Author: Mark

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Grassroots Innovation: Business is Like Swimming, Not Running

Grassroots Innovation: Business is Like Swimming, Not Running

Let’s take Greg Eisenbach’s totally on-target analogy and expand just a bit. Greg points out:

…a world class swimmer is only 9 percent mechanically efficient. This means 91 calories out of 100 in swimming are lost due to friction.

For the non-world class swimmer the best way to increase your speed is not to spend more calories, but figure out how to become more efficient. A gain from 3% efficiency to 4% efficiency would represent a 33% increase.

Business is the same way.

This probably explains why a little thing like the new technology in competitive swimming suits had such a huge (and controversial) impact in the 2008 competitive season. In competitive swimming, small advantages are huge advantages.

One of the big differences, though, between swimming and business is that a competitive swimmer knows, in real time, that he is winning or losing. Triathlons aside, a typical swim race is under a minute, a long one might be a couple. In this competitive environment, it is impossible to be complacent and believe you are in the race when, in fact, you are not.

On the other hand, I have worked with a number of businesses (or operations within larger businesses) that have had a truly amazing capacity for denial. What else can explain a headline in a company’s internal newspaper that exclaimed the “big order” when, in fact, the customer had placed a mixed order, giving 80% of it to the competitor… but no mention of that inconvenient truth. So when this company also wonders why people feel “no sense of urgency” you have to wonder. Of course the real story was all over the local news, about how the competitor had gotten the bulk of the order, and how the local company had “lost” it, only getting 20%. What does that do for the corporate credibility? Not much.

World class swimmers are 9% efficient. World class manufacturing value streams are about 40% value-add. (By % value-add I mean the time the product is actually in the value stream vs. the time something that matters is actually being done to it.)

Contrast this with a typical manufacturing flow where the value-add can easily drop into single digits.

This is basic stuff, but sometimes we forget what this lean stuff is about.

Consider a 10% value-add flow. Out of 100 minutes in the plant, 10 minutes are spent actually processing. The other 90 minutes are just sitting, moving, counting, stacking, etc.

Let’s say I spend my time and energy to speed up the value-adding process (like make the chips fly faster, speed up the processing time, find some high-tech fast curing compound). Let’s say I am really successful and cut that value-adding time in half. Whoo-hoo.

Now out of 95 minutes in the plant, 5 minutes are spent actually doing something.

Not exactly a stellar improvement, no real impact on lead time, no reduction in inventory, no reduction in waste. All of the original costs are still there, and I have probably just added more.

On the other hand, if I were to focus my time and energy on reducing that 90 minutes of “other stuff” I run into a couple of realities.

First, all of that “other stuff” costs time, money, space and accumulates inventory. It adds to lead time. Cutting it in half cuts the lead-time from 100 to 55.

And critically important – these changes are typically pretty easy to make. They don’t require engineering or computer science degrees, they just require watching the work and asking “Why is this stopping, why can’t it just go to the next operation right away?”

Greg is dead-on with his analogy. The difference, though, is that there is much higher potential for businesses to improve than there is for swimmers.

But like swimming, small advantages are huge advantages. It isn’t the companies that make the “blitz” type of changes that are sustaining world-class players. It is the companies that, every day, scratch out another little improvement.

It is those “a little every day” companies that, over time, build an insurmountable lead. They engage more of their people, and they learn as an organization what continuous improvement is all about. The “blitz” approach retains the knowledge in the few experts who are responsible for all of the kaizen activity. As good as they may be, they can’t be everywhere.

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GM CEO Wagoner to step down at White House request

GM CEO Wagoner to step down at White House request

I find this news interesting on a lot of levels.

I have never worked at GM, and have never met Rick Wagoner. GM’s current problems have been a long time coming. They are not solely due to the current economic downturn, the market conditions have simply removed the veil.

GM has been steadily losing market share for a long time, while, in my opinion, clinging to the idea that somehow, someday, there would be a spontaneous triumphant return to the good old days. As someone else has said recently, “Hope is not a strategy.” GM has been institutionally unwilling to face harsh realities, and has fallen into the trap of “continuing to do the same things and expect a different outcome.”

Ironically, GM has had for a couple of decades, the best possible insight into their most successful competitor. No other automobile company has had the incredible advantage of unlimited access to a joint venture with Toyota. Everyone else has had to learn from books, consultants, or what they can glean from people they hire in. Not GM. And not just how to run it. They watched the entire process of converting the worst plant they had into the best. On that note alone, I am not sympathetic in any way to GM’s plight. They have just been very good at finding reasons why they couldn’t.

So, all in all, I agree that Wagoner’s time has past, he has had his chance, and he has failed the company.

But now what?

