Posts

Posted on

Will Kodak Be Here in 2013?

This is of no particular interest to anyone but those of us who spent time working “in the yellow box.”

Tonight the Megamillions jackpot is $206 million dollars.

Eastman Kodak’s (at $0.69 / share) market cap is $186 million.

Though Kodak is mostly known as a (former) consumer products brand, today most, if not all, of its strength is in commercial graphics and printing where it is a clear leader.

The question is whether or not they have (or can raise) enough cash to downsize the company to fit its market, and whether or not their management realizes that is what they (in my opinion at least) have to do.

Lest you think about winning the lottery and buying the company, consider these two tidbits:

  • There is a recently enacted “poison pill” clause in Kodak’s corporate charter that lets them issue stock faster than you can buy it.
  • The above is wholly unnecessary because anyone who buys the current company also inherits the Kodak Park site in Rochester which, for all intents and purposes, has been an industrial chemical facility for the last 120 years or so.

I learned a lot during my time at Kodak. I had pretty decent access to the highest levels in the company, and experienced the process of some really tough decisions that were being made. To be known by face and name to top level corporate executives and people working on the shop floor is a rather unique perspective. Going back, knowing what I know now, would I take the job again? Without a doubt.

When I first interviewed there in December 2002, I grasped the implications of Clayton Christensen’s Innovator’s Dilemma immediately when I asked a simple question: “How much are you feeling the impact of cell phone cameras on your business?” The people I asked didn’t grok the question, much less the answer. Two years later, cell phone cameras were listed as the #1 displacer of one-time-use cameras. Today they are displacing consumer grade digital cameras in general.

There is no doubt with anyone that events in the next 4-6 months are going to answer the question in the headline of this post.

Posted on

A Customer Experience Story

This has nothing to do with lean production except at the touch point of the customer experience.

Mrs. LeanThinker was looking for a replacement for her well-worn 5 quart stock pot. We were in Macy’s home department browsing.

She found one she really liked, a Circulon Symmetry model, full retail $140, sale priced at $69.95. Only this one was a brown color, and she wants black to match everything else she already has.

“Does this come in black?” A reasonable question.

“Yes” was the answer.

“Can you get it?”

“Let me check.”

The answer was that, yes, they can get it but because Macy’s didn’t stock it, they would “have to” sell it at full price. They do, it was offered, match online prices except Costco and Amazon.

We fired up the Droid, got online, and found this (click the image for full size):

pricematch

See the second line there?

That’s right. Macys.com has the same item at the “sale” price.

So Macy’s ended up price matching to their own web site. Oh – and they are shipping it to our door for no extra charge. Go figure.

Some things I just leave in the “perplexing” column. Yes, I know, they are two separate business streams and all, but really?

Then there is the Best Buy debacle that is brewing. Cancelling Black Friday orders on people three days before Christmas, but offering the item they ordered at full price in the store? I’m guessing there are lawyers involved faster than you can say “class action.” Where were the lawyers when the decision was made? What were they thinking?

Posted on

The Annual Operating Wish

As we approach the end of the calendar year, many companies are starting to work on their Annual Operating Plans Wishes for next year.

Why do I say wish? Because all too often these plans dictate what they wish would happen. Throughout the year, performance is “measured” against the plan. Positive variances are rewarded. Negative variances are, well, not rewarded.

To make things more interesting, each department: Sales, Production, Purchasing, etc., is responsible to meet the plan independently of the others. That makes sense, it is the only way they can be “held accountable.”

So when sales fall short in 1st quarter, production keeps producing. They have to. Otherwise they wouldn’t meet their AOP numbers.

To make things more interesting, if the sales mix changes from the original plan, and there is a raw material shortage that prevents shifting the production to match sales, production just makes whatever the can, whether it is selling or not.

It is pretty easy to think this through to a process of running overtime on weekends to build a product that was sold at a discount to “make the numbers” in the AOP.

The hilarious thing is that I have yet to meet a manager, at any level, who does not agree that this is exactly what happens, and that it is a poor way to run the business.

Yet we keep doing it over and over.

OK, so what to do about it?

The most important thing to grasp is that “the plan” is just that. It is not a fact. It is a working hypothesis, a prediction. It is wrong the day it is made. (If you can perfectly predict the future, why are you reading this?)

The purpose of making a plan is to identify the unexpected. If the sales mix and numbers start to depart from the plan, the entire system responds. This isn’t every department for themselves. (or shouldn’t be) This is about running the company to maximize total margins.

That means working together as a team with one plan, not a separate one for everyone.

