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Remembering NUMMI: Gipsie Ranney

Gipsie Ranney is a consultant with The Deming Cooperative.

A white paper she recently wrote, contrasting NUMMI with The Big Three, has been circulating by email. I requested, and received, her permission to publish it here.

Remembering NUMMI

Gipsie B. Ranney
January, 2009

The discussions of a bailout for the U.S. owned auto industry – The Big Three – and the recommendation that a czar be named to oversee them so that they don’t waste U.S. taxpayers’ money has led me to think about an experience I had in the early 1990s. I had the opportunity to tour the New United Motor Manufacturing (NUMMI) factory in Fremont, California. Thinking back on that experience has led me to wonder how much good an injection of cash would do.

Much has been written about Toyota’s production system, but my observations on that visit may help to shed additional light on the differences between Toyota and The Big Three and what the likely outcome of attempts to cure what ails The Big Three may be. As you probably know, NUMMI was established as a joint venture between General Motors and Toyota. Middle management personnel from GM were sent to NUMMI to spend time learning about how Toyota did things. The tour I made was conducted by some of those GM employees. As I understood it, the GM employees who were sent to NUMMI were required to write at least one white paper about what they had learned. Rumor had it that only a few people back in GM ever read those papers and employees who came back to GM from NUMMI found themselves unable to get back into the career progression at GM, so there were few who volunteered to go after the initial volunteers. This led me to believe, after my visit, that perhaps the best opportunity GM would ever have to learn something useful was being thrown away.

Before the tour, I didn’t think I was going to see anything remarkable. I thought I would confirm my belief at the time that all The Big Three had to do was get busy on improvement and all would be well. I came away shaken by what I learned. The most important things I learned were about thinking. Toyota clearly thought differently about producing vehicles. Whether they have maintained these ways of thinking in spite of opportunities to be diminished by adopting the practices of The Big Three will have to be answered by someone else.

Before the Fremont factory had been turned over to NUMMI, I was told it had the worst record of management/labor conflict of any U.S. automotive plant. Now, management/labor conflict was nearly non-existent. Further, I was told that among the assembly plants connected to GM, the NUMMI factory (since Toyota entered the picture) had the best quality record, although it had the worst quality record of any Toyota assembly plant. It was my understanding that the top management of the NUMMI factory were Japanese, as were the engineering staff.

The first area we visited in the factory was the incoming materials warehouse. This warehouse was devoted to parts and materials supplied within the United States. Of course, the warehouse had visual controls. There were areas painted on the floor with signs over them that said how much of what items should be there. As I recall, supplies came into the warehouse on a four-hour cycle; that is, suppliers shipped enough of an item to last for four hours. These supplies would be on their way somewhere in a new vehicle in four hours. This was part of the JIT (Just in Time) materials supply system that has been copied throughout the U.S. (I was amused at the time by ads I saw in airline magazines offering to warehouse a supplier’s parts and send them JIT to their destination. This was a new, more expensive version of the push system for production and management of inventory that I suspect still exists.)

The answer to a question asked by someone else on the tour was stunning to me. The person asked what kind of computerized inventory system they had at NUMMI. The leader of the tour at the time – a materials management person – responded, “we don’t have one; the Japanese say that computerized inventory systems lie.” I was somewhat familiar with inventory at Big Three factories. Huge inventories of component parts were maintained. It sometimes took days of shut down to do a complete physical count of inventory. We were told that NUMMI could do a complete physical count in four hours – that made sense, since that was generally all the inventory that was there except for parts shipped in from Japan. Why the huge inventories in Big Three factories? Partly because the production system was a push system – vehicles were built to satisfy sales forecasts that were often overly enthusiastic, and partly because the parts were there Just in Case. If there was a failure on the production line, there needed to be lots of spare parts to keep production going. I had heard horror stories about production lines that were halted for lack of parts that were the right size, even though there were hundreds of thousands of parts – of the wrong size – in inventory. I had consulted with several companies that had a very difficult time matching up the records of inventory in their information system with the actual physical inventory. That is, the computerized inventory system contained “lies.” They spent a lot of time and effort trying to decide what the correct numbers were. As a result of the design and operation of their production and supply systems, NUMMI was able to avoid the expense of the computerized record system and the expense associated with management of huge inventories. Whatever was spent trying to keep the records straight and keep track of where the parts were in Big Three factories was not being spent at NUMMI.

A friend commented that he believes the material flow system used by Toyota may provide their biggest competitive advantage. In American manufacturing systems, one of the first steps in providing for material needed to produce a product is to create a Bill of Material (BOM) based on the design of the product. The BOM lists all of the parts needed; for example, a car needs one engine, four wheels, one catalytic converter, one steering wheel, two headlights, and so on. When the production of one car is planned, the BOM is used to order all the parts needed to produce the car. When the parts arrive, the appropriate electronic records of inventories are altered accordingly. Then when the car is produced, the BOM is used to delete the parts used from the inventory records. This is known as “backflushing.” Engineering changes involving changes to part content of a product should lead to corresponding changes to the BOM. When this doesn’t happen accurately or soon enough, use of the BOM and backflushing leads to accumulating errors in inventory records and incorrect orders. The result is computerized inventory systems full of “lies.” One company expects to save approximately ninety percent of the cost associated with inventory by switching to Toyota’s Kanban system. My friend pointed out that the Kanban system is self-correcting and does not require the labor hours, elaborate information systems, and inventory expense associated with traditional systems of material management. Another friend pointed out that many of the practices Toyota uses to manage material may have been adopted by The Big Three. That may be the case, but this example illustrates differences in purposes, concepts, and questions, and therefore methods, that can exist in organizations’ approaches to their work.