Personally, I think it is time for an outsider, possibly even someone from outside the automotive industry, to take charge. That is what Ford did, and though they are also hurting badly, they are moving in the right direction. The key qualification, in my mind, is someone willing to deal with the truth as it is, and capable of cleaning out the people who operate under any belief system other than “We are responsible.”

Another aspect of this story is disturbing, however. Wagoner’s departure is not at the request of the board of directors (though it should have been). No, it is at the request of the President of the United States. Now with the U.S. Treasury as a significant (and growing, apparently) stakeholder in GM, I suppose he can make that request. But this whole thing is, in my mind, dangerous territory.

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How Do You Look At Problems?

A couple of posts ago, I tried to emphasize “hypothesis testing” as the key, core thinking behind the TPS. For that matter, I think that anyone who truly understands any of the various improvement approaches out there will find the same thinking at the core. Certainly Six Sigma; Theory of Constraints; and TQM are all about surfacing and solving problems. They may use different language, might insert the initial lever between different bricks, but in the end, the approaches all embrace the same basic thinking.

I’d like to put out there an idea that it is the way problems are regarded and approached that separates “gets it” from “business as usual.”

What Constitutes “a problem?”

In “traditional thinking” a problem is something which disrupts output. It is something serious enough that it cannot be ignored.

In a true continuous improvement mindset, anything that causes variation from the plan, in any way, is “a problem.” Any barrier between the current condition and the idealized world is “a problem.”

What triggers a response?

In “traditional thinking” if output isn’t disrupted, spend time elsewhere. There is a caveat to this, however. The parable of the “boiling frog” (whether true for actual frogs or not) can drive an ever higher level of numbness as “normalized deviance”   sets in.

Since continuous improvement is a process of discovering the ideal process, variation from the plan is new information. It must be investigated and understood. If everything is running smoothly, then the problem solving shifts to the next barrier to higher performance.

What triggers alarm in the organization?

This one may be the most controversial. While “stopped production” is certainly cause for alarm and immediate response, in the traditional thinking world, it is the only thing that really gets people’s attention.

In a thinking and learning organization, I would add to the above “No problems are apparent.” If there are no andons, there are no defects, there are no line stops, there are no shortages, there are no disruptions, then there is a BIG problem. I say that because these conditions are impossible and it is only because your system is totally numb that you would not see them.

Target Condition

Given the above, then I think it is safe to offer that silence is equated with “stability” in the traditionally reacting organization. Of course it isn’t stable at all, it is just that there is so much systemic anesthesia that nobody feels anything.

In the continuous improvement mindset, things are running as they should if there is a continuous flow of problem being surfaced and solved. That is the only way to be 100% certain that things are getting better every day.

“Management Commitment”

The term “management commitment” is tossed around as a prime reason for failure of improvement initiatives. There are lots of good reasons for this, but until we really define exactly what leaders need to do every day, stop using euphemisms, and start getting real about leadership’s actual role in this process, we are crutching the problem. This is partly “our fault” because we teach the basics very badly. We put top leaders into “kaizen events” but never explicitly link kaizen to daily problem solving. In doing so, we convince them that if only they support enough kaizen events, the organization will be transformed. The logical result is a monthly report on how many kaizen events have been run. Argh.

If we used kaizen events to explicitly teach the core questions, the rules of good process design, and the concept of applying PDCA to everything, we might get more traction. That can be difficult, but maybe if everyone in the industry starts thinking in terms of a few core mantras we might get a chorus going.

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Setting Up For Success (or failure)

Remember when, a few short months ago, everyone was too busy taking orders and building up all of that inventory that you see out of your window now? Times have changed.

Then again, very few can claim lack of a “burning platform” now. Platform? Today it is more about getting out of the building alive!

Still, a few organizations are trying to drive change into the way they operate, and many more will fail than succeed.

The reasons why this is true were articulated by John Kotter back in 1995 in his now classic article Leading Change: Why Transformation Efforts Fail.

The short list is:

  1. Establishing a sense of urgency.
  2. Forming a powerful guiding coalition.
  3. Creating a vision.
  4. Communicating the vision. (Over-communicating!)
  5. Empowering others to act on the vision.
  6. Planning for and creating short-term wins.
  7. Consolidating improvements and producing still more change.
  8. Institutionalizing new approaches.

The question, then, becomes “Are you deploying effective countermeasures against these known failure points?”

I would like to share an exercise I used (admittedly improvised as I went) with a company leadership team a few years ago. It ended up really hitting them between the eyes with the gap between their perception and the reality.

Prior to the day, I had them all read the article.

We spent some time discussing and understanding each of the eight points Kotter discusses.

Then I had each of the little sub-teams we had break out and score how effectively they felt they were dealing with each of these eight items. For example, how well did they rate themselves on “Communicating the vision?” It was a simple numeric rating, 1-5.