Posted on

Lean Leadership Begins With Self Development

In Chapter 2 of The Toyota Way to Lean Leadership, Jeff Liker and Gary Convis describe one of the most important, and least emphasized, aspect of developing leaders – the necessity for intrinsic motivation. In simple terms, the desire has to come from within. This theme ties together everything else in the chapter, and I suspect, through the rest of the book.

On the other hand, this isn’t about the typical western “everyone fend for themselves” environment that develops unhealthy (and unethical) cutthroat competition.

They describe a nurturing environment that will allow and support anyone with the desire to take on ever increasing responsibility and challenges, and learn through a process of developing mastery.

The Role of Sensei

Not surprisingly, the role of the sensei described in Lean Leadership is quite consistent with the process that Jeff Liker and Mike Hoseus describe in Toyota Culture.

While the work environment itself is built around opportunities for learning, it is far different from out western ideas.

Lean Leadership sums it up quite well as they discuss the role of the sensei.

  • In the west, the teacher’s role is to show you the shortcuts.
  • At Toyota, his role is to make sure you don’t take shortcuts.

The teaching process is one of challenge and struggle – but not abandonment. It is guidance through discrete learning stages on the way to mastery.

Mastery

“Standard work” has always been regarded as a core element of the Toyota system. Liker and Convis build on the concept as far more pervasive than simple work procedures. We have known there is more to it for a long time, but like the list of what doesn’t work, authors, consultants and practitioners continue to emphasize the work procedure model.

In Lean Leadership, we see standard work as a path to mastery, and we see the reason behind the emphasis.

Liker and Convis describe a three stage process of learning and developing:

  • Shu – being taught. In this stage, the teacher says “do this” and the struggle is to get it right.
  • Ha – competent, but following by rote. In this stage, the teacher asks questions to cause reflection, and the struggle is to understand.
  • Ri – mastery, the point where the team member has enough depth to improve upon and teach the task.

The point of standardizing and stabilizing a process is to allow the team member the chance to master it. Why is this important? Because then the team member can pay attention to solving problems to improve the work vs. solving problems to simply get it done.

Even this is fairly easy to grasp in the context of bolting a suspension together, or welding a scissor lift. But the same principles apply to leadership itself.

Mike Rother’s Toyota Kata is about application of this principle in the core processes of leadership: Problem solving and coaching. By standardizing problem solving, we give team members the opportunity to master it so they can focus on solving the problem rather than trying to figure out how to go about solving it. It sounds like subtle semantics, but it is a huge difference.

But, again, this is about demonstrated capability rather than classroom hours Compare this process with how we typically “certify” practitioners in the west.

At Toyota the learner’s capability is judged by direct observation, just like any other process. While there must be an internal drive to learn, the challenges and struggles are tailored for the learner’s next stage of development.

Self Development vs. Mandated Development

All of this brings us to one of the core differences in the Toyota described by Liker and Convis.

Throughout my career as an internal “lean guy” in companies large and small, our “lean skill development” (or whatever you want to call it) process for leaders was largely driven by establishing requirements.

We wanted to require leaders to participate in kaizen events. We wanted to require them to attend the Lean 101 class. At one company, managers and supervisors were required to teach the “World Class Competitiveness” course. We want to include classes and educational events on their performance goals. We wanted to make them learn it.

To get back to an earlier post it doesn’t work.

The Toyota process is reversed. There is no requirement for anyone to master anything other than their current job. But if you want to get more responsibility, it is incumbent on you to demonstrate the drive to develop your own capability.

One purpose for universal team member involvement in kaizen is for leaders to directly observe who has the right motivation to learn and take on more. That is the beginning of the leadership development process.

In our companies today, of course, we have the situation of an existing hierarchy. Leaders have gotten into senior positions without having any of these skills. Our western management process is one of detached decision making from summaries presented by staff on PowerPoint. If a new initiative comes along, the senior leaders delegate it and “support” it by not shutting it down.

That doesn’t work if you want to change the status-quo.

What does? A drive to master something new and a realization that personal development is a continuous life-long process. That is the key message I get from this chapter. More to follow.

Posted on

‘Tis The Season for Management by Measurement

It must be that time of the year. I see traffic in the online forums asking about how to set key performance indicators for lean staff people so their performance incentives can be set.

If anyone were to ask my advice here, it comes down to one word:

Don’t.

Two reasons.

First, we have overwhelming evidence that these incentives not only don’t work, but they actually make performance worse in the kinds of work you are asking these people to do.

The Overjustification Effect

Dan Pink on motivation

All of this is consistent with what Deming told us decades ago, yet we keep doing it.

The second reason is inconsistency and misalignment.

Having the continuous improvement staff operating to separate metrics disconnects their efforts from line management’s. They become responsible for improving the operation while the line management processes are… what?

The message to the shop floor team is pretty clear here. They can read an organization chart. Do what the boss says, then, if we have time, and if the improvement guys can make the case, then maybe listen to what they have to say.

