  In business, the more stable the organization - in terms of purpose, values, leadership styles, employee turnover, and focus - the safer it is to increase speed.

The loss of control, along with the increased variability in processes and results caused by impatience and short-term thinking can quickly throw an organization off-course.  These are the behaviors that drive people to think that being faster means cutting corners instead of strengthening and improving processes.

Focusing on value for the customer can speed up decision-making and processes while prventing the haphazard cost-cutting measures that too often lead to financial trouble, industrial accidents, encvironmental disasters, and deaths.

Keep the Focus Clear

Speeding up an operation requires constant vigilance for anything that interferes with processes operating perfectly every time.  Interference in processes can result from design, handoffs between people, or a variety of other technical, organizational, or cultural issues.  Because of this, it is important for a company to develop the ability to honestly and objectively assess itself for those things that slow it down.

When leaders maintain stability in the organization's basics, and focus attention on improving speed and flexibility, remarkable things can happen.  The improvements in agility will be accompanied by reduced costs, increased customer satisfaction, and a safer operation.

Does Size Matter?

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Is There a "Best" Size for a Company?

I had coffee with a colleague awhile back and we got into a discussion on whether there is a "best" size for an organization.  Small companies are fast and flexible but often lack the capital needed to grow.  Although large companies tend to be slow and unable to deal with change effectively, they have the capital and geographic reach that small companies lack.  A large company also has the ability to crush or acquire a smaller competitor that is seen as a threat, if the threat is recognized early enough.

An interesting observation about this subject is, as a company grows, it tends to become slower and less able to do many of the things that made it successful in the first place.  Additional layers of management and more formalized systems can slow the decision-making process to the point where it becomes unable to respond quickly to changes in its environment.  Another common characteristic of companies as they grow is a tendency to become more risk averse in an effort to meet conservative financial targets or protect share price.

Does it Matter?

So what is the optimum size for a company?  Does it depend on industry?  There are obviously some industries like consumer electronics where, no matter how large a company is, it can't survive without the ability to quickly adapt to, or drive, changes in the market.

These are interesting questions to debate, but I wonder if they really have answers.  What if an organization can remain fast and flexible as it grows?  Think about how successful a company could be if it could continue to be as fast and flexible as it was when it was small and growing.  There are not many examples of large, fast-moving companies, but that does not mean that it is not possible (or important).

A Matter of Survival?

Like most aspects of leadership, it's an issue of focus.  When leaders of an organization determine that speed and flexibility are competitive issues, they will give it the focus they need to make them happen.

I believe that success in the years ahead will require the ability to drive and adapt to changes quickly and effectively.  The world is changing at such a rapid pace that the organizations that are unable to adapt will not be competitive.  Developing the capability will require addressing areas like speed of new product development, flexibility of processes, implementing and upgrading information systems, etc.

Increasing speed and flexibility for many organizations will require transformation.  For too long, we have become obsessed with the idea of growth as the focus of a business.  Investors tend to lose confidence in companies that experience slowing growth [refer to Fortune magazine articles on Google and 100 Fastest-Growing Companies] which can cause problems when, in an attempt to appease the financial community, a company shifts its focus toward growth through acquisitions that are not necessarily strategic or sensible.

If the focus is on developing the ability to drive change through innovation, and respond to change by increasing flexibility, the growth can occur organically through increased competitiveness.  Although organic growth in revenues does not tend to match the growth that can occur through acquisition, it can be much more profitable and less destructive to the company and its culture.

Innovation and speed do not need to be limited only to companies like Samsung, Apple, and Facebook.  Every company has the ability to improve flexibility and adapt to changes in its environment.  Size does not need to be a deterrent to change.  It is a company's characteristics and capabilities, not its size, that determines its flexibility.  All it takes is recognizing the need, being sensitive to the friction created as the company grows, and continually addressing the elements that interfere with the ability to change.

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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