Use of the traditional approach to materials management and the consequent cost of inventory leads to distraction of the management that prevents them from addressing issues of greater importance to the future of the enterprise. The statement, “you can’t manage what you don’t measure” has become a mantra for American business. But, as a friend has observed, when one decides to measure something and attaches a meaning to the measurements, one has framed the questions to be addressed and defined suitable answers. NUMMI had no interest or need to keep detailed records of inventory. They had changed the question from “how do we manage inventory and reduce inventory cost?” to “how should material flow through the system?” The Big Three could gain great benefit from asking themselves what the important questions might be. I have often wondered how often managers of American businesses fall into the trap of using existing measures for no other reason than because they are there – required by regulation or for tax reporting purposes, rather than deliberately choosing indicators that will help them manage. Questions should precede answers.

At NUMMI, some automobile components were imported from Japan. One of these was the engine. Another person on the tour told us that a materials director at the engine division of a Big Three company had just issued an edict that the purchase price of every part being supplied from other divisions and outside suppliers had to be reduced by exactly the same percentage in the next year: ten percent. While touring the area where engines were inserted into the vehicles at NUMMI, the tour guide related that the Japanese had evaluated the importance of every engine component to the proper functioning of the engine. He said that they would then attempt to reduce the purchase price of components that were not as important while they invested resources in improvement and perhaps paid a higher price for components that were critical to reliability. The contrast between the foolish edict to reduce the prices of everything by the same percentage and the intelligent consideration of functionality and reliability of the product was another example of a difference in thinking – Toyota’s approach being far more mature.

In the stamping area, we learned that the same approach was used to design and build the dies that were used to stamp parts of the vehicle body. The material used on the surface of the die was very expensive, but extremely hard, while the other parts of the die were far less expensive than what was used in US companies. NUMMI’s dies served longer and were, overall, less expensive to build. These two examples illustrate the notion of optimizing an entire product system in terms of cost and performance, rather than sub-optimizing by trying to minimize each individual component’s up front cost. These are different ways of thinking about purpose and method.

At the time I visited, the NUMMI factory was not highly automated in terms of the use of robots. We saw robots helping factory workers put the seats in vehicles. We were told that robots were not used in the factory to replace workers; they were used to assist workers when the work was physically very demanding or difficult. I was reminded of a Big Three assembly plant where robots were installed to replace the welders who welded the frames of vehicles together. After a short time, the robots were removed and replaced by humans. The reason was that there was so much variation in the components coming in to be welded that the robots got confused and were making pretzels instead of frames. The human welders had been adjusting to that variation for years.

The replacement of people by machines is a favorite method used in the U.S. to affect accounted costs. However, direct labor is often the least expensive per hour kind of labor in a company. Machines must be maintained (or should be) and the software associated with automation and other computer operated equipment must be revised to accommodate changes in production processes. The labor expense associated with these activities is often more expensive per unit time than direct labor. Some of these expenses even show up as engineering or information systems expense. Sometimes, humans are needed instead of automation run by software because they are more adaptable and more easily maintained. The more complexity in any production system, the more opportunities there are for failure. The point here is that choices made in the design of a production system must be considered from a total system viewpoint, rather than from a simplistic, accounted cost viewpoint. I understand that Toyota’s new U.S. factories are highly automated. I would expect them to have been sensible about the design of these systems and to consider the possible consequences of their choices.

Lots of attention is paid to the cost of labor, and labor cost has been a favorite excuse for lack of competitiveness. But the options for ways to be non-competitive are limitless. I was told that one of The Big Three required that measurements on approximately 1200 “key indicators” were required to be reported to the central administration monthly. There were probably thousands of people accounted for in overhead doing the work to make those reports. There were not enough executives in the central administration to review all those numbers and probably a rare few of them knew what to make of the numbers if they did review them.

There is no question that existing obligations are major factors in the financial problems The Big Three are having. It is interesting that the big focus is on organized labor and the obligations for benefits to salaried retirees are not discussed nearly as much. The UAW certainly isn’t lovable, and the concessions they have obtained in terms of pay and benefits have been enormous and seriously detrimental in the long run. But one question keeps coming to my mind with regard to those concessions. Did the UAW simply issue an edict that there would be concessions? Of course, the answer is no. It takes two to make a contract and the management of The Big Three agreed to those contracts with the UAW. Surely there was someone in the management of each company that did some computations to see what the concessions would cost the company in the short term and the long term. I suspect that there was an extreme desire each time a new contract was negotiated to avoid a strike. After all, a strike would happen right away and would affect that year’s bonuses, but the consequences of the concessions would come to roost in the future and it would be more difficult to find someone to blame.

