Tag: Leadership

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Russia’s Factories Gear Up for Efficiency

This article in Business Week offers a glimpse into some of the opportunities, and challenges, facing Russian industry, both in dealing with the global recession, and their tremendous work to get out from under the legacy of a state run economy.

Two things really jump out at me. First, this particular CEO (other than the fact that he is 26 years old(!) is taking a proactive approach to the recession. He is taking responsibility for dealing with the problems, not simply playing victim and blaming the economy.

…Andrey Gartung, the 26-year-old CEO, believes the global economic crisis offers an opportunity to boost productivity. This year he is adding new product lines, ordering every department to trim costs by 15%, and asking workers to ferret out waste wherever they find it—with prizes of up to $300 for the best ideas. “The companies that will survive are the ones that are efficient,” Gartung says.

With that kind of attitude, I think Mr. Gartung will go far.

But the thing that really jumped out was the incredible magnitude of the opportunity.

Despite Russia’s 7%-plus economic growth recently, much of its industry is little changed from Soviet times. Factory productivity is just 16% of the U.S. level, according to Strategy Partners, a Moscow management consultancy.

That means, friends, that they have an 84% upside. If they can harness that, think about what it means in terms of competition.

Russia, of course, is not without its problems – political, social, economic. The little tidbit that the CEO of this factory is the owner’s son comes out about 2/3 of the way down, as does the fact that the owner is a member of the Russian Parliament. Though I am sure that Mr. Gartung is sharp and competent, in general, this kind of thinking is not going to help Russian industry as a whole.

But rather than focus on them, take a look in the mirror. What is your productivity upside? What is your attitude about these economic times? Do you honestly believe your operation is as good as it can get? Or are you satisfied with 15 or 20% of what it could be?

Consider Toyota’s response to their first quarterly loss in decades – essentially saying treating the loss as evidence of a problem.

Remember that old definition of insanity: “Continuously doing the same thing, and expecting a different outcome.” If you don’t like the results you are getting, then dig in and try something else.

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Amazon.com Gets It

Not many people know that Amazon.com is one of the “places to see” if you are looking for companies practicing the TPS. The fact that their sales and profits are hitting records as most others are scratching and clawing to stay in business is telling.

This recent post by Kevin Kelleher on Gigacom really sums the whole thing up with one sentence quoted from Jeff Bezos’ letter to shareholders:

At a fulfillment center recently, one of our Kaizen experts asked me, “I’m in favor of a clean fulfillment center, but why are you cleaning? Why don’t you eliminate the source of dirt?” I felt like the Karate Kid.

If you have to keep cleaning up a mess, find out where the dirt is coming from.

But the philosophy goes deeper.

If an assembly Team Member is continuously spending time cleaning up threaded holes, go find out how the debris is getting in there (or find a way to keep it out). Go and see.

If you keep losing market share, find out why customers prefer your competitors products. (And don’t sit around a mahogany table talking about it, GO AND SEE.)

Other posts on the same site relate to eBay’s troubles trying to compete with Amazon. The difference, I think, is summed up in a quote from an Amazon executive related to me by someone who was a fly on the wall in one of their meetings:

“At an eBay sellers meeting last quarter, my counterpart was booed off the stage. That is not going to happen here.”

Kaizen is less about the tools than it is an obsessive curiousity about what the next problem is between you and perfection.

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Back to Basics

The Lean Enterprise Institute is taking up a “Back to Basics” theme.

But what, exactly, are “the basics” of the Toyota Production System?

This is critically important. Permit me to cite an analogy.

Look at a house. What do you see? What would you say are “the basics?”

At first glance, all houses have walls, a roof. They have a door. They are divided into rooms for various activities and purposes. A “basic house” is going to have an entry, a living room, a kitchen, a couple of bedrooms, a bathroom. More complex houses will have more rooms, fancier architecture, higher grades of materials, be bigger, but the basics are all there.

OK, that is a basic house.

I make this point because when people talk about the basics of “lean manufacturing” they talk about the things you can see. If I open up Learning to See, and turn to the “Green Tab” the chapter’s title is “What Makes A Value Stream Lean.” That chapter is primarily (right after the talk about waste and overproduction) a list and description of “Characteristics of a Lean Value Stream.”

