Does Anyone Really Care About Developing Leaders?

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"What is at the heart of transformation? It is the release of the power of intrinsic motivation. How? By creating joy, pride, happiness in work; joy and pride in learning . . . Create leaders with attributes that work to help their people, who know how the work of the group fits in to the aims of the company." - W. Edwards Deming

How serious are you about developing leaders? Virtually all companies talk about the importance of leadership development, and a Google search of the term will return almost 17 million hits. So businesses obviously take it seriously, right? Well, not really . . .

I’ve dealt with a number of organizations over the years and found that, although most talk about the importance of leadership development, very few actually take it seriously. The usual process is to identify those with potential and send them to a seminar to train them how to be a good leader. From that point, these future leaders may enter a sink or swim program where stretch projects may thrown at them to see if they can survive. And for those who are able to make it into leadership positions, the higher they go, the less time they have for further development. In the end, many organizations let other companies develop their leaders and hire them away when they're ready.

Among the problems caused by an ineffective leadership development system include variation in leadership styles, excessive costs and time associated with recruiting new leaders from outside the organization, demotivated team members who see that leaders are regularly hired from the outside, and sub-optimal business performance.

Those organizations that do a good job of developing leaders are deliberate about developing talent and have a clearly defined process for making people succeed. These companies tend to view leadership as a system rather than a group of individuals focused on managing people and achieving targets however in their own way. This is a critical distinction because approaching leadership as a system naturally drives the organization toward a standardized approach that requires continual improvement in order to assure that the business continually improves.

Some of the elements that are generally a part of an effective leadership development system include:

• Clearly Defined Competencies: Understanding the DNA of the organization’s leaders is critical to assuring that you are selecting the right candidates and developing in the right areas. Besides selecting the wrong people to develop, failing to clearly understand the expected competencies of the organization’s leaders can result in a wide variety of leadership approaches across the company that confuses the organization and demoralizes people.
• Standardized Approach: Creating a standardized approach for identifying and developing leaders assures consistency in results and provides a basis with which to improve. As with any process, knowing what you expect and comparing to results identifies the gaps that need to be addressed to move closer to the desired state. A problem with a particular leader should be looked at as a problem of the system for development. The individual may need action to deal with the immediate issue but the system needs to be looked at to determine why the problem occurred and how it can be prevented in the future. Standardizing the development process also clarifies expectations of existing and future leaders.
• Everyone has a Coach: Although assigning challenging projects focused on development is an important part of the process, the results can backfire when they aren’t combined with effective and ongoing coaching. The objective of assigning a challenging project is development - not to weed out those who can’t cut it; and without coaching, there is little chance that any real development will occur. Also, since everyone develops bad habits now and then, senior leaders need coaching to assure problems are identified and corrected quickly.
• Leaders Continually Develop: Leadership development does not end when a person moves into a leadership position. If the organization is to continually improve, its leaders need to continually develop their own abilities. There is no such thing as the perfect leader and, although it is something everyone in a leadership position should strive to become, it won’t happen without continual development. In fact, one of the biggest problems with western leaders is, the higher one moves up the ladder, the less personal development that tends to occur.
• Pipeline of Future Leaders: One of the biggest complaints people have about investing heavily in developing leaders is that, the better the system, the greater the chance they will be recruited by other companies. Although this will undoubtedly happen, the better the system, the more likely you will have a pipeline of potential leaders to fill the gaps. In fact, anytime a leader is hired from the outside, it should be seen as a failure of the system because someone from the inside was not ready to move into the position.

No system is as important to the company’s success as leadership development. Because there is no easy way to measure the system’s performance, though, it is often given little attention and done poorly. All too often, it is assigned to a small team within the HR department and, although supported, lacks the commitment and involvement of the most senior leaders needed to succeed.

A Lean Approach to New Year's Resolutions

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2015 has arrived, and for many it’s time to start working on the resolutions we’ve made to address personal problems and make life better for the future.  Despite best efforts, though, many of us will end up abandoning our resolutions and try again next year.

I was thinking about how common it is to fail with resolutions and wondered how a lean approach may help the process.  When you think about it, resolutions are about solving problems, so why not approach them with a kaizen mindset and put serious effort this year into being successful.  Who knows . . . we may end up feeling good about ourselves and actually come up with some different resolutions next year.