The central administrations of The Big Three tend to issue edicts to their organizations about what performance is expected. An edict issued in one of the companies stated that warranty cost was to be reduced by fifty percent this year to next year. The design and testing of a vehicle and its components takes several years. Major redesigns are not done every year. Major components are often carried over from one year’s vehicle to the next. The designs of vehicles and production systems for next year were already completed. How could such a reduction be achieved? Obviously, the individuals responsible for the edict were not thinking clearly about the constraints the nature of their business placed on performance. Of course, one “reason” for high warranty costs that regularly surfaced was that the dealers were cheating. So the edict to cut warranty cost by half may have been aimed at making the dealers behave.

Are we beginning to see a pattern here? Problems that are assigned to suppliers, direct labor, and dealers as sources of non-competitiveness appear to me to be manifestations of what Peter Senge called “The enemy is out there.” According to this view, some of the problems of non-competitiveness that are due to poor thinking and poor decision-making are ignored and the blame for all problems is assigned to some other group. If in no other way, we could all follow Michael Jackson in this regard and “start with the man in the mirror.” Reflection on one’s own role in one’s situation is difficult, but seems to be critically important to avoid repetition of the same mistakes.

I have not discussed what I saw in production at NUMMI in any detail because Toyota’s production system has been analyzed many times. One aspect of NUMMI that I thought was very important was management of the labor force. We learned that direct labor on the production line had secondary jobs that they were supposed to do if and when the production line stopped. They would do various equipment maintenance tasks and cleanup tasks. My understanding of Big Three direct labor is that production workers have no responsibility for maintenance; they have quotas for a shift’s production, and when they complete their quota they can go sit in the cafeteria or find a place to sleep. The management of NUMMI was able to negotiate an agreement with the UAW that enabled the assignment of auxiliary tasks to workers, but apparently the management of The Big Three were not.

As I understood it, there were work groups in production at NUMMI that rotated among different jobs in an area. There were levels of qualification that could be achieved by an individual worker for each job in the area. As a worker gained more training and experience, he or she was able to move up to the next level of qualification. The highest level of qualification was “teacher” or “instructor” or something similar. The work groups had improvement projects that they worked on. Their tasks involved improving the quality of the output of their area, or improving efficiency, or making the work easier to do, or all three. If they were able to demonstrate that their ideas for improvement were good, they would be implemented. As I saw it, these aspects of the organization of work helped to enable people to be engaged and to have a sense of contributing to their joint enterprise. At times, there may be too much focus on the technical aspects of the Toyota production system (lean, JIT, …) and not enough on the culture. The commitment that comes from personal pride in one’s work is a critical, but unmeasurable, aspect of any employee’s contribution to the enterprise.
The most remarkable insight I gained at NUMMI came as an answer to a question from a member of the touring group. The person asked what had been learned about the reasons that management/labor conflict had been reduced so much. The tour guide answered, “The answer we get from members of the labor force is that the Japanese do what they say they will do.” This was the same labor force that had held the record for most grievances filed per year in an assembly plant in the U.S. To me, this says a great deal about trust. There are circumstances in which you can trust a manager to be generous or kind or helpful; there are circumstances in which you can trust that manager to be harsh or intolerant of certain behaviors. In both cases, the manager who can be trusted to behave as you expect may be preferable to a manager who is unpredictable and cannot be relied on to provide the resources you need to do a good job. Some consultants imply that all managers need to do is to be nice to people and everything will be O.K. I doubt if that is sufficient.

Several months ago, I remarked to a person who deals with 401K investments in a very large financial management company that I didn’t think investments in American car companies would be a good idea. He remarked that I was wrong since they were coming out with some great new products that would be fuel efficient. I don’t think he knew very much about the nuts and bolts of building cars and trucks. The new products would at first only be a drop in a giant bucket. It takes years to develop and test new vehicles and to retool factories to produce them. The Big Three had equipped themselves to continue producing SUVs and other fuel guzzling products that were becoming more and more unattractive as gas prices shot up. As a friend remarked, redesigning a car is not the same thing as redesigning the label on a soup can. Equipping a production line to build a car is not the same thing as printing a different label. Of course, this may change in the future as more flexible factories are built. The point of my rambling here is that the press and Congress are talking about redesigning the automotive industry in the U.S. when I suspect very few of them are qualified to do that. I think it would be preferable to have members of the Toyoda family do it – wishful thinking, I’m sure.

After World War II ended, Toyota had, or created for themselves, the luxury of taking time to think, to experiment, and to learn with the conscious aim to improve their capabilities. If The Big Three were not in such a state of emergency, they could profit by asking questions aimed at sustainability and improvement, such as: What is important to our customers? (This requires actual research, not just speculation or the use of company mythology.) What kinds of changes do we expect in the future that might change what our customers need and value? What changes do we expect that will impact our ability to serve the needs of our customers? How can we improve our relationships with our suppliers and our customers? How can we make our work easier or simpler? How can we design the work so that it flows better? What products or processes need improvement? How can we improve the interactions that take place between departments? How can we more wisely use performance indicators and the information they provide? As it is, The Big Three seem not to have the luxury of careful thought.

