Lean is NOT Common Sense

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How many times have you heard that lean is “just common sense?”  Over the years, I’ve noticed that those who say this are generally the ones who resist lean the most.  Referring to lean as nothing more than common sense is often an excuse to ignore transformation and continue to do things in the same way.

Depending on your frame of reference, common sense can tell you to:

• build inventory to handle changes in demand or chronically late deliveries;
• set individual goals for people (and tie closely to bonuses and performance reviews) in order to improve performance;
• run large batches to deal with long setup times and continued stockouts;
• reduce costs by pressuring suppliers to drop prices;
• address problems by looking for solutions rather than countermeasures

Lean is a very different way of thinking for most people and requires significant transformation of individuals and the organization in order to be successful.  Before this transformation begins to occur, many aspects of lean thinking will actually appear counter to common sense.  Do not let anyone hide behind the “common sense” shield during the transformation.

The Effect of Structure on Performance

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No one component may seek its own reward without destroying the balance of the system. Each component is obligated to contribute its best to the system as a whole. – W. Edwards Deming

What effect does an organization’s structure have on the ability to be successful?  For years, western business has clung to the notion that a functional organization is the most beneficial, but what effect does this really have on overall performance?

Doesn't the performance of the organization as a whole matter more than the performance of any individual area?  If so, is there a correlation between the two?  If individual functions optimize their own performance, does this automatically improve performance of the larger organization?

A SYSTEMS THINKING PERSPECTIVE

Lean requires a systems thinking mindset; meaning that the success of an individual function is determined by the contribution it makes to the organization.  Over an over again, I have seen examples in functionally-structured companies where individual areas - intentionally or unintentionally - focus on their own goals with little or no regard to the effect they have on other areas.

This tendency toward functionally-focused goals, which is common in western business, is a significant contributor to the construction of silos within the organization that are difficult, if not impossible, to break down without a drastic change in leadership and culture.

The alternative is a process-oriented structure that drives people to focus on the performance of the system rather than an individual area.  Each person uses his or her own special knowledge and skill to optimize the system; and rewards are based on the overall performance of the system.

The common argument against moving from a functional to a value stream (or process-oriented) structure is that sharing between specialists and improvement within the functions will cease to occur.  Although it is possible for this to happen, it is not a strong enough reason to remain in a functional structure.  Systems can  be created to assure that learning and sharing of information within functions occurs.  Since people tend to be inherently interested in their areas of specialization, assuring function-focused learning systems are effective is most likely easier than getting the various functions work effectively with each other to achieve organizational goals.

I have worked with organizations over the years that wanted to deploy lean thinking but were afraid to let go of a functionally-oriented structure.  In these instances, the functional pull toward individual goals and rewards had generally won out over the drive to optimize the organization and led to sub-optimal results.

I once worked with a manufacturing company where the supply chain team directly supported operations by procuring materials used on the production line.  On-time delivery performance for one particular factory was consistently around 60%, which negatively impacted customer satisfaction.  According to operations data, roughly 75% of late deliveries were attributed to material shortages.

Since the product produced within this factory was strategically critical for the company, team members within operations felt significant pressure to improve performance.   Although supply chain team members also felt pressure to improve delivery performance, they reported to a corporate function separate from operations and were primarily driven to reduce material and inventory costs rather than improve delivery.

Because of the situation, delivery performance continued to suffer, motivation was low, stress levels were high, teamwork suffered, and employee turnover increased.  Although from the outside this problem seemed easy to remedy, organizational politics and the natural tendency to cling to a functional organization (i.e., the we've-always-done-it-that-way syndrome) prevented the shift to a process-oriented structure.

Organizational transformation cannot occur without transformation of thought.  Everything that is known must be questioned to determine whether or not it helps the organization move toward its vision.  In most cases, without a significant reduction in the white space between teams, functions, and locations, the ability to sustain any improvement in performance will be difficult, if not impossible.

What is Lean Six Sigma And Why Is It Necessary?

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Several years ago, the term Lean Six Sigma (LSS) appeared on the scene and since then, countless books, seminars, and conferences have popped up referencing the term.  I’ve read books and articles on the subject but continue to have trouble understanding the distinction between LSS and just plain lean.