  1. Produce to your takt time.
  2. Develop continuous flow wherever possible.
  3. Use supermarkets to control production where continuous flow does not extend upstream.
  4. Try to send the customer schedule to only one production process.
  5. Distribute the production of different products over time at the pacemaker process (level the production mix).
  6. Create an “initial pull” by releasing and withdrawing small, consistent increments of work at the pacemaker process. (Level the production volume).
  7. Develop the ability to make “every part every day” (then every shirt, then every hour or pallet or pitch) in fabrication processes upstream of the pacemaker process.

Now I have to say right now that I have always loved this chapter. I cannot count the number of people I have referred to “The Green Tab” as a fundamental primer. It includes all of the basics, just like our house.

In their latest book, Kaizen Express, the LEI has brought out some more detail on these same points, and added a few “rooms” to the house. One critical aspect they add is various topics that add up to quality. (It’s kind of like leaving out the kitchen or the bathroom if you don’t mention that.) They talk about zone control, line stop, and countermeasures to quality problems. (I will do a full review on this book soon.)

Then on page 99 starts four pages on Employee Involvement where they talk about practical kaizen training (PKT), and suggestion programs.

Let’s go back to our house. The things we said were “the basics” were the things you see when you look at it from the street, and go inside and walk around in it. But in an industrialized country, the modern single family residence is a miracle of accumulated knowledge and technology. The basics are the things that keep it from sinking into the ground, from catching on fire, from leaking and rotting. They are the things you can’t see, but unless you understand them, your house may look like the one next door, but it won’t perform like the one next door.

I have been in dozens of factories that had takt time, some semblance of continuous flow, pull systems, supermarkets, all of that stuff. They had run hundreds, maybe thousands, of kaizen events, and had suggestion programs. All of these things were visible just by walking around.

Yet most of them were stuck. They had reached a point when all of their energy was being expended to re-implement the things that had slid back. Three steps forward, three steps back.

They had read Ohno’s book, they knew the history of the Toyota Production System. They understood all of the engineering aspects of the system, and could install very good working examples of all of it.

But something wasn’t there, and that something is the foundation that keeps the house from sinking into the ground. It is the real basics.

Kaizen Express hints at it on pages 99 – 102, it is true employee involvement. And here is a real basic: Employee involvement is created by leader involvement. Not just top leaders, all leaders, at all levels.

To be honest, a lot of technical specialists don’t like that very much for a couple of reasons. First, engaging the leaders, at all levels, is really hard. It is a lot easier to get things done by going straight to the gemba and doing it ourselves – we show people how to do it, we “engage” them in the initial implementation, and everything is wonderful for the Friday report-out.

But I contend that the foundation of the Toyota Production System is the leadership system. It is the system of leadership that holds up all of the walls that we call takt, flow and pull. Those things, in turn, enable the leadership system to function better. The “characteristics of a lean value stream” evolved in response to the leadership system, in order to strengthen it. It is a symbiosis, an ecosystem.

“But it didn’t start out as a leadership system.” No, it did not. The history of how the Toyota Production System evolved is well documented, and the leadership system was less designed than it evolved. But let’s go back to our house analogy.

Primitive houses only have the “basics” I described above. They don’t have sophisticated foundations, some are just built on skids (if that). But because they lack the basics, most of those primitive houses don’t last.

And there is the paradox. When we say “back to the basics” we cannot only refer to the chronological history of how the system developed. We have to take the most successful, most robust example in front of us today, and we have to look at what fundamental thing holds this thing up and lets it grow more robust every day.

So let’s take a look at what Toyota teaches when they teach someone the basics.

The article Learning to Lead at Toyota was written back in 2004, but I still feels it offers a lot of un-captured insight into the contrast between what Toyota thinks are “the basics” and what most others do. I want to encourage everyone to get a copy, and not just read it, but to parse it, study it, and use it as an “ideal condition” or a benchmark. Compare your “lean manufacturing” and your leadership systems to what is described in here. Ask yourself the question:

Do we really understand the basics?

Note: There are now links to my study guides for Learning to Lead at Toyota on the Resources page.

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John Shook: Purpose, Process, People

Like many of us, John Shook has been commenting in his column about GM at a precipice seemingly of its own making. One of the questions he has addressed in a couple of columns is “What did GM learn from NUMMI?” or perhaps more precisely, “Why didn’t GM learn from NUMMI?”