Each sub-team then debriefed the group, and found everyone was pretty close to consensus.

In the meantime, we had another group going through the same exercise. This group consisted of the direct reports of the top leadership team.

We compared the numbers. They were very different.

The leaders rated themselves as being pretty effective. Their direct reports were not so kind. We didn’t do it, but it would have been interesting to do the same thing another level down again.

The leaders gained a decent understanding of the huge gap that existed between what they thought they were doing vs. how it was being read by their staff. What the leaders thought was a clear, crisp “change” message was pretty mushy by the time it was filtered through words vs. actions.

Try it in your organization. Assess yourselves. Then do the same assessment with another group a couple of levels closer to reality. See what you get.

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The TPS In Four Words

ptolematic_universeIn the world of science, great discoveries simplify our understanding. When Copernicus hypothesized that everything in the universe does not revolve around the Earth, explaining the motions of things in the sky got a lot easier.

In general, I have found that if something requires a great deal of detail to explain the fundamentals, there is probably another layer of simplification possible.

Even today, a lot of authors explain “lean manufacturing” with terms like “a set of tools to reduce waste.” Then they set out trying to describe all of these tools and how they are used. This invariably results in a subset of what the Toyota Production System is all about.

Sometimes this serves authors or consultants who are trying to show how their process “fills in the gaps” – how their product or service covers something that Toyota has left out. If you think about that for a millisecond, it is ridiculous. Toyota is a huge, successful global company. They don’t “leave anything out.” They do everything necessary to run their business. Toyota’s management system, by default, includes everything they do. If we perceive there are “gaps” that must be filled, those gaps are in our understanding, not in the system.

So let me throw this out there for thought. The core of what makes Toyota successful can be expressed in four words:

Management By Hypothesis Testing

I am going to leave rigorous proof to the professional academics, and offer up anecdotal evidence to support my claim.

First, there is nothing new here. Let’s start with W. Edwards Deming.

Management is prediction.

What does Deming mean by that?

I think he means that the process of management is to say “If we do these things, in this way, we expect this result.” What follows is the understanding “If we get a result we didn’t expect, we need to dig in and understand what is happening.”

Control ChartAt its most basic level, the process of statistical process control does exactly that. The chart continuously asks and answers the question “Is this sample what we would expect from this process?” If the answer to that question is “No” then the “special cause” must be investigated and understood.

If the process itself is not “in control” then more must be learned about the process so that it can be made predictable. If there is no attempt to predict the outcome, most of the opportunity to manage and to learn is lost. The organization is just blindly reacting to events.

Here is another quote, attributed to Taiichi Ohno:

Without standards, there can be no kaizen.

Is he saying the same thing as Deming? I think so. To paraphrase, “Until you have established what you expect to do and what you expect to happen when you do it, you cannot improve.” The quote is usually brought up in the context of standard work, but that is a small piece of the concept.

So far all of these things relate to the shop floor, the details. What about the larger concepts?

What is a good business strategy? Is it not a defined method to achieve a desired result? “If we do these things, in this way, at these times, we should see this change in our business results.” The deployment of policy (hoshin planning) is, in turn, multiple layers of similar statements. And each of the hoshins, and the activities associated with them, are hypothesized to sum up to the whole.

The process of reflection (which most companies skip over) compares what was planned with what was actually done and achieved. It is intended to produce a deeper level of learning and understanding. In other words, reflection is the process of examining the experimental results and incorporating what was learned into the working theory of operation, which is then carried forward.

Sales and Operations Planning, when done well, carries the same structure. Given a sales and marketing strategy, given execution of that strategy, given the predicted market conditions, given our counters to competitor’s, we should sell these things at this time. This process carries the unfortunate term “forecasting” as though we are looking at the weather rather than influencing it, but when done well, it is proactive, and there is a deliberate and methodical effort to understand each departure from the original plan and assumptions.

Over Deming’s objections, “performance management” and reviews are a fact of life in today’s corporate environment. If done well, then this activity is not focused on “goals and objectives” but rather plans and outcomes, execution and adjustment. In other words, leadership by PDCA. By contrast, a poor “performance management system” is used to set (and sometimes even “cascade”) goals, but either blurs the distinction between “plans” (which are activities / time) and “goals” which are the intended results… or worse, doesn’t address plans at all. It gets even worse when there are substantial sums of money tied to “hitting the goals” as the organization slips into “management by measurement.” For some reason, when the goals are then achieved by methods which later turn out to be unacceptable, there is a big push on “ethics” but no one ever asks for the plan on “How do you plan to do that?” in advance. In short, when done well, the organization manages its plans and objectives using hypothesis testing. But most, sadly, do not.