The Big Three, and the entire international automotive industry, are in deep trouble at the moment. They are certainly not responsible for some of the trouble they are in. But The Big Three are responsible for managing their organizations wisely. I think that will take more than money. It will take a different culture and a different mind.

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Walking the Gemba

Duke left a great question as a comment to “A Morning Market.” He asked:

What’s the key differences between the [morning] market meeting and a gemba walk? Maybe I should ask what is the purpose of a gemba walk?

Good question.

I’ll start with one of my (other) favorite quotes from an old friend, Dave:

“It isn’t about shaking hands and kissing babies.”

That is to say, a lot of leaders think that heading out to the work area to “show the flag,” and do a meet-and-greet with the team members is “walking the gemba.” While they may be at the gemba, and they may actually be walking around, this isn’t it.

Walking the gemba is part of “Check” in Plan-Do-Check-Act. It is the process of carefully observing to see where things are not as they should be. Sometimes there is less walking involved, and more just standing and watching.

This, of course, begs the question: Watching for what? This, ultimately, is what makes it different than even just walking around looking.

Try this exercise. Go to some place where any activity is taking place. It really doesn’t matter what. If you aren’t in a factory, just go watch someone doing data entry or computer work. Watch the receptionist process walk-in customers and phone calls.

Note: Whatever you choose, please talk to people and tell them what you are doing, otherwise this is going to seem creepy to them if they aren’t used to it.

Get a feel for what is happening. More importantly, try to envision what is supposed to be happening. If this process were going perfectly, how would it look? Try hard to visualize in your mind a smooth, totally value-adding work flow.

Now, as you watch, become totally conscious of what is really happening. Why is this process other than how you visualized it? What disrupts the work? Where could mistakes be made? What keeps those mistakes from being made? Is it just vigilance? Or is there some mechanism to either prevent the mistake or either cue the person on the correct way, or alert them on the incorrect?

Is there any backtracking, rework, looping around? Are things where they are actually needed? Do people have to look around for things?

How do they know what they should be doing? What is their source of information? Do they have to hunt it down, or worse, guess at what should be done? Or is the “right thing” and the “right way” chrystal clear to even the casual observer (that would be you).

Is there a pace to the work? Even if it isn’t traditional takt-time work (especially if it isn’t), there is some kind of deadline. How does the person know whether things are on time or not? When do they learn they are behind?

If the person encounters some kind of problem, something unexpected, something needed but not there, what happens? Is there a support system to get this person back on-process? Or is he or she left to their own devices to just figure it out?

As you watch, keep your standard very high. If something is not obviously as it should be, then question whether it is. “Control” has the burden of proof here, not chaos.

When you see these things, focus in on one of them. Ask yourself “Why?” does this condition exist? Where does the problem originate? Go there. Study some more. How is it that this process fails to support its customer? Do they have a clear understanding of what is expected? (Probably not, most don’t, especially administrative processes.) How do they know they delivered (or didn’t) what their customer required? Did they think their output was defect free (according to their standards), but was really causing problems for their customer?

Often it helps to look at one person doing a single task, find a single issue, and follow the trap line upstream until you arrive at the origin of the problem. Often, again, you will have a fixable root cause right in front of you.

Now the fun begins. As a leader, it is not your job to fix the problem. That is not what you are looking for.

When you walk the gemba, you are assessing how well your organization is tuned to seeing these issues, clearing them, finding their causes, and solving them. If you see these opportunities, then your job now is to teach.

Grab whoever it is whose responsibility bounds both the effect and the origin of the problem. Guide him through the same things. If this issue was unaddressed, there are a couple of problems this leader must address.

First, there is someone downstream likely coping with an issue that he should be raising. (Or worse, there is no process for raising the issue, or worse still, no process to respond if he does.) If that isn’t happening, help this leader understand that this is the shortfall here, not the actual issue. It is now his turn to teach, in turn, either the Team Member, or whatever leader is between him and the Team Member.

Second, upstream, there is a process which either does not understand what “defect free” is, or does not have (or does not use) a positive way to verify it before sending it along. Same issue. This is a leader training process until the education reaches the level that should be doing the checks and the verifications.

The best way to learn how to do this is to walk your flow with someone who has the skill. It is simply a skill, and it can be taught. But learning also requires some humility, and the student must bring that to the “classroom.”

So, to recap in two short statements.

  • The gemba walk is a “Check” of Plan-Do-Check-Act.
  • You are checking the health of your leadership systems by looking at how they engage their people and processes.

Walking the gemba is a process of developing your people.

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Chasing the Rabbit – Steven Spear

Steven Spear has been on the cutting edge of research about what makes exceptional organizations exceptional for over 10 years. The landmark paper “Decoding the DNA of the Toyota Production System” summarized his PhD research on Toyota. His dissertation is the 5th most popular publication on ProQuest, the online source for academic work.

His recent book, “Chasing the Rabbit” brings his work from academic publications such as “The Harvard Business Review” into the mainstream business press.

One of the differences between Steven Spear and most other experts on the TPS is that Spear is, first and foremost, a student of theory. He does not make casual observation and render an opinion. Rather, he develops a formal theory then seeks to continuously test it against facts.