Develop the Plan

Once you’ve clarified the resolution and understand exactly what it is you want to accomplish, develop the plan to get you there.  If you want to lose weight, how are you going to do it?  Is it through exercise, diet, better quality sleep, or a combination of actions?  A lean mindset would guide you to not take on too much at one time, so it’s important to break down the problem and address the most important areas first.

Rather than get too detailed with the plan for the entire year, though, start with specific actions for the next month or two and keep things more general further into the future.  Also, be aware of becoming obsessed with the plan - the key is to start doing something, so if you find yourself spending too much time making a plan, you’re probably stalling.

Create a Dashboard

Create a simple dashboard to measure progress with your plan and ultimate goal.  If you decide to exercise to lose weight, measure how much you are actually doing it compared to your plan.  Your dashboard should also include a measure of your ultimate objective (e.g., your actual weight) to make sure that your actions lead to success.

As in a business setting, you are trying to be honest with yourself and make your problems visible.  If you are not exercising as planned, for example, or you are but not losing weight, you need to see it so you can do something about it. 

Address Your Problems

Suppose you planned to exercise five times each week but your dashboard shows that you are only doing it 2-3 times.  Rather than relying on trying harder, you need to figure out why you’re not exercising as planned.  Understand what is interfering with exercising regularly and develop countermeasures to correct the root cause of the problem.  If you come to the conclusion that the target was too aggressive, you need to figure out whether less exercise will get you to your objective of losing the desires amount of weight.

A Shift in Thinking

Just as best efforts won’t lead to success in a business, trying harder will not lead to personal success.  Without a method that you continually check and adjust, your chances of success are likely to be fairly small.

I’m not suggesting going overboard with the process and creating A3s and fancy charts to measure your progress.  Approaching a resolution in a simple way with a lean mindset, however can make the effort more interesting and who knows, you may even learn something to take back to the workplace.

Creating a Continuous Improvement Culture Requires More Than Logic

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There are very few people in business who would argue with the value of continual improvement.  Whether following the principles of lean or not, leaders regularly talk about the importance of improving processes, products, and services.  Why, then, are some organizations significantly better at driving and sustaining continual improvement than others?

It Takes More than Logic

Establishing a culture of improvement should be as simple as encouraging people to look for better ways of doing work.  This is, after all, one area where common sense should prevail and everybody should be aligned, right?  Well . . . not really.  Appealing to common sense and logic by discussing issues like competitive position, rising costs, or falling revenues will only get you so far in sparking an ongoing improvement effort.  Even establishing programs that reward and recognize people for implementing improvements seldom drives the type of behavior that is needed to sustain the change.

Changing a culture to one where improvement happens on a continual basis requires more than appealing to logic because it tends to run counter to common sense – at least when compared to the way most businesses operate.  There are natural organizational and psychological barriers that interfere with the ability to improve on a continual basis.  One of the most significant barriers is related to the way people think and approach work and, without a concerted effort to shift thinking toward a mindset of continual learning, efforts to improve will likely be fragmented, discontinuous, and difficult to sustain.

A shift in thinking means getting everyone – from the CEO to the shop floor – to approach everything they do in terms of scientific method.  Most people know about scientific method but, for a variety of reasons, don’t consider applying it outside of the laboratory.  Creating an improvement-focused culture, however, requires learning; and learning results from continually comparing results to expectations – the basis of scientific method.  The vehicle for this is the Plan-Do-Study-Act (PDSA) cycle, and success results from reprogramming people to apply PDSA-thinking in everything they do.

Scientific Method – A Quick Review

As shown in the figure below, scientific method refers to the process of testing an idea – or hypothesis – to determine whether or not it appears to work as intended.  It begins with consciously considering the hypothesis, conducting one or more tests to prove the validity of the hypothesis, studying the results of the test, and accepting, rejecting, or adjusting the hypothesis as a result.  In the end, the cycle drives learning by helping people gain improve their understanding regarding the reasons why a hypothesis is true or not.

Applying the PDSA cycle in a business environment involves consciously understanding that a specific action, decision, process, or standard is intended to achieve a specific outcome.  Testing the hypothesis could be done off-line in a limited area of work, or in the normal course of business, but the key is to always compare outcomes to actions and, as a result, learn what needs to change and why.