John’s latest column, titled Purpose, Process, People, points out rather bluntly:

My answer to that question remains that GM actually learned far, far more than most people realize about process but didn’t get very far with the people part.

In an earlier column, John raises the possibility that perhaps GM and Toyota each view the world through different lenses of vastly differing purpose (what I could call core values, the things that aren’t written down, they just are within an organization).

Yes, GM wants to survive — hence the humbling appearances on Capitol Hill by Wagoner and the two other Detroit CEOs. Yet had GM been seeking long-term survival a la Toyota, it would have made different decisions all along. GM wants to survive, all right, it wants to survive so it can continue to make money. Toyota on the other hand, wants to make money to survive.

Think about that: Toyota makes money to survive; the Detroit 3 exist (survive) to make money. Those contrasting senses of purpose will take you down very different paths.

This conclusion lines up perfectly with GM’s behavior regarding their NUMMI opportunity.

…  And so it went — Toyota running NUMMI operations, GM selling Novas while dispatching people to NUMMI to learn.

… [by 1994] at least, GM still didn’t know how to make a small car profitably and still didn’t understand TPS. And here we are today. So the question remains: why not?

Why not indeed?

So we have a situation where Toyota is running a GM car plant, building an excellent small car. GM seems to have been treating it as a factory, with an ROI, rather than for what it really was: A learning laboratory for the GM as a whole. Yes, they sent thousands of GM people there “to learn” and then brought them back into their old work environments and what? Somehow expected these smart people to transform the company?

Here is what I think happened.

NUMMI was a factory. So who do you send to a factory?

You send factory managers. You send line managers. You send supervisors. You send people who have jobs in a factory so they can work with their NUMMI counterparts and learn from them. Makes perfect sense, doesn’t it?

And, as a sidebar to all of this, what was Toyota learning? They were learning how to transplant the TPS outside of Japan. They were learning how to teach their system to people who didn’t grow up in it.

Let’s look at the process Steven Spear outlines in Learning to Lead at Toyota. In this case, an experienced, seasoned senior leader comes from a U.S. auto company to Toyota. They need to teach him “how to lead at Toyota” and they need to do it reasonably quickly.

They don’t sit him down to Death By PowerPoint orientations. They don’t have him go through the financial. (at least not right away). They don’t put him in classes. And most importantly, they didn’t have him shadow another factory manager to “learn the job.”

Instead, they send him to the shop floor to, essentially, learn to be a Team Leader – a senior hourly Team Member. He has to un-learn how to provide the answers, and learn how to guide people to their own solutions. He has to learn to let go of the goals and targets and understand that those goals belong to the Team trying to meet them, not the boss. His job is simply to help them push their capabilities.

So what would it have taken for GM to have a chance to “get” what the Toyota System is all about?

Where was Roger Smith? Where were the other executives from Detroit? Ironically, this time period really marked the beginning of GM’s decline. My conjecture was that NUMMI was “a factory” and these senior corporate leaders felt they had nothing to learn there that could not be picked up with a tour and a briefing. It was profitable, they were sending “their people” to learn why. Good ‘nuf.

Actually, this pattern happens in nearly every “lean manufacturing implementation” out there. The senior leadership is “committed” to the point where they are willing to hire the experts and have them teach people how to “be lean.” But, in truth, this is about changing the way the company is run. Very few “lean implementations” succeed without a transition in top leadership. Of those which do succeed, few of them survive the next leadership transition unless that person was carefully developed within the system.

Kaizen is a process of learning, and only people can learn.


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Managing The Burning Platform

David Henry in the UK presented an interesting question on The Whiteboard. He said:

During this economic downturn, is the long term philosophy of lean put at risk by the short term focus on cost reduction? Is that necessarily a bad thing? Does this urgency give opportunity for greater engagement with line management and provide the catalyst for change?

My first thought was a quote cited by Steven Spear from an Emergency Medical Technician:

Air goes in and out. Blood goes round and round. Any variation on this is a bad thing.

Translating, keeping the patient at least marginally alive is always the first priority. And of course that makes sense. It buys time, and that is what is needed.

So back to David’s question.

It is really easy to say that, in these emergencies, long term thinking doesn’t matter. But I contend that it is even more important right now. This is a time for action. It is not a time for panic.

This means that as the company’s leaders look to how to navigate through this rough time, they need to take the time to reflect, develop multiple ideas, and bias execution toward short-term survival and sustainable solutions.