During his years of research into high-performing organizations, Spear has found consistent examples where – all conditions being equal; where products are a commodity; where the playing field is level – one organization in the field consistently outperforms the others over time. Spear builds on a metaphor of the front-runner in the Boston Marathon seemingly coasting to victory while the pack following him struggles, fights and elbows for the honor of coming in second. He calls these high-performing or high-velocity organizations the “rabbits.”

Spear’s theory of what differentiates the “rabbit” organizations is, ironically, that they consistently apply theory and theory testing into their management systems. I suppose it took someone who was well trained in the “theory of theory” to really see that. He has extended the application into a general set of principles that he has found across all organizations which excel. Further, he has found that mediocre operations which begin to apply the principles can rapidly and dramatically improve their performance.

He makes his case through example after example of organizations outperforming their peers and comps.

I am not going to repeat those stories here – you can click on the link above, buy the book, and read them for yourself. Rather, over a series of posts, I am going to go through some of the points in the book that struck me, share my mental notes, cite examples where I believe his theory holds, and hopefully spark some discussion.

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Andon Leadership

On a world-class automobile assembly line, the actual work is continuously being compared to the planned work. In each work zone, there is a planned sequence of tasks which are expected to produce a specified output.

If there is any departure at all from the planned sequence, if things get behind the planned timeline, if the necessary conditions are not there, if any process step does not complete as required then either the Team Member or an automated system turns on a help call – an andon.

The response is immediate. The first response is within seconds with a priority of clearing the problem. The line itself is still moving, but if the problem is not cleared before the end of the takt time the line automatically stops – things go from “yellow” to “red.” When that happens, the responsibility for the problem also shifts up a level in the response chain.

The priority is still to clear the problem quickly – and clearing the problem means to restore conditions required for safety and quality without compromise.

Once the problem is cleared, and the line re-started, the rest of the problem solving process engages to find the cause of the problem and address it in the system itself. If the problem is outside of the bounds, or outside of the capability, of the original Team Leader to solve, then his chain-of-support will engage to help him solve it so that his skills can be improved.

In summary – we have a sequence of tasks to be accomplished over about six hours that, in the end, will result in a car. That sequence of tasks is further broken down into sub-intervals where progress against the plan is checked. If problems develop, the system responds, swarms the problem to clear it, understand it, and adjust the process if necessary.

None of the above should be a surprise.

But what happens in your management monthly reviews?

Huh? How are management monthly reviews related to an assembly line?

Let’s see. In a reasonably functional organization the business plan is (or should be!) a series of tasks to be accomplished over a period of time that, in the end, will deliver specified results. That sequence of tasks is further broken down into sub-intervals where progress of the plan is checked.

But in a typical monthly review, the analogy ends there. When problems develop, the reasons are discussed, mentioned, and worked around. In dysfunctional organizations only the objectives are discussed, and in truly dysfunctional organizations the objectives themselves are adjusted to match what is accomplished.

Shift your thinking a bit, and apply the assembly line analogy to its end-state.

The monthly review is the fixed-stop position. Up to this point, the person responsible for the task “owns” it. He should be checking progress and ensuring that things are getting done as specified, and that the results being achieved are as anticipated (predicted). He should be monitoring conditions and making sure that the operating assumptions are holding. Ideally those checks are built-in to the process and planning so that they are at least semi-automatic.

If all is “green” going into the monthly review, then things are great.

But if something is “off” – yellow – that is equivalent to an andon call. The responsible person is that first-responder. He has until the next review to clear the problem. Think about the ramifications here. This means that if the reviews with the boss are every month, the responsible manager better not wait until the week before to find out what is happening so he can report on it. He has to stay in touch with what is happening.

The monthly review is the fixed-stop-position at the review, and the “andon” goes red.

The reviewing manager now “owns” the problem. His job is now to ensure that there are effective countermeasures in place to get things back on track. That does not absolve the responsible manager, but rather, this becomes a “check” and an “act” for his professional development by the more senior leader.

Again, think of the ramifications. The responsible manager must not only be in touch with what is happening, he also needs to make sure his people are being developed and pushed to fully understand the problems as they occur.

The job of these leaders, at each level, is not only to keep intimately in touch with what is going on, but also be fully aware of the skills, gaps and development of their people. If someone should be able to handle an issue, but can’t, that is a skill gap that, like any other gap, must be addressed (in this case by developing the person).

In mediocre organizations, professional development is owned and overseen by H.R. and may be tied to the annual review process. In organizations that “get it” professional development is a natural part of the leadership process, and happens at all levels in the natural course of getting things done.

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Expectations

This is a bit of a more pragmatic breakdown from the “How Strong Is Your Immune System?” I plan to follow-up with some practical approaches and tools to implement and conduct the kind of problem solving that needs to be done every day.

As we “promote lean,” what expectations to we set?
How well do those promises match up with what is delivered?
If there is a gap, does it dampen the enthusiasm of “management support?”

I think this is important for us to understand.