Let’s look at another process in “people management” – finding and acquiring skills and talent, in other words, hiring.

In average companies, someone needing to hire someone puts in a “requisition” to Human Resources. HR, in turn, puts that req out into the market by various means. They get back applicants, screen them, and turn a few of them over to the hiring manager to assess. One of them gets hired.

What happens next?

The new guy is often dropped into the job, perhaps with minimal orientation on the administrative policies, etc. of the company, and there is a general expectation that this person is actually not capable of doing the work until some unspecified time has elapsed. Maybe there is a “probation period” but even that, while it may be well defined in terms of time, is rarely defined in terms of criteria beyond “Don’t screw anything up too badly.”

Contrast this with a world-class operation.

The desired outcome is a Team Member who is fully qualified to learn the detailed aspects of the specific job. He has the skills to build upon and need only learn the sequence of application. He has the requisite mental and physical condition to succeed in the work environment and the culture. In any company, any hiring manager would tell you, for sure, this is what they want. So why doesn’t HR deliver it? Because there is no hypothesis testing applied to the hiring process. Thus, the process can never learn except in the case of egregious error.

If we can agree that the above criteria define the “defect free outcome” of hiring, then the hiring process is not complete until this person is delivered to the hiring manager.

Think about the implications of this. It means that HR owns the process of development for the skills, and the mental and physical conditioning required of a successful Team Member. It means that when the Team Member reports to work in Operations, there is an evaluation, not of the person, but of the process of finding, hiring, and training the right person with the right skills and conditioning.

HR’s responsibility is to deliver a fully qualified candidate, not “do the best they can.” And if they can’t hire this person right off the street, then they must have a process to turn the “raw material” into fully qualified candidates. There is no blame, but there are no excuses.

Way back in 1944, the TWI programs applied this same thinking. The last question asked on the Job Relations Card is “Did you accomplish your objective?” The Job Instruction card ends with the famous statement “If the worker hasn’t learned, the teacher hasn’t taught.” In other words, the job breakdown, key points and instruction are a hypothesis: If we break down the job and emphasize these things in this way, the worker will learn it over the application of this method. If it didn’t work, take a look at your teaching process. What didn’t you understand about the work that was required for success?

I could go on, but I have yet to find any process found in any business that could not benefit from this basic premise. Where we fail is where we have:

  • Failed to be explicit about what we were trying to accomplish.
  • Failed to check if we actually accomplished it.
  • Failed to be explicit about what must be done to get there.
  • Did something, but are not sure if it is what we planned.
  • Accepted “problems” and deviation as “normal” rather than an inconsistency with our original thinking (often because there was no original thinking… no attempt to predict).

As countermeasures, when you look at any action or activity, contentiously ask a few questions.

  • What are we trying to get done?
  • How will we know we have done it?
  • What actions will lead to that result?
  • How will we know we have done them as we planned?

And

  • What did we actually do?
  • Why is there a difference between what we planned and what we did?
  • What did we actually accomplish?
  • Why is there a difference between what we expected and what we got?

The short version:

  • What did we expect to do and accomplish?
  • What did we do and get?
  • Why is there a difference?
  • What are we doing about it?
  • What have we learned?
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Learning To Sensei: LEAN.org

John Shook’s latest column on LEI’s site is about coaching and whether it is better to give them the answers or just ask questions.

Asking questions in a way that actually teaches is a skill that we, as a “lean” community do not foster very well. Certainly in U.S. corporate culture, we are expected to be the experts, and to have the answers. John’s post is summed up well by his last paragraph:

Learning to Sensei: A prerequisite for the apprentice sensei who is learning to not give solutions is to grasp for himself the fact that he doesn’t actually know the solution. Once you grasped that, then it’s very easy to not give “the answer” you simply don’t really have an answer to give. But, while it is not necessary for you to give or even possess “the solution”, you do have an important obligation, which is to give the question or learning assignment in a way that will lead to the learning, with learning as the goal. Once that is accomplished, all sorts of “solutions” will fall out. Then you can experience the joy, liberation, and humility that come with admitting you don’t know.

You can read the whole thing here:

LEAN.org – Lean Enterprise Institute: Coaching and Questions; Questions and Coaching

Now, as an additional value-add…

This really falls under the general notion of “Socratic teaching.” One of the best overviews of what this is really about is Rick Garlikov’s classic piece where he recounts his experiment with teaching through questions. If you don’t think this can work for difficult topics, then I suggest you read his account of using only questions to teach binary arithmetic to a typical class of third graders. If he can teach 8 year olds to understand that 0110 + 0011 = 1001, then surely we can get adults through understanding why takt time is important for management.

“What are you trying to do?”

“How will you know you have done it?”