For example, some companies got caught short with a mountain of inventory, and need to convert it to cash. They can always just take the brute force approach and hammer it down by manual micro-management. The problem comes up when sales and production volumes return. They didn’t use the brute force approach at higher volumes because it was impossible to manually manage everything. But whatever they did do at that time (1) is what got them into the problem in the first place and (2) is what they will do next time unless they address the core problem(s).

So, yes, take the necessary short-term actions. But at the same time, look in the mirror and say, out loud, “We are responsible for this.” Embrace that statement, even if it is not completely true. That is what self-empowerment is all about.

Then go and understand the dynamics of your supply chain, what causes orders to actually be placed, why the excess stuff was there (because somebody thought it was necessary), and what changes you can make (mostly to your thinking) that will change the system.

By the way, it is very easy to say “implement kanban” at this point, and yes, that works. But I honestly think a prerequisite is firmly embracing, owning, the concept that what you did before DIDN’T work.

This is one situational example of how to turn these devastating times into opportunities to emerge ready to maneuver when opportunities present themselves. The barriers are mostly between our ears.

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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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Behind The Scenes Of An Outlier

Yesterday when I published Gipsie Ranney’s white paper “Remembering Nummi” I did so because I thought she made some points that others would be interested in.

Let me take you behind the scenes of WordPress. One of the things this little program makes available is a stats tracker. This is the graph of daily “Site Views” over the last month. I think the graph speaks for itself:

graph1Needless to say “Remembering Nummi” got some legs under it.

Looking at the graph, you can see that this site has a pretty steady pulse to it. The dips are weekends. The little (second highest) spike you see correlates with a link back from a site in Europe. Looking at this, and other information, I can reasonably conclude that I have a couple of dozen regular readers, probably from feeds, and the difference is click through traffic from other sites and search engine traffic.

Something different obviously was going on today.

I also see the regular sources of click-throughs to this site. This is a pretty typical list:

gembapantarei.com/2009/01/the_essenti…
leanblog.org
google.com/reader/view
leansupermarket.com/servlet/Page?temp…
google.ca
gembapantarei.com
gembapantarei.com/2009/01/finding_tim…
linkedin.com/mbox?displayMBoxItem=…
us.mc354.mail.yahoo.com/mc/showMessag…
search.conduit.com/Results.aspx?q=Typ…
170.2.59.38:15871/cgi-bin/afterWorkOp…
my.yahoo.com/p/3.html
translate.google.com.br/translate?hl=…

But here is today’s:

tmalive.tma.toyota.com/toyota/story.c…
dailynews.tma.toyota.com/story.cfm?st…
clipsheet.ford.com/article_view.cfm?a…
clipsheet.ford.com/article_view.cfm?a…
dailynews.tma.toyota.com
clipsheet.ford.com/article_view.cfm?a…
toyota.lonebuffalo.com/story.cfm?stor…
global.clipsheet.ford.com/article_vie…
tmalive.tma.toyota.com/toyota
global.clipsheet.ford.com/article_vie…
dailynews.toyota.com/story.cfm?story_…

So I conclude that “Remembering NUMMI” got picked up by a couple of news clipping services and fed into Toyota and Ford.

First, then, is a “Welcome” to any new readers from these great companies. Please feel free to peruse, comment, and even offer to write a guest post.

Though I cannot attribute to anything other than who does, or does not, subscribe to a particular clipping service, I did find it ironic that this article, really taking a critical look at the need for government guaranteed “bailout” loans to the automotive industry, was read exclusively by people in two companies who (so far) have not asked for any help. (I speak primarily of Ford here – they conspicuously said “We can get by for right now, thank you.“

To this I offer a personal comment – as a former Boeing employee I have met (though certainly did not know) Alan Mullaly (now CEO of Ford). While no leader is perfect, I believe he is certainly capable of helping the Ford culture to “confront the brutal facts” of their business. My main question about Ford is whether they had already hit the iceberg when they brought him on board.

To GM and Chrysler, though, I guess I would offer: Gipsie Ranney seems to be talking to you guys. It would behoove you to listen to her. Yes there are devestating external factors at work, but guys… your boat was leaking faster than the bilge pumps were pumping long before the storm. Stop blaming the weather and take a look inside. That is where your issues are.