In the enthusiasm to “make the case” many lean manufacturing proponents point (and rightly so) to the higher performance levels of organizations that have done it. They talk about greatly improved quality, much faster inventory turns, greater returns on capital, much quicker response and throughput. By whatever measure, these systems clearly perform better.

The implementers start teaching the system through its mechanics. Takt time to pace everything; one-piece-flow; pull systems, supermarkets and kanban; quick changeovers; standard work; mistake-proofing.

Now I will be the first to tell you – this is how I was taught – the “just do it, and you will understand” approach. But no matter how well-intended, there is the danger of a diluted message: “Copy the mechanics of how these operations work, and you too can have these results.” Or, put another way, it “Don’t ask questions, just do it” gets (mis)translated into “You don’t have to understand it.”

Wrong. You do.

An expectation is created that, by implementing the basic mechanics of takt, flow and pull, these terrific results can be achieved and sustained.

Here’s the rub. All of the “tools of lean” are designed to force problems to the surface and make them too obvious to ignore. There is an implied expectation that the organization will see these problems and take on the challenge of tackling them as they emerge – true kaizen.

Of course all of this presumes that the organization has the resources, skill and most importantly the stomach to deal with these problems quickly and efficiently.

Bluntly, most don’t. If they did then none of this would have been necessary in the first place.

By implementing the tools alone, they are in effect taking a Newcomen steam engine – primitive, big, inefficient, slow, but functional through brute force- and replacing it with a state of the art steam turbine.

Yes, the turbine is much more efficient, but if you took one and dropped it into the year 1715 it wouldn’t run for very long. They didn’t have the resources or the skill to operate or maintain it.

So, in our lean- implementing factory, the new system is put in and in fairly short order, all of the previously hidden and tolerated problems are now revealed.

And it reveals the problem of “no process to devote the time or to develop the resources and skills to handle those problems” – to detect them, fix them, understand them and solve them.

Lacking the time and skills, the first line leaders do what they must to get the job done… they return to the tried-and-true countermeasures that keep the problems from disrupting things too much:

Kaizen Deterioration Reinforcing Loop

This is the fate of many so-called “kaizen events” which seek to make great change in a hurry.

So why does this happen?

I can speculate that it is a combination of ignorance on the part of some implementers who “got” the “just do it” part but didn’t pick up the “think for yourself” part.

Somewhere, sometime, someone established a precedent that making dramatic but unvalidated changes to a system was “kaizen.” Perhaps, at some point, a sensei said “Don’t ask questions, try this…” with the intention that people would try it and learn what problems came up, only to have it turned into “Do this” without any follow-up or understanding.

Others, perhaps, have an underlying fear that if they revealed just how much work and change was really involved that the leaders would be scared off and not take the first steps.

Now, to be clear, a certain amount of “just try it” is required to anchor that initial leap of faith. But the implementers must be prepared to immediately guide, lead, teach, coach and build the problem solving capability of the organization.

But, in the end, digging further into “Why?” doesn’t give us any more actionable information. “The system is designed to surface problems, and there is no process to handle them” is a root cause that can be directly addressed. It is simply important to acknowledge the truth.

What to do about it. I’ll get into more detail in future posts, but to begin, here are some things to think about:

  1. Small steps. (Note that “small steps” ≠ “slow steps”). Kaizen can be done rapidly, but it must be done deliberately in a context of understanding. Understand why things are the way they are, understand the effect your change should have. Try it out – ideally simulate if first – and see what problems surface. Solve those problems, then implement your change.
  2. Dedicate and manage time for solving problems. This is briefly covered by a couple of previous posts, “Why Doesn’t Daily Kaizen Happen?” and “Systematic Problem Solving” but is worth repeating. Problem solving and kaizen are work, just like anything else. If you want it to happen, you need to allocate time, resources and management to organize it.
  3. Develop a systematic approach, then follow it. I am going to go into some detail on this over the next few posts, but I need to emphasize the last part: then follow it. Too many “standards” are declared, then ignored.
  4. Don’t wait for “the next event” to make improvements.
  5. Just get started. Don’t wait until you are ready, you never will be. The only way to learn is to practice, observe yourself, see what works, what doesn’t, and learn. This, in turn, requires something that is sadly in very short supply in most corporations: humility. Learning means acknowledging, usually in public, that “we don’t have the answers” and perhaps that is the most important lesson.

I could digress into a leadership roles discussion here, but I won’t. But if you want to do a bit of pre-reading for future discussions, find a copy of “Learning to Lead at Toyota” by Steven Spear, and as you read it think about the role of the leader in that story. Bob, the protagonist, starts out with one role, and learns his role is actually quite different. There will be a quiz later.

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The Messy World of Dealing With People

Jim’s recent comment about his job having a heavy dose of psychology certainly rang true with me. Even Deming acknowledged this in his discussions on “Profound Knowledge” (which is at the core of the TPS even though we use different words).

This article The most common pitfalls that new tech managers face is about leadership in the I.T. world, but the issues are actually common to leadership in any technical function – including those of us who started out as kaizen event leaders or trainers. The skill set is different, and is rarely considered (and almost never developed) prior to promoting someone. So – if you are in this situation, read the article then look in the mirror.