I've had people tell me that lean is about attacking waste; six sigma is about reducing variation; and LSS combines the two into a complete approach that is more effective than either by itself.  Sorry, but this explanation still does not convince me that LSS adds anything besides confusion.

I have never seen an effective lean deployment – before or after the advent of LSS – that did not include a focus on reducing variation.  Variation causes waste and interferes with flow and, because of this, must be addressed as a critical element to improvement efforts.

W. Edwards Deming wrote extensively about the importance of reducing variation, and Genichi Taguchi based his methods on minimizing variability.  Both Deming and Taguchi heavily influenced Toyota and were integral to the development of TPS and lean.

If we want people to take lean seriously and truly buy into the approach, we have got to be consistent with the message.  Rebranding lean and presenting it as something different risks turning it into just another business fad – which, for the sake of Western business, is something we cannot afford to let happen.

Using Countermeasures - Not Solutions - To Address Problems

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One element of the Toyota Production System that has not gained much attention is the practice of addressing problems with countermeasures instead of solutions.  Although seemingly nothing more than an issue of semantics, I find the focus on countermeasures versus solutions rather significant.

Solutions Thinking

One of the common misunderstandings many people have about six sigma or kaizen is the idea that the tools will lead to the development of a solution to the root cause of a problem.  Organizations are highly complex systems and it is naive to think that any of the problems they face result from a single root cause or can be resolved by a single solution.

When all of the factors and interactions that can influence work are understood, it becomes clear that the best we can do is attack problems by addressing as many of the perceived causes as possible with the idea that we may never permanently fix the issue.  Because of this, remaining competitive requires continually developing and implementing measures to improve processes and accept the fact that some of the problems the organization faces may never completely disappear.

This is a difficult concept for many to accept because of the importance our culture places on solving problems.  Countermeasures can, at first glance, appear to be nothing more than temporary fixes to problems rather than permanent solutions - which is counter to what organizations are trying to achieve with lean.  In reality though, it is just the opposite, because a solutions thinking mindset can give a false sense of security that a particular problem has, in fact, been eliminated.  This can be very dangerous down the road if a problem that the team thinks it resolved returns.

This is not to say that a countermeasure approach focuses on symptoms of a problem rather than the root causes.  The tools and methods associated with an effective kaizen process help a team get down to the root causes of a problem.  The difference with this line of thinking, however, is the concept that there are several potential root causes to any problem and that actions taken to address a problem are based on what is known today with whatever information is currently available.  As the environment changes, the problem can reappear as a result of new or different interactions that were not known at the time it was last studied.  Although the initial countermeasures were valuable to the company, the team needs to continue its efforts to assure performance remains stable or continues to improve.

The Learning Organization

Another significant advantage of a countermeasure approach is the amount of learning that takes place within the team.  Rather than studying the problem, developing a solution, and moving on, the team moves around the PDCA cycle many times as it continues to address root causes with more and better countermeasures.  With each trip around the cycle, the team learns more about the process and the interactions where problems can occur.  As a result of continuing to develop and test hypotheses, team members truly become experts about the processes with which they work.

A Cultural Transformation

One of the critical challenges of lean thinking is changing the organization’s culture so people get the idea that continual improvement is not only possible, but necessary for survival.  Talking in terms of solutions, however, can actually interfere with this type of transformation.

In the most basic sense, the term countermeasure refers to action(s) taken in response to a problem, whereas a solution implies achieving a state where a problem has been eliminated.  [See definitions] Note that the term countermeasure makes no reference to solving a problem.

When the team starts referring to improvements as countermeasures instead of solutions, the culture starts to change.  People begin to believe that problems may never be completely solved and understand the need to continually strengthen processes.   Improvements are celebrated, but only as temporary steps toward the ultimate, albeit unattainable goal of perfection.

Starting at the Top

Adopting a countermeasure mindset within the organization requires a good deal of clarity and consistency from leaders.  There will be frequent opportunities to coach team members on a new way to look at and address problems.  As with any type of culture shift, however, there will be a good deal of inertia pulling the team back to old – and more comfortable - ways of thinking.  Because of this, it is critical that leaders apply relevant countermeasures when progress has slowed.  Like mountain climbing, organizational transformation can take significant time and effort to make a small amount of progress; while any lapse in focus can result in a fairly quick decline.