Although the concept appears simple, most people don’t generally think or act in terms of the PDSA cycle.  We tend to make a decision or document a process and move on; rarely taking the time to look back and learn whether the results matched expectations.  Often, the only time we do look back and make adjustments is when a problem occurs that is significant enough to warrant attention.  Since we don’t normally think scientifically, however, and we’re not always looking for the gaps, we miss the small issues that prove the hypothesis – the decision, action, or process – is incorrect.  And often, the significant issues start off as small ones that, because we don’t notice or worry about them, grow into big problems.

Reprogramming Thinking

The organizations that are able to successfully change the way people think understand that it cannot happen through occasional coaching or random interactions.  These organizations have, for instance, a new employee orientation and follow-up process that is intensive – especially for leadership positions – and includes much more than showing the new person where the lunchroom is or how to enroll for insurance.  It incorporates a heavy emphasis on developing problem-solving capabilities and adjusting the way the person thinks.  The more pervasive PDSA thinking is throughout the organization, the easier it is to adapt the new person’s mental models because, in addition to formal coaching, learning happens informally through observation and interactions with others.  In those organizations where thinking is not generally guided by scientific method, however, transformation requires a concerted and deliberate effort of coaching and developing key leaders.  In turn, these leaders coach and develop others, eventually changing the organization’s mindset.

The first step is to understand that transformation requires more than desire and support to be successful.  It is a leadership issue that requires commitment, involvement, and an openness to change the way the organization thinks and learns.  Relying solely on logic and common sense to drive the change, on the other hand, will likely result result in little more than frustration, disappointment, and a long wait.

Standardized Work: Avoiding the Complexity Trap

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“No matter how great the principles behind a manual are, it has no value if it cannot be applied in practice.” – Taiichi Ohno*

One of the most critical but challenging elements of an organization’s lean transformation effort is the adoption of standardized work.  Often underestimated by those just learning lean, the benefits of standardized work include among others, reducing process and product variability, providing a starting point for investigating problems, helping people identify when a problem is about to occur, and enabling improvements to be sustained. 

Within the oil and gas industry, it is common to face resistance from people recounting images of one of the major players known for creating large, overly complicated instructions that strangle innovation and, in reality, cannot be fully followed - and oil and gas is unfortunately not the only industry where this happens.  There are companies in virtually every industry that complicate documentation to the point of ineffectiveness and crushing the creativity of team workers.  Documents in these companies tend to be long, complex, and rarely change, and as a result, create a false sense of security that the standards are helping achieve consistent, predictable, and inherently safe performance throughout the operation.

How Much is Too Much?

So what is the difference between a lean thinking approach to standard work and one where the documentation is ineffective and stifling?  Both approach standardization with the objective of reducing variation in the way work is done.  Both use standards to assure the most important aspects of the process are followed and work is done safely and with a high level of quality.

To prevent heading down the wrong path when rolling out standardized work, it is important to understand the key differences between the two approaches and what it is that makes one more effective than the other.

Guided by Scientific Method

Although there are numerous differences between a lean and traditional approach to standardization, the most glaring is that work in lean thinking organizations is guided by scientific method or a PDSA (plan-do-study-act) mindset, while traditional organizations are not.  Although a seemingly simple difference, the effect on standardization, as well as other aspects of the business, can be dramatic.

In both types of organizations, standardized work is the best current practice known at the time it was developed and is expected to be followed as written.  Organizations guided by PDSA thinking, however, consciously accept the notion that following the practice to consistently producing safe, efficient, and high quality work is a hypothesis - and people are always looking for the hypothesis to fail.  Whenever a defect, delay, or incident occurs, it is understood that the hypothesis has failed and that a quick adjustment - or improvement - is necessary to prevent a similar failure from occurring in the future.  The resulting change to the process becomes a new hypothesis that it will operate as expected and, when it fails, will drive further action.