This article Why Do Rational People Make Irrational Decisions ties in with my previous post about Blame vs Accountability. It might help answer the question we all ask sometimes: “What were they thinking?”

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A Firefighting Culture

In honor of October being Fire Prevention Month (at least here in the USA), I’d like to talk about firefighting.

“We have a firefighting culture.”

“We spend all of our time fighting fires.”

We have all heard (and sometimes made) these statements. But I would like to take a couple of minutes and look at what real firefighters do.

They don’t just run in and spray water everywhere in an effort to “do something.”

They study fire. They seek to understand how fires start, how they burn, how they spread. They understand the interactions between fire, air, the specific environment (building structure, outdoor terrain, etc).

They develop a plan to attack the fire. They make themselves reasonably sure that if they do (a), (b), and (c) that the fire will respond in a predictable way.

They execute the plan.

They watch the results. If the fire behaves the way they predicted it would, they continue with the plan. If something unexpected happens, they pause their thinking long enough to understand what additional factor may be at play; what they might not have known or considered. They seek to understand the situation whenever something is going differently than what they predicted.

They adapt the plan to account for the new information or the changed circumstances.

They continue to do this until the situation is under control, and the fire is out.

While doing these things, they work methodically. They verify success at each step of the plan – they do not move ahead of their confirmed progress (which would put fire behind them and block their escape route).

While theirs is a dangerous business, they do not, as a matter of course, put human life in jeopardy simply to save property. Heroics are reserved for saving the lives of others.

Once the fire is out, the fire investigators arrive. They seek to understand how this fire started. Where did fuel, oxygen and a source of ignition come together and how? What fire suppression mechanisms failed, and why? How, why, did it spread? Did containment fail? This information is incorporated into the knowledge base of the society in general in the form of regulations, building codes, electrical codes – countermeasures.

In short – firefighters relentlessly follow PDCA.

Now, I must admit that, occasionally, in the excitement of the moment, firefighters get ahead of themselves, or rush into something they don’t fully understand. We usually know when this has happened because there are somber processions and bagpipe music. But even then, they seek to understand what happened, why, and improve their process to prevent recurrence.

Now, the next time you say “All we do is fight fires” consider the above. My guess is that you aren’t fighting anything. Rather, you are running around, making a lot of noise, but tomorrow the building is still burning – just in a different place.

Don’t forget to check your smoke alarms and change the batteries!

Be sure to read the follow-on post here: /2011/01/17/firefighting-kata/

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Why Doesn’t Daily Kaizen Happen?

More than one organization gets stuck in kaizen events. By "stuck" I mean that kaizen events are the only mechanism for improvement. A good indicator of this is "waiting for a kaizen event" to make an improvement that everyone agrees should be made.

At the same time, I see leaders who understand that these kinds of improvements should be made on a daily basis, but those leaders are frustrated because that doesn’t happen.

So why does this happen?

There are a few things that have to be in place, but even with a workforce that understands improvement and where this is going, even with shop floor leaders who understand how to do it, that doesn’t seem to be enough.

So here are some things to think about.

You block out time during the day for your start-up meeting, end-of-shift cleanup (a different topic). You block out time for preventative maintenance (you do, right?). You block out time and resources for the things you expect to get done.

Do the low-level work groups capture, in real time, the little issues that disrupt smooth work? Those are your daily kaizen opportunities.

Do you block out time for daily kaizen? If you don’t, then you are saying "Do kaizen when there is nothing else to do. Your daily kaizen time should not count as "available minutes" when calculating your takt time.

Do the Team Leaders and Supervisors expect the work teams to work on those problems during the kaizen time?

The bottom line: Don’t just wish it would happen. Look at what is necessary for success (skill, time, leadership, tools, expectations), make sure those things are available. If actual events are not what you planned, then study and understand why not and fix it. Daily kaizen is no different than production. You have to plan for it.

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Span of Support vs Span of Control

One of the popular buzzwords floating around out there right now is "servant leadership." Like all buzzwords, it is easy to say, and easy to subjugate.

One of the best terms I have heard that helps set the thinking is "span of support." Normally leader-to-lead rations are discussed in terms of "span of control." By saying "span of support" instead, the entire concept is turned on its head.

That makes it much more clear that the job of the leader is to ensure his or her people have what they need to succeed, to help them clear problems, and develop them professionally.

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The Power of Vision

In the last post I brought up the advantage of having a long range plan vs. quarter-to-quarter thinking. I’d like to explore the concept a little more by way of an analogy.

Put yourself in the spring of 1961.
The USSR, by all demonstrative measures, is ahead of the USA in human space flight, and seems to be increasing that lead. On April 12, Yuri Gagarin orbited the Earth. On May 5, Alan Shepard went up, and came down on a 15 minute trajectory.

At the time, there were important geo-political reasons for establishing a public perception of technological leadership, and space exploration seemed to be the place to do it.

On May 25, President Kennedy made a public commitment to regain, and maintain, that leadership. He could have done it with corporate-speak:

This nation will become the world leader in space exploration.

But he didn’t. He said:

“I believe that this nation should commit itself, to achieving the goal, before this decade is out, of landing a man on the moon, and returning him safely to the Earth.”