Strategy Deployment: Hoshin, PDCA & Drucker

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In another chapter from the book of simple concepts that are difficult to implement comes the story of strategy deployment.  Over the years, I have seen some great business plans that failed to deliver because of the inability to stay focused and drive them into the organization.

Hoshin kanri is a process focused on setting direction, developing plans, and managing implementation.  Progress on the plan is continually reviewed to understand when adjustments are needed to achieve success.

There have been many books written about Hoshin Kanri that cover the subject in great depth.  And since I could never adequately cover the topic in detail in a short blog post, I’ll try to hit on what I consider to be the high points of the process.

Hoshin & Drucker

Much of the hoshin process appears to be aligned with Peter Drucker’s method of strategy deployment.  I have always considered the strength of Drucker’s approach to lie in his technique of continually asking a few simple questions to get people focused on what’s truly important.

What are we trying to achieve?
How are we doing?
What are we doing about it?

Hoshin Kanri follows a similar approach through the application of the Plan-Do-Check-Act (PDCA) cycle to business planning.  Deploying strategy requires an obsessive focus on the few high-level objectives that are critical to success.  Utilizing Drucker’s simple questioning technique within a PDCA framework helps maintain focus by increasing understanding of the following:

PLAN:  What are our objectives?
DO:  What are our plans to meet objectives?
CHECK:  How are we doing?  Are our results meeting objectives?
ACT:  What are we doing about it?

Another benefit of PDCA in strategy deployment is that it drives home the idea that business planning is not a once per year exercise.  It is an ongoing process that needs continual reflection and adjustment to succeed.  There is no "new" plan each year - there is only a new revision that has been adjusted to account for progress and changes in the environment.

Deploying Strategy

 The initiatives that are developed from the business plan also go through the PDCA process to assure they continue to progress.  When doing the CHECK on each of the initiatives, the team should follow the general approach listed in the exhibit.  By creating the initiatives, the team is predicting that completing them will result in meeting one or more business objectives.  Because of this, it is important to review whether the initiative is progressing as planned and, if so, whether or not it is driving the desired results.

Although the Drucker questions appear simple, the answers can get fairly complex.  The key is to provide enough time to reflect on the answers in order to keep people focused on objectives.  The effectiveness of leadership, after all, lies in the ability to simplify complexity.  Whether using Hoshin Kanri or some other method, it is critical to utilize some type of framework that enables this to occur.

Why The Obsession With Speed?

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Many years ago, I remember W. Edwards Deming questioning the obsession businesses had with speed.  I thought it was strange coming from the man who worked so closely with Toyota - the company that invented lean.  Wasn’t one of the main objectives of the Toyota Production System to reduce cycle times and make processes run faster?

I’ve thought about Deming’s question for many years and, after working with a variety of production and improvement systems, I finally came to the conclusion that Deming may have been referring to the idea that rhythm between processes is more critical than the speed of individual processes.

Rhythm vs. Speed

Companies put a lot of effort and focus on the speed and efficiency of processes.  People are measured and rewarded on their ability to speed up the processes with which they work.  As a result of this focus, we often end up with a completely unsynchronized production or service system, thereby increasing inventory and costs, and in most cases, slowing down the company, as a whole.

I have seen many instances where people pushed as much output as possible to the next step in the process in order to meet goals – even when the next step was not ready or able to handle the extra work.  As a result, teamwork breaks down, finger-pointing increases, WIP inventory increases, and quality decreases. A common response to the buildup of WIP in the system includes measures to attack the symptoms (e.g., the increased inventory), rather than the causes (lack of synchronization and poorly focused goals).

There is an optimal speed at which a process should operate in order to meet objectives (i.e., its takt time).  Achieving and sustaining takt time requires that every step in the process operate in rhythm with each other.  Any individual step in the process that produces in excess of takt time has a negative effect on the overall system, which is often as destructive as producing too slowly.  Whether the operation provides a product or service, the key is synchronization at the optimal pace.  Even ignoring the internal cost and cultural problems associated with a lack of synchronization, one has to question the practice of producing faster than customers want.

Although I'll never know, it could be that Deming was referring to the idea that synchronization of processes – and meeting takt time – is far better than increasing the speed of any individual process.  He may have been trying to teach the concept that, without a focus on rhythm, speed means nothing.