Traditional organizations do not approach standards in this manner because it is not normal behavior for people to be looking for something they created to fail.  A significant amount of time would be spent creating the perfect document that includes enough detail to accurately describe the prescribed process.  When the instruction is released, the work would be considered "done" and the person would move on to his or her next project.  The document would only be revised when a big problem occurs that identifies a glaring weakness needing attention.  And since people are not specifically looking for the practice to fail, the small issues would be ignored.  As a result, continual improvement of the process does not occur and variability between operators in the way work is actually done grows.

A Shift in Thinking

Keeping instructions short, visual, and easy-to-follow requires more than just telling people to do so.  It requires a far more significant shift in thinking than many people realize or are ready to accept.  When standardized work is approached standardized work as part of a continual experiment toward creating the perfect process, it will become seen as far more than just a way to convey information.  It will become seen as the anchor to learning and effective problem-solving, and a critical element to the company’s overall success.

Copyright © 2014 Gregg Stocker

* From The Toyota Mindset: The Ten Commandments of Taiichi Ohno by Yoshihito Wakamatsu (Enna Products Limited, Bellingham, WA, 2009)

Making Learning a Habit

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“The ability to learn faster than your competitors may be only sustainable competitive advantage.” – Arie de Geus 

Ever since the The Fifth Discipline: The Art & Practice of the Learning Organization was published back in 1990, business leaders have talked about the need to transform their companies into learning organizations.  And although the concept of organizational learning and its connection to competitive success is logical, there seems to be significant differences in what people think the term learning organization means.  As a result, in the 25 years since Peter Senge wrote the book, it seems that very few companies have successfully implemented the concept and truly become learning organizations. 

Learning and Performance 

The first point to clarify about organizational learning is that knowledge means nothing if it doesn’t eventually result in improving performance in some way.  The value of knowledge is in the ability to use it to improve quality, cost, safety, revenues, or some other aspect important to the organization’s success.  It should be noted that the value of knowledge could also be indirect - e.g., by coaching others to improve performance. 

Secondly, it's important to understand that there is a difference between individual and organizational learning.  Although there is obviously a relationship between the two, competitive success will occur on a much more consistent basis when people improve their ability to learn as a team. If we think of success as resulting from a continual cycle of learning and applying, the faster an organization is able to move around the cycle, the more success it is likely to achieve. 

Making Learning a Habit 

Creating a learning organization requires establishing the culture, methods, and systems that support learning and make it become a part of the work people do every day.  Leaders can talk about the importance of learning, but without a method that institutionalizes it in some way, it will never become a part of the organization's DNA.  Besides enabling is to occur on a consistent basis, effectively standardizing an approach can make learning an expectation of everyone in the organization. 

This is where many people fail to understand the significance of the PLAN-DO-STUDY-ACT (PDSA) cycle.  Often thought of as only a tool to address problems, the PDSA cycle is a method to drive individual and organizational learning. 

Based on scientific method, the PDSA cycle drives learning through a conscious understanding that every action is  based on a hypothesis that a specific outcome will occur and, when the outcome does not occur as expected, the hypothesis needs adjustment.  It is in the failure and subsequent adjustment of the hypothesis where learning occurs. 

As an example, the current design of a process is a hypothesis that it will enable work to be consistently produced in the right quantity and at the right quality and cost when needed.  Whenever this doesn't occur - e.g., defect, delay, cost overrun, etc. - the hypothesis is proven wrong and something about the process needs to improve.  Team learning occurs through the understanding of the root cause(s) of the problem, and in experimenting with countermeasures to address them.   

Learning driven by the PDSA cycle can be applied across the organization from the leadership team to the shop floor.  Selecting where and how to set up a new factory, deciding whether or not to enter new markets, or choosing where to focus capital investment in the coming year are all hypotheses that can drive learning.  The key is to consciously understand that the hypothesis, to study outcomes closely to know whether or not results met expectations, and to discover how to close the gap between the two. 

The Classroom is Where the Work Occurs 

For years we've been taught that learning takes place in a classroom where experts convey knowledge to students.  When looking at the value of classroom learning in terms of improving performance and competitiveness, though, it becomes evident that the connection is weak, at best.  And although there are some benefits to conferences, seminars, and in-house training classes, they are not the type of activities that drive team learning. 

Establishing PDSA-thinking throughout the organization is a significant change for most companies, but the results in terms of advancing team learning and improving performance make it well worth the effort. 