If you must have management-by-KPI, then the performance measurement for continuous improvement must be exactly the same as the line manager being supported. Why?

The question I would ask is “Who is responsible for the performance of the organization?” If it isn’t the line leader, then why does that position exist?

It makes no sense whatsoever to have the lean implementer working to a different agenda.

Our management traditions of de-aggregating and delegating are not serving us well. We need to take a systems view and realize that everything is inter-related. Further, we need to grasp that B.F. Skinner’s (dubious) research on rewards-based-behavior simply does not apply to management. Never has. Wishing otherwise isn’t going to change it.

Posted on

Decisions, Decisions

How many “If-Then” steps do your team members have to deal with in the course of their routine work?

Every one of those branch points is a decision. It is a point where the team member must memorize decision criteria and the correct choice(s).

Each “If-Then” in the process flow potentially doubles the number of possible paths the process can take.

Each decision is an opportunity to make a mistake.

The more complex a process, the more time and experience the team member requires to master it.

Mental bandwidth is limited.

The more attention they must expend to do it right, the less they can devote to thinking about how it could be done better.

How complicated a world do you create for people trying to do the work?

The more “flexible” your human interface with the process, the more complicated it is for the person who has to use it.

Do they have to enter ad-hoc query criteria into computers to pull information they routinely need every day?

How many decision criteria are things that people “just know?”

How often does someone encounter a problem or new situation and get a verbal instruction from the supervisor on how to handle it? What happens then? Maybe a general announcement at the next team meeting, if you’re lucky?

Go down to your work area.

Watch how people interact with the routine work.

Each of those decision points is an opportunity to simplify your process flow and make life a little less stressful for all of you.

Posted on

The Tough Decision: What Not To Do

Today’s Dilbert strip highlights a situation that is only funny because it happens so often:

The idea that a company can focus on 25 key areas, or 125 key performance indicators (yes, I said 125 because I have seen it myself) is obviously ludicrous.

Of course a manager has a legitimate concern to ensure people don’t take their eyes off things that are important to focus on something else.

But the leader’s role here is to ensure there are processes and systems in place that anchor the routine things. Further, those processes and systems need to be designed to alert the appropriate people when something goes out of control, or past a boundary.

Without having any routines the manager has no choice but to make everything something to focus on.

Because there is no standard process, everything must be managed as an exception.

This stresses the organization because in reality they can only micro-manage a few things at a time. It is left up to the people to decide what isn’t going to get done. The bosses response at that point is going to be negative no matter what they accomplish. “Respect for people” does not play here.

Leader’s toughest job is deciding what we are not going to work on right now. It isn’t as tough as it seems because if a focus or challenge is selected well, it actually organizes the problem solving effort to pull just about everything else in behind it.

Let’s take an example from a previous post: On time delivery.

If we say “We are going to emphasize “on time delivery” as a theme or challenge this year, what kind of things might people end up working on?

  • Having every operation start on time.
  • Sources of delay.
  • Quality issues (which cause delays)
  • Safety issues (also cause delays)
  • Visual controls and good response to problems (to get on top of problems quickly)
  • Equipment reliability.
  • Setting a good operational takt time.

The list goes on. But by having a decent challenge, the local area can focus on the things that are impacting their ability to deliver on time. It isn’t necessary to make a laundry list of everything that could cause a delay and measure it from the top of the organization. If you do, everyone’s energy is dissipated working on problems that they don’t necessarily have.

Of course this is all based on having a leadership process that gets down to the work area, grasps what people are actually working on, and coaches them through the process of aligning their efforts and solving the right problems in the right way.

Hmmmm… so does that mean that the #1 thing to focus on if you want consistent on-time delivery might be leadership development?

I guess I need to get back to the Liker and Convis book.

Posted on

Defining Leadership

Chapter 1 of The Toyota Way to Lean Leadership is titled “Leading in the Toyota Way: A Lifelong Journey.”

It seeks to draw a sharp contrast between Toyota’s leadership model and the model that is taught and practiced in a more “traditional” Western company.

Where the “teaching” process in a traditional company tends to be tacit – reinforcing some behaviors and discouraging others, in the Toyota described by Liker and Convis, the process is far more deliberate.

It is a process of aligning to explicitly stated core values that have been in practice since the inception of the company, but only written down in 2001 as The Toyota Way 2001.

Then, because the word “leadership” often carries one of those “I know it when I see it” kinds of definitions, the authors use examples and construct a model to describe what they have observed. That model then structures the next few chapters (Yes, I peeked ahead).