Lean: It's More than Kaizen

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I have noticed recently that there is a common misconception about the true meaning of lean.  Even among some improvement consultants, what is often referred to as lean is really nothing more than kaizen.  This is unfortunate because many organizations are missing out on the benefits associated with a true lean deployment.

Lean = Kaizen Plus Production Control

Too often, people learn about value stream mapping or the categories of waste and think they understand lean.  Although true that lean includes identifying and reducing waste, this type of activity is only one component of lean.  Changes to improve a process or system – whether through value stream mapping to reduce waste or an independent project to address a quality issue, is kaizen.

What many people do not seem to understand is that a focus on production control is what differentiates lean from a kaizen or 6-sigma process.  Without an emphasis on production control, companies miss an important component to align improvement efforts with business objectives and, more importantly, transform the organization and gain buy-in at all levels.  In the most basic sense, lean is about production control and kaizen is one way to help gain control over the production process.

Aligning Improvement With Business Results

The purpose of a business is to continually improve the value it provides its customers.  A company’s processes are critical to achieving this purpose.  Whether providing a product, service, or both, there is an optimal pace at which processes need to operate in order to meet objectives and, therefore, the needs of customers.  Lean thinking requires clearly understanding this pace (referred to as takt time) and focusing efforts on eliminating or reducing the effects of anything that interferes with synchronizing the overall system to operate at this pace.

Whenever I visit an operation that claims to be lean (a problem in itself because an operation is never truly lean), I ask questions about takt time.  All to often, I get blank looks or comments that takt time does not apply because the company does not have manufacturing operations or that they produce a highly customized product.  By ignoring takt time, however, these companies are focusing their efforts on general process improvement (e.g., 6-sigma or kaizen) rather than lean.  The problem with deploying a kaizen – rather than a lean – approach is that it becomes more difficult to directly tie improvement to business results, making it tougher to gain (and sustain) buy-in throughout the organization.

Takt Time:  Not Limited to Manufacturing

As written in a previous post, takt time can be calculated for virtually any process.  Whether the process produces invoices, maintenance services, gas wells, or sandwiches, there is an optimal pace at which it must operate to meet objectives.  Understanding and striving to consistently operate at this pace is a vital part of running the business. Note:  it should be inherently obvious that success also requires that the process must provide - and continually improve - its product or service at a level of quality that customers expect.

Although a kaizen or 6-sigma process is commendable (and a valuable component of lean thinking), a company that stops there is missing out on a critical improvement opportunity.  Focusing on takt time makes the connection between improvement and business objectives much clearer.  As a result, it becomes much easier to get people throughout the company to buy into the process.  In fact, once people understand – and are held accountable for – takt time, they will begin to look for ways to reduce the waste that interferes with the throughput of their process.  Improvement efforts become seen as part of, rather than interfering with, meeting objectives.  And when this happens, transformation can truly begin to take place.

Determining Takt Time

Takt time can be determined for virtually any type of process.  Examples include:

• Number of invoices processed within a given timeframe to keep up with demand;
• Number of gas wells to be drilled over a period of time to meet production objectives;
• Number of bags handled at an airport to keep airplanes and passengers moving;
• The pace of filling prescriptions at a hospital to keep staff from waiting, and assuring patients don’t experience medication delays;
• Making coffee and specialty drinks in order to meet customer preferences while keeping waiting lines relatively short.

With this in mind, a basic process for implementing lean should include:

1. Clarifying business objectives (including clearly understanding the customer’s needs);
2. Determining the optimal pace (takt time) for critical (and eventually, all) processes to meet objectives;
3. Implementing visual measures for throughput (to enable process leaders to understand how well they are keeping up with takt time);
4. Standardizing processes and systems (i.e., the value stream);
5. Continually identifying those things that are preventing the value stream from meeting takt time (which can involve shortening or reducing variation in cycle times).

Improving processes in order to meet takt time is where kaizen or 6-sigma enters the picture.  These approaches provide a framework for improving the throughput of processes in order to meet objectives.  Without creating energy around takt time, however, a 6-sigma implementation can easily lose focus and miss an opportunity to gain full buy-in of the improvement process by leaders.

Introducing takt time gives perspective to people to help them better understand why the organization is pursuing lean.  It provides the business context that is so critical for successful transformation and commitment, and helps reduce debate regarding the importance of spending time on improvement projects.