Is Assessing Lean Wasteful?

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"The most important things cannot be measured." - W. Edwards Deming  

  

The other day, I was asked my opinion about assessments to measure an organization's progress on a lean journey.   Although I generally don't use assessments, I really hadn't given the subject much thought before our discussion.

The idea behind a lean assessment is to identify the gap between the current state of the organization and where it will be when it is "fully lean."  Although it should make perfect sense to assess the current state to better understand the gaps and whether or not the deployment is progressing, I have never seen assessments result in any real value for an organization.

Organizational transformation is a complex undertaking, and attempting to improve the process by formally assessing progress can actually drive the process off track.  When using an assessment to gage progress, the focus can easily become the score rather than true culture change.  Also, attempting to objectively measure change by assigning a number or score to the effort is still very subjective.

Some of the problems I’ve encountered in the past when using an assessment tool to gage and drive progress toward a lean transformation include the following:

1.  Disintegration with the Business  

Assessing lean separately from the business can strengthen the belief that it is another flavor-of-the-month initiative that has nothing to do with actual business results.  Companies exist to serve customers, and if it is not absolutely clear that the objective of pursuing lean is to help do it better (more safely, with better quality, and lower costs), it doesn't matter what the assessment is showing; the effort will fail.

The real assessment occurs during the reflection of business results and target conditions during the annual planning process.  Creating an effective annual plan requires developing an understanding of the reasons for the gaps between what the organization tries to accomplish and what it actually accomplishes.  Besides the fact that this process is itself a lean effort, taking action to close the gaps can be used to further drive lean behaviors and systems.  Developing a plan that fails to address the big issues, attempts to take on too many priorities, or is ignored throughout the year shows a problem with the lean deployment – and you don’t need an assessment to show it.

Whether or not the effort is referred to as “lean” does not matter - people will see that it as a way to improve business results and be much more likely to join the effort.

  

2.  Subjectivity   

Regardless of how clear the assessment questions or elements appear to be, the process is still subjective.  Attempting to increase the clarity of assessment questions generally requires additional effort, training, and time, and you have to ask if this is really where you want your lean resources to spend time. 

Another issue with the subjectivity of assessments shows up when people are held accountable for the rating number or grade from the process.  When assessment scores are used for performance reviews or bonuses, the focus becomes the score rather than the application of lean thinking to improve performance.  And arguments around the scores is nothing but waste. 

  

3.  There is no End 

Deploying lean is like climbing a mountain that has no peak.  Since there is no end to the journey, there is no way to clearly define the target.  If a team scores a 5 out of 5 in kaizen activity, for example, does it mean that they have no room to improve?  This type of thinking is the complete opposite of what a lean transformation is trying to accomplish.

4.  Change Requires Dealing with People 

Building sustained success with lean requires continual coaching, developing, and stretching of people.  Changing the way leaders and team members think is critical to the process and unfortunately there is no set formula for change.  Besides the fact that people learn at different rates, each team member will have different levers for transformation, and what is successful with one will not necessarily work with another.  Because of this, it is not possible to standardize the change process.  Successful organizational transformation requires an understanding of W. Edwards Deming’s System of Profound Knowledge.  One of the four elements of profound knowledge is psychology.  Leading a lean transformation requires an understanding of people – how they think, how they learn, and what motivates them to continually improve.  Attempting to standardize the process by tying it to an assessment ignores this and relying on the tool to drive change.  

5.  It’s Still About Gemba

Assessment processes often turn into office exercises where an auditor meets with a supervisor or manager in an office to discuss the area being assessed.  Even if the assessment is conducted in the actual workplace, it is generally nothing more than a snapshot of how things are working at a specific point in time.  Afterwards, some type of report is written that may or may not be read by the organization’s leaders.  Even if a leader reads the assessment report, it is not possible to develop the level of understanding needed to lead the change without regularly going to where the work is done.  Assessments shifts leadership from a face-to-face coaching and development process to one of judging and grading – definitely not a lean leader behavior.

In the end, it’s important to remember that the effort is about continually improving toward perfection rather than “adopting lean.”  Using an assessment to gage progress on the journey can easily shift the focus away from this and toward the idea that lean is another trendy business initiative that will eventually go away.  Letting an assessment take the place of everyday interactions – including meetings, one-on-one discussions, and observation – misses valuable coaching opportunities that are the basic responsibilities of leadership and much more effective in changing behavior.