Only the second statement is actionable. Only the second statement carries the possibility of failure. And only the second statement galvanizes action. In pursuing that goal with that degree of commitment, it achieved the first – to demonstrate world leadership in space exploration, not with words, but with action.

Of course the first statement carries no risk, since there is no actual performance requirement. Perhaps that is why corporate-speak carries that kind of language today. The shareholders can’t fire the board for not achieving something that was never articulated. The statement leaves open the capability to re-define the goal so that it matches what was actually done – something that happens all too often in today’s world.

So when one company says “We are going to sell more products next year.” and another says “We are on year 2 of our 10 year plan to be #1 in sales with 15% market share.” which one do you think can align actions of the people in the company?

To continue, when Kennedy made that speech:

  • The United States had a human space flight experience totaling 15 minutes.
  • The world had human space flight experience totaling under 2 hours.

Nobody actually knew, for sure, what the moon was made of.

To be sure, the visionaries within NASA had been thinking about sending someone to the moon for a long time. And in May, 1961 there were competing strategies in play at NASA for getting it done. They either involved an unimaginably HUGE rocket (think twice the size of the one that actually did it), or two or three Saturn class rockets to launch and assemble the lunar spacecraft in orbit. But when faced with a deadline of “before this decade is out,” the challenges were immense. Another strategy, considered a bit crackpot at the time, was named “lunar orbit rendezvous.” It involved a smaller (but still huge) rocket to send a throw-away lander on the moon along with a re-entry capsule. The capsule remains in lunar orbit, the lander lands, takes off, docks with the capsule. The crew transfers to the capsule, and they head home. As each piece fulfilled its intended purpose, it would be discarded.

It became increasingly clear, in the months that followed the speech, that neither of the “mainstream” approaches would get the job done with the time and resources available.

During the summer, consensus formed around the lunar orbit rendezvous scenario.
Key Point: Once they decided to pursue that option all further pursuit of the others was stopped. They committed. They did not have the resources to do otherwise.

In the corporate world, how often does that happen? Once a project, or even an idea, has any kind of resourcing or momentum behind it, stopping it is incredibly difficult. More things to do get added, but it seems that nothing gets taken off. This is equally true of “improvement schemes.” I recall a company that had active people in various improvement initiatives. There was the “Workout” group. There were the TQM people. There were the Six Sigma folks. (It took me a while to realize that the TQM and Sigma people considered each other competitors, where I had initially lumped them in together.) Then there were the “Lean guys” who had just come in. There were also pockets of Theory of Constraints believers, the agile guys, everyone saying they had “the answer.”

Back to NASA.

Landing a person on the moon by the end of the decade was a clearly articulated vision for accomplishing the high level mission of becoming “the world leader in space exploration.” That was the hoshin.

After a round of “catchball” a strategy was selected from the options available. Note that the catchball didn’t negotiate the goal. That was stated. The question was not whether to do it, but how to do it. The strategy was Lunar Orbit Rendezvous (LOR). They committed to the strategy and ceased all distracting activity to focus 100% of their energy on getting it done.

To make LOR work, they had to learn three things:

  1. Can people stay and work together in space for the 10-14 days required for the trip?
  2. Can people work outside the spacecraft in protective suits?
  3. Can one space vehicle locate and dock with another?

We do these things routinely today, but in 1961 nobody knew the answers.

These three things were the ONLY major objectives of Project Gemini.

The fourth big task was to develop the Saturn V as well as the facility to assemble and launch the rockets.

This goal is very sticky.
Any time one of the hundreds of thousands of Team Members working at NASA and in the contractors had a decision to make, the criteria was simple: “Will this action help the effort to put a man on the moon by the end of the decade?” If the answer was “No” then don’t do it. Great idea. But don’t do it. We don’t have the time or energy for the distraction.

The second thing it did, and this is even more important, is in the face of major setback – the Apollo 1 fire in January 1967, the organization was able to recover, regroup and stay on course because they had a sense of destiny. There was a clear goal, and they were working to meet it. It provided a compass that pointed the way when all other navigational references were blacked out.

Contrast this with the way NASA has been run during the Shuttle era. The massive amounts of energy involved in space travel mean this is, and is likely to remain, a risky business. But in the shuttle era, the tragedies seem to have created doubt and loss of confidence. There is no higher purpose other than space flight for its own sake. They are running it like a business.

“But we ARE a business! you may say. Sure you are. But the truly excellent businesses, those with the ability to adapt to changing situations quickly and recover are the ones whose sense of “self” transcends quarterly profits and financials. They are successful because they stand for something more.

A few years ago I remember standing outside in the Seattle area during an earthquake that lasted close to a minute. It was an unsettling experience because the ground itself was moving. Leadership’s job is largely providing a sense of solid ground so everyone else can operate without feeling off balance. This is done with very clear goals that are

  • Simple to understand.
  • Unexpected – they compel attention
  • Concrete – they can be seen, touched, felt.
  • Credible – they make sense in the larger context.
  • Emotional – they appeal to people’s feelings and
  • have Stories – they can be communicated in a way people can visualize.

Kitchen sink “KPI” lists don’t do this.