Across the chapter they are describing leadership, not as something practiced by individuals, but as an interdependent ecosystem that links tightly to every aspect of the company. Certainly individuals each have their own style, but it is expressed within a context defined by commonly held beliefs and norms of behavior that combine to form what we call a “culture.”

Someone from outside that culture (such as Gary Convis coming from Ford, and other Toyota managers I have known personally), has to work hard to assimilate into it.

Outside the context of the book, I have also seen the opposite: Take someone who knows nothing but the Toyota culture and put them into a “traditional” company and many of them have a hard time adapting to a completely alien environment. The support structures they are used to are simply not there, and it can be psychologically very isolating.

One example of this contrast is in how these two systems see “Challenge.”

In a traditional company, a “challenge” is issued as a “stretch goal” and it is up to the individual to figure out on their own how to meet it. In the most extreme case of an “only results matter” environment, they may disregard their fellow team members, rules, ethics, even the law to get there. While we have spectacular examples such as Enron, there are lots of companies where “inventory targets” are met by starving off production at the end of the quarter and pulling in orders from the next.

“Challenge” is one of the explicit values in The Toyota Way 2001 but it looks quite different. Yes, there are challenges issued. But behind that challenge is a support structure. The leaders, at all levels are expected to stretch their own personal development, but to do so within the context of kaizen, deep understanding gained by genchi genbutsu, team work and most important of all, respect.

The leader’s development level is gauged by how the challenge is met even more than whether it is met. Just “get-r-done” doesn’t work here.

Posted on

Once Again: What Doesn’t Work

The introduction of The Toyota Way to Lean Leadership covers ground that:

  1. Has been covered before – we know all of this.
  2. Needs to be covered again, because most people act as though we don’t know it.

Simply put, Liker and Convis (legitimately) feel the need, once again, to let us know the things which reliably fail when trying to build a sustaining culture of continuous improvement.

“So let’s train some Lean Six Sigma experts to grab the tools and start hacking away at the variability and waste that stretch out lead time; this will make us more successful, both for our customers and for our business. What could be simpler?”

What indeed.

I am, once again, reminded of a saying that “People will exhaust every easy thing that doesn’t work before they try something difficult that will.”

The authors cite some of the same things that we have heard before:

  • Trying to determine ROI for each individual process step, or each individual improvement, doesn’t work.
  • Trying to motivate the right behavior with metrics and rewards doesn’t work.
  • Trying to copy the mechanics doesn’t work.
  • Trying to benchmark, and copy, a “lean company” in your business doesn’t work.

Yet, even though we have been hearing these messages for at least a decade, actually longer, I continue to encounter managers who try to work this way.

The authors assert, and I agree, that this is the result of people trying to fit Toyota’s system into a traditionally taught management paradigm that is so strong people aren’t even aware that there is a paradigm, or can’t conceive there is anything else.

They are stuck inside their threshold of knowledge when the answer is beyond it.

This reminds me of the Edwin Abbot’s 1884 story of Flatland, a two-dimensional world populated by creatures who cannot conceive of “above” and “below” their planer existence.

Although his story is often read by students struggling to grasp models with four, five and more dimensions to them, it is really a story of social change and paradigms.

Our management systems are a “flatland” with Toyota’s system existing in a space that we have to work hard to grasp. We can see pieces of it where it touches ours, but like the creatures in Flatland who only see two dimensions of three dimensional objects, we only see the pieces of TPS that we can recognize.

Posted on

The Boundary of “We Don’t Know”

One of the graphics in Bill Costantino’s presentation really struck me, but my thought was out of context so I wanted to make a separate post about it.

It was the concept of the “current knowledge threshold” illustrated here:

current-knowledge-threshold

As I interpret it, the red line depicts the “we know how to do this” area. It is the domain where the team is comfortable working, they have a good grasp of cause and effect.

For problems which are outside the red line, the organization needs to engage in deliberate activity to gain understanding, to push the boundary of knowledge until the problem is enclosed by it. I tried to illustrate that process at the end of the original post.

Sadly, this doesn’t happen often enough.

Instead what happens is the organization develops a comfort zone inside the red line. Things that are outside the red line come labeled with “That doesn’t work here” and “We have reached the limit of what we can improve.”

Organizations, even sub-organizations within the same company that out-perform the baseline knowledge – who have cracked problems outside the red line – get dismissed as “no different” or “nothing special” or are attributed with special, unrepeatable, circumstances to account for their different performance. (I have seen this up close.)

If you are serious about kaizen, it is important to be operating right at the edge of the red line.

“What have we done today that, yesterday, we didn’t know how to do?”

“What will we try tomorrow that, today, we don’t know how to do?”

Those are questions that push learning.

By the way – if you are spending all of your time inside the red line, and solving the same problems again and again, your performance is likely flat lined. This is the “improvement plateau.” That is another topic for later.