Simple Formulas Are Nice But They Don't Work

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American business loves quick and easy answers.  In fact, the best way to get people to pick up a book or read an article (and I admit, I’ve done it myself) is to provide an easy-to-follow formula that solves a difficult business problem.   While this approach can help sell magazines, it really doesn’t do much to help drive actual improvement.  Organizations are too complex to assume there is a quick answer to any of the significant problems they face.  Although formulas do appear to provide easy steps to follow, they do not provide the knowledge necessary to effectively address the big issues.

Fortune Magazine recently published a one-page article entitled 5 Ways to Stay Ahead of Rising Costs.  The article presents five easy steps to address out-of-control costs in an organization, including a two or three sentence description of how to apply the step.  Although each step appears to make sense on the surface, accepting and blindly following recommendations like this can easily backfire and result in causing more harm than good.

The article’s focus is on imposing accountability for spending in order to drive responsible management of costs.  Although it’s hard to argue with the need for accountability, it is very easy to misapply this type of effort and distract people from their main responsibilities – including serving customers.

Below are the five ideas presented in the article, along with my thoughts about each.

1. Share the Responsibility:  This involves making someone in the company accountable for every line in the financial statements.  By the time the numbers make it to the financial statements, however, it is too late to do anything about them.  While I have no problem with making people accountable for understanding and monitoring spending within their areas of responsibility, it needs to be done real-time, and through a process of comparing actual costs against expected costs.  Also, it is unrealistic to think that one person can be responsible for an item – like a line on a financial statement – that is comprised of so many elements.  This type of approach often clouds the idea that cost is an element of a target condition, which includes safety, quality, and delivery of product or service, rather than an isolated objective.
    
2. Reveal the Price:  Making sure people know what actions cost is important and can lead to improvements as long as the focus does not become solely on reducing the price.  As presented above, the target condition of applying this practice needs to be something like reducing cost while maintaining or improving quality.  I agree with the article, however, that most organizations really have poor cost information systems.  In far too many companies, information on costs is often inaccurate and provided far too late to drive any real improvement.
    
3. Monitor the Use of Items:  Of all the ideas presented in the article, this is the one that’s probably applied the most and resulted in the least amount of improvement in organizations.  Although it’s the easiest step to take, shifting into a counting paperclip mode of operation is one of the most frustrating and distracting actions companies take when costs are out-of-control.  In my first job out of college, I asked for a set of folders to organize the projects I was working on.  A couple days later, the office manager came to my office with an expandable folder that was taped, written on, and worn, explaining that the company was focusing on reducing the costs of office supplies.  After she left, I threw it in the garbage and bought my own folders.  Although that was many years ago, I still remember how demotivating that was, and how it made me feel about my decision to join the company.
    
4. Spend Wisely to Win:  I completely agree with focusing spending on the efforts that are most likely to result in business for the company.  The problem with this suggestion is the difficulty of applying it in real situations.  This is a perfect example of an idea that requires significant knowledge to effectively apply.  A lot of thought, clarity, and planning is needed before attempting to blindly implement this type of thinking within the organization.  It’s just not that simple
    
5. Raise Your Prices:  As with the idea of spending wisely, raising prices can be very dangerous if not done correctly.  Determining what your products or services are worth lies with your customers – not you.  If you can’t make money by selling at the price the market is willing to pay, you’ve got to find ways of lowering costs without lowering quality.

I’ve seen many organizations over the years go through periods where costs became the focus, and each time people would respond by lowering spending.  More often than not, though, while short-term costs dropped, longer-term problems increased significantly because of the lack of knowledge and planning behind the approach.

Although controlling costs is obviously important, companies are not in business to save costs.  If your approach to managing costs is not backed by knowledge, you can wind up saving your way into oblivion. 

Formulas for success – like the one in the Fortune article – make running a business seem easy, and although the elements of leadership are simple, they are anything but easy.  You still need to be able to communicate the purpose, develop and deploy an effective strategy, and continually adjust along the way to be successful, and an overly simple formula will not make it any easier to do.